So… You Want to be a Real Estate Investor…

By Lou Brown

If you have the intention to be successful in Real Estate, taking a look at what is working for others may be a good place to start…

Let’s understand what you want to accomplish. Do you want to have your own business in real estate?

Do you want to buy and sell, or buy and hold, or deal in mortgages, or buy and renovate, or build, or subdivide, or some derivation of these?

Frequently I meet individuals who just think about real estate investing in terms of a way to make money, without considering the direction to take. In my mind, that’s similar to a teenager saying, “I want to get a job, so I can earn some money.” Well, that’s great… but what kind of job?

With a general goal like “making money” or “being a real estate investor” people proceed based on what they think they should do next. Which may or may not be a smart move.

Think about the traditional process we go through to start earning a living…We start with over a decade of school.

Now, did they teach us a skill to go into business at school?

No, that is NOT what is taught at school… they teach you how to work for someone else! Even courses entitled Entrepreneurship, Business Management, and Business Applications don’t teach what you need to know about creating, and more importantly… sustaining, a viable business. You see, they don’t teach what you need to know about the process of owning and running your own business. They do teach much of what you need to know about how to work for someone else, but unfortunately they do not teach us how to work for ourselves.

Not only are you not taught how to start or maintain a business for yourself, they also don’t teach how you can get wealthy. That’s the process of how to create assets that work and create income for you, instead of you working for it.

So, what can you do to learn this?

1) You must learn from someone who has done it for themselves. 2) More importantly, you must learn and adopt a process to have that happen for you without all the expensive and time-consuming trial and error that comes with creating a business without a path to follow.

Michael Gerber, author of “The E Myth,” stated that 1,000,000 people go into business in the United States each year, but within 5 years, 96% of them are out of business. I don’t know of anyone who has that intent, but that’s what happens.

They, like you, are attracted to creating a business in hopes it will provide a good living and retirement income too. But for 96% of them, that promise, or vision does not come true and they lose the chance to get freedom from the shackles of working for someone else.

Gerber goes on to say that those with the dream of entrepreneurship thought business worked one way when in actual fact successful businesses work in quite a different way… hence, the title of the book, “The E Myth.” He reports that when the entrepreneur follows a different path, 75% are still in business AFTER five years.

What he found is that those who enter business with a franchise are able to build and sustain their business because they have a path to follow… a clear, direct, tested and proven path that leads them right to the money without the risks and pitfalls that so many others fall into.

Seems sorta obvious, right? Think of some franchises…McDonalds, for example, has a system that works. It works worldwide. Follow their system and it’s almost a guaranteed succeed.

Let me relate a story. Years ago, I invested in building a Holiday Inn, (funded using private money). We could have opened that hotel and called it “Lou’s Motel”. That would have saved us a ton of expense, but would it have been an uphill battle for us to find customers? You bet it would! Not only that, we would have had to create our own reservations system, housekeeping training, accounting software, resources for supplies, and all the rest.

Instead, we opted to go with a known brand – Holiday Inn. Now at the time, this was very expensive; tens of thousands to use their name; multiple thousands for their training and more for their software and 8% of every dollar that came in, for the entire length of the franchise agreement was theirs.

Whew! But we opened the doors to an immediate 100% occupancy and understanding of the proper way to manage the hotel, staff, marketing and lots of support. We were able to take their training, tools, technology and team and have an up and running business without having to make it up as we went. That made sense to me -Doesn’t that make sense to you?

So the question you may be asking is…” Does the Real Estate business have such a path?” You bet it does! And you can actually choose the path to follow.

Your real estate investing needs to be thought of as a business – not just buying and selling a house – and just like a business, you’ll want a business plan to follow; one that allows you to build a business that will generate a good income and a future of dependable continuous cash flow for you and your family.

Your business plan needs to cover all the aspects of this confusing real estate business…

  1. Provide for safety and allow for controlled expansion.
  2. It needs to include all the possible profit centers in Buying, Renovating, Managing, and Selling.
  3. The paperwork and processes need to support all the aspects, so profits and risks don’t get overlooked.
  4. It needs to provide a business model that can be easily duplicated regardless of the size or economic condition of the market you are in.
  5. It needs to have a training and support component to allow for adjustments as the market changes.
  6. It should provide branding to benefit from nationwide recognition and marketing.
  7. It should support building a sellable business, so you can exit when you want to without having to liquidate.

In order for this concept to work in your real estate business your business plan needs to include all the necessary Tools, Training, Technology and Team(tm). It needs to be a holistic approach rather than a concept from here, a form from there, a piece of marketing from someplace else all jumbled together like some untested recipe. In fact, that is the recipe for disaster that so many would be investors follow.

And this is why, as Gerber explained, 96% of businesses without a plan will be out of business in such a short period of time.

Does this make sense to you?

So how do you get a true, time tested business plan that works in all locations and takes advantage of the most compelling profit centers in the business – complete with support to be sure that occurs?

You have to look at people who have and have been using a plan that survives the test of time and still produces results. Fads come and go, and so do the cycles of the real estate market, so don’t base your future on a trendy investing “flash in the pan.”

In my 40+ years of running my successful real estate business, I’ve identified the component parts to make a real estate business work – for anyone – regardless of their current net worth or monthly marketing investment.

