My New Real Estate Investing “Toy” Review

I just picked up a great new software program, and figured I’d let my readers in on it as well.

It’s called RealProspect, and I’ve found it to be the best Real Estate Investing software that I’ve tried so far…designed specifically for real estate investors to better manage our prospecting activities.

Phone Calls From Motivated Sellers

 

Eventually people will start calling YOU! Most won’t be motivated, but some will! You want the ones that are MOTIVATED! When they call YOU, that’s when you screen them over the phone first and determine their motivation. Then you go visit them and get face to face with them and build a relationship with them. You want them to get comfortable talking to you. They may want to talk about their dog for all you care. Let them! Get comfortable with them. Let them build some trust in talking with you.

Whenever they talk, you SHUT UP and just LISTEN!

Listen to everything they say. The more they talk, the more information they let out. The more information they let out, the more you learn about their PROBLEM. The more you learn about their problem, the more you will be able to find out what they really NEED! Once you got that information you can now figure out a SOLUTION that will SOLVE their PROBLEM by being able to give them what they NEED! Your solution to their problem gets them what they need and you make a profit for your problem solving skills!

You’re a PROBLEM SOLVER!

You are the DOCTOR OF SOLUTIONS!

DR. BUYER, the master of problem solving!

Real Estate Investing How To Find Motivated Sellers On A Tight Budget

You get a bunch of business cards printed up. Put them out everywhere you go. Hand them out to everyone you meet.

Get flyers made up. Post them everywhere you can. Put them in Laundromats, bowling alleys, advertising boards in supermarkets, car washes, etc. Put them anywhere and everywhere you can put them!

Then get some “bandit signs” made up for about a buck a piece. I use BanditSigns.Com they are quick and inexpensive. Just buy the cheapest signs that they have, and post them anywhere and everywhere you can. Expect some to get torn down or destroyed. That’s what happens to bandit signs..:) Put them on Telephone poles. Nail them to a stake and post them in the ground on every intersection in town. Let the world know that “YOU” buy houses for CASH! Just give you a call!!!

See The Next Post To See How To Handle The Phone Calls…

Choosing The Right Type Of Real Estate Investment Strategy

You need to focus on deals where you can get in and out of, with a quick profit where you have no further obligations or liability in the deal. Then you can use the profit you make and spend it on whatever you choose. You won�t have to worry about getting caught up in a mess that you cannot financially afford to be in.So what type of deals can you do that will allow you to do this? Well, the answer is pretty much any type of deal if you know how. So let�s look at some of the ways you can accomplish this using different types of deals.

The most common deal that everyone hears about getting started with is flipping properties. The first thing that comes to mind when hearing the term, “flipping properties”, is doing wholesale flips, where you find a run down property, get it under contract, and flip it to another investor, leaving the other investor with the lion share of the profit and making a quick profit for yourself. The truth of the matter is there is more ways to do flips than just looking for run down properties. You can flip just about any type of deal, whether it be a wholesale flip, a retail flip, whether it be making a cash offer, doing a L/O, or even a “subject to” deal.
This is where having the knowledge comes into play. The more knowledge you have, the more ways you will know how to structure the different types of deals and be able to make a fast profit without having to take on the risk by staying in the deal.

If you have done your research then you should already know by now that the deals to be had are from sellers that are motivated. You also know that the best way to find these motivated sellers is by making it easy for them to find you. You know that the way you make it easy for them to find you is by marketing yourself and letting the world know that you buy property.

Once you are set up with marketing yourself, this means you are going to run into many different types of sellers, with different types of properties, with different types of problems that you are going to need to know how to structure the deal in order to make it work. Not every deal is going to work by just trying to do a L/O on it. Not every deal is going to work by being able to just get the deed by doing a “subject to” deal. Not every deal is going to be a Junker, where you can do a wholesale flip. In order to take advantage of anything that comes your way, you�re going to have to know about as many ways as possible to do a deal in order to prevent from missing out on the opportunity of making a nice profit, just because you only knew about one way of doing things.

Based on my experience and knowing what I know now, if I were just starting out and I was cash poor, or had little cash to start with and I needed to make some money to pay other obligations first, these are some of the ways I would focus on putting fast cash in my pocket, without having to take on the risk of staying in the middle of a deal.

