Real Estate Investing Business Blog

I wanted to provide an update to whats going on in my business. Its been 2 months since I’ve made a post on here and I apologize for the delay. Unfortunately, this site is not the #1 priority of my business and because of this it falls behind in importance.

I am however going to try and continue to provide relevant and useful information to help those of you interested in real estate investing.

So where am I now? I am restructuring my current assets. I am going through my properties and moving them from commercial loans to commercial lines of credit. So far I am in the exploration stage of this. I’ve talked to a few of my banks and I’ve gotten different answers from each of them.

From First Georgia Banking Company I was told that its better to have the properties paid off and I can put a business line of credit on them after that. From Covenant Bank and Trust I was told I can take my current properties and combine them into a credit line using the equity in the properties. Omni National Bank told me that they do not offer credit lines.

So that’s where it stands. What I am actually doing is going to BB&T in my area and putting a business line of credit on a home that is unencumbered by any mortgages. After I have done this I plan on paying off each property one at a time and combining everything into credit lines.

Why am I working on credit lines? I’ve talked to several other experienced investors and this seems to be the route to take. There are less rules and restrictions on the credit lines as apposed to the numerous rules on the commercial loans that have been coming up over the past year.

One of my banks, First Georgia Banking Company currently has it where if you refinance a property with them you can not removed your original 20% and you only get 80% back in repairs. With credit lines none of these rules exist. Its 80% of appraised value.

So thats where I’m at. I’m also considering opening up my own You Tube page. I’ve looked and haven’t seen a video diary of someone trying to become a millionaire through real estate basically documenting their trip. All the videos seem to be geared toward selling tapes and seminars. While I do sell my DVD’s, that would not my main focus. I think it would be enlightening to make a video diary of my journey. If I decide to do so I will let everyone know.

We’re in a tough time to sell homes because all the buyers have been scared away. So its even more important then ever to properly market your homes. When it comes to trying to sell your home you have to first know that what you price your home is the most important factor in determining when it will sell.

If you price it to high then you can expect that it will take far longer to sell and may perhaps not sell. This certainly holds true in our current market. There are just more homes that are for sale then there are buyers so in order to quickly move my houses I’ve had to price them below value. Here’s some examples.

Last year I had a home at 111 Mohawk Trl that appraised out for $133,000. I had to sell it for $108,000. Even with the tremendous price cut I was able to make $15,000. Its all about making your profit goals. If I had wanted the full $133,000 I would probably still be waiting to sell that home.

I had another home appraised at $113,000. I sold it for $103,000. I had another that in my estimation was valued around $115,000. Its under contract right now for $108,000. So the most important point you need to take is that price controls everything. In a Sellers market you can get away with selling your home for what its worth. In a buyers market you may sell it for what its worth but it will take a lot longer. I aim to have all my houses under contract within 2 months of starting my marketing process.

So what marketing do I put into place?

• I have professionally made signs.
•  I have a full time ad that runs in the paper.
• I also run my add in the free classifieds and the local little classifieds you can buy at gas stations. Here they are called the North Georgia Classifieds and the North West Georgia Trader.
• I have a website that shows all my homes. I also have a place to collect their name and email so I can add them to a list so in the future when I obtain new homes I can market to the people on that list.

When I have at least 2-3 homes I’m selling I spend about $1,000 a month in marketing. It may seem like a lot but from that I generate 5 to 10 phone calls a day. Just as it is with finding a deal where you can make $30,000 its a numbers game finding the right person who wants to buy your home.

So remember the price is the most important item to consider. My ways of marketing are pretty standard its pricing the home right that counts.

I wrote a few days ago that my new direction in investing would be to sell off interest in my properties to other people. The reasons for me to do this was to build back up my cash reserves and to lower my debt to income ratios. This will make my commercial bankers happier with me and will enable me to start buying again. It also helps because I will be bringing new business and partners to my bankers.

