Remember, you’re a problem solver!

To be a successful real estate investor, you need to be great at solving problems.  In fact, your income will be directly proportional to your ability to help a seller overcome problems associated with real estate.

This often means developing creative offers that give your seller everything they need yet still allows you to make a profit.  Oftentimes, price isn’t the only thing that will determine whether you’ll buy a house.  There may be a non-monetary challenge that the seller is facing, and if you can work in a solution to that challenge, you’ll stand a better chance of getting the deal.

For instance, I was contacted by a seller who had inherited three properties.  She was living in one of them, while the other two were vacant.  She wanted to sell the properties, and then use the cash to buy another home to move to.  The problem was that she needed a couple months to find another house to buy, pack all of her stuff and move.   She had been in touch with several other investors who made her cash offers, but they all wanted her to vacate by closing.  I was able to work a deal with her where we would close on the three properties all at once, give her enough cash to pay for her next property, and hold the remaining cash in escrow to be paid once she vacates.  In addition, I put her in touch with a realtor who started her home search right away.  It was a simple gesture, but one that turned out to be the deciding factor for her to sell to me.

Another time I met with a seller who was very firm on his sales price.  In fact, the amount that he wanted was a good $40,000 more than made sense for me to pay as a cash offer.  In my early days as an investor I would have simply said, “sorry, I can’t do it” and moved on.  This particular duplex would have brought in some serious cash flow if I could structure the proper terms, so I came back to this seller and said I can pay his price if he would accept my terms.  I ended up making him an offer where I gave him the sales price he wanted, paying half of the price at close, with the other half paid in one lump sum 5 years later.  Since he didn’t need all the cash at close, this was an acceptable solution to his problem.  It also allowed me to borrow a smaller amount of private money, so my payment was really low.  I have over $1000/mo positive cash flow on this property and it was all because I was able to solve his biggest concern in a creative way which still allowed me to make it work as an investment.

Remember this next time you meet with a seller.

Remembering my days as a brand new investor (Part 2)

So in my previous post I talked about how I first got interested in real estate investing, by way of a late night infomercial which promised quick cash by buying properties ‘no money down’.  Of course, my experience getting started was frustrating, and several setbacks caused me to shelve the idea of being a real estate investor.  If you haven’t already done so, be sure to read that story.

Getting laid off from my engineering job and losing an awesome real estate investment was pretty tough.  I was SO close to getting my first deal, only to have it snatched away just before closing.  Not only that, I was finding it difficult to land a decent job.  I was doing everything I was told to do.  I was sending out my resume everywhere I could, attending job fairs, submitting applications whenever I saw something decent become available online.  It just didn’t seem to be working, and I was burning through my savings.  Ultimately, I had to move back in with my parents to save some cash.

My girlfriend at the time (who is now my wife) saw me struggle finding work, and she suggested that I start thinking out of the box.  “Go knock on some doors” she said.  “You have to get out there and make something happen.”  I was reluctant to do this, but now looking back, I realize that fear was holding me back and her advice was as true for job hunting as it is for real estate investing.  (more on her uncanny advice later)

I essentially went out and started “knocking doors” of local companies to see if they were hiring or in the need of engineers.  One of the businesses that I visited was a waterjet company.  (they used a high pressure stream of water to precision-cut metal and other materials)  I introduced myself to the woman at the front desk.  She saw me dressed in a suit and carrying a folio.  “Are you a vendor?” she said.  “No, I’d like to work for your company.”  Even though I gave a confident smile, I was shaking inside.  She was intrigued enough to introduce herself, and I quickly found out that she was not an administrative assistant or front desk person…..she was the owner of the company.  An hour later we shook hands, she offered me a job.

1st Lesson learned:  To get what you want, you have to think out of the box and act in spite of fear.

2nd lesson learned:  Some of the best opportunities aren’t “advertised”, you have to get out there and find them

My position was sales engineer.  I was tasked with bringing in new business for the company.  It was a great experience, and I was finally able to bring in some stable income, but it wasn’t my dream job. All the while, I was thinking about real estate, but I still didn’t know that I could REALLY purchase houses creatively without any of my cash or credit. I thought I would ultimately need work for months or years to save up enough money for a down payment, but I wasn’t earning enough to make my dream a reality.

