Tampa Real Estate Investors Alliance Blog

In last month’s article I explained how the housing boom of the early 2000s created an equally big boom in mortgage fraud. While the housing collapse changed the nature of the crime, the ensuing flood of foreclosures just gave the banks another reason to commit fraud.

Fortunately for homeowners, there has been a wave of investigative agencies that are exposing exactly what the banks have been up to. While my last article covered the types of fraud that the banks have committed, this article will focus on the methods that investigators use to find the fraud in real estate deals.

Due to the fact that the fraud examinations are normally conducted with the purpose of being used in litigation, they tend to fall under the mantle of forensic accounting. In other words, they are conducted with the assumption that the case they are investigating may end up in litigation or a criminal trial. This means that fraud investigators must possess the skills to follow through with a mortgage fraud investigation from beginning to end. This includes but is not limited to researching, collecting evidence, taking statements from people involved, and testifying to their findings in court or a deposition. Read More→

Once again, we are at the end of the first quarter. Over time, I have asked you to make a plan, do your research, and utilize your mentor’s skills. Now I want you to consider something essential. As a mentor, I have begun to ask people these questions:

What kind of relationship do you have with money?

How does this affect your success?

Think about it. Many of us were programmed to see money as the root of all evil. We think that people with money are corrupt and greedy—and yet we want what they have! How can you achieve wealth when you believe it is bad? You are contradicting yourself, aren’t you?

Do you continually shut yourself down with thoughts like “I can’t afford that”? If so, how can you think this and simultaneously expect to attract wealth into your life?

The answer is that you can’t.

I can help you to see that you can.

Read More→

Focusing on current real estate comps will prepare you for making deals happen in today’s real estate atmosphere. Are you ready to dive into the real estate market by investing in a rental property? The opportunities are ripe, but don’t make rookie mistakes. Follow these tips and you’ll be on your way to securing a successful deal.

1. Don’t trust the owner’s numbers. Your due diligence should involve checking with unbiased sources to determine the expenses, maintenance fees, leasing commissions and other costs associated with any property. Double check data provided by the broker or seller using your own real estate comp source . Talk to another apartment owner. Check public records. Confirm all numbers so you know exactly what kind of expenses to factor into the deal.
2. Don’t underestimate property taxes. Factor in the right property tax amount, not what the current owner had been paying, particularly if it’s a long-term owner. Your property taxes could be based on the sale price. Check with the county assessor for accurate numbers.
3. Give special attention to the big-ticket items. The heating system and roof can be your biggest headaches and most costly repairs. Know what you’re getting into. Have them inspected by HVAC and roofing specialists, respectively, not a general inspector. Issues are not a deal killer, however. In fact, it can work in your favor and give you the negotiating room to improve the deal. Read More→

Recently, 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→

“Treat your password like your toothbrush. Don’t let anybody else use it, and get a new one every six months.” ~ Clifford Stoll

Tonight you’re closing on a lucrative short sale. Afterwards, you’ve got a special dinner planned. And it’s good to know your seller will sleep better than she has in months. Yes, it’s going to be a great night. All you need to do now is print out the paperwork.

So you turn on your laptop and … nothing. Nothing. Just the dreaded blue screen of death!

Viruses happen. Spilled coffee happens. Accidentally dropping your iPhone in the swimming pool because you insisted you could carry four margaritas while you dance the hula with your cute cousin Betsy, well, that happens too.

If you’re like me, your whole life is in your iPad. Heaven forbid all that information should suddenly disappear! You can install anti-virus programs, you can be careful what you download, but here’s the bottom line: It’s not a matter of if your system will crash. It’s just a matter of when. It’s true for notepads and smartphones as well as laptops and PCs. So no matter what else you do, you’ll need to make sure all that wonderful information lives somewhere safer than your laptop. Read More→

“Listen to advice and accept correction, and in the end you will be wise. People can make all kinds of plans, but only the Lord’s plan will happen.” (Proverbs 19:20-21)(NCV)

Many smart business men and women pride themselves in knowing the trends, critical success factors, competitive strategies and other business indicators that could affect the success of their business. It would be totally unwise for an entrepreneur to develop a comprehensive business plan without the consultation of an attorney, accountant and other business professionals. The reason for these abundant resources is obvious. In order to succeed it is necessary to have sufficient expert and credible counsel. That being said, I find it so amazing how many extremely brilliant business professionals fail to see the relevance or the need to get counsel or instruction from the one expert that has a flawless track record for the successful oversight and management of the entire universe; God, the creator of the universe!

