Atlanta Real Estate Investors Alliance Blog

With the real estate markets slowing in many areas of the country, we are seeing a resurgence of owner carryback financing. Most of you are aware of the basics of such financing, but you may not have been exposed to some of the more creative approaches.

Let’s look at Jack who wants to move away from day-to-day management of his properties as he is involved in another business venture that is taking more of his time. He could just sell off his properties, pay the taxes and re-invest the proceeds in an investment that doesn’t require the management oversight.

One house Jack purchased some time ago for $100,000 is now worth $150,000. After concessions, realty fee and closing costs, Jack nets $140,000. And after the $80,000 mortgage is paid off, he has $60,000.

But hold on, federal and state taxes have to be paid. Between depreciation recapture and capital gains, taxes total about $12,000. So, Jack is left with $48,000 to invest. Read More→

I’ve written a weekly real estate investing newspaper column for more than ten years. During this time, we’ve looked at all kinds of creative deal structures and financing…but what exactly are these?

The easiest way to tell you what creative deal structuring is, is to tell you what it’s NOT. It’s not finding a house to buy at fair market value and then going to an institutional lender to get a traditional mortgage. That said, about everything else is creative deal structuring and financing.

The best deal structurer I know is Pete Fortunato. He has been one of our three primary real estate investing teachers since 1999. (The other two are Dyches Boddiford and Jack Miller.) Over the years, we’ve taken almost every seminar Pete has taught – every time he has taught it!

Much of our real estate investing knowledge comes from Pete. My biggest ah-hah Pete moment was seeing a picture of his Benefits House for the first time. These days, that picture hangs on the wall in front of my desk. Whenever considering a deal, I look at it and contemplate different ways the deal can be done. Read More→

“The future starts today, not tomorrow.” ~ Pope John Paul II

Remember last month, when I talked about how amazing it is that one little smartphone or tablet can do so many useful things? Well, not everyone has much use for smartphones.

Take my Uncle Milt: He’s convinced that true happiness lies in a phone that’s just a phone. And he’s pretty sure iPads are, well, evil. Every time I see him, he grumbles about the latest new-fangled technology. Bad enough they invented the fax machine, he says – he never did get the hang of that thing. Too many buttons, and he never knew whether to dial 9 or 1 first. And don’t even mention that curly fax paper!

Well, yesterday Uncle Milt’s mentor told him he has to learn how to use an iPad. Uncle Milt is not a happy camper.

Does this sound like you? If it does, this month’s column is for you. Read More→

When a real estate developer runs into a snag, and needs additional money to complete a project, or he wants a shorter-term loan of, say, six months to six years, he frequently turns to the “hard-money” market. In a nutshell, these are lenders who are looking to get a decent return on their money, with a margin of safety. They usually do this by holding a lien on the property, or on another property the borrower owns, in a practice called “cross-collateralization.”

If you’ve got a lot of money in your self-directed IRA, and it’s been earning relatively weak returns, hard money lending provides a potentially lucrative way for you to “take charge” of your assets. With hard-money lending, you aren’t depending on the skills of a mutual fund manager you’ve never met, nor do you need to settle for the lackluster interest rates currently available from investment-grade bonds and treasuries.

Instead, you’re free to seek your own deals with any number of private real estate developers. Here are the advantages to hard-money lending in your self-directed IRA: Read More→

As investors, we all hope and wish that all of our contracts go smoothly. As much as we hate to admit it, the truth is that some things are out of our control. Appraisals, hidden renovation cost, weather and financing are just a few examples of what we have little to no control over. How one handles these obstacles is going to be what differentiates you from all the other real estate investors.

Last month I terminated my first contract of 2013. I contracted this property with the intent of purchasing it to remodel and sell. At first look it was a no brainer. The home was a newer property located in a popular suburb. It was in need of some cosmetic updating and stainless steel appliances but the market changed overnight. As usual, I did my due diligence, pulled comps within the last few months, calculated the renovation cost needed to match the comps, and offered accordingly. A week before closing I reviewed the market and it turned out the builder had sold two new construction properties and listed the homes directly to pending. These homes KILLED the deal. The after repair value I had in mind was for the same amount as the new construction properties. Obviously, a remodeled home cannot be priced the same as a new construction. At this point many others would have terminated and moved on but not me, and you shouldn’t either. Read More→

If I could wave a magic wand and re-live my early real estate investing career from the beginning, I think I would first try to learn more about what seller’s needs and thoughts are. I would also want to better understand the thoughts and logic that run through a seller’s mind when they are motivated and want to sell their house.

If I had a better idea of what the sellers wanted it will be much easier to make offers the seller might be happy with and hopefully get them to sell me their house at a price and terms I’ll be happy with, and they will get what they want and also be happy with. If I had only known what I know now it would have been far more profitable for me and my family.

I shudder to think of all of the lost deals I have had simply because I never stopped to think about what the seller’s needs were? My thoughts were usually about how I could make a killer deal for myself. This was not the best nor the most profitable way to make money buying real estate. You need to take a minute, step back and analyze what the seller’s wants or needs are, (or at the very least use a little logic to try to think about what the seller might want or need before making them an offer) you are making a big mistake. If you think about what the sellers needs are you will have a distinct advantage while actually sitting face-to-face with them and are negotiating. If you will do this, at least you would have a direction to start going in.