One way, would be the wholesale flip. If a ran into a property that was in need of a lot of repair I would get it under contract and flip it to another investor that was into doing rehabs. Depending on the amount of profit I was able to pencil in for myself would depend on how I would handle doing the flip with my Buyer. If I were just making a smaller profit, between $2k – $5k, I would just assign my contract over to my Buyer and be done with the deal. If I were to stand to make a larger profit on the deal, where I didn�t want my Buyer to know what I was making to prevent from losing that Buyer, I would set up a simultaneous closing and close the deal at a title company or at an attorney�s office if attorney�s were the ones that handled closings in my state, rather than title companies.

Whichever way I handle closing the deal, once it�s closed, I�m out of the deal with a quick profit in my pocket and I don�t have any further obligations or liability in the deal. I can use the profit for anything I choose without having to be concerned about something going wrong with the deal later since I�m not involved with it after that.

I might have a seller that calls with a nice property they need to get rid of. It could be a deal that might be had by getting it way below market value if it had a lot of equity in it. This may require a cash offer in order to get it tied up under contract. Once I have it under contract, I can then market it at a good price below market value in order to get a fast sale, and either assign my contract over to my Buyer, or set up a simultaneous closing between the Seller, myself and my Buyer. This is pretty much the same as flipping a wholesale property in need of a lot of repairs, only in this case, I�ll be marketing it for a retail Buyer instead of a wholesale Buyer. Just like the wholesale flip, once I close the deal with my Buyer I�m out of the deal with a fast profit in my pocket. Now I can use that profit towards anything I want without having to worry about any unforeseen circumstances that could arise since I�m no longer tied to the deal.

I might have a Seller that calls with a nice property to get rid of, but they have little to no equity. Well, we know trying to make some kind of a cash offer isn�t going to work because the Seller owes too much on it. So in order to make a deal out of this I�m going to have to be able to buy this one on some type of terms. If I can buy it with favorable terms then I can structure the deal in such a way that would allow me to use forced appreciation. I can do this by reselling the property and offering some type of terms to my Buyer. The problem is, I don’t want to have to remain in the middle of this deal because any cash I need I have to use for something else. Since I�m cash poor, and I don�t have an adequate reserve fund set aside, and I won�t be able to put any cash I get up front from this deal into a reserve fund, I�m going to have to do this deal in such a way that will allow me to get in and out of it, with no further liability on my part.

So what if I were to get this under a L/O arrangement? Usually under a L/O deal I would get a Tenant/Buyer to put into the property where I would make some up front cash from the option consideration my Tenant/Buyer pays me, plus some monthly cash flow while they lease the property from me, and some additional profit on the back end when they go to exercise their option, since their option price would be higher than my option price I have with the Seller. Since I�m going to be using any cash I get up front on this deal for other obligations I can�t afford to take any risk by staying in the middle of this deal.

What happens if my Tenant/Buyer turns out to be a deadbeat and stops paying? Or what if they lost their job and couldn�t pay? What if they refused to peacefully vacate the property and I had to hire an attorney to have them evicted? What if I got the property back and I had to go in and make $2k – $5k in repairs just to get the thing ready for another Tenant/Buyer?

Remember that I�m cash poor and I had to use any option money I got up front from the Tenant/Buyer to pay other obligations. I only made a couple hundred bucks per month while they lived in the property that they did pay on. I probably used that extra cash for other things also. So where do I get the money from to take care of this problem? I�m cash poor and I have no credit where I can borrow from anywhere. So now what? Let me tell you what. YOU�RE SCREWED!!!
OK, so how can I avoid that from ever becoming a problem? Easy! Don�t stay in the middle of the deal! Rather than getting all wrapped up in becoming greedy with wanting to risk everything just to get that extra monthly cash flow, and any back end profit, IF the Tenant/Buyer was to exercise their option, just get as much as you can up front and ASSIGN your contract over to your Tenant/Buyer. Just use that money they would normally pay you as the option consideration and take it as your assignment fee to let them just step into your position. Your Tenant/Buyer actually ends up with a much better contract because they will have more than one year to exercise their option that you would have given them under a new L/O contract with you. They will get your contract, which will be a lower monthly payment than what a new contract with you would have been. They end up with a much better deal by being able to take over your original contract you have with the Seller. ALWAYS make sure you get a signed release of liability from the Seller when you assign your contract over to someone else. That way if you�re Buyer should ever screw up; the Seller can�t come back to you and hold you liable for the contract.
All you need to do is continue to do deals like this until you have made enough money to take care of your other financial obligations that you needed the cash for. Once you have taken care of that you are ready to move on to the next step. The next step will be building your cash reserves. I would want a minimum of $25k in cash reserves built up before feeling safe enough to protect myself before using any of the profits from the deals I do, that I will remain involved with.

