Archive for April 2015

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The Profit Newsletter - April 2015The April 2015 Edition of The Profit Newsletter is available for download just in time for our Atlanta REIA Main Meeting on April 6th. There are 48 pages of valuable information this month for your real estate investing success. Download it and check it out! The Profit is Atlanta REIA’s digital, interactive newsletter for serious real estate investors delivered as an Adobe PDF file to read on your PC, Mac, Smart Phone, iPad or other mobile ready devices. Many of the articles and ads in The Profit contain many hyperlinks you can click to get more information online! The high res version of The Profit is “print ready” for those who want to print the newsletter on their home or business printer. Be sure to Subscribe to The Profit by Email or Subscribe to The Profit by Text so you don’t miss a single issue.

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Jon and Stephanie IannottiMy wife Stephanie and I have been doing Creative Real Estate Deals for over 30 years. In fact we have done close to 2,000 of them with none of our own money or credit.

We have mentored hundreds of students across the country and Canada. We love to teach what we do to others and our reward is watching them succeed.

Well, back in 2007 the market started turning down and we all know about the Greatest Recession of all times that followed. We quickly found that a lot of the techniques we were using suddenly were not working anymore. So we created a technique that we actually had used since we started investing and named it ACT, or Agreeable Contract Terms.

With ACT, we were able to get sellers to give us terms or pricing that was agreeable to us right up front. This worked for about 2 ½ years. Then in 2012, the market started changing again. It became more of a retail market. Have you talked to a seller lately? I bet they want ‘CASH, Full Retail, or More than Retail’ for their home, right? Well, we are seeing this across the country. Read More→

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From Paper to (Almost) Paperless

Posted on April 3, 2015 by

“Americans spend 3 billion hours per year filling out tax forms and keeping tax records.” ~ Jim Ramstad

There are two things I’ll never do again: first, teach one of my own kids how to drive; and second, help my Aunt May file her tax returns. I’m pretty sure you know Aunt May, or someone just like her. She’s a really sweet lady whose house looks spotlessly organized until you open a drawer or a closet. When she hints that she needs help with her taxes, you volunteer. I mean, she needs you, and she’s so nice! How hard could it be?

Anyway, that’s what I thought. But a day before taxes were due, Aunt May came over with six boxes full of paper. Six boxes! Each contained every manner of paper from receipts to bank statements to movie tickets to Christmas cards. Everything under the sun – except the things I needed. It took sixteen hours, eight aspirins, and three pots of coffee to figure out that she was getting a refund of $1.47. Nope. I adore my Aunt May, but I’m not going through that again.

I’ve never been quite as disorganized as Aunt May, but I’ve certainly had my moments. I discovered pretty quickly that I had better organize my business so I could find what I needed, when I needed it. When you’re trying to convince a potential seller that you run an organized, professional operation, it’s best if you can find the contract they signed. Read More→

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A Tax Sale Deal Review

Posted on April 3, 2015 by

Tom DiAgostinoAt Fortris we have several levels of Mentoring and in the past one of these levels was the Generals Club. That club has now been retired. But several years ago we opened it up to 8 investors. The concept was total immersion into the tax sale business and working through an entire deal utilizing the General’s capital while teaching them the entire process of construction management, sales, the associated legalities, and the basics on how to become a very successful real estate investor. At the end of the project we gave the General back all their investment, as well as their mentoring fee plus half the profit on the project they had been tasked with. Currently we still maintain partnership investments with five of the original eight members.