I developed a system that allows you, regardless of income or background, to build a business that will have all the benefits a franchise offers without nearly the typical investment. It includes Tools, Training, Technology and Team™ … all in one place AND with the component that is the most important – the wealth aspect and huge profit center of holding property.

Anyone who is serious about having control of their financial future should have holding income producing real estate as the center or at least as a component of their portfolio. You need assets that will work for you for the rest of your life.

This is where real WEALTH resides… assets and equity working for you instead of you working for it.

The combination of Income, Depreciation (tax benefits), Appreciation (growth), Equity Build-up (appreciation and mortgage pay-off) and Leverage (using O.P.M. – other people’s money) makes this the IDEAL unbeatable combination of investment benefits usable by anyone in any walk of life.

Because of your involvement with Realty411, you likely have the basic tools already. That is a good start. You may be someone who can see the value in the holistic approach including branding to allow you to take advantage of all the profit centers.

If you understand the benefit of the “franchise concept” (a proven model and system of success that can be duplicated by anyone) and would like to structure your business to run systematically, then you are welcome to take a look at how I’ve structured my business. It’s a model that has provided me with a lifestyle I love and has provided hundreds of other investors with the same.
You can access a free training on this system anytime, 24 hours a day, by going online to millionairejumpstart.com/dealw.

Equipped with the right holistic tools, training and support, you will achieve your goals. My mission and prayer for you, is success in this business that will benefit you and your family for many years and generations to come.

Warmly,

Lou

Certified Affordable Housing Provider

Top FIVE Alternative Financing Available to Entrepreneurs

by Teresa R. Martin, Esq.

Financing is indeed the most crucial of the puzzle for almost every business. Unless you have access to enough capital to bootstrap your business or raise it from family and friends, chances are, you’ll need a loan or investments.

When a conventional bank loan isn’t right for you, or if you’re looking for an additional injection of capital to grow your company, there are plenty of other options. Here are five alternate ways to finance your startup or grow your small business.

LOVE MONEY

This is money loaned by a spouse, parents, family or friends. A banker considers this as “patient capital”, which is money be paid later as your business profits increase.

When borrowing love money, you should be aware that:

  • Family and friends rarely have much capital.
  • They may want to have equity in your business: Be sure you don’t give this away.
  • A business relationship with family or friends should never be taken lightly.

RETIREMENT FUNDS

As with borrowing money from friends or family to buy a business, some might consider using money from a retirement nest-egg risky. That said , it can often be an effective way to invest in your entrepreneurial endeavors for more and more of today’s business buyers.

As laid out by the government’s ERISA law, you can invest your existing IRA or 401(K) funds to the purchase of a business without taking any early distribution and incurring penalties.

It’s even possible to combine money from your retirement fund with loans and other funding methods for greater flexibility. Many entrepreneurs choose to invest in a business they control because they believe the growth opportunity is greater; and they want to diversify a portion of their retirement holding outside of the stock market.

ANGEL INVESTORS

Angel investors invest in early-state start-up companies in exchange for a 20 to 25 perfect return on their investment. They have helped to startup many prominent companies , including Google and Costco.

Angels are generally wealthy individuals or retired company executives who invest directly in small firms owned by others. They are often leaders in their own field who not only contribute their experience and network of contacts, but also their technical and/or management knowledge.

They tend to finance the early stages of the business with investments in the order of $25,000 to $100,000. Institutional venture capitalists prefer larger investments, in the order of $1,000.000.

In turn for risking their money, the reserve the right to supervise the company’s management practices. In concrete terms, this often involves a seat on the board of directors and an assurance of transparency.

Angels tend to keep a low profile. To meet them, you have to contact specialized associations or search websites on angels.

SELLER FINANCING

Increasingly today’s more business-for-sale transactions are resting on a seller-s willingness to finance at least part of the sale. In a deal that includes seller financing, the seller takes part of the purchase price in cash and the remainder in the form of a promissory note that the buyer will pay back with interest over a period of three-to-five years.

This has become essential; buyers are having difficulty accessing funds through traditional methods, therefore there’s a natural gravitation toward seller-financed business to help offset some of the cost upfront.

Conversely, sellers who continue to say no to seller financing are finding it difficult to close a deal, and as more of them have realized this, there has been an increase in seller-financed businesses on the market. If you’re in the market for a small business it’s important to be aware of alternate funding options, but know that in some cases it’s still possible to borrow from a bank.

Government stimulus and bank policy have been trying to promote ongoing small business lending, although many banks are still more conservative than they used to be about when and to whom they’ll loan money.

CROWDFUNDING

Crowdfunding sites such as Kickstarter and Idiegogo can give a boost to financing a small business. These sites allow businesses to pool small investments from a number of investors instead of having to look for a single investment.

Make sure to read the fine print of different crowdfunding sites before making your choice, as some sites have payment-processing fees, or require businesses to raise their full stated goal in order to keep any of the money raised.

Today’s business-for-sale marketplace is full of exciting opportunities that will allow you to take your destiny into your own hands and with various options available there’s no reason to let a shortage of traditional capital sources get in the way of your dreams.

ABOUT THE AUTHOR

Dr. Teresa R. Martin, Esq. is a motivational speaker, author, million-dollar real estate wealth coach, business strategist, and legal counsel. She is living the life she loves and an teach you how to do the same!