So far I have sold an interest in one of my properties to a fellow investor for $5,000 and I am in talks with a Realtor who is to busy being a Realtor but wants to get involved with investing. If it works out I should be able to sell him interest in 2-3 properties.

How is all of this structured? The partner and I create an LLC. I am the managing member the partner is just a member. This allows me to keep control of the company. The partners gives me $5,000. I deed the property into our LLC.

Whats attractive about my offer is that on some of my properties we will be able to take the property, go to one of my bankers, refinance it and I will be able to give $5,000 back to the partner in the form of a loan from the company. The loan will be paid off when the property sells or cashes out. So I’m able to return the money my partners give me which of course makes them very happy and also allows them to reinvest that money into other properties that I may have in the future. This doesn’t work on all my properties just the ones where the numbers come out right. Its a win/win for everyone involved. If your looking for an idea to make money with the current market conditions I believe this could be a way for you to go. Just make sure you choose a financially strong partner, and make sure its a partner who isn’t interested in running the business aspect of it.

There is always a way to make money in any market. You just have to find it.

I’ve released a new seminar DVD called No Cash No Credit Investing. This course goes into detail about how you can get started in real estate investing with no cash and no credit. I do all my DVD’s as a seminar presentation that you can play on your TV screen.

While you may not gain the networking that you get at seminars with my DVD you will gain the knowledge that you need to get started at a fraction of the price. 

The web page for my new DVD is http://www.nocashcourse.com.

However, don’t order from that page just yet. Instead of the normal price of $20 for this DVD you can take advantage of my 72 hour special. Until 12:00 noon on Friday the price for my blog readers is $10 with free shipping. To take advantage of this offer click the link below to be taken my blog specials page to order the DVD.

The Special Is Now Over 

Go ahead and order while you can. This order link will be removed after noon on Friday.

Here are some of the articles that came in the Real Estate Investment Blog Carnival.

Don Conrad presents Writing your rental ad posted at Find That Quality Tenant.

TerryT2 presents How You Make Money With Investment Real Estate posted at Actual Real Estate Profits.

Helen Anderson presents 5 Tips for Buying a Home in a Down Market at Best CD (Certificate of Deposit) Rates, Money Market Rates, High Interest Accounts posted at Bankaholic.

The Home Crowd presents Condo Blacklist - Another obstacle for buyers/sellers posted at The Home Crowd.

Will presents Why I Still Love Real Estate Investing: Being A Landlord posted at Your Finish Rich Plan.

Life. Money. Development. presents The 7 Attributes of Leadership posted at Life. Money. Development..

I always say you need to learn from as many people as you can  to help broaden your own understanding of real estate investing so that eventually you can develop your own method and game plan. Check them out.

Last night I picked up a book called Harmonic Wealth by James Arthur Ray. I read it today and was very pleased with this book. I have to admit in many places it steps out on a limb putting quantum physics with positive thinking. I am not a scientist nor an expert on such matters I just know from my personal experience that what the author stated in this book matches what I believe. It also mirrors other materials that I’ve read in the past as well.

Essentially, you have to know that your going to make it. You have to know exactly where your going and you have to put action with it. What I particularly liked about this book was the fact that this wasn’t about just how to achieve your dreams it brought a truth of reality with it. If you are only making $30,000 a year and you want to make $100,000 a year you have to be a bigger person then where you are at now. If your making a $100,000 and want to make a $1,000,000 you have to be even bigger.

The author is very careful to use bigger instead of better which I completely agree with. It takes a lot more energy and a lot more work to produce a larger income but it doesn’t make you better then anyone else in the world. Its just a matter of working harder making yourself bigger on the inside and out.

I was also happy to see another primary message in the book is that the universe, god, etc will give you want you want but you need to understand there is a cost to it as well. If you want to be a millionaire you will have the problems a millionaire. You will have more responsibility, more worries, and more work.