Ann S., one of our Generals, invests in the city of Baltimore which is a very tough market. Baltimore doesn’t allow any scraping of tax sale data from their site, so we needed to pull all the enhanced lists manually. The bidding process is different than any other I’ve ever seen. First the interest rate is bid down which means that you can offer to take a lower rate of interest payment to win the lien. It is also a sealed bid including a premium offer you are willing to pay, over and above the interest, added in. The county processes all the submissions and the best combination of bid and premium gets the lien. If the property does not redeem, the bid will be packaged according to the best offer combination. For example, if the lien is $5000 and the interest rate is 24%, the bidder may structure their offer to take 7% interest on the $5,000 certificate and then pay a premium of an additional $6,000 above the lien cost if the lien does not redeem. A fairly complicated structure. All the premium bids are sealed and no re-bids are possible. You only get one crack at getting it so you have to use your opportunity to make your best offer possible. Read More→

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As an active investor, I get a ton of deals regularly from other wholesalers especially with springtime rolling in. They come in all sorts of shapes, forms, fonts, graphics and so forth. While they all have a variety of information, it is rare that ads come with enough information to make a decision on whether it is worth spending time on them. So as a Buyer as well as a wholesaler, I thought I would share some do’s and don’ts to apply when you put ads out to your Buyers to set yourself up for success.

DO’S

DO put the address – I am amazed at why anyone would think I would look at a deal without an address but it happens.

DO think like a homeowner wanting a perfect house to describe repairs – This is what your Buyer is going to be aiming for. As an example, you may be ‘ok’ with the minor carpet stain however that won’t cut it when your Buyer’s Buyer will want new carpet. Description trumps number estimates since each Buyer has their own contractor with their own pricing.

DO give comparable sales that make sense – radically mixing styles of homes, comps that are too far away for the geographic area, large square footage differences, ignoring unique features such as lakefront, acreage and many more considerations can radically affect what are the best comps. Read More→

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Would You Break Into A Vacant House?

Posted on April 3, 2015 by

You’re out working foreclosures and see an obviously vacant house. There is a sign in the window saying the home has been abandoned and winterized. You look through the window and confirm that it is vacant. Do you open the door with your “investor key” (a credit card) and go inside to look around?

Over the years, real estate investors have hotly debated this topic. Some investors would never go in the home, while others think nothing of slipping the lock so they can inspect the interior before bidding on the property.

I know investors who regularly go into vacant homes. The popular thought is that there’s nothing wrong with that. The investor is not there to steal or vandalize anything, he’s there to estimate the rehab cost so he can accurately determine his maximum purchase price. What can possibly be wrong with this?

There are a lot of funny stories told by seasoned investors about things they found in abandoned properties; things you can’t believe a homeowner would leave behind – like artificial limbs, stuffed (taxidermy) animals, porno magazines, etc. After hearing these stories, many new investors come away thinking that it’s OK to break into vacant homes. But I’m here to tell you – think again! Read More→

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Welcome back! In our last article, we talked about how trends come & go in all things, but we specifically discussed the fact that there are two tried & true strategies that have seemed to stand the test of time in Real Estate Investing. Those strategies are: Wholesaling and Lease Options.

Wholesaling was discussed last time – it’s mainly done in the “Ugly” house business (houses that need a lot of work). And Lease Options are typically understood to be done in the “Pretty” house business (houses that don’t need much work).

Thanks for hanging in with me so far, veteran investors. Keep reading. It gets better.

Lease Options have been around for a good, long time. Certainly as long as any of the well-known, current ‘Gurus’ have been teaching. The way they work is basically like this:

A homeowner/seller wants to sell their house, but a typical wholesale-style deal (usually with a lowball price offer) doesn’t work, or they just don’t like the offer… or the offer doesn’t make sense. I mean, why would any sane seller sell their house that doesn’t need much work that they have a ton of equity in for a deeply-discounted price? Read More→

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A New Way to Do Real Estate

Posted on April 3, 2015 by

Well, it’s been over three years now since ACTS came into the world, and so much has changed since its origination in October of 2011. If you’re not aware of what ACTS means, it stands for Assignments of Contracts and Terms System. It has changed the business of a lot of my students throughout the country and added a lot of additional revenue into their lives, including my own.

However, some people think ACTS is all about over leveraged houses, which is not correct. In fact, ACTS pertains to any kind of terms deals with the seller that can be assigned to an owner occupant tenant buyer, thus the term Assignments of Contracts and Terms System.