As founder of the Generational Wealth Zone Group, Teresa R. Martin formed the original vision for a group of companies that would help clients create, manage, protect and grow their wealth. She is dedicated to showing individuals and entrepreneurs how to become financially empowered by turning the work they love into a profitable and sustainable business.

 

The Deal of the Century

By Alton Jones

Is this your last opportunity to create greatness?

For all we know, it might be. That’s certainly how I live my life. But as the holidays come up, I see more people getting into the slowdown mindset. Thinking they won’t be able to do anything between Thanksgiving and new years, they stop trying. There are no good deals to be had this time of year, right?

This mentality is absolutely wrong. I believe that every opportunity might be the last to create greatness. Life is short and uncertain. We’re always existing in one of three zones — green, yellow, or red. When you’re green, you’re kicked back. In yellow, you’re about normal. But in red, you’re working hard every minute, constantly on the move, looking for the next angle and the next opportunity. I’m always in the red zone, and I hate to see people slack off to green this time of year.

Never get a good deal this time of year? I believe that the deal of the century comes along at least once a week. But you have to be operating in that red zone to get it. You have to be looking for the great seller, the private lender who will bring you the deal of the century. You have to be willing to fight to the end to get it.

You also have to deliver value. On our first Rehabs2Riches boot camp, the hotel practically had to kick us all out at the end. I was delivering high-quality content so impactful that the attendees didn’t want to leave. They were scared they’d miss out on the golden nugget that was gonna put them over the top. They stayed until the last minute, the last second of day three, because I delivered value.

I believe that price is only an issue in the absence of value. People don’t care how much you know until they know how much you care. I’ve had people sell their home to me over other buyers not because I offered more money — I didn’t — but because I created a value for them. The home had been their mother’s, and in the family for over 50 years. They needed to know that it was going to be treated with respect.

I understood the emotions behind that, and exercised the golden rule. I asked a few simple questions about what was most important to them, and then showed them they could trust me to respect the house.

I found that deal by operating in the red zone, and I secured it by delivering value to the seller. And it wasn’t really about real estate — it was about building a relationship, because as I always say, we’re in the people business.

And if we’re in the people business, why wouldn’t you be operating in the red zone this time of year? Holiday events, family get-togethers, and business cocktail parties — they’re all opportunities to build relationships and find the deal that will put you over the top. You’re surrounded by people who you should build relationships with, even if they can’t do business with you right now. They might refer you to someone else down the line. But you can’t be dawdling along in the green zone and expect to find it.

The deal of the century is happening this week. Stay in the red zone and go get it.

 

Are You Ready To Live Overseas? Before You Move, Read This.

-Special Submission by Matt Malouf-

The surge of Americans living full-time and seasonally abroad continues. Currently, The Association of Americans Resident Overseas (AAR) estimates that 8.7 million American reside oversees. Our editors have seen many real estate investors who read our publications make that transition.

Their reasons are varied, but have included: to retire early from a corporate job, to explore other cultures, as a way to stretch their monthly cash flow, to upgrade their standard of living, and of course, for the ever-so-popular amore.

If you’ve been considering moving to Coast Rica to escape that boring 9-to-5 or have always wanted to own a bed-and-breakfast in the Island of Santorini, read on to see if this option suits your lifestyle.

Starting a new life in a new country can be nerve-wracking. You have to understand the new culture and it is difficult when you get labeled as a “foreigner” or an “expat” on first sight. Here are a few tips that can help you adapt to a new life in a foreign county.

Trying New Things

As they say, you should always be willing to try new things, but, of course, you need to draw a line somewhere.

However, there are a lot of people out there who are afraid to eat new things, let alone experience extreme sports and adventure. This is the fear of the unknown and many research studies suggest we fear uncertainly more than a known bad outcome. Some of the questions that come to mind when people want to try new things are what if that country is dangerous, what if I drown and what if I don’t like the new dish.

It is natural for some level of fear to always be present when trying out new things; however, our overactive imagination makes it seem so much worse. Once a person makes up his mind to try new things at every possible turn, he or she will see a reduction in their fears and a thirst for new experiences.

Trying new things also makes us grow. Taking yourself out of your comfort zone and putting yourself where the action is will make us more empowered, open-minded and far from being bored. Afterall, you only live once.

Do As the Romans Do

A lot of people have trouble adapting to new places. Although living in an exotic new land may sound like a romantic notion, many people fail to make the transfer from expat to compatriots when they stick to their old lifestyles.

Most people experience culture shock after they witness a culture so vastly different from theirs. Culture shock slowly sets in and results in depression. This further alienates a person from the locals and makesthem feel lonely and homesick.

So, if you want to live abroad, make sure to open up your mind. Remember, this is not the country from where you came from and your old notions and concepts will no longer serve you. Since you will encounter different rules, observe how other people are acting in that situation so that you can understand what is expected of you.

One of the biggest concern of foreigners is that they are uncomfortable being a “visible minority.” A white person will stand out like a beacon in Nigeria or Japan and is bound to generate some odd looks. But if you adapt to the locals’ customs and follow their lead, you will see that your differences will look less marked.

