Feel Like Your Branding Sucks? 5 Ways to Cure That Now!

By Sharon Vornholt

Have you ever felt invisible in your marketplace?  If you can honestly answer yes to that question, I’m 100% sure it’s because your branding sucks.

Does this sound like you?

  • You feel like the best kept secret in town
  • Maybe you have a good reputation, but you’re not well known (we’re not counting your friends and family.
  • You’ve been at it a while and the customers you have are happy, but you just don’t have enough of them
  • You’re doing okay, but you know that’s just not good enough
  • You’re losing out to competitors because their marketing is better or they’re well known
  • You know something needs to change, but you have no idea where to start when it comes to branding

When someone has a strong brand it’s because they were in charge of building their brand.

What Are the Major Components For Up-leveling Your Brand?

There are a lot of components to a brand, but when you think about up-leveling your brand, there are 5 things to focus on first.

Remember that your brand is how people feel about you.

Here are My Top 5

#1.Your Compelling Story

People might not remember much about you, but at the end of the day, they will always remember a great story.  Crafting your compelling story is critical.  You want to put together your story in a way that compels people to want to work with you rather than your competitor.

Before you even say it….everyone has a story.

Maybe you didn’t live on the streets or have a near fatal illness, but YOU have a story.

#2.Your Customer Avatar

What exactly is this?

Your customer avatar represents the person that is your ideal customer or your dream customer. When you get clear on exactly who your ideal customer is, you stop trying to attract “everyone”.  Everyone is NOT your ideal customer.  When you are just marketing to the masses, what happens is you end up attracting the wrong customers.  You know – the ones you hate working with.

#3. A Great “About Me” Video on Your Website

You probably know that you need a great about me page on your website.  This page should also have your compelling story on it.  But did you know, that having a professionally produced “about me” video on your page can dramatically increase your credibility?

Now I’m not talking about a quick iPhone video. I’m talking about a quality professional video. (These can be quite pricey at times, but in this series you’ll find out how to get one.)

#4. Professional Photos

Don’t we all hate this one?

Most of us would rather have a root canal than have a professional photoshoot, however this is essential.  If you check around you can find someone to do this for you pretty reasonably when you consider the huge impact it will have on your brand.

#5.Your Authority Book

So, you think you don’t have enough expertise to write an authority book?

I want to tell you that just simply isn’t true.  If you have been in business for any length of time, you have a book in you.  Writing an authority book is the ultimate credibility piece.

Take a look at your competitors for just a minute.  Who in your immediate area has written an authority book?  I’m pretty sure that answer “almost no one” no matter where you’re located.

 

Sharon Vornholt

Sharon Vornholt is the owner of Innovative Property Solutions, LLC in Louisville, KY.

Sharon owned and operated a successful home inspection company for 17 years. She began investing in real estate in 1998 and became a full time real estate investor in January of 2008.

Sharon specializes in wholesaling, and is also an experienced landlord and rehabber.

In addition, Sharon is an internet marketer and also writes articles for several national real estate sites. Sharon is the author of a popular real estate blog called the “Louisville Gals Real Estate Blog”. For your FREE REPORT “Probates and Absentee Owners: Your Fast Track to Real Estate Riches”, stop by her blog at: http://LouisvilleGalsRealEstateBlog.com.

 

The Greatest Real Estate Investment

By Jimmy V. Reed

Your Local Real Estate Investment Club could make you RICH!

By Jimmy V. Reed

I want to make money in real estate, but “I just don’t know how.”  Let me tell you, I cannot count how many time in 20 plus years of investing I have heard that.  I would always respond every time the same way: have you been to your local real estate club?  And the answers would vary from; I didn’t know I had one, to yeah but all they ever want to do is sell me more training.

So first up; I didn’t know I had one.  Well let’s go back about 22 years ago as I sat in my first LIVE Real Estate training class.  Let me tell you I was pumped and ready to go make my first million.  But as the class came to an end my mind started to instill some fear tactics.  Now of course I was the one in control of these infiltrations to my mind, but what starts to happen after your weekend of pumped up steroid training is reality starts to set in.  You start to question what if I cannot find a deal, or any cash, or even a buyer?  What will I do?  Well on the last day of my training the company that was teaching us allowed the local Dallas Real Estate Club Aireo to come in and give out a free pass to their next meeting.  I knew then this was the blessing I was looking for.  They actually talked to the students for about ten minutes, telling us we needed to come because there would be all kinds of investors, money lenders, title companies and even CASH Buyers!

So a few weeks went by and I went to this meeting and let me tell you it was the best thing I ever did.  That first meeting though was really scary for me; I was in a world I didn’t feel very comfortable in.  Then about ten minutes after I was there I saw a familiar face from my training class.  I went up and we started talking about our training and this club we were at, and all the folks there.  A little later we saw someone else from our class. Soon we started all forming a little Networking group, and talking about what we had learned and what our concerns were about investing.  Then we talked about the current situation we were in, the club, how we felt like the little fish in a big pond with some really Big Fish.  We really believed the seasoned investors were going to swallow us up.  Soon the meeting started and there were different folks coming up to the front and one I remembered the most was this guy named John Zarrella.  Man, he was loud and funny and was throwing out ideas I never had even heard at my LIVE training.  I thought this guy knows a lot.  What I really liked is he didn’t look like an investor.  In fact, he had long hair and even an earring in his ear.  But then I found out he was one of the guys who created the club.

Over the years I would go hear him speak and he had his own local trainings.  I attended one of the club sponsored Saturday trainings where they taught me how to fill out my local contract.  I was so happy because this was one of those things that really worried me in the beginning.  Anyway, I learned a lot in that one day training.  In fact,  there must have been a hundred people in it that day. Then I realized there were other newbie investors out there just like me.

