Archive for January 2014

Download The Profit Newsletter for January 2014 (PDF)
The January 2014 Edition of
The Profit is Available for Download!

The Profit - January 2014 - High Quality PDFThe January 2014 Edition of The Profit Newsletter is available for download just in time for our Atlanta REIA Main Meeting on January 6th. You can download The Profit Newsletter as a High Quality PDF or Low Res PDF for slower devices. The Profit is the official newsletter of the Atlanta Real Estate Investors Alliance and is a digital, interactive newsletter for new and seasoned real estate investors delivered as an Adobe PDF file to read on your PC, Mac, Smart Phone, iPad or other mobile ready devices with a PDF reader. Many of the articles and ads in The Profit contain many hyperlinks you can click or tap to visit websites, watch videos, listen to audios, download content, send emails, comment on articles, share socially and much more! The high res version of The Profit is “print ready” for those who want to print the newsletter on their home or business printer. Also, be sure to Subscribe to The Profit Here so you don’t miss a single monthly issue.

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This past summer, we hired a college bound student to help with things on our farm.  She is a great young lady that wants to be a veterinarian.  It will be a financial challenge for her to find a way to pay for the first four years, let alone the graduate program but she is doing everything she can to figure out a way to obtain her dream.  She even joined the National Guard to help pay for college. 

She didn’t have a car so she went car shopping shortly after starting work for us.  I expected that she would find a small, fuel efficient car for her long trips to college.  I was shocked when she showed up with a shiny crew cab four wheel drive pickup.  I wished she would have asked for some advice on good vehicles that would have met her needs and provided cheap reliable transportation.  She just didn’t know.  That is true for all of us.  There are usually things that we don’t know that can hurt us financially.  We just don’t know what we don’t know.

If we want to achieve the financial future we desire, we should pay attention to the habits of the folks that have achieved financial success.  They leave clues that we can learn from.   We can learn a lot from them if we are willing watch and learn.  Growing up I was greatly influenced by a man named Norbert Volny.   I started working for Volny at about age thirteen and while we worked on the various projects, he would pour words of wisdom into my life.  One of his favorite sayings was, “You will never get rich on a W-2.”  Read More→

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Who and What is Your Market?

Posted on December 30, 2013 by

Motivated SellerIn last month’s article we discussed Step #1 of “Determining Your Marketing Plan in 7 Easy Steps” which was to “Determine How Many Leads You Need to Succeed”. This month we’re going to cover Step #2 which is to Determine Your Market”.

A Market (noun) is defined as “a place or area where products and services are bought and sold”. Your market consists of the area where you do business, the products and services you buy and sell as well as the buyers and sellers of your products and services. To Market (verb) means “to promote products and/or services” to your Market (noun).

So in Step #2, you need to determine the market area where you want to do business, what products and services you will offer, and who the buyers and sellers of your products and services will be.

Like last month’s article, we’re going to use Wholesaling as our chosen real estate investing strategy to illustrate how to determine your market.

Wholesaling is the business of locating houses (usually the house and/or owner is distressed), putting them under contract for a very low price and quickly selling or assigning (quick turning) them to other investors well below retail price. Wholesaling is the art of finding bargain properties and passing them along to bargain hunters at bargain prices. Read More→

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Constructing Offers

Posted on December 30, 2013 by

Last month, we discussed Prescreening Prospects, so this month we’re going to talk about constructing offers to sellers.

Once the seller is called by either you or your virtual assistant using our property information sheet, the prospects will come at you in one of four categories: 

  1. they’ll be free and clear
  2. there’ll be a mortgage with lots of equity
  3. there’ll be a mortgage with a small amount of equity, or
  4. they’ll be over-leveraged

All prospects will fall into one of these categories.

So, now our job is to look at the property information sheet and figure out what to do next after we receive this information.  In this lesson, I will go through each of these and provide the script for you to make the call with the information sheet in your hand.

