If you’ve been following our real estate investing column, you know that since the beginning of April, Kim and I have been on a quest to find out where the cheese moved. 

At April’s foreclosure auction, we noticed a sudden and dramatic shift in the real estate market.  For reasons pointed out in earlier columns, the foreclosure auction is no longer the best place to find deals.  The low-hanging fruit is G-O-N-E!  (You can find our earlier columns here.)

We think the best way to find out where the cheese moved is to go to the frontlines.  For this reason, April’s goal is to meet face-to-face with 60 sellers.

I’m writing this on April 17, 2013.  Here are our results so far this month:  I’ve met with 35 sellers; we’ve found and bought a house on Green Acre Lane in Cartersville; we have a second house under contract (it’s a short sale deal); and we’re working to buy a third property before it’s sold at May’s foreclosure auction (it’s a subject-to deal.)

It’s astonishing how much and how fast the market has changed.  Since 2009, the foreclosure auction was THE place to buy.  Now, because of a huge increase in competition and a dramatic decrease in the number of foreclosure properties, the prices people are paying for foreclosures are increasing, while profit margins are tanking.  Scary stuff! Read More→

Last week’s column – The Cheese Has Moved – was about the dramatic change Kim and I witnessed at April’s foreclosure auction.  We watched investors pay a lot more for properties.  Higher purchase prices ensure thinner profit margins, and thinner profit margins mean greater risk – it reminded us a bit of 2005 and 2006.

Since the fattest deals will no longer be found on the courthouse steps, we’re forced to ask, “Where did the cheese go?”  In other words: Now where will we find the best real estate investing deals?

To answer this question, I’m on a quest to spend April knocking on sellers’ doors.  The goal is to meet face-to-face with 60 sellers.  On the front line is most often the best place to find out where the market is going.  (By the way, I’m posting the daily results from my door knocking on North Georgia REIA’s Facebook page.)

What am I seeing out there?  Real estate is experiencing an incredible shift. Read More→

If you haven’t read Who Moved My Cheese? by Spencer Johnson, it’s time to – especially if you’re a real estate investor – because folks, when it comes to buying property at the foreclosure auction, the cheese has definitely M-O-V-E-D!

From December through March, Kim and I took some time down and didn’t work foreclosures.  We got back at it last month and went to April’s foreclosure auction loaded for bear.  There were six properties on our target list.  With this many targets, we were confident of being the high bidder on at least two of them.  Imagine our disappointment when we left the auction without buying anything!

At the auction, Kim and I quickly noticed that things had definitely changed – and changed in a BIG way.  From 2007 through 2012, buying at the foreclosure auction was like shooting fish in a barrel – it was a target-rich environment.  Each month, there were 170 or more properties advertised for foreclosure, but only a couple of able investors on the steps to bid.

This is no longer the case.  This month, there were only 80 properties advertised for foreclosure.  And on the steps, the number of investors bidding on properties has dramatically increased.  In little ol’ Bartow County, we even have hedge-fund buyers and online bidders.  Crazy stuff!

So here’s the question: With a lot fewer properties advertised for sale and many more folks bidding, what do you think is happening to the sale prices of foreclosure properties – they’re climbing, right?  And what do you think is happening to investors’ profit margins – shrinking, aren’t they? Read More→

Recently, I spoke with a real estate investor who’s having a tough time moving up to the next level of investing.  She’s very smart – she has a college degree and is working on her masters.  She isn’t the least bit afraid of hard work.  She and her husband have already done a couple of deals.

Here’s the thing: She feels she needs to know everything about real estate investing before doing her next deal.  I think this has a lot to do with her level of education.  For years, she’s been taught that to succeed, you must first go to school and learn lots of stuff before stepping out into the real world. 

This just isn’t so.  I’m not anti-education – far from it!  Each year, Kim and I invest 5% of our net income into our education.  At the same time, we’ve never let a lack of education keep us from meeting with sellers.  Never forget, meeting face-to-face with sellers and asking Pete Fortunato’s famous question, “Why are you selling such a nice house like this?” is the Alpha and Omega of real estate investing.  Never find a reason to NOT meet with sellers – even if you don’t know what you’re doing! Read More→

We’ve all heard that too much of a good thing can be bad.  Let’s look at two examples and see if this theory holds water: rental property and chicken poop.