Most business professional are highly proficient in their trade. They have acquired specialized skill-sets, training and experience that allow them to comfortably make informed day-to-day decisions. They take advantage of a plethora of seminars and high level training to assure they remain abreast of cutting edge technologies, best practices, and current trends in their specific industry. Business men and women make commitments to pursue continual personal development activities that include empowering seminars, formal learning, the latest industry training, speaker guilds, and a host of other events designed to improve themselves, their employees, and their company. Read More→

How to Find Investors – It’s Fairly Simple!

When you’re looking for private money, it is not an art. It’s a fairly simple process.

How to Find Investors – Benefits

The benefits really depend upon the negotiation with you and the lender. Here are a few of the many possible benefits:

• You’re dealing with an individual who can make the decision right then and there, or as close to right then and there as you can.
• You generally pay points for loan origination fees to traditional lenders, with private lenders, whether points are paid or not is a matter of negotiation.
• Traditional lenders require payments on loans; with an IRA it may be possible to arrange a no payment loan.
  • If you need a one-year or two-year loan to do a rehab and the investor says “I don’t need the cash flow because it’s in my IRA, I’d rather have the extra one or two percent.” That’s great; you’d rather not make any payments until the house sells.
• You set the terms with the private lender, not the bank.
• Many times, there’s no personal credit required; however, not always.
• There are often no personal guarantees; this varies by lender and negotiation.
• In some cases, you can get dollars upfront for funding expenses.
  • That’s not always the case. Many private lenders will say “no money upfront”; still others will say “100% as long as the Loan to Value is 65% or less.”
• Some lenders will require some sort of equity, “skin in the game”, to make a loan. That’s one of the nice things about dealing with private lenders; the terms are completely negotiable between you and the lender.

Read More→

Master lease options are a great way to get started in the real estate business but are often misunderstood. A master lease option is two separate contracts, the master lease and the option to purchase. Together they make up the master lease option (MLO).

A master lease gives you the right to “rent” an entire property. This could be anything from a single family residence to a large apartment complex or strip mall. Once you have a master lease in place you control the property. This includes the management and the operations. You can essentially become the landlord yourself or hire management at your discretion.

The option to purchase sets the purchase price for a certain amount of time and for a certain price. You will negotiate this price and time frame during your offer and negotiation process. Usually an option fee is placed at the time of the signing. The option money is used as a non-refundable deposit to the seller in order for you to control the sale of the property. If you do not close the sale in the time frame set in the purchase option, then you will lose the option money. If you do close the sale then the option money is applied to the purchase price. Read More→

Let me ask you a question; are you properly managing your prospects? Are you taking the time to follow up with the sellers who didn’t initially accept your offers, or the sellers you still need to make offers to? Did you know that you are leaving thousands of dollars in potential income behind if you aren’t following up with sellers? One of the easiest ways to make a fortune in the real estate business and gain the advantage over your competition is to take the time to follow up with motivated and semi-motivated sellers. You’ve already got the seller in your pipeline, you’ve already done the marketing and spent the money to find this person, now all you need to do is to follow up with them until they either sell you their property or tell you to go away. How much simpler could it be?

There are two types of sellers we are going to follow up with, those we’ve already made offers to who haven’t accepted our offer and those who have not made any decision after our initial contact with them. Quite often, you will need to make multiple contacts with sellers before their situation changes and dictates that they sell their property to you. If you stay in touch with these sellers, you build credibility with them and when it comes time to sell they will contact you first, even if they have been contacted by someone else in the meantime. Read More→

I thought this might be a good time to explain why a seller will be better off selling their property they have never personally lived in if they were to give the investor/buyer seller financing terms instead of the seller getting all cash for their property. When you are negotiating with a seller who thinks they want all of their money at closing you know isn’t thinking very clearly and it is your obligation to inform them why your seller financing offer will always be better for them than if they were to get all cash at closing.

