Tampa Real Estate Investors Alliance Blog

The December 2014 edition of The Profit Newsletter is now available for download 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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I’ll admit it; I’m a bit of a seminar junkie. I go to every seminar I can and I probably should go to the “Seminars Anonymous” meeting too. The truth is, I’ve learned from all of them (even the bad ones). I sit near the back so that I can find an electrical outlet for my laptop and type furious notes as I’m listening. Some larger conferences offer wi-fi (wireless) access so you can browse the Internet when a speaker mentions a specific site. Trouble is you tend to check your email and wander other places online. And then you’re not actively listening. So beware of being too plugged in.

How do you know if the seminar was worth the cost, the hassle of traveling and the time out of the office? If you’re not purposeful, after a week or two, you may not even remember the name of the great speaker let alone what he or she said or what you got out of it. And you really haven’t changed the way you do business or anything. Here are some steps to take to set yourself up for success before you actually fork out your hard earned dollars.

To get the most out of any seminar (or event in general), there are two sets of preparation, pre and post event. US Army lives by the 5 P’s – Prior Preparation Prevents Poor Performance. So, here are a few things you can do prior to jetting out. Read More→

This technique will be used frequently and is one of my favorites to make a property easy to fund. It simply means the seller will take back a second, allowing you to get a new first to cover down payment and other costs.

The big advantage is it sets the stage for you to negotiate a deal that’s easy to fund because you can borrow the first at a low LTV making a hard money loan easy to get.

Example:

Seller wants $1,000,000 for an apartment complex that needs $100,000 in work. She owns it free and clear and fixed up and rented, you feel it’s worth $1,800,000. Seller says she’ll take $100,000 down and the balance within 24 months but will subordinate to a new first and take low or no payments or interest on the $900,000 second.

Purchase price $1,000,000
Down payment $ 100,000
Seller second $ 900,000

New hard money 1^st $300,000
Less down payment -100,000
Less rehab costs -100,000
Cash to you $100,000

Financing structure
New 1^st $300,000
Seller 2^nd +900,000 – no or low payments
$1,200,000

Your exit is to buy, fix and refinance with a good, permanent loan, or sell. You should be able to get a $1,350,000 loan (75%) or more and pull out cash once it’s stabilized. Read More→

In January of 2014, Florida passed a law that allowed the Banks to push their foreclosures through the court system faster than the normal 879 days that it used to take. I have seen foreclosures go through the court as quickly as 4 to 5 months because the Sellers, even though they do not have an attorney, do not take the time to file an “Answer” when they are served with the Summons and Complaint. An Answer, in which they themselves can file, simply states that they would like this matter set for trial. This letter includes the caption of the court pleading and their address and telephone number. They would have to file this Answer with the Court along with a Proof of Service that they mailed a copy to the Attorney representing the Plaintiff (Bank). Once an Answer is filed, the Court must slow down the Foreclosure proceedings to allow enough time for the proper hearings that are entitled to the Sellers.

I used to advise my students to wait to send marketing letters to Sellers who were in Foreclosure for at least 6 months. Times have changed! I am now recommending, due to this new law, that the marketing starts as soon as the Notice of Lis Pendens (a document letting the public know that the Sellers are in Foreclosure) is served to the Seller. Many Sellers are running scared. They are moving out before they even have time to fight the fight. I say “Don’t Run and Don’t Let the Bank Win” and do a short sale. Even if you are doing a Loan Modification and/or Short Sale, the Bank is still pushing through the Courts to get a foreclosure hearing date set. However, a short sale takes control of the Sellers destiny. Read More→

“What the world really needs is more love and less paperwork.” ~ Pearl Bailey

Welcome to 2015 – I know it’s going to be a great year! And while the weather is cold, what a good time it is to review office procedures and forms to make sure the business is humming along as efficiently as possible. I guess you could call it a kind of pre-spring cleaning. I know, it’s not as good as sledding, but work with me, here.

If you’ve taken any of my courses, you know how much I like to automate. The fewer steps it takes to get something done, the better I like it. Creating a good system of business forms is a big part of automation, especially if I can get forms to share information with each other, or feed data into a spreadsheet. So part of my pre-spring cleaning is to review my forms every now and then to make sure they still make sense.

And let’s face it: There’s nothing more annoying than trying to work with a badly designed form. If you doubt that, get online right now and try applying for a job at some big company. It can be a real nightmare!

Forms, of course, have always been a pain in the neck. The military is famous for them. Heck, the Romans probably had rotten forms, too. Until just a few years ago, there was no relief from bad forms. You were stuck with whatever form somebody handed you. Read More→

This month I want to continue the line of thinking how sellers think differently than investors. Last month I talked about how sellers believe their property is worth top dollar even though many times they failed to keep the property in good condition.

Once you realize this will be what you will be facing when you first talk to most sellers you will have a better understanding of why sellers say the things they do when you ask them questions, such as “We Want ALL Cash” for our house.

You need to realize that the investor is trying to buy just another house they can make money with, while many sellers are selling a home that has emotional meaning to them if they live in the property. This difference of thoughts and emotion make a huge difference when you are negotiating. As I said before, this isn’t rocket science it’s just a fact of life. When you understand how sellers think you might have an easier time putting together a more profitable deal. By finding out what the seller’s true needs are, will give you a position of power when negotiating your deals. Remember, each seller has just one house to sell and you have thousands of houses to look at and choose from. This is why you are the one in the position of power when negotiating.

