The October 2013 Edition of The Profit Newsletter is available for download just in time for our Atlanta REIA Main Meeting on October 9th. You can download The Profit Newsletter as a High Quality PDF or Low Res PDF for slower devices. The Profit is the official newsletter of the Atlanta Real Estate Investors Alliance and is a 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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I spent the last weekend attending a training event put on by one of the premier real estate teachers in the country today. As I listened to her teach phenomenal content, I kept hearing her talk about the MAO formula to determine the most that anyone should pay for any property. The basic MAO formula is… “The After Repaired Value of the subject property X 70% less Repair Costs = the most you should pay for any property” when using institutional or private financing.

As she talked, I kept thinking to myself, what if the buyer can’t qualify for institutional financing? What if private financing isn’t possible either? What if the buyer doesn’t have someone lined up who can get institutional or private financing? If that is the case what good is the MAO formula to the buyer?

Sure, I know the buyer could use a Hard Money loan to fund their deals and there is a formula for getting a Hard Money loan too. The basic Hard Money formula used in my area is… “The After Repaired Value of the subject property X 65% less the Lenders points and fees = the most that can be borrowed on that property”. The biggest problem I see using Hard Money loans is if the borrower can’t get the property they are buying resold quickly. Most hard money loans are short term, usually one to two years in length and if the property hasn’t sold and the Hard Money loan becomes due and payable, the borrower may find it impossible to find other financing to replace the Hard Money loan and could lose the property. Read More→

One of the things I have learned over the years about my ongoing marketing efforts is that my results only seem to be limited by how much time, effort and creativity I put into the marketing process and not how much money I spend. The more time and energy I put into the marketing of my real estate investment business, the better my results tend to be. When I decide to slack up, get lazy and not stick to my marketing plan, my results quickly diminish as a result.

This is also true of the people I hire to market my business for me. Their success does not depend on how much I pay them, nor the size of their marketing budget, but how much time, energy and creativity they put into the marketing process.

Remember, 800 Pound Guerilla Marketing is about dominating your local market using a little time, effort, creativity and a relatively low budget using both new and traditional marketing techniques along with the power of the Internet. The more time, effort and creativity you put into the marketing process, the better your results should be.

As real estate investors, one of our most important responsibilities is to generate a steady flow of motivated buyer and seller leads for our business. After all, no leads = no deeds = no profits. If we don’t want to be responsible for personally generating leads ourselves, then we must hire someone competent to generate leads for us. But even if we do hire someone, it is still our responsibility to make sure they are generating the quantity and quality of leads we need to meet our business’s short term and long term financial goals.

If you want to generate all the leads you can handle for your real estate investing business, start by following these 7 easy steps to determine your marketing plan and your marketing budget: Read More→

If you want to sell/educate/entertain/enlighten/etc. just about anything to anyone in the world these days, you can and should have a website.  No matter what you do, you will be able to reach and communicate with anyone you desire with this incredible tool.

But how do you make one? What do you put on it? What do you say?

And how do you add those cool videos and funny pictures of cats on there that everyone loves?

Yes, these are the questions I often hear people ask. And today, I’ll do my best to answer them for you!

To begin, you need to ask yourself: WHY do I want a website, and WHAT will I be doing with it? 

Well, I’m happy to say that I have the answer for you, and that answer is: “It depends.” Read More→

Considerations

Hard money lending can be a great place for self-directed IRA or other retirement assets. There are, however, a few things to be aware of before you commit:

• Hard money loans can be illiquid. If you are nearing or over age 70, pay attention to your required minimum distributions. You must make these RMDs, even if the borrower pays the loan late. You may want to earmark RMD money to come from another source besides the hard money lending part of your portfolio.
• RMDs do not always have to be taken in the form of cash, some self-directed IRA investors that do hard money lending have elected to take their RMD in the form of the actual loans themselves. In fact, you can even take a portion of the loan as your RMD thus becoming partners with your IRA on that loan. (For Example: You can take 25% of the loan as your RMD. You would then own 25% of the loan and your IRA would own the other 75% of the loan.)
• Your ability to contribute new money to your self-directed IRA or other retirement account is limited each year. For self-directed IRAs, for example, you are limited to $5,500 in new contributions. Anything over that must be rolled over into the account from another qualified retirement asset, or you will have to borrow the difference.
• You cannot lend money to yourself or certain family members, via your self-directed IRA. You therefore cannot make a hard money loan to any property in which you, your spouse, your ascendants or descendants and their spouses has an interest. Similarly, you cannot lend money from your self-directed IRA to any project in which any legal, accounting or financial professional who advises you on your self-directed IRA investments has an interest. Read More→

Whether you are a serious investor or you’re just getting started in the real estate investing business, you need to have at least one Realtor on your “dream team”. There are many ways a Realtor can help you in your business, both on the buying and the selling side and they can play an integral role in building your business.

One of the questions I get a lot is “how do I find a Realtor to work with?” There are many ways to do this. You can find one by asking other investors who they use. They may or may not want to share this information with you. You can also go to your local real estate club. There are always Realtor/Investors at those meetings. Another way to find a Realtor to work with is to check with the Board of Realtors and find Realtors who specialize in investor properties. This type of Realtor may also work with bank owned properties which can also net you some really great deals, especially in today’s market where there are so many foreclosures and motivated sellers.

You need to find a Realtor who is going to do a good job for you. Make sure the Realtor you pick is at least a broker-salesman. These types of Realtors have usually been in the business for a long time and have a lot of experience in dealing with all kinds of properties and situations. You also want to work with a Realtor who is motivated to bring you deals and buyers. Read More→

In last month’s issue, I began to explain exactly what securitization is and why it is fraudulent.  For several years the mortgage banks in this country were flat-out making up transactions and trusts to cover for the fact that they were pocketing their investors’ money.  But that wasn’t enough for them.  They bundled up the loans, intentionally loaded them with toxic mortgages to increase their rate of return, and sold them to themselves for a “profit.”

