To connect with Jim, please choose a link below:

jim@18summers.com

jjplaybook.com

Origins of the Dispute - Why Now?

• Shifting Real Estate Landscape: The rise of online real estate platforms, discount brokerages, and flat-fee MLS listing services has challenged the traditional model of high commission rates. Buyers are becoming more cost-conscious and seeking alternative service models.

• Consumer Advocacy: Increased media attention on high housing costs and concerns about hidden fees like commissions have fueled public scrutiny of the real estate industry. Consumer groups are pushing for more transparency and buyer-friendly practices.

• Department of Justice Scrutiny: In 2020, the DOJ launched an antitrust investigation into NAR's policies, specifically focusing on the Buyer Broker Commission Rule and its potential anticompetitive effects. This investigation is ongoing and its findings could influence the outcome of the Moehrl lawsuit.

Part 3: Potential Outcomes and Implications

• Scenario 1: NAR Loses: The court could overturn the Buyer Broker Commission Rule, giving sellers more flexibility in how they offer compensation to buyer's agents. This could lead to increased competition and potentially lower commission rates for buyers. However, it could also make it harder for some buyers to find representation, especially in rural areas.

• Scenario 2: NAR Wins: The court could uphold the Buyer Broker Commission Rule, maintaining the status quo. This would likely benefit real estate agents and traditional brokerages, but it could also leave buyers feeling frustrated with limited choices and high costs.

• Uncertain Future: The lawsuit is complex and ongoing, with multiple appeals possible. Predicting the final outcome and its long-term impact on the real estate industry is difficult.

Tyler and Michael had a comprehensive discussion about the current state of businesses and the economy. They explored alternative investment opportunities, including franchising, real estate, and cash-flow businesses, as potential avenues for financial security. The conversation also featured Greg Mohr, who provided insights into the franchising process, including different types of franchise models, fee structures, and potential earnings in the service sector.

Summary

Business, Economy, and Investment Challenges

Tyler and Michael discussed the current state of businesses and the economy, focusing on the challenges faced by employees and business owners due to government intervention and market uncertainties. They also explored alternative investment opportunities, including franchising, real estate, and cash-flow businesses, as potential avenues for financial security. Greg Mohr, the owner of Franchise Maven, joined the conversation to explain his role as a middleman between franchisees and franchisors, providing valuable insights into the franchising process.

Franchise Models and Earnings Potential

Greg provided Tyler with an explanation of the different types of franchise models, particularly the role of a master franchisor. He detailed how a master franchisor purchases all 10 territories in an area and uses one as a training unit for new franchisees, then sells the remaining territories to other franchisees and earns a commission on the franchise fees and royalties. The team also discussed the concept of multi-level marketing, real estate ownership in the fast-food industry, and the potential earnings in the service sector. Tyler shared his personal experience with the service sector, expressing concerns about high fees and a lack of understanding from some service providers.

Franchise Fee Structures and Vetting Process

Tyler and Greg discussed the general fee structures of buying a franchise. Greg explained that the one-time franchise fee usually ranges from $50,000 and includes all necessary information and training. The ongoing fee is a percentage of the gross sales, typically between 5 and 10%. Greg emphasized that franchisors are looking for both business and background experience from potential franchisees. Tyler shared that their model is similar to a franchise, where they rent their facilities to operators. However, they have implemented strict measures, including hiring a consultant with real estate and business experience, to ensure the quality of care for their residents. Greg and Tyler also agreed that involving a consultant in the vetting process can increase the success of the franchise.

Franchise Feasibility Discussion

Greg and Tyler discussed the feasibility of starting a franchise as a side hustle with a budget of around $50,000. Greg confirmed that it is possible to manage a franchise with a time commitment of 10 to 15 hours weekly and that he has many clients who continue to hold their primary jobs while managing their franchises. Tyler raised a question about the process for someone who doesn't know which franchise to invest in, to which Greg clarified that the first step would be to have a conversation to understand the individual's interests and aspirations.

Franchise Earnings Inquiry and Information

Tyler inquires about the potential earnings for a franchise investment. Greg explains that the Federal Trade Commission prohibits the disclosure of specific earnings data by franchisors. However, Greg assures Tyler that he will provide all necessary information to help him make an informed decision. Greg also mentions that he will talk to multiple franchisees to get a sense of their earnings and experiences. Towards the end, Greg outlines his role as a coach in the process, helping Tyler determine if franchising is right for him and, if so, identifying the most suitable franchise opportunity.

Franchisee Characteristics and Benefits

Michael discussed the characteristics of a successful franchisee with Greg, who emphasized the importance of being coachable and willing to follow a process. Greg also highlighted the benefits of being part of a supportive network and following a specific territory. The discussion revealed that Greg provides free services to help potential franchisees find a suitable franchise within their area. The group also touched on the availability of SBA loans for financing.

Funding and Exit Strategies for Businesses

Greg and Tyler discussed funding options for SBA loans and SBA express loans, with Greg explaining that SBA loans can be obtained quickly while SBA express loans take longer. He introduced the concept of using a 7a loan for larger loans and using a 401k plan from a previous employer for funding by doing a rollover into a self-directed 401k. Greg also shared his experience of using retirement money to fund his business by creating a C corporation. Michael expressed his desire to terminate his franchise commitment and start a new business venture, leading to Greg explaining the process of exiting a franchise agreement.

Greg can be reached via FranchiseMaven.com

Tyler and Mike discussed the current state of the real estate market and the uncertainty caused by economic and political changes. Tyler, an active realtor, shared his experience from the last crash and his concern about the current situation. He noted an ongoing migration to Florida, but a decrease in sales due to high-interest rates. Despite the demand, people are unable to afford to buy properties due to the increased rates, causing a shift in the market.

Tyler's Finance and Entrepreneurial Journey

Tyler shared his recent experiences, including launching a podcast and becoming a tour guide in Key West. He voiced worries about the current credit crisis, with credit card spending at an all-time high, and the potential issues this could bring for the country. Tyler stressed the importance of having multiple income streams and discussed his involvement in a real estate fund that buys single-family homes and converts them into assisted living facilities. He emphasized the recession-proof nature of this venture and his and Mike's cautious approach to finances. Tyler expressed gratitude for their initial decision in starting the fund, as they managed to avoid an unfavorable adjustable rate mortgage on a 2.7 million dollar property. This would have led to them hitting a debt cap of nearly 9%, amounting to about 3 million dollars. Mike agreed, mentioning that many funds are currently experiencing similar issues due to rising interest rates.

Housing Crisis and Inflation Advice

Tyler warned about the market being in an affordability crisis and advised against speculative investments in real estate. He shared his personal experience of maintaining a long-standing relationship with his landlord in Key West, which allows him to maintain his housing security at a lower cost than buying a home. Despite this, he acknowledged that some people are still buying homes to move into, due to the common belief that it makes sense to buy. Tyler also pointed out the significant inflation in food prices and advised caution for those flipping houses. He concluded by emphasizing that the country is becoming a renter nation and encouraged thoughtful consideration before making a home purchase.

Housing Market Caution and Recession-Proof Investments

Tyler discussed the current state of the housing market, expressing concerns about the potential for a market crash due to rising interest rates and overpriced houses. He advised caution and suggested focusing on recession-proof investments like service businesses and residential assisted living, which he believes will stand the test of time. Tyler also highlighted the potential for buying great deals in Florida when people get scared and the need for a strong team to capitalize on such opportunities. Mike agreed with the assessment and expressed interest in the proposed strategies.

Real Estate Market Forecast: Prices Stable, Rates Fluctuating

Tyler and Mike discussed the state and future of the real estate market. Tyler argued that prices would not decrease and asserted that the market had reached a new normal. He predicted that interest rates would continue to rise, but then drop again, leading to increased buying and further price hikes. Mike found this concept difficult to accept.

Exploring Assisted Living Rental Market Potential

Tyler and Mike discussed the potential of the rental market, particularly in the assisted living sector. They highlighted the demand for such services due to an aging population and the suppression of individual user costs in this sector, which they predicted would soon explode. They also outlined their strategy of leasing properties to Alf operators for five-year terms, reducing risks and ensuring stability. Tyler and Mike closed the meeting by inviting listeners to their upcoming webinar and emphasized the importance of protecting against inflation in investments.

Next Steps

Register for the next webinar at cashflowguys.com/webinar

1. Understand the zoning laws in your area. The first step to working through zoning issues is to understand the zoning laws in your area. This includes knowing what types of uses are allowed in different zones, as well as the specific regulations that apply to your property. You can usually find zoning information on your local government's website.

2. Talk to your neighbors. Zoning issues can often be resolved through informal discussions with your neighbors. If you are concerned about a proposed development, talk to your neighbors to see if they share your concerns. You may be able to work together to find a solution that everyone is happy with.

3. Contact your local zoning board. If you cannot resolve the zoning issue with your neighbors, you may need to contact your local zoning board. The zoning board is responsible for enforcing zoning laws, and they may be able to help you resolve the issue.

4. File a zoning appeal. If you are not satisfied with the zoning board's decision, you may be able to file a zoning appeal. A zoning appeal is a legal challenge to a zoning decision. If you file a zoning appeal, you will need to present evidence that the zoning board's decision was incorrect.

5. Work with your elected officials. If you are unable to resolve the zoning issue through the zoning process, you may need to work with your elected officials. Your elected officials can introduce legislation to change zoning laws, or they can pressure the zoning board to make a different decision.

Working through zoning issues can be a complex process, but it is important to remember that you have rights. If you are facing a zoning issue, do not hesitate to seek help from your neighbors, your local zoning board, or your elected officials.

Understanding the intricacies of zoning regulations is paramount for real estate investors looking to maximize their opportunities and minimize risks. Zoning regulations, put in place by local governments, dictate how land can be used within specific areas. These regulations establish different zones, such as residential, commercial, or industrial, each with its own set of permitted uses, building codes, and restrictions. As a real estate investor, having a comprehensive understanding of zoning regulations is essential for making informed decisions, identifying profitable investment opportunities, and navigating potential challenges.

Zoning regulations act as a blueprint for urban planning, ensuring the harmonious coexistence of various land uses and protecting property values. By familiarizing themselves with local zoning codes and restrictions, real estate investors can assess the feasibility and potential of a property for their intended purpose. For instance, if you plan to develop a commercial property in a residential zone, you might face zoning hurdles and restrictions. However, by being knowledgeable about zoning regulations, you can proactively identify suitable properties that align with your investment goals and avoid costly surprises.

Furthermore, understanding zoning regulations helps real estate investors anticipate future market trends and development opportunities. Zoning changes, such as rezoning residential areas for mixed-use developments or creating designated zones for certain industries, can significantly impact property values and investment potential. Staying informed about zoning updates and proposed changes in the local area allows investors to adapt their strategies and capitalize on emerging opportunities. Additionally, being aware of potential zoning challenges and restrictions enables investors to develop comprehensive mitigation plans and seek necessary approvals, ensuring smooth transactions and successful projects.

Lastly, a solid grasp of zoning regulations is indispensable for real estate investors. By understanding zoning codes, investors can make informed decisions, identify suitable properties, navigate challenges, and seize opportunities that align with their investment objectives. Keeping a pulse on zoning changes and updates empowers investors to stay ahead of the game, unlock hidden potential, and thrive in the dynamic real estate market.

Mat can be reached through the following links: 

https://matsorensen.com/about

https://www.linkedin.com/in/matsorensen

https://www.youtube.com/@MatSorensen

https://www.entrepreneur.com/author/mat-sorensen

https://directedira.com/

https://kkoslawyers.com/

• Steven is a self-made investor who has discovered how to leverage the systems and processes he has learned into a robust portfolio of rentals.