As luck would have it, after nearly a year as a sales engineer, I had an opportunity to interview for a sales position with a medical device company, and I got my ‘dream job’.

I sold neurosurgical instruments and equipment.  It was so fascinating, as a big part of my job was attending brain surgeries.  It also helped me hone my sales skills, and pay was good so I was able to save up a enough cash for a down payment on a property, if I could ever find a deal.

Since creative real estate turned out to be a bust for me the first go-around, I decided to look for houses the “normal” way.  My best friend had just got his real estate license, so I had him looking for properties for me.  My goal was to start making lowball offers on houses that needed some fixup.  So I made offer after offer, each one resulting in the same thing.  Either they were getting rejected completely, or anything that came on the market at a reasonable price was being bid up to full retail price.  It got to the point where my friend told me “I can submit this offer, but it’s just going to be rejected”.  Remember, this was back in 2003 when the real estate market was in the middle of the huge sellers market.

I was losing hope. I was also still living with my parents. The urge to find a great investment property that I could fix up while I lived in it gave way to just finding a place that I could live in and call home. I ended up buying a townhome in summer of 2003. It wasn’t great, but at least it was mine.

Something else happened that summer which would be the turning point in my real estate investing career. My friend who helped my buy my townhome and I attended an evening seminar with a guy named T Harv Eker. Some of you reading this right now may be familiar with T Harv, he runs a self development and company called Peak Potentials, and one of their signature events is a weekend seminar called the Millionaire Mind Intensive. Now, this isn’t a real estate specific event, but the goal of the seminar is to help you understand and change your ‘money blueprint’ to think more like someone who is rich and successful. It was also an opportunity to meet and network with a lot of people.

By chance (or fate), I ended up sitting next to a man named Bruce.  Over the course of the day, I was able to talk with Bruce and found out that he was a real estate investor.  Specifically, a creative real estate investor.  That is, he was flipping houses without any of his money or credit!  This really got me interested.  He had recently completed a wholesale deal that netted him a 5-figure paycheck in just a matter of days.  Bruce suggested that I visit the local real estate investing club, called REAPS (Real Estate Association of Puget Sound).  That one suggestion forever changed my personal and career path, and I can’t wait to tell you more in my next post…….stay tuned!

REAPS Kitsap Meeting – Deals of the Year!

Here’s your official invite to this Thursday’s REAPS Kitsap investor meeting. This meeting will be our annual “Deals of the Year” where you’ll get to hear from fellow REAPS members as they share some of the deals that they’ve done over the last 12 months.

Watch the video below and then be sure to pre-register HERE

This will be a very educational and inspiring meeting, and you’ll certainly learn a lot!

Meeting is Thursday, 11/6/2014 at the Poulsbo Library. Networking starts at 6:30pm and meeting starts promptly at 7pm. CLICK HERE to pre-register.

Remembering my days as a brand new investor (Part 1)

I remember when I first got excited about real estate investing.  It was back in the year 2000 when I saw a late night infomercial starting Carleton Sheets.  Carleton showed that for three easy payments of $97, you could learn how to buy properties No Money Down, and one day you too could be sitting on the beach drinking a margarita and enjoying your millions.

After seeing this informercial multiple times, I decided to plunk down the credit card and start my journey as a real estate entrepreneur.  I eagerly awaited for the CD set and workbook to arrive in the mail, and when it did I devoured the content.  If I wasn’t listening in my car, I had the Sony Discman at my side and headphones on.  I was so pumped to get started, but I felt stuck taking it to that next step…which was action.  ’I'm not quite ready’ I thought, so I decided to listen to the whole course again, just to make sure I really knew what to do.

One of the strategies that he taught was to find motivated sellers who had assumable mortgages and offer to buy their house by assuming their mortgage payments and offer them the balance of their equity at a later date.  If the house was listed by a real estate agent, I could even ask the agent if they’d take their commission in the form of a note.  Boom, a no money down deal.

