8 Powerful Strategies the New Real Estate Entrepreneur Can Use to Overcome Negative Thinking

It’s no secret that negative thoughts provide the fuel for the engine of self-destruction.   New real estate entrepreneurs quickly come face-to-face with multiple opportunities to become discouraged, and unless they take concrete action to overcome negative thinking, these opportunities can quickly derail their hopes and desires for success.  Negative thinking in real estate investing can best be defined as the process wherein the entrepreneur tends to search and find the worst outcome for an investment decision or reduces their expectations to the worst possible scenario.  This process may manifest itself in a myriad of different ways for you as a beginning real estate entrepreneur.

Consider the situation when you are searching for your first potential real estate rental.  As you review the available properties, you begin to look for all the ways in which each property WON’T work as a rental.  Maybe there isn’t a large enough yard, or maybe the bedrooms are too small.  Every property seems to have more and more problems.  It doesn’t take long and your entire thought process has become one centered on the negative aspects.

First of all, you need to realize that you are not alone when you have these thoughts.  It’s almost human nature to think of the “what if” problems and to dwell on negative outcomes.  This situation, however, should not persist if you want to have success in the fast-moving world of real estate today.  Investors and entrepreneurs like yourself are having success all across the globe investing in and using real estate strategies to create wealth.  The thing that almost all of these individuals have in common is that they have learned how to overcome negative thinking and to change those thoughts into positive ones.  When this happens they soon find that there are solutions to almost all the small and large problems that seem to pop up out of nowhere.

Let’s look at eight powerful strategies the new real estate investor can use to overcome negative thinking, keeping in mind the fact that becoming a positive minded person is a process.


Strategy #1 – Recognize Negative Thoughts as Learning Experiences

Negative thinking is primarily based on fear or apprehension of things that have not yet taken place.  When a new entrepreneur begins a journey based on the unknown, negative thinking is quite common.  Your first responsibility is to identify the fact that you are actually dwelling on the possibility of failure or disappointment.

Your thought process may be based on things you have heard of happening or things that you have read about.  The outcome of your present real estate investment should be different from any negative things that may have happened in the past.  Now is the time for you to learn from past mistakes, both personal as well as those mistakes of others.  Your goal is to learn from these mistakes.  It is also extremely important that you learn to use those negative thoughts as learning experiences and not as expected outcomes in the future.

Your goal must be to remove negative thoughts from your mind and replace them with positive ones.  This exercise of turning negative thoughts to positive ones should be something that you can recall when faced with unfortunate events.  You need to be able to think back to when you were thinking in a negative manner and visualize how you changed the thought pattern to a positive one.  The very act of remembering that you were able to change the thought pattern will be a help in repeating the process when you encounter yourself thinking in a negative way.


Strategy #2 – Remove and Replace Negativity in Your Surroundings

Charles F. Glassman is a well-known doctor in New York who wrote a book titled, Brain Drain: The Breakthrough That Will Change Your Life.  He wrote, “Believing in negative thoughts is the single greatest obstruction to success.”  That is certainly true for real estate entrepreneurs who allow themselves to be ruled by those negative thoughts.  This being the case, you should ask yourself why you tend to think in negative thought patterns.

It’s no secret that we are oftentimes a product of our environment.  We think and act like the people we associate with.  The relationship between our thought process and the physical environment is also real.  If you work in a dark and dreary, cluttered, and depressing room, your thoughts will mirror your surroundings.  One quick way to improve your thought process and to remove the negative thoughts is to improve your physical environment. This includes cleaning the room where you work, the car you drive, and the way you dress.

It also includes removing negative things and people from your surroundings.  Don’t expect to have negative thoughts if you associate with people who are constantly complaining and voicing negative thoughts.  If you want to improve your entrepreneurial success, start by improving your friends and associates.

When you go and inspect a property, dress the part of the successful entrepreneur.  You will be surprised how much more success you will have when you already act successful.  As you remove negative people and things from your environment, you will quickly find yourself thinking in a more positive manner and positive thinking yields positive results.


Strategy #3 – Identify Personal Investment Fears and Don’t Let Them Drag You Down

There is no guarantee that any individual real estate purchase will be successful, but if you follow proven investment strategies, you will have a much greater chance of succeeding.  The reverse is also true:  There is no guarantee that any individual real estate purchase will fail!  Unfortunately, there are many new real estate entrepreneurs who fall into “the negativity trap” where they actually act and believe that failure is eminent.  Don’t let this happen to you.  It’s natural to have investment fears, but those fears can and should be controlled when you learn proven investment strategies, and then incorporate that training into your new real estate venture.  The more training you have, the greater your chance of success.  Still fear is something that can plague new entrepreneurs.

SEE ARTICLE: How to Overcome Personal Fear in Today’s Financial Climate

Before you can eliminate fear as part of your negative thinking, you need to be able to identify what that fear is actually based on.  Are you afraid of talking to people?  Do you have a fear of losing money that is needed for other purposes?  Take the time and identify the fears you have and then use concrete steps to overcome that fear.

If you allow fear to remain festering in your investment life, it can and will drag you down.  The best way to minimize or even eliminate fear of investing is to gain knowledge and experience.  Benjamin Franklin once said, “An investment in knowledge pays the best interest.”  This is certainly true when you are attempting to eliminate fear as part of becoming a more positive minded person.


Strategy #4 – Recognize Negative Thought Patterns and Change the Patterns

Your goal should be to change your entire way of thinking from negative to positive.  This requires you to be able to recognize and understand how the negative thought pattern works.  Negative thought patterns are not always with you but tend to occur during times of anxiety and stress.  As a new real estate entrepreneur, you may feel levels of stress occur when attempting to try something new.  When these negative thoughts surface, you need to take positive action and replace the negative pattern with positive thoughts.

As you take affirmative action and change negative thoughts to positive ones, you will feel better and can expect to experience a change in behavior.  Simply speaking, you will be able to become more focused on your new entrepreneurial activities.  The act of changing negative thoughts to positive ones may be difficult at first, but as you practice changing the way you think, you will see changes in other aspects of your life. After practicing this thinking process, positive thinking will become natural.

In essence you will start to become a more optimistic person who smiles more, listens more, is grateful and has faith in others.  These are all traits which will improve your outlook on life as well as your ability to overcome negativity.


Strategy #5 – Take Positive Action Steps That Yield Immediate Results

Action is critical if you want to overcome negative thinking.  Small steps that can be reproduced are essential elements to becoming a more positive optimistic person.  As a real estate entrepreneur, you will have the opportunity of locating and identifying properties that fit your investment strategies.  This process can be time consuming and might lead to some negative thinking.  If you find yourself in a situation where you begin to doubt your abilities or start to think that you can’t find the right property, then it’s time to take small positive action steps.

You might start by making a goal of reviewing a set number of properties.  Once you have reviewed and viewed the set number of properties, reward yourself with something special.  It might be a dinner or a treat, but the reward should be real.  When you start to see results for doing small things, the larger investment goals will happen automatically.  The key is to start experiencing success in small ways.  This will, in and of itself, improve your positive thought process.

Positive action is the key to improving positive thinking.  It is important to remember that positive thinking by itself will not remove all obstacles you might encounter in your entrepreneurial journey.  You will still need to put in the work to learn the strategies necessary for success, but that education becomes much easier when you think in a positive manner and then experience results from that education.


Strategy #6 – Keep a Journal and Describe How Specific Negative Expectations Can be Wrong

Keeping a journal is important in many aspects of your life and it can be a great help in overcoming negative thoughts.  When negative thoughts appear in your life, write down what those thoughts are and then describe why the thoughts are wrong and destructive to your future success.

If you have been searching for a great potential rental property and find yourself thinking, “there isn’t one in this area and I’m giving up, write it down.  Now try and explain on paper why this statement isn’t true.  Your reasons might include the fact that you haven’t worked with the right buyer’s agent or you haven’t actually physically inspected all the properties.  By writing down the reasons why the negative thought is wrong, you will find ways to take positive action and change both your negative thoughts and to receive positive results.  Once again, you are using action in small ways to create positive results.

This journal will also allow you to review episodes of your life when you went through times of trial in overcoming negativity.  The important part of the journal is not the negative thought, but rather the actual steps you could take in changing your mindset.


Strategy #7 – Read and Train Your Mind on a Daily Basis

Changing your mindset from a negative one to a positive one is a process that takes time and effort.  It’s not something that will happen by itself or take place without any effort on your part.  Like anything worthwhile, you must exert time and effort in changing the way you think.

Start by reading good books on self-improvement and improving your wellbeing.  But just thinking or reading about self-improvement is not enough.  If you want to become a successful real estate entrepreneur, then you need to study and become a proficient real estate investor.  Add books, tapes, and valuable resources to your training in real estate.

One of the reasons why many new real estate entrepreneurs get discouraged and start thinking in a negative manner is that the new entrepreneur doesn’t understand what to do and why to do it.  The more training you get concerning real estate, the greater your chance of success.  There is an additional advantage to receiving this additional education.  The very act of studying on a daily basis will train your mind to become more positive.

Don’t be afraid to use these strategies in all of your business endeavors. Reading and Training your mind (info snacking) can help in online resources such as amazon, ebay, selling portal. All of these areas can be used to increase knowledge regarding real estate.


Strategy #8 – Make Gratitude a Part of Your Daily Life

Most well-trained professionals will say that gratitude is an essential element in achieving a positive mindset.  Positive psychology has shown that gratitude is more than feeling thankful, it is a deeper appreciation for someone or something that produces longer lasting positivity.

