Archive for April, 2014

Joint Venturing

Posted on April 4, 2014 by

Recently I wrote about private lending and how you can work with other investors to profit together. However, the same can be accomplished with investors that might not have ever considered real estate. In fact, they may be someone you never even knew had the funds to invest in real estate in the first place. The more you let others know about what you are doing as a real estate investor the more opportunities may present themselves. Real estate investing is a sales position and the number one rule of sales is ABC, “always be closing!!”

Everyone always says to have your elevator pitch ready and I have to agree. No matter where you are or what you are doing you should always try to bring up what you do. I have learned that most people are intrigued with investment real estate, especially when they see tons of reality television shows about it nowadays. Usually bringing it up is effortless because most people who do not know each other ask the other what they do for a living. Be ready to answer all the questions and have business cards ready. As you tell the group what you do you will see some of the people’s interest increase as you speak. Make sure to give everyone a card but when you get a moment take the people that showed the most interest aside and set up a meeting. Your chances of finding more investors, whether they are buyers or lenders, will increase the more you do this. Read More→

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Time is the most important part of our life that we can never get back. When I started as an Investor back in 1998, I worked a full time job as a legal secretary, was married with 2 children ages 2 and 6, a step-son age 20, and worked part time in my real estate career. Time Management was very important to me as I needed to be able to earn 1 year’s salary before I was able to quit my job and work a full time real estate career. Just like most new investors, we attended numerous boot camps to sharpen our skills and take that leap of faith into the real estate arena. I chose this article about time management because I do a One Day Safari with my individual students by coming to their own home to evaluate how they are spending or wasting their time and how can I help them improve their production in addition to reviewing multiple other marketing and business systems to move them forward.

As I write this article, I need you to “act as if” I am sitting in your home, evaluating your production and asking you, ARE YOU WASTING TIME? The most important part of your business is to make sure that you have a designated workplace separate from all of the noise and interruptions of your life. Well? I tried having my office upstairs so I could keep track of my children when I quit full time…that didn’t work. I had a private phone line and a business line set up at my home. When the business line would ring, I used to grab the phone no matter what time of the day it was. I was hungry for a deal! After trying this for a couple of months, I decided it didn’t work because as soon as I would get on the telephone the kids would always want something and I literally would have to run into the basement or my bedroom and lock the door. However, the kids still followed, knocking on the door and wanting something! Even though I was working full time as an investor, I had to put my kids in day care and/or work around their schedule (i.e. naps, bedtime). I decided it was best that I would set up my office in the basement. I got tired of running to the office phone for deals, so I decided to work normal business hours 9 to 5 p.m. However, if you hunger for deals, you may want to answer the phone every time it rings, day or night. Read More→

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How to Add Value to a House

Posted on April 4, 2014 by

As if there isn’t enough to do, real estate investor, contractor, business owner, host to my video blog and busy husband, father and grandfather, I’m adding new books to my list of activities.

Finding the time to write has been challenging with a wife in graduate school, five children and two grandchildren to keep up with. I figure my next full book will take me a good year to write.

For those of you already connected to REIAComps , the control and feeling of confidence you have over your deals is priceless. Using REIAComps to investigate the value of houses as they come to market, against other less reliable sources is a no brainer.

But back to the book, the title I am thinking of is something like “How to Add Value to a House, which will represent responses to repeated questions I’ve had over the years and is more of a “what to and why to” rather than a “how to”.

It will talk about the specific renovations you should target; it talks about why some areas of a house are valued more than other areas. It will actually be about how to maximize the potential of any house you are renovating. Read More→

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I believe that one of the greatest challenges to any real estate investor is raising the money or finding creative ways to fund deals. Going to the bank for money can be a long and arduous task, and while you are waiting weeks for approval, another investor with ready funds just bought your deal. Plus, the bank is going to insist that you fund the deal in your own name which can be damaging to your credit. In fact, taking properties in your own name can be outright dangerous. In addition, in our current market, it’s nearly impossible to get funding from banks to purchase great deals. And if you already have more than three loans in your name, you won’t get the money at all. So, where do you get the money or what creative ways can you use to fund your deals?

