Author Archive

Sage Advice From an Old Investor

Posted on August 1, 2016 by

After closing the doors of North Georgia REIA forever, we have been reminiscing about the best lessons we’ve shared with our group.

With this in mind, here’s some sage advice from an old investor.

How do I know whether a deal is good or not?  How do I know what I’m looking at?  And if I decide to take the deal down, how do I get it funded fast without going to a bank?

When Kim and I began our investing careers in 1995, we thought all houses were pretty much the same.  But over time and with experience, we’ve learned what types of houses make the best investments.  Read More→

Share

Long ago, Kim and I learned that options are an incredibly powerful deal-structuring tool that allows you to control lots of real estate for little or no money…and with very little risk!  And here’s the best part: Because so few know anything about options, you have almost no competition!

Simply put, if you are not using options as one of your primary real estate investing tools, then you’re leaving a lot of money and opportunity on the table.

When most folks hear the word “option,” they automatically think lease-options.  While lease-options are fairly popular, they are just the tip of the option iceberg.

Options allow you to control a property without the risks associated with ownership.  You can control one (or all) of the benefits that come with ownership: income, profit, amortization, growth, use, management and tax benefits.

One of the best things about options is that you can control hundreds of thousands of dollars worth of real estate for less than $100 – and control it for decades.  No other document in real estate is this powerful! Read More→

Share

The Music is in the Man

Posted on June 6, 2016 by

In my early twenties, I’d decided that to be successful, I needed to buy a Mercedes Benz and a gold Rolex watch.  Dean Kates, who was my mentor back then, told me the following story to help me understand that greatness comes from within, not from what you own – that bling is pretty much meaningless!

After many years away, a world-famous violinist returned to his small hometown in Georgia.  He came to play a benefit concert to raise much-needed funds for his high school’s music program.  Because the violinist was one of the very best musicians in the world, the town spared no expense rolling out the red carpet for him.

At a reception held two hours before the concert, many of the performer’s high school chums showed up to pat him on the back and wish him well.  As a group, they asked to see his one-of-a-kind Stradivarius that had been built in the 17th century.  It was said that the music that flowed from his Stradivarius was the sweetest, purest, most heart-touching melody the world has ever known. Read More→

Share

Two decades ago, Kim and I set a goal to replace our earned income with investment income.

There are a couple of advantages to achieving this goal.  First, you don’t have to labor for a living.  In other words, your capital is working for you instead of you working for your capital.  Second, the tax rate on earned income is much higher than it is on investment income.  Said another way: With investment income, the government lets you keep more of what you make, and when it comes to money, more is better than less, right? 

To accomplish this goal, we figured we’d need fifteen single-family rental properties.  Each month, the tenants would send in their rent checks.  Part of these checks go toward paying the mortgages, insurance, property taxes, vacancies, repairs and management.  We get to keep whatever is left over to spend or invest how we see fit.

There is a downside to owning rental property.  Though for tax purposes the government considers what you make to be passive income, there’s still hands-on work that needs to be done to maintain the property and manage the tenants. Read More→

Share

You Bought the House…Now What?

Posted on April 4, 2016 by

When Kim and I were baby real estate investors, we were totally focused on buying our first investment property.   Then one day it actually happened!  I remember leaving the closing attorney’s office feeling pumped up.  When we got in the car, Kim asked, “Now what?”

Now what, indeed!  I hadn’t given that part of the equation much thought.  This happens to a lot of new real estate investors.  So once you buy a house, what do you do next?

To answer this question, let’s look at three properties we worked on recently. 

The first is 337 Rail Drive in Adairsville, Georgia.  Kim bought this house at the November 2015 foreclosure auction.  From the start, it was a flip.  In other words, we bought this property to resell quickly.  We’re flipping this home because we need to replenish our cash reserves.

Shortly after purchase, Kim had the property trashed out.  Because our contractors were tied up rehabbing Akin Drive, she elected to delay doing the extensive repair work Rail Drive needed.  Instead, she offered it at a wholesale price, which was well-below market.

In less than a week, Kim found a qualified buyer and accepted her purchase offer.  Unfortunately, about a week later, the buyer changed her mind because she was scared about the amount of work the property needed.  We refunded her earnest money, hugged, and parted friends. Read More→

Share

To succeed at real estate investing, or business, or life, requires bone – the right kind of bone.

Because real estate investing is pretty easy to understand – you buy a house and then either sell it or keep it as a rental – lots of folks are interested in becoming investors. Want proof? Look at all the traveling dog-and-pony shows coming through town offering their “free” seminars to a “select few.”

We get lots of calls from would-be investors who’ve attended one of these get-rich-quick-snake-oil events. Most actually believe that real estate millions can be acquired by working only thirty minutes a week and without meeting face-to-face with sellers. That’s like a doctor trying to build a successful practice having office hours from 9:00 to 9:30 a.m. and without seeing any patients. Crazy, right? Read More→

Share

Goodbye. We’ll See Y’all Later!

Posted on January 31, 2016 by

Kim and I want to thank you for reading our weekly real estate investing newspaper column for the past 13 years. With this last article, we say: Goodbye, y’all!

In 2003, when we started this feature, we were still fairly new to real estate investing. As we gained knowledge and experience, we shared the creative deal-structuring techniques we learned that allowed the impossible deals to become not only possible, but also probable.