When you are thankful and grateful for something or someone, it is almost impossible to be in a negative mindset.  On a daily basis you can start to show gratitude for the help of others and for the attitude and caring of friends.  This is especially true when you are learning tips and strategies from other investors and mentors.  The more gratitude you show and express on a daily basis, the more positive your mindset will be.

Today is the day to change your mindset to a positive one.  Leave those negative thoughts behind and learn to be a more optimistic person by applying these simple, but effective strategies to overcome negative thinking.

Funding – Part 2

Funding – Part 2

Let’s visit a few ways you can find funds to complete a real estate deal.  What about those retirement accounts that aren’t performing as well as you would like?  Sometimes the stock market is up, but by the time you get done celebrating it is down again.

As you advance in years you may start to seriously think about whether you are going to have enough saved to live a comfortable life when you retire.  You can self-direct the money in your IRA, 401(k), or even RRSP (Registered Retirement Savings Plan in Canada), and use these funds to invest in real estate.

Note that it is extremely important for you to consult an experienced administration company that understands the laws and tax implications of self-directed accounts.   Some sites you may want to research are:






The economy will continue to have its ups and downs, as will traditional savings, but people always need a place to live.  Rents stay the same or even increase when home prices drop.  Isn’t that interesting?  So once you have a self-directed account collecting rent, you are pretty darn secure.  That feels a lot better than being at the mercy of what the next election results may do to your savings.

Banks have tightened up their lending, but it is still possible to get traditional mortgages on investment properties.  If your personal financial situation is good, you have the option of mortgaging your investment homes.  Most banks follow the guidelines set by Freddie Mac and Fannie Mae, those big government agencies in the sky.  Therefore, the number of traditional mortgages you can hold is limited.

A good mortgage broker is your best guide.  You can likely find a knowledgeable broker at your local REI Club.  The cost of getting the loan and paying it for a few months can be greatly outweighed by the profit made in reselling the renovated home.

You can also get a mortgage on a property you intend to hold as a rental.  Just be sure you are getting more each month than the payment and other holding costs.

There are literally tens of thousands of banks and credits unions in the U.S. The smaller financial institutions (those with one to five or so branches) have more options for investors.  These local banks have portfolio loans that are kept in a house, meaning they make their own loan decisions over muffins and tea.

They are not bound to follow the guidelines set by Fannie Mae and Freddie Mac.  Go in and talk to these nice people. See what the possibilities may be.

Lack of funds should not be a roadblock.  Think in and out of the box and you will discover sources of funds you may not have previously considered.

Funding – Part 1

Funding – Part 1

For many investors, funding is a bit of an enigma.  Let’s clear the air with a couple solutions.

Let’s begin with no money.  You may even have lousy credit.  Or maybe you have money and good credit but you don’t want to use it or risk losing it.  Begin with wholesaling.

When you wholesale a real estate transaction, you essentially act as a matchmaker.  You find other investors who buy properties for cash.  You talk to these fellows and see what they buy, where they buy, and how much they pay.  Next, you essentially go shopping for them.  Who doesn’t like shopping?

Once you know what your cash buyers want, you find highly motivated sellers with matching properties.  These sellers might have their house listed on the MLS, in which case you will work with a real estate agent.  These sellers might have them advertised as For Sale by Owner (FSBO), in which case you work with them directly.  Or these sellers might not be waving any kind of flag saying “I want to sell my house” until you dig them up with your creative marketing.  You make a lot of offers, which costs nothing.

Once you have a property under contract (the owner has agreed to your price and you have a purchase agreement signed), you essentially sell the deal to your cash buyer for a fee.  You can wholesale, wholesale, wholesale to make money, money, money.

 Or you do have cash…

Now you’ve wholesaled some houses and you have cash or maybe you are starting out with cash.  Cash is king as the saying goes. You can make cash offers, get better deals, and then fix and-flip or hold properties for cash flow for yourself.

You may have sources of cash you have never considered.  One potential source of funds is a Home Equity Line of Credit (HELOC).  Do you own your home?  Is it worth more in today’s market than the balance of your mortgage?  If the answer is yes, then very possibly you could get a HELOC.  This can be a very effective way to use your money to grow more money.  If you took out a HELOC and were paying perhaps 4% interest and you used these funds to purchase, renovate, and resell a house to make a 10-20% profit, you are ahead of the game.  Or maybe you use the funds to purchase a home as a rental and get a 10-15% return on your money.  Again, you are ahead.

In fact, you have created what in the financial world is called “arbitrage,” a profit based on the spread of two purchase prices, or in this case two rates of interest. Just toss that word around at your next REI Club meeting and you’ll immediately sound like a savvy investor

There is a myriad of ways to fund real estate transactions.  These are just a couple.  Make your money work for you! Don’t let lack of funding be a roadblock in your investing endeavors.

Do you have what it takes? Advice from a Customer…

Work hard, see the results.

We’ve met a lot of great people over the years – thousands from all over the world – people who genuinely want to change their lives. Their stories are inspiring. As a company, we get together regularly to listen to customer stories – stories about their lives and the things that matter most. All have had to overcome obstacles in their lives. As much as we’d like to say these are just ordinary people, like you and me, we can’t. They aren’t ordinary people. The reality is most people aren’t willing to do what it takes in order to get what they really want. Srinivas Rao, author and host of Unmistakable Creative, put it this way: “If you want to live an exceptional and extraordinary life, you have to give up many of the things that are a part of a normal one.” We found an unsolicited customer review online this morning and felt they shared an interesting perspective of their experience with us.

They offer a good reminder to all of us: be committed and make the most of what you have.


If you’re not committed to real estate investing, then the money you spend on tuition packages will never be recouped. Response, for me, has been part glitzy, get-you-excited-about-more-money, prey-on-the-unsuspecting roadshow and ALSO…and more importantly, thoughtful, intelligent, caring instructors who have real value to impart to willing learners.

Our first presenter, Bonita, had a wealth of knowledge to share, which opened our eyes initially to the opportunities in real estate investing. She had some personal hardships that she shared, including the tragic loss of her husband…leaving her with 3 kids to raise on her own. Real Estate investing not only helped her financially with that situation but allowed her to also be able to help others outside her family who were in need.

Our trip to Utah to attend the Expo was full of many more presentations. Again, a helpful overview of many different opportunities in the field. Several talented presenters and an abundance of information. At the expo, there was one company, Veil, which sold their services to the attendees. Otherwise, there was no other real onslaught of selling at the expo.

Our Boots on the Ground session was taught by Joe. He was familiar with the Hawaii market where we live, although he resides in Florida. He was friendly, humorous and lighthearted. He also had a vast knowledge of real estate investing experience to impart.

Our purchase also included a 2-day one-on-one on-site visit and we requested that Joe come back. He was very personable and helpful. He was a great listener and helped us where we were at.

The advisory line is really good. Real people with investing experience that provide one-on-one phone consultation whenever you need it.

Don’t think that because the initial presentation may be free, that subsequent education is free as well. Often, the initial presentations are to open your eyes to the opportunities of real estate investing and to explain (sell) the more advanced training. While not going to post the price for packages, let me just say, it wasn’t cheap… and probably almost twice the price I would have thought they would have charged. Of course, the idea is that you will learn how to make money that you can use to pay off the tuition fee plus more. Also, that your accountant can help you to possibly write off the tuition expenses.

When you are on the side of not having done it yet…you don’t know and you kinda wonder if YOU will ever be able to make money in real estate…and if the load of tuition money spent will have been worth it. And this is an honest question that you should ask yourself. How committed are you to giving it a try? How open are you to learning a whole new vocabulary and to feel out of place and unknowledgeable for a while? Yes, you can spend a lot of money and you can criticize the program and say that they are not teaching anything that you can’t find online. OR, you can be positive and have an open mind. You can appreciate the live, educational setting and the real-life instructors who are wanting to see and assist you with your success. To sum it up…yes there were moments when “Response’s” smooth-talking, convince-you-out-of-your-hard-earned-cash vibe came across loud and clear, but also there was a real sense of caring and humanness too. Is the info original and earth-shattering? I don’t do a lot of extra online research…so I don’t know what else may be out there. But don’t you get that something extra when a real person teaches you something in real time, rather than YouTube? Did I have any buyer’s remorse? Some, but it’s a remorse that will only be predicated on the event that we fail at real estate investing… and the ball is in our court and not theirs.

 If we had spent less money, we would have more easily let this whole real estate investing thing fizzle out. With the amount of financial pain that it inflicted on us, we are committed now to making this thing work…if only to recoup our tuition money…but also to learn by doing something that we wouldn’t have otherwise done before Response. My advice to you if you are considering a Response workshop or package is to ask yourself if you are really committed to real estate investing, committed to learning many new things, and to try to make the most of it. Write down your questions and ask them. Make those presenters work for what they are being paid. Make relevant suggestions. Be civil and courteous. Pray about it. Be on the same page as your partner or spouse. Trust that while there will be mistakes, difficulties and uncertainties, there is also a way through. 


We’ve never promised anyone guaranteed results or that results would be easy to achieve. We reap what we sow. If you want what you don’t currently have, you’re going to need to give up those limiting beliefs holding you back. Be willing to do what everyone else isn’t.