Well let’s bring in the Second topic folks are concerned about at clubs: Sales!  At the end of the training that day I felt very sure of myself that I could actually fill out a Texas contract with no problems, especially since they gave me four examples of some already filled out.  As my wife and I started to leave we were talking with other investors who had taken the class and to my surprise they were unhappy with the class.  They were upset that the class cost what it did, and that they had already been spending too much money with all these trainings.

I was thinking to myself yeah I have spent some money but, I also knew that I needed this training if I wanted to get paid in real estate.  I saw the value of someone who already made money doing this business showing me how to do it also, and faster than me trying to do it on my own.  In fact I was sure it would have cost me more and taken longer if I would have tried to do it all myself.

A few months went by and I finally did my first deal and got paid.  I was so happy it had actually worked.  I have to tell you it did not even go as I had planned but it did work.  Years later I started doing my own trainings.  I knew if I taught people what I knew I could multiply my efforts and do more deals.

Twenty something years later that club Aireo had always been there for me to go and network with other investors, learn from the guest speakers they had, and even allowed me to put my deals I had for sale on their Deal Table.  It was still allowing me to make money, in fact in 2002 that club founder John Zarrella and I became partners in the Fort Worth real estate club.  Who would have guessed that one day I would be partners with a great investor, friend and Christian Brother, and all because I went to a real estate club?

Now I write you this story on how you can make money at your local real estate club.  Keep in mind some investors are not really investors. What I mean is they got into this business to get Rich Quick.  They really did not have the right attitude from the beginning.  They just did it for the CASH!  In fact many newbies do not support their clubs; they only go when they think there is something in it for them.  That the guest speaker is going to reveal something they have never heard before.  They seem to forget the basics, and that is the ability to network regularly with like-minded individuals who are interested in real estate.  They tell themselves I will save the money this month by not going since I really already know how to do the topic of the night.  In fact a lot of seasoned investor say the same thing.  What they forget is; one you might learn something you did not know in regards to the topic of the meeting that night. Two, who you might meet at that meeting that could change your business forever.  Oh yeah, remember they know so much that they want to skip the meeting to save the money.  First clue would be if the meeting is going to tap your wallet dry, you may not know as much as you thought.  Well I don’t mean to be harsh but think about how the rich in this country do things.  They are always looking for ways to get together to brainstorm ideas with each other.  They Network all the time, they know the value of it, it’s why they’re RICH!

In closing, that club Aireo had to finally close its doors after some 24 years of teaching and helping investors.  A few days after they did I heard from a lot of folks saying wow! how could it be? Why did it happen? Simple; you have to support the things that mean the most to you in life.  You usually won’t know what you had till it’s gone.  I hope everyone reading will go to www.Nationalreic.org , look under Real Estate clubs for your local meeting, then go to it.  Who knows, someone at that meeting may just change your life, teach you something new, and Oh yeah; make you RICH!

 

Jimmy V. Reed         

Jimmy V. Reed of Fort Worth, Texas has been investing in real estate since 1987.  In 1991, he started conducting full-day training sessions on Wholesaling.  He then began teaching and mentoring others throughout the country. He is currently the founder of the Fort Worth R.E. club www.1REclub.com and has his own real estate training company that includes Wholesale, Probate, Mentoring & a Biblically based Debt Free training course and more!

More info available at www.JimmyReed.net

 

Understanding Japan’s Counter-Intuitive Real Estate Market

By Priti Donnelly

You may think real estate investing is solely about property growth as you would find in Australia, U.K. US, Singapore and similar markets. The Japanese property market is not ripe with prospects for increased property value. So, why then is the market saturated with foreign investors?

Creating Opportunities Beyond Capital Growth

The Japanese property market suffered at least 25 years of declining/flat-lining prices. Although capital growth made a quiet entrance from 2012 to 2016, it was too soon to for investors to comfortably speculate growth. Instead, investors found a new opportunity. Because of the decline, properties became quite affordable while rental rates remained stable. The result, steady and higher yields across Japan– the ideal cash flow market from high yield rental income.

To put it in perspective, for as little as USD $30,000 at 7.5% yield net pre-tax investors can earn monthly rental income of approximately $170/month. As an added benefit, in a prime location you might also gain property value, but that is not the focus of property investing in Japan. This market is about common sense investing without the speculative nature.

Overcoming the Language Barrier

This is not your typical internationally friendly business market. On one hand, you will experience the most reliable and honest professionals in Japan, while on the other, foreigner-shy professionals who likely cannot speak English. Furthermore, to invest in Japanese properties you will need a local address, phone number and a local bank account, impossible without communication and cooperation. To get around this barrier, savvy foreign investors use a trusted local Japanese/English speaking proxy or representative to act on their behalf for both communication and access to the required information.

Understanding Old Structures

Some novice investors shy away from the Japanese property market believing with a huff and a puff, structures could be blown down. It is true that structures built before 1981, including smaller steel-frame buildings, and even wooden frame houses, were not built to last and require major renovations and repairs over time. However, a major change to the Building Standards Act for earthquake resistant construction methods for buildings (reinforced concrete blocks) occurred in 1981. This became the turning point that investors often looked to when purchasing property. That being said, there is still a niche market for older properties because of the higher yield. In truth, regardless of age, with due diligence, if the property has proof of regular maintenance, renovations, repairs to the interior and exterior, as well as sufficient funds for ongoing repairs, and is tenanted, an older higher yielding property could prove to be a diamond in the rough.

Accepting Foreign Real Estate

Today, the best real estate opportunities do not have to be in your own back yard. JPMorgan Chase says the Japanese real estate and infrastructure is becoming more attractive particularly with no more than 50% of leveraged funds. Above that, real estate doesn’t become the driver, but the leverage becomes the driver of your return.