• Using primarily direct mail consisting of his own "yellow letters" system of marketing, he is able to consistently generate a steady amount of leads that has resulted in him now owning over 90 units WITHOUT PARTNERS.

How He Built a 90-Unit Rental Empire Without Any Partners

Before diving into Dr. Steven Nguyen’s success story, it’s important to understand the basics of real estate investing, including the different types of investment strategies available such as fix & flip, buy & hold, wholesaling and more. Knowing which type of strategy best fits your individual situation can help you make informed decisions about which investments are worth pursuing and which ones should be avoided.

Dr. Steven Nguyen was able to leverage his systems and processes into a successful rental portfolio with over 90 units without any partners involved. He started out slowly by acquiring his first property in 2003 and then began building up his portfolio from there. One key factor that helped him succeed was having an organized system in place for managing both short-term & long-term goals with regard to each rental property he invested in — this allowed him to maximize profits while ensuring that all properties were consistently maintained at their highest levels so that tenants would stay longer and vacancies would be kept at a minimum.

Dr Nguyen also utilized direct mail marketing and “yellow letters” system as part of his overall marketing strategy when it came to generating leads for potential renters or buyers for each of his properties. He found that targeting distressed property owners who were likely in need of help selling their homes quickly or renting out their properties on a long-term basis yielded great results — often times these individuals had little knowledge or experience when it came to real estate investing so they were willing to work with him on favorable terms that allowed him to generate steady returns from each investment he made. This type of targeted approach proved invaluable when it came time for him to expand his business further down the line as he already had an established network of people who trusted him enough to do business together again in the future. Conclusion: Through hard work, discipline, smart systems implementation, and an understanding of the basics behind real estate investing; Dr Steven Nguyen has been able to successfully build up a portfolio consisting of over 90 units without any partners involved! His story serves as an excellent example for anyone looking for strategies on how to build up their own rental empire without having any prior experience or capital upfront – if you can follow in his footsteps with determination then there is no telling what heights you can reach!

Investing in "situations" can often be a more lucrative choice than investing in property. People looking to make money through real estate investments often overlook the seller's situation. However, there are many advantages that come with investing in situations instead of simply focusing on physical structures or land. Situations offer a variety of clues that can help you prepare offers that are more likely to be accepted. Additionally, situations will guide you toward a better understanding of what the seller needs to know in order to say "yes" to your offer. Thus, those looking for a lower-risk investment should consider investing in situations rather than solely focusing on the property itself.

Steven provides tons of solid gold nuggets in this episode that I'm sure you'll want to know.  As promised, here is his link tree if you want to connect with him and learn more or follow him on social media:

https://linktr.ee/makingmultifamilymoney

Richard Roop has been creatively buying and selling real estate since 1996. Over the past few decades has become known as "THE Marketing Consultant for Real Estate Entrepreneurs." He's one of the top "direct response" marketing gurus dedicated to helping real estate investors generate more leads, negotiate better deals, and... create more consistent, predictable cash each and every month. 

Richard has bought over 500 homes since 1996 as a creative real estate investor.

​​Richard specializes in sharing proven, low-cost real estate direct marketing strategies for attracting a steady flow of motivated sellers, as well as real estate business marketing systems for getting investment properties occupied fast.

Richard knocks this episode out of the park with value and packs it full of gold nuggets that will bring massive value to anyone who invests the time to listen.

If amazing content isn't enough, he put together a free giveaway package consisting of some of his rock-solid training on direct mail and real estate marketing which can be found at http://Roopodia.com/7keys

Once you get on board with the fact that all properties are "overpriced" you can move past this objection and focus on learning why the seller is selling, what the pain points are of the seller and what they plan to do with the proceeds of the sale.  

Be focused on learning how much income it currently generates and what the potential is for an increase of income.

First, how could you possibly be able to accurately pick what the future buyer would want?  How do you know they want terra cotta accent walls?  What if they don’t like that shade of blue?  These are questions you should be asking yourself before you do any improvements to a property in preparation for sale.

Keep colors neutral so you can appeal to the largest number of buyers.

Cleaning and decluttering often bring more ROI than repairs do.  In over 20 years of selling real estate, I’ve come to the realization that 90% of buyers will complain about the improvements you choose to make.

If you are selling your current home, or perhaps one you inherited, consider first cleaning and decluttering.  Have an estate sale or garage sale and get rid of all the extra stuff.  

If you are a home flipper, find a new construction model home in your market and go walk the models.

Notice the colors they choose and the amenities they provide, those choices come from market research.  Homebuilders put lots of effort into maximizing efficiency on new builds, and frankly, doing what they do can save you a fortune.

I know home flippers that follow the other flippers they see in the market in regard to finishings and such without ever visiting a new construction model.  What happens is a classic case of the blind leading the blind.  One flipper makes a bad design choice and is quickly copied by the next ten flippers behind him.  The end result is a bunch of crappy renovations that nobody wants.

I recently had a home seller ask me if they should do any improvements to their home before selling.  It was a really cool historic home located in a great neighborhood that was in full swing in regard to gentrification.  Several homes in the neighborhood have been renovated making the neighborhood a crown jewel of the area.

The seller’s home did show some deferred maintenance but had curb appeal and was in an ideal location.  This home would be a great renovation project for an incoming homeowner in a neighborhood that boasted pride of ownership.  Because of the type of home, it was and the location, it would bring top dollar in its current condition with no money invested in improvements.

I explained to the seller that I could bring them a buyer willing to pay between $550K to $575k for their home as is, no repairs or upgrades, just move out and clean..  Instead, they chose to list it with “the neighborhood agent” for $515,000 in August.  They said the other agent had sold 50+ homes in the neighborhood which is what made them choose the local lady.  They went on to say that the agent said they will need to replace the roof, A/C, refinish floors, paint, on and on which wound up costing them around $30k give or take to complete.

The price dropped $16,000 twenty days after listing, then another $20,000 a week later, then $10,000 two weeks after that, two more weeks dropped the price another $10,000 and it finally went under contract on 10/15 with a list price of $459,000.  It’s still not closed so only time will tell what it sold for (assuming the agent can get the deal closed).

In this case, the seller lost out on $146,000 or more ($30,000 of which was in improvements).  All due to bad advice and an ineffective marketing strategy.

To get top dollar for any property, the whole world needs to know it’s for sale.  You don’t have to try to trick anyone by putting lipstick on a pig, instead, invest that money in your marketing.

Run paid ads on Facebook, Instagram, Youtube, Twitter, Wall Street Journal (for higher-end houses), and so on.  Make the house viral on social media.  Doing so can often bring you more money than ever thought possible in your wildest dreams.

I have so many true stories of how I have used purely marketing strategy to give my sellers heart palpitations when the offers start to roll in.  This happens because everyone with eyes and ears knows the property is for sale.

I truly believe there is a buyer for every house.  In almost every instance, the reason a property isn’t selling isn’t a price problem, its a marketing problem.  The buying public does not perceive the true value of the home because you simply have not found the right buyer.  Without guerilla marketing finding the highest paying buyer will never happen.

Folks, it’s no rocket science to sell your next property at a price so high it sets the market, you just need to hire the right team to help you get it there.  That team can be a Realtor or Wholesaler who is a marketing expert or a marketing expert that will bring cash-wielding buyers to your front door.  Either way, unless you can get people to the front door in droves (without using price as a motivator) you’ll never see top dollar and have to live with leaving money on the table.

We have owned this one since 2014 and currently operate all the apartments as short-term rentals.  In 2016 when we made the switch from long-term to short-term tenancy I met with my insurance agent at the time to be sure I had adequate coverage for the change of use.

I figured that the property would be subjected to a bit more use and abuse due to the short-term nature of our tenant’s stays.

My agent suggested that I simply purchase an additional liability policy that would cover any claims of damage or liability that stemmed from the short-term occupancy.  The cost of the plan was only $1200 a year which was well within my budget since the property consistently cashflows 10x that or more each month.

In 2020, my insurance agent sold his practice to another agent and retired.  I did not find this out until 6 months after the sale which irked me a bit I must admit.

After chasing down the new agent for well over two months, I finally received a call back where he explained he has been “busy” with the takeover of the agency.

I ask that my policy be reviewed to be sure it still provided adequate coverage for my short-term rental which he acknowledged that it did.  

This fall, while speaking with one of the agents in the office on an unrelated issue the conversation came up about policy renewal.  I asked if it was still necessary to have three separate policies due to the Airbnb situation which she replied that my wind policy would not offer any coverage in the event of wind damage from a hurricane or likewise if I was using the units as short term rentals.

You can imagine my feeling when I discovered that all along I have been underinsured!

If I had suffered a loss at any time over the last 7 years due to a storm or wind damage I would have zero coverage available to me.  Let’s not even get into the wasted money of paying for the wrong policy, EVEN after being proactive about full and unsolicited disclosure about exactly how I operate that property.

The agent determined that I had to switch to a commercial insurance policy because of the AIRBNB element.  This increased my annual insurance costs by over $6,000 per year.  

As you might imagine I wasn’t real pleased about receiving this news but at the same time, I am thankful the issue was discovered and hopefully corrected.

I must say, after this debacle, I am very insecure about whether or not I have the proper coverage.  I certainly don’t want to pay for coverage I don’t need, nor do I want to risk being under-insured.

Clearly, I need to have another licensed insurance agent take a look at this situation which has proven to be a challenge all by itself.  It seems no insurance agent in Florida needs more customers.  They don’t answer the phone, respond to email or website inquiries.  Even those who referred to me simply will not respond.

After about trying over two dozen companies I finally got one to call me back only to learn that they would not consider quoting the policy without me proving my roof was under ten years old.  I was dumbfounded to hear this because the effective age of a pitched shingle roof in Florida is 20-25 years, yet now the insurance companies have decided that they no longer like that timeframe.

Fortunately, the roof was on schedule to be replaced this year anyway so needless to say we expedited that process and are now awaiting the materials to arrive for the roofer to begin the project.  Once that’s done the roofer will provide me a 4 point inspection form and proof the job was completed that I can turn over to my current and future insurance companies.

In the end, it’s the cost of doing business.  I could choose to get all upset about it, sell off my portfolio and trade crypto in my Mom’s basement, yet that would be foolish.

When I consider the $100,000’s of thousands of dollars of legally tax-free income I have earned from this investment property over the years, the costs I mention in this episode become small and insignificant.  

In summary, how you choose to interpret things that happen will make you or break you.  Those that crack under pressure are generally the same people whose property I wind up buying at a bargain price because they simply chose to fail.  Instead, choose to succeed, find a solution because I assure you there is a solution for each and every problem you face.

 I’ve done my best to keep you up to speed on trends I discover that end up trapping good people into difficult situations.

When I first got started, I followed the herd-like most of us do.  I flipped houses first, then later wholesaled for a while.  While I made some serious cash doing these things, I also wound up paying far too much of my earnings to the IRS in the form of tax.  I also overpaid mailing houses, sign companies, call centers, software salesmen, and asset protection lawyers that said I needed a bunch of LLS’s, trust, and other nonsense.

Recently I’ve been learning about investing in / trading cryptocurrency.  I’ve read books, watched YouTube videos, read forums and chat groups, and dabbled in it myself.  

I still have lots to learn (tech analysis), discovery and rationalization of trends, and so forth.

I have discovered that public opinion or group thinking is often the driver of cryptocurrency performance and not so much the technology.

There are groups of people who spend their days and nights offering unsolicited advice on crypto without any sort of credentials being presented or discussed.  For all I know I could be talking to some teenager in his mom’s basement.

When Elon Musk, Mark Cuban, Robert Kiyosaki, Logan Paul (YouTuber), Gene Simmons, and Snoop Dog speak, what they say influences the financial markets of cryptocurrency.

