Atlanta Real Estate Investors Alliance Blog

Hello fellow investors,

I hope you enjoyed the 4^th of July last month and took a moment to think about the fact that this country has fought many wars to give each one of us independence and the ability to create and do business as we wish with unlimited income potential. In this country our income is only limited to our vision and our determination to succeed at what we choose.

As the year goes on I am getting reports that many of my students are doing deals and starting to make some serious money, and I’m not talking about doing short sales or wholesale deals exclusively. One of my students found a seller who has 80 free and clear houses they want to sell and are willing to do seller financing terms. My student is cherry-picking the deals she wants and is finally deciding that sending letters is a good thing not a laborious waste of time. Three of my other students who are working together have bought 40 properties since the first of the year all with seller financing terms and many with zero percent interest rates and monthly payments as little as $200. I had lunch with another student from Missouri yesterday who has four properties ready to close in less than a month and one of the properties doesn’t have a monthly payment due for 12 full months and zero interest. All of these deals my students are doing are coming from their letter campaign sending letters to “Non-Owner Occupied – FREE & CLEAR” Property Owners. Read More→

Today, I’m going to combine marketing & technology to share an extremely powerful tool that you can use for a TON of different uses in your home or office – all for absolutely FREE!

As anyone in marketing knows, the PHONE is one of the strongest weapons you need to use. Making calls, taking calls, and sending or receiving text messages or even broadcasting voice blasts are all things we need to do to reach and serve our customers.

If you’re buying houses, you need a phone number to use in your marketing to get your motivated seller prospects to contact you. If you’re selling houses, you should have a separate phone number for that. If you’re offering any other type of services, such as consulting, etc., guess what? You should use another number for that!

The trouble is, getting all these phone numbers & systems can add up to be substantial sum, and can add to your overhead expenses very quickly.

So what can you do?  Well, the major phone companies don’t want you to know about your options, because they want your money – as much of it as they can squeeze out of you!  That’s why companies like Vonage & MagicJack have gained so much popularity recently – because they essentially give you the same services for a much cheaper price. Read More→

One of the biggest mistakes we continually see real estate investors make is buying a rental property that produces a NEGATIVE monthly cash flow.  When it comes to rental properties, positive cash flow is much more important than equity!

Here’s a typical example: An investor buys a single-family rental for $90,000.  The property will rent for $725 per month and have mortgage payments of $485.  The investor thinks: Wow, the property will produce a positive monthly cash flow of $240 – boy will I be sitting pretty.

But what about little expenses such as property taxes, insurance, repairs, vacancies, and management?  When you factor these costs into the equation you suddenly find yourself knee deep in a pit of money-losing quicksand.

Always remember that investors make their profit – including positive cash flow – when BUYING the property.  For a deal to be profitable, it’s critical that you know all the numbers and structure it accordingly. Read More→

When in real estate, a person wears many hats and learns to adapt to a ton of situations. This mean, however, you must be knowledgeable enough to do so. You may be a buyer’s representative, seller’s representative, wholesaler, investor, contractor, mediator, property manager; the list goes on and on. The only thing that remains constant is you. One may argue that you can delegate these tasks out to a “specialist;” but, how do you know if the “specialist” is any good if you are not capable enough to evaluate their work? In other words, if you know and understand what the specialist does you can save thousands of dollars per transaction. Read More→

OTHER TRUSTS

There are numerous possibilities for the name given to a trust. Such names are often chosen to reflect the primary function of the trust: Education Trust; Wealth Replacement Trust; Charitable Remainder Trust; Spendthrift Dynasty Trust, etc.

Since names are assigned to trusts the public can get the wrong impression. It is often assumed that a named trust is like any other consumer good, such as the name ‘car’ or ‘truck’. A person wants to buy, say, a car but not a truck. They want a Spendthrift, but not an Education Trust. Actually all trusts are just trusts. The primary thing that differentiates them are clauses written into the trusts. For example, a single clause will turn an education trust into a spendthrift education trust.

The point is not to let names become confusing. The fundamentals of trusts are simple to comprehend. First, all trusts are either inter vivos or Testamentary. Inter vivos trusts are set up while the grantor is alive and are often referred to as a ‘living trust’. The testamentary trust, on the other hand, is set up after the person’s death by authority written in the deceased’s will. All trusts will be either an inter vivos or a testamentary trust. Read More→

It is the goal of this column to answer questions about QuickBooks and how it is used in the REI arena. Know how to record transactions in the proper way and have your set of books in good shape when it comes time for taxes. Submit your questions to Karen@smallbusinessadvisor.biz and we will do our best to get them answered here in this column.

Q: I just started to use QuickBooks and when I look at my chart of accounts I found an account called “Opening Balance Equity”. I did not create this account. How did it get there and what is it used for?

