Atlanta Real Estate Investors Alliance Blog

The November 2012 edition of The Profit, the official newsletter of the Atlanta Real Estate Investors Alliance (Atlanta REIA), is now ready for download in high or low resolution format. Read and enjoy a variety of articles on real estate investing and more from David Tilney, Jim Hitt, Karen Bersad, Don DeRosa, Russ Hiner, Michael Vazquez, Kimberlee Frank, Erven Kimble, Chris Littleton, Deborah Harris, Tony Pearl, Mike Barnes, Kathy Kennebrook, Larry Harbolt, Bill Cook and Bob Massey. And don’t forget, Atlanta REIA Business Members can advertise in The Profit at deeply discounted rates.

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I have a friend in Colorado Springs who owns a bank. Many years ago I complimented him on the caliber of his employees as well as the longevity of their employment. My banker and I both understood that his most important assets walked out of the bank each night to go to their respective homes and his job was to motivate them to come back each morning. His key for hiring great employees was to screen for proper job skills, attitude and moral code. His key to retaining these employees was to empower them to be the best they could be and to treat them with respect and appreciation. 

A light bulb went on in my brain when I realized that this could be the same key needed for my success as a landlord. When I accepted tenants to rent a property, I had certain expectations of them – to maintain and improve the property and grounds, to pay the rent on time, to get along with the neighbors and to reside in the property for a relatively long period of time. I also expected my tenants to be problem solvers who should call on me only when they needed additional support. This, in effect, was the tenant “job description,” but was I sharing my expectations and screening for the proper skills, attitude and moral code? I realized that screening applicants for rental properties was very much like hiring employees for a job.  Read More→

Private Lending Explained

If someone wants to just simply hold the paper secured by an asset, they’re actually going to be a private lender for that asset. That’s right…private lending simply means a private individual is loaning the money rather than a bank or lending institution.

Private Lending…The Numbers

In this example, Jack Brown has $100,000 in a Rollover IRA, which is just another way of saying Traditional IRA. He wants to loan it to an investor as a first mortgage on a property worth $135,000.

Private Lending…Determining the Value

Perhaps Jack’s realtor, an appraiser or some resource told him, or perhaps he’s sophisticated enough to look at the deal and say I’m comfortable that the deal is worth $135,000. We always suggest doing your ‘due diligence’ and using professionals to assess the value of an asset you are going to loan money on.

In this case, we’re looking at an LTV – Loan to Value – of 75%. Hold on a minute, isn’t 75% LTV a bad idea? Everyone has to determine their comfort level when loaning money. I personally do not lend on anything over 60% Loan to Value. Read More→

It is the goal of this column to answer questions about QuickBooks and how it is used in the real estate investing 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 and getting answers here in this column.

But first, choosing the appropriate management software package is essential to the success of your business. You need a package that is appropriate for your business currently, but that can grow and evolve as well. QuickBooks software is the perfect solution for your account management. As your business grows you can upgrade to QuickBooks Enterprise if needed.

In using any accounting software, please understand that without a proper chart of accounts – that specifically fits your business – your information and reports won’t provide you with what you need or want to know. There are two reports that are most important to the business owner, the Income Statement and the Balance Sheet. Some refer to the Income Statement as the Profit and Loss Statement.  The Chart of Accounts drives everything. Read More→

“A picture is worth a thousand words.” ~ Anonymous

Today, here’s on offering for you Android fans.

Let’s set the scene: You’ve found a terrific little house to buy. You’ve finally reached an agreement with the seller, but one of his requirements is a little unusual. You want to run it by your lawyer.

Unfortunately, it’s 4:00 p.m. on Friday. In one hour, your attorney is flying to the Himalayas for three weeks to climb Mt. Everest. Even if he could get a signal up there, he has no intention of answering his phone while he’s gone. If he receives the offer before he leaves, he will read it on the plane and at least send you a quick text before he piles on his mountain-climbing gear. But if you don’t get it to him in time, well, you’re going to have to rely on Bernie, your wife’s aunt’s boss’s son, a really strange guy who just passed the bar exam after failing it twelve times. You’d really, really like to use your own attorney.