Most people get the weekend off and don’t have to worry about work. That’s not the case for me and it won’t be the case for you either if you invest in real estate. Lets look at my weekend. This weekend I had to sign up a tenant to a home, answer complaints from 2-3 tenants, and also find out I’ve got to spend an extra $500 on one of my houses for repair work. Now it wasn’t exasperating or stressful but most people get to enjoy the weekend and the time off. I had to work a few hours. As I grow I may have to work more. Eventually I will reach a point where I will hire a property manager but I’ll still have other issues to deal with. The growing process will never stop. The bigger the income that you want the bigger that you’ll have to be.

The good news which I thought was very inspirational was the fact that the more fires and issues that you have come up then the more progress that your making towards your end goal. It means you have to become bigger in yourself to handle the problems. You have to grow.  I wouldn’t have tenant complaints, and repair issues if I wasn’t active and growing towards my goals in real estate. Its part of the process. I know I’m growing. You shouldn’t let road blocks and other problems cloud your vision. Its just a price you have to pay to reach your dreams and when they arise you know your on the right path. 

One of the most important things that you can do for yourself is to continually educate yourself and to read books that will motivate you and inspire you. The fact is you have to keep your mind fresh and motivated and this is very difficult to do having to face the everyday struggles and battles that we all go through. So in that spirit I’ll be adding some of my favorite books to my links list and reviewing some of them as well over the next few weeks.

I highly recommend Harmonic Wealth. I’ve read a lot of motivational books and its been awhile since I’ve been really impressed by one. Most of them are just repeats of each other but I really did enjoy this one. Some of it gets very abstract but its well worth the read.

So we are in a tough market. Its taking forever to sell a rehab and its a pain just to get them through underwriting and to get your buyers an approval to close. The lending rules keep changing every week it seems. So what do we do?

Many investors have given up. Many have went back to seeking work that they did before. So what about me?

Let me tell you about my situation. The banks are telling me NO. Now understand I bought 27 houses last year. I have the experience and knowledge. My credit is good so whats the problem? Ever since last quarter of last year I’ve selling all of my properties using owner financing also known as rent to own. A unfortunate consequence of owner financing houses is you do not recieve the same amount of cash as rehabs until  1-3 years down the road. As I’m holding more properties my load of debt increases. The result is the banks wants to see more cash in my accounts for the number of properties that I have. I’m short on the amount that they are comfortable with. So what can I do?

I guess I’ll have to give up. Throw it in……….

Yeah right…….Thats what the 98% of people would do. People like me do not run in that crowd and hopefully you don’t either. Everyday is a fight but you only lose when you quit. 

So what can I do? Who is buying houses right now? Its not your normal buyers. So what other market does that leave me with? Investors and those wanting to be investors. How can I sell to investors and make a profit?

I am going to sell some of my owner financed properties to other investors and if I can’t move them outright then I will sell a half interest in my properties to other investors or new investors wanting to get in the game. How is this possible? My owner finance contract says that I can transfer the property and do as I like as long as the contract goes along with it. So my investors have to take the contract with the property.

Who would want this? Experienced investors looking for equity or most likely new investors who do not have the time or perhaps the experience but want to get into the game. I believe the market of people in this group is huge particularly among professionals such as doctors, lawyers, etc.

This will do two things. It will raise capital for me and it will decrease my debt liability since if you have a partner the monthly payments only count half against you.

If I sell a half interest in my properties I will guide you along as to how I do it. This is a new tactic for me and I believe will be a highly profitable one amounting to $5,000 to $15,000 a month which is a good profit the current times that the housing market is in.

Here are the posted articles for the Real Estate Investment Blog Carnival. 

Don presents Pre Construction Investing posted at Tony Travis.

Blue presents Get Your Real FICO Credit Score For Free posted at Money Blue Book: Personal Finance Blog.

MoneyKing presents Real Estate Profits And Losses. Scenario 24: Keep The Math Simple With Your Tenants! posted at The Money Kings - RULE your money at home, at work, and at play!.