Japan provides opportunities for stable, monthly cash flow from rental income with yields from 5% to 11% net pre-tax. Add to that, currency exchange and the yen’s role as a safe-haven currency and it’s easy to see why this is a booming market for foreign investors, contrary to the standard real estate investment approach.

Priti Donnelly is the sales and marketing manager at Nippon Tradings International, a proxy and buyers’ agency representing foreign investors with purchasing, selling and managing real estate in Japan. She focuses on Japanese Real Estate, an alternative to speculative real estate investment —  steady monthly rental income, high yield, and affordable properties – a market worth considering.

 

Priti Donnelly – Manager, Sales and Marketing

Nippon Tradings International (NTI)

 

$30,000 Flips in Your Own Backyard!

By Reggie Brooks

Whether it’s quick cash that you need right now, or long term wealth that you’re looking to build, it can be done fairly quickly, and Vacant Property specialist Reggie Brooks is the expert to teach you how to do it.

Reggie’s going to teach you the steps he took to go from making $3,000 per month at the telephone company, to over $42,000 per month in his real estate business. And he did it doing exactly what he’s teaching – Vacant, Distressed, Abandoned Properties!

Here a smidge of what Reggie’s teaching…

  • Make Easy Profits from Money-Making Flips In Your Own Backyard
  • Why the banks won’t lend on these properties, making owner financing easier than ever! With owner financing, you don’t need money, credit, or a job
  • How to make serious money with properties that are upside down, meaning the value of the property is less than what’s owed against the property
  • How to use Reggie’s “Secret Weapon” which will speed you toward finding those owners who’s mailing address is the same as the vacant property address
  • How you can easily make $10,000 within the next 2 weeks with vacant properties
  • How to get 100% funding for your profitable vacant property deals – You’ll be amazed!
  • How to get all the money you need for you investments “chasing you”, instead of you chasing it. And there’s No Qualifying!!!
  • How a blind student easily made over $14,000 on his 1st deal. He’s a rich man now!
  • And Much, Much More!

Reggie is a dynamic speaker/educator. Come prepared to take lots of notes. You don’t want to miss out on golden nuggets like very creative ways to find motivated owners of vacant properties, or the various case studies of people who have used Reggie’s system to make big profits buying and selling these unwanted properties.

Reggie Brooks, is an international speaker, author and educator, dedicated to inspiring others to achieve personal success through real estate investment. He is also the #1 Vacant, Abandoned & Distressed Property Specialist in North America.

Having risen above a life of poverty, he has achieved what many people consider to be impossible. He went from making $36,000 per year at the local telephone company, to making over $40,000 per month in his real estate business. Today, Reggie delivers his personal philosophies for success at major business venues and expositions throughout the United States. Reggie attributes his success to faith, dedication to success, and to the invaluable coaches he has had along the way.

 

HANG IN THERE!

By Kathy Kennebrook (The Marketing Magic Lady)

I recently read that the definition of an Entrepreneur is someone who jumps off a cliff and builds the plane on the way down. I would have to totally agree with this sentiment.  Jumping off into “Never-never land” is almost “par for the course.”

When we first started our real estate investing business my husband used to say I would go out and make the mess (find the deal) and he would clean it up (get the inspections done and get the rehab going).  But, my Friend, HANG IN THERE!

The second deal we ever did in our real estate business was a subject to deal. The seller just wanted us to take over the mortgage payments on his house so he could walk away. There was $145,000 of equity in the deal that I didn’t want to lose out on even though I had no idea what I was doing. Heck…I had no idea what taking a property subject to even was at that point. So we just wrote down on yellow legal pad paper what we had agreed to with the seller. I then went back to my local real estate club and found someone to help us do the deal. He charged us $10,000 for his help in creating the paperwork to legally do the subject to deal. Ultimately our paycheck was $51,000. So yes we built the plane on the way down and it was very profitable for us to do so.

Getting started as a Real Estate Investor requires you to at least jot down your “TO DO” list and begin making a plan as you go!

I have always been one of those people who has to jump in first and do it and then fix it later. You need to be able to tame the fear monster and jump in and get some deals done. You will want to get some education in order to do the real estate investing business, or work with someone who already has the education until you figure things out. Working with a partner or a mentor is one good way to get started. I have a mentoring program available and I have many students who have done a ton of profitable deals.

However, your own education is going to be an ongoing process and you need to do it. If you try to do deals without having any idea what you are doing, you’re going to get burned out quickly. You will not get offers accepted, you won’t know what to do if you do get an offer accepted and you may not make nearly as good a deal as you could with a little education under your belt.

Remember:  Your real estate EDUCATION is a process!

There are several things you need to do in order to become a Real Estate Investor.

Sitting in front of the television watching re-runs or playing video games isn’t one of them. You will be able to find lots of reasons to put off getting started in the real estate business. My personal favorites were “my job is keeping my too busy” or “the kids need me” and “What if I mess up?” Once I started making a specific plan and put it in writing, things started to happen. I started keeping a detailed planner outlaying what I have to do the next day, the next week, the next month, etc. This helped to keep me very focused and moving ahead in a specific direction. This will make your business grow faster than you know. You will be able to track tasks, deals, and you can keep your appointment schedule organized as well.  Always remain FOCUSED!

Even after all the years I have been investing in real estate, I still go to seminars and read books to learn even more ways to do great deals.  Continued education is the KEY.  In the beginning, I learned enough in a very short time to do a lot of profitable deals and you can too. But I wasn’t afraid to just jump in and get a deal under contract. Once you get active in the business you will run into a lot of different kinds of scenarios concerning sellers and situations. This is one of the reasons I offer a mentoring program to my students. If they get stuck on a deal or an offer, they know where they can get their questions answered. So, they know they are “building their plane” on the way down.