Now here’s the problem: You are at the house with the seller. Neither of you has a scanner. You are 45 minutes away from your office. Your assistant has the week off. What to do? Read More→

The Atlanta real-estate market has finally hit bottom which means that things can only go up. How do I know that? Stupid money has returned: once again, people are willing to pay too much for properties, and banks are willing to look the other way. In fact, there is big money from hedge funds that are allowing people to buy many properties at once. What this means for us, the agents and small investors, is that we face more competition for the properties which are priced right.

So what do we do? We arm ourselves with research. Without knowing what we are up against, we cannot make informed decisions that will keep us in the game.

First, when you find a superstar, they become your benchmark: you do research and find out their business model. But studying them is not enough; you must take action by mirroring what they do to be successful. Read More→

Today, the person that has the inventory calls the shots and the infamous REO agent has the inventory everyone wants. There are currently more investors with the willingness and ability to buy but not enough deals. More and more of the “investment deals” that are circulating are beginning to show smaller and smaller margins. If you have the ability to establish a strong long lasting relationship with a REO agent your success as an investor can become more stable.

The number one thing you have to remember about an REO agent is that they are not the final decision makers. They answer to asset management companies who answer to someone else and so on. The REO agent that you establish a relationship with can be your cheerleader. That agent can work for you in convincing the asset company that accepting your offer is in the seller’s best interest. This is accomplished by performing on all of your contracts, or at least on the majority of them. Creating a track record with REO agents is very important. Once a track record is created you will be the first person that comes to that agent’s mind when the next HOT deal becomes available. How awesome would it be if that agent called you and gave you a heads up that they had a slam dunk deal in the pipeline and you contracted it before it hit the market? This happens! Read More→

Now IS the perfect time to purchase and resell short sale properties.  Why?  Due to major mistakes by Lenders made at the time Homeowners obtained financing, our market is flooded with homes in which the Lenders are willing to accept short sales.  Lenders such as Bank of America, Wells Fargo, GMAC, CitiMortgage and Chase from 2006 to 2008, have major mistakes in their paperwork.  They are reaching out to Homeowners asking them to do a Short Sale or Deed-in-Lieu.  However, many of the Homeowners aren’t aware of the fact that they can’t do a Deed-in-Lieu if they have a second lien.  And, if they owe Homeowners Association dues, which are a personal debt against the Homeowner, they may still be liable for the difference. 

Homeowners Association dues need to be satisfied in full so that if a house is deeded back to the Lender, the Homeowners are no longer responsible for any more dues.  There is a statute which states that the Lender that forecloses on the property is responsible to pay only one year of Homeowners Association dues.  When conducting a short sale, this statute has little or no meaning to the short sale Lenders, meaning they may not agree to even pay one full year.  I have seen Homeowners deed their property back to the Lender only later to find out that they are still liable for the difference owed on the Homeowner Association dues.  Brutal! Read More→

“The soul of a lazy man desires, and has nothing;
But the soul of the diligent shall be made rich.” (Pr 13:4)

Some think wealth accumulation is the result of a series of uncontrollable events called luck or chance. Others believe it is solely the result of a person’s deliberate, well thought out financial planning and activities performed during the course of their lives. Our look into the Wisdom of God reveals that, “diligence is at the source of wealth accumulation and laziness is the culprit behind poverty and despair”.

It takes more than just wants and desires to produce success and wealth. The difference between unproductive people and those that are highly successful is not in their possessions. It goes deeper than that. The difference between a person that refuses to work when given the opportunity and a person that works hard to obtain success is not in their actions. It goes deeper than that. The difference between these two, fundamentally different, groups of individuals goes deeper than their desires; their hopes; their aspirations; or even their dreams. Read More→

Whenever I am out and about talking about real estate investing or teaching on property management, someone always asks the age old question. What does it take to be a good property manager? There are four distinctive skill sets required to manage property effectively that I call the four buckets of property management. Each one of these buckets requires very different personality traits and proficiency. A property manager or management company must have the “right people, in the right seat on the bus” to insure your success as a real estate investor.  Property Managers use two basic business models.  One is “Departmental Management” where you have a team approach and different members handle the different aspects of the management. The other is “Portfolio Management” where one person is assigned a portfolio of properties and manages all aspects from start to finish. There are advantages & disadvantages to both models. Let’s take a look at the four buckets I referred to and you decide which model better suites your needs. Read More→