The August 2013 edition of The Profit Newsletter has arrived just in time for our Tampa REIA Meeting on August 8th. You can download The Profit Newsletter as a High Quality PDF (Recommended) or Low Res PDF (for slower devices). The Profit Newsletter is the official newsletter of the Tampa 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 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 so you don’t miss a single monthly issue.

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Last month’s article was on “Driving for Dollars and Farming with Flyers”. As you are out driving neighborhoods in search of houses to buy, you will soon discover that there are many vacant houses out there. Some of these houses are obviously for sale or rent as indicated by a sign in the yard, but many are not so obvious. These houses are just sitting empty, often deteriorating, waiting for someone like you to come along and buy them. Many of these houses appear to have been abandoned and unkept.

Vacant houses often provide some of the best opportunities to create some killer deals. After all, many of the houses have mortgages, taxes and other expenses that the owner is responsible for paying, even as the house sites vacant and unused. Even houses that are free and clear have expenses the owner must pay to avoid tax liens and code enforcement violations. Since the owner doesn’t live in the house, they are often highly motivated and more than willing to do just about anything to get rid of it.

When I am out driving neighborhoods and spot a vacant house, I stop and take pictures and write down the address. If the house is for sale by owner or for rent, I write down the number on the sign and call the owner later. I will even call Realtors from time to time if I know the house has been sitting vacant for a while since the owner might be motivated and eager to sell. Read More→

Hello fellow investors,

I hope you enjoyed the 4^th of July last month and took a moment to think about the fact that this country has fought many wars to give each one of us independence and the ability to create and do business as we wish with unlimited income potential. In this country our income is only limited to our vision and our determination to succeed at what we choose.

As the year goes on I am getting reports that many of my students are doing deals and starting to make some serious money, and I’m not talking about doing short sales or wholesale deals exclusively. One of my students found a seller who has 80 free and clear houses they want to sell and are willing to do seller financing terms. My student is cherry-picking the deals she wants and is finally deciding that sending letters is a good thing not a laborious waste of time. Three of my other students who are working together have bought 40 properties since the first of the year all with seller financing terms and many with zero percent interest rates and monthly payments as little as $200. I had lunch with another student from Missouri yesterday who has four properties ready to close in less than a month and one of the properties doesn’t have a monthly payment due for 12 full months and zero interest. All of these deals my students are doing are coming from their letter campaign sending letters to “Non-Owner Occupied – FREE & CLEAR” Property Owners. Read More→

It is as easy to succeed as it is to fail. Why does this sound untrue? Because most of us forget that we have a choice: we can enjoy the good and overcome the negative. What we must remember is that when we encounter something that we initially see as negative, we have a choice about how to react.

Did you know that Harland David Sanders, the famous KFC “Colonel”, couldn’t sell his chicken? More than 1,000 restaurants rejected him.

Or that Walt Disney was fired by a newspaper editor because he “lacked imagination and had no good ideas”?

Or that Henry Ford’s first auto company went out of business?

What made these people successful after so many “failures”? Read More→

Which is better for real estate investors – buying a note in pre-foreclosure, buying the house through a short sale, or waiting until the house comes on the market as an REO?  That depends on the difference in the discounts expected, the condition of the house, and the likelihood of reaching an agreement with the current homeowner to either move or purchase the note at a discount and remain in the house.

The discount on the note may well be less than the amount of discount the lender will be willing to take for the house as an REO. Having the note gives the note holder considerable flexibility—and some additional risks.  The note buyer can decide to set up a new mortgage with the current homeowner, negotiate a “cash for keys” or deed-in-lieu of foreclosure with the homeowner, or may be stuck taking the homeowner through a long, drawn-out foreclosure process.  If the latter happens, then the note buyer may well be better off waiting until the home comes on the REO market rather than tying up funds unproductively waiting for the foreclosure process to complete.  However, if you have a cooperative homeowner, buying the note presents you with some incredible opportunities. Read More→

One of the biggest mistakes we continually see real estate investors make is buying a rental property that produces a NEGATIVE monthly cash flow. When it comes to rental properties, positive cash flow is much more important than equity!