Cameron presents “Feel Good” Movies are Making You Fear Success posted at Success Secrets - SuperSonicSuccess.

Joe Manausa presents Creative Home Selling - Taking A Lesson From Wall Street posted at Tallahassee Real Estate Blog.

Joshua Dorkin presents Fuels Costs, High Gas Prices and the Real Estate Investor posted at Real Estate Investing For Real | A BiggerPockets Blog.

Rio presents How to pay off your home in half the time posted at Get Financially Fit!.

Chris Kuhlman presents “You’re an idiot” says the educated college student posted at Chreff Properties.

I do the blog carnival because I want you to see what other people are saying about Real Estate Investing, Real Estate, Financial Education, and Success in general. Diversify your knowledge and learn from as many people as you can.

Enjoy!

So where do you look if you want to find a deal? Pick and choose from any of these.

Vacant Houses - Drive and find vacant houses. Find who owns it. Make then an offer

Preforeclosures - Find out the people in danger losing their home. Door knock or market to them. Make them an offer.

MLS - Make a large number of low ball offers on potential properties

Probate - Learn how the probate system works. Market to them. Look for estate sales.

Marketing - Run marketing anywhere from direct mail to billboards to bandit signs and more to get people calling you.

Referrals - Tell everyone and anyone that you buy houses. Tell all mortgage brokers, pawn shop owners, title pawn shops, etc. and offer to pay referral fees

FSBO’s - Door knock or market to FSBO’s. Make offers to them.

That’s all of the basic ways to find properties. Notice the key is to make a lot offers to find a deal. Thats it. There are no hidden tricks.

Its up to you to obtain the knowledge and to have to drive to put what you know into action. Do you need the knowledge? Get my REI Basics 101 DVD. Use it to help you create a plan, work your plan, and then change your plan as you grow or to fit your needs. However, the only way you’ll get started is by taking the steps necessary.  Do one thing on your plan everyday to bring you closer to your goals. If you do then soon enough you will find your way there.

I’m sure you have seen at least one commercial for investing in real estate with no cash and no credit. There are tons of products out there promoting this hype. Why? So they sell you on hope. Hope is a great thing. I do not want to dismiss hope. I do believe that it is a great disservice to everyone though when most of these products do not even address a fundamental issue. 

It comes down to this if you want to be successful at real estate investing it all starts with understanding and following budgets.  You must know exactly what you need to take in every month to break even and to gain a profit. You must also fight to pay down all the bad debt that you can. Otherwise it will grow and eat you alive. You must understand credit. You must understand how credit scores work and if your score is down you need to obtain the knowledge to help increase it.

You can invest in real estate with no cash and no credit. That’s not the problem. The problem is if you do not have the ability to manage and control your cash and credit then this will be the wrong business for you. This because no matter how much you try you will never be able to grow. You must know how to control your finances and you must know every penny that is going out and coming in every single month.

Bad situations happen to everyone. If your credit is not so good or you have no cash to invest with I don’t want you to feel discouraged. As long as you can control your finances and understand how credit works then you can get started in this business, but you need to be realistic and understand that real estate investing is not a quick band-aid for your problems. There are to many other investors and product pushers who are pushing information and products on people who never address this issue. The obvious reason of course is they sell on promises and the hope to people that they can fix all their problems by investing in real estate with no cash and no credit.

If you have no cash and no credit your issues will not be fixed until you understand how you are where you are. For some people it was just a set of circumstances or situations that arose to put them where they are. For others they just do not know how to manage money. You need to learn how to manage money. For those with credit issues I strongly suggest looking into www.creditboards.com. They have a huge forum full of information to help you with your credit.

Once you understand and can manage your money and you understand your credit score and how the system of scoring works then I would look for information on how to invest in real estate with no cash and no credit. I started out with no cash and I was able to succeed and you can too. However, success will only follow once financial discipline and control are put into place.