Author Archive
Dung Beetle Meets Honey Badger
Posted on May 6, 2014 byMy plan for 2014 is to spend a lot of time traveling the country teaching real estate investors how to knock on sellers’ doors and creatively structure and fund deals.
The Alpha and Omega of successful real estate investing is to get face-to-face with sellers on a regular basis and make lots of written offers. Nothing an investor does is more important than this. And for the past nineteen years, I’ve proven time and again that the fastest, cheapest and most effective way to get face-to-face with sellers is to simply knock on sellers’ doors – eight out of ten sellers will invite you in!
The skeptics – and there are many – say, “Bill, that door-knocking thing may work in Georgia, but it won’t work in (insert whatever state you want).” The thing is, since 1978, I’ve traveled around the country (and most of Canada) making a living by knocking on homeowners’ doors. The truth is, people are the same everywhere – wonderfully kind wherever you go!
I told some investor friends in Tampa, Florida that I’ll be heading down there soon. A texted message came from Timber Benning, a real estate investor in that area. Her text read: Hey Honey Badger, when you come down, please keep me in the loop for your door-knocking extravaganza.
Honey Badger? What in the heck is a Honey Badger? I called Timber and she explained that at Wayne Arnold’s Exchangers meeting in St. Pete, he told his folks that I was coming down and that they should spend some time door-knocking with me. He said that when it came to door-knocking, I was like a Honey Badger. Read More→
$1 Million in the Bank and Starving to Death
Posted on April 8, 2014 byJust met with a guy who has a very interesting story that you’re not going to believe: He has $1 million in the bank, but doesn’t have enough money to buy food! He’s practically starving to death.
This guy worked hard, saved hard and invested wisely his entire life. When he retired, he had $1 million in liquid capital. To keep his money safe – the volatility of the stock market scares him – he invested his money in bank CD’s paying 3.6% interest. Last year, when the CD’s matured, he was forced to roll his retirement money into new CD’s with a dismal 0.6% interest rate.
Here’s the thing: These days, this guy’s investment doesn’t earn him enough to live on – he’s forced to exist like a pauper. He said, “Once I became a millionaire, I thought I’d never want for anything. I couldn’t have been more wrong!”
Before your dumbfounded look affixes to your face forever, fully understand this man’s predicament. He and his wife have $1 million cash, but they don’t want to spend any of this principal. Their retirement goal is to live off the interest the $1 million generates. Read More→
Why Are the Number of Foreclosures Plummeting?
Posted on March 10, 2014 byThere’s no doubt that the number of properties being advertised for foreclosure has been plummeting for the past year and a half. The question is, why?
In 2009, when foreclosure numbers began to skyrocket, the only way a bank could deal with borrowers who were behind on their mortgages was to foreclose. The fact that banks – actually it was loan servicers like the infamous MERS – didn’t have possession of the borrower’s note, nor the legal right to foreclose on the property, is a topic for judges and attorneys.
At the same time, you had thousands of borrowers who, because they couldn’t/wouldn’t make their mortgage payments, simply “gave the house back” and walked away. (It didn’t matter to the borrowers that the bank didn’t give them a house; it gave them money…and the bank – rightfully so – wanted their money back, not a house.) A bank’s only tool to deal with this situation was to foreclose on the property, and then sell it in hopes of recouping some of their loss.
Fast-forward five years. These days, lenders have many more tools to use to help homeowners avoid foreclosure. Two examples are: 1) The Cash-for-keys program, and 2) A wide variety of government-backed loan modification programs, like HARP. Read More→
Learning About Real Estate Investing
Posted on February 10, 2014 byIf you’re a Baby Boomer or a Gen Xer, then you’re thinking more and more about retirement – mainly, how are you gonna afford it? After all, we all know that Social Security is not much of a retirement plan.
This need-to-know desire is driving lots of folks to learn about real estate investing. After all, more folks have achieved financial freedom from real estate than from all other types of investments – combined!
The question we’re continually asked is, “What’s the best way to learn how to successfully invest in real estate?” Here’s a hint: All those TV infomercials are nothing but hot air. Those “gurus” who come to town offering a “free” seminar are just snakes in the grass…but then, you already know this.
After 19 years of investing in real estate, we’ve learned that the two best ways to learn are 1) Meet with sellers and ask Pete Fortunato’s famous question: “Why are you selling such a nice house like this?” 2) Hang out with been-there-and-done-that investors.
