Archive for Articles
The Key is Finding MOTIVATED Sellers
Posted on March 21, 2011 by
As folks pass from their thirties into their forties, they suddenly realize that sixty-five and retirement isn’t that far away. They also realize that Social Security is a great retirement plan…if the thought of living under a bridge and eating cold beans out of a can is appealing.
These realizations are why Kim and I are asked to speak to groups around the country about real estate investing. Most folks know that more people achieve financial freedom through real estate than from any other type of investment.
There are lots of reasons why real estate is a great investment/retirement vehicle. Here are just three: 1) Rental income has a very low tax rate. Remember, how much you keep is more important than how much you make. 2) Everybody needs a place to live and about 37% of Americans rent, not own, a home. 3) In the end, the tenant pays off the property for you!
We’re often asked, “To be a successful real estate investor, what is the MOST important thing that I need to do?” Easy answer: Read More→
Are Your Property Taxes Too High?
Posted on March 18, 2011 by
Do you think your property taxes are too high? If you do, how do you get them lowered? And who’s responsible for determining the amount you pay in property taxes, anyway?
Let’s begin with the last question first. I greatly respect and much admire the folks who work in the Tax Assessor’s office. They have a daunting, thankless job!
When Kim and I first began disputing our property taxes in 2006, I viewed the Tax Assessor’s office as my adversary. Over the years, after spending a lot of time getting to know these folks and learning how the process works, I now realize how WRONG I was. Read More→
Use What You Have… to Get What You Want
Posted on March 15, 2011 byPete Fortunato (PeterFortunato.com) has been one of my main real estate investing teachers for many years. The guy is phenomenal! (Not to be confused with pneumonia…I’m dyslexic – what happened to “spell it like it sounds?”) Pete is one of the best and most creative deal structurers on the planet!
Pete has a great saying: “Use what you have, to create what you need, to get what you want.”
Until recently, I’ve never fully understood what he meant. But finally, the light turned on!
As real estate investors, we’re often asked by prospective tenants or buyers, “Will you work with me on the deposit?” The usual answer is, “No. Are you nuts?” Ok, perhaps we only think the “Are you nuts?” part.
Point is, we’ve always required the cash up front in order to make the deal work.
Similarly, when we’re buying a property, all too often, the homeowner also wants all the cash up front. Since I’m always light of having the amount of cash the seller needs, the deal is lost.
Now, let’s think like Pete. It’s not the cash that the seller wants, is it? Isn’t it what the cash will buy or do that’s the key? Read More→
The Fair Lease/Purchase… An Investor’s Perfect Hybrid!
Posted on March 14, 2011 byWe see them all over the roads today. Growing in popularity, Hybrid vehicles are beginning to offer an enticing option to dependence on foreign oil supplies. Similarly, the Buy Low, Rent Smart, Sell High lease/purchase model offers investors a Hybrid of the “buy and flip” and “buy and hold” investment models.
Most residential investment models resemble and can be grouped into one of two general categories. Each has a major flaw that concerns many investors who consider or invest in each model.
The “buy and flip” model by definition is for the investor who seeks to purchase property at a discount, oftentimes improve the property, then sell the property quickly for immediate gain. This model is ideal for investors who have no interest in landlording, as the “buy and flip” investor does not intend to seek a tenant for the property in advance of sale.
The main problem with the “buy and flip” model is that if a buyer does not come by quickly, then the investor is faced with discounting the property and/or involving a real estate agent in the marketing of the property. Due to this possibility, most “buy and flip” investors need a discount of 25% or more even after adjusting for the necessary repairs and improvement. With such high investor discounts, the pool of properties available with such significant discounts is often small. Simply put, the higher the discount the investor needs to make his or her model work, generally the fewer properties available at such a steep discount. Read More→
Never be the Motivated Guy in the Deal
Posted on March 9, 2011 byA few days back, Brad flew in from Virginia to discuss his real estate investing business. He’s an experienced investor who, for the past three years, has been having a really tough time keeping his head above water.
