Atlanta Real Estate Investors Alliance Blog

Just met with a would-be real estate investor.  For two years she’s been trying to get into the investing business.  Problem is, she has yet to meet with a seller face-to-face.

When I asked why she hasn’t met with any sellers, she said: “What if the seller takes my offer?  How am I gonna pay for the property?  Banks sure aren’t lending to investors right now!”

Ironically, the fear of the seller saying, “YES!” is what keeps most would-be investors from ever making their first offer. But the astonishing thing is, if your deal is a good one, the money will ALWAYS find you! 

We get loads of calls from investors who are looking for money to fund their deals.  For example, yesterday an investor contacted me about a 2-bedroom, 2-bath condo he wanted to buy and flip.  The condo’s ARV (after repaired value) is $65,000.  It needs $15,000 in repairs.  The seller agreed to a $48,000 sale price.  But when all the expenses are factored in, there’s no way this investor will make a dime on this deal, and that’s why no one will fund this one. Read More→

I received several emails after my article last month regarding “Are Investors Flipping over the Gray Line.” The questions were about Land Trusts and transferring the beneficial interest at the time of closing.  So … I am writing to all of those individuals who might be ‘Flipping Over the Gray Line’ but not really knowing it.  Or maybe you are being coached by mentors and/or partners who are advising you that this is alright to do.  If that is the case, then I want you to fully realize who will be liable for the wrong doing.

First off, the Short Sale Approval Letter and the Short Sale Arm’s Length Affidavit will advise you how you can conduct the closing regarding several factors:  Closing Date, Approved Short Sale Amount, Approved Commission and Closing Costs, Approved Buyer Name, and any Deed Restrictions such as how long the new Buyer must hold the property before selling the property or if you are aware of any other agreements to sell this property to someone else at a higher price.  All of Bank of America’s short sale letters and/or the Short Sale Arm’s Length Affidavit state that the Buyer cannot resell the property for 30 days.  However, sometimes the Title Company, due to the wording in the Short Sale Approval Letter and/or the Short Sale Arm’s Length Affidavit, is not instructed to place this restriction directly on the Deed.  This is where the Investor/Buyer thinks they have found a loop hole!  The Investor/Buyer will close with Title Company A and then the same day or shortly after will turn around and close with Title Company B who has no knowledge of the Buyer’s requirement to hold the property because they did not do the first closing.  Read More→

This month I will be discussing even more ways to find all the buyers you need for your real estate investing business.

If you have taken the time to build your dream team, you might also want to talk to your dream team Realtor to see if they work with any wholesale buyers in your area. They almost always have clients looking to buy wholesale deals. They may also have pre-qualified buyers for your other deals as well. Having a Realtor on your dream team is a necessary part of building a successful Real Estate Investing Business and if you have trained your Realtor correctly from the beginning they should already be providing these leads for you.

Many home buyers in the current market are asking friends and family members for possible leads on properties. So another technique I employ to find more potential buyers for my properties is to offer incentives to folks who have already purchased properties from me in order to get referrals. This is a technique that many Real Estate Investors simply forget about, but it can be very profitable for you. Read More→

Did you hear the news?  Citigroup may have to pay a $7 billion settlement to resolve mortgage probes.  Why?  To get the government to stop looking into whether it defrauded investors on billions of dollars worth of mortgage securities.  Most of the payment will be in cash, but it will also include a few billion dollars to help struggling homeowners.  How magnanimous of them!  Citi created hundreds of billions of dollars worth of fraudulent mortgages, and now that they’ve been caught after 7 years of foreclosing like crazy on their fraudulent mortgages, they’re finally going to cough up a few billion to help out some of the people they haven’t foreclosed on yet.

This news brings to mind a case I read about recently where a REGIONAL bank had the owner of a property falsify mortgage documents in order to originate a riskier loan.  That’s right, the regional bank has the owner of two VACANT lots certify that there were houses on the two lots.  Then the bank made a loan as if the nonexistent homes were actually on the two vacant lots.  Why on Earth would the bank lie and increase their risk by loaning out so much more money than the land was worth?  It was all part of a large scale scheme to rake in as much money as possible by defrauding the bank’s investors. Read More→

Joint venturing is a great way to invest in real estate. In our situation, a private lender lends all the funds to purchase the property and all the renovation costs. Knowing the investors criteria, it is our responsibility to identify and contract real estate investments opportunities, deal with the contractors and exit the project. Once a property is identified and acquired, it is time for the renovation. This is where the joint venture can become a bit more complex.

