The November 2014 Edition of The Profit Newsletter is available for download just in time for our Atlanta REIA Main Meeting on November 3rd. 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.

See The Profit Archives for our past editions.

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“It doesn’t make a difference what temperature a room is, it’s always room temperature.” ~ Steven Wright

There are certain people who should never touch anything mechanical. My Aunt Effy is like that. She didn’t get her brakes fixed until one of the brake pads actually fell out of her car. She bought a sewing machine and ended up sewing her pants to the wall. And who knew you could do that much property damage with a weed whacker?

So you can imagine our reaction when Aunt Effy decided to buy a programmable thermostat for her home. Heck, we were all afraid she would melt the dog.

Luckily, she got some good advice at the mega-hardware store, and bought a “smart” thermostat called the Nest. Have you seen one of these things? I have, and now I’m a big fan.

Even though the Nest is a programmable thermostat, you don’t really have to program it. Instead, just adjust the temperature the way you like it. Make it warmer, make it cooler, keep yourself comfortable. Turn it down when you leave the house. The Nest will “learn” what you like, and pretty soon, it will adjust itself for you automatically. Nest’s website says this can save you 20% of your energy bill. And since it kind of runs itself, it’s easy enough even for my Aunt Effy. Read More→

A seller recently called me and asked if I would buy his house. I, being of sound mind and body, said, “Tell me about your house.” It turns out that he is a foreign national and wanted to leave the country as soon as possible. He was very firm on the price and terms. He wanted to sell the house in as-is condition along with the furniture. He was open to me taking over their mortgage payments (subject to).

The terms that the seller wanted included their price ($190,000 with the principle balance at $140,000) which was above fair market value for the neighborhood but included all of the furniture. He wanted $30,000 down. The first mortgage payment was $1040 per month. Utilities were $220 per month. There was no Homeowner’s Association. The seller valued the furniture at $30,000 and the house at $160,000. The house was in excellent condition, no repairs necessary; in fact, it was overbuilt for the neighborhood with professional landscaping, a swimming pool/spa, decks, and a definite “wow factor.” I estimated that the house would rent for $1400 per month.

Of course, I had done my research and knew that he had overpriced the property. I believed that I could get him to take $10,000 down, allow me to take over the payments, and have the payments at $1200 a month for 120 months. This would pay him off owner second at 0%.

My exit strategy was to put a home-owner occupant into the property. Selling all of the furniture would allow me to recoup my down payment. Read More→

“Tell Me, and I Forget; Teach Me, and I May Remember; Involve Me and I Learn” ~ Benjamin Franklin

I just finished a very successful Quick Start Boot Camp here in Jacksonville, and I remember why I keep teaching. We had people from all over America and a couple Canadians, and even a Brit in the class of 175 students.

On the first day, I called for all who were doing deals to stand up and then invited them to the front of the room as a group. Frankly, I was shocked at the number. You see, quick Start is where people get the basic training to start their business, not usually where more seasoned veterans hang out. Oh, we always have some returning for a refresher, but I had about 50 people stand and come forward this time, and I asked all to tell a little about their businesses.

The numbers were staggering. A few were seven figure earners. Some built sizable businesses and a couple had become trainers. All my children. All starting from a point of ignorance. None taking no for an answer. Here’s another quote from old Ben… “We are all born ignorant, but one must work hard to remain stupid.”
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Welcome back! In Part One of this article, we talked about how you have issues & need some serious help. No, I’m not getting personal with you. I say this because if you’re the one doing everything in your business, you probably won’t be in business for long because you’re most likely going to get burnt out or work yourself to death. Not good. So that’s what the last article was all about, remember?

Then I left you with a cliffhanger: HOW to solve this massive problem. Well, I said I was going to come through with the goods, and I aim to deliver, so here we go…

How to Get the Help You Need in Order to Be Successful & Keep Your Sanity (or what’s left of it)

The answer is…

Technology and Teamwork! (or T & T for short)

Do you like that title? No? I stayed up all night thinking of that! :)

Ok, the concept is simple… Write this down:

• Use existing TECHNOLOGY to AUTOMATE as many of the tasks you need done, then…
• HIRE someone to do as much of the rest of the stuff FOR you.
  Depending on what you need done, you might have to hire a FEW ‘someones.’
  Don’t let that bother you.