Also, ask questions. If you feel lost, there is no shame in asking for help. You can always ask for explanation if you feel you have missed something. Also pay attention to not just the words but nonverbal communication to get a better idea of what is going on.

Once you accept change and adapt to your life in a new environment, you will find it has opened venues of opportunities for you and will lead to more thrilling and interesting stuff.

Don’t Wait For Anyone Else

Once you get to your new country, don’t wait for others to give you instructions on how to go about doing your business. Take the initiative and do it yourself. Ask lots if questions. Many Americans will experience a 180 degrees difference when they come to live in India or Egypt. The best way to cope with it is to go out and participate in what the locals are doing. You can learn a lot from actually experiencing things compared to what you are just told or what you read.

Speak the Language

Many English speakers are under the misapprehension that they can get by throwing random words of English and locals will understand them. Hence, they suffer quite a shock when they realize not many people in Asian or African countries speak English.

It is recommended that people who want to live in a new country must at least learn some key phrases in a foreign language so that they can order food or drink or find their way to a hotel. However, knowing the language extensively will enable you to have proper conversations with the locals, which can help you quickly learn about their customs and traditions. It will show how interested you are in knowing about your new country.

Pursue New Activities and Hobbies

In my understanding, if you are learning to live in a new country, you should also try and pursue some new hobbies. Try to explore where you are and what your place is in the greater scheme of things. This will help you look at the world from a different perspective.

One of the best things you can do is to look for a group that matches your interests. Even if you are from the other side of the world, there are always commonalities. Are you interested in cooking and is there a group offering local, exotic cuisine classes? Is there a local who likes to travel the world like you do and have many exciting stories to share? Join them.

If you are feeling isolated, look for a community of expats or start your own group. They will be native English speakers and will understand the norms of where you came from and can offer you words of advice.

Respect Different Cultures

Remember that unfortunate photo of Selene Gomez baring her leg in a mosque while she was on a visit to the United Arab Emirates? Don’t make that mistake. Be responsible and respect other people’s culture and religion.

The first thing you need to do is to accept the fact that there are many different cultures in the world other than just our own. Even if you do not agree with a custom or tradition, remember that it could encompass the country’s value and you need to honor your role as a visitor. An act that may seem simple or trivial to you may reflect something far more significant for a person from that culture. Being open-minded can fill your life with positivity and also encourage friendships with people from different race, culture and backgrounds.

If you follow these few simple rules, pretty soon you will be able to make a new home overseas. So, do you have what it takes?

-Special Submission by Matt Malouf-

Malouf is an International Real Estate Consultant.

For more information, please visit MyLifeWorldWide.com

Malouf has also published a book, please find more information @ https://www.amazon.com/Matt-Malouf/e/B07CGHV3XJ

Network in the “American Riviera” at Realty411 and SB-REIA’s Annual Conference

Santa Barbara, Calif. — Sophisticated real estate investors from throughout California and beyond will unite this Saturday, August 31st, at the exclusive Hilton Santa Barbara Beachfront Resort, located on 633 E Cabrillo Blvd, Santa Barbara, CA 93103.
The annual expo and conference, which is hosted by Realty411 magazine and the Santa Barbara Real Estate Investors Association, begins at 9 am and takes place in the Fiesta Room.
The 8th Annual Complimentary Real Estate Expo and Conference will highlight numerous renowned companies and speakers, such as: Paul Finck – The Millionaire Maverick – If you are ready to take your real estate portfolio and life to a new level, then don’t miss Paul’s life-changing presentation. Anthony Patrick, New Harvest Ventures – Learn from local rehabbers who are doing numerous transactions in Southern California. Jeremy Rubin – The Friendly Flipper is ready teach you how he left his corporate job for the thrill of full-time flipping in the Central Coast. Mussette Profant – Sterling Sites – Discover the best way to maximize your rehab budget with this renowned architect residing in the area. Rusty Tweed – TFS PROPERTIES – Rusty Tweed has been involved in real estate transactions throughout his entire adulthood, having purchased his first rental at 22 years old in his native home of Toronto, Canada. Soon after landing in Southern California, Rusty began sourcing and flipping foreclosures and has done dozens of real estate flips. Tina Lewis, Social Media Expert, will share some fantastic strategies to significantly expand your social media outreach. This special presentation will focus on social media for Brokers, Agents and Investors! In addition, one of the publisher’s personal brokers, Cindy Eisen, Coldwell Banker Select Realty, will answer questions about the local market and some of the creative strategies she has seen in her long-standing career in real estate. Cindy has been instrumental in helping Realty411‘s publisher in acquiring and selling some of the distressed properties they have purchased and rehabbed since moving to the 805 area code from Los Angeles County.
Plus, guests will have a chance to meet TOP PRODUCERS and PRIVATE MONEY LENDERS from the Central Coast, as well as from throughout Southern, Central, and Northern California. This complimentary event will also have coffee, pastries, and even lunch for early-bird guests (OUR FIRST 25 GUESTS RECEIVE LUNCH TICKET, SO PLEASE ARRIVE EARLY). Realty411 and SB-REIA’s Annual Beachfront Expo is one real estate conference that motivated individuals should not miss.

