It can be argued that a butterfly and a caterpillar are one and the same.  OK, maybe they are – but not at the same time!  It’s one or the other – but not both!  So, which are you?

As real estate investors, we all start off the same – as caterpillars.  We just know the basics: how to crawl, eat leaves and poop.  Our world is limited to the tiny branch we’re clinging to.  We’re not much to look at, and we’re preyed upon by just about every creature in the animal kingdom.  Our life expectancy is about 12 seconds.

Now here’s the thing: God didn’t mean for caterpillars to stay caterpillars.  He meant for them to grow and develop into beautiful, high-flying, far-traveling butterflies…but only those that are hardworking and resourceful get to complete the journey from caterpillar to butterfly.

Never compare yourself with others. You never know what is going on behind the face. We will look at a person who has a job and likes what they do. They don’t plan on leaving their job and living off their investments. They will be able to buy through a realtor and pay a premium. I love to have these individuals in my wholesale stable.

The house is three bedroom/ two bath in a lower moderate income area (such as Mableton, Lakewood, Decatur, Norcross.) The price is $80,000, top of the market, with no equity. The buyer will pay 25% as a down payment. The interest rate is 5%. The principal balance is $60,000. The P& I payment will be approximately $322.09. Taxes will be $1000. Insurance will be $500. The payment for T&I is $125.00. The total payment is $447.09/ month. If the house rents for $825, the cash flow is $377.91 per month. This is great!!! Let’s look at the other side. It looks like 22.6% cash on cash return. (YES!) Read More→

 It was 3:30 PM on a Friday afternoon in 1984. I was thinking about the weekend, and my primary goal was to move a new tenant into one of my rental units. The phone rang, and I proceeded to talk to a desperate seller. I went through my property information sheet, and the deal sounded too good to be true. I was excited. Here was an opportunity to purchase a three bedroom, one bath house in Decatur for $15,000. The property was a 1960’s brick ranch in average condition. All three of the mechanical systems were in place, and the roof was 10 years old.  The rent on the property was $700.

The total amount of money in the transaction would have been $25,000, all in price. The return on investment cash on cash would have been 33.6%. It would’ve taken three weeks get the property market ready. The retail price of the home would be $65,000, and it would sell in three months with a net profit of $33,500. Read More→

Driving for dollars. Is this a game show, with the host saying: “Good evening, ladies and gentlemen. In tonight’s edition, we have…” Seriously, you can make a lot of money at this “game”—my favorite source of finding good deals in real estate.

Pick a neighborhood that interests you, e.g., in transition, being fixed up, near a river, and so on. Drive around it slowly and write down at least 20 addresses of neglected, vacant, or condemned homes. Often, they’re sporting signs saying For Sale, For Sale by Owner, or For Rent.

Next, contact the owners. You may have to be persistent and call and call to find their numbers and reach them. You can contact the Registrar of Deeds, get on the Internet, and go to the local tax records office. Ask a realtor to look them up on the MLS computer. Once you find them, call or write them to learn more.

Houses with Motivated Sellers: How do you tell if a house or property might be owned by a motivated seller? Look for the following characteristics: Read More→

One of the hot topics in real estate investing these days is something called creative deal structuring.  This leads to a question that we’re often asked: What exactly is creative deal structuring?    

To answer this question, we need to begin by describing what it’s not.  One way you can buy a property is to pay cash for it.  You won’t find any creativity in that deal structure.  You can also find a property you like, apply for a mortgage, and then a month or so later, go to an attorney’s office to sign a big stack of hard-to-understand documents.  Not much creativity there either.

Creative deal structuring begins when you find someone with a real estate problem that “normal” solutions can’t resolve.  For example: A homeowner owns a nice home that in 2006 was worth $130,000 but today is only worth $70,000.  She owes $80,000 on her mortgage – making her upside down by $10,000.  Now throw some motivation into the mix – the lady needs to sell immediately so she can move to Tennessee and begin her new life.

Let’s see, a cash buyer wouldn’t be interested in this deal.  And you’d be hard-pressed to find a realtor who would list this house – unless it’s a short sale listing.  So how would you structure this hopeless situation? Read More→

One of the best real estate investing teachers in the country is Pete Fortunato.  What makes him so special?  Pete knows how to creatively structure deals in ways that make impossible deals possible.

Before Pete became one of our primary teachers in 1999, Kim and I did all of our deals the same old way.  We’d find a house, apply for a mortgage, close with an attorney and then either sell or rent the property.  Bottom line: If we couldn’t get a mortgage, we couldn’t do the deal.  We felt like we were buying a Model T Ford from Henry Ford.  Mr. Ford used to tell his customers, “The Model T comes in whatever color you want – as long as you want black.”

