In our last issue, I dealt with Locating Prospects by using a virtual assistant to call FSBO ads.  I said that’s pretty much all we do here and can’t keep up with the leads they generate.  This month we’ll discuss how to determine if it’s a suspect or a prospect and quickly determine which need to be called and which need to be trashed.

It all begins with my Property Information Sheet.  It’s also located in my courses.  This form is the heart of the pretty house business.  It’s as important to an investor as food is to a restaurant.  (Nope, I couldn’t write this without a restaurant reference.)

There are several things you must know before you can prescreen a prospect.  Until you get these facts, you can’t tell if it’s a deal or a dud.  Many try and wonder why they are confused.  You’ll always be confused without the critical facts. Read More→

As a trainer of appraisers for nearly 15 years, to those who hold private and public roles, one thing is certain, local assessor offices around the country make relying on their values rough on investors. However, for those of you connected to REIAComps, the control and feeling of confidence you have over your deals is priceless. The stuff going on in places like Clark County, NV or even your own area won’t shake you.

Most municipalities across the country use a formula tied to market value for assessing residential property taxes. In many parts of the country some form of non-disclosure is the norm. Thus, relying on assessed value is a second option.

However, when the decision to reduce the assessed value of a property from $19.5 million to $2,500 was decided by the State Equalization Board in NV, you can just imagine the problem this caused. The use of any assessed values to develop an offer price or ARV is literally eroded. There goes any hope of making a good offer to buy or sell. Read More→

Last Friday, I took Michele, a new real estate investor, out knocking on sellers’ doors.  Hers was a very, very special case that touched my heart.

Recently, Michele lost her husband.  This caused her to fall into financially troubled times.  In an attempt to dig out of the I-don’t-have-any-money pit, she attended one of those “free” real estate investing dog-and-pony shows that come to town regularly.

Michele went to the seminar hoping to find an “easy” way to make “lots” of “quick” cash.  Don’t you know – this is exactly what their course promised!  Because Michele didn’t have the $20,000 cash needed to pay for the special “mentoring” package, she chose to raid her retirement account – the last money she had on earth – to buy the “guru’s” package.  In other words, she willingly dove headfirst into a barrel of fishhooks!

Before you roll your eyes, know this: Over the years, I’ve met thousands of people who have made similar decisions!  Why do you think those dog-and-pony shows continue to come to town? 

Michele’s intentions were good – she was simply looking for a way out of her financial mess.  She honestly believed she was trading her $20,000 for $1 million dollars. Read More→

Alright – Winter Time! Time to hunker down and do some deals before Christmas. You want to give out good gifts this year right? Well get to it then! It’s cooler out so you will be less tempted by the beach and the pool and can focus on your marketing and getting the phone to ring.

So as I am writing this article in early November, I’m thinking about the deals we did in October. It was actually one of our best months (after a bunch of slow months). We did (9) deals in October. Yeah – that seems like a lot. And they were some of the easiest deals we have ever done – and the way we found and executed the deals was about the most cost effective way you can get them. We spent zero marketing dollars – directly – on getting these deals. How is that possible you ask? Well let me explain.

Networking. The (9) deals were all accomplished just through networking. I found the sellers of the properties and buyers for those properties just through networking. No direct mail, no fancy websites, no bandit signs, no door knocking. Over the past year and a half or so we have been out there in the real estate investing game and doing marketing, meeting buyers and sellers, meeting other investors, meeting other real estate professionals – whether its Realtors, Title Agents, Contractors, Property Management, etc. We get out of the house a lot and do a lot of networking and do our best to build relationships. Read More→

With the holidays here everyone begins to think about everything they are thankful for having in their lives. I did the same and came up with the same things everyone else thinks about like family, friends, having a roof over my head, a career I love, etc.  Then I began to think about what I was thankful for having in my work life. When I was done with this list I noticed I forgot the contractor. Without a great dependable contractor, investing in real estate is difficult. Think about how much more work load you would have if your contractor was not dependable. You would have to drive to all your projects every day, you would need to supervise numerous tradesmen daily, order materials, shop around for the best labor and material prices, put up with all the laborers excuses, etc. I am not saying contractors are perfect but they can be trained to work perfectly for you as an investor.

First of all, the best way to know if you have a great deal is to have a contractor validate your estimated repair cost with a scope of work sheet along with the cost. Keep in mind that no one can see behind walls so make sure to have a reasonable cushion. The benefit about having a contractor you continuously work with is that he/she can adjust their numbers if need be to make your project a deal. They do this because they know you will have another project coming soon. I have had many tight deals become very profitable due to having the right contactor. I know what all the wholesalers are thinking, “How can I get a contractor to do this for me if I am still not buying houses and investing myself?” To accomplish this, start by teaming up with a contractor that has shown you his work and you have verified he/she is dependable. When you contract a property have him/her give you a written bid and include it in your marketing packet. If an investor purchases the home, uses the contract and the contractor performs, you are now the go to guy/gal with the right connections. Best of all, when it comes time for you to do your first investment you will have your go-to contractor ready to give you, the guy that gave them plenty of business in the past, a great price. This is the ultimate win-win situation if executed properly. Read More→

The more time I spend with real estate investors, the more I appreciate the variety and creativity of their real estate transactions.  However, one thing I hear often concerns me: unlicensed real estate investors “brokering” a transaction for a fee.  In the real estate world, transactions with real estate brokers[1] are far from unusual.  This is only noteworthy with investors because many investors do not hold real estate licenses.  Because the investor is unlicensed, the law will generally void the investor’s ability to get paid a brokering fee – no matter what the contract says. 