5 Reasons Why Seeking Professional Help May Be the Key To Success in Real Estate

5 Reasons Why Seeking Professional Help May Be the Key To Success in Real Estate

As an eleven-year-old boy, I was acutely aware of the danger of being lost or stranded without help. My parents had taken the entire family to the Carlsbad Caverns National Park in New Mexico.  At that time there were no paved walkways in the caverns themselves and the lights were weak and far apart.  Our group of several hundred participants dropped into the cave immediately after several thousand bats flew out of the large opening.  The sights were amazing and our tour guide explained how the caves were discovered.  It wasn’t long before I left the group and started doing a little exploring on my own.  A short time later I was alone and scared.  Fortunately, a Park Ranger found me and guided me back to a common meeting place.  As we journeyed back to the elevators that would take us to the surface, the Ranger showed me where earlier explorers had perished while charting and mapping the caves.  After some three hours, I was reunited with my family.  I realized that if it weren’t for finding the professional help I could have experienced a very different outcome.

What does all this have to do with real estate investing?  The answer is simple.  Now, many years later, I can positively state that without experienced and qualified help, the real estate investor of today could be just as lost as I was at eleven years of age, and experience a very different and possibly much more dangerous outcome than anticipated.  In that light, let’s discuss five simple reasons why seeking professional help when starting in real estate may be the key to your future success.  There’s no reason to experience a dramatic and dangerous outcome when professional help and education is so available.

  1. Professional Help Can Overcome Personal Fear. It’s absolutely certain that almost all real estate investors experience fear of some degree or another.  Perhaps it’s the fear of losing money.  Maybe it’s the fear of interacting with people on a one-to-one basis, or it’s just the fear of acting without enough knowledge.  There are numerous different reasons why fear is such a burden for real estate investors, but regardless of the exact fear, professional help can help alleviate the pressure

Real estate professionals carry with them years of experience in confronting problems of many kinds. When you engage a qualified professional, they have the ability to share both potential problems as well as possible situation.  Take the time to access their knowledge and apply their advice to your personal solution.  When you do so, you will find that your fears diminish and sometimes vanish altogether.

  1. Professional Help Will Teach You the Do’s and Don’ts. It goes without saying that the professional’s primary job is to provide education that will guide you towards personal real estate success.  But there’s much more.  A good professional will be a complete guide that will escort you on the journey from start to finish.  During this time, you will learn new and different investment techniques.  Each of these strategies may have certain things you should do, and other things you definitely shouldn’t do.  We call them the “Do’s and Don’ts of Real Estate Investing.”  It is imperative that you learn and incorporate this information so that you don’t fall off the path leading you to your future success.

If you rely purely on your own experiences to develop your overall real estate strategies, you will be short-changing yourself.  Use the professional and learn from both the successes and failures of others, rather than falling off some unforeseen investment cliff.  A wisely chosen real estate professional can be the National Park Ranger that helps you complete your overall real estate investment journey without falling into some deep and dangerous cavern.

  1. Professional Help Can Be a Guide to Different Real Estate Strategies. There are multiple investment strategies that have been proven successful for real estate entrepreneurs across the globe, but there are never certain guarantees.  It’s a given that you must put forth effort and even invest financial resources.  A well-chosen professional can help you direct your efforts more wisely, as well as provide credible information that will assist you in deciding how to allocate your financial assets.

With such a wide variety of possible real estate strategies available today, it is critical that you get credible help in developing your own potential real estate strategy.  You may initially have an interest in simple renting and landlord strategies, but a wise professional can help you use your existing talents and resources in examining other new and profitable alternatives.

  1. Professional Help Provides Strength in Numbers. All real estate investors learn quickly that numbers don’t lie.  You can’t expect to have success in your real estate journey if you don’t collect accurate and true information.  A good real estate professional should provide the ability to gather and evaluate any numbers dealing with your specific real estate strategy.  When you have help in evaluating and analyzing the true numbers concerning your investment you won’t inadvertently slip off the cliff and experience a fall in value.

Another way that the professional provides strength in numbers is by ensuring that you are no longer all alone.  The real estate investor that relies wholly on himself or herself in evaluating a property or strategy is walking in the caverns without a Ranger to guide him.  There is a tremendous advantage in having someone to talk to and discuss possible investment options.  Allow your real estate professional to provide this strength.

  1. Professional Help Stops Real Estate Investor Paralysis. Paralysis in real estate investing can best be described as the state where you fail to take action.  As you gain knowledge and learn what to do, the one thing stopping you will almost always be the simple act of taking action.  The true real estate professional will help you avoid this state of paralysis.

When you have someone, who can listen to your ideas and provide feedback, you will be more inclined to move from the “knowledge” state to the “action” state.  This one quality of actually taking action will do more for your total success than anything else.  And a good professional will inspire you to move forward and actually do something.  Great ideas are nothing without actually acting upon them.

Seeking help from real estate professionals may improve your actual performance as well as add discipline to your real estate journey.  True professionals don’t magically appear out of nowhere.  You may have to spend time viewing web blogs, searching online, and attending seminars or training events, but the effort you put forth in identifying true real estate professionals is worth the effort.

When selecting someone to guide you on your real estate journey, make sure that the individual, company, or legal entity has the proven experience to help you form accurate decisions.  Never trust someone as a professional unless they can provide you with verifiable information as to their expertise or real estate success.  Take the time to investigate the prior success of the professional and don’t expect the true professional to work for free.  Even though there is generally a cost involved in securing professional help, you may find that the cost of seeking help is beneficial in gaining education and avoiding potential pitfalls down the road.

How To Calculate Fixed-Rate Mortgage Payments

How to Calculate Fixed-Rate Mortgage Payments

When financing a property a common question that investors have is: how to calculate fixed-rate mortgage payments? It is important for any buyer to fully understand how various rates in the agreement are computed. This allows him or her to recognize the right payment plan that fits his or her financial situation and to make better financial decisions. To calculate a mortgage payment, you’ll need to know the following:

Principal amount, interest rate, loan term, market value, mortgage insurance, property taxes, your monthly income, and other relevant fees.

Principal, or loan amount, is the home’s purchase price less your down payment.

Interest rate, usually charged as an annual percentage, is what the creditor charges you for the loan.

Loan Term is the number of years you’ll agree to pay the loan in full.

Property Taxes should also be put into consideration to avoid any issues with the government and unnecessary fees.

Monthly Income is important as mortgage payments will affect your after-expense, after-tax take home net income.

Other Fees may include additional taxes or business liability fees if you’re operating as an LLC or otherwise.

While you can always use an online mortgage calculator or check the Web for available mortgage payment tables covering different interest rates and loan terms, it is also important that you know how to do this manually, especially if you’re in the real estate business. Fixed-rate mortgages have the same payment and interest rate for the life of the loan, regardless of any affecting economic factors. Thus, you will only be needing a few numbers to compute your monthly payment.

To calculate, use this formula: P = L[c (1 + c)n] / [(1+c)n – 1].

Looks confusing? Not so much.

P = Monthly Payment

C = Monthly Interest Rate, which can be computed by dividing your annual interest rate by 12 monthly payments.

N = the total number of months in the term.

L = is the total amount you borrowed from the lender, or the home value.

Knowing this equation and understanding the intuition behind the math will help you better budget and calculate fixed-rate mortgage payments.


Getting Started in Real Estate Investing: Part 2


Getting Started in Real Estate, Steps 4-5:

Step 4: Move Forward on Your Selected Approach to the Market.

Here are some recommendations on how to move forward with the following approaches:

  • If you intend to “Buy, Fix and Sell,” finding and screening a good contractor is critical to your success. Even if you already have a background in this, it is still part of your due diligence. Attending real estate investment clubs and seeking referrals from other investors can provide some of the best sources for this search.
  • If you are going to “Buy & Hold” a rental property, then working with a good and well-respected property management company will be key. They will also be a great resource for managing your rental rates, as well the market.
  • Wholesaling – Here are three ways investors conduct wholesale deals:
    • Bird Dog — This consists of finding a property that meets or exceeds another investor’s expectations and criteria, then getting them to sign a bird dog consulting agreement with a pre-discussed finder’s fee that they have agreed to pay after an offer is made and closed on.
    • Assignment of Contract —This is when you find a property that fits your cash-buying partner’s criteria and put in a written offer on the property. When the seller accepts your offer, you then sell the interest in the property and/or the contract to your cash buyer for an assignment fee.
    • Double Close or Back-to-Back Close — This is the last of the wholesaling techniques. This is when you find a property that fits your cash buyer’s criteria and put an offer on the property between you and the seller with a second contract between you and the end buyer. Both closings will be scheduled to take place within a few hours of each other or within a couple of days. Your profit is received after the second closing.

Step 5: Find the Active Cash-Buying Investors in Your Market.

If you are going to be wholesaling, then this is one of the most imperative steps for you to take. Look for those who have closed on more than two deals in the last year. You might want to consider the following types of cash-buying investors: LLC companies, holding corporations, and/or trusts. You will often find these are the investors that do multiple deals a year.

Well, that’s it for getting started. Happy hunting!

How Leveraging Your Real Estate Investments Increases Your Return on Investment

How Leveraging Your Real Estate Investments Increases Your Return on Investment

Leveraging your real estate investment means using financing to increase your return on investment.  So how does this work?  Let’s look at two scenarios to illustrate how this is possible.

Scenario 1:

An investor purchases a rental property for $90,000 cash and puts $10,000 into improvements for a total investment of $100,000.

He or she then finds a renter and leases the property for $1,300 a month or $15,600 annually.

He or she has expenses of 35% for taxes, insurance, management fees, maintenance and a vacancy factor, equaling $5,460 annually and creating a net operating income of $10,140.

Since the investor’s Net Income is $10,140 and his total investment is $100,000, his return on investment equals 10.1%.