Let’s start with free and clear houses.  You’ll know they’re free and clear because the seller will tell you that when you ask, “How much do you owe?” Once you have this information, you have a prospect that will either give you a “yes” answer or a “no” answer to the owner financing question on the right side of the property information sheet.  If it’s a yes answer, it’s a prospect.  If it’s a no answer, it’s a suspect.  If the seller will not take their equity in monthly installments, this is a dead deal unless they answer yes to the lease purchase question.  If they do say yes to monthly installments, it’s now just a matter of calling them and verifying the facts you have on the property information sheets, assuming you weren’t the first to talk to them in collecting the information.  When you make that call, there’s a script you can use to determine which of the two categories they fall into: Read More→

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Selling an investment property can be a very challenging process. One of the preliminary considerations in selling the property is what price you should ask. Evaluating the prices of comparable houses in the neighborhood may sometimes solve this problem. However, for those of you connected to REIAComps , the control and feeling of confidence you have over your deals is priceless. Using REIAComps to investigate the prices of houses, which are comparable to your deal, that have recently been sold will provide you a solid value to set the sales price.

Now there are several methods by which you can discover prices of comparable houses in your market area. The first, most costly, but probably reliable method is by hiring a professional home appraiser to conduct an appraisal of the property. Professional appraisers typically evaluate your home and similar homes in the same geographic area and provide you with a report stating the price of your house and comparing its features with other houses that have recently sold in the area. The challenge is these appraised values don’t typically represent the savvy needed for an investor like you. You need not just what a home might sell for, but what you should acquire the dwelling for in the first place. You always want to “make your profit when you buy”.  Read More→

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What’s New in QuickBooks 2014?

Posted on December 30, 2013 by

It is the goal of this column to answer questions about QuickBooks and how it is used in the REI arena. Know 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 by you, the members, submitting questions to Karen@smallbusinessadvisor.biz, and getting answers here in this column.

QuickBooks® Pro 2014

If you have QuickBooks® 2012 or older and are thinking about purchasing 2014 version – you are in for a surprise on how the program looks and some new areas that have been added. I will point out just a couple here but there are many more.

QuickBooks Pro® 2014 has a “What’s New” yellow bar on the side of many of the windows that have new features.  When you click on the bar an overlay feature will pop up to indicate where the new features are. Most of these are in your shortcut windows.  Once you have viewed them and are comfortable that you know the features you can turn off the yellow bar under the “Help” drop down list.  You can always turn it back on if you need to refresh your memory about a feature. Read More→

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Stocks, bonds and mutual funds are all well and good – for those seeking ordinary returns. But if you have a particular expertise, or access to a lucrative market for just about any good or service, you have the potential to earn much more by going into business for yourself than you stand to gain by investing in the broad market.

Fortunately, your Self-Directed IRA doesn’t limit you to the mundane investments you read about in the papers all the time. In fact, IRA rules only restrict you from investing in a few things: life insurance, jewelry, gemstones, art and other collectables, alcoholic beverages, and some forms of gold and precious metals of insufficient purity or standardization. Other than that, the sky’s the limit on what you can own!

Owning a Business in Your Self-Directed IRA

By using your Self-Directed IRA to start or acquire a business, you are in control. Rather than hoping against hope the market will be kind to you this year, you can make things happen yourself. Want your business to grow? You can invest in advertising, new equipment, a new truck, more staff – whatever it takes to react to the current economic environment. Many of our clients find that investments like these often pay off far better than anything the same investment reasonably earns in the stock market, at least at an acceptable level of risk. This must be an arm’s length business, you can’t operate the business, and you can’t draw a salary from it. Read More→

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Small Business AdvisorYou’ve heard her at the monthly meetings, “I’m Karen Bershad and I am the Small Business Advisor!” Karen’s firm has been a business member with Atlanta REIA since it started and has been helping small businesses and their owners for almost 20 years.  The past eight years however have been tailored to the specialized services for the Real Estate Investment industry.  With 40 years of business experience in the area of ownership, management and a wide variety of other lessons learned, Karen Bershad provides a unique outlook on how businesses need to have their “back office” running smoothly.

Most entrepreneurs don’t give it much thought, but as your business grows, it faces issues unrelated to producing the goods and services it sells. This inevitable trilogy of headaches includes legal, accounting and marketing decisions. Certainly life would be simpler if you could call in your accountant, your lawyer or whoever handles the marketing whenever the need arises.

