Archive for Articles

Real Estate AuctionAt this month’s foreclosure auction, Kim and I were prepared to bid on four properties.  After losing the bid on the Peppermill Drive property to another investor, a new investor asked how we determined our T.O.P. (Top Offer Price) bid.  It was a very good question – one that we’re asked regularly.

Before we bid on a property, I’m adamant that we first do the following:

1) We see the house – both inside and out.  Our goal is to do a thorough inspection of the property to determine an accurate rehab cost. Read More→

Atlanta a Cold Market?Obviously, numbers and statistics and the correct understanding and application is crucial to any business model. But something which does not get that much attention is the incredible importance of where you draw your statistics from, do they come from reliable sources are they relevant to what you are engaged in or are they erroneous or misleading and of no value whatsoever. As someone who understands that correctly obtained and used information will not lie to me, I am sometimes astounded by what people take as accurate and truthful. Attached below are numbers generated by the NAR. You would of course believe that these are very good and valid numbers, but if you take a close luck you’ll find that’s not actually the case will get into that further in the moment. Let’s take a look at the two primary statistical methods for determining values first used by the NAR media and and second average. Read More→

Deborah HarrisMore and more I am hearing positive predictions for the housing market for the second half of 2011, as well as certainly for 2012 and beyond. I had the pleasure of hearing local economist Roger Tutterow recently, and he echoed some of the positive positions I have read and heard elsewhere. He noted that economic expansion truly resumed in the 4th quarter of 2010, and noted that consumer confidence always lags economic upturns. He noted that the risk of a double dip recession was a low 15%, and that with inflation coming back into the picture rates will be increasing by late this year or certainly next year. Of particular interest to us, he noted that homes in Atlanta are now fairly valued, the bottom has already occurred, and we will see a return to normal in 2013 or 2014. This matches the Case-Shiller forecasts for a return to a sellers market in that timeframe, and a likely housing shortage by 2015. Read More→

Internal Revenue Code (IRC) 12Recently, I spoke to a group of real estate investors and was asked this question: “What is the best way to make money in real estate?”  Easy answer: Internal Revenue Code (IRC) 121.

Since most of us aren’t CPAs, let’s look at this incredible way to structure a deal and get tax-free money.  Here are the basics of Section 121: If you are married, have lived in your house for two of the past five years, and then sell your house, you get to keep up to $500,000 ($250,000 if you are single) of the profit from the sale – TAX FREE!  Better still, the IRS says you can do this every two years! Read More→

The 800 Pound Gorilla

Posted on August 3, 2011 by

Shadow InventoryAlthough the drop in default rates shows promise, the amount of shadow inventory still creates a dark loom over the future of housing prices, according to latest results from Standard & Poor’s U.S. Residential Performance Index. The shadow inventory of unresolved distressed properties is currently at an estimated $405 billion, representing a four-year housing inventory and one-third of the outstanding U.S. non-agency residential mortgage debt. The report states that full recovery will only occur once the supply of distressed properties shrinks to less than a quarter of the current volume. Additionally, the monthly liquidation and cure rates are at about 2.5%. This is due to an overall resolution rate of 5%, where these rates have lingered in the past nine months. The slowing first default rates allows borrowers to resolve loans and clear out the inventory instead of defaulting and adding additional units to the current inventory. Read More→

Mobile Home ParkLonnie Deals are among our favorite – and most profitable – creative real estate investing deal structures.  What’s a Lonnie Deal?  It’s when you buy a mobile home in a mobile home park for cash and then resell it with owner financing.   Lonnie Scruggs invented this technique, and that’s how it got its name. 

Lonnie got into real estate investing in 1971 at age 41.  He mainly bought single-family homes and rented them out.  In 1986, because he was tired of being a landlord, Lonnie decided to get into the note business.  Problem was, it was hard finding good notes to buy. Read More→

How to Appeal Your Property Taxes

Posted on July 25, 2011 by

Tax Bill - Property TaxesIf you own real estate in Georgia, then you probably just received an Annual Notice of Assessment from your county’s Tax Assessors Office.

