Author Archive
Got Funding? Get Creative!
Posted on September 2, 2013 byFunding can be one of the largest barriers to entry in the real estate business. I remember the very first time I walked into a lenders office and tried to discuss funding for my first apartment complex I wanted to buy. My experience (or lack of) was immediately brought to my attention not to mention my complete lack of liquid assets (NO CASH!)
That day was quite sobering as I left that office although I was still determined to break into the real estate business. Which was a fortunate attitude seeing as I had quit my job as a pilot to go into real estate full time two weeks earlier.
What followed was the next 8 years of survival in the business and ultimately an almost 400 unit portfolio. I survived the Great Recession by mastering the techniques of creative financing such as seller financing, master lease options and raising private capital just to name a few.
If you are just starting out or whether you have been in the real estate business for a while, you always want to complete each transaction with as little cash out of your own pocket as necessary. The more cash you keep in your pocket the more options you keep open to yourself. Remember; Options = Cash! Read More→
Rehabbing with Creative Financing
Posted on July 31, 2013 byIf you have looked at more than a few deals over the last year you have undoubtedly seen a distressed asset. Repairs needed, low occupancy, bad management (or tenants) are some examples, just to name a few. From single family to large apartment complexes there are distressed assets in all types of real estate these days. Fortunately they can be hidden goldmines if you know how to get financing. Most lenders are not lending on distressed assets, making it harder to close these deals, let alone mitigate the needed repairs.
My favorite way to deal with this is with a master lease option or seller financing. If you can get the seller to give you control of the property then you can do the fix-up and flip it for cash or keep it for cash flow!
Either way you structure the deal, the idea is to limit the cost of getting into the deal because you will have repairs and other expenses to overcome while you get the property cash flowing. Here are some tips for getting started with a rehab property using creative financing. Read More→
Be Valuable
Posted on June 27, 2013 byOf all the creative financing techniques I use to build my business, the one that made me the most money and will make you the most money is the art of being valuable. Creative financing is one of the fastest ways to get started in the real estate business. This can include things such as seller financing or a master lease option. No matter what tactics you use, it always comes back to creating value for your buyers.
The first thing you want to do when you are getting into business is to decide what it is you bring to the table. What things do you have that others will value? Once you figure out where your worth is then you must decide how you will trade that worth for what you want. In most cases you are trying to trade your value for entry into a real estate deal but remember, the real estate business is more than just closing a deal. There is partnerships, private money, experience etc. All of these things have value and you will want to focus on gaining as many of these skills as you can. Read More→
Working With Brokers and Agents
Posted on May 31, 2013 by“What’s the best way to find deals?”
This is the number one question I get asked by my real estate students. The answer is in the title. Most people new to the real estate business these days are looking for a “magic bullet” system that will bring them all the good deals they can handle. Unfortunately it doesn’t usually work that way.
There is no better way to consistently produce viable real estate deals than through quality relationships with commercial brokers and agents. No owner of a commercial property is going to go out to the road side and put up a “For Sale by Owner” sign and hope a qualified buyer happens to drive by. They are going to find a great broker and list the property with them.
I tell my students “You are trying to buy a property that is not for sale yet.” Good deals don’t stay on the market long. If you call an agent and they have something for sale, chances are it’s not a good deal. Your job is to build a relationship with this agent or broker so that when a seller walk in the door with a hot deal…you immediately get a call! Read More→
My First Real Estate Mistake
Posted on May 1, 2013 byMy first property turned out to be my first mistake in the real estate business and one of the best lessons I ever learned.
I am a pilot by trade. I graduated college and went straight into the flight academy. I flew and instructed there until my first real job as a corporate pilot for a medical supply company in Macon, GA. When I quit that full time job to go into real estate full time I had saved up $10,000 and had one deal under my belt. My first deal…a duplex which cash flowed $300 dollars a month. It was the best deal I ever did because it got me going in the business and now I have almost 400 units and 8 employees. I also made one giant mistake!
Always place the deal in context of the surrounding market. I analyzed the deal like I was taught and it did cash flow accordingly. I closed on the deal for $40K. Shortly after I attended my first REIA meeting in which I was promptly told “you’re an idiot!” Unfortunately I had to agree with the person that was telling me this. He and his friends had been buying similar duplexes in the neighborhood for $20K! I paid twice what the property was actually worth. Read More→
The Art of Master Lease Options
Posted on March 26, 2013 byMaster lease options are a great way to get started in the real estate business but are often misunderstood. A master lease option is two separate contracts, the master lease and the option to purchase. Together they make up the master lease option (MLO).
A master lease gives you the right to “rent” an entire property. This could be anything from a single family residence to a large apartment complex or strip mall. Once you have a master lease in place you control the property. This includes the management and the operations. You can essentially become the landlord yourself or hire management at your discretion.
The option to purchase sets the purchase price for a certain amount of time and for a certain price. You will negotiate this price and time frame during your offer and negotiation process. Usually an option fee is placed at the time of the signing. The option money is used as a non-refundable deposit to the seller in order for you to control the sale of the property. If you do not close the sale in the time frame set in the purchase option, then you will lose the option money. If you do close the sale then the option money is applied to the purchase price. Read More→
Making Creative Offers
Posted on February 28, 2013 byMaking creative offers is one of the most lucrative skills a real estate entrepreneur can master. Creative offers lead to creative financing and creative financing leads to faster financial freedom. I have built a portfolio of almost 400 units and I have never walked into a bank, qualified for a loan and put money down. I have a lot of bank loans now, but I took control of each property with some form of creative financing and then refinanced at a bank.
I did this by understanding one simple concept- “Solving people’s problems pays well!”
The first step to making offers that get accepted is to create an offer that solves one or all of these three problems; the seller’s problems, the properties problems, your problems.
You will need to gather a bit of information to effectively make your offer. Start by asking about the seller’s motivation to sell. Don’t always assume that money is the only motivation for a sale. Sellers often have other reasons for selling such as dealing with bad management or need to retire. Whatever the motivation is, finding a way to solve that person’s problem is key to writing an offer that gets accepted. A master lease works well for these situations. Read More→
Getting Started in Multifamily – Part 1
Posted on January 30, 2013 byHave you ever thought about getting into the multifamily business? It’s not easy and it’s not for everyone, but if you have what it takes I can show you how! I created Real Estate Raw to pull back the curtain on the commercial multifamily business. I have survived the down turn of the economy and quite frankly I don’t want to go through that again. Do you?!
How many real estate seminars have you sat through to only find that it was one big SALES PITCH! Starting a business armed only with sales pitches is never a good thing. In this 5 part series I will be teaching you the “real side” of the real estate business.
Notice I keep saying real estate “business”? That is one of the first lessons that most people get wrong when starting out in real estate. Let me clarify this for you.
An investor is someone who is sitting around with cash that they need to get a return on. If you have all the cash you need to buy real estate with…then you are an investor. If you are trying to create wealth in real estate (not spend it) then you will need to raise money and possibly qualify for some loans…you are not an investor, you are a real estate entrepreneur. Read More→