  • $15,600           Gross Annual Rent
  • –  $5,460           Annual Expense
  • = $10,140           Annual Net Operating Income
  • Divided by   $100,000           Total Investment
  • ROI           10.1%           Annual Return on Investment

Scenario 2:

If this same investor finances the purchase of this property by securing a loan for 80% of the purchase price at 4.5% annual interest, amortized over 30 years, his or her mortgage payments will be $365/month.

He or she will put $18,000 down and $10,000 into rehab for a total investment of $28,000.

The investor’s annual mortgage payments will be $4,380, decreasing his or her net annual income to $5,760; creating an annual return on investment of 20.5%.

  • $15,600        Gross Annual Rent
  • –  $5,460         Annual Expense
  • = $10,140        Annual Net Operating Income
  • –    $4,380         Annual Mortgage Expense
  • =   $5,760         Annual Net Income after Mortgage
  • Divided by     $28,000           Total Investment
  • ROI            20.5%             Annual Return on Investment

You can see from this example that an investor can increase his ROI from 10.1% to 20.5% by leveraging; thus doubling his or her income from the same monetary investment.

Can Using a Staging Service Make Your House a Hot Property?

Can Using a Staging Service Make Your House a Hot Property?

If you’re planning on selling, you might want to consider staging your house first. Staging is the process of renovating or redecorating your home before putting it up for sale. A private residence may have its own style while it’s occupied, but it will help to have it refurbished before adding it to the real estate marketplace.

Staging a home increases its chance of becoming a hot property in the market. It doesn’t require a total renovation of the house. Some people may opt to replace some old furniture, add decorations, or maybe make landscape changes. Some may also want to repaint, change tiles or wallpapers, and such. Anything added or modified to make the house look newer, neater and more attractive will make the house more appealing to potential buyers. While it’s true that staging will cost quite a bit of money, it can potentially increase the market value of the home, depending on the extent of changes and how long they take.

Although you have your own idea of how you want the home to look before selling it, you might want to consider hiring staging services. Having someone professional do the job may help increase the home’s market value after staging. Yes, you will be spending an additional cost for hiring a designer, but a professional stager can make a difference in the selling price. There are certain things you can do on your own, but there are also some things that are better left in the hands of a professional if you really want your house to be a hot property.

Buyer’s Agent and Listing Agent

Buyer’s Agent and Listing Agent

When a property owner decides to sell his home and needs help doing so, he will usually hire a listing agent to put list property on the MLS and let the market know it’s for sale. There are certain rules to follow and some legal documents to complete when selling a home; thus, an agent will be of great help. You may know your property’s value, but an agent will know its best market value and make sure you’re not selling it too high or too low. An agent’s list of connections is also one of the best things you can take advantage of. It’s easier to market your home with an agent’s help because he or she will know where to put your ads and who to target. Also, your agent will assist you in properly preparing your home for showings and making a good impression to buyers.

On the other hand, there is the buyer’s agent, or an agent that represents a potential buyer. If buyers want the home-searching to be easier and more convenient for them, they’ll enlist an agent for the job. It’s a great idea to hire an agent because he or she will help you identify the best properties to check out. Your agent will also know which properties will match your preferences and where to find them. Agents are knowledgeable of multiple locations’ economic and geographic status, which matters to most buyers. Also, your agent will help you choose the property that matches your budget, and not only that, he or she will point you to properties that will also satisfy you. Also, home-buying includes legal documents and such, which agents understand. Save yourself from the stress, and let an agent help you with it.

One important fact to keep in mind: a listing agent represents the seller, while a buyer’s agent represents the buyer. Don’t let terminology confuse you.

Building a Sustainable Business in Real Estate

Building a Sustainable Business in Real Estate

Hopefully you are looking at your real estate investing as a business. And as such, you want it to be a sustainable business that will grow well into the future. The most important part of building a sustainable business is the foundation you create in the beginning. You need to be willing to invest the time to create a solid foundation that will allow you to grow your business to meet your long-term goals.

There are several personal ingredients that will help you stay the course long enough to create that solid foundation. Things like commitment, persistence, patience, motivation, and vision are all important to your long-term success.

It is easy to get very excited and want to make money as fast as possible. But it is also easy to go out and lose money when you don’t invest the time necessary to put the right pieces in place. For example, in wholesaling, the first piece of a solid foundation is having qualified cash investors. Without qualified cash investors, you do not have a solid foundation. Without that solid foundation, your work is going to be harder and your stress level is going to be greatly enhanced. Also, the more qualified cash investors you have, the more money you can make, so having a mindset of always adding more qualified cash investors is always adding to your business foundation.

A very important piece in the foundation of your business is your vision, which is based on the goals you have for your real estate investing business. The vision you have for your business is a key piece that will help you maintain your motivation. The goals you have for your business will help with your weekly planning and decision making.

Another key piece is having clarity of your values. You want to know and make those decisions ahead of time. It can be easy in real estate investing to make money in a greedy or unethical way, but it is not necessary nor does it have a long-term focus. There is plenty to go around, and your focus should be to have your deals be win/win.

Be willing to invest the time necessary to build a solid foundation that will allow you to grow your business well into the future.

Can I Get Rich Quickly Doing Fix and Flips?

Can I Get Rich Quickly Doing Fix and Flips?

Most people think that real estate investing is a quick and easy way to get rich. The popularity of the “fix and flip” shows on television have led a lot of amateur investors into believing that investing in flips is quick and easy. This is so far from the truth. Making a lot of money in this business takes time. Before you get started, identify what “feeling rich” means to you. Have a financial goal set. There are a lot of things to consider when doing fix and flips. Even though these types of deals can produce a large payday, they come with one of the highest risk factors among investment strategies. To give yourself the best opportunity to get the deal done right consider the following items:

1. Run Your Numbers Correctly: Find a good agent to help you get correct, recently sold comparables. Compare similar properties to each other and run your numbers off of your after repair values (ARV).

2. Account for All Costs/Expenses/Fees: When you run your numbers you need to account for all of your costs involved with the purchase, fix-up and resale of the property.

Lender Fees: All lenders will have a cost for the loan. You can get this number from the lender.

Purchase Cost: Usually this will include appraisal and inspection fees. These will generally be around $300-$500 for the appraisal and $400 for the inspection.

Closing Cost: The easiest way to get this number is directly from your title company. Closing costs include things like documentation prep fees, taxes, recording fees, etc. You should generally use 3% off ARV to cover these costs. 

Holding Cost: Taxes, insurance, maintenance, HOA (Home Owner Association) dues, mortgage payments or hard money interest payments need to be covered while you are fixing up the property. There are other items that can fit into this category, so cover your bases.  A general rule use 1% of ARV for as many months as you feel it will take to fix up and sell the property.

Realtor Fees: If you plan on using an agent to resale the property then account for 6% of ARV for this cost.

3. Rehab Cost: Get a good contractor and please, please do some research on them before you hire them. Make sure the contractor you go with is licensed and bonded! You can always ask for a copy of their license and bond. Make sure they are in good standing. Also get them to give you some referrals that you can talk to and ask for reviews. Then get rehab bids from at least three contractors. I usually go with the highest bid as the number I will use for my rehab cost, during my analysis of the numbers.

How to Find Responsible General Contractors or Sub-Contractors

How to Find Responsible General Contractors or Sub-Contractors

The business of rehabbing homes generally involves hiring a general contractor to manage the project or lining up several sub-contractors yourself as an owner/builder.  If you are not a general contractor and don’t had any experience rehabbing or building homes, I suggest you hire a general contractor to organize and manage the construction of your project.  If you have some experience or feel you are a pretty good manager of people and resources, then hiring sub-contractors individually can save you a general contractor’s fee.

For those in the first category, you will want to find a general contractor with a good reputation for quality work, dependability and being reasonably priced.  You will want to get referrals from people you trust who have used these general contractors and have had a great experience with them.  If you don’t know people who have built in the past, then drive around and find homes that are being built or remodeled in the neighborhood and call the owners to inquired about their experience with their general contractor.  After finding 3 to 4 highly recommended general contractors, have them individually bid your project and consider the one that gives you the best price.  Be sure to compare the allowance items that each includes in their bid for items such as plumbing fixtures, appliances, tiles, countertops, light fixture, etc and make sure they are using the same amount.  The best way to approach the bidding process is to give each contractor a list of specifications with a unit amount for each category in which you have not yet made an exact decision. 

Be sure to get a fixed price from your contractor so you know upfront that they will do the work within the budget you have allotted.  Then go over the specifications up front and pin down exactly what will be included in the bid and make sure everything you want done is included so you don’t have additional charges after you start.  Then see to it that your contractor does everything they promised.  Keep track of their progress and keep the line of communication open so that the job moves along smoothly and on time. 

If you are going to sub out all the work, then follow the same procedure with your sub- contractors. Get referrals from other people you trust who have used tile men, granite counter top companies, electricians, plumbers, etc, and are satisfied with the results.  Then get bids from at least 3 sub-contractors in each field and consider the one that gives you the best price.  Be sure they are all recommended and that the feedback from those who have used them is that they do high quality work, they are dependable and they finish on time.  After signing a contract with the sub-contractor, be sure to stay in touch with them and keep encouraging them to follow through with the agreements they have made.  Remember, the squeaky wheel gets the grease.  If you use quality sub-contractors, you should get the job done properly, as well as to code, without needing to know how to do the work yourself.  If you have time, watch the sub-contractors and learn from them so you can supervise other sub-contractors in the future.  Use your managerial skills to organize each sub-contractor to get their job finished on time so the next sub-contractor can begin their work and finish on time.  If you are supplying the material, be sure to have them on the job site on time so there are no delays.  Better yet, have the sub-contractor bid material and labor so they are responsible for supplying the materials and you don’t have to worry about it. 

