Search Results for "kim cook"
Options: The Safest & Cheapest Way To Control Real Estate
Posted on July 13, 2016 byLong ago, Kim and I learned that options are an incredibly powerful deal-structuring tool that allows you to control lots of real estate for little or no money…and with very little risk! And here’s the best part: Because so few know anything about options, you have almost no competition!
Simply put, if you are not using options as one of your primary real estate investing tools, then you’re leaving a lot of money and opportunity on the table.
When most folks hear the word “option,” they automatically think lease-options. While lease-options are fairly popular, they are just the tip of the option iceberg.
Options allow you to control a property without the risks associated with ownership. You can control one (or all) of the benefits that come with ownership: income, profit, amortization, growth, use, management and tax benefits.
One of the best things about options is that you can control hundreds of thousands of dollars worth of real estate for less than $100 – and control it for decades. No other document in real estate is this powerful! Read More→
The Music is in the Man
Posted on June 8, 2016 byIn my early twenties, I’d decided that to be successful, I needed to buy a Mercedes Benz and a gold Rolex watch. Dean Kates, who was my mentor back then, told me the following story to help me understand that greatness comes from within, not from what you own – that bling is pretty much meaningless!
After many years away, a world-famous violinist returned to his small hometown in Georgia. He came to play a benefit concert to raise much-needed funds for his high school’s music program. Because the violinist was one of the very best musicians in the world, the town spared no expense rolling out the red carpet for him.
At a reception held two hours before the concert, many of the performer’s high school chums showed up to pat him on the back and wish him well. As a group, they asked to see his one-of-a-kind Stradivarius that had been built in the 17th century. It was said that the music that flowed from his Stradivarius was the sweetest, purest, most heart-touching melody the world has ever known. Read More→
Getting Mailbox Money Without Tenants
Posted on May 10, 2016 byTwo decades ago, Kim and I set a goal to replace our earned income with investment income.
There are a couple of advantages to achieving this goal. First, you don’t have to labor for a living. In other words, your capital is working for you instead of you working for your capital. Second, the tax rate on earned income is much higher than it is on investment income. Said another way: With investment income, the government lets you keep more of what you make, and when it comes to money, more is better than less, right?
To accomplish this goal, we figured we’d need fifteen single-family rental properties. Each month, the tenants would send in their rent checks. Part of these checks go toward paying the mortgages, insurance, property taxes, vacancies, repairs and management. We get to keep whatever is left over to spend or invest how we see fit.
There is a downside to owning rental property. Though for tax purposes the government considers what you make to be passive income, there’s still hands-on work that needs to be done to maintain the property and manage the tenants. Read More→
You Bought the House…Now What?
Posted on April 13, 2016 byWhen Kim and I were baby real estate investors, we were totally focused on buying our first investment property. Then one day it actually happened! I remember leaving the closing attorney’s office feeling pumped up. When we got in the car, Kim asked, “Now what?”
Now what, indeed! I hadn’t given that part of the equation much thought. This happens to a lot of new real estate investors. So once you buy a house, what do you do next?
To answer this question, let’s look at three properties we worked on recently.
The first is 337 Rail Drive in Adairsville, Georgia. Kim bought this house at the November 2015 foreclosure auction. From the start, it was a flip. In other words, we bought this property to resell quickly. We’re flipping this home because we need to replenish our cash reserves.
Shortly after purchase, Kim had the property trashed out. Because our contractors were tied up rehabbing Akin Drive, she elected to delay doing the extensive repair work Rail Drive needed. Instead, she offered it at a wholesale price, which was well-below market.
In less than a week, Kim found a qualified buyer and accepted her purchase offer. Unfortunately, about a week later, the buyer changed her mind because she was scared about the amount of work the property needed. We refunded her earnest money, hugged, and parted friends. Read More→
Pick Your Bone: Wishbone, Jawbone or Backbone
Posted on March 9, 2016 byTo succeed at real estate investing, or business, or life, requires bone – the right kind of bone.
Because real estate investing is pretty easy to understand – you buy a house and then either sell it or keep it as a rental – lots of folks are interested in becoming investors. Want proof? Look at all the traveling dog-and-pony shows coming through town offering their “free” seminars to a “select few.”
We get lots of calls from would-be investors who’ve attended one of these get-rich-quick-snake-oil events. Most actually believe that real estate millions can be acquired by working only thirty minutes a week and without meeting face-to-face with sellers. That’s like a doctor trying to build a successful practice having office hours from 9:00 to 9:30 a.m. and without seeing any patients. Crazy, right? Read More→
Goodbye. We’ll See Y’all Later!