Please understand that continued education is a key to YOUR success.

A “Hang in there” mentality must always be maintained.  You will initially make mistakes.  We are human.  But eventually, YOU will be very successful.  So, HANG IN THERE!

For all the information you need on adding mentoring to your business so you can “build your plane” check out my website at www.marketingmagiclady.com or call my office directly at 941-792-5390. I offer an amazing six month mentoring program for my students. Many of my students have done many deals and made huge profits in their real estate business by working with me as their mentor. I look forward to working with you too!

ABOUT THE AUTHOR: 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 co­authored 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 Donald Trump, 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, Donald Trump, Dr. Phil, Dan Kennedy, Mark Victor Hansen, Ted Thomas and Suze Orman to name a few.

Get a Whiff of What Tim Herriage is Cooking Now…

Learn Why Tim Sold His Real Estate Agency Business to Concentrate on His New Mantras: Balance & Barbecue

Award winning real estate entrepreneur Tim Herriage is cooking up something new for investors and business owners. Have you reserved your seat at the table yet?

Tim is the real deal. You probably know him from some of the sizable and influential companies he’s worked with in the industry already. Now he has refocused and is serving up some new opportunities for serious investors.

Tim Herriage – The Serial Entrepreneur Turns Foodie

You may know Herriage as the Managing Director of Blackstone’s B2R Finance. He’s done a lot since then. He’s also managed franchisee development for HomeVestors, founded and sold off REI Expo, and then founded the 2020 REI Group of companies, encompassing insurance, finance, acquisitions, dispositions and fund management.
He has also bought more than 1,500 single family properties and closed on over $1B worth of deals. He’s cone $3k house deals and $230M transactions too. Needless to say, if you want to get in a room with a really smart and experienced real estate investor and dealmaker, Tim Herriage is probably at the top of your list. 

Switching Gears 

Last time we caught up with Herriage, he was putting the pedal to the metal in a mustang. This time he was hoping into a truck to head down to San Antonio to check out some potential Airbnb real estate deals with his son. If you’ve visited the 2020 REI website recently you will have seen some big news. Tim recently sold most of the companies in March 2019. He remains in a strategic advisory role with these companies. The exceptions are his home buying company, his insurance company REI choice, and much of the underlying technology that made these ventures successful.
You’ll now find him via his new website and podcast Business and BBQ at TimHerriage.com, as well as at a new series of live mastermind groups. 

Why BBQ is so Important 

You can even be gluten free or a vegetarian and still have a great appreciation for BBQ and grilling. Eating together and the smell of the food on the grill is really the epitome of the American Dream. It’s as much a core part of the DNA of it as real estate.
It’s social connection, it’s shared passion, it’s delicious and it is a great reward for the work we put in. 
Yet, how crazy is it that you can even be a multi-millionaire business owner, and not find time to go visit a local BBQ place you’ve had your eye on for years. That’s the catch of the American Dream. The fine print they don’t warn you about on the label. It’s the land of opportunity, but if you aren’t careful, you’ll quickly lose sight of your real why and be time poor. Even with all the success that Tim has obviously enjoyed as businessman and deal-maker, he woke up to the fact that he was way busier than he needed to be.
He was creating new jobs for himself, that he didn’t really need. Ones that could take him further from spending time with his family, and why he set out to invest in the first place. 
So, he decided to start to schedule time to visit all the barbecue places he had been wanting to visit. He put them on his calendar. Then he began to realize what he was missing. He not only developed his palate, but found a new passion, and many analogies and lessons that applied directly to life, finances and real estate. As he has applied these things, he’s found a new sense of happiness and appreciation for value. Now you’ll find him injecting his restaurant reviews and BBQ tips into his new blog and podcast on a regular basis.

Refocusing & The Secret Ingredient 

The monumental shifts Herriage has recently made are all about refocusing on what’s most important and what’s most profitable. For him, that is largely, investing in rental property deals which can produce passive income and appreciate organically, as well as engaging others more socially, and regaining that time freedom to spend with those he cares about most. He says if he had just purchased one more property earlier, and held it, his net worth could be up by another $5M today.
His top tip for both success in finances and BBQ? Patience. It’s not an easy talent to master. Yet, if you’ve ever tried to cook a brisket you know it’s all about keeping the fire at the right temperature and waiting long enough.
For great food and a great life, the roadmap and recipe is out there, it’s just a matter of whether we choose to follow it and can wait for the best results.

Growth Versus Gains 

As Herriage has experienced all too well for himself, our culture seems to be all about the hustle, and go, go, go, without really thinking about it. He asks, “If last quarters numbers were good, why do you need to hustle so fast and furious to best them again, just because everyone else is doing it?” He poses whether it may make more sense to maintain those great numbers, and focus on cutting costs and being more efficient in order to enjoy both more profit and time freedom instead? This is especially true when aggressive growth can ultimately cannibalize what we really want most.
One of the great tools and areas which he has personally found an edge is in insurance. He is not only the founder of REI Choice Insurance, but its first customer and first to make a claim against his policy too. He’s become passionate about sharing the savings that smarter insurance can offer real estate investors.
REI Choice can reportedly offer investment property policies for 30% to 50% less than other big popular national companies, while giving investors everything they need, and none of the things they don’t. You can get a free quote for your properties online in 5 minutes, and they are backed by Lloyds of London. Herriage adds that they have a far better record for paying out claims that names you may have been inclined to default to in the past. Of course, when you serve others well and solve their needs, the growth comes too. REI Choice has been gaining traction at an incredible pace of around 50% quarter over quarter.