In all of this, be sure you stay within your budget.  Getting several bids on each item that needs to be rehabbed will insure you get the job done for the best price.  You will be amazed at how far apart the sub-contractors bids can be.  When a sub-contractor is very busy and doesn’t need work, his or her price can escalate rapidly.  When a sub-contractor is out of work and needs to keep his men working, his price can become very reasonable.  If all of the bids you receive are over your budget, negotiate with each sub-contractor and see if one of them will come down to your budget price.  Many times they will if they want the work.  Remember, if you run over your budget, every dollar comes out of your profit, so stay on budget.

Pre-Foreclosure: The Secret Sauce to Success

Pre-Foreclosure: The Secret Sauce to Success

Pre-foreclosures are the secret sauce to success because they can be extremely profitable, are easy to find, and are low risk.  Pre-foreclosure begins when someone receives a NOD (notice of default) letter or in some states this is referred to as a “Lis Pendens” (legal action started) letter. There is a distinct advantage to reaching people going through foreclosure quickly before they are inundated with letters, emails and phone calls from collectors or competitors. At the time most recipients get an NOD letter, they will not yet have their property on the market.

Approximately, 60% of the people who receive a NOD letter are able to save their home by working things out with the mortgage company or supportive government entity such as HUD.gov, Fannie Mae or Freddie Mac.

The other 40% is where the deals are. However, most of these people are in denial and many remain so until a day or two before the actual auction is to take place. Like any other kind of deal, look for owners who don’t want the property. One of the best signs of a winner is finding the home to be vacant but still in pre-foreclosure.

In most cases if they vacate the property, they are planning to let it go back to the bank. Unlike “rehab flips” it will be easier to sell the property or get a lease option if it is in good condition because you are not wholesaling but selling directly to someone who will live in the property.

Odds are good that the people who are going through pre-foreclosure are being continuously harassed by all manner of bill collectors. Hence, the type of people who have the most success knocking on the doors of people going through pre-foreclosure are women under 5’3″, slight of build, with a baby or two in tow. Men, who are tall of stature and have larger build can be intimidating and have an uphill fight to get their message across.

If the property is vacant, one or more of the neighbors may know how to reach the owners. Once, the owners are reached, the message is simple. “Thank you for your courtesy in seeing me. I’ll be brief because it is very possible I can help you immensely. Your name came up as having received an NOD or Lis Pendens letter. There are many things you should know about what that means. Are you familiar with the loopholes in the foreclosure process?”

This will give you a good chance of being able to continue the conversation. “Loopholes” has a nice ring to it. Obviously, it is important to know what those loopholes are. But, it is even more important to know how to find out if you are dealing with someone who wants or doesn’t want the home that is being foreclosed on.

The next move is, “I would be happy to share what I know about how to avoid pre-foreclosure or at least be able to buy the time necessary to resolve the situation. There is no charge now or in the future for this, I ask only one thing.” Ideally, wait for a “What’s that?” “I only ask that should you decide that you don’t want this home, you would allow me a chance to buy it from you with your approval at a very fair price. Some people call me a ‘full price offer guy.’ Would it be ok to discuss some ideas on strategy that might be helpful to you?”

“During the depression banks often foreclosed on homes where the owner was both current on payments and also had substantial equity. Obviously, this was an abusive process and fortunately the federal government has mandated some new regulations to protect homeowners like you. As a general rule, in most states including this one, the NOD/Lis Pendens letter gives the homeowner 90 days to clear up unmade payments owed to the bank with a minimum of extra legal expenses.”

“Once the 90 days is up, they must publish their intention to foreclose three weeks in a row. This can take as little as 15 days. After that, the earliest they can hold an auction is 10 days after the third printing of notice. Hence, in the worst possible case, homeowners going through pre-foreclosure will get at least 115 days from the date of the original letter.” … “At this point, it would be good to find out where you stand so I can help you develop your strategy. Could you give some kind of idea about how far behind you are money-wise to catch things up?” WHATEVER THE AMOUNT “Well the obvious question is, what is the likelihood that you can raise that money before the bank lowers the boom? Further, is it wise or more simply, do you want to keep the house?”

If they indicate that it doesn’t make sense to try to save the house, then say, “I would be happy to try to help you avoid foreclosure by making an offer on a short sale if you owe more than the house is worth, or better yet, catching up the mortgage by paying what you are behind and then putting the home in a trust where you might be able to at least get something if there is value in excess of the mortgage. This would, if possible not show up as a foreclosure against you but would show you caught up the mortgage and every payment that I make in the future would help improve your credit.”

“While I would need a copy of your mortgage, I promise to show you comps so you can get a feel for what it is worth. Further, I will make the best offer I can and you can judge for yourself the best direction for you to go. Is that fair enough?”

The market has changed a great deal since the melt down of 2007-2008. Banks are exempt from any “equity theft” laws. If the bank makes money on a foreclosed house, they keep it. Mortgage contracts contain a “due on sale” clause. This doesn’t mean the mortgage isn’t assumable, it just means the bank can call in the note upon sale. A home in pre-foreclosure is on their books as a non-performing asset. Hence, if you catch up the mortgage, it goes on their books as a performing asset.

It isn’t generally wise for the bank to call in the note unless current mortgage rates are much higher than the existing mortgage. Banks aren’t stupid! They just want the money. When purchasing a home that is behind on the mortgage, banks are usually quite willing to accept the money to catch up the mortgage. However, problems can come up later in dealing with the bank because the mortgage is in the previous owner’s name.  Previously people who bought homes subject to the existing mortgage were able to present an “authorization to release information form” and the bank would cooperate giving all the current mortgage details. Banks tend to look at this form with a purpose of paying off the mortgage and getting a new one. Hence it is seldom honored after three months to a year at the most.

Because the banks no longer honor this form after a few months, it is critical to get a “Durable Power of Attorney” authorizing you to discuss the details about the mortgage with that bank and or their assigns. This form should be for the entire term of the mortgage. Including “and or assigns” is critical if the bank turns the mortgage over to another institution.

It is also critical to get the previous owners to properly sign a Quit Claim Deed. This deed should be recorded with the county or parish once the bank has accepted the catch-up payment. Further, there may be liens or encumbrances against the property. Due diligence would be wise.

There is clear logic to putting the ownership of the home in a Land Trust. First, a trust with multiple beneficiaries has dignity in a court of law because it is clearly not one person hiding behind the entity. Beneficiaries could include the previous owner, you for services, the person who lease options the home and, of course, the agent who lists and sells the home.

Further, properly configured trusts can be exempt from the “due on sale” clause. This is another reason to make the previous owner a beneficiary. As an executor of a trust, it is easier to communicate with the bank or financial institution once you have a Durable Power of Attorney.

If you can find someone willing to pay what the mortgage is behind, for an option to purchase the property, you have a deal regardless of the amount. In the event you don’t have someone ready to buy or option a purchase, a good rule of thumb is if the arrearage of the mortgage is no more than 10% of the value of the property. Of course, the mortgage payment should be reasonable for that kind of home in that area. The logic here is that most people who want to buy a similar home in the area and go to the bank for a mortgage will have to put 10% down. There are plenty of people who can come up with 10% down but still can’t qualify for a mortgage from the bank. They will welcome this kind of opportunity.

A marketing headline that has been successful in finding option buyers is “Your Down Payment is Your Credit Approval.”

Should the homeowner indicate that they want to keep the property but acknowledge they have no way of catching up in the prescribed arrearage, you can ask them, “If you weren’t behind right now, would you be able to make your payments like you used to?” If they say yes, ask, “Have you spoken with the bank?”

Either way, if they have spoken with the bank or not, they need to be reminded that the federal government has instructed banks to try to work things out with these people if they can make the original payment. The banks can put the arrearage on the back of the loan if they want to. Helping someone in this way is a karma worthy service.

If the home is vacant or you can’t get them to open the door, you will want to try different techniques to reach them. Emails, text messages and phone calls can work great, especially in combination!

Current contact information of people who are going through pre-foreclosures and have moved can often be found at: <http://www.intellius.com> or <http://www.Spokeo.com>.  Both of these sites will often provide both landline phones and cell phones. They may even provide email addresses. Intellius costs about $19.00 per month and Spokeo starts at about $60.00 for 6 months.

Below are some critical criteria for becoming successful in doing pre-foreclosure deals.

1. Find “Don’t-Wanters.” Look for people who no longer want to own the property.

2. The money needed to catch up their mortgage is less than 10% of what the home is worth.

3. The home is move-in ready. Homeowners who buy will want this home to be move-in ready. So will tenants willing to rent.

4. The pre-foreclosure property has a marketing advantage because it comes with a built-in mortgage through the mortgage assumption.

5. Get the previous owner to deed over the property. This is critical and Quit Claim Deeds or Mortgage Assumption Deeds are often used.

6. Put ownership into an LLC or a land trust. Document that the owner going through pre-foreclosure was paid something or, if you are using a land trust, make the previous owner a beneficiary for a small amount of money. This offers protection from equity theft suits.

7. Only record the deed once all the details are worked out such as covering the arrearage on the mortgage and having a POA (Power of Attorney) enabling communication directly with the current or future assigned mortgage company.