Today, I rarely do an overleveraged property because it seems like the number of them is continually declining. In fact, the last time I looked, about 17% of the properties in America were over leveraged according to USA Today. Today, I deal more with free and clear properties and those who have a mortgage with some equity on them. I buy these properties either through owner financing or on a lease purchase. Then, I either install a tenant buyer in them or sell them with owner financing. You will have to decide which one you should do, but I’ll show you how to determine what’s right for you in your area and your personal business objectives. Read More→

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Subject-To?

Posted on April 3, 2015 by

Like most investors, I too send out yellow letters to distressed homeowners. Obviously, the intention is to find a property that can be acquired below market in order to make a profit. In most cases the properties that are contracted are either sold as a wholesale deal or are purchased to be renovated and sold. In a few instances the opportunity to contract a property subject-to presents itself but this situation is not usually what you expect it to be. Let me describe my most recent experience with a potential subject-to situation.

Most investors already know what a subject-to is but for those that do not let me give you a simple explanation. A subject-to is when a homeowner deeds the property to the buyer but the mortgage that the homeowner has remains in place. When the buyer is deeded the property he/she now owns the home “subject-to” the existing mortgage. In other words, the buyer will begin to make the mortgage payment or find a renter or new homeowner to do so in order for the buyer to one day own the home free and clear. Read More→

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As investors we have to be mindful of some basic principles. While knowing the value of a property is extremely important, real estate investment itself can prove to be particularly challenging.

Knowing the true value of real estate is critical, try to do a deal without it and see. The guidance and data within REIAComps.com has consistently shown investors how to determine both solid acquisition value and after repair value to earn lasting profits.

Use the following six things to get a handle on your business before you start pouring money into a real estate investment.

1. You must be honest and realistic when working with others.

If you want to separate yourself from the competition, tell the truth.

There are a handful of opportunities where you can make a large amount of money in a relatively small amount of time. Real estate is one of them. However, it seems these types of businesses also tend to attract the less than desirable. Read More→

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Because money has been easy to get over the past 15 years I wanted to show you how leverage can truly maximize your profits regardless of your credit history. If you can think about the conservation of cash idea borrowing money from banks can definitely be a thing of the past. Leverage is one way how you can use the limited money you have in the most effective way to maximize your profit potential on every property you buy. If you have less than good credit or if you simply don’t want to use your credit you may want to learn how to use less money and with leverage maximize your profits. If you already have limited money you can use what money you currently have to buy one house but you will only profit or grow your money from that one house and nothing more when you rent or sell the property you bought. Leverage can accelerate how you build wealth if done correctly.

Here is a simple example of what I am talking about. For this example let’s say you have $100,000 you have worked hard to acquire over several months or years or you have the ability to borrow $100,000. One day you decide to buy a rental property. You quickly find a house you believe will be a good rental. The sellers of that house are asking $100,000 for their property. During your face-to-face discussions with the sellers you find they would be willing to allow you to make payments to them every month until the property is eventually paid for over the longest period of time you can get the sellers to agree to. Read More→

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There are times when we are going to purchase a short sale and then rehab the property for a higher profit. During the rehab on the property, I take my partners shopping. We go to Home Depot and look at all the items I normally put in my cookie cutter houses and I show them why I have chosen each and every product. Then they get to pick their own products and we discuss the price differences to analyze the affect on our profit. It is really fun shopping for an entire house in Home Depot, but the bottom line is to save money. After our trip to Home Depot, we will head over to the cabinet shop if it is a higher end property and we will pick the cabinets and handles. Then we are off to the granite company with a piece of floor tile and a cabinet door so that we can match our granite throughout the house. I call this program my Mentor Program as I bring everything I have learned and taught through my Real Estate Junkie course to my students. By the time we are done, it’s been a “power-shoppin’ day!”

I always recommend that you have a Pro Account at Home Depot which gives me an automatic 10% off everything and if you are a member of a REIA group, you can save another 2% so … working with me already has saved you the cost of a new kitchen on the rehab or more. Read More→

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