Atlanta Real Estate Investors Alliance Blog

The October 2014 Edition of The Profit Newsletter is available for download just in time for our Atlanta REIA Main Meeting on October 6th. The Profit is an 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.

See The Profit Archives for our past editions.

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The land trust is an agreement that allows real property to be held privately for a beneficiary. That way, the beneficiary, whether it be you or your entity, does not show up on the title in the public records.

Follow me here. Say you have $1 million insurance coverage for liability. You hit an attorney in the cross-walk with your car. Will he settle for the insurance limits or will he sue for more? Or what if your insurance company denies your claim for some reason? How much will the suit be?  Well, that usually depends on how deep he thinks your pockets are. If you own property in your own name, the lawyer suing you will easily find your house and any other properties you own in the public records. This could easily become a $3 million suit.

Before you even know you will be sued, the opposing attorney could have the sheriff park in front of your house, knock on your door while you are eating dinner and hand you your lawsuit in front of all your family and the neighbors!

But, if you have your property in a land trust, beneficial ownership is hidden. Your land trust is not filed in the public records. Your ownership stays private. No one knows who the beneficiary is but you. Read More→

Okay, we’re almost at the end of our series of articles on how to get through the entire process of buying and selling on a lease purchase, ACTS or owner financing deal. The last two steps in our process are to follow up with your buyer to get them to the closing table, and set up the closing so you can actually get it down and collect the final check.

Alright, so let’s assume that to this point you have been out into the market place and attracted prospects to call you and have found one or more that have enough money to get your attention. Now, you’re ready to move forward. In our case, we try to find 2-3 prospects, and, of course, the ones with the most money rise to the top quickly. Unless they get screened out from something we discover about them, they usually win the battle.

Once they are located and they have seen the house, now it’s time to get an oral commitment from them that they want it. Then, it’s time to do your due diligence prior to setting a meeting. When we put a lease option tenant buyer in a house or sell it with owner financing, there are a few things we want to see in the form of a report. That list is a credit report, a Megan’s law report for sex offenders, a background check, a criminal check, a debt-ratio report, and proof of income. Read More→

If it’s a combination of high contribution limits and downright simplicity and ease of administration you’re looking for, and you have significant cash flow coming from your own business, practice as an independent contractor or other earned income from self-employment, then the SEP IRA, including the Self-Directed SEP IRA may be the way to go.

How it Works

The SEP IRA, or Simplified Employee Pension plan, is an employer-funded, defined contribution pension plan available to businesses of any size, including single-employee corporations, independent contractors and self-employed individuals.

Entrepreneurs in each of these categories initiate a SEP IRA plan to cover all qualified employees. The plan sponsor then funds the plan on an equal basis for each covered employee. You cannot set up a plan to cover yourself alone, if you have other employees. You must contribute to the plan for all qualified employees, equally, across the board. However, this is obviously not much of a concern for independent contractors and for businesses owned and operated by a single employee or a husband and wife team. Read More→

To maintain the spirit of the season (Halloween) I thought I would tell you about a few of the mistakes that I have made in the real estate business and share the lessons with you.

Know the value of something before you buy it!

My first mistake was to pay way too much for my first deal. It was a duplex. The numbers worked as far as cash flow was concerned but I never researched my comparable sales in the area. I paid twice what everyone else had bought duplexes for. It cash flowed so I was able to operate but that killed any exit strategy of selling or refinancing. Cash flow is great but you must always have an exit strategy before you buy. Make that a part of your deal analysis.

If something is cheap… there is probably a reason.