Posted on February 9, 2016 byKim and I want to thank you for reading our weekly real estate investing newspaper column for the past 13 years. With this last article, we say: Goodbye, y’all!
In 2003, when we started this feature, we were still fairly new to real estate investing. As we gained knowledge and experience, we shared the creative deal-structuring techniques we learned that allowed the impossible deals to become not only possible, but also probable.
We also shared most every mistake we made along the way. We did this because more great lessons are learned from failure than from success!
And, we wrote a ton of articles about what it takes to succeed. No matter what field you’re in, the attributes it takes to succeed can be boiled down to these ten: love, accomplishment, discipline, persistence, belief, integrity, associations, a yearning to learn, sacrifice and giving back.
The story about how our weekly column first got in the paper demonstrates these attributes at work. Read More→
Do You Have Big But Disease?
Posted on January 12, 2016 byThe thing that kills most real estate investors – heck, the thing that prevents 95% of folks from reaching anywhere close to their full potential as human beings – is the dreaded Big But Disease!
It goes something like this: I want to start my own business, but… I want to do more for my church, but… I want to own 20 free-and-clear rental properties, but… I want to get in shape, but… I want to improve my marriage, but… I want to spend more quality time with my kids, but…
That stinky Big But Disease will squash your dreams, murder your goals, and destroy the person you were born to be!
Starting today, what if you replaced saying “but…” with saying “I’ll do whatever it takes to get this thing done!”
So instead of saying, “I want to run a marathon, but…” you’d say, “I want to run a marathon, and I’ll do whatever it takes to get this thing done!” With this attitude how much more would you accomplish in your lifetime? Read More→
There Are No Tears in Real Estate
Posted on December 11, 2015 byWith less than a week left before completing a major rehab on our latest real estate investing deal, all Kim wanted to do was to drop to the floor and cry when she saw what had happened to every interior wall in the home.
The day before, the walls had been perfect. But on this day, the walls looked like something you’d see in one of those circus houses with funny mirrors that make your head look huge while making your body look the size of a walnut.
In this home, we’d replaced all the paneling with new paneling. Then came two days of constant rain. Because the HVAC system wasn’t yet working, there was a significant increase in the home’s humidity level. The new paneling quickly absorbed the excess humidity and became wavy.
A multitude of things made Kim want to cry. All the time and money spent demolishing the old walls and installing the new ones was for naught. The rehab was scheduled to be completed in five more days, but now would be extended by at least two weeks. The extra work would cause this rehab to go over budget. Read More→
Wish I Had a Do-Over
Posted on November 11, 2015 byI’m writing this on Friday, October 9, 2015. It’s a heavy day for me. Today is the sixth anniversary of Jack Miller’s passing, and for the past few days he has been frequently on my mind.
Many of you have never heard of Jack Miller; even fewer took the opportunity to learn from this great man. Jack, hands down, was the best all-around real estate investor I’ve ever met. He was the definition of original. There was no boundary he wouldn’t push.
Put simply: Many of the creative deal-structuring and funding techniques investors use today were born in Jack’s wonderful imagination. There has never been, or will ever be, another Jack Miller.
I wish I had a do over. Although I attended most of Jack’s seminars, there were more than a handful that I missed. If I could get that do-over, I’d be front and center at each one of the meetings – taking notes like crazy!
Kim asked what I’d pay to attend just one more of Jack’s seminars. I said one hundred thousand dollars wouldn’t be too much. God, to hear Jack ring his big bell that let folks know that class was back in session…yep, one hundred thousand dollars would be well-spent money!
When Jack passed, he was nearly eighty years old and at the top of his game. Here are some of Jack’s quotes I wrote down at his February 2009 Money Matters seminar…which turned out to be the last seminar he taught!
Read More→
If You’re Not Saying Wow, Then…
Posted on October 22, 2015 byBoy was Mike ever excited! He found his first real estate investing deal; a property he planned to keep as a rental. Knowing that Kim and I loaned money to purchase investment homes, he gave me a call.
Mike’s contract was a gem of an opportunity – at least according to him. The seller told Mike that six other buyers were lined up with cash money. If Mike wasn’t able to close within a week, the seller would let another lucky stiff…errrr…I mean investor…have the home.
Mike explained that the house was built in 1955, had three bedrooms and one bath, needed a good bit of work, the neighborhood was okay but not great, and like-kind houses in the area rented for $800 per month. The seller told him the home’s fair market value was $115,000, but he was willing to let Mike steal it for $89,000.