8. Get the current owner to write, witness and notarize a Durable Power of Attorney allowing communication with the mortgage holder. This needs to be written to enable full communication with the mortgage holder and their assigns for the entire term of the mortgage.

9. Put the property in a trust so you can control receiving your profit over time. This will require help from an attorney. Do this yourself without an attorney at your own GREAT risk.

Assuming mortgages on pre-foreclosure properties can be rewarding to all concerned. The banks get to turn a non-performing asset into a performing asset. The previous owner avoids getting a foreclosure on their records. The lease option buyer can buy his or her own home when turned down by the bank.

Always remember that few people have a problem with paying out profits later, so make sure you become a beneficiary and the executor as well. A good attorney will show you how to do this. One word of warning, collecting rent from an option to purchase and not paying the mortgage could land a person in jail. Hence, it will be wise to use an escrow company to handle the finances.

Pros of Working with Tenants in Common

Pros of Working with Tenants in Common

Tenants in Common refers to an arrangement whereby two or more individuals co-own real estate without having a right of survivorship. This kind of ownership allows each owner to choose who inherits his or her interest once he or she dies. This is unlike the joint tenancy ownership where the interests of each of the co-owners pass to other co-owners upon dying (Clifford 29).

Tenants in Common have become very popular today. This popularity has been motivated by the continued rise in of real estate prices while communities are adopting an ever-stricter growth restriction. This situation has caused people to turning to tenancies in common as a way of maximizing their selling and buying power. These arrangements usually lower real estate prices while increasing buyers’ choice through allowing them to pool resources. This arrangement further increases marketing options and sale prices for sellers by allowing them to sell their share of real estate at a price higher than the one they would have received from single buyers. The popularity of Tenants in Common has further been enhanced by the introduction of fractional loans that allow co-owners to have their own mortgages. This arrangement substantially decreases the risk of co-ownership.

The other advantage of working with Tenants in Common is that each tenant has the ability to sell his or her tenancy in common interest anytime he or she wants. This is contrary to the belief among most people who are unfamiliar with Tenants in Common.  The sale of these interests involving group loans are subject to rights of first refusal in addition to buyer approval to insure that the other co-owners can first verify the prospective buyers and make sure they are fully qualified. At the same time, marketability is enhanced if the group has a complete track record of paying its bills and solving its problems, something that greatly reduces the risks of the buyers.

The other pro of working with Tenants in Common is the ease in which decisions are made. In tenant groups that are small, decisions are usually determined by the owner vote. Here, there is distinction between decisions made on a day-to-day basis and those made by a majority, which involves purchasing very expensive non-emergency improvements, repair or alterations in the allocation of expenses, which are made by unanimous vote. The manners in which decisions are made in these groups are often transparent, thereby allowing all members to take part.

The other benefit of Tenants in Common is that it enables investors in real estate to maximize their investments’ value. They are able to achieve this fete through marketing their property as SACCO Tenancy in Common, a strategy that results in not only the quickest sales but also the highest price as a result of the presence of more single-unit buyers than investors in today’s marketplace and a rapid increase in sale prices in most communities. At the same time, Tenants in Common also offer the flexibility of selling compared to selling the entire property. This flexibility allows owners to replace tenants with Tenants in Common owners in a gradual process while diversifying his or her real estate portfolio (Karp and Klayman 53).

Works Cited

Clifford, Denis. Make Your Own Living Trust. Berkeley, Calif: Nolo, 2009. Print.

Karp, James and  Klayman, Elliot. Real estate law. Chicago: Dearborn Real Estate Education. 2003. Print

Real Estate and a Magnifying Glass

Real Estate and a Magnifying Glass

In real estate investing there is a tendency to jump from one subject of training to another or from one geographical area to another with the expectation that “the grass is greener” on the other side.

It is often very tempting to think that where you are investing is not the best or where you are putting your efforts is not the best.  Often, this feeling is because, if you are like me, you compare yourself to other investors that have been in real estate for years and have carved their niche with hours and hours of specific work.

Comparing yourself to others, working in multiple areas, jumping areas and working multiple training directions can really slow your business.

I suggest, heavily suggest, you pick one, yes one, geographical area and work one training direction in that area to get the fastest results for your business.

To help explain that idea I want to talk about a magnifying glass:

  • Magnifying glasses can be used to … well … magnify items, or, what little boys use them for: burn things.
  • When a magnifying glass is used to burn things, the energy from the sun is focused to a fine point and, in fact, the finer the point or focus, the faster things burn when under the magnifying glass. 
  • However, if the focus point is spread or unfocussed, the speed of the fire decreases because the energy of the sun has been spread.
  • Once a fire has been started, you can move the energy without fear of the item you are burning going out.

The real estate investing business is no different than a magnifying glass.  If you work two geographical areas, then you have spread the energy or focus of your business and slowed your ability to “burn” quickly.  Though there are hundreds of methods for purchasing real estate, you can imagine that the more methods or trainings you implement, the less focus you have and the slower your business runs.

After you have successfully created a business in one area and with a specific method or training, you can move your energy.  It is a lot easier to move areas or work on other methods once the “fire” of success is burning.

Focusing energy in your real estate business can help you succeed or “burn” quickly. 


3 Ways To Sell Your Fix and Flip Quickly

The worst thing an investor can encounter when trying to sell their investment property is to have it sit stagnate on the market. I would always suggest trying to have the property sold before you even finish with the renovations and start marketing your property before you even start renovations. The following are my top three ways to sell your fixer-upper quickly:

  1. Market the Property from Day 1: This means the minute you get the keys, advertise the property. Before the renovations even start, post the property everywhere. Online ads have become a new way for buyers to search out properties. Advertise it as a “build to suit” or “custom design your new home,” as these are attention-getting headlines. Let the buyers chose their style, color, layout, etc. I would advise that if you attract buyers using this method, have the contract written up and extend for the time period it will take to complete the upgrades. Also have them put down at least 3% of the purchase price as non-refundable earnest money, this way they will be committed to the deal.
  2. Market the Property to the Neighborhood: This is a simple technique I’ve found that helps sell a property quickly. Make some flyers about the property, and then on a weekend, walk the neighborhood (for your safety, don’t walk alone, take a friend with you). Knock on every door and let the neighbors know you are an investor and you are fixing up the ugly house and you want their help to sell it. Tell them that if they refer a buyer to your deal, then you will give them a $250.00 finder’s fee (the fee can be whatever you want). The majority of homes sold are by neighbors telling their family and friends about a house in their neighborhood.
  3. Run the Numbers Correctly: One of the biggest reasons homes don’t sell is because they are overpriced. Make sure you run accurate after repair values, and set a tight rehab budget. Get good comparables from your real estate agents. Be sure to not over improve a home, as this will not always get you more value and it will be difficult to sell at a higher price.

The methods I mentioned in this article have helped many investors sell their properties quickly. These tips can be applied to any area. Don’t be afraid to think outside the box when it comes to marketing your property for sale. Get creative and have some fun with it.

3 Ways to Market Properties to Cash Buyers

3 Ways to Market Properties to Cash Buyers

We all probably know that cash transactions have been a rising trend in today’s real estate market. In fact, 30% of real estate sales are cash payments made by local and international buyers. It won’t be a surprise if paying cash for real estate properties becomes a more common practice than the traditional way.

Investors tend to favour cash buyers due to various benefits entailed with cash buying, such as people who have enough savings to purchase their dream home or are on the hunt for hot locations and are offering to buy with cash. There are a lot of reasons sellers are holding out for cash buyers and one of them is getting their hands on the money fast. A cash sale can be done in a matter of a few days with less paperwork and no waiting for loan approvals that could get denied in the end. Buyers can also save a lot of money on closing costs and other fees associated with a mortgage loan by paying with cash. Think about the money you would save on interest alone!

It is for these very reasons that plenty of investors are after cash buyers. So, where do you find cash buyers and how can you make your property stand out against other competitors? There are a lot of creative ways to make your property attractive to cash buyers but we will just narrow it to three.

“Old-school” or Conventional Method

Although the Internet offers a convenience that makes most people underestimate the use of selling their property the “old-school” way, there’s no denying the fact that prospect buyers still rely on their trusted realtor when purchasing a property. Hiring an agent to enlist your property could still be one of the best methods to sell your property quickly. Remember that real estate agents with years of experience have met and know a lot of cash buyers in the business.

Even by just putting a simple FOR SALE sign in the yard could be a good opportunity to attract a prospective cash buyer. You never know when one will pass by your area and notice your sign.

Attending real estate auctions, where there just might be a flock of real estate investors armed with cash looking for great deals, is another opportunity to market your property.

Internet Marketing Method

Post your property for sale on various real estate websites for all the world to see. There are websites where you will have to pay to advertise your property but there are also websites that will let you post your advertisement for free. Take advantage of using websites like Craigslist, Zillow, eBay classified and ForSaleByOwner.com as plenty of investors are on the lookout for deals.

Network with Other Investors

Make connections by contacting people in the industry to see if they know people who are actively looking for investment properties. Get in touch with people like building inspectors, appraisers and other people that often deal with buyers in the real estate market. Offer them referral fees for buyers they send your way.

To make your property attractive to buyers, you must be ready to sell it slightly lower than its market value. Although you might be getting a price that is lower than what it is expected to sell at, just think about the benefits mentioned earlier, like not having to go through the hassles of selling a property traditionally.