I gotta say, such a phenomenon does not make me comfortable with cryptocurrency in any way shape, or form.  In fact, it keeps me from investing any large amount of money in this space.

I’m not saying crypto is bad, evil, shady or anything like that I’m just saying before you leap in, might want to swim around in the shallow end and get a feel for your risk tolerance before proceeding past your comfort zone of loss.

When you invest in anything be sure to never invest more than you are willing to lose.  I decided my magic number was $5,000 for crypto.  Although the investment has grown quite a bit, I also realize that if Snoop Dogg can’t find weed because of the supply chain issues then it’s likely he may tweet out some nonsense to wipe out my profits.

As I dig into learning more about the chart analysis of crypto, the more I see and come to understand how market cap and trading volume impacts the price of crypto, unlike stocks, those are generally the two metrics available to track.  Please note both of those are directly impacted by emotion and the public consensus on the very second a crypto buyer executes a trade.

The bottom line is that we all need to do our best to avoid playing monkey see monkey do when it comes to investing.  Take a time out to learn about what you plan to invest in, how profits are derived, know the risks and only invest that which you are willing to lose until you get to a place where you feel comfortable taking bigger steps.

To connect with Shawn go to YesnerLaw.com

The easiest way to understand it is to think of it as a credit card that has a credit limit.  Imagine if you paid all your bills using that card and suddenly decided you wanted (or needed) to buy more stuff.

If the credit line is maxed out, simply call the bank and ask for a higher line of credit...what could go wrong?  LOTS, lots can go wrong.

There is an unimaginable amount of bad information spewing from Washington DC on this topic which is why I made this episode.  It's time for you to take action to protect yourself from our elected criminals.  This episode will help explain what's really going on, how we arrived here, and then offer suggestions on how to prepare yourself to weather the storm.

SHould you be nervous about the debt limit? No, but you should be taking steps to prepare and to protect your financial future.

The event can bring with it a bunch of emotions from landlords and their tenants, some good, some bad, some indifferent.  

Nonetheless, there is a "right way" to raise the rent such that the most desired outcome for you is probable and that's what I am discussing in this week's episode.

Before we go any further, let’s discuss the two types of vacancies.

Physical vacancy applies to actually empty units (nobody living in them)

Economic vacancy identifies the difference between the potential (proforma) rent and the actual rent.

As a passive investor investing in someone else’s deal, it’s a good idea to perform your own independent market research.  Your findings should align with the finding of your deal sponsor.  

If you are buying a property yourself as an active investor, the same is true.  You can’t count on the Wholesaler, Broker, or Seller to be accurate with the information they provide.

It’s not that they are lying necessarily, instead, it’s more likely that they simply were not willing to do their homework if they are the Broker, Wholesaler, or Deal Sponsor.  If the seller is off, I often find they are conveying what the “feel” it will rent.  Let’s keep in mind that they never actually get that much, after all, they don’t want the tenants to leave right?

In this episode, I’m going to break down how you can assemble the most accurate information available.  Its making decisions based on facts that will keep you safe during your investing journey.

If you want to learn more about what I am up to in Key West as far as my upcoming deals, go to keywestcashflow.com/call and schedule a time to get on my calendar to discuss our plans down here and how we might be able to work together in the future.

As a student of J's Jill and I have built an incredible STR business that allows us the freedom to run it from anywhere in the world.  

Recently, we relocated to Key West, Fl to begin buying up long and short-term rentals in this market.

With the help of Mike Marino of LayoverMoney.com we plan to revolutionize the traditional methods of syndication investing by building a streamlined, highly optimized investing opportunity for our investors.

If you want to learn how to grow your very own short term rental business, you can get started today by texting "blueprint" to 949-506-5255

As a student of CashFlowDiary myself I can tell you that learning this skills will prove to be absolutely life changing if you choose to do the work.

We discuss the several ways a syndication or investment fund is taxed and also how the individual investors are taxed.

Did you know it's possible to achieve a zero tax rate without being Jeff Bezos?  I didn't but it certainly is and John discusses how that is possible amongst many other juicy tax strategies in this episode that you're not going to want to miss!

In this episode, I break down what I am seeing as it pertains to labor and materials shortages and how that can impact all real estate investors worldwide.

Don’t underestimate how the current and upcoming shortages can and will impact your business.  I am hearing more and more reports daily from friends and colleagues who are having trouble finding even the most basic supplies to maintain their rentals or finish flips.  

Experts are saying the shortages will likely worsen before they get better so why not take a minute to access your position and take appropriate measures to protect yourself and your business.

Google Definition: Equity multiple is a metric that calculates the expected or achieved total return on an initial investment. It’s calculated through an equity multiple formula that divides the total dollars received by the total dollars invested.

Equity Multiple = Total Distributions / Total Invested Capital

Example 1: 

An investor purchases a property for $100,000; 

The property is sold for $200,000.   

The deal produces a 2x equity multiple. 

If the investor only receives $150,000 back, the deal delivers a 1.5x equity multiple.

Example 2: 

An investor purchases a property for $100,000; 

The property pays $7,000 a year in net operating income; 

The investor sells the property for $165,000 after six years

In this case, the equity multiple calculations would be $207,000 divided by the initial purchase price of $100,000, or a 2.07x equity multiple.

Example 3: 

Leverage Example: 

An investor purchases a property for $100,000

The investor used a loan for $50,000 and put $50k down

The  property pays $7,000 a year in net operating income

The annual interest payments on the loan of $2,500

The investor sells the property for $165,000 after six years

In this case, the equity multiple would be 2.84x. While leverage can amplify returns because the cost of debt is cheaper than the cost of equity, it’s important to remember it can also destabilize a project and amplify losses.

Equity multiple is an easy comparison tool because it provides a quick glimpse into the total profit investors can expect to earn on a particular investment, provided its successful. 

Keep in mind that it’s dangerous to put too much weight on this metric when deciding a go/no go decision because this metric does not factor time.  Internal rate of return DOES consider time in the calculation yet like other metrics also has its shortfalls.  True IRR cannot be considered unless the asset has already completed a given cycle of performance and has been exited. 

In Florida (and I believe in all US States) for a contract to be considered enforceable, there must be “consideration” which is most often meant to be some sort of cash deposit or earnest money

Wholesalers are notorious for not using earnest money when they attempt to go under contract with a seller on their home, this is a great way to lose deals!

Many folks will tell you that it’s not necessary to use earnest money which will come back to bite you the minute a seller decides not to sell to you or honor your contract.

In this episode, I cover how to use earnest money to win a seller’s approval on your offer over others which is critical in this very competitive market

As you might know, the CDC created another eviction ban even though they (and President Biden) acknowledge it's probably not going to hold up in court. So with that news, I reached out to my team of experts, and that's why Attorney Shawn Yesner of Yesner Law is my guest this week to help us unwind this situation. As usual, the #YesnerWins team does a great job helping us navigate these shark-infested waters. So listen in to learn what to do if you have a non-paying tenant this year.

When Kyle got started wholesaling, he quickly discovered that generation can get expensive really quickly.  Also, he discovered that it takes a great deal of time to generate leads when you are going at it all alone.  He needed to figure out a way to generate high converting quality leads without breaking the bank and without working lots of hours to get them.  That’s when Botfox.net was born.

Kyle cast aside all other forms of marketing and doubled down on teaching himself how to use Facebook groups to find cash buyers and motivated sellers.  He then wanted to scale his business but knew that was impossible by himself.  It was then that he developed his proprietary training system to teach others how to generate leads for him!

Kyle has put in the work and sweat to develop the Botfox system which is what he uncovers in this episode you won’t want to miss.

Here's what I mean...

We all know the riches and fame that can come from being a real estate investor, blah, blah...but it can also destroy people faster than it can make them a rockstar.

Real estate investing is something that attracts people of all financial classes, rich and poor.  The problem is that many of the poor investors have yet to develop the personal financial discipline necessary to be successful in real estate.

If you're having a tough time making ends meet month after month, real estate won't usually save you, in fact, it will likely make things worse.  This week I expand on this thinking and offer solutions to help get you on track in the future.

Frankly, I find Zillow’s project brilliant, they were able to secure funding capital for 3% give or take and are buying up these properties in great markets around the country and making a fortune on volume sales.  Instead of complaining about their methods, I’m going to watch and learn how they are doing this and replicate it.

It’s easy to cry foul these days, there’s always someone in earshot that will commiserate with your pain and join you in victimhood, but imagine the possibilities if instead of complaining about it, we simply learned how to make those profits for ourselves….after all, I’m sure Zillow would enjoy a bit of competition in the marketplace so with that said...let’s go make some MONEY!!

The seller got an appraisal which came back at $320,000, we then listed it at that price.

The same day as listing it, I began my paid Facebook ad campaign.  A Facebook friend of mine saw the ad and messaged me that he has just bought the house across the street from the one I was selling and sold it for $55,000 MORE than we were asking.

Needless to say, the seller wanted the price raised, which we did, and subsequently sold the home for $370,000 even though it was smaller than the other house.

Stories such as this remind me of how powerful a network can be.  Had my Facebook friend not offered up this otherwise unavailable information, we could have wound up selling the home for $50k less.

This is why I continually stress the importance of building a database and a local network in the area you plan to focus on.  Ignoring this advice could likely cost you much more than $50,000…

In today’s times, you can hire someone quite reasonably to help you build an online and local network.  Attending networking events of all kinds, not just real estate ones goes a long way towards building that ever-important local network.

There was also a time where I mistakenly thought of some of the experts in the real estate industry to be a thorn in my side or worse...deal killers.  This was a clear example of a misguided mindset holding me back.

Once I began to realize that bringing in the experts meant that insure my business against losses everything changed for me.  You might be wondering what losses I am referring to, those I discuss in this week’s episode.

Moving down here meant starting from scratch for the most part. None of my Realtor marketing applies down here because I am now needing to target a completely different type of client.

As a Realtor, I focus my marketing dollars on attracting sellers. This same approach is what I have used for years to find motivated sellers. But moving to a new market means I have to learn this market just like I did the Tampa Bay Market.

What does that mean?

First, every day I walk, ride my bike, or drive down a different street. Every day I do this when I leave the house, never taking the same way home twice if possible. I do this to discover the nuances of my new home city.

Often I meet new people when walking or riding my bike which is why I prefer those methods over driving. By walking I get to see everything that I would miss if I was driving.

The other day Jill and I celebrated our 13th wedding anniversary and decided to spend the day on a walkabout. We walked down the street to breakfast at a new place we have never been to. 

We walked the shops and galleries and low and behold met someone who knew of me because of a mutual friend. This person’s parents are selling a home on the island which is listed by a friend of mine. Ironically, I met the parents a week prior while my fund partner Mike and I were out property shopping.

Long story short she is going to be getting her real estate license which means perhaps she will join my team down here in Key West as a buyers agent.

During our day out and about I identified about a dozen properties that need my help which I plan to skip trace and begin marketing to. You see, these are opportunities that I have driven by for years, as has everyone else, and likely nobody has put much effort into trying to solve these problems.

Last week I went down to the code enforcement meeting and sat through it. Why? Because I wanted to learn who the code enforcement officers are as well as their mannerisms. I also had the opportunity to hear the staff from the planning commission address issues and watched them work with the residents. If you are looking for problems to solve, code enforcement is a great place to start. Hint: These days most meetings are recorded, you can listen to the recordings while you do other things and listen for the addresses and case numbers, you will also learn who the movers and shakers are in town.

This week I dropped over $10,000 on a youtube video ad agency to find motivated home sellers in Key West, the plan is to saturate the market with my marketing to outspend all other Realtors in key West. The one person who willing to spend the most to get and close a lead wins.

As most of you know, I’m not a believer in named markets, because there is always more than one way to accomplish a goal, especially if it’s buying a house.  In this episode, I discuss a few little-known tips to help real estate buyers get their offers accepted.