One of our biggest real estate investing ah-hah moments happened at our first Pete seminar.  He flashed a diagram of a house up on the screen.  The thing making this house different was that each room represented one of the eight transactional benefits of a real estate investing deal.  The eight benefits are: Growth, Income, Amortization, Profits, Management, Security, Tax Benefits and Use. Read More→

I advise landlords to regularly inspect their rental properties – both inside and out.  This will help keep little problems from becoming big problems.  Another good piece of advice is to know the neighbors around your rentals and make sure those neighbors have your phone number.

A few weeks back, I inspected a property we manage in Canton, Georgia.  The tenants had lived there for about five months.  They kept the home spotless, paid on time and were comfortable to work with.

While we allow pets, these folks didn’t have any…or so they told me.  As I did a walk-around inspection, I opened the gate to the backyard and suddenly realized three very important things:  First, the tenants had acquired a momma Pitbull and her six pups.  Second, momma Pitbulls are VERY protective of their babies.  Third, I didn’t have a change of underwear – something I suddenly needed DESPERATELY! Read More→

Cruising yard sales and working at a pawn shop are two of the best ways to learn how to negotiate.

I’ve spent years doing both, and one of the biggest mistakes I see people make is asking the seller, “What is your asking price?’

Big Mistake – huge!

Think about it:  when a seller prices an item for sale – whether it’s a boat, house, or trinket – he has a ‘written’ price in his mind.  Usually, he will ask one price, but will take another.  So when you, as the buyer, ask the seller, “What’s your asking price?” he mentally sees the ‘written’ asking price in his mind and gives you that answer, instead of the price he will actually take. Read More→

Most folks mistakenly think negotiating is a beat-the-other-side-over-the-head-until-they-quit thing.  This couldn’t be further from the truth!  Over the years, we’ve sat down with thousands of buyers, sellers and tenants and successfully negotiated hundreds of Win-Win deals.

What’s a Win-Win deal?  It’s when both parties leave the negotiating table feeling like they ended up in a better place than where they started.  They may not be in the exact place they wanted to be, but they are in a better place!

Here’s a nugget I learned from Pete Fortunato: No one is gonna say yes to a deal that puts them in a worse place than where they started.  Given a choice between a worse place and the same place, folks will take the same place about every time – in other words, no deal! Read More→

People often ask me at continuing education classes or networking events what an enhanced owner’s title insurance policy is, when it is allowed to be used, and what additional coverage it offers to its purchasers. It must first be mentioned that each title insurance underwriter has different guidelines, coverages, and exceptions, so there is never an across the board answer to this question that will encompass every title underwriters’ policies. With that said, the example I am about to expound upon is adopted by six of the major ten underwriters here in Georgia, so if it is not an exact list based on who your closing attorney is writing your policy with, it will at least give you a good idea of some general benefits.

An enhanced policy provides additional title insurance coverage to a purchaser of residential real property.  The enhanced coverage includes title matters that are not within the scope of a standard owner’s policy.  The enhanced coverage for the owner creates a greater risk to a title underwriter so accordingly, a 20% increase in the premium over existing title insurance rates is charged for this policy, but the policy amount coverage increases by 10% per year for the first five years, so financially they make sense to purchase. Read More→

In 1995, when Kim and I made our start as real estate investors, we knew nothing about nothing about real estate.  When we attended local real estate investor meetings, we didn’t understand anything anyone said – it was as if they spoke a different language.  It was very frustrating!

So why didn’t we quit – after all, that’s what most would-be investors do soon after they start, right?  We didn’t quit because Kim and I didn’t want to “work for the man” for the rest of our lives.  We wanted to make our own way.  We wanted to have our capital assets working for us instead of us working for our capital assets.   

Can’t tell you the number of times someone has told us, “Yeah, I’ve been thinking about buying some investment property, but don’t know where to start.” Read More→

When we’re selling or renting a house, the neighbors can help make it a pleasant experience or a real nightmare.  Bill and I always try to talk with the neighbors and listen to their needs and concerns.  We want the neighbors to like our house and appreciate the improvements we make.  We also want the neighborhood’s values to benefit from our sales price.

We recently bought a house in a very nice neighborhood where the values had taken a terrible turn downward.  We did a beautiful rehab to the house and property, spending about $24,000 on improvements.  The neighbors were patient with the noise and tolerant of our trucks constantly blocking the road. Read More→