Sure, neither of these ways is sexy, but they are incredibly effective. Gotta add one other thing: You’ve got to do both a lot…once or twice just won’t cut it. Read More→
The Objective is a Written Offer
Posted on January 4, 2014 byA common mistake made by real estate investors is to forget why they knock on the seller’s door. By “forget,” I don’t mean the seller answers the door and the investor stands there with a stupid, lost look on his face. I mean the investor doesn’t understand the basic objective of why he’s there.
Do you know the ultimate objective of meeting with sellers? I mean, why are you there? What’s the purpose? Is it to be given a tour of the seller’s house?
Recently, I was working with a couple of investors. By “working,” I mean I was watching and critiquing – the investors had the lead and were responsible for what happened in the house. We went in the first seller’s house and got the grand tour. In the end, the investors told the seller they’d get back with him, then left. Same thing happened in the second seller’s house.
One of the hardest things about teaching is for the teacher to keep his mouth shut. Oh, do I ever have a problem with this! Not immediately correcting someone when they’re doing something wrong practically makes my eyes bleed.
Before going in the third seller’s house, I asked the investors, “When y’all are all done talking to the seller and are ready to leave, will you please ask if I have anything else to add?” Read More→
A Barrel Full of Fishhooks
Posted on December 6, 2013 byLast Friday, I took Michele, a new real estate investor, out knocking on sellers’ doors. Hers was a very, very special case that touched my heart.
Recently, Michele lost her husband. This caused her to fall into financially troubled times. In an attempt to dig out of the I-don’t-have-any-money pit, she attended one of those “free” real estate investing dog-and-pony shows that come to town regularly.
Michele went to the seminar hoping to find an “easy” way to make “lots” of “quick” cash. Don’t you know – this is exactly what their course promised! Because Michele didn’t have the $20,000 cash needed to pay for the special “mentoring” package, she chose to raid her retirement account – the last money she had on earth – to buy the “guru’s” package. In other words, she willingly dove headfirst into a barrel of fishhooks!
Before you roll your eyes, know this: Over the years, I’ve met thousands of people who have made similar decisions! Why do you think those dog-and-pony shows continue to come to town?
Michele’s intentions were good – she was simply looking for a way out of her financial mess. She honestly believed she was trading her $20,000 for $1 million dollars. Read More→
Making the Impossible Deals Possible
Posted on November 6, 2013 byA realtor asked me to talk about a real-world example of a recent deal we did that demonstrates how we make impossible deals possible. No problem, but I ask one favor: As I describe the homeowner’s situation, BEFORE you read how we structured the deal, think about how YOU would have done it!
The seller had a three-bedroom, two-bath home in Acworth, Georgia. The property needed zero work – it was beautiful! Fair market value was $60,000. His mortgage balance was $92,000 – making him $32,000 upside-down in the property. The home would rent for $850 per month. His mortgage payment was $925 per month – a $75 negative cash flow. At the time, the home was vacant and costing the owner over $1,000 per month. The financial drain was killing him. One last thing: The owner HATED tenants! His last two tenants all but destroyed his investment property.
The owner just wanted done, but he wouldn’t consider doing a short sale or letting the home go back to the bank.
Can you make this impossible deal possible? What if I told you that structured creatively, this deal will make you $200 per month, risk-free…with a tens-of-thousands-of-dollars bonus at the end? Please take a few minutes to structure this deal. Read More→
Dinner With The Millionaire Next Door
Posted on October 9, 2013 byHave 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→
What is Creative Deal Structuring and Financing?
Posted on September 6, 2013 by
I’ve written a weekly real estate investing newspaper column for more than ten years. During this time, we’ve looked at all kinds of creative deal structures and financing…but what exactly are these?
The easiest way to tell you what creative deal structuring is, is to tell you what it’s NOT. It’s not finding a house to buy at fair market value and then going to an institutional lender to get a traditional mortgage. That said, about everything else is creative deal structuring and financing.
The best deal structurer I know is Pete Fortunato. He has been one of our three primary real estate investing teachers since 1999. (The other two are Dyches Boddiford and Jack Miller.) Over the years, we’ve taken almost every seminar Pete has taught – every time he has taught it!