A: The account “Opening Balance Equity” is not a General Accounting Practice account; it is an account that is generated by QuickBooks specifically for setting up specific accounts that will have a beginning balance. For instance: bank accounts, credit card accounts, mortgages and several other types of accounts. QuickBooks “assumes” that the brand new user may not know where to put the off-setting entry when setting up a bank account or other type of account with an existing beginning balance. It allows the user to get their accounts set up and begin using QuickBooks. Later, your CPA will come along and re-class those amounts to their proper place in your books. This account should always have a zero balance.  You should never post anything directly to this account. Read More→

Which is better for real estate investors – buying a note in pre-foreclosure, buying the house through a short sale, or waiting until the house comes on the market as an REO? That depends on the difference in the discounts expected, the condition of the house, and the likelihood of reaching an agreement with the current homeowner to either move or purchase the note at a discount and remain in the house.

The discount on the note may well be less than the amount of discount the lender will be willing to take for the house as an REO. Having the note gives the note holder considerable flexibility—and some additional risks. The note buyer can decide to set up a new mortgage with the current homeowner, negotiate a “cash for keys” or deed-in-lieu of foreclosure with the homeowner, or may be stuck taking the homeowner through a long, drawn-out foreclosure process. If the latter happens, then the note buyer may well be better off waiting until the home comes on the REO market rather than tying up funds unproductively waiting for the foreclosure process to complete. However, if you have a cooperative homeowner, buying the note presents you with some incredible opportunities. Read More→

“To say that I am organized is an understatement, but my car tells a different story.”
~ Emily Procter

I love summertime, don’t you? So many memories in the making! Barbecues with the family. Long, lazy evenings by the pool. Ball games and beer.  Mowing the lawn. Mowing the lawn again. And mowing the lawn again…. And when, oh when, are those kids ever going to sleep? Man, it’s hot! I’m going inside.

I love air conditioning, don’t you?

When you’ve had enough of the summer heat, maybe it’s time to pay some attention to your office. You do have an office, right? And no, a pile of paper on the kitchen table doesn’t count as an office. You need some dedicated space.  It could be just a corner of a room but it needs to be set aside just for business. It needs to be pleasant, quiet, and comfortable.

You may not want to spend the time, but it really is important for you to organize all the files and “stuff” you’ll have around you.  If you’re not organized, things fall through the cracks. Deadlines get missed. Money evaporates. I’m speaking from experience here.  There was a time when my home office looked like the aftermath of a hurricane.  Stuff was everywhere.  That’s when I knew I had to get organized!

Now, it’s your turn. Your home office doesn’t have to be expensive. It does need to be reasonably efficient, though, so setting it up deserves some quality time and attention. Read More→

Hope everyone is doing well and out there putting out their marketing, getting leads, and doing deals. You can’t make much money in real estate if you aren’t doing deals, right? Real estate “Deals” can come in many forms. You can have a wholesale flip, where you are basically flipping the contract for a fee or doing a double closing. You might be closing on a house yourself that you intend to fix up and resell (fix n flip). When you resell that house, which would be considered a deal, and that is when you get paid (my favorite part). You might have just bought a house from the bank or a wholesaler that you intend to put a renter in. You may have just stroked a deal with a home owner to “owner finance” their house and you intend to rent it out. Or, you were able to negotiate a lease option with a home owner with a nice low down payment and monthly payment, and you can turn around and lease option that to somebody else for a higher down payment and higher monthly payment – very nice!

Gotta love Real Estate – so many ways to make money!! But we’re not in it for the money are we? Yeah – we are. Ha! Read More→

If 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→

It is as easy to succeed as it is to fail. Why does this sound untrue? Because most of us forget that we have a choice: we can enjoy the good and overcome the negative. What we must remember is that when we encounter something that we initially see as negative, we have a choice about how to react.

Did you know that Harland David Sanders, the famous KFC “Colonel”, couldn’t sell his chicken? More than 1,000 restaurants rejected him.

Or that Walt Disney was fired by a newspaper editor because he “lacked imagination and had no good ideas”?

Or that Henry Ford’s first auto company went out of business?

What made these people successful after so many “failures”? Read More→

(This article is continued from Part 1 in the July 2013 Edition of The Profit Newsletter.)

3. Listening to poor advice. This is something you probably already know. As you go through life, there will never be a shortage of people who want to give you advice. Your parents, your spouse, friends, in-laws, kids, they all have opinions about what you’re doing and what they think you should be doing. Very often, the value of their advice is worth exactly what you paid for it . . . nothing!

   I’m not saying these do-gooders aren’t honest, intelligent and well-intentioned. However, you must ask yourself, are these folks qualified to give you advice? Have they had any experience in what you’re doing? It seems to be human nature for people to offer advice on subjects they know nothing about. What baffles me is how often the recipients of this so-called wisdom will listen to it and even act upon it without ever questioning the credentials of those giving it.

   Through many painful experiences, I’ve learned that when you take advice from people who don’t know any more about the subject matter than you do, the quality of that advice is, at best, suspect. Plus, very often, listening to unqualified advice can have a negative impact on your focus (see roadblock #1).

   So, who should you be listening to? I believe in taking advice only from people who are: Read More→