Mike was chomping at the bit with no time to waste. He needed a purchase money loan and he needed it now!
After digging into the guts of this “deal,” here’s what we discovered. Read More→
My Top 10 Landlording Lessons
Posted on September 17, 2015 byKim and I have been managing rental property and tenants since 1997. We still own the very first single-family investment property we bought way back then!
Between then and now, we’ve made every landlording mistake in the book. We’ve bought bad rental properties, rented to awful tenants, and let tenants get three or four months behind in rent.
Here’s the important thing to remember: With every mistake we made, we learned what not to do. And with everything we did right, we learned what to keep doing. That said, here are the top 10 landlording lessons I’ve learned over the years.
Number 10: Take the magic nickel. Why own rental property? If you flip a house, you make a dollar. The only way to get another dollar is to find and flip another house. With rental property, you only make a nickel. But it’s a magic nickel that you get every month for as long as you own the house!
Number 9: Begin an eviction ASAP. Over the years, we’ve had tenants not pay us on time. In the beginning, we’d work with them only to be left holding the bag after three or four months of non-payments. When a tenant defaults on the lease, immediately file for eviction in order to get the eviction clock started. Read More→
No Seller Wants Cash – EVER!
Posted on August 10, 2015 byJust got a call from a realtor. She represents a homeowner who needs a quick sale. The realtor said, “Bill, my client will only consider an all-cash offer. We’re not interested in any of your creative razzle-dazzle deal structures, understand?”
Kim and I get a lot of calls like this. I’ve learned not to say, “No seller wants cash – EVER – ya dingbat!” Saying such would ruin the relationship and destroy the possibility of meeting face-to-face with the seller.
So what do you think? Do sellers really want cash or could I possibly be right?
In this situation, what if I immediately agreed to pay the seller’s $80,000 asking price – in cash? There’s only one condition: The seller must put the $80,000 on her kitchen table, cover it with plastic wrap, and agree that once a month the seller, realtor and I will get together and marvel at the big stack of money.
Sure, this is a silly stipulation that no seller would agree to. But why – since the seller is getting exactly what she wants – wouldn’t she agree to it? Think hard on this. It’s an important question to contemplate! Read More→
What Makes the Best Rental Property?
Posted on July 6, 2015 byOver the past twenty years, Kim and I have bought a wide variety of investment homes – everything from a one-bedroom, one-bath duplex to a six-bedroom, four-bath McMansion. Experience has taught us what makes the best – and worst – rental property!
Jack Miller said: Everything else in real estate is harder than a house. With that said, Kim and I stay away from townhomes, condos, duplexes and apartment buildings. We’re not saying these are bad investments; it’s just that they require a lot of hands-on attention, and our goal is freedom, not a j-o-b.
When it comes to single-family homes, the most in-demand property is a three-bedroom, two-bath home…with a garage…without steps…on a level lot…in a nice, convenient neighborhood. We call these Walmart houses.
Think of a Walmart house this way: Go to a checkout register at Walmart that has ten people in line. You hold up a picture of your investment property and ask, “Who would like to live in this home?” You want eight out of ten hands to go up. Next – and this is the most important question of all – you ask, “Who can afford to live in this house?” The eight out of ten hands need to stay up. If several hands drop, then your rental property is too high-end – which means you’ll have fewer prospective tenants able to afford the monthly rent…and having fewer applicants is not better when it’s time to rent your property! Read More→
How Do We Fund Our Deals?
Posted on June 8, 2015 bySince we don’t use banks, how do we fund our deals?
Do banks have money to lend? Think carefully – this could be a trick question! Don’t banks “borrow” the money they lend from their depositors? And why do depositors keep their money in the bank? Because it’s the safest place to keep it, right? But is it really?
What interest rate is your bank paying on savings these days – 0.3%? And what is the current rate of inflation…something like 4%?
Here’s a broad-brush picture to help you understand what’s really happening. You put $10,000 in the bank earning 0.3% interest. One year later, your nest egg has grown to a whopping $10,030. But let’s not forget about inflation. In reality, after you factor in inflation, the actual buying power of your $10,000 dropped by 3.7% to $9,630! What – you LOST money? Read More→
How to Make a Written Offer
Posted on May 11, 2015 byLast Saturday, I took thirteen real estate investors from the Chattanooga Real Estate Investors Association door-knocking. Before heading out, we discussed how to make a written offer to a seller.
The group had a number of questions: 1) How do I find a property’s fair market value? 2) How do I discover market rents in the area? 3) How do I make a written offer right there on the spot?