For additional information or tickets, please visit:

https://www.eventbrite.com/e/santa-barbara-real-estate-investors-expo-with-sbreia-realty411-tickets-61493386374

LIVE WEBINAR: Kansas City vs Dayton, Ohio

Dear Realty411 Reader, You are invited to join Phil Alexander from Maverick Investor Group on a live webinar this Tuesday, where he will break down two of the hottest rental property markets this year: Kansas City and Dayton, Ohio. They are very different markets, so…how do you decide between the two? What are the real differences, and…which one is best for your real estate investing criteria? Listen to a market-comparison, where we break down these two markets side-by-side so you can understand the differences and determine which is the best fit for YOU.
LIVE WEBINAR: Kansas City vs. Dayton, Ohio: A Turnkey Real Estate Market Comparison Tuesday, August 27th at 6pm PT (9pm ET) RESERVE YOUR SPOT
The webinar will include a private buying opportunity for cash-flowing rental properties in BOTH Kansas City and Dayton. You will get access to off-market single-family rental properties that are fully renovated with tenants and local property management in place. PS: This webinar is LIVE so you can get your personal questions answered at the end of the webinar!

Marketing to Motivated Sellers in Rural Communities

By Kathy Kennebrook

Since I am the type of investor who purchases properties in multiple counties and in multiple states, I have had lots of experience buying homes and vacant land in rural communities. In fact this is a part of our business that we find to be very profitable for us . I will share with you that buying properties this way is a science in and of itself. There are many different parameters and techniques you need to implement to buy properties in rural areas, but it can be a very profitable business for you.

First of all, if you like to buy vacant land, it can be a real challenge at times. For example, many times the parcels you are looking to purchase will not have a street address, making them more difficult to locate on public records to do a search. You will need plat maps and street maps in order to locate these properties. One advantage to buying in rural areas is that generally speaking the folks at the court house, the property appraiser’s or assessors office and the tax collectors office are usually easier to work with and very knowledgeable about the local area and property.

If you plan on buying vacant land, I would suggest getting a plat map book which shows the subdivisions and the properties in lot and block. The easiest way I found to do this is to go to the court house or property assessors’ office and ask if they have a copy you can buy. If this is not possible, find out if you can make a copy of the one they have. Sometimes they will let you borrow it, or copy it on the premises.

This is another main difference when working in rural areas; the folks at the Court House and Property Appraiser’s office are much more likely to be very helpful to you. Having a Plat Map Book available will make it a whole lot easier to locate the properties you are trying to buy. If it is possible, you may also want to purchase a computer program that shows this type of information so you have it at your fingertips. There are programs like Real Quest or Win2data available for this purpose.

The other thing you will also need is a street map of the community. Usually these street maps will also show subdivision locations. This also makes it easier to find the properties you are trying to locate. You can use the plat and the street map together to locate the specific properties you are interested in making offers on.

If you are looking to buy properties in rural areas there are three main ways to find motivated sellers. One of those is to work with a local Realtor. Usually, they are much easier to work with than those in larger cities. They are usually willing to share information for example on why a seller needs to sell. If the first Realtor you talk to won’t help, find another. You do need to be careful in one respect when working in rural areas with Realtors. Many times the Realtors themselves are investors, so you need to make sure they won’t snipe deals from you if you ask them for help with comparables before you have a property under contract. Also make sure the Realtor you are working with has access to the MLS because some of them do not. Sometimes there are MLS listings in these rural areas that can produce good deals for you as well. Additionally, if you plan to list properties with a Realtor, you want to make sure they get listed on the MLS.

The second way to find motivated sellers is to simply use signage. Usually in a smaller community, the sign ordinances are not nearly as strict as they are in a larger city. When you put signs up in the ground or on poles, they are likely to stay there for long periods of time, so using signage usually works very well to find motivated sellers.

The third way to find motivated sellers is to do direct mail campaigns to non-homestead exempt or absentee owners. The programs I use to do this are called Real Quest and FIS Data.  If you go to my web site at www.marketingmagiclady.com, you will find a lot more information on these companies. These programs can provide plat maps, sales information, property information, comps, and more. I personally use these programs to find motivated sellers in the community I like to buy in.

Another way I use to find all the motivated sellers I need in rural areas is to send direct mail to owners of vacant land whose tax bill has not been paid. This is an easy list to get and can be obtained from the tax collectors office. Usually these are folks who have inherited properties they really don’t want or need and this list is an extremely effective list source.

There is absolutely a lot of money to be made in rural communities and people sell for a variety of reasons. I find the main ones to be estate and probate and pre-foreclosure. All of these situations create wonderful opportunities for buying properties well under their value. Just remember that you will have to be a little creative when you resell or lease these properties since you are dealing in a very small market area. Usually I will advertise in the newspapers of bigger cities surrounding the rural area or work with a Realtor who can get these properties list nationally. There are lots of people who are looking for vacation properties in rural areas.

You will also need to set yourself up with a title company who understands your business, even if you have to train them yourself. I know that the first couple of deals I purchased into land trusts I had to explain to the title company. I even provided them with the deed that included all of the duties of the trustee. Once you have them trained, they can be a real asset to your business, especially when it comes to working with out of state sellers.

Buying properties in a rural area is a real learning experience, but I will tell you that if you take the time and the energy to do it, there is a lot of money to be made, and there is almost no competition for these properties at all.