Let’s Start With the Technology.

A few examples of things you should get and start using immediately include: Read More→

It took me years to understand that Sellers think differently than buyers. I know this sounds too idiotic to even discuss but from years of negotiating with sellers I can tell you that if you don’t understand how sellers think it will be impossible to negotiate profitable deals. Jimmy Napier told me years ago that we investors are trying to buy just “another house”, while the seller is selling a “Home”. Once I heard this it got me to thinking. It’s true; a seller has a different reason for the way they negotiate. This has changed how I negotiate and the techniques I use. I no longer believe that always offering CASH for every deal is the best offer to make.

Because I know there are as many ways to buy a property, as there are properties to buy I understand every seller has a different reason why they are selling and just getting all cash is NOT the only reason why they are selling their property. It will be your job to figure out what the seller really wants. While sitting at kitchen tables I have heard time after time what a seller really wants and money isn’t many sellers only motivation. Once they tell you what they want then hopefully you can then go on to solve the seller’s problem whatever it may be.

Over the years I have heard a myriad of reasons why each seller wants or needs to sell their house. Some needed to sell because the size of their family had grown and they have simply outgrown the house they have. Possibly I could sell them one of my other houses in exchange for the house they need to sell. Some sellers have reached retirement age and no longer need such a large house to take care of. Again, I might be able to sell them one of my houses or find them a house they would be happy with, buy it and exchange my house for their house. I call this “double dipping”. Some sellers may have had a job transfer and need to sell their house quickly because they are now making two house payments they can’t afford to make, the house they left and the house they are now living in. Some sellers may no longer be able to take care of the property because of their age or physical condition or, they can’t afford the monthly payments any longer. Some sellers may simply want to rid themselves of the large monthly payment they are paying and are having trouble making each month while trying to save their credit score. Some seller’s have back property taxes they can’t pay and their lender is threatening foreclosure if they don’t. You will never know what motivates the sellers until you ask. Read More→

Landlords, what’s the best way to deal with tenants who are a pain in the tail and make you want to vomit? Easy answer: Never let them in your rental property in the first place. And how do you accomplish this feat? Read on, my friend – it’s actually pretty simple! But first, a story…

Several weeks back, we had a property go vacant in Cartersville, Georgia. It’s a nice three-bedroom, two-bath home with a two-car garage. Though a good number of applications came in, one stood out above the rest.

The application was neat and complete. The prospects were from Cartersville, so they have a lot of ties to the community. The husband was an experienced contractor who knew how to fix things. The wife was disabled and received a guaranteed monthly government check. They didn’t have any kids or pets and didn’t smoke. They were looking for a place they could live in for the rest of their lives. Looking at the application, there was nothing not to like about these folks!

Because Kim and I have been managing rental property for almost 20 years, we have learned that no matter how good tenants look on paper, there are a couple of steps we must take before letting them move into our property. Read More→

Every day the Banks are making minor and/or major changes on how they do short sales. What was once an easy short sale system, now varies depending upon each lender. Many lenders will want the Sellers to use their own in-house short sale package, even though my detailed generic package pushes the deals forward. Sellers really don’t have a true concept of how much debt they have when it comes to paying all of their debts. Many of them will not even include a debt on their financial statement to the lender, just because they are choosing not to pay it. In my short sale system, I have created a detailed short sale package with forms that are used to help my Sellers make sure that everything is included and maximize their chances in the consideration of the short sale.

In January of 2014, Florida allowed a law to be passed that the Short Sale Lender may receive a Deficiency Judgment at the time of the Foreclosure while still having the asset (property) in their portfolio and not even selling it yet. Before this law was passed, the Short Sale Lenders could foreclose on the property and then they have a choice whether or not to either forgive the debt or pursue the Sellers. If they forgive the debt, they still issue a 1099 (Forgiveness of Debt Form) which means the Sellers would have to pay taxes on the amount that the bank has forgiven. Or the Lender could go after the Sellers again by filing a new lawsuit for a Deficiency Judgment on the balance that is owed AFTER the Lender sells the property and releases it from their portfolio.. Many Short Sale Lenders are amending their complaints to request this immediate deficiency judgment. Sellers are blind to the new changes and they are burying their heads in the sand, thinking they are living in the house for free and then letting the property go to foreclosure with no repercussions.   Read More→

For those of you with an interest in real estate, yes, you can buy pre-foreclosure properties using a Self-Directed IRA. The same goes for other self-directed retirement accounts, including 401(k)s, SEPs, SIMPLE IRAs, and even Coverdell Education Savings Accounts and Health Savings Accounts, if your balances are large enough to make it work!