Much of our real estate investing knowledge comes from Pete. My biggest ah-hah Pete moment was seeing a picture of his Benefits House for the first time. These days, that picture hangs on the wall in front of my desk. Whenever considering a deal, I look at it and contemplate different ways the deal can be done. Read More→
Landlords: How to Increase Cash Flow WITHOUT Raising Rents
Posted on August 6, 2013 byOne 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→
The Gag Reflex
Posted on July 5, 2013 byLast month, Kim and I were part of a panel discussion at Dustin Griffin’s Atlanta REIA monthly meeting. The topic was about how we’re structuring our deals in the current real estate market. A lot of time was spent answering questions about hedge funds and how they’re driving up home prices.
Because hedge funds are gobbling up an ungodly number of properties – and are willing to pay at or above a property’s CONSERVATIVE fair market value – many “investors” are no longer able to be high bidders at the foreclosure auction. And because many of these so-called investors know of no other way to buy property, they simply quit showing up – or worse yet, pay WAY too much for a property.
Frankly, Kim and I don’t give hedge funds much thought – other than thinking they’re making one giant mistake that’s gonna bite them in the butt one day soon! Sure, these days we’re rarely the high bidders on the steps, but that doesn’t mean we’re not doing deals. Just the opposite is true! Read More→
How We Financed The Deal
Posted on June 10, 2013 byOur last column sure brought in a ton of calls and emails! In that column, we explained how last month we found, closed and financed a home in just three days by knocking on sellers’ doors – and didn’t use any of our own money. (You’ll find that column, titled “What’s Old is What’s New,” on our website.)
Here are the most common questions we were asked: What is a private-money lender and how do you find them? Why do private-money lenders lend to you? How are private-money lenders secured and paid?
More than a decade ago, Kim and I learned that a bank isn’t the only place to get a mortgage. There are individuals who will loan you their own money and fund your deals.
While banks can be a good source of long-term financing, they require a mountain of paperwork and take weeks to verify your information. It often takes a month or more to get an institutional loan. On the other hand, when dealing with a private-money lender (PML), because we’re dealing with a real person and the purchase property is being used as collateral for the loan, we’re often able to get immediate funding and close within a day or two. This is exactly what happened with our April purchase. Read More→
Nine Pillars of Success
Posted on May 6, 2013 byA civic group asked if I would speak to its members about success. After being in “the game” for nearly 40 years and achieving much success – along with experiencing a ton of failures – I’ve whittled my list of attributes needed for success down to nine.
First, let’s acknowledge that each person’s definition of “success” is different. More importantly, it’s a mistake to make my definition your definition. You must decide what success means to you!
Sadly, lots of folks never take the time or make the effort to write down what success means to them. This is like getting in the car to go on vacation without having a destination in mind. How will you know if you’re on the right road, or whether you ever arrived?
Here are my Nine Pillars of Success: Action, Persistence, Sacrifice, Belief, Integrity, Associations, Life-long Learning, Loving What You Do and Giving Back. Let’s briefly look at each attribute. Read More→
What’s the Difference Between Yield and Return?
Posted on April 5, 2013 byRecently, an investor asked us to explain the difference between “yield” and “return.” When Kim and I first became real estate investors, we asked this exact same question.
Yield and return are different ends of the same stick.
A yield looks forward – it’s looking into the future. It hasn’t happened yet. It’s what you project your investment dollars to earn each year for the life of the investment.
A return looks backward – it’s looking at what your investment actually did. There’s no guesswork about what you made because everything has already happened.
To better understand yield, let’s look at an example: You buy a 12-year-old, two-bedroom, two-bath mobile home in a park. Your all-in purchase cost is $2,750. You sell this home for $8,500 with the following sale terms: $500 down, with monthly payments of $275, at 18.63% interest, for 39 months. Read More→
Why Real Estate Investors Need Constant Training
Posted on March 11, 2013 byKim and I are teaching a financial calculator course later this month (February 23, 2013). Yesterday, an investor called to ask whether he really needed to take the course. I explained that a contractor’s most important tool is a hammer, a NASCAR driver’s most important tool is a racecar, and a real estate investor’s most important tool is a financial calculator.
After a bit of discussion, the investor said he’d pass on the course because it would be a waste of time. Out of curiosity, I asked how many real estate investing seminars he attended each year. His answer wasn’t surprising: NONE!
Here’s the funny thing: Even though I teach a financial calculator course, want to guess where Kim and I are this weekend? We’re in Vegas attending Gary Johnston’s Money Not Math seminar – it’s a three-day intensive financial calculator course.
I already can make a financial calculator sing and dance. For years, I’ve taught folks how to use them. So why do I “waste my time” taking financial calculator classes? Seriously, I want you to answer this question! Read More→
Which Type of Real Estate Investing Deal Has The Highest Yield?