In this episode, I peel back the curtain for everyone to learn where my income comes from.

What's important about this episode, in particular, is that you understand that it's because I have multiple streams of income that I don't have to ever go back to work.

By focusing more on several smaller streams instead of one larger one I bet insulate myself from sliding backward financially because if one income stream suffers, the others continue to produce.

The same is true in real estate, it's not a bad idea to spread yourself out a bit, perhaps by investing in different types of assets or deals while also doing some passive and active investing.

As you see an opportunity, capture it, add it to your portfolio and then go out and get another.

He also taught me the importance of “going for the close” also known as asking for the business.

Humans tend to spend a great deal of time thinking about what they want and more time coming up with reasons they cannot get what they want.

Such thoughts often lead us down a rabbit hole of doubt which eventually leads to our belief that whatever we want is behind some sort of roadblock that we won’t be able to overcome.

Here are a few examples of what I am referring to:

Not applying for deal funding because you don’t feel you will be approved.

Not wanting to answer the phone when a potentially motivated seller calls because you don’t know what to say to them.

Being resistant to spend any time with a seller in fear you will look stupid by asking questions or not feeling like you know the right questions to ask.

Refusing to make offers in fear of being rejected.

Feeling that a larger valued deal is “too big” or “too expensive” for you to handle.

Fear of being rejected by a seller or Realtor because you “can’t afford” to buy anything worth having.

What I just mentioned only scratches the surface as you might imagine.

Here’s the reality of what’s happening in the seller’s mind:

Did I overprice this property?

Will people heckle me or be mean if I overprice my property?

What if I put a sign-out and nobody shows up? Well, I could drop the price but then I’d be admitting I overpriced the property to begin with and therefore look stupid for sure!

How do I really know I am getting a fair price for my property?

What if I sell it too cheap?

If it sells too fast doesn’t that mean I sold it too cheap?

If I think I sold it too cheap can I back out of the deal?

What if buyers bring Covid into my home

I don’t have the energy to clean up or organize and buyers coming through will judge me as a nasty mess for not being clean.

How do I know if I picked the right Realtor?

Should I even hire a Realtor or do it myself and “save the commission”

What if we are not yet at the top of the market, I wonder if I should wait a little longer?

Landlord Sellers think:

Buyers walking through my units will anger my tenants

If my tenants know the property is for sale they will all move out suddenly

What if the new landlords make my tenants move out suddenly?

All of this leads up to one thing...STRESS!!

Now that we covered all that, I think it is fair to say that both buyers and sellers are under tremendous pressure when trying to complete a real estate transaction.

Regardless of the current market conditions, the most effective way to overcome the majority of these issues is to position yourself as transparent. Be approachable, be willing to sit down with your fellow human, look them in the eye and work through the process.

No matter how hot or cold a market is, there will always be buyers and sellers with problems to solve. In 2021 face to face has become a less popular option but services like Zoom and other apps make it easy to communicate with others via video or audio.

Use these services, open up dialogue and talk things out.

When I am brokering a property sale transaction for a buyer or seller, I encourage all parties to get on the phone or meet in person to negotiate the transaction. I want active participation from all parties. It’s these meetings that bring forth the best results for all parties in most cases.

I realize that for many the thought of sitting down face to face with “the other side” as they say may be terrifying. I assure you that if you give it a try you will likely be pleasantly surprised by the end results.

I also realize that many people simply won’t agree to an open discussion or negotiation due to the crippling fear of confrontation. Regardless I ask you at least try by asking for a meeting, the worst thing that can happen is the other party would say no.

Please know that the other party is as scared or nervous as you are.

Some bragged about being able to conduct business and earn capital gains free of the worry of taxation.

Those days are over…

Last week I was listening to an episode of Rich Dad Radio titled “The IRS Versus Bitcoin” where I stumbled upon some shocking news reported by CPA Tom Wheelwright, a Rich Dad advisor.

Tom warned listeners by saying that anytime you use or trade cryptocurrency, it becomes a taxable event!  He went on to say that if in 2020 you did ANYTHING besides buying cryptocurrency you must declare it to the IRS when filing your taxes, if you don’t, it’s a FELONY.

It seems that any transaction except buying bitcoin is subject to a tax beginning at a rate of15% for both the user of the bitcoin and the receiver.  There is also capital gains tax that will apply to many transactions.

So much for bitcoin being unregulated!

We will have to wait to see if the IRS can gain any traction in regard to enforcement…but that never really stopped them in the past.

That got me thinking…in today’s brave new world it seems our elected leaders have the ability and the gall to pass just about any legislation they are paid to make into law.  These policies and laws are often created without much thought to how they will impact everyone they represent.

It’s been said many times that if you simply pay attention to what the government wants you to invest in, you can enjoy a relatively tax-free or at least tax favored lifestyle.  Those that complain about how things are an attempt to circumvent the system are often found out and severely punished.

Before your mind goes down a political rabbit hole, you must understand that the IRS does it’s thing regardless of who is in office, yes, the IRS’ activities are influenced by the White House, Congress, and Senate but that doesn’t change the fact that in a basic sense, taxation, for the most part, can be avoided.

Here is a stackable nugget of what I have learned thus far which has helped me legally reduce my tax obligation year over year, while never having to sacrifice my lifestyle to accomplish it.

The Government does not like you flipping anything, houses, apartments, businesses, whatever…they want you to earn in streams of income, not piles.

The Government wants you to provide housing, not buy and flip it and by doing so decrease affordability.

The Government these days wants you to invest in renewable energy sources, soon, expect the tax benefits of investing in oil and gas to be reduced or 67disappear.

When you generate piles, they are easy to see and discover, yet nobody is looking for streams to steal.

Many say that taxation in and of itself is a crime.  So if you were a criminal looking to steal money, wouldn’t you gravitate towards looking for the easy to see and easy get piles to steal from? Of course, you would.

I’m not suggesting you hide income from the government, they will find it eventually so why hide it, instead, structure your affairs such that you mostly earn streams, and can turn piles into streams.

For Sale By Owner Properties are overpriced

Properties sold by wholesalers are overpriced

Bank Foreclosures are overpriced

Listed Properties are overpriced

ALL off-market properties are overpriced and actually “on market” so stop saying off-market people

All contractor bids are too high

All Real Estate Commissions are too expensive

All Lawyers are too pricey

All closing costs are too costly

All Lenders charge too much in fees

All Banks charge too many fees

Income Tax is a Ripoff

Sales Tax is Theft

Property Tax is a scam

All Cable bills are too costly

All water bills are ridiculous

All electric bills are feeding a monopoly

All new cars aren’t worth what they are asking

All Hotels aren’t worth the nightly rate

All meals at fancy restaurants are price gouging

Mixed drinks sold at a bar are a rip-off, the price of a cold beer is crazy…

Regardless, each and every one of us buys or pays for these things each and every day of our lives.

Look at the property anyway, find the value, if there is none then go look at another.  Either way, if you allow the price of something to stop you in your tracks you will never cover any ground, you will remain stuck.

Listen in for some great tips on how to discover opportunity regardless of the “asking price” of an asset.

Many years in sales taught me to avoid scripts if at all possible so I could better craft the meeting into a more conversational style.  I did not want to risk sounding like a robot, instead, I wanted to build rapport and ease into the conversation so that I could learn what I needed about the seller and their pain points without sounding like a lawyer in a cross-examination.

As a result of learning to get better at talking with sellers, I created my property information form.  I looked at tons of examples I found on the internet and took bits and pieces from each one in order to craft one that best fit my needs.  In fact, I still use the form to this day in each and every Seller encounter.  

To obtain a free copy of the form visit my website at CashFlowGuys.com and click on the resources tab for the download link.

In case you’d like to watch the video on YouTube, here’s the Link: https://youtu.be/iepZC3HdS8E

The video was about the coming proposed changes to the CFPB’s policies as they relate to mortgage forbearance.  The CFPB (Consumer Finance Protection Board) is concerned that in the coming months we could slip into a major foreclosure crisis spawned from the mass number of mortgages that will be exiting forbearance very soon.

Here is a link to the proposed ruling: CFPB RUling

Currently, there are approximately 3 million Loans in forbearance

1.7 million of those mortgages need to start getting repaid (forbearance expiring)

In short, their short-term proposal is to force loan servicers (lenders) to extend a borrower’s mortgage by as much as 40 YEARS. (480 months)  That’s 40 years ON TOP of the remaining time you have on the mortgage.

It flat out says the borrow if affected by covid has a RIGHT to a 40-year extension.  

The proposed policy change also suggests no foreclosure filings allowed until Dec 2021.

This is a very unique situation, after playing the audio from Meet Kevin’s video I break down what he said and hopefully provide some insight that will help you see the bright side of this situation as it pertains to us real estate investors.

Every minute of everyday people incorrectly spell things when listing items for sale.

Find those items and you will find motivated sellers.

This could be on eBay, Amazon, Facebook Marketplace, Craigslist, Offer Up or other online sales sites.

Here are some examples of things I have bought at a huge discount because the ads were misspelled or miscategorized or under-advertised and then sold the items at a huge upside after marketing them properly.  By under-advertising, I mean limiting exposure to items for sale, being lazy, not telling the world.  This is a common mistake that Realtors and House Flippers make.

I bought 6 sets of Halcyon Technical Scuba Gear being sold by a fire department on eBay.  All new and unused, no idea why they were selling, frankly don’t care.  The seller spelled Halcyon wrong so nobody bid on the auction.  The starting bid was $500.  I was the only bidder and won the auction for the opening bid amount.  ONE set of the gear was worth $1,900 alone.  I sold five sets for $1,500 each for a total of $7,500 and kept one set for myself that lasted me 15 years without fail.

I once bought an FSBO property back in the old days when buyers and sellers were allowed to communicate and be in the same room..imagine that…

In a casual conversation with the seller discussing what was next for her, she stated she now needed to get rid of her other four houses she had inherited.  Had I asked this question sooner in the buying process we could have been closing on 5 houses instead of one.  It turned out that the day before closing her niece announced that she was getting her real estate license and she promised her the chance to sell the homes on the open market so she could get the experience.  Needless to say, I lost out on 4 more listings and my client lost out on a couple more great deals.  And YES, I tried everything I could think of to sway her towards selling now instead of waiting to later to no avail.

Back in the late 90’s I was walking through a parking lot behind a thrift store and noticed a bunch of golf clubs and bags leaning up against a full dumpster.  Inside the dumpster was loaded with baseball equipment, bats, batting helmets, catcher gear, and more golf clubs and bags.  I walked back home, got my truck, and unloaded that dumpster by hand into my truck in two trips.  My total take on that adventure was $21500 in sales with ZERO inventory costs.  It turned out the thrift store manager did not think used sporting goods would sell very well and he did not want to take time to clean the germs from the helmets, pads, and golf club grips (he was a germaphobe).  Over the next 6-8 months I went back to that dumpster twice a week at night before the pickup day to restock my inventory.  I wound up making an additional $50,000 from that same dumpster for a grand total that exceeded $72,000.

Every time you see something that someone else does not want ask yourself this question….How can I make a decent profit from this item in a short amount of time with minimal effort?  Who do I know that would value this item or items more than me?  What specific steps can I take to find and notify that person that my item is for sale?

Here’s the bottom line, there is an opportunity is everywhere around you.

A CONVERSATION ABOUT PERCEIVED VALUE:

A customer asked a contractor friend of mine how much it would cost to do this project. 

My friend gave him a proposal: $4500

The customer responded: That seems really high. 

My friend asked: What do you think is a reasonable price for this job? 

The customer answered: $2500 maximum

My friend responded:  Ok, then I invite you to do it yourself.

The customer answered: I don't know how to.

