3 “Vital” Keys to Getting Millions in Private Money for Real Estate

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Financing can be a real sticking point for most beginning real estate investors. Even seasoned investors can hit a brick wall with financing from time to time. And with the mortgage industry changing on a daily basis, there is no better time than now to build a private lender network to fund your real estate deals.

Check out my article, “3 “Vital” Keys to Getting Millions in Private Money for Real Estate.” It’s posted over at theREIbrain. If you haven’t checked out theREIbrain before, it’s an incredibly useful site. Trevor, the founder, has put together a huge resource center for investors.

Trevor and I are doing a webinar later this month where I will be explaining how I’ve recruited millions of dollars for our company over the past 6 years. I’ll also be providing a download link to the power point presentation that I’ve used time and time again to bring new investors onto my team.

Sooo, stay tuned for details. You’re not going to want to miss this one!

Posted in Real Estate Investment Financing Strategies | 1 Comment »

How I’ve Made Hundreds of Thousands of Dollars with this Creative Real Estate Investing Secret

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I heard a story recently about an investor that contracted a great deal but ended up losing it because he didn’t know the insider secret that has made me hundreds of thousands of dollars since I got started.

He began his due diligence shortly after he contracted the property like he normally would, ordered a title search, and set a tentative date for closing. After further analyzing the deal, he realized everything was good to go. The attorney said the title was clear, and he had his financing lined up.

Then, the unthinkable happened! He called the seller a week prior to closing but did not get a returned call. The seller had evidently fallen off the face of the Earth. His frustration continued to mount as he continually called and visited the property to track down the owner week after week until one day, there was a car in the driveway. But it wasn’t the seller’s car.

Come to find out that the seller contacted another investor after signing the contract, got a better offer, and sold it to another investor. The investor that bought the deal said that the seller told him that he had met with other investors but assured him he hadn’t signed any paperwork.

If you do not know the secret to protecting deals you’ve contracted, it is not a matter of whether or not you will lose a deal to another investor, it’s a matter of when.

You may be saying to yourself that the seller is contractually required to sell the property to you under the agreed upon terms, and you would be right. But now you’ve got a decision to make. Do you chalk this one up as a learning experience and make sure you protect yourself next time or do you hire an attorney? And we all know who wins once attorneys get involved.

I am fortunate because I learned early on from my mentor how to protect myself to prevent situations like this from ever occurring. Since I chose to join a real estate investing mentoring program, I didn’t have to learn from the school of hard knocks.

How to Protect Yourself from Contract to Close

After you get a contract on a property, you want to file the correct paperwork so that the world will know that you have an interest in the property. This technique will cloud the title so that no one will be able to get clear title to the property without going through you. We do this to protect our interest in the deal, not to cause the seller any problems with their property.

There are two different forms that can be used to do this. One is an Affidavit and Memorandum of Purchase and Sale and the other is a Notice of Purchase and Sale. The only difference between the two is that the affidavit is signed solely by the buyer. The Notice of Purchase and Sale is signed by both the buyer and seller. The Notice is a stronger document but both require a notary. So, if you meet a seller and it is not convenient to have a notary present, you can simply use the Affidavit.

One very important thing to make sure that your form does is to cross reference the deed. This is so that when someone does a title search, you make sure that they find out that you have an interest in the property. If a title searcher doesn’t find your paperwork, it’s not going to do you any more good than having not filed it in the first place.

We have saved many deals over the years that have translated into hundreds of thousands of dollars by using this creative real estate investing technique. Put yourself in the driver’s seat by clouding a property’s title after contracting it. You’ll thank me later.

Posted in Business Management Systems and Tools, Tips and Tricks | 2 Comments »

“Cookie Cutter Rehabbing” Part 2 : Real Estate Investing Renovations

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Last week we went over how to increase your efficiency and profit through “Cookie Cutter Rehabbing.” This strategy entails using the same repairs and upgrades in the same way for every house in a given area, price range, and exit strategy. We also covered the advantages gained in estimating costs and shopping for products.

This week we’ll look at finding bargains, installing updates, hiring contractors, marketing houses, and making competitive offers.

Finding Bargains

You’ll remember last time we talked about how easy it is to shop for products using a cookie cutter approach because you know what supplies you need in each house of that type.