I have a long-time friend who owns more than 100 single-family rental houses.  Most people look at this guy with awe.  Sadly, I’m forced to look at him with pure pity.

We talked this morning.  I invited him to join me, and five of our investor friends, on a 5-day trip to California in April.  The purpose of the trip is to get together and discuss creative deal structuring and financing. I’m pretty sure lots of golfing and boating will be thrown in for good measure.

He really wanted to go but was forced to weakly admit, “I can’t be away from my rentals for that long.  Something is bound to go wrong, and when it does, I need to be here to fix any problems.”

He and I got into real estate investing around the same time.  We had similar goals: to own enough rental properties to produce enough mailbox money so we no longer would have to labor for a living.  This would allow us to travel, spend more quality time with family and friends, plus give us the means to help others. 

Today, we’ve both reached our goal…sort of.  The problem is, my buddy doesn’t know his number.  When asked how many rental properties he wants to own, he answers, “More.”  More?  Why more?  When is enough, enough?  When does enough become too much? Read More→

Attending Gary Johnston’s Financial Freedom Principals seminar last year (GaryJohnston.com) caused us to make a radical change in what we teach.

Since 1997, Kim and I have taught people how to successfully invest in real estate.  Gary’s seminar was the springboard that shifted our teaching from just real estate investing, to how to gain financial freedom.  It just so happens that real estate – for reasons like high yields, solid cash flows, huge tax advantages, etc. – is our primary investment vehicle of choice.    

What is financial freedom?  It’s when the net income from your INVESTMENT assets is greater than your expenses.  Think of it this way: On March 1, you have $30,000 in the bank.  Because of an illness, you don’t work all month and don’t get a paycheck.  You are the sole breadwinner.  After paying all of your March bills – expenses never stop – how much money do you have in the bank at the end of March? 

If your answer was less than $30,000, then you’re thinking like a wage slave.  If your answer is more than $30,000, then congratulations – you understand the concept of financial freedom!  Your investment income covered your expenses…and then some!

Here’s the thing: Your goal should be to create a gap between what you earn and what you spend, and then invest this difference in an appreciating capital asset that produces cash flow – you know, mailbox money! Read More→

We get lots of calls from real estate investors who want to go with me to see what it’s really like to knock on sellers’ doors.  I got such a call a few weeks back.  The investor flew in and we went door knocking.

Need to back up a minute.  Tom (the investor) and I had a number of conversations before he flew in.  He was having trouble doing deals on a regular basis.  In addition, when he met with sellers, he didn’t feel he was creating any kind of lasting bond with them.

On the phone, Tom seemed like a really nice guy.  Our conversations never dragged.  When it came to real estate and creative deal structuring, he knew what he was talking about.  Also, he was out there beating the bushes and seeing plenty of sellers – but for some reason, they just weren’t responding to him.  I couldn’t understand the problem – that is, I couldn’t understand the problem UNTIL I met with Tom face-to-face. Read More→

Kim and I were at our horse ranch when the Adairsville tornado came spinning through last week.  When the rain began blowing sideways and we saw a couple of our trees crash to the ground, we beelined it for the hall closet.

Almost immediately, TV news began showing all the destruction the tornado had done to our wonderful little town – it was one video clip after another of total devastation!

We have a lot of friends and a number of investment properties in Adairsville and Calhoun.  We called to make sure folks were all right, but the phones were out.  We prayed – a lot!

Here’s the thing: we quickly realized that the tornado was not about the devastation and destruction: It was about all the wonderful people who came together to help make things better! Read More→

Last week’s column brought in lots of calls and emails asking for more information about how we buy mobile homes for cash and then sell them with terms.  The two most common questions we received were: 1) How do we determine our purchase price?  2) How do we determine our sale price?

Today, let’s answer these questions.  Oh, and if you think this is boring stuff, then you must think 70% yields on your investment dollars is boring stuff, too.   

Let’s look at how we determine our purchase and sale price.  For this example, let’s assume we’re thinking about buying a fifteen-year-old, two-bedroom, two-bath singlewide mobile home in a park.

First, we investigate to see how much other 2/2 properties are RENTING for in the area.  Let’s say, between apartments and single-family houses, the average rent in the immediate area is $700 per month. Read More→