What’s on the Menu 

So, where is Tim Herriage planning to eat next, and what are his next real estate investing moves?
Tim has a very bullish outlook for the US real estate market. He’s looking forward to sharing that with other serious investors at his upcoming mastermind groups.  
For those who own rental property, are looking for more, and are equally generous in sharing their experience and adding value to others, Tim Herriage is hosting a private mastermind group in Texas in August, and yes, there will be BBQ on the menu. 50% of the seats are already taken. You can reserve yours at REIMastermind.com.  
Tim Herriage

Tim Herriage is the Founder & CEO of 2020 REI Group, a collection of entrepreneurial real estate investment companies specializing in brokerage, acquisition, disposition, private equity, nationwide financing, and advisory services.

Herriage has been on the leading edge of the real estate investor space for over a decade, founding the REI Expo and previously serving as Managing Director for Blackstone’s B2R Finance and Franchisee & Development Agent for HomeVestors® of America. Herriage has acquired more than 1,200 single-family investment properties and completed more than $1 billion in real estate transactions, predominately in the North Texas area. In addition to being a seasoned entrepreneur, Herriage is passionate about creating and spreading opportunities for others to succeed in real estate investing by providing innovative financing offerings, quality education programs, and reliable structured investments. Through his private equity and fund management firm, Elevate Private Capital, Herriage and his team source and invest in strategic real estate assets, with the current fund focusing on providing investors with exceptional opportunities to benefit from the rapidly growing Dallas/Fort Worth residential real estate market. Herriage also established Investable Realty to provide investors of all sizes with specialized brokerage and investment property finding services. Through DFW Investors, Herriage hosts resource-rich events for the local Dallas / Fort Worth investor community, providing guidance and support for investors in all stages of the investment life-cycle.

Are You in A Bubbly Market? If So What do You Do?

By Jimmy V. Reed So what do you do when the market is rising and Investors everywhere have become motivated buyers? – Jimmy Reed It seems everyone has just started buying any and everything in real estate and for very high prices. You go to the tax sales and they sell for more than the Tax value and many times more than the comps and the buyers have not even been inside the properties. Yet I see and know a lot of season investors out there that are diversified in their investing strategies. They like me refuse to become Motivated Buyers. But not everyone has that luxury. The reason is most investors seem to have only one or two exit strategies and that’s it. The most popular has to be Buy, Fix and Flip! More Newbies are entering the arena mainly due to the many popular HGTV shows. Some of those shows are really good, but many are, well let’s say they do not show the complete picture or as I like to say “all the numbers”. Then there are some that are spot on. My wife and I really like the mother daughter team from “Good Bones” Fact they were just in Texas at the Realty 411 Expo. By the way places and events like that are great for Networking. I even made contact with an investor that might work with me in our Costa Rica Investment project.
Anyway I have been in real estate for 30 years as an Investor. What you need to keep in mind is you need many different exit strategies to be successful in real estate investing. What I mean is you need to know how to wholesale real estate when the equity is there to do so. You need to be able to Buy & Hold properties to generate income on a monthly basis. Buy Rentals right and you always have Cash coming in. You also need to know the most popular exit these days which is to Buy, Fix & Sell, but you need a lot of equity to do that. Then you also have notes, right now you can get some really good deals on notes. They may not be local or even in my market, Texas but keep an eye out for them. Some notes may have a lot of equity in them, so if something goes wrong you actually may end up with that property and a lot of equity. So as a real estate investor you need to be able to adjust to the market conditions as they change. Be in properties that have exit strategies that work for you now. You may also consider opening an IRA to wholesale, sell, or buy rentals & notes with. Then you are also building your wealth for the future. Typically with an IRA you are building that wealth tax free. Using a Roth does have some real advantages.
Currently my market has gone nuts. But this can work to your advantage if you want to sell some inventory. Fact I am selling a lot of my inventory, and if possible I try and sell owner financed with large down payments to investors. Their seems to be a lot of Buy & Hold investors in my market now from outside the state. If you are a newbie to the investing arena it’s going to be tough, however there are ways to get paid. You will first need to know all you can about real estate investing, so you may need to get some training. You are going to have to be able to move really fast when a deal pops up. You are also going to have a lot of competition out there. That is why I teach my students right now to stay away from list and focus on areas such as Probates that have not even been field or petitioned for probate in the courts yet. There is a lot less competition in Probates and you usually can get more time to work the deal which will help new investors be able to wholesale them.
I started out as a wholesaler many years ago and still do it today. What I like about it is I did not need any money to get it done. Keep in mind if the market does bust then the wholesale game becomes the best exit strategy ever, again! The main thing is position yourself so you can maneuver positively so no matter where the market turns. If you keep your eyes on the market and not so much on the quick buck, you can become very successful at this real estate game! Be Blessed with Success! Jimmy Reed
Jimmy V. Reed of Fort Worth, Texas has been investing in real estate since 1987. In 1991, he started conducting full-day training sessions on Wholesaling. He then began teaching and mentoring others throughout the country. He is currently the founder of the Fort Worth R.E. club www.1REclub.com and has his own real estate training company that includes Wholesale, Probate, Mentoring & a Biblically based Debt Free training course and more! More info available at www.JimmyReed.net

Constructive Receipt: A Hidden 1031 Exchange Danger

By Dr. Robert G. Hetsler, Jr.

When done correctly, a #1031 exchange can be a fairly straightforward process. However, there is often one area that catches potential exchangers off guard. The concept of constructive receipt often torpedoes the tax deferred nature of an exchange, and subjects the exchanger to immediate capital gains taxes.