As you talk with the seller and start to ask them the important questions you will start to better understand what is motivating them to sell. If you don’t ask the important questions you’ll never get the answers you need to put together a profitable deal – a deal which is good for both you and the seller. Let me explain… Read More→

Funding 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→

If someone would have told me one year ago that I would be a full time real estate investor together with my husband and flipping houses for a living, I would have laughed at them! To be totally honest, real estate was never a passion of mine and I hadn’t given it much thought until I read “Rich Dad Poor Dad.” That got the wheels turning and when Matt (the hubby) discovered the niche of real estate we now love best…. Wholesaling… it seemed too good to be true! I was a total skeptic, but in the end, there were a few things that changed my mind and made me want to take the Plunge! In less than one year, we’ve flipped 44 properties totaling over $1,000,000. We’ve attended meetings almost nightly during the week, networked our rear ends off, attended classes, and met a lot of people. What we’ve discovered is that “taking the plunge” is often the hardest part for people even though they despise their jobs and know that real estate could be their vehicle out of the rat race.

So, what changed for me you might ask? How did I go from skeptic to believer and what does it REALLY take to make the plunge and ramp up a full time real estate career? It may not be for everyone, but for those who really want it… continue to read because I’m going to share my tips for “Making the Plunge!”

In the beginning, something that got me motivated to take charge was thinking about my financial future and looking at the statistics of the average American at retirement. We were barely making ends meet as it was, despite the fact that we were both working full time. The average American retires at 62 years of age and 95% of them are either dead broke or DEAD by that age! I couldn’t tolerate the thought of being a work horse for the remainder of my life only to pass on debt to my children and be a bother to them during the last years of my life. I didn’t know HOW this would all work out, but I was ready to look at some “other options!” Read More→

You can locate motivated sellers even if you have little or no money to work with. Way back in the early days of my business I used some very inexpensive techniques to locate very motivated sellers, since we only had a limited budget to work with like many people who are just starting out in the real estate business.

One technique we used was to develop a special flyer for ourselves. We then had it printed on legal paper in a bright color. Fluorescent paper works really well for this technique.  The reason I used legal paper was because I could print two flyers to a page. That way I could get twice as many flyers for half the money.  On a weekend, my husband and I would stick these flyers everywhere we could think of, in gas stations, phone booths, Laundromats, on public boards in grocery stores, home improvement stores, delis, bars, etc.

We would also take these flyers and lay them door to door during the weekend days at least twice a month. Each time we would lay the flyers door to door, we would pick a neighborhood we wanted to buy houses in. We kept a chart on the wall to show us which neighborhoods we had done and when. This was one way we could use to track  the leads that began coming in. We ended up getting our exercise and doing something for our business at the same time, which was creating leads that turned into deals. Read More→

Though recent signs have pointed to a lessening of the ongoing housing inventory crunch, many markets in the Atlanta metro area are still experiencing shortages of homes for sale. With consistent reports of inventory overall declining in the metro area, we found some bright spots. Using REIAComps helps to quickly see the number of sales and the best prices to buy year over year.

By looking at REIAComps valuation data, we were able to identify the top five markets experiencing unique growth making them the easiest metro Atlanta markets to crack.

5) Locust Grove: The City of Locust Grove derived its name from a grove of locust trees that could be seen throughout the town. Locust Grove was a major rail distribution center for cotton, peaches, and other farm products. In 1870, the first store was built and since that time many new businesses have moved to Locust Grove and is the reason for it being a warm market and easy to crack.

4) Griffin: Downtown Griffin is the historical, cultural, and government center of Spalding County. Griffin offers citizens and visitors the pace and charm of small town living with convenient access to the heart of the South, located only 40 miles south of Atlanta. Recently, downtown Griffin features retail and restaurant attractions as well as commercial office space and residential units for citizens and visitors interested in experiencing a live/work/play environment. These convertible spaces are ripe for investment and redevelopment. 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. It is our intention to do this by you the members submitting questions to Karen@smallbusinessadvisor.biz, and getting answers here in this column.

Q: I need to segment my balance sheet AND income statement into three departments (classes). Which version of QuickBooks can provide me with this capability?

A: The lowest edition you can use to have classes on both the balance sheet and the income statement is the QuickBooks Premier.

Q: If I change the reporting basis in the Reports & Graphs preferences from Cash to Accrual what reports will this change? Read More→

If you’ve been around the real estate investing community for a while, you already know the Sign Mafia. They have been serving our community of interest since 2002. They are best known for their bandit signs and property marketing packages.

What are bandit signs? They are any signage placed in highly visible spots, designed to generate leads for buyers and sellers. They are key in guerilla marketing on the fly. Signs are typically placed in areas that are sometimes illegal, if not in violation of local ordinances, hence the name “bandit signs” and the SIGN MAFIA.

The reason bandit signs are so effective is, when people are in a certain situation or are in need of something and they see a sign for that purpose, they are likely to call. Signs are a great way for you to let people know your business and what services you provide. Without these signs, they may never know you exist. Plus, it is a certainty they are capturing information from other bandit signs, yours should be among the choices of information available. 

Used as informational signs, directional pointers, sign toppers, or for quick info like phone numbers and web sites, bandit signs are a quick, inexpensive and highly visible way to get attention. Whether it’s to get leads to buy or sell properties, signs can be most effective, especially if utilized on a continuous basis. Read More→