I have several great ways for you to find money to fund deals and end up with all the money you will ever need. The fastest and easiest way to locate funds is to find hard money lenders. This is the easiest type of lender to find, especially if you are just starting out in the real estate investing business. So what is a hard money lender and where do we find them?

A hard money lender is a person who will not require a credit check or long drawn out approvals like a bank would. What they will require is that you pay them an interest rate of usually 12-18%. They may also charge points on the front of the deal, usually between 3 and 5 points. These fees are sometimes negotiable and will vary depending on what part of the country you live in. They will also probably charge a pre-payment penalty if you pay the loan off early. Read More→

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Hungry? There’s an App for That!

Posted on April 4, 2014 by

“Never order food in excess of your body weight.” ~ Erma Bombeck

Gosh, I’m hungry. Hey, I’m all for working hard, but there’s a limit. Ever hear of an acronym called “H.A.L.T.”? Don’t get too Hungry, Angry, Lonely, or Tired. Well, I’m hungry! So this month, I’m taking a little dinner break.

Picture this: You’re knee-deep in grout and dust from working on a bathroom rehab. You’ve been at it all day, and now you’re rushing to pick up your Aunt Mavis at the airport. The only thing she’s had to eat in eight hours is one of those tiny bags of Real Georgia Peanuts they give you on the plane. And you sure don’t have the time or energy to cook. What to do?

Well, in the old days, you’d pick up Aunt Mavis, drive home through rush-hour traffic, thumb through a thick printed phone book for a pizza place that delivers, call in your order, and a pizza guy would magically appear at your door – in about 45 minutes. By now, it would be several hours since poor Aunt Mavis enjoyed her peanut “lunch,” and she might be too weak to eat.

Thank goodness for 21st century technology! While Aunt Mavis is waiting for her luggage, you whip out your iPhone, log into your favorite restaurant app, and in just a few clicks, you’ve ordered dinner. You pick it up on the way home, serve it immediately, and spend the rest of the evening catching up on Uncle Eddie’s medical conditions. Read More→

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Make money while you sleep…

There’s nothing sweeter than making money while you sleep by owning free and clear residential real estate.  Think about it, you spend a third of your life sleeping, imagine how much more income you can make if you have passive Cash flow. 

Sounds great doesn’t it

“Making money while you sleep”, “massive passive income”, “owning free and clear residential real estate”…it all sounds great, still we have all heard the stories of people that lost their shirts trying to make this a reality. You can avoid getting ripped off by asking 12 critical questions. The key to making successful turn-key investments it knowing the questions you need to ask.

Question #1: Do the principals actually invest their own money in cash flow real estate?

Would you buy a Mercedes from a guy who drives a Chevy?  Ask them what they invest their money in.  It’s quite common in the real estate teaching world to find guru’s that make their money from teaching and not by following their own teachings. Read More→

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Here is a common problem in our industry: we find a property and we have to decide, is it deal or not a deal? Many people get hung up on this question, but you can’t let it paralyze you. You can’t worry so much that you lose out. (By the way, remind me to tell you the biker story.)

Here is the most important thing… you have to have solid information: comparables, equity, repairs, and rental rates (above $150,000 not necessary). Then you have to run the numbers. These two simple things will lead you to success in deciding if you have a deal or not.

Quick and Practical Advice on Deal Determination

  • You can buy properties which are upside down IF the mortgage balance is more than what the property is worth.
  • You can buy properties that have a tremendous amount of equity.
  • You can buy properties with owner financing. 

Now, ask yourself: What is my business model? Read More→

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Atlanta REIA Thanks Lima One Capital!

Posted on April 4, 2014 by

If you’ve been to the monthly Atlanta REIA meetings, you’ve seen the big blue table topper display and the smiling face of Lima’s representative, Cortney Newmans.  Lima One Capital is an active Atlanta REIA Business Member and we thank them for their ongoing participation and support.

As a fully capitalized, direct lender for residential real estate investors and home builders, with offices in Atlanta, GA Greenville, SC, Charlotte, NC, Lima One is revolutionizing the hard money industry with highly competitive and straightforward rates, the length of their loans, and unmatched customer service.  Says Mr. Newmans, “Our loans provide clients with the ability to capitalize on great opportunities in the real estate market… and we hold firm to a policy of no hidden fees and no junk fees; we close quickly and offer our clients the most professional customer service in the industry“.