The relationship in a joint venture is clear cut until it reaches renovation. This is where a project can go from being a 1-2 month renovation to a 3-4 month renovation. Keep in mind that the majority of the joint ventures you do as a veteran investor will be with newbie investors or investors who have never done real estate investing. However, they always tend to have opinions on how to run a project or what should go into a renovation. Once in a while you may joint venture with a seasoned real estate investor who no longer wants to be involved in the day to day operation but they usually will be. To avoid these issues here are 5 tips to keep the joint venture running smoothly. Read More→

Do you think that the other wholesalers in your town are your competition?  Not if you position yourself as a useful ally.  Other wholesalers can be wonderful resources to help you grow your wholesaling business.  So what do I mean by positioning yourself as a useful ally?

First of all, be useful.  Bring value.  In wholesaling you are either providing the Deal (the property at a great price) or you are providing the Buyer.  Or both.  If you have one but not the other, you may want to consider teaming up with another wholesaler.

Example #1:  You have a friend of a friend (Billy Buyer) who has just inherited $100K and wants to buy a fix and flip property at a wholesale price.  You have heard of wholesaling, but haven’t really done any deals yet, and haven’t been doing any marketing – so obviously you have no deals that are your own.  You have another friend (Harry Wholesaler) who has started marketing for wholesale deals, and has found a sweet deal – way under market value ($55K) that would work great as a fix and flip and meets Billy Buyer’s criteria.  But Harry Wholesaler has no buyers.  So you step in and put Harry’s deal under contract with an assignment (for $60K total).  Then you go ahead and assign that deal to Billy for a FEE (for $65K total).  $65K is still a great deal for Billy Buyer and you and Harry make $5K each for putting together the deal. Read More→

There’s nothing out there that quite offers the unique advantages of direct investment in real estate:

• Tangible value
• Potential for substantial income from rent
• Potential for capital appreciation
• Effective safeguard against inflation
• Extensive availability of leverage
• Ease of borrowing against the asset for other investing
• Effective hedge even against economic collapse

REAL ESTATE IRA BASICS

The good news is, though, is that it’s quite easy to hold real estate – actual, tangible real estate – within your IRA, provided you adhere to a few basic rules. Read More→

Recent indicators clearly show home values in nearly half of the country’s largest metro areas will not reach their pre-recession peak levels again for another three years or more. The data I have been seeing using REIAComps during the first half of this year are proof the recovery is still very much in its middle stages.

Nationally, home values remain double digit percentages below their 2007 peak. Looking ahead, U.S. home values are expected to rise through the early part of 2015. Really though, It will take another 3+ years for national home values to recover their pre-recession levels, assuming a steady rate of appreciation. And this is not every where. Las Vegas will take another decade.

For those of you already connected to REIAComps, the control and feeling of confidence you have over your deals is priceless. These new statistic add power and knowledge to your tool belt. Using REIAComps to investigate the value of houses as they come to market, against other less reliable sources continues to be a no brainer. Read More→

This is one of the most powerful business lessons that I have learned. That may not be what you were expecting to read but let’s face it…its true. No one cares about you, your business, your services or you in general. The one thing that people always care about is their own problems and finding solutions to those problems. Now let’s put that into the real estate world.

Whether you are interested in commercial real estate or single family homes…people still only care about solving their own problems. They don’t care about your investment or doing business with you or what deal you may be working on. They care if you can solve a problem for them and that is the root of becoming wealthy in the real estate business. If you can master the art of creatively solving problems then the financial doors to financial freedom and cash flow will swing wide open for you. If you view real estate and the world at large as a place to serve yourself, the doors to wealth will stay firmly shut. You may be able to force your way into the business world with self-serving actions but why? Why not have all the people who have what you want just simply give it to you and say “thank you” when you take it?

Everything you want in the real estate world is likely to be owned or controlled by someone else. There is no more free land in the world waiting for you to run out and stick a flag in it. Everything is owned. Now you job is to go out and get those sellers and owners to “give” you what you want. You do this by solving problems. Here are some very common problems in the real estate world today. 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 Karen@smallbusinessadvisor.biz, and getting answers here in this column.

Q: I am new to having my own business – just what is accounting?

A: Accounting is the process by which financial information about a business is recorded, classified, summarized, interpreted, and communicated to owners, managers, and other interested parties. An accounting system is designed to accumulate data about a firm’s financial affairs, classify the data in a meaningful way, and summarize it in periodic reports called financial statements. Owners and managers obtain a lot of information from financial statements. The SBA helps to:

• establish the records and procedures that make up the accounting system
• and/or may supervise the operations of the system

Once the books are in good order they can then be passed on to the CPA to either work with the owner to suggest strategies and/or prepare taxes. Most owners and managers rely heavily on the CPA’s judgment and knowledge when making financial decisions. Read More→