We also shared most every mistake we made along the way. We did this because more great lessons are learned from failure than from success!

And, we wrote a ton of articles about what it takes to succeed. No matter what field you’re in, the attributes it takes to succeed can be boiled down to these ten: love, accomplishment, discipline, persistence, belief, integrity, associations, a yearning to learn, sacrifice and giving back.

The story about how our weekly column first got in the paper demonstrates these attributes at work. Read More→

Share

Do You Have Big But Disease?

Posted on January 4, 2016 by

The thing that kills most real estate investors – heck, the thing that prevents 95% of folks from reaching anywhere close to their full potential as human beings – is the dreaded Big But Disease!

It goes something like this: I want to start my own business, but… I want to do more for my church, but… I want to own 20 free-and-clear rental properties, but… I want to get in shape, but… I want to improve my marriage, but… I want to spend more quality time with my kids, but…

That stinky Big But Disease will squash your dreams, murder your goals, and destroy the person you were born to be!

Starting today, what if you replaced saying “but…” with saying “I’ll do whatever it takes to get this thing done!”

So instead of saying, “I want to run a marathon, but…” you’d say, “I want to run a marathon, and I’ll do whatever it takes to get this thing done!” With this attitude how much more would you accomplish in your lifetime? Read More→

Share

There Are No Tears in Real Estate

Posted on December 7, 2015 by

With less than a week left before completing a major rehab on our latest real estate investing deal, all Kim wanted to do was to drop to the floor and cry when she saw what had happened to every interior wall in the home.

The day before, the walls had been perfect. But on this day, the walls looked like something you’d see in one of those circus houses with funny mirrors that make your head look huge while making your body look the size of a walnut.

In this home, we’d replaced all the paneling with new paneling. Then came two days of constant rain. Because the HVAC system wasn’t yet working, there was a significant increase in the home’s humidity level. The new paneling quickly absorbed the excess humidity and became wavy.

A multitude of things made Kim want to cry. All the time and money spent demolishing the old walls and installing the new ones was for naught. The rehab was scheduled to be completed in five more days, but now would be extended by at least two weeks. The extra work would cause this rehab to go over budget. Read More→

Share

Wish I Had a Do-Over

Posted on November 9, 2015 by

I’m writing this on Friday, October 9, 2015. It’s a heavy day for me. Today is the sixth anniversary of Jack Miller’s passing, and for the past few days he has been frequently on my mind.

Many of you have never heard of Jack Miller; even fewer took the opportunity to learn from this great man. Jack, hands down, was the best all-around real estate investor I’ve ever met. He was the definition of original. There was no boundary he wouldn’t push.

Put simply: Many of the creative deal-structuring and funding techniques investors use today were born in Jack’s wonderful imagination. There has never been, or will ever be, another Jack Miller.

I wish I had a do over. Although I attended most of Jack’s seminars, there were more than a handful that I missed. If I could get that do-over, I’d be front and center at each one of the meetings – taking notes like crazy!

Kim asked what I’d pay to attend just one more of Jack’s seminars. I said one hundred thousand dollars wouldn’t be too much. God, to hear Jack ring his big bell that let folks know that class was back in session…yep, one hundred thousand dollars would be well-spent money!

When Jack passed, he was nearly eighty years old and at the top of his game. Here are some of Jack’s quotes I wrote down at his February 2009 Money Matters seminar…which turned out to be the last seminar he taught!
Read More→

Share

You’re Not Saying Wow, Then…

Posted on October 20, 2015 by

Boy was Mike ever excited! He found his first real estate investing deal; a property he planned to keep as a rental. Knowing that Kim and I loaned money to purchase investment homes, he gave me a call.

Mike’s contract was a gem of an opportunity – at least according to him. The seller told Mike that six other buyers were lined up with cash money. If Mike wasn’t able to close within a week, the seller would let another lucky stiff…errrr…I mean investor…have the home.

Mike explained that the house was built in 1955, had three bedrooms and one bath, needed a good bit of work, the neighborhood was okay but not great, and like-kind houses in the area rented for $800 per month. The seller told him the home’s fair market value was $115,000, but he was willing to let Mike steal it for $89,000.

Mike was chomping at the bit with no time to waste. He needed a purchase money loan and he needed it now!

After digging into the guts of this “deal,” here’s what we discovered. Read More→

Share

My Top 10 Landlording Lessons

Posted on September 16, 2015 by

Kim and I have been managing rental property and tenants since 1997. We still own the very first single-family investment property we bought way back then!

Between then and now, we’ve made every landlording mistake in the book. We’ve bought bad rental properties, rented to awful tenants, and let tenants get three or four months behind in rent.

Here’s the important thing to remember: With every mistake we made, we learned what not to do. And with everything we did right, we learned what to keep doing. That said, here are the top 10 landlording lessons I’ve learned over the years.

Number 10: Take the magic nickel. Why own rental property? If you flip a house, you make a dollar. The only way to get another dollar is to find and flip another house. With rental property, you only make a nickel. But it’s a magic nickel that you get every month for as long as you own the house!

Number 9: Begin an eviction ASAP. Over the years, we’ve had tenants not pay us on time. In the beginning, we’d work with them only to be left holding the bag after three or four months of non-payments. When a tenant defaults on the lease, immediately file for eviction in order to get the eviction clock started. Read More→

Share