Posted on February 9, 2013 byWhich Type of Real Estate Investing Deal Has The Highest Yield?
Our bank savings account is earning less than 1% interest. It’s not even keeping up with inflation. Meanwhile, Kim and I did a Lonnie Deal a few weeks back and we’re getting an eye-popping 50.38% yield on our investment. If you’re like us, you believe it makes better financial sense to get a higher yield versus a much lower one.
So what’s a Lonnie Deal? Basically, it’s when you buy a mobile home (that’s right, a trailer) in a mobile home park for cash and then sell it on time. Hey, in 2008, I had the same soured look on my face as you do right now as you ask, “Trailers? Seriously? Are you kidding me?”
Back then we were getting tons of calls from folks looking for $500-per-month housing. We couldn’t help them because our single-family houses rented for between $800 and $1,400 per month. I remember telling Kim that because of the huge demand for $500-per-month property, we needed to start doing Lonnie Deals.
We bought our first trailer on September 19, 2008 in Bartow County, Georgia. Our all-in purchase cost was around $5,500. We sold it on November 9, 2008 for $16,900 with the following sale terms: $500 down, $16,400 loan balance for 75 months at 18% interest with monthly payments of $375. Our yield on this deal is a jaw dropping 81.22%! Read More→
Order Lonnie Scrugg’s New Book Today for FREE!!!
Posted on January 25, 2013 by
Folks,
Lonnie Scruggs, the father of Lonnie Deals, published a new book today: Taking the Mystery Out of Money
You can download it today AND TODAY ONLY for F-R-E-E!
Lonnie is a national treasure and one of the most talented and successful real estate investors in the country. We LOVE this guy!!!
Here’s a link to down load his his book. Again, it’s free for today and today ONLY!
LINK: http://www.amazon.com/Taking-Mystery-Out-Money-ebook/dp/B0036ZAO6Q
Bill Cook
Financial Calculator – A Wealth Builder’s Most Valuable Tool
Posted on January 6, 2013 byYou’re probably asking “Are you really gonna talk about financial calculators?” and thinking: Yawn, yawn, yawn – wake me when it’s over!
Here’s the thing: Our real estate investors group is geared for experienced investors. To master creative deal structuring and financing, we all need to know how to speak the same language. A great communication device that accomplishes this task is a financial calculator.
Remember, a financial calculator is about MONEY, not math! Knowing how to make it sing and dance is critical to achieving financial freedom. I promise, once you know how to use a financial calculator, your real estate investing world will never be the same. Plus, you will be head and shoulders above most any investor you meet – including the so-called gurus!
Let’s use a financial calculator to answer this interesting question: Can you become a millionaire by delivering pizzas part-time for five years? If you think you can’t, then you’d be W-R-O-N-G! Read More→
The 8 Benefits of a Real Estate Transaction
Posted on November 3, 2012 byOne of the best real estate investing teachers in the country is Pete Fortunato. What makes him so special? Pete knows how to creatively structure deals in ways that make impossible deals possible.
Before Pete became one of our primary teachers in 1999, Kim and I did all of our deals the same old way. We’d find a house, apply for a mortgage, close with an attorney and then either sell or rent the property. Bottom line: If we couldn’t get a mortgage, we couldn’t do the deal. We felt like we were buying a Model T Ford from Henry Ford. Mr. Ford used to tell his customers, “The Model T comes in whatever color you want – as long as you want black.”
One of our biggest real estate investing ah-hah moments happened at our first Pete seminar. He flashed a diagram of a house up on the screen. The thing making this house different was that each room represented one of the eight transactional benefits of a real estate investing deal. The eight benefits are: Growth, Income, Amortization, Profits, Management, Security, Tax Benefits and Use. Read More→
The Chaos of Foreclosure Morning
Posted on July 3, 2012 by
Most mornings I’m at my desk and working by 4:30 a.m. This is especially true on the first Tuesday of each month – this is the day Georgia’s foreclosure properties are auctioned off.
If you’ve seen Kim and me at the auction in Bartow County, we usually look calm, cool and collected…everything under control. Just wish you could see us a few hours before the auction starts – the picture is VERY different!
Foreclosure morning is chaos around here. Papers are flying around, computer keyboards click furiously, our foreclosure book is flipped through continuously, and the phone rings incessantly! It truly is something to behold.
As an example, let’s look at what happened the morning of last month’s foreclosure auction. Read More→