My friend responded:  Alright, then how about for $2500 I'll teach you how to. So besides saving you $2000, you'll learn valuable skills that will benefit you in the future.

The customer answered: Sounds good! Let’s do it! 

My friend responded: Great! To get started, you are going to need some tools. You will need a chop saw, table saw, cordless drill, bit set, router, skill saw, jigsaw, tool belt, hammer, etc..

The customer answered: But I don't have any of those tools and I can't justify buying all of these for one job.

My friend responded: Ok. Well then for an additional $300 I can rent my tools to you to use for this project. 

The customer answered: Okay. That’s fair.

My friend responded: Great! We will start the project on Monday. 

The customer answered: I work Monday through Friday. I’m only available on the weekends. 

My friend responded: If you want to learn from me then you will need to work when I work. This project will take 3 days so you will need to take 3 days off work. 

The customer answered: That means I’m going to have to sacrifice my pay for 3 days or use my vacation time! 

My friend responded: That’s true. Remember, when you do a job yourself you need to account for unproductive factors. 

The customer answered: What do you mean by that? 

My friend responded: Doing a job completely from start to finish includes time spent to plan the project, pick up materials, travel time, gas, set up time, clean up, and waste disposal amongst other things. That’s all in addition to the actual project itself.  And speaking of materials, that’s where we will start on Monday so I need you to meet me at the lumberyard at 6:00 am. 

The customer answered: At 6 am?!! My workday doesn’t usually start until 8 am! 

My friend responded: Well then you’re in luck! My plan is to start on the deck build by 8 am. But to do so we have to start at 6 am to get materials picked up, loaded, and delivered to your job site.

The customer answered: You know, I’m realizing that a lot more goes into a job than what a customer sees in the finished project. Your proposal of $4500 is very reasonable. I would like you to handle the project.

CONCLUSION:

When you pay for a job, especially a custom job, (whether it’s a physical project or digital project) you pay not only for the material and the work to be completed. You also pay for:

✔️ Knowledge

✔️ Experience

✔️ Custom Skills

✔️ Tools

✔️ Time to plan

✔️ Time to prepare

✔️ Professionalism 

✔️ Work Ethic

✔️ Excellence 

✔️ Discipline 

✔️ Commitment 

✔️ Integrity 

✔️ Taxes

✔️ Licenses 

✔️ Sacrifices 

✔️ Liabilities 

✔️ Insurance 

If you request a proposal for custom work to be done, please don’t disrespect a service provider by trying to get them to lower their prices. 

If their proposal exceeds your budget, there’s nothing wrong with getting other proposals. 

Just remember.. you get what you pay for. 

👉🏼 SERVICE PROVIDERS: Know your worth and be confident in it.

👉🏼 CONSUMERS: Recognize their worth and be respectful of it. 

Sharing this to support all my friends, family, and clients who are Entrepreneurs, Business Owners, and tradesmen.

Less successful people focus only on the deal or the potential profits.

In this episode, I discuss the five most common examples of Real Estate Malpractice and how to avoid them.

If you are able to avoid these pitfalls and learn why they are pitfalls, you will virtually eliminate any competition you might have in the marketplace.

Always remember that your beliefs and needs are not identical to the seller’s beliefs and needs which means to understand the seller’s problem, you have to get good at asking questions.

How do we get good at asking questions that are easy to answer?  We practice and learn by doing.  Listen in this week and add another set of tools to your investor toolbox.

When I first started marketing, I quickly learned that leads of any kind don’t come for free, so I had to be careful to be sure I did not waste them.  By wasting a lead, I mean underestimating the value of a lead and therefore not putting much (if any) time into reaching them with my message.

Honestly, I didn’t think much about the value of one lead over another.  I mistakenly thought that all leads were the same and therefore had equal value.  Soon, I realized how wrong I was about the lead evaluation process and it was then that I found out that I was throwing money away (literally, in the trash)

When using direct mail in your approach it's common to get returned mail back when your mail piece cannot reach the seller.  This of course only happens if you a sure to include a return address on your mail piece (using a return address on your mail pieces is a golden nugget, you’re welcome).

Over the years I have met thousands of investors from all over the world.  I often ask those who use direct mail what they do with the mail that comes back undeliverable.  I can honestly say that over 80% of the people I have asked this question to have told me that they remove the bad addresses from their mailing list and discard the mail piece.

That’s it, in the trash it goes!

Please know that the tougher it is to locate someone the better the lead quality is.  That’s because most of any competition you might have will give up at the first sign of difficulty in reaching the hard-to-find seller. 

Think about the sheer number of people that talk about wanting to invest in real estate, buy the books and courses and never take any further steps.  The majority of people who want to be investors simply quit at the first sign of hard work.  The same is true for most things that lead to financial success.

This reminds me of a situation that is going on right now with one of my students.

He just did a mailing to his list of motivated sellers and received a handful of them back as undeliverable.  Taking my advice, he decided to skip trace those returned postcards to see if he could find a better address to mail his postcard to.  The seller had an uncommon name so he began the search by using good ole’ Google to see what he could find on the person.  Low and behold it turns out the seller was arrested for committing a double murder and is currently serving two consecutive life sentences for his crime.  Needless to say, my student now knows where this seller can be found literally for the rest of his life.

Most investors upon hearing this would turn and run the other direction, but not my student, he is working through the problem until he can have the opportunity to sit down in front of this seller and begin to help him solve his real estate problem.

Imagine looking through bulletproof glass sitting face to face with a cold-blooded killer! Worse, imagine negotiating the sale of an apartment building with one!

The reality is that he has found a seller with a problem that likely needs a very unique solution.  This ladies and gentlemen, THIS is how creative deals are born.

So far, he has used his Propstream account to search the property’s public records and recorded documents that the mortgage is current.  Further searching on Propstream revealed his lawyer recently filed a Lis pendens on the property which we imagine is a strategy to use the property as collateral towards the payment of legal fees of defending the client who is now in prison.

In speaking with the prison officials, he was told that in order to visit the seller in prison he would need the seller’s authorization to accept his visit.  The next step is to begin writing letters to the seller in prison so that he helps him see the benefit of accepting such a visit.

Stay tuned for updates on this real-world true story.

Yes, I am still living in the Florida Keys, however, I have a real estate team in the Tampa, FL, and Key West Markets now.

I often find it shocking how easy it is for Realtors to kill deals for their clients and for themselves.  I thought I’d bring value this week by educating you on the most popular way Realtors are blowing it this year.

For those of you planning to buy in 2021 or ever again this applies to you. If you ever plan to sell any real estate of your own in the future this topic also applies to you.

Granted, if I was to discuss every way Realtors, Buyers and Sellers kill deals this would turn into an 80-hour audiobook instead of a podcast.

Tons of buyers are shopping before being sure they are fully qualified for a mortgage.  Clearly, if you are using 100% cash then this won’t apply to you.

This week I have had several instances of this happening. 

I believe every Realtor should know this already but since this week proves they don’t I’ll share with you what I mean about this.  It’s always a bad idea to show houses to people who have not proven they are approved to buy such a house, here is why.

• The Buyers fall in love with a house and later find out that their lender can’t get them approved for the mortgage due to credit or income issues. Make no mistake, buyers will fight Realtors tooth and nail on this because everyone is eager to go house shopping but your time is being wasted if there is no preapproval.
• Lenders sometimes give preapprovals that are useless. What do I mean?  I mean that the lender hands out a boilerplate approval letter (the same as they give to everyone) without first checking the buyer’s credit and verifying their income.  I’m not sure if they do this simply because they are lazy, or maybe they think the buyer is more likely to be loyal to them if they “think” they are approved quickly.
• When a buyer goes under contract on a home, the next step is usually to get a home inspection and termite inspection (the latter is more common in the south). Next, an appraisal is ordered which means by knowing the buyer has forked over around $700 to $1,000 to have these services performed.  There are no takebacks or refunds if they later find out they can’t qualify for a mortgage on the house.  If it’s a commercial property the bill is significantly higher.

Before you go shopping for any real estate, be clear on how you intend on paying for it.  There’s nothing worse for a seller to take their home off the market only to find out a month later that the buyer is not qualified to buy it.  Lost market time can crush a seller’s equity and even destroy another deal they might be working on if they needed to sell in order to close on the next purchase.

If you are raising private money, you should have more than one financial friend to work within the event the first investor or two flake out. 

Consider closing on the concept with several financial friends.  By closing on the concept bring them up to speed on the particulars of your deal, how you intend to proceed, and then simply probe for their buy-in.

Lastly, always offer a seller the option to accept payments for their equity.  Notice how I said that, instead of saying “seller financing” which terrifies most sellers, dumb it down to say payments for their equity.  This is because technically, the seller is NOT loaning you money, therefore they are NOT financing you.  Instead, they are simply accepting payments for their equity.

2,056,000 mortgages are considered seriously delinquent (which means over 90 days past due)

Only 5% are in forbearance

That means that there is a title wave of defaulted assets building up looking for a shoreline to destroy.

What does this mean for you?  MASSIVE OPPORTUNITY!

When the title wave hits it will be epic, beyond imagination and that’s not a conspiracy theory...that’s a fact!

The Federal Government will likely extend the foreclosure ban when it’s up for renewal in an effort to plug a leak in the dam that’s only temporarily holding back the water.

It doesn’t really matter whether you are for or against the foreclosure ban because it’s already happening, and there is nothing you can do about it, except PROFIT!.

The mounting debt that is late mortgage payments won’t simply disappear.

There will be no flick of a pen to put cash in the accounts of lenders, especially on privately held mortgages.  Big banks will likely get bailed out again but note investors could get wiped out.

How does this spell opportunity?

For starters, mortgages that originated in the last several years were likely written at very low-interest rates.

In the lifetime of any mortgage, the value of the property that secures it will rise and fall and rise again, that’s undeniable.

Origination is the most expensive part of a mortgage for the borrower, after that it’s just interest and principal payback provided it’s paid on time.

Let’s compare it to buying a new car versus buying a used car.  When you buy a new car it’s estimated that it loses 10-20% of its value the very second you pull it off the lot.  

Much more is lost if your negotiating skills are lacking or you become desperate to sell it.

When you buy a home, it’s common to pay thousands of dollars if not tens of thousands of dollars for closings costs and commissions for all the support staff used to find, fund, and close the transaction.

That money, once spent, is often considered gone forever unless the buyer waits for the property to appreciate to a level that absorbs those closing fees.

As an investor, when you buy a property from a motivated seller you can often secure a significantly discounted price and save a small fortune if you buy with cash or private money.

By private money I don’t mean the typical hard money loans you hear about at your local real estate meeting or club, I’m talking about financial friends you assist in funding your purchases for the long term in order for them to capitalize on a much longer-term gain than is typical with other types of structures.

You can also “take over” the existing mortgage by buying the property subject to the existing mortgage.  

Buying a property “subject to” means the underlying mortgage stays attached to the property and in the seller’s name.  The deed is transferred into your name which means you own the property but the seller’s lender has a lien against it in the form of a mortgage.

Provided you stay current on the loan, it’s likely you can simply make payments until paid in full with no issue.

Here’s a great time to hire a Real Estate Attorney that’s well versed in the process to assist you in preparing the contracts and disclosures necessary to inform the seller of how things are going to happen.

Here’s an example of what I mean:

Jimmy bought a house 4 years ago for $300k and put 20% down resulting in a mortgage in the amount of $240,000 which has a payment of $1,145.80 plus taxes and insurance.

He is having a tough time keeping up with his mortgage, in fact, he is 90 days past due.

Like most Americans, Jimmy doesn’t have $5,000 laying around to get caught up, and each month it gets worse.

Today the payoff would be approximately $222,000 if you bought it today.

Assuming the property appreciated 10% per year, that would mean the property is now worth $439,230.