Finding Off-Market Deals

Finding Off-Market Deals

To be a successful investor you need to have a pipeline of potentials deals. It is no secret that the Multiple Listing Service (MLS) is the common source for finding properties to make offers on. However, the investor that can find deals outside of the MLS will find that there is less competition and more possibilities. In order to capitalize on these deals, an investor must utilize some less common tactics. In this article I will outline three techniques for finding off-market deals. Disclaimer: There are many techniques for finding off-market deals but for the purposes of this article I will outline three.

First, is direct mail marketing. A direct mail campaign can be extremely valuable if it is implemented correctly. Begin by identifying your target list in which to mail. One such list is absentee owners. This list contains people that own the property but don’t live at the property. A more common name for these owners are landlords. Some landlords want to be in that position while some landlords want to unload the burden of being a landlord. It is the job of the direct mail piece to find the landlords that are motivated to sell. A key component to implementing a direct mail campaign is to be consistent. This technique rarely works if you only mail a one-time piece. Therefore, you should mail a marketing piece to the same list multiple times in a year.

Another technique for finding deals is “Driving for Dollars.” You can implement this technique in two different ways. One, you can intentionally drive neighborhoods in which you want to invest looking for houses that are vacant, with overgrown yards, or deferred maintenance. On the other hand, most of us travel to the same places every day. We go to the office/work then back home utilizing the same streets, turns and maneuvers so often we could travel the route with our eyes closed. Therefore, the second way to implement this strategy is to take a different route home every time you make the trip. By doing this, you will effectively kill two birds with one stone. This strategy is as old as the hills but still very effective.

The third technique is networking. The saying goes, “Your net worth is directly related to your network!” This is true in many industries but especially real estate. There are many deals that are completed between investors. Co-wholesaling, partnering, and joint venturing are all common tactics in real estate investing. Therefore, if you are looking for off-market deals, networking with other investors and real estate professionals will yield hearty results. One of the best places to find other investors is at a real estate investing club. When attending a meeting, make it a goal to meet 10 new people every time. This tactic will substantially grow your network over time. All of these people can be valuable sources for off-market properties.

In this article I have outlined three common techniques you can use to find off-market properties. If faithfully implemented, these techniques will be valuable resources for finding deals with less competition.

3 Ways to Keep Going When Things Get Tough

3 Ways to Keep Going When Things Get Tough

When you are an investor it can become really hard to press forward when things get tough. Some problems you may encounter might include: nobody answers their phone, nobody will reply to your messages, your offers are not being accepted, you can’t find any good comps and so on. But, when things get tough, that’s when it becomes worth it to press past your tough point and move forward. It’s similar to when exercising muscles; you will see progress for a period of time and then things will plateau and no progress will be seen.  This is the time that makes a difference between those who are going to succeed and those who are going to give up and amount to nothing. So how do we press forward?

  1. Set goals that are smart.

    Specific – We need to know not just that we want to make a lot of money but how we are going to make that money.

    Measurable – Is your goal something that you can measure? Can you keep tract of your progress?

    Action Oriented – Have you set a goal that will motivate you to get going?

    Realistic- Are your goals something you are actually able to reach?

    Time Oriented – We need to give ourselves deadlines to push us to get things done.

    Setting goals is important in all aspects of life, and when we don’t set goals, we won’t see success.

  2. Find a solution to the problem.

    We may come to a time when we feel things are just not going well and it’s not going to work out, but in these times we can stop, take a breath and find out how to solve the problem. If our agent is not sending us comps to look at after we ask them over and over to do so, we need to get a new agent. If our cash buyers are not interested in our properties, we can interview them again to better understand what they are looking for. If we don’t work at getting rid of our problems, we are just going to be digging ourselves into a deeper hole.

  3. Reward yourself.

    When you set a goal and reach it, its time to reward yourself. From going out to ice cream with the family to eating out with that special someone, reward yourself with something you enjoy. You may not have become a millionaire, but you are going to find satisfaction in reaching your small goals that are going to lead you to accomplishing your big ones.

All investors hit hard times and feel that there may not be a way to press forward. But the difference between the successful, wealthy investors and the poor, angry ones is that one complains about their problems and the other takes the bull by the horns and blasts threw them.

Portfolio Deltas Simplified

Portfolio Deltas Simplified

Our family has a dog named Hans who loves retrieving tennis balls. Hans will pester you night and day to throw him the ball. And if there happens to be more than one tennis ball lying around, he will put as many as he can into his mouth. One ball is easy for Hans to manage. But, if there is more than one ball, Hans begins to lose focus and, with each additional ball, it becomes more complicated for him to keep them in his mouth. The same can apply for those who trade the markets. One trade is easy to focus on, but adding more positions, with varying sizes, can make trading much more difficult to manage.

Delta is the rate of change. That definition is what one will often hear when talking about options. It has little meaning to the novice investor. Delta may be better understood by thinking of it in terms of shares of stock. Consider the following: if you own 77 shares of stock and the stock goes up a dollar, you would have made $77 dollars. If you own an option with 77 deltas, and the stock goes up a dollar, you would also make the same $77 dollars. So, a better working definition of delta is the number of shares you are trading. If you have multiple contracts in a trade, then your deltas would be multiplied (5 contracts x 80 deltas = total of 400 deltas.) That trade has 400 deltas, or would act like your trading 400 shares. The more shares one holds, the more deltas the portfolio has. So, delta can be thought of as the amount of risk or exposure to the market. If you are trading 1,000 deltas in a portfolio, you would have considerably more risk in your account than if you were only trading 100 deltas, so the larger the portfolio’s deltas are, the more the portfolio is exposed to market movement. Therefore, managing deltas is of the upmost importance to the individual trader.

Knowing when the markets are overbought and oversold can be pivotal points of interest for your total deltas. If markets are at tops, reducing deltas may help reduce the risk to a portfolio. How does the individual trader shrink the number of deltas one holds in a portfolio? Exiting trades and placing bearish trades that come with negative deltas will both reduce deltas and exposure to market conditions. If the markets have found a level of support and the markets are expected to go up, adding deltas to a portfolio may add to your returns.
In the end, a delta is a quick an easy way to view your portfolio and a mathematical value that quickly shows the amount of risk that one has to their portfolio. If Hans could talk, he would tell you one ball provides more focus, more enjoyment and less anxiety. And like one ball, a portfolio delta provides a single number, better focus and clarity to your bottom line.

Vertical Spreads and Alice

Vertical Spreads and Alice

In Lewis Carroll’s Alice in Wonderland, Alice asks; “Would you tell me, please, which way I ought to go from here? That depends a good deal on where you want to get to. I don’t much care where – Then it doesn’t matter which way you go.” Vertical spreads would agree with Alice, we don’t care much where the trade goes. Stocks will go up, down or sideways, up a little or down little. Of the five directions a stock may move, verticals will benefit the trader in 4 out of 5 of those possible directions. Like Alice, it doesn’t really matter where the stock goes.
Which is easier, picking where the stock will go or where it won’t go? The answer is where it won’t go; you will be right 4 out of 5 times. Most strategies face much harsher odds. Trying to pick where the stock will go will be correct only 1 out of 5 times. Verticals are much more forgiving. Let’s look at a hypothetical trade. XYZ stock is trading in a range between $100 and $110. The stock has run up to $110 resistance on low volume and seems to be turning over with a current value of $108. The trade will be to sell out of the money calls at $112 with another call bought at $113 as a hedge. The purpose of this trade is to have both options expire worthless. The $112 call is the reason for the trade, the $113 is for insurance against the unlikely event the stock changes direction, breaks resistance and moves above the $113 dollar value. Selling about 30 days before expiration will provide little time for the trade to achieve $112 value. If all goes according to plan, the trade will achieve success if the stock remains below the $112 value.

Stock price at expiration Success or Failure
$114 Fail
$112 Success
$110 Success
$108 Success
$106 Success
$104 Success
$102 Success

As you can see from the chart above, most scenarios will prove successful with only one situation where the trade would fail. This is considered a high probability trade. If the stock trades anywhere below $112, this vertical spread will be at max profit. As long as the trade stays in the $10 range between support and resistance the trade will be profitable. Like Alice’s comment “I don’t much care where,” verticals tend to work the same way. When setting up verticals, we pick the time frame, the situations where the stock price may go, and where the stock price may not go. Verticals have flexible rules, plenty of setups, and a lot of solutions.

Lessons Learned from a Professional Poker Player

How do the same professional poker players find themselves sitting around the same final tournament table each year? Do the good cards naturally fall into their hands? They must be luckier than the rest of us. Or, can we learn a few things from these professional card players? Below is a list of skills that these players have that could transfer to any stock and option traders.

Ability to adapt is a skill that is necessary to a poker player, as well as participants trading in the stock market. Conditions change and hundreds of new factors will cause the topography of markets to change. Knowing how to navigate the new and ever-changing landscape is essential to successful trading. Simply put, trade the trends. A trader’s ability to observe market conditions when trends change and adapt to these new conditions is the key to success. Holding to old beliefs after markets have changed is the best way to lose money. Be flexible and have the ability to adapt when conditions change.

Varying the size of your bet can help put the odds in your favor. Placing larger bets when using higher-probability strategies or when conditions mathematically are in your favor will allow larger size wins when you are right and can help pay for smaller losses when you are wrong.
Emotional control is essential to investing, like it is in professional poker. Trading is a long-term battle. What happens in a single trade is of little meaning to your portfolio unless it causes the trader to give up. Focusing on your goals and eliminating your emotions when making decisions is crucial to success. Of course, it’s easy to be happy when right and sad when wrong, but making decisions should be void of emotions. Trading plans can help overcome emotions and keep them at a distance. Following rules can minimize anxiety and the feeling of being out of control.

