Private money is the holy grail of the real estate business today and the art of raising it can make or break your business.  One of the biggest mistakes that I see new investors make is that they wait until they have a good deal to start raising private money. Most people think that all they need to do is find a good deal and the money will just show up. If you have a good deal you may get lucky and be able to quickly find private equity, but “luck” is not a solid business practice.

First rule of private money is you must always be looking for it. Once you have a deal it’s far too late to start raising money. Planning for funding is one of the biggest areas that you need to consistently be working on. People invest in you first and the deal second.

Networking is the backbone to raising private capital. Relationships are the key to networking so in short relationships = Money. You must always be building relationships if you want to be good at raising private money for your deals. Relationships can take time to find and form so time is of the essence. Get started now! Don’t wait until you have a deal. If you are intimidated about speaking to potential investors about doing business with you then that is a sign that you don’t have your real estate education in place as well as you should have. If you know your business, it’s not hard to talk about it. If you’re nervous then keep studying until that nervousness gets replaced with an excitement to talk about what you are trying to do. It will happen. Read More→

Really good real estate investors know and rely on valuation of their deals as the key to success and profits. The economic slump that richer countries have suffered during the past seven years can be blamed on a runaway housing bubble that started right here in the U.S. All the market areas covered by REIAComps, insure when pricing changes happen you are not caught off guard. 

When it comes to the tic of the housing bubble, there were other issues like poor oversight of the broader financial system which led to the crash. But without the real estate bubble, there would likely have been no financial crisis.

Which is why the fact that similar-looking bubbles inflating in countries from Canada to the U.K. have economists worried that there might be other catalysts of future crises laying wait for us in the weeds.

Last week, in a Forbes article, IMF economist Min Zhu published an article called “Era of Benign Neglect of House Price Booms is Over,” in which he sounded the alarm over rising global home prices. Zhu explains how he determines whether home prices in a particular country are overpriced.  Read More→

As a Wholesaler and an Investor, my pet peeve and the pet peeve of almost all cash buyers I talk to is when they get a lead from a Wholesaler and the “repair estimations” are WAY off!  You can probably relate.  If you are doing this, you are killing your reputation as a legitimate Wholesaler.  And your reputation is everything in this business. 

This can also apply to when you are co-wholesaling or joint venturing on another Wholesaler’s deal as well.  You don’t want to advertise or re-market a property when they are totally off on their repair estimate.  Because then you get a bad name because you took their word for it.  Time to get a bit more thorough and bit more professional guys (and gals).

An accurate repair estimate is critical in making decisions on real estate deals – especially Wholesale deals.  Of course smart investors are going to do their own due diligence anyway, but you don’t want to waste people’s time by claiming a house only needs $5K in work, when it really needs $15K in work.  It’s best to over-estimate repairs as opposed to under-estimating repairs when relaying that information to your buyers.

And YES – there are two types of repair estimates – the “Rent Ready” estimate – or the “Full Rehab to Retail Flip” estimate.  Because we are either selling to Landlords – who may only need to get the place “Rent Ready”.  Or we’re selling to Fix n Flippers – who need to get the place sparkling brand new so they can resell for top dollar.  If you know the place is just going to be a rental (for me that’s $60K and under ARV) – then you can probably get away with just knowing the “Rent Ready” estimate.  Read More→

Over the last two years I have covered in great detail the Securitization Swindle the banks have been perpetrating for over a decade.  The banks were successful because they created such a tangled web that it was nearly impossible for everyday people, lawyers, and judges to understand what was happening.  For years homeowners just couldn’t catch a victory in court, but things have been changing…  Courts across the country have started to see the light and rule in the homeowner’s favor.  In this month’s article I’m going to explain how an ordinary homeowner can stand up to the banks and win.

The first step is to find an attorney who truly understands securitization.  This was a process that was specifically designed to confuse intelligent people and convince them nothing fishy was happening.  You can’t expect just any attorney with an ad in the yellow pages to understand the process well enough to convince a judge that you were wronged.  You must find an attorney who can convince a judge that the transaction laid out in the mortgage paperwork never happened.  The lender never loaned a dime of their money to the homeowner.

In a securitized loan, the money for the loan was provided by an unrelated third party who was never named on the note.  The bank got this money from investors who believed they were buying into trusts that funded mortgages.  Instead of creating these trusts, the bank pocketed the money and used some of it to fund mortgages in its own name.  The bank then covered up its tracks by fabricating a series of sham transactions it called “proprietary trading.” Read More→

There are risks sellers face when using a contract for deed to sell their property. I address two main risks: (1) if a buyer challenges the seller’s eviction attempt, a seller is likely to lose, as many judges are hostile and unfamiliar with contract for deeds, and (2) although contract-for-deed law is historically clear in Georgia, it is archaic and the trend in other states makes it likely that Georgia may eventually find the seller’s eviction remedy unlawful.