For more information on finding motivated sellers in rural areas and the Real Quest and FIS Data programs, along with all of the other tools you need to find motivated sellers, visit my  website at www.marketingmagiclady.com  I am one of the top Trainers in the country with regard to marketing and finding profitable real estate deals and I offer ongoing support to all of my students and customers. While you are at the website be sure and sign up for my FREE Monthly Newsletter.

Kathy Kennebrook

Kathy Kennebrook is the ultimate success story. She spent over 20 years in the banking industry before discovering the world of real estate. After attending some real estate seminars this 4 foot 11 mother of two got really excited and before you know it she’d bought and sold hundreds of properties using none of her own money or credit.

Kathy holds a degree in finance and has co-authored the books- The Venus Approach to Real Estate Investing, Walking With the Wise Real Estate Investor, and Walking With the Wise Entrepreneur which also includes real estate experts Suze Orman, Robert Kiyosaki, and Dr. Wayne Dyer.

She is the nation’s leading expert at finding highly qualified, motivated sellers, buyers and lenders using many types of direct mail marketing. She is known throughout the United States and Canada as the Marketing Magic Lady. She has put together a simple step-by-step system that anyone can follow to duplicate her success.

Kathy has been speaking throughout the country and across Canada for over 14 years and has shared the stage with Ron LeGrand, Dr. Phil, Dan Kennedy, Mark Victor Hansen, Ted Thomas and Suze Orman to name a few.

Kathy is going to share with you how she generates a seven figure income by mailing a handful of letters throughout the year to highly selected targets by knowing exactly what to send them, who to send them to and exactly how to deliver her message. She will teach you the secrets of pre-screening and automating your marketing and follow up systems to put your entire Real Estate business on auto-pilot.

 

Having Trouble Finding “Good Deals”?: Use Probate Leads to Diversify Your Lead Source and Find Motivated Sellers

By Kristine Gentry, Ph.D.

We’ve all heard that the real estate industry is changing.  Investors often wonder – “How can I find properties worth investing in?” With more and more competition in the marketplace, challenges in getting loans, and cautious homeowners staying put, it can feel like it is impossible to find property that you might be interested in purchasing for your real estate portfolio.

What new and experienced real estate investors are seeing in the market is a fundamental change that may last for the foreseeable future.  Overall, the nation is experiencing a shortage in the amount of properties that are being put on the market, leading to a lack of leads.  This is creating increased pricing on homes that are for sale and issues in trying to build and acquire a real estate portfolio.

Does This Mean Real Estate is a Bad Investment?

In short, the answer is no. Real estate is not a bad investment and has proven to be a very good investment over time. However, investors are probably changing their investment strategy and looking at markets that still have “room to grow.” In addition to looking to new markets, some investors are looking to expand their source of leads.

Housing Shortage Equals Inflated Prices

Most economists will tell you that the biggest drivers in the market are supply and demand.  As you can imagine, decreased supply in the housing market means that pricing has skyrocketed, something that real estate investors simply cannot afford when they are looking for business opportunities. These historically high prices mean that people who are making less money have to spend more of the income that they do have on a home.

Surviving the Shortage as a Real Estate Investor through Probates

If you are interested in continuing to work in real estate, then you know something has to change.  Real estate investors have a limited amount of options when facing a market like this.  Some investors have simply moved on to other business opportunities, while others have succumbed to the increased prices, which have hurt their business and their balance sheets.  But, there is a segment of real estate investors who have found a profitable way to deal with the challenges of the housing shortage by finding a new source of leads.

While many investors are only looking at the traditional segments of the market – single family, residential homes that are for sale by families who want to upgrade that are listed on the traditional MLS-style forums – there are other homes on the market that can be purchased at a significant discount.  Properties owned as part of a probate are widely available and can be purchased for well less than comparable homes in the area.  In fact, there are an estimated 100,000 probates entering the market each and every month throughout the United States.

Probate properties are those homes, apartments, multi-family homes and commercial sites that were previously owned by an individual who has passed.  The local court then appoints an Executor to ensure that these homes and other properties are sold to take care of paying medical bills, funeral fees and other obligations.

Probates Provide Motivated Sellers

Once you start working in probates you will understand why Executors are motivated to sell their properties quickly and for a substantial discount.  Each Executor is responsible to the court to ensure that the assets of the individual who has passed have been liquidated in order to meet financial obligations and provide an inheritance to the individuals left in the family.

Executors not only feel the pressure to sell because of the court, many also feel the need to sell quickly because of other pressures.  While Executors can be a family attorney or an accountant, many times the Executor is a family member who has responsibilities of their own.  They may even live out of state and making repeated trips to show a home or apartment building can be nothing short of challenging.  Executors also understand that, in addition to time constraints, the home their family member owned may not be fully updated.  In addition, most Executors have to split the profits of the home sale with other family members. All of these conditions provide the opportunity for homes and other properties in probate to be purchased for a fraction of the current market value.

Finding Probate Leads

Now that you understand the value of having access to probate properties in this challenging economy, you may be wondering how to get access to them.  Many individuals who are starting a probate business decide that going to the local courthouse is the best way to look for opportunities in their area.  This can take time, as you need to allow for travel to and from the courthouse as well as time evaluating filings to see if there are holdings within the probate appropriate for your business.  As you can imagine, this can take away valuable time from your growing investment business, your family, and the job you currently hold.

