The August 2014 Edition of The Profit Newsletter is available for download just in time for our Atlanta REIA Main Meeting on August 4th. The Profit is an digital, interactive newsletter for new and seasoned real estate investors delivered as an Adobe PDF file to read on your PC, Mac, Smart Phone, iPad or other mobile ready devices with a PDF reader. Many of the articles and ads in The Profit contain many hyperlinks you can click or tap to visit websites, watch videos, listen to audios, download content, send emails, comment on articles, share socially and much more! The high res version of The Profit is “print ready” for those who want to print the newsletter on their home or business printer. Also, be sure to Subscribe to The Profit Here so you don’t miss a single monthly issue.

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This is one of my favorite ways to buy!!! I do several of these a year.

It’s HOT, HOT, HOT out there, and if you’ve been sitting on the sidelines, wondering if real estate investing is for you, now is a great time to dive in! Today, let’s focus on one of my favorite investment techniques: “subject to” mortgages.

Most of you know that when you buy a house, you usually receive a warranty deed, which gives ownership of a piece of property.  If you’re paying all cash for a property, you just exchange the cash for the warranty deed.  Pretty easy most everyone knows that. 

But if you don’t have all the cash, you have to borrow the money.  Most of you know how the typical mortgage loan works: your banker says, “Sure, just sign this promissory note that says you’ll pay it all back.”  In return, you get a security instrument that says if you don’t pay the promissory note, the bank gets the property.  In most states, that security instrument is the mortgage (In Georgia, we use security deeds). That mortgage, when it’s recorded, creates a lien on the property.  In other words, the bank puts everyone on public notice that if the owner sells or transfers the property, the bank has to be paid off first.  Read More→

What is Probate? Probate is a vehicle to create inventory. A common misperception is that probate is automatically a good deal, but putting a contract on a probate property is the same as putting any other property under contract.

Finding probate properties is the same as finding foreclosures, divorces, and tax liens. Spending time building or purchasing databases and then marketing directly to them allows us to have more probate properties to select from. 

These are the factors that affect whether or not a probate is a good or bad deal:

1. The purchase price in relationship to the after- repair value
2. Appreciation
3. Cash sale or owner financing
4. Condition
5. Type of property

In today’s current real estate market, appreciation is happening at such a rate that paying current market value has its advantages. Here are some things to consider: Read More→

Last month we talked about locating prospects, meaning buyers, and discovered that the two main ways we do it is, putting out signs and running ads on sites like craigslist. This month, we must discuss how to pre-screen those prospects when they get to us so we can determine the difference between someone we should work with and someone we should ignore.

We must start by deciding how we are going to capture these leads as we generate them. They will come in two forms: 1. Phone Call 2. Online. The first thing we must do is figure out how we are going to take the inbound calls. We use PATLive. Here, you have the choice of either having them taken live, or driving them to a voicemail box and just leaving enough information for you to decide whether you want to call them back. And here, my friend, is the key to pre-screening. The goal is to collect enough information to determine if they are worthy of your time. We’ll come back to that in just a minute.

If you use a voicemail system, check with PATLive on what’s called an IVR, Interactive Voice Response system. They can now set it up so the machine can ask several questions from your buyers without any human intervention. You might note, this is how we receive all our leads that we drive in from the radio at Global Publishing. A voice recorder handles all of the information and does a couple of upsells before they even get off the phone. This use of the IVR has changed our industry and now PATLive can make it available for you as a real estate investor. Read More→

Last month we discussed four of the major mistakes I made when I was learning to be a real estate investor setting at sellers kitchen tables trying to structure profitable deals to better provide for my family and the dumb things I did that cost me thousands and thousands of dollars over the years. This month I am sharing with you more of the things I did when I didn’t know what I was doing when negotiating. If you will learn from my mistakes it should take years off of your learning curve and help put thousands of dollars in your pocket every year.

5. Sounding Like and Expert – this is a mistake I see all too many beginning investors make. Many years after I started buying houses, my mentor, Jimmy Napier told me to always be at or just below the sellers intelligent level if you want to be successful negotiating with them. Until I learned what Jimmy told me I would say the things I would hear from a seminar speaker that the sellers didn’t understand. This was not good. I found out that when you sound too smart many sellers get uneasy because they start to think that you could be getting ready to take advantage of them in some way. Never sound too smart when talking to the sellers. Read More→

Just met with a would-be real estate investor.  For two years she’s been trying to get into the investing business.  Problem is, she has yet to meet with a seller face-to-face.

When I asked why she hasn’t met with any sellers, she said: “What if the seller takes my offer?  How am I gonna pay for the property?  Banks sure aren’t lending to investors right now!”

Ironically, the fear of the seller saying, “YES!” is what keeps most would-be investors from ever making their first offer. But the astonishing thing is, if your deal is a good one, the money will ALWAYS find you! 

We get loads of calls from investors who are looking for money to fund their deals.  For example, yesterday an investor contacted me about a 2-bedroom, 2-bath condo he wanted to buy and flip.  The condo’s ARV (after repaired value) is $65,000.  It needs $15,000 in repairs.  The seller agreed to a $48,000 sale price.  But when all the expenses are factored in, there’s no way this investor will make a dime on this deal, and that’s why no one will fund this one. Read More→

I received several emails after my article last month regarding “Are Investors Flipping over the Gray Line.” The questions were about Land Trusts and transferring the beneficial interest at the time of closing.  So … I am writing to all of those individuals who might be ‘Flipping Over the Gray Line’ but not really knowing it.  Or maybe you are being coached by mentors and/or partners who are advising you that this is alright to do.  If that is the case, then I want you to fully realize who will be liable for the wrong doing.