If you are already in a position to where you don�t need to make some fast cash to use towards other obligations, then you can start with this next step, which is building up your cash.

Now that you are ready to start building up your cash you can either continue to do deals, where you flip them to an end Buyer or assign your contracts over to them. You can then take the cash you make and put that away in your reserve fund until you get enough saved up before venturing into other things. Or you can jump-start your investing by doing more deals where you can take advantage of building up monthly cash flow and equity that will provide you with some nice paydays on the back end when you�re Buyers eventually cash you out. Your main goal here should be focused on getting your reserve fund built up before you touch any of the up front profits you make from your Buyers down payment money or option consideration money. Put all of that into your reserve fund until you have at least $25k in reserves. If you average $5k per deal in up front cash then you will only need to do 5 deals to get your reserves up to $25k.

Once you have built up your reserves you will have the cash on hand to deal with any unforeseen problems that may arise. Basically, you will be using your Buyer�s cash to cover any expenses you incur should one of them default on their agreement. Then when you get another Buyer to put into the property again you can replace the reserves you used with the cash you get up front from them. Meanwhile you can use any of the monthly cash flows coming in for other things, like replacing your income to live off of.

Once you�ve reach your minimum goal of getting $25k in reserves you can then start using some of the up front cash you get on future deals towards other things. Even though you have some reserves built up you should continue to take some of the up front cash you get on future deals and put that away towards building cash that will allow you to do other deals you normally couldn�t do without having cash on hand to invest. As your portfolio of properties continues to grow you should add a little more towards your reserve fund to allow you enough cash to carry you over, should you ever run into a problem where you end up with a handful of vacant properties at once. If the economy or something were to take a dive you will have enough cash to carry you over until things turn around again, hopefully!

As you continue to do deals and get more experience your knowledge base will grow with it. Then you can start looking into other things if that is something you choose to do and diversify your investments.
So if I were starting out today I would start with flipping property, L/O�s and doing “subject to” deals. With having a good understanding in each of these types of avenues of real estate investing, I could have more than enough to keep me busy with doing a lot of deals. The key is to educate yourself in everything you can that pertains to these types of deals and you should be way ahead of the game if you implement a good solid plan and take action!

If you could afford to, I would buy at least 3 courses. One on flipping properties, one on doing L/O�s and one on doing “subject to” deals. If you can�t afford to get all 3 right away then pick one on L/O�s or flipping properties and start with one of those. Then take action and get out there and just do it! Get that first deal under your belt by flipping or assigning it over to another Buyer and cash out with a quick profit. Take $300 – $400 of that profit and buy the next course. Then go out and do another deal and take enough out to buy yourself the 3rd course. Then crank out the marketing and get those Motivated Sellers finding you! Then close some deals and begin building your way to financial freedom!
The important thing is to implement a good plan and stick to it until you reach your minimum goals in order to give yourself a solid foundation to where you don�t get yourself into trouble and end up living in a financial nightmare!

I can get into a lot more detail on this but it would require writing an entire course on the subject and this is already getting way to long. These are just some basic ideas to help you with finding some direction on where to start after you have done your research and educated yourself with the basics.

Real Estate Investing Getting Started Part II Selling The Subject To Deal

What is the FASTEST way to sell a property?

Sell on TERMS!