Well, after contacting a handful of sellers and real estate agents, I hit a huge roadblock.  For one, I found out that very few mortgages are truly ‘assumable’ (I didn’t learn until later about ‘subject-to’ investing), and I also learned that asking real estate agents to reduce, delay, or chop up their commission into payments was not their preferred method of doing business.

My enthusiasm fizzled as quickly as it had started up.  The course found it’s way onto the shelf in my bedroom, and for the next year I gave up on ‘creative’ real estate, opting instead to work with a real estate agent in order to find an investment.

I had recently graduated from the University of Washington with a mechanical engineering degree, and was hired on at a local computer company.  With a good job out of college, I finally had the ability to qualify for a home loan.  My goal was to buy a small multifamily property and live in one unit while renting out the others.  It was a great plan, and I soon found an awesome opportunity in Bremerton, WA.  It was a tri-plex for only $133,000.  After collecting rent and paying expenses from two of the units, I could live nearly payment-free in the third.  We presented my offer, and after some back and forth, low and behold, it was accepted!!  Holy crap, I was actually going to be a real estate investor!  It was a dream come true, but I quickly realized my dream would end….

My first ‘deal’ that didn’t happen

This all occurred in September of 2001, and we all know what other event took place that month.  A few weeks after the 9/11 tragedy, and shortly before our scheduled closing date, the worst of the worst happened…I got laid off.  Ugh!!  Not only was my job gone, but so was the triplex that I was about to purchase.  I was heartbroken to say the least.

I now had new priorities, I needed to find another job so real estate got put on the back burner.  It would be nearly two years before I would get back into real estate, and little did I know it at the time, my life would change all due to a chance encounter with another investor.  (to be continued…..)

Tonight’s REAPS meeting – Using Virtual Assistants in Your Real Estate Investing Business

If you’re local to Western Washington, join us tonight 3/7/13 at 6:30pm as we discuss how to use virtual assistants in your real estate investing business. For as little as $2/hour, you can have someone else find off-market deals, locate motivated sellers, create and update your website, and do all the other tasks that you know you need to do in your business but haven’t found the time to do them.

Click HERE To Pre-Register For Tonight’s Meeting

I Got Paid To Buy A House Today And Will Never Have A Mortgage Payment

I bought a duplex today and made $5k on the day I bought it. That’s right, I got PAID to buy a house, and I structured the deal a little differently than I normally do, but there is a good reason why. Here’s a quick synopsis of how it was structured, and I want to give you a little private money lesson and an assignment at the end.

The property was a bank-owned duplex in Bremerton, WA. It has 3 bedrooms, 1 bath on each side and will rent for $900/mo (each side) after fixup. It needs about $15k in work to make it in great rentable condition.

I paid $90,400, which is a great price in Bremerton. Now, instead of paying my lender 6-7% simple interest like I do on my other deals, I asked if he’d like to be a 50/50 cash flow and equity partner. He agreed.

The terms of our agreement that I wrote up included $5000 that would be paid to me for acquiring the deal. I received that today.

He covered all the costs to purchase, plus will pay for remodel and any holding costs until the property is rented.

Once rented, as income comes in from tenants, expenses like taxes/insurance and any utilities will be paid from the gross rents, and then the net income after that will be split 50/50.

Why would I be willing to give up half of my equity? I have a very good reason.

My private lender and I will both receive about $750/mo NET NET NET positive cash flow, and the best part is I will never, ever, ever have a payment to make on this property. There is no mortgage, no promissory note, nothing. If the property becomes vacant, there is no negative cash flow.

We intend to hold this property for 10 years or longer, maybe we’ll sell when the market is booming again, maybe not. My private lender is a big winner in this too, and he’s ecstatic. He doesn’t have to do any work, gets an excellent return on his money, and a huge upside when we decide to sell down the line.

Here’s the teaching point for this. This deal was made possible because I had quick access to private money. The property was on the MLS, and I didn’t have to do a whole lot to find the deal. Just a solid cash offer. In fact, there were two other offers that were higher than mine, but the bank chose my offer because I didn’t need to have financing and I could close quickly. Private money made it possible.