But what does this all mean for the title on a property that had a loan go through this process?

Basically, the title was flawed from the get-go.  Nobody who was a signatory to the loan had ANY interest in the repayment of that loan.  MERS and all the others were just filling a role by pretending to be officials of the bank that was lending the money, when in reality they were a signature factory.  If the trusts had been managed correctly from the beginning, the name of the trust should have been on the note and on the mortgage.  They weren’t.  Instead the banks set up a huge maze of companies to process the loans with defective notes and mortgages. Read More→

OK!  So you have decided you want to get into real estate investing and you have gone to some real estate seminars and classes and read some books.  Great!  You have learned that the next step is to put out some marketing to get leads coming in, like people that want to sell their house, and hopefully at a discount.  So you have started doing one or more of the following:

1. Mailing letters to home owners that say you want to buy their house
2. Put out bandit signs on the side of the road that say something like “We Buy Houses”
3. Have set up a website or websites that people find when they search “We Buy Houses” or other various search terms (“Sell my house fast”, “Sell your house fast”, etc).
4. Have put an ad in the newspaper or Craigslist that says “We Buy Houses”, “Fast Cash for your home in as little as 3 Days”
5. Have put out flyers around town with similar messages as the above.
6. Or one of the other (96) marketing strategies that Dustin teaches us.

And then what happens?  The calls start to come in.  YEAY LEADS! Read More→

“I blog because I have something to say.” ~ Eddie Huang

Do you have a blog? Have you ever thought about starting one? For a while there, you could be shunned if you didn’t have a blog. Every Tom, Dick, and Alice had a blog. Heck, even my second cousin Flora, the cat lady, had a blog. All God’s children had a blog! Thankfully, the hype has subsided. But the potential benefits of blogs – and pitfalls – are still there.

I’ve done some blogging myself, with mixed success, and in doing so, I’ve developed some ideas about what works and what doesn’t. Since I’ve been reexamining the idea of blogging as an investor, I thought I’d share my thoughts with you here.  

As you know, I like to start at the beginning, and I’ll bet at least one of my readers doesn’t really know what a blog is. A blog is simply an online journal or diary. That’s pretty much it. Beyond that, each blogger decides what his or her blog is going to look like.

But first you’ve got to decide if blogging is for you. Read More→

Funding in the real estate business can be one of the biggest barriers to entry and one of the biggest headaches!  Here are some tips to help get your next deal funded.

Remember that the only thing that sellers really care about is solving their problems. Make your offers a solution to their problems. Do your homework on the seller and the property. Find out why they are selling and if the property is distressed in any way (deferred maintenance, low occupancy, etc.). Make an offer that solves the seller’s problems. An example might be using a master lease option to take control of a distressed property, fixing it up and then refinancing or selling it.

1. Use master lease options. A master lease option or lease option is a set of two contracts that give you the right to control the property (master lease) and an option to purchase the property for a set price and for a set amount of time. A master lease option will allow you to take control of the operations of the deal and give you time to stabilize the property. Once that is done you can exercise your option to purchase or sell the option to a new buyer for quick cash.  Read More→

I was just up speaking for Atlanta REIA when a member asked me “isn’t closing short sales back to back illegal?”  My answer was NO!  He asked me, when did that change?  It has never changed.  He just didn’t ask the right questions to the right Attorney or Title Company.  Closing a short sale back to back can only be done with full disclosure which I always do on my paperwork to the short sale lender and to the “C” Buyer.  I provide copies of my purchase agreement which I have signed with my “A” Seller and me as “B” Buyer to the short sale lender.  I then provide copies of paperwork that I had signed with my “C” Buyer and me as “B” Seller to my title company.  If you are using my paperwork, here is how I disclose the back to back CASH closing.  Remember, disclose, disclose, disclose!

1.  The “C” Buyer is a cash buyer.

2.  The “B” Seller/investor must has signed a form along with the “C” Buyer, stating that they are aware that the “C” Buyer’s money is going to be used to close the first transaction between the “A” Seller who is doing the short sale and the “B” Buyer/Investor who is purchasing the property prior to selling to the “C”/Buyer.

3.  In addition, the Title Company and/or Attorney who is writing title insurance on the property, their underwriter has no problem with this type of transaction as long as this form along with the disclosure stated in your purchase agreement to the short sale lender is provided to them for review. Read More→

Have you ever made a TOTAL fool of yourself – when you were least expecting to? Read on, and learn how I stepped square in the middle of it!

Last night, one of my lifelong friends – Mary Ann Doering – invited Kim and me over to a small dinner party she was having for her neighbors.  Mary Ann is a wordsmith and the woman who proofs my columns.

As much as I like and appreciate Mary Ann, I did NOT want to go to her dinner party.  Frankly, any get-together that doesn’t include real estate investors, capitalists and financial-freedom seekers bores me to tears.  No matter – Kim made it clear that we WOULD be attending.  What I didn’t know was that Mary Ann was setting me up BIG TIME!  She was about to pull off her best practical joke on me EVER!

We got to Mary Ann’s before the other guests arrived.  A few minutes later, the doorbell rang.  Prior to the couple walking in, Mary Ann whispered, “I barely know these people.  They’re pretty boring from what I remember.”  GREAT, I thought: Now I’m really glad I came.

After meeting “Tim” and “Jane,” I began doing what I always do – asking questions.  At one point, Mary Ann mentioned that she was rereading The Millionaire Next Door by Tom Stanley.   Tim asked, “Who is Tom Stanley?” Read More→