So I run an ad in the paper.
NO BANK QUALIFYING!!!
RENT TO OWN
NICE! 4bd/2ba House
Call xxx-xxxx

The phone starts ringing off the hook!
I find a potential Buyer that has $5k to put down and says they can afford to pay $1700 per month. ($150k homes in the area would rent for $1200 – $1400 per month, so getting $1700 a month on a $1400 rental when offering an OPTION TO BUY, will bring a premium rent and people will gladly pay it, because no one else will even finance them because of one reason or another) I agree to give them an option to buy the home for $165k in one or two years. YOU get a premium on the sale price because you’re offering TERMS!
I collect the $5k up front as “Non-Refundable Option Consideration” and “IF” they exercise the OPTION, the $5k will be deducted from the purchase price of $165k, leaving my Tenant/Buyer with a balance owed of $160k. If they don’t exercise the option the option money paid is non-refundable and is lost by the Tenant/Buyer!

I get the $5k up front, plus first month’s rent of $1700. Since I was lucky and found this Tenant/Buyer in the first week, I get to keep 100% of the first two months rent since my payments won’t start for 60 days! So I collect $5k + $1700 first month rent up front, for a total of $6700. The following month I collect the full $1700 for rent and the 10 months after that I collect $300 per month positive cash flow. At the end of the year, IF the Tenant/Buyer exercises their option, they will pay $160k. After paying off the underlying mortgage of $145k remaining on the Seller’s mortgage, I’ll collect another $15k at closing.

So let’s see, that’s….
$5k option money up front
$1700 first months rent
$1700 second months rent
$300 x 10 months rent = $3k
$15k at closing ($160k – $145k = $15k)

That’s $26,400.00 over 12 months total PROFIT!

Now what happens if my Tenant/Buyer doesn’t exercise the option in a year???

WONDERFUL!!!!!!!

Now I get to start all over again! I get to collect another option fee, raise the rent after a year for inflation and get a higher selling price for the option the next time around!
I just keep repeating the process over and over again until someone eventually exercises their option!
Assuming every tenant was to exercise their option in the first year…. how many deals like this would you have to do each year to make $100k???
Just FOUR deals like this one and you’re making $105,600 per year!

How many hours would that work out to be to find and structure a deal like this and get a Tenant/Buyer in the property? Not very many!

How many hours per week would you have to put into working at your job to make $105,600.00 per year???

One thing to remember is that the typical homebuyer or seller does not understand any type of creative real estate buying or selling. They typically use a realtor to buy or sell. When that realtor doesn’t sell that home or when that buyer can’t get that loan…. that’s where motivation starts to set in.

The buyer starts getting motivated to to buy. In many cases the Buyer will gladly pay any price to just get in if you can solve their problem.

The Buyers just need someone that will sell to them. They can’t get a bank loan or some just “think” they can’t get a bank loan and they only care about two things! How much down and how much per month? If they can afford the payments and have enough to put down in order to allow them an opportunity of owning a home, price doesn’t matter to them as much. They just WANT to be able to buy a home!

Your job is to become the “PROBLEM SOLVER!” Instead of thinking in terms of, I’m looking to buy properties, or I want to be an investor, or how do I buy properties with no money, or how do I get financing, etc…

Start thinking in terms of being a “problem solver”. Your job is to find SOLUTIONS to fix someone else’s problems! Your job is to sit down with these people and find out what their problem is. Once you figure out what their real problem is, you now know what they NEED! They all WANT an all cash sale. They WANT full price and WANT someone to just waltz in and buy their home the traditional way. But your job is to find out what they really NEED! Once you find out what their PROBLEM is, then you can determine what their NEED is. Once you know what they really NEED, then your job to get the deal closed is to just come up with the SOLUTION that will get them what they NEED that will SOLVE their PROBLEM!

You are not a real estate investor, you�re a PROBLEM SOLVER! You find SOLUTIONS to solve anyone’s PROBLEM! That’s how you make the deals come together!
The best way to find the Motivated Sellers is to get them to find YOU! You get them to find you by getting the word out that you buy property! Any property, any condition, any price, any time! It doesn’t matter. Just present the property to you and you will figure out a solution to solve the Seller�s problem to get them what they NEED!