This means that over $200k net profit is a reasonable event after paying commissions and fees.  The only question that remains is, how much of that $200k are you willing to share with Jimmy and your team?

Skipping this one detail could cost you thousands of dollars and possibly result in you losing ownership of the property you intend to buy.

I am talking about the details found in your title insurance commitment, precisely the info found in section B 2 of the commitment where exceptions to title insurance coverage are listed.

Before we dive in, I’d like to briefly explain what title insurance is and why you need it.

Title insurance is designed to protect a buyer of real estate if any past issue relating to the marketability of title has been overlooked over the entire history of ownership for that particular property.  

Title insurance only protects you in the event of PAST title issues, not future ones.  It’s designed to protect you from problems that may arise from things that happened before buying the property.  

By the way, when I say “property,” I mean any real estate where ownership transfers whether it be residential or commercial, vacant land, whatever.

What’s an exception? An exception is a specific item set forth that is not covered by the policy, which is excluded from coverage. STANDARD EXCEPTIONS. 

Every commitment has standard or regional exceptions. The traditional Owner's Policy will not cover any defects in title, losses, or claims, which fall within the standard exceptions.

Here are some examples of standard exceptions found on title insurance commitments:

• Municipal Liens (for things such as water, sewer, garbage service unpaid bills)
• Assessments for Water, sewer, streetlight, drainage, or other types of improvements arranged for by your local government.
• Unpaid Property Taxes
• Federal Tax Liens
• Court Judgments
• Foreclosure Proceedings
• Fines
• Rights of tenants as about specific unexpired lease backed rights
• Encroachments
• Boundary Issues
• Restrictive covenants such as deed restrictions or other restrictions that pertain to the use of the land
• Child Support Liens

Please note that the actual value of any property, regardless of use, lies in the marketability of its title.

To get a copy of a free cheat sheet put out by First American Title, go to cashflowguys.com/title

If you buy any real estate piece without first obtaining Title Insurance, you are taking a huge risk!

In many cases, if you buy a property from a wholesaler with a double close, you will not receive title insurance for the purchase, meaning you are entirely uninsured against issues from the past cropping up and ripping you off.

In a perfect world, your Realtor should be reviewing the title commitment with you if you are buying a property.  

If you are not working with a Realtor, then understand that the title company or closing Attorney is usually NOT required by any law (per se) to review these items with you or to call your attention to them. However, they must provide a copy to you, often buried in a mountain of other documents.

Sometimes these issues will prevent a lender from originating a new loan that uses the property in question as collateral.

If issues are found and NOT listed as exceptions to coverage, the title insurance policy will pay for legal expenses and any other related expenses to correct the title issue if it impacts the marketability of the title.

When reviewing this document before closing, you can see that the title company and seller clear all the exceptions before closing.  

Once the issues are corrected, be sure to either have a replacement title commitment created or insist that the one with the problem documented be “marked up” and signed off by the title closing agent/attorney.

Once the item has been either removed or marked upon the commitment, you will have insurance protection if it comes up again as it relates to the marketability of the title.

Before we get started….

I’m NOT a CPA or Tax Professional; the info herein is my opinion...wait, why do we say that?  What has ever happened to a non-CPA giving advice?  I have no stories to tell on the topic...if you do, email info@cashflowguys.com because I’m curious

A 1031 exchange is a legal vehicle for deferring capital gains taxes. By electing 1031 exchange status when selling one property and investing in other investment properties, you get spared from capital gains taxes. (temporarily)  Why?  Because those taxes are deferred, not excused or forgiven…

To get the facts on the 1031B program right from the Internal Revenue Service, go to irs.gov and search 1031 for further details.

Let’s talk about deferment for a minute... 

At the time of this recording, the US Debt Clock shows our current debt at almost 28 trillion dollars.  Our elected bottom feeders are about to add 1.9 trillion dollars to that in the next 30 days.

This means the US debt is spiraling out of control, how will we ever stay afloat as a country?  Only one way...TAXATION!!

Do you honestly think that taxes will EVER go down in the future?  Spoiler Alert, they won’t, in fact, they can’t.  So, if taxes are only going to increase over time, why would you want to defer your tax obligation to a future time when taxes are higher?

The second thing to think about is the impact of being rushed on your decision-making ability.  In order to complete a 1031 exchange, you have to designate the replacement property or properties within 45 days.  Do you honestly think 45 days is enough time to find, negotiate and go under contract on a great deal?  No..

Likely, because you lack the time to do so, you will wind up buying out of desperation to “just get a deal done” while the clock is ticking.  Below we will get into the math..

By the way, “designating the properties” means a notice to the seller of each designated property.  The seller will need to sign the notice (according to the IRS.gov website).

That’s not much time to put a deal together no matter what the economy is doing.  

Is it easy to overpay when you feel pressured to make a decision?  Yep

Head over to IRS.gov and search form 8824 and download the instructions, there is lots of good info here that you should discuss with your tax professional before proceeding.

Let’s talk math for a second.  

Using a capital gains calculator I found online, I entered the following information:

Original Purchase Price: $150,000

Sale Price: $250,000

Annual Income of taxpayer $150,000

Filing Status: Single

Capital Gains Tax: Approximately $16,900 (married taxpayer would have a slightly lower number)

Have you ever lived there?  This is what the IRS says about that ”If the property given up was owned and used as your home for at least a total of 2 years during the 5-year period ending on the date of the exchange, you may be able to exclude part or all of any gain figured on Form 8824. For details on the exclusion of gain (including how to figure the amount of the exclusion), see Pub. 523, Selling Your Home.” 

If You Choose to go the 1031 route…

Step 1 – Find a 1031 Qualified Intermediary

Like self-directed IRAs, you are required to use a qualified third-party provider to get the break from the IRS. They will help handle everything for you. 

Step 2 – Identify The Properties You Will Buy

Upon the sale of your assets, you have 45 days to identify what properties you will reinvest in. Not that you can locate multiple properties. You don’t have to close on them all.

Step 3 – Close On Your New Assets

After closing on the sale of the properties you are exiting, you have 180 days actually to close on some of the deals you have identified. Note that you can also use your funds to improve or even build new properties.

If you own income property as I do, such headlines certainly don’t help us sleep well at night, do they?

Some of the people I have talked to recently are thinking about dumping their portfolios.

Others are talking about allowing leases to expire and just keeping the units vacant until this blows over.

Many buyers are beginning to second guess their decision to make a purchase until this blows over.

Frankly, I think it's a great time to buy because never before have we had times so uncertain.

Uncertainty breeds motivation in sellers.

The biggest future challenge for buyers will be in obtaining institutional financing as lenders will likely pull back from lending on income properties.

Now is a good time to hone your capital raising skills, you can do that at PrivateMoneyCrashCourse.com

The eviction ban only applies to a portion of the population which seems to exclude many tenants who think they may be covered under this ban.

Be proactive in open communication with your tenants in the event they fall behind.

Yes, there will be a percentage of “Professional Tenants” that will try to use this situation to their advantage, but I feel that percentage will be a minor one.

Recently, rental assistance stimulus has been passed and is available in many areas.  If you have a tenant falling behind i’d get up to speed on how you can apply on behalf of your tenant to get paid.

Getting up to speed begins by calling your local state HUD office to get the ball rolling.

Please know that there is TONS of misinformation out there to intentionally worry good people in times of financial crisis.  Avoid news websites, or any other non-official government information source when it comes to learning about the programs and how your tenants can qualify.

Let’s not forget that this crisis is not impacting everyone equally which means there are still lots of good quality tenants out there that are ready, willing, and able to pay your rent.

Now is a great time to access the value you are providing to your tenants.  It’s more challenging to intentionally screw over a good person, so be a good person and be sure you are providing more in use value than you are taking back in cash value.

When talking to sellers, go ahead and bring the topic of eviction bans up in conversation and discuss it.  A polite conversation about this topic can serve to motivate a seller even more than they already are to unload their rental property sooner rather than later.

Although there are differing opinions on what is considered turn-key, it generally means that the purchase, rehab, and management as a rental is done by a third party instead of the individual investor having to do everything.

While for many it's a realistic way to get your foot in the door to the world of investing the end results are often less than exciting.

Ease of Acquisition: 

Most people have a tough time putting deals together, they don’t have the time or desire to work their own seller leads.  To buy a turnkey rental you simply place a deposit and wait for your turn.

The easier something is to buy, the more people are generally willing to pay for it. 

This means that turnkey providers can often pack a hefty profit into each deal for themselves because people love the done for you model.  Such a practice means skinny margins for the end buyer.

Proforma Returns:

Turnkey providers often use proforma documents to outline the expected profits from owning the property they are advertising.  It's important to note that these numbers are rarely ever achieved and the actual returns are often considerably lower.

You should do your own independent research to double-check the expected returns as advertised by the provider.  Call three property managers and ask them what the rent amount should be based on the specific address you are thinking about buying.  Ask them if they would manage it and how much they would charge.  Also, ask them if they would feel comfortable replacing tenants if the need arose in a reasonable time frame.

Be sure to check each expense to verify its accuracy, often what’s listed is an estimate, sometimes it's just a guess.

Repairs and Rehab:

Always get a home inspection done, even if the property was freshly renovated.  Having a third party licensed home inspector to double-check everything and provide a report is a worthwhile minor investment.  Expect to pay between $400 to $600 for a home inspection on a single-family home.  Multi families will cost more and are usually priced per unit.  The inspector will be able to check and report on the electrical system, plumbing, HVAC, Roof, and overall condition of the property.

After receiving the inspection report, be sure to have the provider take care of any needed repairs BEFORE closing, especially safety items such as those that involve electricity, gas, or structural issues.

Summary:

Turn-Key Rentals can be a good investment for those who lack the desire or skill to go at it themselves.  Because more people are involved in the acquisition lower returns should be expected but some return on investment is much better than no return on investment.

Doing nothing will lead to your nest egg being consumed by inflation as time move on, don’t get caught up in that.

Putting out an offer too soon can often lead to instant rejection.

Putting out an offer too late may cause the seller to think you are a tire kicker.

Sellers often want us to make an offer as soon as possible, why is this?

The urgency to receive your offer usually is because of one or two reasons, they are nervous about the selling process and want to get it over with as soon as possible OR because they suspect you might just be wasting their time.

Have you ever been concerned about saying the wrong thing to the seller and upsetting or offending them?

Does the thought of not knowing what to say to a seller make you a bit nervous?

Everyone says to build rapport with the sellers, heck, I teach that too, but I realize it’s a huge challenge to build rapport with a stranger these days.

Social Media, The Pandemic, and just plain everyday society make it more challenging than ever for many people to build relationships these days.

In recent years humans have grown to be far more skeptical than ever of each other.

Some gravitate to communicating via text messaging so they can avoid being face to face or having to speak spontaneously.

Others use social media as a means to communicate.

It is helpful to understand that being shy doesn’t begin and end with buyers, it’s a real issue amongst sellers too.

Fear of confrontation and shyness is a huge part of why many homeowners hire Realtors to sell their homes for them.  For many, it’s worth paying tens of thousands of dollars to avoid a potentially uncomfortable experience.

So how do we overcome these issues?

One word….TEAM

Sales skill is not inside of each and every human, it’s a rare breed that has the skill and enjoys the process.  Some people jump out of airplanes for a thrill, others? (people like me), we SELL!

If you are not a Rockstar salesperson and feel you would not enjoy learning how to become that Rockstar, join forces with someone who IS a great salesperson.

A great salesperson knows exactly when it is time to make the offer and close the deal.

Why waste time learning a skill that you likely will never use and will ultimately make you feel uncomfortable in attempting?

By bringing on a salesperson or “acquisition manager” you will garner far better lead conversion results than you could ever expect to achieve on your own.