Let me give an example.  Suppose Nick (a real estate investor) enters into a transaction whereby he introduces the Seller of an unlisted property to a Buyer.  Nick helps the Buyer and Seller negotiate the price and assists in the execution of the necessary contracts.  Because of his work, the Buyer and Seller agree to pay Nick $10,000 at the closing and put it in writing.  The closing occurs.  However, the Buyer and Seller do not pay Nick.  Frustrated, Nick calls his attorney to see if he can recover the $10,000.  He receives very bad news. Because he is not a licensed real estate broker, the law will not enforce his contract nor allow him to recover for his time. Read More→

Atlanta Carpet Service is a charter business member with Atlanta REIA and a veteran provider of flooring and installation services to the real estate specific market since 1990. Company owner, Jeff Nix is also the volunteer Business Member Director with AREIA. More than your ordinary flooring store, ACS has extensive experience and exposure to the Real Estate industry & rehabbers market dating back to 1985 providing flooring in all price ranges from low end rehab replacements up to residential occupied homes. Read More→

Since I am the type of investor who purchases properties in multiple counties and in multiple states, I have had lots of experience buying homes and vacant land in rural communities. In fact this is a part of our business that we find to be very profitable for us. I will share with you that buying properties this way is a science in and of itself. There are many different parameters and techniques you need to implement to buy properties in rural areas, but it can be a very profitable business for you.

First of all, if you like to buy vacant land, it can be a real challenge at times. For example, many times the parcels you are looking to purchase will not have a street address, making them more difficult to locate on public records to do a search. You will need plat maps and street maps in order to locate these properties. One advantage to buying in rural areas is that generally speaking the folks at the court house, the property appraiser’s or assessors office and the tax collectors office are usually easier to work with and very knowledgeable about the local area and property. Read More→

Rick is a single person with no immediate family. After hearing a discussion I did on stacking Limited Liability Companies (LLCs), he wanted to know what he could do as a single person. At the time he owned seven properties. Three had almost no equity. One had over $60,000 equity and the other three varied from $25,000 to $30,000 in equity.

Rick was fully exposed to the liabilities created by ownership as well as management. He indicated he was actively seeking more property. His objective was to acquire roughly 12 properties in the near future. He did not want to risk all he had worked for in one frivolous lawsuit.

First, he needed to insulate himself from the management liability. Management seems to be even a stronger lightening rod that property ownership. By separating management from ownership, any payment for management by the owner becomes earned income. To provide a liability shield and mitigate the tax issues, an S corporation can be used. Plus a corporation provides additional tax-advantaged fringe benefits every entrepreneur should consider. In certain situations a C corporation could be used, but the S corporation suited Rick the best. 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.

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Q: I received a “Refundable Security Deposit” from my tenant. How do I enter this into QuickBooks?

A: This is a Liability account that you will need to payout at some later date. In your chart of accounts you should have a Liability account set up for Security Deposits Escrow – or some name that sets it apart from security deposits you paid that are owed back to you (which is an Asset). In the deposit window, instead of showing this as income you should go to this special Liability account and book it to that account.  When it is time to pay the tenant the money back, less any damages if need be, you will write the check out and expense it also to this Liability account to clear the money from the account. Read More→

Many Realtors and Investors really don’t know the secrets to a successful short sale. They think just because they make an offer close to market value that their short sale should go thru! Obviously, that is not correct. The secret to a successful short sale consists of several things including 1) listing price and 2) broker price opinion/appraisal on the property.

Let’s start with the listing price. How do real estate agents get paid? By commission right? Are they not taught that they need to list the house as high as possible to get the best price for the seller and the highest commission for themselves? So … when a Realtor is not trained how to do a short sale, what price do you think they list the house at? They list it for as high as possible. Unknowingly, they are doing a disservice to the sellers, buyers and themselves; as it is the Short Sale Lender that tells the agents, sellers and buyers how much they are willing to sell the property for. So, when the Realtor lists the property high, it encourages the BPO agent, who is also a Realtor, to try and reach for the list price. Remember, they use to be Realtors receiving commission and they too would list the property as high as possible. The only designation that I hold as a Real Estate Broker is SFR which stands for Short Sale Foreclosure Resource. I took this class just to see what the Realtors are being taught on short sales. I was impressed that they also recommend that the property be listed LOW not high so that the BPO Agent will provide the Short Sale Lender with their own value instead of reaching for list price. Just like an appraiser, they are also encouraged to reach for the list price since 99% of the time appraisals do not come in higher than either list price and/or the purchase price which a buyer is willing to pay. Read More→

The last several months have been extremely encouraging for real estate investors who are purchasing notes from banks!  Every day more and more judgments in foreclosure cases are coming down in the homeowner’s favor as judges become aware of the depth of fraud the banks have committed. What we are seeing in the market is more judges making the right decisions, and the banks starting to run scared of this turning tide.

Several judges across the country are clearing their dockets with surprising speed using one simple trick.  They are forcing banks to prove that they made a loan to the homeowner.  Simple, right?  All of the signed documents the banks can throw at the judge don’t matter if they can’t prove that they ever loaned money to the homeowner.  The fact of the matter is that the banks never actually loaned out any money to the borrowers.  For years judges have been taking the banks’ word that they have all of the signed paperwork from the homeowner that they need, and inferring that a loan was made, but that is starting to change.  The number of judges accepting this smokescreen, while still too large, is shrinking. Read More→