Real Estate Investing Getting Started

BEST WAY TO GET STARTED IN REAL ESTATE

Here are a couple of ideas that should help you get started in the right direction and answer how you can do a no money down deal with no cash, no credit, no income, no nothing, except having some general knowledge backed with a desire to succeed by going out there and taking ACTION!!!

The way most people make money in this game is by using creative techniques to solve one person’s problem while being able to structure the deal to where it makes you a profit.

The key to finding a lot of deals in this game is to look for the MOTIVATED SELLERS…. forget about looking for houses, that’s a waste of time and requires way too much work!!! Narrow it down to dealing with “MOTIVATED SELLERS” and make fewer offers that result in getting more offers accepted!

Let me give you an example on buying a house for full market value, with no money out of your pocket, picking up a quick $5k up front, some positive cash flow every month, and a nice payday on the back end…. plus where talking about dealing in NICE homes with this strategy….NO junk properties!

Mr. Seller has a newer home he purchased about 2 years ago. When he purchased the home he put about 5% down and was able to qualify for 95% financing. After closing cost he had hardly any equity left. Mr. Seller ended up buying a new home a couple years later. He’s been trying to sell this home before he has to close on his new home. He can’t even afford to list the home with a realtor because he doesn’t have enough equity in the property to even cover the 6% – 7% commission he would have to pay a real estate agent.

Now the Seller’s new home is finished, ready to be moved into and he needs to close on it. He closes and figures he’ll sell the old home soon, but soon enough doesn’t seem to be coming. Now the Seller is starting to have some financial problems because he has to start paying two mortgage payments until someone buys the old home. The Seller has a problem now because he can’t afford to make two mortgage payments. If something doesn’t give pretty quickly, he’s going to fall behind on the payments on the old home. He’s going to pay the new homes mortgage first. But he doesn’t want to be late or get behind on the payments of the old home either. The Seller is worried about damaging his credit if he misses any payments.
This is where I would come along and be in a position to SOLVE HIS PROBLEM! I can put a stop to the Seller’s worry and stop the bleeding TODAY! All the Seller needs to do is agree to my TERMS and I’ll even pay him what he owes on the property, which is pretty close to full market value. The Seller knows he wasn’t going to get any money out of it after paying off his mortgage and closing costs, so all the Seller wants and all he NEEDS is to get out from under his mortgage payment!

I agree to take over the Seller’s mortgage. I take it over “subject to”, which means I assume the Seller’s loan without even qualifying through the lender that holds the Seller’s mortgage. The Seller will deed the property over to me. I now OWN the home. The Seller is still on the loan that has the lien against the property. The Seller remains responsible to the lender for that loan until I pay it off! Usually within a few years when my tenant ends up exercising their option that I will give to them under a lease option agreement. I won’t be liable for the loan on the property to the lender. The Seller’s bank can’t come after me if something where to go wrong. The loan is in the Seller’s name, not mine! However, I will be liable to the Seller to perform on our contract agreement to make his payments and pay off that loan eventually, but my liability is to Seller, not his bank.

The Seller deeds the property over to me. The house is worth $150k. The Seller’s loan balance is about $145k. I agree to start making the payments in 30 – 60 days from today! Now I have 30 – 60 days to market the property before my payments start. The payments are $1400 PITI

Read The Next Posting To Find Out How TO Sell This Property…

New Site That I Found With Desperate Sellers In South Florida Real Estate Market

I constantly scan through the internet to find great deals on real estate deals in South Florida.

Recently,  I came across an excellent page for South Florida Real Estate Investors that want a wholesale deal on a property.  I believe that it’s more geared towards “End Buyers” that want to live in the property, but I found some houses for 50 – 60 cents on the dollar in there.

It’s an independent site made up of people that NEED to get out of their properties, ASAP.