So what is constructive receipt and how is it different than actual receipt? Actual receipt is easy to identify – the exchanger directly receives the sale proceeds from the relinquished property. It also doesn’t matter what form the funds take – cash or wire transfer into an account. The bottom line is if the exchanger has direct access to the funds at any time, the transaction no longer qualifies as a 1031 exchange.

But constructive receipt is slightly more elusive. Constructive receipt occurs when the exchanger has the right to receive or control funds, even if he or she does not have direct access to the funds. As an example, if an exchanger receives the proceeds in the form of a check, then he or she is deemed to have constructive receipt even if they never cash the check.

The mere act of accepting the check, made payable to the exchanger (even with no intention of cashing it themselves), cancels the exchange before it really begins. Even if the exchanger plans to immediately endorse the check over to the qualified intermediary.

Because of the concept of constructive receipt, it is critical that any investor planning to conduct a 1031 exchange brings a qualified intermediary on board before the relinquished property is sold. This eliminates the possibility of constructive receipt.

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If a 1031 exchange is in your future, visit our website to learn more about these powerful tax deferral tools and our qualified intermediary and replacement property locator services.

Why Banks Do Not Allow Junior Liens

By Edward Brown

Ever wonder why bank’s voluminous real estate loan documents usually include a covenant that the borrower has to accept which prohibits junior [or secondary financing]? Most of the time, these covenants don’t even have language that allows for secondary financing with lender approval. They merely state that no junior liens are allowed. In fact, the language is strong enough to imply that placing a junior lien behind the bank’s 1st mortgage constitutes a default [most likely a curable one] {curable defaults are ones that can be remedied, such as placing insurance on the property if the current insurance expires or is cancelled, as compared to incurable defaults which cannot be remedied (or, undone) such as the borrower filing a Chapter 7 bankruptcy}. Placing a junior lien behind the bank’s 1st mortgage is usually curable if the junior lien can be re-conveyed and the property is put back in the same condition [title wise, that is] as it was at the time the bank made its 1st mortgage.

One might ponder why banks are so strict about not allowing junior liens. After all, a junior lien is behind the 1st mortgage. In fact, some non-bank lenders actually prefer subordinate financing because it is as though there is additional security – another party has an interest to protect; however, traditional banks do not view it in the same way. There are a few reasons for this. First, banks have strict underwriting guidelines wherein they look at the DSCR [Debt Service Coverage Ratio]. The DSCR is a ratio that analyzes the cash flow after normal expenses compared to the monthly requirement for the loan in question [both principal and interest]. Many banks have changed their DSCR ratio requirement, since The Great Recession, from 1.1 to 1.35. This can place a tremendous burden on the borrower to have to come up with a larger down payment, in most cases, thereby requesting a lower loan request by the bank, which, in turn, produces a lower monthly loan payment. Many borrowers find that they have to come up with upwards of a 35% down payment as compared to 25% [pre Great Recession] in order to satisfy the 1.35 DSCR. Adding junior liens may place the borrower in the default provision of the DSCR if the junior lien requires monthly payments.

Another point to consider is that the bank priced its loan based upon original underwriting guidelines and being the only mortgage and that no junior financing would be added. The potential risk of negative changes in the DSCR or possibility that the borrower stripped equity away by placing a 2nd mortgage had not been considered, and the bank was not compensated accordingly. The more debt on a property, the more likely there is for a chance of foreclosure. Although the bank may be protected in its 1st position [presuming that the property has not substantially declined], when a foreclosure is triggered, there is a strong likelihood that the bank may have to alter the asset class of the property from performing to non-performing or it may be categorized as a “troubled asset” or put on the “watch list” by regulatory bodies even if the bank is not at risk for losing money. For example, if the borrower put 35% down on a $1,000,000 building and borrower $650,000 from the bank, the bank’s 65% LTV loan may be considered conservative. However, if the borrower obtained a 2nd mortgage for 15% LTV, the property now is 80% leveraged. If the borrower defaults on paying on the 2nd, he may or may not default on paying on the 1st. If the borrower defaults on both the 1st and 2nd, the bank’s loan clearly has turned non-performing. Non-performing loans can have a devastating effect on a bank, as they are required to set aside reserves, and defaults exacerbate this situation. The more reserves required to be set aside means the less money the bank has to lend out and generate income. Since banks lend out in multiples of their deposits, any money that is set aside [that cannot be lent out] has a negative multiplier effect.

The 2nd may or may not cure the 1st and start its own foreclosure. Even if the 2nd cures the 1st, the bank is still left with a possible foreclosing party [the 2nd]. When banks make loans, they are usually looking/hoping for those loans to continue until maturity. Once a loan is made, there is less work the bank has to do. They collect the interest income and hope they do not have to use other resources to babysit a loan. The cost of these resources tax the bank’s bottom line. Banks are not in the business of taking over borrower’s properties. They do not want REO’s [Real Estate Owned properties]. It is much better for them to carefully underwrite loans in the beginning and avoid problems. If the 2nd ends up with the property because nobody outbid the 2nd at the foreclosure, the bank is faced with a new borrower. The bank may have to underwrite the new borrower. In fact, if the 2nd is outbid at foreclosure, the bank is still faced with a different borrower than they originally underwrote. This new borrower may or may not qualify under the bank’s lending guidelines.

What about the scenario wherein the borrower borrows on a separate property and cross-collateralizes against the bank’s subject property? In this situation, the borrower is not attempting to strip out equity from the original property. The borrower may just be faced with the reality that he cannot obtain a loan for the target property unless he is willing to allow the new lender [on property two] to place this same loan on property one for added security.  Unfortunately, although this seems innocent enough, if the bank finds out that a junior lien was placed on the property, [original one] they still may consider their loan in default. A lender who cross-collateralizes against other properties may trigger a foreclosure on all properties they encumber in order to get the borrower to move toward a solution to satisfy their loan that is in default [under their terms…usually for non-payment of mortgage payments].