Brad owns 17 single-family homes, 2 duplexes and a 26-unit apartment building. He wanted me to look over his portfolio to find out what he’s doing wrong and what he can do to become more profitable.
Over the years, I’ve had the opportunity to meet with a lot of investors, study their portfolios and discuss ways they can do better. One of the biggest and most common mistakes made – by both new and experienced investors – is doing deals that should never have been done. Read More→
The Three Faces of Foreclosures
Posted on March 8, 2011 bySo you want to invest in residential foreclosures? Not sure quite where to start? It is helpful to understand first that there are three faces to “foreclosures”, each with very different characteristics.
The first face of foreclosure investing is the “pre-foreclosure”. The pre-foreclosure period begins when a homeowner gets behind on his or her loan, and ends with the foreclosure sale. The pre-foreclosure phase itself is divided into two stages.
The first stage covers the period of time beginning when the homeowner misses their first mortgage payment, and ends in the final month preceding the impending foreclosure sale. During this time if a homeowner is not already marketing their home, it will be up to the investor to reach out to and find these distressed homeowners through ads (“We buy homes fast” and “We have CASH for homes”) and networking.
The second stage occurs during the final month leading up to foreclosure. The precise laws differ from state to state, but most states require some form of public notification of a pending foreclosure. Investors can seek out these notifications, and many have ample contact information for the investors to approach the distressed homeowner. Many larger communities have a number of online and subscription services which compile the pending foreclosures in a specific geographic range. You can also network within your local real estate investors association and/or do an internet search (e.g. “foreclosure listings in order to find these publications and services). Read More→
How to Buy a Home for $101 – REALLY!!!
Posted on March 5, 2011 by
There Kim and I were, standing in front of the Bartow County Courthouse in Cartersville, Georgia, at the December 2010 foreclosure auction – freezing our tails off. We’ve been working the monthly foreclosure market since 1995.
Cheryl Bagby, the young lady who cries the foreclosures for McCalla Raymer, the largest foreclosing attorney in the southeast, had just finished reading the legal notice for a home in Acworth, Georgia.
It was a nice 3-bedroom, 2-bath home in a great location on about an acre of land. The home was rented to a tenant who was paying rent of $795 per month.
When Cheryl finished reading the legal, she said, “The opening bid for this property is $100. Are there any other bids? Going once, going twice….” What happened next will blow your mind! But you’ll have to read along a little further if you want to know how this story ends. Read More→
Today: The “Perfect” Time to Invest
Posted on March 5, 2011 byShould an investor swim or reach for a life preserver?
Just a few years ago, the number of real estate investors was growing by leaps and bounds; however, today many investors that were attracted to real estate in the early part of this decade due to skyrocketing property values have retreated to the sidelines. The market has been cooling nationwide, and so it seems has the appetite of many investors. The million dollar question is, are they right? Should other investors follow their lead?
To help answer this question, let’s look at a similar occurrence that happened in the late 1990s in the stock market. Stocks began to appreciate rapidly in the mid 1990s. In response, stock investment clubs popped up all over the country. The increased interest in the stock market drew more attention to stocks from previously inactive and novice investors. This brought more money into the stock market, which in turn drove prices even higher. The bubble burst on the stock market in the early 2000s. Stock investment clubs closed and interest in the stock market waned in response to the declining values.
The end of the bull market and start of a bear market in the early 2000s sent many of these new stock investors to the sidelines, just as real estate investors attracted to skyrocketing property values earlier this decade have also just recently retreated to the sidelines. As we asked above, are the retreating investors right? The answer is a resounding NO. Read More→
What is a Mastermind Group and How Can You Benefit From One?