Lima One Capital offers a 13-month loan, which is perfect for real estate investors who plan to sell the property, refinance it through conventional lenders, or conduct a 1031 exchange.  Lima also offers a longer, 5-year loan for those investors who want to hold onto the property and rent it out in order to generate income. Read More→

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Say you are fighting a foreclosure on a securitized loan that you took out during the housing boom.   Using a fraud investigator you were able to prove that the foreclosing entity forged your signature on the note.  You rest your case and wait for the judge to come back with a ruling in your favor.  Ten minutes later the judge rules that the foreclosure can continue as scheduled.  This is surely a miscarriage of justice, right?

Not so fast.  The judge made the right call, and you need a better attorney.

Here’s an example.  Let’s say a friend lends you $1,000 and you agree to pay him back in installments.  After a few months of making payments on time, you default on the loan and your friend sues you.  In court your friend produces a promissory note that lays out the terms of the loan with your signature.  You acknowledge that you were lent the money by your friend and then defaulted on the loan, but you have never seen this promissory note before.  Furthermore, you have evidence that your signature on the note was a forgery.  Under the rules of evidence, your proof of forgery should be tossed out.   The reason is simple.  You have already admitted to owing your friend the $1,000 and that you defaulted on the debt.

A note is merely documentation of the debt.  If you have already acknowledged that you owed the money and then defaulted on the terms, the note itself, whether forged or legitimate, is irrelevant. Read More→

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Just met with a guy who has a very interesting story that you’re not going to believe: He has $1 million in the bank, but doesn’t have enough money to buy food!  He’s practically starving to death.

This guy worked hard, saved hard and invested wisely his entire life.  When he retired, he had $1 million in liquid capital.  To keep his money safe – the volatility of the stock market scares him – he invested his money in bank CD’s paying 3.6% interest.  Last year, when the CD’s matured, he was forced to roll his retirement money into new CD’s with a dismal 0.6% interest rate. 

Here’s the thing: These days, this guy’s investment doesn’t earn him enough to live on – he’s forced to exist like a pauper.  He said, “Once I became a millionaire, I thought I’d never want for anything.  I couldn’t have been more wrong!”

Before your dumbfounded look affixes to your face forever, fully understand this man’s predicament.  He and his wife have $1 million cash, but they don’t want to spend any of this principal.  Their retirement goal is to live off the interest the $1 million generates. Read More→

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Tips for Using QuickBooks

Posted on April 4, 2014 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.

Q: I have negative balances on some expenses on my income statement.  How did this happen?

A: Negative expense numbers can happen. It is possible you made a purchase and booked it to one expense and returned it and booked the refund to a different expense.  Therefore, the refund had no expense to cancel out (if there is nothing else in that account). Do a search for the original purchase and either move that to the account you booked the refund to or put the refund where the purchase is.  A negative balance can show up if you made a journal entry and did not post the debit/credit transaction correctly.  Just go back and reverse the entry. Read More→

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A Fresh Start

Posted on April 4, 2014 by

Have you hit a wall with looking for deals? Are you having trouble finding deals that make financial sense or that will cash flow at all? Are you having trouble getting started with your multifamily investing business? Not sure where to get started? If this is the case, I can help you with a fresh start. If you are just beginning then this article will help you to avoid a lot of unnecessary frustration and to jumpstart your investing career.

What size deal should I start with? This is one question most people ask when they get started in multifamily investing. Let’s take a close look at the answer.

To qualify for a commercial loan these days most lenders want to see that you and your partners have the net worth equal to or greater than the loan amount. So if you are looking at a $1,000,000 dollar deal then you plus your partners must have a collective net worth of about $1,000,000. Notice I said “collective” net worth. That means you can have $0 net worth and use the value of your partners to cover it.

Next step is to decide what your net worth is plus the net worth of the people closest to you, ones in which you think will join you in a multifamily deal. This may be family, friends or close business partners. Once you decide what your collective net worth is, you have the first piece of a formula that will lead you to success. Read More→

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