Public policy may state that a bank is not allowed to interfere with a borrower’s business and force him not to purchase/borrow on other property that the bank has no involvement. There also may be a question as to the validity of the “no junior liens allowed” as this may technically interfere with the borrower’s business, especially if the bank’s 1st mortgage is extremely low. For example, if the 1st mortgage only has a balance of 20% [either because the borrow put a substantial amount down or the 1st loan is so seasoned, that it has been amortized down to a low balance], there is very little risk of the bank not getting paid in full. Even if a 2nd is placed upon the property, one has to question how the bank is impeded should the 2nd start a foreclosure. In previous scenarios above wherein the DSCR was negatively altered due to a 2nd mortgage, a 20% LTV on the 1st should still satisfy a 1.35 DSCR in most circumstances. After the 2nd obtains the property [or a new owner should the property end up in a higher bidder’s hands], most new borrower’s would hopefully be qualified to service a low LTV. Of course, each circumstance is independent, and most banks will want to preserve their right to enforce the “no junior lien” clause.

Usually, only if the bank pulls a preliminary title report, are they aware of the junior lien. They are not usually automatically notified. The main question is whether the bank will automatically declare a default if a 2nd is placed on the property behind their 1st? When banks find out that a 2nd exists, they may either ignore it or send a letter requesting/demanding that the junior lien be removed as per the terms of the bank’s loan documents. Whether a bank decides to pursue its demand that the junior lien be removed is up to the bank; however, they want to preserve their rights by notifying the borrower that they have requested removal, and thus, have written evidence that they contacted the borrower, so the borrower cannot claim ignorance or non-notification of the break in the covenant of the bank terms. This notification protects the bank should the bank choose to start its own foreclosure due to the default.

Most borrowers who have asked permission for a junior lien to be placed behind the bank’s 1st mortgage have usually been told, “No”. That is why most borrowers figure it is better to ask for forgiveness than permission in hopes that the bank will not find out about the junior lien until the borrower either sells or refinances the property in question.

 

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.

REHABBING FOR BIGGER PROFITS

By Reggie Brooks

A thorough inspection of the subject property will serve as a basis from which to begin the rehabilitation. Until you are experienced enough to perform this inspection yourself, it is wise to seek the services of a competent professional. Most contractors will give you a free estimate of repairs when they know they stand a chance of getting the job.

You may consider exercising your option to do the work yourself. In the beginning, it might be worth while to spend your time working on your properties, but as the number of properties you own increases, you’ll be better served to delegate your fix up work to some one else, while you focus on finding more deals. If you are going to do a fair amount of work on your properties, always keep in mind that if you’re not a plumber, electrician, roofer, carpenter or such, don’t try to tackle jobs that are beyond your skill level. Leave those jobs for the professionals.

Another word of caution. Many times you’ll find that a little cosmetic repair will bring a property back to life, thus saving you lots of money. It is important not to over-rehabilitate your project. If the property is in a low to moderate income neighborhood, the amount of money you spend on such items as flooring, plumbing fixtures, door hardware, etc. would probably be lower than that of a property in a high dollar neighborhood.

Do a little shopping around for the best prices on materials. While your local hardware store may fill your needs when it comes to small items, rarely can they compete with the large contractor warehouse type stores. If you are planning to do some or all the work yourself, I recommend that you purchase good quality tools. Much money is wasted on cheap tools that have to be re-purchased over and over again. If you’re performing a small job and have no desire to do your own contracting work, then it doesn’t matter as much.

Be aware that you can rent almost any tool you’ll ever need from an equipment rental yard. Look in the local telephone directory under “Rental”. While rehabbing the property, pay particular attention to the following:

  • Curb appeal: Exterior paint and landscaping are the first and the last thing a buyer or renter sees. Don’t skimp – make a good impression. More than likely they’ll drive by at different times of the day and night. Give them something pleasant to think about.
  • If you’re remodeling (moving interior walls around), try to create a design that will give the property an open feeling.
  • You may find it more cost effective to replace old, outdated kitchen cabinets with new ones. Look in your local phone directory for cabinetmakers and compare prices.
  • Consider using ceramic floor tile instead of sheet goods. It may be a little more expensive, but it will pay off in the long run.
  • Consider installing ceramic counter tops instead of the formica type. Not only are they more durable, they are also more attractive to potential renters or buyers.

When rehabbing, some of the areas to focus your attention are:

  • Foundation
  • Plumbing system
  • Electrical system
  • Roofing
  • Interior walls
  • Exterior walls
  • Landscaping

Foundations

The two most common types of residential foundations are the concrete slab, and the raised foundation. Properties that are built on a concrete slab are secured by anchor bolts protruding from the concrete. Also, they have no crawl space to allow a person to get under the property.

The raised foundation is one where the property sits on top of a continuous concrete foundation that extends around the perimeter of the building. This type of foundation does have a crawlspace which allows a person to crawl under the property.  Some of the signs of possible foundation problems may include, but are not limited to:

  • Major cracks in exterior walls
  • Major cracks in interior walls
  • Doors and windows operating improperly
  • Floors not level

If the subject property shows signs of possible foundation trouble, and if the profit potential is great enough, have a foundation expert take a look at it before you make a commitment to purchase.

Plumbing Systems

Water flows to your property from the serving utility company through a water meter, usually located at the front property line. In very cold climates this meter may be located inside the house. The main shut-off valve to the property should be mounted above grade, and can usually be found near the front of the property on the same pipe as the outdoor faucet.