Posted on January 26, 2011 by
Have you ever sat down with a small group like-minded people with whom you felt like you were mentally connected, that you could think more clearly and that ideas came to you more naturally when you were in their presence. This feeling of mental connectedness is an excellent example of what the late, great Napoleon Hill spoke about in his famous book “Think and Grow Rich”.
Hill said “The mastermind group is a coordination of knowledge and effort of two or more people, who work toward a definite purpose, in the spirit of harmony. No two minds ever come together without thereby creating a third, invisible intangible force, which may be likened to a third mind.”
A good mastermind has a synergy of energy, purpose, commitment and excitement that each member brings to the group. Participants constantly raise the bar by challenging each other to brainstorm new ideas, create and implement new goals, stay focused, and provide each other with the ongoing support they need. Working with a group of like-minded, motivated and enthusiastic individuals will definitely help you expand your mind and achieve more than you have ever thought possible.
If you are looking to participate in a mastermind, be sure to check out Atlanta REIA’s new Mastermind Group for Real Estate Investors.
How I Got Started in Real Estate Investing
Posted on December 16, 2010 byHave I ever told you how I got started in Real Estate Investing? This is a TRUE Story…
I was nervous. I was confused. I didn’t know if real estate investing was going to work for me, but i really wanted it too! It was my first deal and I was doing it with another investor who wanted to use my money. I thought I had everything set.
If it DID work, I was going to get my money back and make a BIG chunk o’ change. If not, I faced embarrassment and shame in front of my friends and family. I had read a few books. I had studied the concepts. I thought I did everything right.
Wrong! Luck was not on my side. Although I did the deal, I ended up getting cheated by the other investor and I lost all of my money. Everything that could go wrong did go wrong! Ever hear of “Murphy’s Law?” Yeah. It was like that but a lesson well learned.
I could feel the pain, anger and confusion boiling in the pit of my stomach like a bad Mexican meal. I was almost ready to quit – even after just ONE deal! But something inside me made me give it another try. I knew it was my fault that I screwed up and allowed myself to get taken advantage of by another investor who knew a lot more than I did.
Being a professional college student for many years, I figured I just needed a little guidance and training. After all, if it worked for so many other people, why couldn’t real estate work for me? So rather than give up, I decided to DO something about it. I had to make myself smarter. I had to learn some more and get the right training like I did in my college days.
But where could I go? Who could teach me? This was before I even knew real estate investor groups like Atlanta REIA even existed.So I began my search. (Read more to see what I discovered!) Read More→
If You Don’t Play, You Can’t Win
Posted on December 14, 2010 by
Recently I attended another Real estate Seminar. It was held at an upscale hotel. There were the usual cast of characters in the room… a cross section of beginners to experienced investors. I saw a number of familiar faces. Folks from the local REIAs were in attendance. The instructor was upbeat confident and appeared a knowledgeable doer. He asked the audience 2 telling questions:
- How many of you are making 10 offers a week?
- How many of you have a buyers list?
What Every Real Estate Investor Should Know About Incorporating
Posted on November 9, 2010 byOne of the big pitfalls of starting a small business, such as real estate investing, is how to protect your personal assets from your business investments, and the other way around. If you buy everything in your personal name, you run the risk of a single lawsuit wiping out not only your investment, but also your personal property. As such, I generally recommend that all small business owners incorporate their business in some way as to provide maximum reasonable protection for your assets.
There is one good reason to buy property in your own name solely, and that is for a refinance. If you buy real estate and plan to refinance the property to get cash out, or to pay off a hard money loan, almost all conventional banks will require the property be in your own name. If you know this is your plan going in, then I recommend you buy the property in your personal name and keep it in your personal name until the refinance takes place. This will leave you exposed to the liability of the security deed, and any consequences of foreclosure or defaulting on the loan, but it is the only way to get the refinance done in the first place. Buying originally in your own name will save you from troubles with possible seasoning issues down the road. Even in this instance, I still recommend putting the property into a business entity of some sort after the refinance is complete. Read More→