Many sellers who use a contract for deed routinely evict their defaulting buyers without incident (see part three for a discussion on remedies). However, when a buyer challenges the eviction, the seller may lose because of the negative judicial perception. 

A few months ago, I was in DeKalb County Magistrate Court attempting to evict a contract-for-deed buyer. Thus, I was assisting my client in using the most popular remedy upon buyer default – eviction. My client’s turn for trial came, and the facts and law were presented to the judge. The judge, who admitted his/her unfamiliarity with the law, nevertheless ruled against my client while vehemently criticizing my client as a shady businessperson. The judge’s scathing remarks came not from the facts of the case, but his/her general view of contracts for deed. In addition, the judge informed my client (and the entire courtroom) that DeKalb County Magistrate judges decided to rule against these “type of contracts.”[1] Although my experience with contract for deeds has fared better in higher-level trial courts (State and Superior Courts), my experience with Magistrate Courts has been concerning. This unfamiliarity and, in some situations, hostility is a good reason for sellers to avoid using a contract for deed.  Read More→

Have you ever considered which of these options will bring you more money?

• Investing in real estate as a Self-Directed IRA investor
• Using your real estate knowledge to earn your living through commissions (real estate sales as a career), or
• Simply investing in real estate

The truth is that each option has its benefits though, as with any other investment, it is always good to diversify. This means that the best option would be to do “all of the above”.

We have met so many realtors who depend upon their real estate commissions to make a living. While realtors and brokers have a wealth of experience in real estate and while they have the unique privilege of seeing the homes coming up for sale before they are advertised, many of them are not real estate investors.

In our last articles, we spoke to you about educating yourself about Self-Directed IRAs so that you can increase your customer base to include Self-Directed IRA investors. In this article, we are going to take it one step further and encourage you to put your real estate knowledge to work for you at a whole new level. Consider for a moment that you can continue to collect commissions from your real estate sales and you can also use your real estate knowledge to purchase real estate. Read More→

Lately, we have been able to contract properties at larger than normal discounts through our aggressive marketing campaigns. The other day we sat down with our bookkeeper, who is also a wholesaler, and she was surprised at some of the prices we contracted some properties. She went on to explain that she recently contracted a property and assigned the contract for $11,000 and felt a bit guilty. I asked if she spoke with the seller after closing or keeps in contact with him to see what he thought. She explained that he was excited to close and even sent her a thank you letter a few days later. I told her that if that was the case she has absolutely nothing to feel guilty about.

Every week my team and I receive calls concerning the sale of homes, lots, apartment complexes, unfinished developments, etc. Once we have an address and a good idea of the property’s condition/situation we make an offer in the form of a range. We never give a hard number until after we have personally visited the property and have done extensive due diligence. If the seller can work with the range we schedule a meeting with the seller or his/her representative at the property. This is where I believe deals and relationships are forged. I get the opportunity to separate myself from all the other “buyers” that may be offering on this property as my competition. Before or while walking through the property I get to know the seller on a personal level. I ask what the reason is for them selling the property. If that question does not answer this question, I next ask what their goals are in selling the property. Try to build some rapport before asking the second question as it may be personal or they may think you are getting too nosey. These two questions tell me how serious and/or motivated they are in selling. I also do this for another reason that many investors may not expect. I do this to see if I can actually advise/help them to stay in their home, if they mention that would be something they wish they could do. Yes, if I am successful in assisting them in staying in their home I do not make money or not as much as I would make flipping the property. However, I make plenty on all the referrals. Read More→

It is the goal of this column to answer questions about QuickBooks and how it is used in the REI arena. Knowing how to record transactions in the proper way and have your set of books in good shape when it comes time for taxes. It is our intention to do this with you, the members, submitting questions to Karen@smallbusinessadvisor.biz, and getting answers here in this column.

Q: How can Reports and Graphs Help me in my Business?

A: Reports and graphs give you insight into your finances; they’re two of the most important benefits of tracking your data in QuickBooks.

Often, people’s perceptions of their business profitability don’t match the facts. If you enter your data in QuickBooks, but don’t take the time to analyze the data, your business decisions are based on incomplete knowledge. Reports let you summarize your financial data so you make decisions based on analysis of the numbers.

Reports give you the bottom line—you can see exactly how profitable your business is. If it’s not doing as well as you’d hoped, you can create reports that show you which areas need improvement. QuickBooks has dozens of preset reports, but if you have specific reporting needs, you can customize any QuickBooks report to show exactly the data you want. And if you’re interested in getting quick information, you can use a QuickReport that lets you summarize information from your lists, forms, or registers with one click of a button. Read More→