There are a number of advantages to using a retirement account to acquire these properties:

If your plan is to fix them up and flip the house, and you do this a lot, you may fall under dealer tax rules. That means that unless you are conducting your flipping activities within a retirement account, all your profits will be taxed as sales of inventory – and therefore subject to taxation as ordinary income.

Furthermore, outside of retirement accounts, those who are classified by the Internal Revenue Service as dealers lose their ability to defer capital gains under Section 1031 of the Internal Revenue Code concerning like kind exchanges. And furthermore, the income may also become subject to self-employment tax of up to 15.3 percent. Read More→

When you are looking to become successful in the real estate investing business, implementing a solid marketing plan for your business is going to be one of your first priorities. This will be the main strategy that will separate you from your competition. In addition you need to develop long and short term strategies and goals for your business as you go.

Decide what your focus is going to be regarding the type of properties you would like to purchase in your Real Estate Investing business and create a plan of action that will begin to bring in motivated sellers in droves and create deals for you. If you don’t know what exit strategies to use, make getting educated one of your top priorities. One of the best ways to do that is to work with a Mentor who can help you achieve the goals you have set for yourself.

Getting a good education in the buying and selling of real estate and having someone to hold you accountable will quickly separate you from most of your competition. You can check out my website at www.marketingmagiclady.com for some really powerful tools for your Real Estate Investing business including my personal Mentoring Program.

Don’t be afraid to do what those around you will not. Dare to be different and consistent in your marketing efforts and the results will be amazing. Niche your marketing and become an expert in your market place. Become educated within your market place so you know what your property values are and what your personal target market is going to be. Decide what kinds of deals you like best and go after them. Read More→

As I’ve said and many other successful wholesalers will always tell you is that “Marketing” is the life blood of your business. “Marketing” is the process of getting leads as well as getting your houses sold, which is how we make money right? And I’d say there are (3) main goals associated with your Marketing:

• Finding Motivated Sellers
• Finding Cash Buyers/Investors or Retail Buyers (building your buyers list)
• Marketing to get a house SOLD

There are many different forms of marketing that we teach and that we use – including but not limited to: direct mail (letters and post cards), bandit signs, posting ads online and in newspapers, websites, flyers, business cards, telemarketing, door knocking, door hangers, social media, etc. YES – that was a lot, and you’re using ALL of them, right?

It wouldn’t hurt to try all of them at some point to see which one works best for you – depending on your personality and your resources (time and/or money). In other words, if you have NO money – telemarketing and door knocking take very little money up front. If you have LOTS of money – big direct mail campaigns might be good for you. I could go in depth on each method, but I’m going to focus on Internet Marketing for the remainder of this article – which encompasses a few of the methods mentioned above. Read More→

When I began looking into investing I assumed that I needed to be a real estate agent so I can learn how to buy and sell real estate. Thus I began taking real estate courses in 2005 and became a real estate agent. I learned that those classes only taught me the law but nothing about how to contract, buy and/or sell real estate. All this came from on the job experience and each transaction taught me something new because no two transactions are the same. For this reason you should be cautious when selecting a real estate agent.

Today, as a broker, I make it my goal to properly train my agents thoroughly. Too often my agents and I work with other real estate agents that have not been properly trained. In fact, many times, those agents have called us to ask how to do/handle certain parts of the transactions. It has happened so often recently that we had to figure out what we would and would not assist with due to liability. We determined if the answer to the question is a fact we would answer. If the response is an opinion or company based we request that they ask their broker. I believe that this has happened more and more as a result of 100% commission brokerages. Agents receive their license and start at a 100% commission brokerage where there is minimal to no training because they are paying 100% commissions. What you end up with is an inexperienced agent that will learn at the client’s expense. When investing in real estate this can be a blessing or a nightmare. Read More→