But if your small business is like most, you probably cannot afford to call on expensive professionals whenever you would like. You would like to be able to handle many of these issues as possible on your own. You went into business to provide a product or service to your clientele and are good at what you do. It is the paperwork, bookkeeping, proposals, etc. that bog you down. Read More→

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A few weeks ago I attended a weekend training put on by, who I believe is the most creative and knowledgeable real estate investor and teacher in this country. The training was put on by Peter Fortunato. Peter spent two days with his class explaining how dozens and dozens of deals he had helped structure without the need for institutional financing or credit. It truly amazed me how he never completed any of the deals he spoke about in the same way twice. Each and every one of the deals was structured in a way to achieve a specific objective. In other words, each deal was structured to come up with exactly what his or the seller’s goal was at that time.  

Some deals were designed to minimize taxes, some were designed to maximize cash-flow, while others were designed to overcome some type of problem the sellers were facing and thought they had no solution to their problem until they talked to Peter. Peter, who is considered the master of “Doing Things on Purpose” would create deal structures that solved the problem at hand. His work has amazed me for years and when I take one of his classes I become even more amazed how anyone could create the deal structures he does. Read More→

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Wait – My Phone Will Do What???

Posted on December 30, 2013 by

I have a thing for tools.” ~ Tim Allen 

So, here it is: January. You’ve gotten most of the pine needles and tinsel out of the carpet so the dog won’t eat it. Aunt Flora and Uncle Ruben have gone back to Miami. Your kids are back in school. And you? You’ve had a minute or two to breathe and enjoy the satisfaction of a holiday season well spent. Time is precious, isn’t it?

But now, it’s time to get moving again. The warmth of the holidays has become the chill of winter, and with that comes heating bills and college tuition and credit card bills. It’s time to make some serious money.

I realize it’s not easy to get in gear again after the New Year. But if you’re like me, you can’t afford to sit on your laurels for too long. Lost opportunities are very expensive.

That doesn’t mean, though, that you can’t have a little fun while you’re at it. So go get that new smartphone Santa brought you, and let’s get cracking. You know you want to!

There was a time when owning a smartphone was a luxury. Not anymore! It’s probably the most useful single gadget you own. I know people who take a lot of pride in having a very basic cellphone. That’s a valid choice, of course, but now I wonder how I ever got along without this amazing device. Read More→

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True Cost

Posted on December 30, 2013 by

When you begin to learn about real estate investing you normally hear about the big picture of how to find and sell real estate. Obviously, this is important because without a piece of real estate to buy or sell there are no profits. However, let’s assume you have the acquisition and disposition of real estate down to a science. Now it’s time to pay more attention to the details because as the saying goes, “the devil is in the details.” I like to say, “Profit is in the details.” In this case I am referring to fully understanding the true cost of closing a property.

Beginning with the contract, it must specify and make it clear who is responsible for each and every penny at the closing table. When you send over a HUD to the buyer/seller there should be no misunderstanding of who should be paying what. After nearly a decade of investing in real estate, I continue to see investors and wholesalers run into this problem time and time again. A few costs that are usually debated over are the title services and settlement costs, document prep fee, courier fee, tax certificate fee, government recording fee, HOA transfer fee, title policy, and even though its only $2, the state guaranty fee.  Individually all these fees are relatively small compared to overall purchase price but together can add up to be a few thousand dollars. Now imagine if you close multiple deals per month, these small costs can really impact your bottom line. So how do you overcome having to pay these fees? Read More→

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Why Do Courts Let Banks Steal Houses?

Posted on December 30, 2013 by

If the courts rule against the banks in the homeowners’ favor, but no news outlets report it, does it really happen?  That’s the situation we’re in now.  If you’ve been digging deep, you might have seen that the estimate of bank losses from mortgage related lawsuits has increased to $100 BILLION in future payouts.  This number includes settlements and judgments as well as legal fees for defending all of the lawsuits.   How many stories about this have you heard on the major news outlets?  Zero.

Over the last 15 years, the banks concocted a scheme to defraud their investors and borrowers that resulted in over 15 million people being displaced from their homes, and you have not seen a single story detailing the fraud the banks perpetrated and the damage it caused.  You would think this is the type of story that would be all over the news, but the media remains silent.

Despite the lack of coverage from the media, the payouts and estimates of future payouts from the banks keep getting bigger.  The reason for this is simple.  Investors and homeowners are filing valid claims of fraud against the banks and judges and juries keeping awarding bigger and bigger settlements. Read More→

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