The first thing to remember is that an offer is different from a purchase contract. A purchase contract is often a formal document written in legalese that no one – especially the buyer and seller – understands. On the other hand, an offer can be written in plain English on a Post-it note that makes sense to everyone! (NOTE: On North Georgia REIA’s Facebook page, you’ll see three of the written offers I made in Chattanooga.)
Randy Shelley is an investor who lives in that area. We spent the day knocking doors in his subdivision. Though he already knew the fair market values and approximate rents for his neighborhood, I asked him not to share this information with the group. Read More→
Would You Break Into A Vacant House?
Posted on April 7, 2015 byYou’re out working foreclosures and see an obviously vacant house. There is a sign in the window saying the home has been abandoned and winterized. You look through the window and confirm that it is vacant. Do you open the door with your “investor key” (a credit card) and go inside to look around?
Over the years, real estate investors have hotly debated this topic. Some investors would never go in the home, while others think nothing of slipping the lock so they can inspect the interior before bidding on the property.
I know investors who regularly go into vacant homes. The popular thought is that there’s nothing wrong with that. The investor is not there to steal or vandalize anything, he’s there to estimate the rehab cost so he can accurately determine his maximum purchase price. What can possibly be wrong with this?
There are a lot of funny stories told by seasoned investors about things they found in abandoned properties; things you can’t believe a homeowner would leave behind – like artificial limbs, stuffed (taxidermy) animals, porno magazines, etc. After hearing these stories, many new investors come away thinking that it’s OK to break into vacant homes. But I’m here to tell you – think again! Read More→
How to Work Pre-Foreclosures
Posted on March 9, 2015 bySince 1995, Kim and I have been buying properties at the foreclosure auction. Over time, we’ve built a unique system that’s very effective. It has allowed us to buy many properties pre-foreclosure, at the auction and from banks after the auction. Today, let’s talk about how to work the pre-foreclosure market.
When it comes to foreclosures, our best deals come from buying pre-foreclosure! At the foreclosure auction, there are always investors willing to work on much thinner margins than what we’re comfortable with, and so we’re often outbid.
On the other hand, when buying pre-foreclosure – that is, before the auction – there’s very little competition. Why? When homeowners are facing foreclosure, because of unfounded fear, few investors will knock on their door.
There’s another BIG benefit to buying pre-foreclosure. Since you’re buying from the owner, there are many more creative deal-structuring tools you can use to construct a win-win deal. If you buy at the foreclosure auction, there’s only one tool – a big dang hammer…CASH! There’s no creativity, beauty or imagination when doing an all-cash-on-the-barrelhead deal – nor is it a win-win deal. Read More→
How to Make the Impossible Deals Possible
Posted on February 9, 2015 byDid you know that every month, within 5 miles of your home, there’s a $15,000 net-profit deal waiting to be had? The hard part is finding it, and then knowing how to creatively structure it into a big-profit deal. There won’t be a large sign in the yard that reads: Stop Here – $15,000 Deal Inside!
A common mistake made by many would-be real estate investors is to run a We Buy Houses ad, then sit back and wait for the phone to ring. A truth: The phone rarely rings! Because of this, most new investors go out of business long before they find their first deal!
To succeed at real estate investing, you must get face-to-face with sellers on a regular basis. The fastest, cheapest and most effective way to accomplish this all-important task is to simply knock on sellers’ doors and ask why they’re selling.
In addition to door-knocking, you must continually learn creative deal structuring techniques from experienced real estate investors. The best creative deal structurer I know is Pete Fortunato. With nearly 50 years of deal-making experience under his belt, he’s the master!
To show you how to make the impossible deals not only possible, but also very profitable, let’s look at one that Kim and I just completed. Read More→
“Impossible” is a Human Invention
Posted on January 6, 2015 byRobert Schuller came up with a great quote in 1973: What would you attempt to do if you knew you could not fail?
As 2015 begins, after finding yourself a quiet place to write down your goals, place Mr. Schuller’s quote in front of you. Next, with each goal you put to paper ask yourself: If failure is impossible, is this still a worthy goal for me to pursue?
At the beginning of each January, many of us make goals – they’re called New Year’s resolutions. This flood of goal setting is evident by the huge increase in the number of folks in the gym, and also by the number of people reading self-help books.
Sadly, by February, we’re back to seeing just the regulars working out – with the exception of two or three new people who’ve gutted out the pain and continue coming to the gym. As for the self-help books, most lay half read on shelves gathering dust…never to be opened again. Read More→
Starters, Estate Builders and Enders
Posted on December 5, 2014 byThere 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→