Let’s think about why I said the seller will always be better off taking your terms deal rather than getting all cash for their property, especially if they are planning to use the money as part of, or most of their retirement plan. Most people want their retirement income to last as long as possible. The key words in this example are a property they have never lived in they are selling. Let me do a simple example of the difference of a seller getting all cash at closing, and giving seller financing terms to their buyer. For this example I want to use simple math to show you how to negotiate with a seller who is stuck on getting all cash when your seller financing offer will be better for them. Read More→

Working on short sales is always exhilarating when you receive updated title work which shows there are additional liens against the property. Many Realtors, Investors and Short Sale Negotiators aren’t knowledgeable or prepared to fight the fight against Credit Card Liens on short sales. I recommend that the first thing you do when working a short sale is to order a title commitment which will do a search to see if there are any liens on the property. Are you aware that the title companies also do a name search for your Seller and Buyer? When a name search is done against the Seller, any outstanding judgments or liens show up on title. In addition, the title company is to order a lien search against the property for water, sewer, and code violations which cost approximately $140. Due to the cost, this additional lien search is done right before closing. I always recommend that the Realtor or the Investor make a personal call to the water, sewer and code violation departments as soon as they start negotiating their short sale. By making the personal call, you can minimize some costs versus have the title company search for you. Some counties provide this information online. However, don’t depend on your inexperience of checking liens on the property, I would highly recommend that you contact the County Department and talk to a live person for confirmation. Read More→

Method Number Two: Direct Mail Campaigns

This can be a full marketing machine all in one if you do nothing else. Not only does it work well for many people, but also the list of targets is so big you can target your chosen prospects and never run out of mailing campaigns. Even though signs work well, the best target you can hope for is an area you like. With direct mail, you can use a rifle approach.

1. Pre-Foreclosures are a goldmine if worked correctly. This is a whole business within the business that’s worth the time and expense to learn.
2. Out-of-town owners almost always work. The list is easy to get from a Realtor or your local record office. This is one Kathy specializes in (with a 12% response rate if I remember correctly). Be sure to mention the property address in the letter and include a response card to make it easy for them to reach you without calling. Some people simply WON’T call. You must call them!
3. New Homeowners who’ve been in the house less than two years. I’ve heard over 70% of the foreclosures occurs within the first two years of ownership and a large percentage of those occur in the first year. Any broker can get you the list. You’re looking for pretty houses so you can get the deed!
4. Vacant Ugly Houses.
5. Target Zip codes you want to buy in. Just pick an area, rent the list of homeowners from a list broker and mail a postcard. Read More→

How’s it going? I was recently talking with someone about a real estate deal he was working on. After listening to him for a couple minutes, something became painfully clear to me:
He was obsessed with this ONE deal because he didn’t have a good, consistent, reliable SYSTEM of bringing in more real estate leads for him to work with.

As a result, he was trying to beat a dead horse, or, for those of you who are sensitive to that kind of talk – he was trying to put a round peg in a square hole and pushing to make a deal out of one that really wasn’t.

Ever have that happen to you? Yeah, I didn’t think so.

There’s a Terrible disease that can infect a real estate investor, new or experienced.

It’s called, “One-Deal-Itis.” This is a condition that will kill your wealth, sap your motivation, and suck up all your time and energy faster than a visit from your in-laws.

One-Deal-Itis is when you don’t have (m)any leads coming in your buying pipeline, and you’re stuck on ONE deal, trying to make it work, when your time & efforts would be much better invested elsewhere. Don’t let this happen to you! Read More→

THE WHY

Why are you investing in real estate? Do you have a plan?

Every business that seeks to grow and achieve success has a detailed business plan. Any real estate entrepreneur that expects cash flow and asset growth in any reasonable time period should have a detailed plan as well.

The first question is where do you want to be in 5 or 10 years? Just saying you want to be rich is not an acceptable answer. “Rich” is a nebulous word and one we will remove from our vocabulary for this discussion.

We will replace it with two concepts that we can define, Cash Flow and Asset Building. Cash flow generates current dollars available to spend now. While cash flow is required to put food on the table and a roof over your head, it is also taxed in the year you receive it. Even with the new tax laws, it can be taxed up to 60% between federal, state and self-employment taxes. Once you think about it, it makes no sense to earn any more than you need to live comfortably, not spartanly or exorbitantly. Read More→