Attention to detail is the last skill we’ll discuss. Poker players are like sponges; they watch everything. Every bit of information they can obtain from what each player does with the cards dealt, to how much money every player has, to which players raise and which players check, is important. Like poker players, we should know the markets and sectors, current market conditions, market cycles, and how the market behaves at each level of support and resistance. Traders should be students of history. In the end, we absorb all relevant information, focus on what matters most (trends, reward and risk, and mix of bullish and bearish trades) and ignore the less important. Trade your plans and follow your rules, and you will feel more confident having a systematic approach to the ever-changing market. There is much to be learned from these professional card players. As we develop their skills, we will be prepared when we find ourselves and our portfolios sitting in the big game.

Lemonade Stands and Liquidity

Lemonade Stands and Liquidity

June is upon us, and the hot weather has sprouted young entrepreneurs in the form of lemonade stands popping-up all across the neighborhood. My boys are part of this business cycle, and are reaping the rewards of my neighbor’s loose change. One of the boys exclaimed “Dad, we are cleaning it up out there” pointing to the curb where there business venture begins each day. I didn’t have the heart to tell them the hard truth. The truth is, like all business ventures, there is a financial cost to things like; sugar, lemons, ice, and plastic cups. If I was to tell them that the first 25 cups sold, barely cover the cost of operations, they might have a change of heart. Sitting in the sun for the hottest part of the day just too breakeven doesn’t seem to have the same entrepreneurial appeal.

Options work the same way! If we choose to do business by placing calls and puts while forgetting entry and exit costs in the form of bid and ask spreads, we, like the kids on my street, may naïvely feel to exclaim, we are cleaning up! When In reality, we haven’t begun to breakeven. See the table below, notice the various cost of doing business for at-the-money options 30 days out on some popular stock’s options. Cost column indicates costs that vary between the bid and ask prices depending on their liquidity. The more the options are traded daily, the tighter the bid ask spread might be. But if one doesn’t pay attention to slippage (difference between bid and ask prices) they might be having to dig themselves out of a deep hole. As a general rule, I try to never place trades with bid/ask spreads greater than 10% of the ask price. So, if we use AAPL as an example, the ask price is $2.10, and ten percent of that price would be .21 cents. Since the bid ask difference is .04 cents, this trade would be fine. Looking at HAE, the costs are 70% which is too great to incur and we would be best to go elsewhere.


Stock Bid Ask Cost
AAPL 2.06 2.10 1.9%
AMZN 17.65 18.20 3.0%
SPY 2.31 2.35 1.7%
HAE 2.00 6.70 70%


So, enjoy the summer and remember, costs are costs, and keeping costs low is always good business. Trading stocks that have high option liquidity and low costs is good business.

Real Estate Investment Clubs

Real Estate Investment Clubs

Real estate is not a property business; it is a relationship business. In order to be successful in real estate, the new investor needs to build a network of other investors and real estate professionals. There are many ways to accomplish this task, however, attending real estate investment clubs is a good way to jumpstart the networking process.

Real estate investment clubs are typically held one night a month and are free to attend for the first time. After the first attendance, you will either have to pay at the door or become a member. It is recommended to become a member as there are benefits to members that exceed the cost of the annual membership fee.

There are 3 main reasons to regularly attend investment club meetings:

  1. Find other cash investors to work with
  2. Network with professionals that will support you in your business.
  3. Learn about the local market.

Finding cash investors is crucial to building a successful investing business. Many times, homes are bought and sold through/with other investors. Most investors will not buy every deal they come across therefore, the investor will sell the property/information to another investor using a wholesale technique. Having a network of cash investors provides options to get a deal completed.

An investor is an expert in buying and selling property. They are not experts in taxes, legal issues, keeping the books, insurance, property management, and other facets of real estate. Therefore, the investor should surround himself/herself with professionals to take advantage of their expertise. In doing this, the investors time is freed up to focus on the business of finding, buying, and selling properties.

We all know the real estate market is constantly shifting. Techniques to find deals are continually evolving. A quick way to find out what is working in the local market is to attend investment clubs. Investment clubs are great places to share ideas, knowledge, and techniques that are working for the current status of the market. Many times, investors willingly share their techniques in an effort to find other deals. A successful investor’s belief is that there are enough deals out there for everyone therefore, the more people they help the more deals will come their way.

Remember, real estate is not a property business, it is a relationship business. A great way to build those necessary relationships is to attend real estate investment clubs.

Buying a Rent Ready Property

Buying a Rent Ready Property

When looking for properties to purchase as rentals, many investors prefer to focus on “rent-ready properties”.

The first and most important part of buying a rental property should be to learn about the current market conditions of the area. Always keep in mind that this is a rental, not a high end home. However, the way that your property stacks up to the direct competition in the area determines your rental amount and occupancy rate. You should make an effort to learn about what type of rental properties you’ll be competing for renters with, to make sure that you’re buying a property that’s in a comparable condition. This should of course be done before you even make an offer on the property to begin with.


Always keep in mind that this is will be your own property even though you are not going to live in it yourself. Make sure that the outer shell of the property is sound and in good condition and that all necessary improvements are completed. If the exterior of your building is compromised in any way, then the inside will be at risk as well.

Also decide what appliances you are going to provide by learning what other rental properties in the area are providing. As you evaluate a prospective property, look for possible liability risks more than minor blemishes. If you can’t physically visit the property yourself make sure that you get a copy of an inspection report.


Here are some issues to look for

  • Are all of the electrical plates present and in good repair?
  • Are there enough smoke detectors and are they placed properly?
  • Are there any issues with lead paint, mold or asbestos?
  • Check the handrails for a good tight fit.
  • Assure that the there are no plumbing leaks.
  • Pay particular attention to the big replacement cost items such as:
  • the Heating system – boiler, furnace, heat pump, etc.
  • air conditioning/cooling system
  • water heater
  • dish washer
  • garbage disposal


Make sure that the house you’re buying looks good so that you can retain the best tenants but you shouldn’t expect custom cabinets and granite countertops in a rental. High end fixtures are typically not required. Just make sure that it looks nice and clean. It’s ok to buy a lower grade home to use as a rental but make sure that it is actually livable.


Remember, if you agree to buy a property in “as-is condition” then you will need to make any necessary repairs that are needed. If you don’t want to do that, you should negotiate with the seller to fix things before closing.


Once you’ve owned the house for a while you may need to replace or repair some things. When you need to replace something in the house, try not to be too cheap. Some investors will take the attitude of “It’s a rental, we’ll just put in the cheapest products that they make and call it good. After all, renters typically are not as careful with houses as they would be if they owned the place.” Unfortunately for you, plastic faucets and cheap door locks break easily and can cost you more in the long run. If while your renter calls you to say that the faucet is leaking, or a locked door handle won’t turn, {because they’re cheap}, you have to fix it. Consider putting in just a bit higher quality than the absolute cheapest, especially if it doesn’t cost a whole lot more.

Selective Tenanting Through Marketing and Promotion

Selective Tenanting Through Marketing and Promotion

Tenants have a “Shelf-Life,” because they need to be replaced from time to time. They move on or you move them out. Show me a cash-flow investor with a two-year track record of making money and paying the bills and I will show you someone who bankers want to take to lunch and discuss low interest mortgages. There are plenty of rental properties where the numbers can work. The key is having quality tenants who take care of the property and pay their rent on time.

All the promotion you may need for a rental unit that caters to University students might be a giant big screen TV and computer with high speed Wi-Fi. A property on a busy street may only need a simple sign in the front yard. But, in most cases, to rent for top dollar and select the highest quality tenants you want to reach a lot of people in a hurry.

Selective Tenanting Strategies

Anyone can throw money at the problem with lots of expensive ads. Here are some things you can do on a ZERO or near ZERO-dollar budget:

  1. Zillow.com/Rental-Manager – Here you can place a complete ad with lots of pictures and full disclosure information. You will get a link to your own page that you can even email to people while you’re visiting with them on the phone. Zillow may be the biggest name in real estate. I have never run an ad here that didn’t get my phone to ring.
  2. CraigsList.org – The secret is in timing. Place your ads at 11:45 AM and/or 6:30 PM so you can stay “above the fold” during peak view times. “Above the fold” means your ad can be see without scrolling. People click they don’t scroll. Do not repeat the same ad or anything close to the same ad before the required 48 hr. wait time. They tend to not post ads till they are “below the fold” for people who abuse their system.
  3. Print flyers that present not just your rental unit but puff up the neighborhood as well. The back of your flyer can include Elementary, Jr. High, and High School Principals or Vice-Principals contact information. Do the same for Churches, Boy Scouts, Girl Scouts, Town Hall Meetings, Health Clubs, Little League, Police, Fire, etc.
  4. Be creative in where you place your flyers. Got a washer and dryer included? Hit the laundromat bulletin boards. Got the big screen TV? Hit the University bulletin boards.
  5. Visit other rentals especially where your property appeals to a different kind of renter than they cater too. They could send you leads. Visit the Section 8 Housing Department. They will give you the lay of the land on how to work with them so you can have half or more of your top dollar rent put in your checking account on the first of each month.


Regardless of how you market or promote for tenants, your future depends on getting good tenants who take care of your property and pay you on time. History repeats itself so here is what you can do to protect yourself:

  1. Have prospective tenants fill out and sign an application allowing a credit report.
  2. Run a credit report. Anyone under 600 probably has late rent pays.
  3. Walk out to their car with them and see how they take care of their car.