Check it out at:  http://www.propertythieves.com

How To Find A Home That Is In Pre Foreclosure Or Foreclosure

Finding a home in the pre-foreclosure process provides you with the best opportunity for profits in real estate investing. When you invest in pre-foreclosures, you can usually negotiate directly with the owner, who is motivated to sell for a bargain price. The best option is to find foreclosure properties before they go to public auction. Finding pre-foreclosures is not difficult, but it does take action on your part. One fact working in your favor is that mortgage lenders are usually required by law to give public notice of default. Public notices are typically filed at the county courthouse and, in most cases, are published in the local newspaper. Public notices of default provide an excellent starting point in your search for pre-foreclosures. You can find most of the information you need, including the lender’s name, the homeowner’s name, the amount owed and the interest rate. However, most public notices only have a legal description of the property and do not include a street address. Starting with the information you have from the public notice, you can find the information you need at the county tax assessor’s office. County tax rolls are public information and anyone is allowed to review them. Take the homeowner’s name from the public notice and find it on the tax roll. Once you find their name, you can match up the property description with a street address. Foreclosure services that provide you with a list of pre-foreclosure properties can be hired for a monthly fee. Some counties are making their foreclosure information available on the Internet. In addition to the public legal notices, you may find leads to pre-foreclosures in the real estate ads. Look for advertisements that suggest a very motivated or even desperate seller. When you call for more information, you may find that foreclosure is imminent. Finding and making an offer for federal foreclosures (FHA and VA loans) is more difficult but may be more profitable in the end. You’ll need to build a business relationship with a federally approved real estate broker. Another excellent way to find pre-foreclosures is to place some classified ads of your own. Your ads should be clear and direct, with the word “foreclosure” featured prominently. Individuals who are looking for a way out of the foreclosure process will welcome the chance to consider your offer. Investing in pre-foreclosures will give you the highest profit potential with the most financing options. All the information you need to get started is printed in the paper every day.

Foreclosure Investing: The Fortune is in the Follow-Up

Successful foreclosure investing requires more than simply locating properties and contacting the owners. In most cases, you’re going to need a plan for consistent follow-up. Remember, foreclosure investing requires a particular response from the property owner. Namely, you want to negotiate a deal that gives you control of the property at an attractive price, while at the same time helping the owner avoid full foreclosure proceedings. Putting together a deal that meets these specifications will take more than one contact with the owner. To begin with, the owner is under a lot of stress as they face the prospects of foreclosure. There’s a good chance that the foreclosure has come about as a consequence of poor financial management or wrong financial decisions. This may make the owner reluctant to make any more decisions about money, even if it appears to be in their favor. Foreclosures are often only part of the owner’s overall financial situation. They may be enduring numerous calls and letters from creditors and collection agencies. Your initial contact with the owner could easily get lost in the flood of communications the owner is trying to deal with (or ignore). Even if your contact does rise above the roar, the owner may view your offer with suspicion. Any offer to help at this point in their situation will seem too good to be true, so they may fear a scam of some sort. Your only alternative in foreclosure investing is to be persistent. You should have no expectation of a quick response from the homeowner. You will need to plan for repeated contact attempts. The secret to successfully getting the owner’s attention is lots of regular, consistent contact. In fact, you need to plan to correspond with the owner every other day, and you need to keep it up until the scheduled public auction. That’s a lot of contact, even if you’re only working on one property. If you are tracking more foreclosure investing opportunities, that will multiply the number of follow-ups you need to track. You’re going to need some sort of system for keeping up with each contact and where each property is in the stage of the foreclosure process. Foreclosure investing requires regular, consistent follow-up with multiple property owners who may not be interested in what you have to say. Follow-up contact is not an optional activity. Your communication with them must be designed to create the desire within them to avoid foreclosure. If you fail in your efforts to contact the owner, there will be no deal for the property. This may sound like a great deal of work and it will certainly take organization. But when it comes to foreclosure investing, the fortune IS in the follow-up.

Found A Neat Little “Legal Web Page” For Real Estate Contracts & Other Freebies

I was in a bit of a pinch the other day…

Ok, I was TOTALLY SCREWED..:) I Made Real Estate Investor Mistake #1 —

“Never Leave Your House Without A Contract”

Well, that’s exactly what I did.  A desperate seller called me while I was out on the road and I thought that I had an extra set of documents in the car.  We all know what happens when you “ASS-U-ME”.

I pulled over and searched around on my laptop, and found this cool site that had a bunch of freebies on it. They sell contracts and other legal services on there  as well, but there is some good free content that you can put to use.

Heres the link: http://offto.net/rocketlawyer/

Hopefully this helps someone out that was screwed like I was..:)