I know you might be thinking but wait! I can’t afford to pay a salesman right now.  I have good news for you, a Rockstar salesperson does not expect to get paid until they close a deal.  This means you can compensate them for the deal itself.

Compensation can come in the form of a cash payment at closing, it can even be financed into the deal sometimes!  Wait, what? 

Rabbit Hole Warning!

Financed into the deal?  Yes, you can pay out to vendors in a deal at the closing table by simply adding the amount of the payout to the sales price and then having the payout listed as a disbursement at closing.  As long as the property appraises for the revised sales price if using a bank loan then everything should work fine.  It wouldn’t hurt to keep your loan officer/processor in the loop as to your intent so there are no “gotcha’s” to sneak up in the final hours before closing.

You can bring your salesperson in on the deal and pay them a portion of the net monthly cash flow.  You could pay them a lump sum amount of future appreciation in a specified time frame.  I have paid vendors using a note and mortgage recorded against the property for collateral and then made monthly or annual payments to them.

Want to dive deeper into this topic?  Then dig in by listening to this week’s episode.

Instead, when compiling a list of people to market to, deep dive into the available criteria to come up with a formula that will lead you to discover motivated sellers.

As you might imagine, motivated sellers are more receptive to selling at a discount and also are far more likely to seriously consider creative acquisition solutions.

Something as simple as choosing to market to vacant properties instead of occupied ones can make all the difference in the outcome of your marketing campaign.

I also announce the names of the two winners of the one-year free subscription to Propstream.  Don’t miss this episode there is lots of value.  If you want to sign up for a 7-day free trial to get motivated seller leads, go to CashFlowGuys.com/Data

Nothing good comes from reflecting back on the drama of 2020.

There is no need to look back on your past, instead, let’s get focused on the changes we can make moving forward to better ourselves and those around us.

 If you have bad credit or low credit as some say, start paying your bills and correct the situation.

Call your creditors and work out a resolution.  If you can’t work through this one problem I guarantee you will fail as a real estate investor because you will certainly encounter greater challenges as an investor than negotiating with creditors.

If you are saddled with credit card debt, stop using them today and begin paying them off as fast as possible.  Dave Ramsey teaches Financial Peace University which will make it simple to get out of debt if you are willing to do the work.

If you are under-earning, stop overspending and focus on earning what you are worth.

If you are not earning what you are worth, change jobs, change careers or work more hours to get out from underneath the grasp of your creditors.

You can fix your own problems, that begins with admitting you have a spending and/or earning problem.  Please stop lying to yourself.

Do not leverage the equity in your home, it’s a trap that could leave you homeless.

Learn how to raise private money instead.  If you refuse to learn how to raise private money you will most likely fail as a real estate investor because banks only loan money to people who do no need it.  Closing costs alone will greatly reduce and profits you hope to make in the first few years.  Don’t leave your financial future to be decided by some salaried loan officer making chump change as an annual salary.

If you are about to do a deal, will it pay for itself?  Are you taking the opinion of those who stand to benefit by you proceeding with the deal?  Sellers Lie, Realtors Lie, Wholesalers Lie...facts are facts so verify everything.

Embrace the idea that you MUST generate motivated seller leads to survive.  Nobody will bring a great deal to your front door ever, instead you will need to go out and seek motivated sellers.

There is no such thing as a property that is priced right.  Everything is overpriced, always has been always will be so stop looking for a “great deal” to be advertised.  Finding a great deal has nothing to do with the asking price.

Sellers, Realtors, and Wholesalers are not appraisers.  Also, the appraiser’s opinion of value doesn’t really matter either.  What matters is knowing if the property will yield the profit margin you believe it will, if not, you are not done negotiating.

Don’t guess about anything in 2021.  Don’t guess as to why someone is selling, ASK

Don’t try to guess what number a seller will say yes to...talk to them instead.

Remove as many middlemen from the equation as ethically possible.  That doesn’t mean you should go around Realtors or wholesalers who have a written agreement with a seller, instead, market directly to non represented sellers yourself and filter them down such that you only speak to the non-motivated ones.

The Bottom line is that 2021 can and will be your best year ever.  For that to happen, you have to give yourself permission to fail and continue to fail until you succeed.  You know right from wrong, you know what’s logical and what’s not.  You don’t need to invest tens of thousands of dollars into education to buy an investment property, instead, apply basic logic and you will far exceed your expectations.

Aunt Suzy doesn’t know…

Social Media Lies...

Brokers Lie...

Wholesalers Definitely Lie…

So who’s opinion do you trust on when is a good time to buy?

How about your own?  When the numbers make sense and allow for a reasonable profit, then buy!

For Rentals: Income minus expenses equals cash flow, if the end result is not acceptable to you, offer less for the property.

Yes, you must allow for greater vacancy AND the time it takes to find well-qualified tenants who are financially secure. 

Yes, you must figure in the cost of management because it’s a legitimate expense, even if you are brave enough to self manage.

For Flips:  If the After Repaired Value (Verified by an appraisal) does not offer a significant profit after deducting the purchase price, repairs, and holding costs...don’t buy.

Make your flip offer subject to an acceptable appraisal.

Forget about what “the market” is doing or not doing….do the numbers as you see them today..make sense?  Will this property offer a fair and reasonable profit at the current purchase price?

Don’t fear getting turned down, it’s part of the process.  Hearing “No” is a good thing, it means you are taking action.  After enough “No’s” the “Yes’s” will come

How you might ask?

By finding motivated sellers and marketing to those sellers right under the noses of any Realtor or Investor competition I might think I had.

Here is how my day went...wakeup at 0630, make a cup of coffee, and get outside on the porch to experience the rising sun and calm surroundings.  I read the Wall Street Journal so that I can stay up to date on what’s happening in the world as it relates to financial markets and the psychology of the consumer.

After all, while many people try to lie to themselves about how they are “not a salesman”, I wear that title as a badge of honor.  I am also a savage marketer...embracing it is what made me wealthy beyond my wildest imagination and what allowed me to retire to the paradise of the Florida Keys.  And for that, I make no apology.

For me to earn any money at all, I first need to find problems to solve...that meant I needed to find two things, motivated sellers and money to invest with.

Finding money to invest wound up being much simpler than I originally thought it would be.  So simple I made a crash course on the topic to show you how to raise all the money you need the easy way, without a big song and dance.  You can grab that course for a whopping $47.00 investment at PrivateMoneyCrashCourse.

See what I did there?  I make no apology...if you want to watch the sunrise in paradise, spend the $47.00, do the work, and move in next door.

Back to my day….

At 10 am I figured I would be productive since my fishing reels won’t be ready at the repair shop until 1pm.  I decided to put together a list of motivated sellers to market my services to.  As a Realtor, I can either buy their property myself or help them sell it...either way, I make money and get to help them solve their problem.

So...I pull a list in my local zip code of pre-foreclosure properties.  I click list Automator so that if any of these sellers work out their financial situation and are able to escape foreclosure I don’t waste their time or my money marketing to them.  Notice I did not mention the waste of my time?  That’s because finding them took me less than five minutes.

I then skip trace them within my system (learn more at cashflowguys.com/data where you can get a free trial and possibly win a whole year of the service for free).

Now that they are skip traced I have the seller’s mailing info and name, a phone number, and an email address to work with.

Next, I invest 15 minutes in creating a landing page for sellers who choose to go online to communicate with me.

Now I go over to the campaign section, find a “done for me” postcard from the list of options and send it to 747 contacts in my database.  This part took 12 minutes. It’s now 10:27 am and I am literally marketing myself to 747 people as often as I want for less than the cost of a dinner for two.

If I want to go crazy and hit them by direct mail, email, AND phone?  I can record a one-time voicemail in Propstream and send it off instantly to all 747 people for less than I will spend buying lunch today.

This all begins as CashFlowGuys.com/Data what are you waiting for?

Never before has our country been more divided.

One thing that we can all be sure of is that we will certainly see lots of change over the next four years.  Some will despise the change, others will embrace it.

Here’s what really matters...Your future success depends on your ability to make lemonade out of lemons.

Yes, we will see radical socialist agendas being pushed down the aisle and likely made into laws that favor tenants over landlords.  The good news is that it takes time to pass new laws which will allow you (the landlord) to prepare for compliance or allow you to sell and buy somewhere else.

Eviction moratoriums will likely be extended, if this impacts you, learn the law because you might be surprised to hear that there are exceptions to this ruling.  If you have non paying tenants, go talk with them, and discuss solutions.  

Our country will likely continue to see record unemployment as both small businesses and big businesses continue to fail.  Maybe now is a good time to get better focused on the steps you need to take to get out of that job once and for all.

As for being divided, focus on building bridges and mending fences with your political rivals.  Americas being divided was intentional by the system, they want us divided, lets show them we choose to take the high road instead and come together.

Federal stimulus money seems to have dried up due to back and forth fighting between the republicans and democrats, when or if it will arrive is unknown.  If you refocus your energy on lead generation you won’t need any stimulus.

I know you might be thinking that lead generation is the farthest thing from your mind right not.  I’m here to tell you that there are people all over the place that are far worse off than you might be right now, and you can help them while making money at the same time.

In order to help anyone, you need to discover the problem properties in your community.  I have been using a new to me technology tool to accomplish just that.  With this tool, you will have both MLS and Public records data at your fingertips.

Go to CashFlowGuys.com/data to get a 7-day free trial.

You will be able to find pre-foreclosures, cash buyers, expired listings while having nationwide access to property records.  This software will help you work up rehab costs, find comps, and complete a market analysis without needing a realtor.  If you are a Realtor, this tool blows the MLS out of the water.

This is in part because many Americans feel that the opportunity to use lines of credit or to get loans to finance such purchases will likely go away soon or at least become more difficult to qualify for.  “Use or Lose” fear of loss feelings take over and cause some folks to buy even when it does not make sense.

The news is talking a lot lately about the potential for a second wave of Corona Virus.  Many news outlets are reporting that there are a looming eviction and foreclosure crisis that will certainly play a part in crashing our economy.

Uncertainty in the stock market has many investors taking to the sidelines by adopting a let’s wait and see approach.

All of these factors have an impact on the current real estate buying cycle.  Even non-investors are scrambling to buy anything that hits the market in hopes of locking themself in now by buying while they still can.

The most practical way to avoid being outbid is to buy what’s not yet for sale.

By this statement, I mean marketing to a specific audience that has a compelling need to sell, yet is not yet listed for sale anywhere.

Here are some examples:

Expired Listings

Lis Pendens Filings

Property Tax Delinquencies

Change Detection

Eviction Filing Records

Again, the best way to avoid being outbid is to situate yourself as the only available buyer by eliminating the competition. Tune in to listen to this week's episode to learn more about going direct to seller.

First, let me say I love the concept of solar energy, in fact, I have solar panels and a large battery bank installed on our motor home which allows us to remain unplugged as we travel the country.

I was originally intrigued by the concept of solar on my sticks and bricks property until I learned the downside of installing solar on a stick and bricks property.

I thought that it would eliminate the chance of power outages for my tenants, but quickly learned that’s not the case.  This is because of how the systems are required to be designed when installed on a traditional home.

The system is designed to harvest solar energy from the sun and feed it to the power grid.  The power company then monitors how much power your setup supplies and pays you in the form of credits to provide them with electricity.  They then provide your home with power from the grid but only charge for what you use that exceeds what you make and send them.

I was told by all four companies I spoke with that when I sold the property, it would be worth more because it has solar installed, this is FALSE!  In speaking with several appraisers I was told that installed solar systems do not have any impact on the value of a home.