I have bought some tough properties in some tough areas. I have been successful with them but I also managed them myself. Learning the art of management has been great but it has also been a tough road and has kept me from buying more deals sometimes. What I have learned is that if you want to a reposition a deal you need to make sure it is in a good area. Most of the repositions I have done were in areas of town that were not so great. When you see an apartment complex that is selling for a good price you need to analyze the deal with your eyes wide open. Sometimes properties are selling at a discount because they need physical repair and sometimes they are selling cheap because they need repair and are in bad area. When looking at reposition deals pay close attention to the demographics of the area the deal is in. Look at the median income of the area. Is there job growth? What is the vacancy of the other properties in the area that are like yours? Look at the rent roll in the delinquency column. Are they actually collecting rent? You don’t want to do reposition deals in marginal areas even if you can buy them cheap. Your property is only as strong as the tenants you can rent to. No matter how much work you do to the property…if you can’t collect the rent it’s not a good deal. Read More→

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

From time to time I have clients ask me questions that are related to the finances of their business and how they should implement certain business practices. These questions do not always relate directly to QuickBooks® but how these things are handled may directly affect how they are entered in QuickBooks®. I felt that one of these may be of interest to the AtlREIA membership and have compiled a few answers here:

Q: Why would I need a Receipt of Payment Policy- in writing – for my business?

A: A uniform payment policy keeps customers and employees on the same page and improves cash flow management. You may use your payment policy to spell out accepted methods of payment and accounting practices. If your business extends credit to customers or sells a subscription or membership service, you should clearly define the expectations for payment as well as the consequences for failing to make payment. As a landlord you should have already done a credit check on your tenant – which does not mean they can’t have problems from time to time. Read More→

The third-quarter results of the Atlanta real estate market are exciting and positive!

It IS possible to make money in this market, and I’ve been in this business for long enough to guide you through it.

On the market right now there is a

• 3.5 month to 5.3 supply of single family houses above $250,000
• 2.9 month to 5.1 supply of single family       houses below $250,000
• There is high demand from cash buyers
• There is an increase in demand and value in the rental market

What do YOU need to know?

Marketing through your own resources for “off market” leads is the best tactic. Hedge funds have slowed their buying. They are recovering their assets right now because they moved too fast and have a lot of vacant inventory that is nonperforming.

Consider your time value. Working FMLS and hoping to get a 30% off price tag is not a good strategy because you will spend all of your time making offers just to get one deal. Realtors are doing a great job of pricing properties correctly to sell in 90 days; take advantage of this. Even the beat up properties are being priced right. Read More→

As many of you know I have taught hundreds of students over the years and I am constantly asked what the most important things a new real estate investor needs to know. First of all I believe every new investor needs to realize that if they plan to be successful and make money from the real estate they buy, they will find that every situation will require a different strategy and structure that they will need to learn if they wish to achieve their goals and dreams.

The key to make almost every deal work is not to “Buy High and Sell Low”, it’s how you structure the deal. Actually this has happened to me a few times over my 35 years as an investor, this IS NOT a good strategy to adopt but it shouldn’t mean you need to lose money. Over the years I have done two deals where I bought a property and because of circumstances beyond my control I was forced to sell those properties for less than what I paid for them. Even though I paid too much for those properties “over time” I made a nice profit on both of those deals.

Each of those properties I bought with seller financing terms and then sold each with seller financing terms. Even though I sold each property for less than what I paid for them I received a higher interest rate when selling than the interest rate I was paying to buy each property. I was able to make a nice profit on each. Read More→

“If it weren’t for the fact that the TV set and the refrigerator are so far apart, some of us wouldn’t get any exercise at all.” ~ Joey Adams

As autumn arrives and the summer heat evaporates, it’s a great time to “reset” your fitness routine. Last month, I talked about the importance of taking care of yourself, and why you should do it now. I also told you about one of my favorite apps, MyFitnessPal.com, which is a great tool for building and executing your good-health plan.

But there’s a lot more to getting healthy than just downloading an app onto your smartphone. There’s eating right, and exercising, and yearly physicals, and – well, all the stuff your mother told you to do. And she was right!  

But I’m not your mother, so let’s just stick to the workplace. You probably spend more waking hours in your office than anywhere else. Hopefully, you’ve done your best to create an office that’s efficient and comfortable. You’ve got a desk and a comfortable modern chair. Maybe you have a couch. And while you might move around a little bit while you’re working, you probably spend most of the day sitting. For hours and hours at a time.

But hey, you go to the gym after work, so it’s okay, right? Read More→