There is a better way.  By using a professional probate lead service you can have up-to-date information and leads delivered right to your inbox on a weekly basis.  With no more trips to the courthouse, no time wasted looking at complex filings that are hard to understand, you will have more time to go out and evaluate properties and opportunities.  Unlike traditional leads in the current real estate market which can be nearly impossible to find and create the environment for high pricing, there are literally thousands of options for probate purchases each and every day. And, as Baby Boomers grow older, these leads will only continue to grow.

Build a Vibrant Real Estate Investment Business with Probates

Having access to leads on a regular basis means that you will be able to find success in probate real estate investing.  With time, patience and a carefully thought out business plan, you can be sure that having these leads will make an enormous difference in your ability to purchase homes and other properties at a favorable price. The key to success in probate is making sure you buy leads from a high-quality and trusted provider. Then, you must reach out to Probate Executors and continue to do so for a minimum of six months. This allows you time to truly work probates and to patiently await those Executors who do not want to sell immediately.

Probates also help you to diversify in that they are not limited to residential real estate. What you will find is that you may come across and Executor who has inherited apartment buildings, multi-family units, businesses, vacation homes, and even personal property, including antiques, artwork, and vehicles.  The variety and opportunity with probates is endless because there is always a supply of leads available.

The Most Reliable Source

Are you looking for a reliable lead source for all of your probate investment needs?  The experts at US Probate Leads offer the highest quality leads available on the market today.  Our certified lead specialists visit nearly every courthouse in the United States, constantly evaluating new probate filings and making those available to our investors.  In addition to our premium lead service, we also offer services that can keep you informed on the newest trends in the market. We can also work with you on your mailers to help you easily reach out to Executors. Contact our office today to learn more about our lead service, monthly newsletter, e-books, seminars, webinars and even our individualized mentoring program.  Contact us today to speak to one of our friendly, knowledgeable customer service representatives.

 

Kristine Gentry, Ph.D.

VP of Innovation

US Probate Leads

Email: [email protected]

Web Site: www.usprobateleads.com

 

 

Dealing With “Balloon” Payments

By Bruce Kellogg

“Amortizing” Versus “Balloon” Notes

An “amortizing” note is one where the principal amount is paid off over the term of the loan. A “balloon” note is one where the payments are not sufficient to retire the debt, and an outstanding balance is due at maturity.

What Is The Problem?

The problem arises when the borrower does not have the funds necessary to pay the “balloon” amount when it comes due. Oh, oh! So, here are some ways to deal with that!

Refinance the Property

The first recourse for an owner who wants to keep the property is to refinance either the property itself, or another property in the portfolio. This is a good approach as long as financing conditions are favorable. If conditions are not favorable, other approaches will need to be considered.

Sell the Property

If the owner does not care to own the property any longer, they can sell it and have the sale pay off the loan. Or, they can sell another property to pay off the loan. If conditions are not favorable for selling, again, other approaches will need to be considered.

Renegotiate With the Lender

This is not an ideal approach because the borrower is negotiating from an inferior position. The lender “has the upper hand” because they can always foreclose. So, the borrower should offer the lender a monetary “inducement” for an extension, either a fee, an increase in interest, or payment amount, or both. But, it gets the job done! (Unless the lender says, “No”!)

Protective Note Terms

The best way for a borrower to protect themselves from becoming in an uncomfortable position is to negotiate protective terms in the note in the first place. One might be called a “rollover clause” or an “extension”. Here, for example, the borrower gets a time extension, say two years, for a 2% interest rate increase. This must be written in the note as one of its terms.

Another approach is to convert the note into an amortizing one when the balloon payment is due. Again, these terms need to be negotiated when the note is written and included with the other terms. In some cases, lenders do not need a cash payoff and enjoy receiving reliable note payments from a proven borrower.

Bring In A Cash Partner

If the above approaches aren’t working, the borrower can bring in a cash partner. This basically involves selling a partial interest in the property for cash to pay off the “balloon”. An escrow is recommended with title insurance, and an attorney should draw up an agreement between the parties, who might not be familiar with each-other.

Return the Property to the Lender

This is the least-desirable alternative in most cases. It involves giving up. If it’s going to be done, it needs to be done right, with an escrow, deed with a “Deed-in-Lieu-of-Foreclosure” recitation, title insurance, and transfer of any rents and deposits back to the lender. The lender should cancel the note, and return the original to the borrower. The lender should also record a “Full Reconveyance” in the escrow to clear the title.

File Bankruptcy

This is an alternative, but a risky one. The day a bankruptcy is filed, a 30-day “Automatic Stay” of all collection actions is established. After 30 days, the lender can file a “Relief from Stay” request to foreclose on the property. There is a hearing, and in the case of homeowners the bankruptcy judge will urge the parties to work something out. In the case of investors, the “sympathy factor” is usually low because investors are considered to have resources and several years to handle the “balloon”. The lender is due the money, the judge is likely to rule. (i.e., no relief!)

Conclusion

A “balloon” payment is one of those things that isn’t a problem, until it becomes a problem. It is best to deal with it up-front, in initial negotiations, when the note is originated. During the term of the note, keep working to pay it off. If the due date comes and the payoff funds are not in-hand, find expert help. You’re going to need it!