First off, the Short Sale Approval Letter and the Short Sale Arm’s Length Affidavit will advise you how you can conduct the closing regarding several factors:  Closing Date, Approved Short Sale Amount, Approved Commission and Closing Costs, Approved Buyer Name, and any Deed Restrictions such as how long the new Buyer must hold the property before selling the property or if you are aware of any other agreements to sell this property to someone else at a higher price.  All of Bank of America’s short sale letters and/or the Short Sale Arm’s Length Affidavit state that the Buyer cannot resell the property for 30 days.  However, sometimes the Title Company, due to the wording in the Short Sale Approval Letter and/or the Short Sale Arm’s Length Affidavit, is not instructed to place this restriction directly on the Deed.  This is where the Investor/Buyer thinks they have found a loop hole!  The Investor/Buyer will close with Title Company A and then the same day or shortly after will turn around and close with Title Company B who has no knowledge of the Buyer’s requirement to hold the property because they did not do the first closing.  Read More→

This month I will be discussing even more ways to find all the buyers you need for your real estate investing business.

If you have taken the time to build your dream team, you might also want to talk to your dream team Realtor to see if they work with any wholesale buyers in your area. They almost always have clients looking to buy wholesale deals. They may also have pre-qualified buyers for your other deals as well. Having a Realtor on your dream team is a necessary part of building a successful Real Estate Investing Business and if you have trained your Realtor correctly from the beginning they should already be providing these leads for you.

Many home buyers in the current market are asking friends and family members for possible leads on properties. So another technique I employ to find more potential buyers for my properties is to offer incentives to folks who have already purchased properties from me in order to get referrals. This is a technique that many Real Estate Investors simply forget about, but it can be very profitable for you. Read More→

Did you hear the news?  Citigroup may have to pay a $7 billion settlement to resolve mortgage probes.  Why?  To get the government to stop looking into whether it defrauded investors on billions of dollars worth of mortgage securities.  Most of the payment will be in cash, but it will also include a few billion dollars to help struggling homeowners.  How magnanimous of them!  Citi created hundreds of billions of dollars worth of fraudulent mortgages, and now that they’ve been caught after 7 years of foreclosing like crazy on their fraudulent mortgages, they’re finally going to cough up a few billion to help out some of the people they haven’t foreclosed on yet.

This news brings to mind a case I read about recently where a REGIONAL bank had the owner of a property falsify mortgage documents in order to originate a riskier loan.  That’s right, the regional bank has the owner of two VACANT lots certify that there were houses on the two lots.  Then the bank made a loan as if the nonexistent homes were actually on the two vacant lots.  Why on Earth would the bank lie and increase their risk by loaning out so much more money than the land was worth?  It was all part of a large scale scheme to rake in as much money as possible by defrauding the bank’s investors. Read More→

Joint venturing is a great way to invest in real estate. In our situation, a private lender lends all the funds to purchase the property and all the renovation costs. Knowing the investors criteria, it is our responsibility to identify and contract real estate investments opportunities, deal with the contractors and exit the project. Once a property is identified and acquired, it is time for the renovation. This is where the joint venture can become a bit more complex.

The relationship in a joint venture is clear cut until it reaches renovation. This is where a project can go from being a 1-2 month renovation to a 3-4 month renovation. Keep in mind that the majority of the joint ventures you do as a veteran investor will be with newbie investors or investors who have never done real estate investing. However, they always tend to have opinions on how to run a project or what should go into a renovation. Once in a while you may joint venture with a seasoned real estate investor who no longer wants to be involved in the day to day operation but they usually will be. To avoid these issues here are 5 tips to keep the joint venture running smoothly. Read More→

Do you think that the other wholesalers in your town are your competition?  Not if you position yourself as a useful ally.  Other wholesalers can be wonderful resources to help you grow your wholesaling business.  So what do I mean by positioning yourself as a useful ally?

First of all, be useful.  Bring value.  In wholesaling you are either providing the Deal (the property at a great price) or you are providing the Buyer.  Or both.  If you have one but not the other, you may want to consider teaming up with another wholesaler.

Example #1:  You have a friend of a friend (Billy Buyer) who has just inherited $100K and wants to buy a fix and flip property at a wholesale price.  You have heard of wholesaling, but haven’t really done any deals yet, and haven’t been doing any marketing – so obviously you have no deals that are your own.  You have another friend (Harry Wholesaler) who has started marketing for wholesale deals, and has found a sweet deal – way under market value ($55K) that would work great as a fix and flip and meets Billy Buyer’s criteria.  But Harry Wholesaler has no buyers.  So you step in and put Harry’s deal under contract with an assignment (for $60K total).  Then you go ahead and assign that deal to Billy for a FEE (for $65K total).  $65K is still a great deal for Billy Buyer and you and Harry make $5K each for putting together the deal. Read More→

There’s nothing out there that quite offers the unique advantages of direct investment in real estate:

• Tangible value
• Potential for substantial income from rent
• Potential for capital appreciation
• Effective safeguard against inflation
• Extensive availability of leverage
• Ease of borrowing against the asset for other investing
• Effective hedge even against economic collapse

REAL ESTATE IRA BASICS

The good news is, though, is that it’s quite easy to hold real estate – actual, tangible real estate – within your IRA, provided you adhere to a few basic rules. Read More→