The pipes that carry water underground to the property are usually galvanized, copper, or plastic. The interior pipes are usually galvanized or copper. Since building codes vary by jurisdiction, check with your own local building department for current codes.

Water Heaters

A typical water heater is approximately 5 feet tall. At the top of the water heater are two pipes, one with a shut-off valve (the cold water inlet side). This is the valve that shuts off the hot water to all the fixtures in the property. The water pipes are usually connected to the water heater by flexible connectors.

A gas water heater has a vent at the top to allow heat and unburned gases to escape. It should be connect to a venting system which terminates at least a foot above the roof. At or near the top should be a temperature and pressure relief valve. The purpose of this TPRV is to prevent the buildup of excess heat and pressure. If it leaks, it can be replaced.

At the bottom is a valve that is used for draining the water heater. This too, as well as every other component previously discussed can be replaced if they prove to be defective. However, if the water heater is old, and looks like it may give you problems, it’s better to replace it now than to have to be bothered with it later.

Stall Showers And Bathtubs

Your property might have any combination of standard bathtub, shower over tub, shower enclosure, or stall shower. If the shower or tub has a glass enclosure, it must be tempered safety glass or approved plastic. The shower head, faucets, and spout should all be in good working condition. If not, they can all be replaced. Check and replace if necessary any worn grouting and caulking.

Toilets

Make sure the toilet is secured properly to the floor. Check for leaks around the base. If it does leak, it’s probably as simple as a new wax ring that goes under the toilet. Flush the toilet and let it fill. If it keeps running, either the tank ball assembly or the flapper may need to be replaced, or the water level should be adjusted so that it shuts off before it reaches the top of the overflow. If the toilet is cracked either in the tank, the bowl, or at the base, or otherwise causing too many problems, replace it.

Sinks

Turn the faucets on and off. They should operate smoothly. If they drip a little, replacing the seats and washers should take care of it. There should be two shut off valves under the sink, unless you have a wall-mounted faucet. The shutoff valves should operate smoothly. While you’re under the sink, check the drain lines and the trap for signs of leaking or rotting. If any of these items do not operate properly, they should be replaced.

Electrical Systems

Every circuit should have a standard circuit breaker or should at least be fused. Each room should have at least two electrical receptacles. The kitchen should have at least two receptacles that are on separate circuits. Replace all broken or cracked cover plates on light switches and wall receptacles. If possible, replace all pull-chain type fixtures with standard fixtures and wall switches. Don’t hesitate to seek the services of a professional whenever appropriate.

Roofing

Only if it is necessary should you consider adding a new roof. If the ceilings show water damage and a close inspection reveals that the present roof is deteriorated beyond repair, then you should consider the possibility of adding a new roof.

Contact several reputable roofers in your area. They will usually give a free roofing inspection. Some roofers may charge a fee, then credit that fee toward the total cost of the roof if you hire them. Gather several estimates and do some comparison shopping in order to get the best deal.

Consider another option: if you do some inquiring at your local roofing supply house, you may find roofers who are between jobs, and will re-roof your property at a very reasonable rate. You might consider buying all the materials, and getting the contractor to supply the labor.

Interior Paint

Pearl White, Navajo White, and Antique White are the common colors used in residential properties. Using a shade of white paint in the interior will make the rooms feel larger. If you hired a painter, he would probably suggest that you use flat paint in every room except the kitchen and bathroom, where you would use a semi-gloss paint. Some investors use semi-gloss paint through their rentals, because it’s easier for a tenant to wash the walls.

Water-based paints are usually easier to work with, and they usually do a sufficient job. Consider using an oil-based paint in the kitchen, bathrooms, service porch, and on the trim. You’ll find that oil based paint is more durable than water-based paint.

Exterior Paint

The exterior of the property may need to be painted. Choose a color that will resist fading and will add to the “curb appeal” of the property. If you’re not sure about a color, drive up and down various streets and see what you like. More people are attracted to the lighter colors. Choose a complementing color for the trim, and consider painting the porch the same color.

Whether you do the job yourself or you get a professional painter to do the work, insist on a good quality job. Old paint should be scraped and sanded, and any holes should be filled before primer and paint.

Consider using the same color combination on all of your projects. This way you only have to keep one color combination in storage for any touch up that might be needed.

Landscaping

Landscaping the front of your property to give it “curb appeal” is essential for getting the most from your property whether you plan to rent or sell. If you’re planning to rent the property, the nicer you make the front of your property look, the better the tenant you’ll attract.

If the grass needs cutting, you can usually hire some of the neighborhood kids to clean it up. A schedule of watering and fertilizing should bring it back to life. If it’s necessary to get the yard looking good right away, then “sod” is your answer. Most gardeners and landscapers can do a neat job with sod, and the end result can be instant lawn.

Top off your landscape with some strategically placed shrubs and some pretty flowers. You’ll be surprised at what this can do for your properties curb appeal, and ultimately, your bottom line.

It is important to continue your education in creative real estate practices. The more you expose yourself to creative real estate principles and techniques, the more you’ll learn. The more you know, the better prepared you are to solve a seller’s problems. The more problems you solve, the richer you get.

I’ll see you at the top!

Reggie Brooks

 

Reggie Brooks, is an international speaker, author and educator, dedicated to inspiring others to achieve personal success through real estate investment. He is also the #1 Vacant, Abandoned & Distressed Property Specialist in North America.

Having risen above a life of poverty, he has achieved what many people consider to be impossible. He went from making $36,000 per year at the local telephone company, to making over $40,000 per month in his real estate business. Today, Reggie delivers his personal philosophies for success at major business venues and expositions throughout the United States. Reggie attributes his success to faith, dedication to success, and to the invaluable coaches he has had along the way.