Good luck!

 

Bruce Kellogg

Bruce Kellogg has been a Realtor® and investor for 36 years. He has transacted about 800 properties in 12 California counties. These include 1-4 units, 5+ apartments, offices, mixed-use buildings, land, lots, mobile homes, cabins, and churches.

Mr. Kellogg is a contributor and copy editor for two national real estate wealth-building magazines: Realty411, and REI Wealth Mag.

He is available for listing, selling, consulting, mentoring, and partnering. Reach him at [email protected], or (408) 489-0131.

Yield Compression – Why are rates in California for alternative real estate financing declining in a rising interest rate market?

By Edward Brown

 

The Prime Rate has been slowly increasing over the past six months, but real estate financing in the alternative sector in California has actually decreased. Why?

Competition between private lending companies in real estate [also known as hard money lenders] has increased over the past five years. This has led to brokers shopping around on behalf of their borrowers to get the lowest rates and points. Too many lenders have had a tremendous influx of capital from the private sector [investors] because of the low rates that banks pay on deposits as well as the volatility in the stock market that has spooked investors.

Prior to 2013, the difference in rates charged by private lenders and the Prime Rate was about 5%. Although the Prime Rate stayed stagnant up until 2018, the rate differential shrunk to about 3.5%. This yield compression was primarily due to the typical economics of supply and demand. There was too much of a supply of money pouring into California by investors, as these investors saw that real estate in California had not only stabilized [since The Great Recession], but had increased substantially, lowering the perceived risks of making private loans.

The default risk of making fairly conservative loans [less than 70% LTV of purchase] was minimized even further by an increasing real estate market. By the time the loan was eventually paid off due to refinance or sale of the underlying property, the LTV had gone down to as much as 40-50%. This was especially true in the fix and flip market for seasoned borrowers with good track records. Although real estate prices seem to have cooled off from the frenzy of buyers [especially those who continually paid over asking price], many of the larger lenders in the fix and flip market have gone as far as lending over 80% of purchase and up to 100% of the anticipated rehab. The amazing part is that these lenders are willing to lend their money out to these fix and flippers at rates as low as 7% and 1 point; this is unprecedented. Not only are these lenders taking more risk than in previous markets, but they are doing so at extremely favorable rates. One can only come to the conclusion that these lenders have a tremendous supply of capital that needs a home; especially those lenders who have investors who are promised a preferred return [usually in a Fund vehicle]. In these cases, idle money is a yield drag to the Fund and jeopardizes the payout to not only the investors but the profit to the manager as is typical in a mortgage pool Fund.

Idle money in a Fund is usually held in a low interest bearing account at a bank awaiting deployment. These deposits need to be liquid, as most private lenders market themselves as speedy – one of the advantages over a typical bank. In addition, their private placement memorandums dictate that idle funds be held in an FDIC insured account; thus, the low yield on these deposits to the Fund.

When borrowers shop around for California lenders, they may find two to five lenders willing to make them the loan they need at favorable terms. Most of the time, the borrowers enlist a mortgage broker who does the shopping for them. Although the mortgage broker may have favorite lenders he/she works with, the broker also knows that many sophisticated borrowers work with more than one broker, so it is the first one who can get the deal done who usually wins out. In addition, the broker realizes that some commission is better than none. Many times, these brokers quote lower than normal rates and points in order to secure the deal. What once might have been quoted as a 9.5% and 3 point deal is now hovering around 8.75% and 1.5 points. [As pointed out earlier, certain fix and flip lenders are charging even less.] The lender usually charges points, so both the broker and the lender are earning less on each transaction because of the lowering of the points that have to be shared between them. Most of the interest rate is earned by the lender’s Fund, but there is overhead that needs to be subtracted as well as the preferred return promised to the investors of the Fund. A 7% preferred return is not uncommon, but, the economics appear to dictate that a preferred return of closer to 6% may be on the horizon.

If interest rates paid by banks to depositors stay relatively low, then investors may not balk at a lower preferred yield; however, if the Prime Rate continues to rise, one might believe that interest rates on deposits at banks will follow. At some point, in order to attract investors, private lenders will have to increase the rates paid to their investors. The only way to do that would be for these lenders to start increasing the rates they charge borrowers, as profit margins to the lenders have been squeezed to its lowest level in many years. It will be those lenders who can run their companies “lean and mean” who will have the advantage in this market and the one to come.

Outside of California, lenders have enjoyed higher yields, but that comes with the potential instability of the real estate market. Many investors have chosen to take the path of least resistance – location, location, location, and stay conservative by earning less than other states may provide, but potentially reducing the risk. Generally, stable California markets have severely reduced the risk of loss of principal and, consequently, produced lower yields to investors/lenders. However, since a loss of 20% of principal in one year means that one has to make 25% the following year just to breakeven over the two year period, the prudent investor/lender might be wiser to accept a lower yield and not balk too much at a lower yield; thus the quandary of investing in California.

Edward Brown

Edward Brown currently hosts two radio shows, The Best of Investing and Sports Econ 101. He is also in the Investor Relations department for Pacific Private Money, a private real estate lending company. Edward has published many articles in various financial magazines as well as been an expert on CNN, in addition to appearing as an expert witness and consultant in cases involving investments and analysis of financial statements and tax returns.