When you use the same supplies in every house, it’s easy to pick up bargains. All of the big box stores, many independents, and several of the smaller suppliers regularly put overstocked, slow-moving, and damaged items on clearance. You can really pile up the savings on these. I was in a big box store today when I noticed three-light bathroom sets marked down to $20 from $100. I bought every set they had. I’ll store them and use them in the next few houses.

Remember though, only buy what you know you’ll use. Otherwise, you end up with a corner of your garage filling up with the dreaded “Items-to-Go-Back-to-Home-Depot.” C’mon, we both know that stuff never makes it back.

I just took a load back that sat in my garage for two years and had to stand in that long, slow-moving return line. I stood there half-embarrassed when the clerk told me that they didn’t even carry about a third of the stuff I was trying to return (Oops…guess I got some of it at Lowes).

That’s where “Cookie Cutter Rehabbing” comes in because you already know what you regularly buy. When you walk by the clearance racks, pick up anything that fits in the plan. If not, move on.

Installing Updates

If you happen to have some skills or experience with renovations, you could take on some of the labor yourself. This is called sweat equity – you trade your sweat for increased equity in the property. If you’re going the hands-on route, using a cookie cutter approach will allow you to continually get more efficient as you go. Each time you install the same shower valve, or ceiling fan, or kitchen cabinet; each time you pick out tiles or countertops or paint colors, it gets easier and faster.

Hiring Contractors

What in the world does “Cookie Cutter Rehabbing” have to do with hiring contractors anyway?

Let me tell you; when I close tomorrow on my next project, I have a list of phone numbers to call. One is my dumpster guy, one is my general contractor, I have a roofer, a painter, and an electrician. These are all contractors who have done work for me before. I know the quality of their work, their pricing, and how reliable they are (or aren’t).

It takes a little while to build a team like this but is well worth the effort. Even if one of my guys doesn’t show up for the job, I have a replacement waiting in the wings. Knowing what I usually pay for certain jobs, how long they should take, and what it should look like when it’s done gives me a leg up when negotiating with the replacement contractor.

Marketing Your Product

In case you didn’t already know, there is a lag time in this business between when you start marketing a property and when you actually fill it with a tenant or sell it. If you start marketing the day you close (or before!) you have a tremendous advantage. I have it built right into my purchase and sale contract so that I can start marketing a property as soon as I contract it. Remember, vacancies are your biggest expense in this business.

As long as you utilize “Cookie Cutter Rehabbing”, if a perspective tenant or buyer walks through when it’s still under renovation, you can effectively describe the finished product to them.

Instead of saying things like, “Well, the kitchen cabinets will be new, but I’m not sure what color” or “I’m not sure if I’m going to replace that bathroom vanity yet,” you could say, “The kitchen cabinets are brand new light oak with Quartz Milano countertops. The bathroom vanities are also new in matching oak with Moen faucets on white cultured marble tops with built in sinks. The property will be available around August 1^st, does that fit your schedule?”

Which description do you think will move a property faster? Here is an important secret: Most prospective tenants and buyers cannot see the potential in a property under renovation. Its best not to show a property before it’s in tip-top shape!

Making Competitive Offers

If you are about to make an offer on your first renovation property, I have some advice. Take the amount you think it will cost and the time you think it will take and double them. Trust me, costs and timelines can quickly spiral out of control. Therefore, it pays to be conservative on your first few projects. That said, if you’ve done a couple of rehabs and inked out your cookie cutter model, you can afford to get a little more aggressive with your offers.

You are bound to run into potential deals that several other investors have either seen or soon will. Oftentimes if you want to buy one of these, you need to have a competitive offer without giving away the farm. Your cookie cutter approach will let you know what you can offer with peace of mind. You’ll have a much more accurate estimate of what the rehab is going to cost and how long it will take. Oh yeah . . . a side benefit of this is that you can sit confidently in front of the seller and explain your offer to them (instead of squirming around trying to make the numbers work). Confidence goes a long way in persuasion.

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Posted in Renovations | 4 Comments »

How to Conduct Your Pre-Contract Due Diligence in Creative Real Estate Investing

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A seller lead comes in from one of your many marketing strategies. You call on the phone and gather all of the information about the homeowner and his property. Now what?