More than anything else you need to know why the seller is selling their house if you want to create a win-win deal. You truly are in control of each negotiation. You just don’t realize it. I concluded many years ago that I have lived many years without this seller’s house and if I am unsuccessful making a deal I will probably live out the rest of my life just fine without that house.

Here is a list of things you need to think about when talking to every seller. Read More→

There are three stages of real estate investing: Starters, Estate Builders and Enders. Do you know which stage you’re in? Many flippers and wholesalers think they’re Estate Builders when, in fact, they’re actually running a highly taxed retail business – they’re not real estate investors! (Saying this is sure to ruffle some feathers, but read on before you call me a liar.)

As the stage implies, a Starter is someone who’s just getting started in real estate. He usually knows little about contracts, rehabbing, landlording or how to creatively structure and fund a deal. He’s been to the closing table less than six times. We’re talking about someone who’s wet behind the ears!

An Estate Builder may still be new to real estate, but his focus is different from a Starter’s. An Estate Builder’s deals are structured to increase the investor’s monthly mailbox money! Mailbox money is money made when your capital assets are working for you instead of you working for your capital assets. Examples of capital assets are rental property and notes.

An Ender has been investing in real estate for decades. He’s very experienced at creatively constructing deals. Many Enders cut back on the number of rentals they own in exchange for simpler-to-manage capital assets like notes, options and master leases. Read More→

Are you doing absolutely everything in your Wholesaling business? Are you driving for dollars, writing your own letters, stuffing your own envelopes, building your own websites, creating your own flyers, taking the calls from sellers, inspecting the properties, getting them under contract, then posting the properties online, pitching them at meetings, showing the properties to investors, etc? Whew – that’s a lot of stuff eh??

Well if you are doing absolutely everything on your own, it’s time to stop! There is help out there. And yes – there is a balancing act: “do I do it myself” or “do I pay someone else to do it”??? Naturally there are some things you will want to do on your own – mainly talking with motivated sellers, making offers, and then getting the deal sold to other investors. So how can you get to where those are the ONLY things you have to do? There’s a lot of other stuff right?

MARKETING

Well the marketing is obviously important – probably the most important thing. There are services out there that can do your marketing for you. Namely letter writing services like www.YellowLetter.com and companies like that. They will create either Yellow Letters or Postcards to send out and they will mail it for you. You just need to provide the list. I believe you can buy lists from them as well. And there are plenty of other list providers out there – do your research. So if you get a list and send it to YellowLetters.com now that part of your marketing is done. Sit back and wait for the phone to start ringing. Read More→

This month, I’m going to take a break from the normal subject matter that I write about (marketing, real estate, technology, etc.) to focus on something a bit more… important. If you’re not ready for a little introspection, go ahead & stop reading now. I won’t judge.

However, if you’re open for some insight that just might help you grow not only your business but yourself as well, I humbly invite you to keep an open mind & keep reading. Please know that I’m usually a very private person, so a lot of the subject matter I’ll be writing about here is challenging for me to open up about.

There’s nothing like a challenge or personal tragedy in your life that will almost compel you to stop or at least slow down to re-evaluate the things you’re doing and the direction you’re heading. For me personally, I had such a tragedy occur recently when my father passed away from a combination of Alzheimer’s, old age & a heart condition just one month shy of his 96th birthday. Three months later, his older sister (my aunt) joined him. She was mere weeks away from turning 100.

My father was a full colonel (retired) in the U.S. Air Force. He served his country honorably, and, as I recently discovered, contributed to many (Classified) projects during the time he served that set the framework for things that are still in place today. By the time this article is published, he will have been laid to rest at Arlington National Cemetery with full military honors. I have no doubt that this will be an experience that will be cherished by all who attend. Read More→

There are several rather unusual ways that I like to use to locate motivated sellers. I’d like to share several of my favorites with you so you can find even more motivated sellers in a non-conventional way. This is absolutely the best time of the year to be locating motivated sellers since property tax bills have just gone out to owners in many states AND the holiday season is upon us. As you know one of my favorite techniques to locate highly motivated sellers is using direct mail and during the holiday season sellers are opening all of their mail since they are getting letters from friends they have not heard from in a year. Here are some of my other favorite albeit unusual techniques to find highly motivated sellers.

The first of these is to contact auction houses in your area and work with them to help you find leads on houses for sale. I’m talking about the auction you go to on Friday or Saturday night to buy “stuff”. Where do you think these auction houses get their merchandise? They get it from homeowners who need to get rid of a household full of items. One way to find these auction houses is to look in the yellow pages or google “Auctions” and find the ads that say “we consign estates”. These are going to be the ones you will want to work with. Many times an auction house will be contacted by an heir to sell items remaining in a property to settle an estate or to simply get rid of things remaining in the property after they inherit it. They may also be working with a widow or widower who wants to get rid of their excess furnishings, sell the home, and move into an assisted living facility or with a relative. The next item of business is to get the property sold as well. You can make a deal with the owner of the auction house to contact you when these situations arise, and they will give you the information about the sellers. If you offer a fair price and the auction house gets paid a commission, this is a good way to buy houses no one else knows about. Read More→