If you are like most property owners, you have four basic questions:  1) What is the Tax Assessors Office?  2) What is an Annual Notice of Assessment?  3) How are property taxes determined?  4) Can I get my property taxes lowered?

The Tax Assessors Office is misnamed!  It should be called the Property Appraisers Office – ‘cause that’s what they do.  They determine a property’s fair market value (FMV).  They don’t set tax rates.  Who sets your tax rates?  YOU DO!  Elected officials – the folks YOU elect – set YOUR tax rates.  Think your taxes are too high?  Blame your elected officials, not the Assessors Office! Read More→

Thank you for paying my mortgage... Mr. LandlordThe number of people who are terrified of owning rental property and managing tenants is amazing.  This unfounded fear is the stopping block that prevents MANY would-be millionaires from ever becoming wealthy.

When Kim and I were in our early thirties, our goal was to retire in our fifties.  Not just retire, but to retire with means…enough means to do what we wanted, when we wanted, where we wanted.

At the time – and this is true for most Americans who are in their thirties and forties – our chances of becoming wealthy and retiring early were zero to nil. Read More→

Real Estate Investing Ain't All Wine and RosesWant to see me go off like a bottle rocket?  Just let ONE of those real estate investing infomercials pop up on the TV.  You know the ones: fancy cars, expensive mansions, beach scenes in Hawaii…with the TV “investor” claiming: All this can be yours if you’ll just buy my super-secret system. Oh, just shoot me dead!!!

Folks, those poop-filled infomercials aren’t real.  What is real?  Let me take you through a typical day of real estate investing. Read More→

Selling or Renting Your Home Fast!

Posted on July 6, 2011 by

Sell or Rent Your Home Fast!As real estate investors, Kim and I have bought, sold and rented a lot of homes over the years.  One of the most important lessons we’ve learned is to pay attention to price.  Price, especially in this market, determines the “if” and “when” your property sells or rents.  If your price is just 2% or 3% too high, it can cause your home to sit on the market for months or even years.

I know, you’ve always heard that the three most important factors to consider in regard to real estate are location, location, location.  That may be true when real estate values are rising, but in this economy, the three most important factors are price, price, price!

Right now, we have two homes on the market – one is for sale, the other is for rent.  Let’s look at how we market each home. Read More→

When Tenants Move Out - Part 2In last week’s column, I shared some of our secrets we use to get our rental properties back from our residents (tenants) in a clean, ready-to-rent condition.  Today, let’s finish up.

One of the easiest ways to get your rental trashed is to insist that your “tenant” stay in the property because the “contract” says so.  It’s a case of you telling the tenant, “You’re gonna stay and pay!” and the tenant saying, “You wanna bet?!”

Folks, though most of our leases run for a year, I NEVER want a resident staying in one of our homes for one day longer than they want to be there!  With this in mind, we have “out” language in our lease agreement.  It simply says: If a resident wants to end the lease, just give us a 30-day written notice and pay an amount equal to one month’s rent.  (NOTE:  To be fair, we, as landlords, can cancel the lease using this same formula.) Read More→

When a Tenant Moves Out – Part 1

Posted on June 29, 2011 by

When Tenants Move OutEarlier this month, three investors visited our ranch.  They were having a lot of trouble with their rental properties.  In addition to high turnover rates, when the tenants moved out, they left the homes a wreck.  The investors wanted to know how to more effectively manage rental properties and tenants.

They couldn’t have picked a better time to visit.  Two of our properties had just gone vacant.  The first property was a high-end home – the husband had been hired by the FBI.  The second home was in a tool-belt neighborhood – the couple had just bought their first home.

When the investors saw the condition of both of our properties, their jaws hit the ground.  The yards were cut, flowerbeds weeded, floors vacuumed, cabinets cleaned, and the bathrooms were spotless!  Truly, with almost no work on our part, another tenant could have moved in that day! Read More→