It wasn’t always this way. I didn’t reach out to find good private lenders until my back was against the wall back in 2007 and beyond, after the market dropped and I was holding onto lots of negative cash flowing properties. I was hemorrhaging cash and realized that I had to do something, or I was going to lose everything. I had to find a way to refinance out of the 12% private money loans that I was paying, and the high interest adjustable rate mortgages that I had taken over from houses I bought earlier.

At the time, it was scary talking to people about my business, and asking for money. I kinda feel I got lucky with my first good private lender at 7% and no points. It was magic, and it started to change my outlook on private money discussions. My private lender was a very successful man, who owned dozens of properties, and he thought 7% was a great rate. If he thought it was great, maybe others would too. I started to talk to more people, and learned a few things:

The most important is your mindset.

Ingrain in your mind that you, the investor, are the PRIZE. You create deals out of thin air, you create opportunities, and people with money would be VERY FORTUNATE to have an opportunity to work with you.

Money is just a commodity, you can find it anywhere. There are millions of people in this country who have over $100k sitting in some kind of account. There’s nothing special about that.

The deal…the deal is what’s scarce. YOU have the ability to create the deal, and you get to choose who gets the privilege of working with you.

Of course, there are other things to learn which I will show you over time, but first you have to work on your mindset.

Here’s your assignment: Pick up the book called “Pitch Anything” by Oren Klaff. Oren is a professional ‘money raiser’, and he deals in the BIG bucks. Multi-billion dollar deals. It’s available on Kindle or iPad too. He has the best stuff on the money raising mindset and really goes deeper into what I’ve just mentioned. READ IT!! When you’re done, let me know what you think, or just post a comment below to tell me what’s on your mind now, and what your biggest private money question is.

Using Jot Form to Build A Simple Opt In Form (And Build Your Buyers List)

As a wholesaler, the two things that will determine your success are 1) your ability to find great deals, and 2) the quality of your buyers list. You should always be building your buyers list, and it’s best to set it on autopilot by creating an opt-in form on your website. There are a ton of great resources for doing this, such as aWeber, iContact, GetResponse and others (cost is minimal), but if you’re looking for a simple, free option, Jot Form is great. In this video I show you how to create a Jot Form to add to your website…or….you can use their hosted form even if you’d don’t have a website of your own.

Postlets Ads on Steroids! [How to Soup Up Your Online Ads]

Postlets is an excellent website for creating eye catching and attractive online flyers for advertising your properties. The only problem, in my opinion, is that you’re limited by their basic templates, with no way to really get creative. Fear not, because I have a great solution for you, even if you’re not really tech savvy. You can create a basic Postlets ad, then copy and paste the code into an html editor like Kompozer. Then, you have an opportunity to really soup them up, even add clickable video links, alternate headlines and fonts and additional information. Check out the video and let me know what you think.

Sellers Can Be One Of Your Best Sources Of Private Money

If you’re having difficulty finding private money, you may have been overlooking a source that has been right under your nose the whole time….sellers! I stumbled upon this by accident several years back. I purchased a property from a landlord, and he offered to finance the property himself. He liked the idea of getting monthly payments at a higher price than I could pay cash. Since he lived nearby, I would often hand-deliver the payments to him and we would spend some time discussing real estate and life in general. After several months of this, he approached ME about investing. It was an a-ha moment. He was a retired real estate investor, liked the idea of receiving monthly income, but didn’t like the management. A perfect situation, and a true win-win.

Sellers of free and clear properties are another good source. After all, even if you don’t end up buying the house, someone eventually will, and there will be a whole bunch of cash that the seller will have to do something with.

Now, you need to keep in mind that the SEC has rules which dictate who you can approach for private money, so you need to establish a relationship with them before discussing investing, among other things which are beyond the scope of this blog post. BUT, the moral of the story is sometimes you’re 2 inches from gold and you might not even know it. Happy investing!

How to Get Comps if You’re Not A Licensed Realtor

Getting accurate comps for properties is very important. Even if you’re not a real estate agent, there are still some good ways to get comps, including one method (which I discuss in the video) of getting MLS access even if you’re not licensed. I also talk about a great website which is available to investors in the NW. If you have other good websites that you use for comps, be sure to list them in the comments below.