Value the Property

First and foremost, my goal is to figure out a conservative estimate of a property’s value. If there isn’t enough equity in a property to meet our buying criteria, I quickly put the lead in the trash can or forward it to a realtor who may be able to help them. I never want to waste any time going to look at a property when I could have disqualified it upfront.

The best way to estimate value is through MLS (multiple listing service). This is the tool Realtors use to comp (or value) property. If you aren’t an agent, I would suggest befriending one.

The next best thing to MLS is Zillow. This free online tool can at least give you an idea to what a property could be worth.

Another way is to find out the tax value on a property. All of the counties that I’ve bought property within have a website that give you basic information about a property i.e. who owns it, when they bought it, what they paid for it, bedrooms, baths, square footage, etc. Depending on the county, tax values can be pretty far off. In Charleston County, they are typically 15 to 20 % lower than actual value, and in Greenville County, they are an accurate assessment of actual value. You will have to figure this out for yourself.

But remember, do not spend too much time determining a property’s value before you have a contract on the it. You simply want a conservative estimate for now for negotiating purposes.

Estimate Repairs

After being in the real estate investing business for awhile, you will be able to walk into a home and have a general idea of what it would cost to renovate. Until then, you may want to have a general contractor at your side prior to negotiating with the homeowner.

My business partner, Dusty, handles all of the in-house negotiations with homeowners. He has been through hundreds and hundreds of houses now, so he can estimate repairs and go right into the negotiation.

It is understood with the homeowner that after we contract the property, we send one of our contractors through to do a thorough inspection. If we find any additional unknown repairs, the agreement would have to be amended.

Watch out for this Common Gotcha

I have talked to a seller on the phone and rushed right over to the property only to find out, it was the seller’s sister, grandson, cousin, or friend. Make sure that you know exactly who is on title. Whenever I got started, I wasted a lot of time talking to people that didn’t have the authority to sell the house in the first place.

It is a requirement now that anytime I set up an appointment with a homeowner, all parties on the title must be present.

Your county website will again come in handy to research the owners of the subject property as this is public information.

Pre-Contract Due Diligence Breakdown

Get a conservative value for the subject property by using MLS, Zillow, and/or your county website. Estimate repairs with a contractor’s help or if you have been in the business for awhile, estimate yourself. And make sure you are meeting with everyone on title when negotiating. This will save a lot of time and heartache.

Posted in Tips and Tricks | 2 Comments »

6 Great Marketing Strategies to Keep the Deals Flowing

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Without leads coming in for your real estate deals, you cannot legitimately expect too much from your real estate investing business. Marketing delivers the life blood to your growing investment portfolio. Here’s some marketing strategies to keep the phones ringing.

1. Farming Target Neighborhoods

One of the most important things you can do as a beginning real estate investor is to define your niche, your target property. For our company, it is single family houses in good condition in a good area having an ARV between $150K and $175K. Once you know what the ideal property is for your investment strategy, determine a few neighborhoods to target. This will involve driving through these neighborhoods on a regular basis, putting out flyers, door hangers, business cards, and introducing yourself to everyone you can. If anybody decides to sell in these select neighborhoods, you will be the first to know.

2. Community Bulletin Boards

Wal-Mart, grocery stores, coffee shops, hometown restaurants, fitness gyms, etc. It’s free and gets your name out in the local community.

3. Magnetic Signs or “Wraps” on Your Vehicle(s)

Turn your car into an advertisement on wheels. Everyone you meet will most likely know what you do before you even open your mouth. You could also get a professional paint job on your car or truck if you want to go the full distance. People can’t help but notice what you do when you become a traveling billboard.

4. Main Stream Media

Radio, TV, or newspapers. This can be more of an upfront investment, but could really get the phone ringing!

5. Friends & Family

Nothing beats a referral from friends and family . . . period! It’s also free and will probably snowball into many more referrals over a lifetime. Make sure everybody knows what you do, and they will make sure you know when somebody needs to sell!

6. Government Programs & Sources

Such as Fannie Mae, Freddie Mac, FHA, VA, etc. You can call and get on all their lists of properties for sale through their programs.

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Posted in Marketing | 2 Comments »