Here’s a typical example: An investor buys a single-family rental for $90,000. The property will rent for $725 per month and have mortgage payments of $485. The investor thinks: Wow, the property will produce a positive monthly cash flow of $240 – boy will I be sitting pretty.

But what about little expenses such as property taxes, insurance, repairs, vacancies, and management? When you factor these costs into the equation you suddenly find yourself knee deep in a pit of money-losing quicksand.

Always remember that investors make their profit – including positive cash flow – when BUYING the property. For a deal to be profitable, it’s critical that you know all the numbers and structure it accordingly. Read More→

Okay, the media in general is touting the US economy is doing better than it has over the last bunch of quarters. People across the country are working again. Typically this news leads people to feel better about the overall economy. More directly, this has translated to a recovery in the real estate market.

Signs show home values are coming up from the lows of 2008-2011. It is easy to keep track of values using REIAComps. Sales in many markets have been increasing and there a good volume of houses to choose from and lastly the number of folks looking to buy are up.

These previously mentioned factors are good for people who purchased at the height in 2004-2007. This was the time period when negative equity was born. Upside down mortgages became common place far too often. Read More→

(This article is continued from Part 1 in the July 2013 Edition of The Profit Newsletter.)

3. Listening to poor advice. This is something you probably already know. As you go through life, there will never be a shortage of people who want to give you advice. Your parents, your spouse, friends, in-laws, kids, they all have opinions about what you’re doing and what they think you should be doing. Very often, the value of their advice is worth exactly what you paid for it . . . nothing!

   I’m not saying these do-gooders aren’t honest, intelligent and well-intentioned. However, you must ask yourself, are these folks qualified to give you advice? Have they had any experience in what you’re doing? It seems to be human nature for people to offer advice on subjects they know nothing about. What baffles me is how often the recipients of this so-called wisdom will listen to it and even act upon it without ever questioning the credentials of those giving it.

   Through many painful experiences, I’ve learned that when you take advice from people who don’t know any more about the subject matter than you do, the quality of that advice is, at best, suspect. Plus, very often, listening to unqualified advice can have a negative impact on your focus (see roadblock #1).

   So, who should you be listening to? I believe in taking advice only from people who are: Read More→

If you have looked at more than a few deals over the last year you have undoubtedly seen a distressed asset. Repairs needed, low occupancy, bad management (or tenants) are some examples, just to name a few. From single family to large apartment complexes there are distressed assets in all types of real estate these days. Fortunately they can be hidden goldmines if you know how to get financing. Most lenders are not lending on distressed assets, making it harder to close these deals, let alone mitigate the needed repairs.

My favorite way to deal with this is with a master lease option or seller financing. If you can get the seller to give you control of the property then you can do the fix-up and flip it for cash or keep it for cash flow!

Either way you structure the deal, the idea is to limit the cost of getting into the deal because you will have repairs and other expenses to overcome while you get the property cash flowing. Here are some tips for getting started with a rehab property using creative financing. Read More→

Hope everyone is doing well and out there putting out their marketing, getting leads, and doing deals.  You can’t make much money in real estate if you aren’t doing deals, right?  Real estate “Deals” can come in many forms.  You can have a wholesale flip, where you are basically flipping the contract for a fee or doing a double closing.  You might be closing on a house yourself that you intend to fix up and resell (fix n flip).  When you resell that house, which would be considered a deal, and that is when you get paid (my favorite part).  You might have just bought a house from the bank or a wholesaler that you intend to put a renter in.  You may have just stroked a deal with a home owner to “owner finance” their house and you intend to rent it out.  Or, you were able to negotiate a lease option with a home owner with a nice low down payment and monthly payment, and you can turn around and lease option that to somebody else for a higher down payment and higher monthly payment – very nice!

Gotta love Real Estate – so many ways to make money!!  But we’re not in it for the money are we?  Yeah – we are.  Ha! Read More→

Today, I’m going to combine marketing & technology to share an extremely powerful tool that you can use for a TON of different uses in your home or office – all for absolutely FREE!

As anyone in marketing knows, the PHONE is one of the strongest weapons you need to use. Making calls, taking calls, and sending or receiving text messages or even broadcasting voice blasts are all things we need to do to reach and serve our customers.

If you’re buying houses, you need a phone number to use in your marketing to get your motivated seller prospects to contact you. If you’re selling houses, you should have a separate phone number for that. If you’re offering any other type of services, such as consulting, etc., guess what? You should use another number for that!

The trouble is, getting all these phone numbers & systems can add up to be substantial sum, and can add to your overhead expenses very quickly.

So what can you do? Well, the major phone companies don’t want you to know about your options, because they want your money – as much of it as they can squeeze out of you! That’s why companies like Vonage & MagicJack have gained so much popularity recently – because they essentially give you the same services for a much cheaper price. Read More→

So how are we going to get ready to have a conversation with our motivated sellers? I believe that readiness is a state of mind, and I have put together some ideas for you designed to help you have meaningful and successful conversations with motivated sellers resulting in profitable deals.

First of all, expect to be anxious and know that it’s okay to be anxious. You probably wouldn’t be very good at what you do if you didn’t care about the outcome.

Next, while you are feeling anxious, get in front of a mirror and practice what you are going to say to the seller. Do this more than once. The more you practice what you are going to say, the more comfortable you will be and therefore less likely to forget what you were going to say. Practice controlling your voice and be mindful of how fast you are talking. Your speech should be at a moderate volume and speed when speaking to a seller.

Remember to breathe! Practice what you are going to say all the way through without making faces, gasping or throwing out any expletives. Your seller doesn’t care if you’re speech is perfect, they just want to know what you can do for them to help them solve their problem. You might even want to practice what you are going to say in front of a spouse or close friend. Read More→

Combining a self-directed IRA and real estate is a trend that is picking up speed fast! Real estate investors are redirecting their focus and purchasing homes with their self-directed IRAs in mass. Partly because they refuse to settle for living on the measly average $1,230 per month social security check that many retirees are forced to budget with.

Large companies are cutting back on their employees’ hours in preparation for the Obama Care regulations and this change is causing people to rethink their futures prompting them to obtain both a self-directed IRA and real estate investments. With their salaries shrinking, they are looking for alternative revenue streams to build their retirement accounts.

So why is real estate picking up steam? Many people have lost their homes to foreclosure, others can’t get financing due to the new bank regulations, and some people simply do not have enough confidence in the real estate market to buy a home so they are looking for rental properties to live in. For these reasons, the demand for rental properties is at an all-time high and real estate prices, while slightly on the rise, are still low enough to make this an investors’ market. Large cities listed in the top 10 fastest-growing U.S. cities of 2013 are among the most sought after in the rental market. There are droves of residential properties on the market at great prices and investors are buying them up quickly. Read More→

OTHER TRUSTS

There are numerous possibilities for the name given to a trust. Such names are often chosen to reflect the primary function of the trust: Education Trust; Wealth Replacement Trust; Charitable Remainder Trust; Spendthrift Dynasty Trust, etc.

Since names are assigned to trusts the public can get the wrong impression. It is often assumed that a named trust is like any other consumer good, such as the name ‘car’ or ‘truck’. A person wants to buy, say, a car but not a truck. They want a Spendthrift, but not an Education Trust. Actually all trusts are just trusts. The primary thing that differentiates them are clauses written into the trusts. For example, a single clause will turn an education trust into a spendthrift education trust.

The point is not to let names become confusing. The fundamentals of trusts are simple to comprehend. First, all trusts are either inter vivos or Testamentary. Inter vivos trusts are set up while the grantor is alive and are often referred to as a ‘living trust’. The testamentary trust, on the other hand, is set up after the person’s death by authority written in the deceased’s will. All trusts will be either an inter vivos or a testamentary trust. Read More→