One upside is that you can earn a tax credit for installing solar (more on that in the episode)

Since it offered no benefit during a grid down situation and was grossly overpriced by the install companies, I passed on the opportunity to install solar on my sticks and bricks properties.  I did however install the solar system on my motorhome and therefore received the 30% tax credit.  In the motorhome, it is priceless since it means we don’t have to go to RV parks any longer since we can generate our own power.

Tune in to hear the rest of the pros and cons as they pertain to solar on investment properties.

First, Allan Domb is a Realtor and the proposer of this new regulation, big shocker there.

This legislation would require a “Wholesaler License” and background check to look for fraud, dishonesty, deceit, or violation of ethics laws.  

This means that many wholesalers better change their tactics; clearly, there have been some antics happening in Philly to draw attention to wholesaling.  When you focus on finding houses for buyers and NOT buyers for houses (playing Realtor) you can avoid scrutiny

When wholesaling, make offers and not estimates of values, after all, your job is not to appraise the house, it’s to flip the contract. This new law is basically assuming wholesalers are misleading sellers about the value of their home, which is completely avoidable.  Instead of haggling back and forth on a purchase price, focus on only discussing the net proceeds to the seller, after closing costs and mortgages are paid (if applicable).  This way you are discussing a significantly smaller number which means less emotion on the seller side.  By discussing seller net, you are NOT discussing the value of the property, after all...only appraisers are supposed to guess at value right? 

Listen in this week as I dive into the nuts and bolts of these proposed rules. -Typical valuation tools do not allow for the condition of the property or the condition of title or circumstances surrounding the sale.  High risk means lower prices.

Before we get too ahead of ourselves, let’s review a few tips to make your renovation projects go smoother and avoid headaches.

First, Always use licensed contractors and be sure they have good reviews and lots of them.

Be clear on what the expectation is, prepare a specific statement of work.  This means you will list out each of the items to be completed by the contractor or vendor in a very specific way to include quantity, size, and color.

If anyone discourages you from pulling permits for a specific job be sure to interpret that as a red flag and NOT a money-saving opportunity.  This is a common gimmick by unlicensed people who pretend to be legitimate contractors.

When choosing colors, stay generic/neutral/ mainstream, don’t “experiment” or let anyone else do so on your behalf.  Be sure the colors you choose will appeal to the masses.  Wall paint? White / Off White or Egg Shell, avoid any daring colors. 

Hire a project manager with experience in renovations to keep an eye on the job, they should be checking on all of the vendors and even the GC if one is used.  This is especially beneficial if you are a long-distance investor.  Perhaps your property manager would be a good fit for this task.

Never pay in advance of work performed, ever.  Only pay as the job is completed.  You can set goals of progress and then possibly make small draws if absolutely necessary but still do your best to avoid these if at all possible.

Lastly, always begin with the roof.  If you are selling a home, the age and condition of the roof will be heavily scrutinized by the lender and the insurance company.  Know the age of your roof, if it has 5 years or less life in it, replace it.  There’s nothing worse than rehabbing a house and then have it all ruined by a leaky roof.  Well, maybe having a buyer be forced to back out of a contract over the roof would be worse, you decide.  

Why no check?  Because you failed to be sure the buyer was qualified to buy the property you were under contract to sell.

Failed closings happen every single business day all across America even though this is an easy to solve the problem.

Sometimes, irresponsible real estate agents fail to insist on earnest money deposits from buyers and their agents.  Sellers often don’t know that a good faith deposit is something that should be insisted upon.

Recently, two different Realtors in Arkansas tried to convince one of my students that they don’t use earnest money in Arkansas...yep, you heard it right, people just sling offers everywhere with no need to put any earnest money in escrow..ever.

What’s interesting is that their state contract specifically addresses the procedures for handling earnest money, even though these two agents swear there is no such thing.

Folks, a contract without consideration (earnest money or something else of value pledged) is NOT enforceable in the United States.

A buyer who fails to provide earnest money has no skin in the game and it’s quite likely they won’t close as promised since they have nothing to lose if they don’t close.

Many wholesalers lock up properties under contract without earnest money thinking that’s fine to do, but if a seller decides not to sell to them the contract becomes non-enforceable.  Let this happen to you a time or two and I bet you will be all about qualifying your buyer.

Tomahawk Properties

Latin American Development & Management 

RETLAW (Retlaw backward is Walter)

Reedy Creek Ranch Lands was run by a guy named M.T. Lott (say the name quickly to get the joke)

In 1955 Walt Disney has learned a powerful lesson upon the opening of Disneyland in Anaheim, CA by not buying a large enough parcel of land to build his theme park.  By the time he realized his error, neighboring parcel owners demanded a small fortune per acre to sell him more land because they felt Walt had deep pockets.

In May of 1965 Disney started buying up land in the Orlando, Fl area to build what would later become Disney World.  Mr Disney was able to buy the majority of the land he needed for an average of $80.00 per acre.  He used Land Trusts to maintain the secrecy of the true buyer name.  Once word eventually got out, the price jumped up 1000% to $80,000 per acre. 

Land Trusts are a great way to take title to a property while keeping the true owner’s information private.  Although not considered “Asset Protection”, land trusts make it more difficult to track down who owns the land and therefore is responsible if things go wrong.  By keeping your portfolio information private, slip and fall lawyers are less inclined to pursue legal action against you if there are no significant assets for them to attach.

Land Trusts can also be used to keep a buyer’s information private to as not to alert the seller of a buyer who is well known or has deep pockets.

If you want to learn more about using Land Trusts to acquire real estate Larry Harbolt’s next class is January 9-11, 2021.  You can grab your ticket at:  LarryHarbolt.com/LandTrust

Our inner voice will warn us of bad things happening in the future if we allow it to.  For that to happen we need to be listening.

Many investors feel pressure to get a deal done.  Many will overextend themselves financially, usually by overspending or under earning.

The pressure to not disappoint a wholesaler, Realtor or Seller by saying no or asking more questions can prove to be overwhelming for many.  Don’t let people pleaser tendencies destroy you financially by buying a bad deal.

Maybe you want to get accepted into the cool kids club at your local real estate club by doing a deal you know you should not do.

Fear of missing out on low interest rates or even the opportunity to get financed for a deal can cause us to make irrational buying decisions.

Easy to get hard money loans make it easy to wipe out your life savings by investing in sketchy deals where not enough due diligence has been performed.

Maybe you feel lucky that a seller accepted your offer because you are “allowed” to do a deal.

If any of this applies to you STOP!

Wholesalers, Realtors and Sellers LIE about needed repairs, they LIE about current rents and future rent possibilities, They lie about ARV or simply have no idea how to compute the figure accurately, they conceal important details that might cause you to back out of a deal.  Its very difficult to catch them and even if you did, nobody really cares, nor do you have the time, money to waste trying to punish them.  This the simple truth.

Your inner voice is likely speaking to you when things are not as they seem.

It’s ok to question everything, that doesn’t make you paranoid or scared or even a newbie, that makes you intelligent and leads to lucrative deals.

Distance yourself from anyone who makes you feel pressured to make an investment decision without having the time to do your homework.

We are in unprecedented times, banks are pulling back funding.  That’s what we call a clue, soon it might be very difficult to borrow money from a bank for a purchase.  That’s a signal that market prices are likely to fall, when? Nobody knows for sure.  We are facing record unemployment, 2.25 million mortgages are currently past due, that’s the highest level since 2010.  Let’s not forget civil unrest and the most controversial election cycle in history.  Be smart, listen to your inner voice, do you homework and you will be able to prosper beyond your wildest dreams.

Landlords that have non paying tenants are most often in deep financial trouble if they have a loan payment to make every month.  This is because most landlords only see a few hundred dollars of profit per unit because the rest goes to the bank.

Non-paying tenants mean that the owner needs to make those mortgage payments even though the tenant is not paying.  Although some landlords can handle this financial burden, most can’t for very long.

Statistically speaking, 24% of multifamily tenants have not paid their rent in full as of Sept 6th, 2020 as compared to only 18.8% in September 2019 according to NMHC.org (National Multifamily Housing Council.  That tells me that there’s a good chance the landlord either has or will have non paying tenants in the near future.  Now is the time to get the attention of these landlords.

How do you find these sellers?  The same way you would find motivated sellers for any other reason, we target market them.

Direct Mail

Paid Social Media Ads

Billboards

Bandit signs

Print Ads in Newspapers

Advertise in Trade magazines that target Property Managers and Landlords

NARPM.org National Association of Residential Property Managers

On the first contact, don’t be surprised if the seller is resistant to share their financial woes with you.  I would imagine that most landlords would be somewhat offended if you called them out of the blue and asked if they had non paying tenants.  Instead, attract them with a targeted marketing message.

As a buyer, you can help them in several ways.  Motivated sellers in financial crisis are proven to be far more receptive to creative options as compared to unmotivated sellers.  If the most pressing problem is non-payment of rent, the owner might feel helpless due to recent moratoriums on eviction.  The good news is as a real estate problem solver, you can step in and help.

Why should you buy these problems?

You can analyze the deal upfront and allow for reduced or no income for 6 months to a year.  That means setting aside an amount equal to the non collected rents to cover expenses that will occur once the property is yours.  These amounts can be taken from any equity due to the seller.  You can also raise this money from your funding partners in advance of the purchase.

Structured properly you will be able to create incredibly profitable deals for you and your partners/investors while helping a seller avoid further pain and torture.

Negotiating terms will be easy (if you let it be) because the sellers will be incredibly motivated with unpaid expenses hanging over their heads.

The current eviction ban crisis shifts the market from being a seller’s market to a buyer’s market pretty much overnight if the property you want is occupied by a non-paying tenant.

Here are the facts you will have to share with the Seller.

The tenants are not required to pay a penny for the rest of 2020, and that date could be extended even farther.  Any unpaid rent and late fees do accrue which means they must be paid at some point in the future.

When evictions ARE allowed, imagine the backlog that is forming and building every minute of the day, it could take a very long time to get your case heard.

If the tenants are paying now, there is no guarantee that will continue, job losses will continue.

Our elected officials cannot agree on the stimulus or unemployment extensions, don’t be shocked when nothing happens until at least November on that front.

If rent isn’t coming in, it will be even harder to keep up with maintenance because of a lack of available funds.

The situation gets worse every month and likely will not improve until 2021 or later.

Face facts, squatters aren’t known for keeping their homes in great shape, expect renovations to be required once you finally have a chance to evict them.

At a minimum, trash outs will be necessary which can cost several thousands of dollars in some cases.

COVID 19 is still a thing, which means people will expect the home they rent to be super clean, if not they will likely pass, which means increased vacancy.

Seller’s can’t really claim rent increases are possible based on current affairs and our financial crisis looming.

The lofty projections of many apartment syndicators will prove to be inaccurate causing investor concerns and in some cases, operators might be replaced.  This could mean that apartment deals may reenter the marketplace.

Tune in to this week’s episode to get the details on how you can structure awesome deals in situations of non paying tenants.

This week the CDC (Center for Disease Control) issued a nationwide ban on evictions that is estimated to last until December 31st, 2020.  When I first heard about this I thought it was some sort of hoax because last time I checked, housing was not part of CDC’s focus.

To go directly to the order to read it yourself go to: http://cashflowguys.com/cdc

The CDC Eviction Ban order applies to ALL Landlords, regardless of what mortgages they have in place (previous orders applied to FHA Loans only).  The only exceptions available apply to hotels, motels and short term vacation rentals.

You should know that in order for the ban to apply to your tenant, the new order requires that tenants supply a specific written declaration to the landlord for the new policy to apply.  Look at Attachment A on the CDC website link for details on that.

According to the CDC, the intent of this new order is to help stop the spread of Covid-19 by discouraging people from moving during these times and to lower the likelihood of homelessness which they feel will increase the spread of the virus.

What’s interesting about their reasoning is that many prisons decided to release prisoners into the streets for the same reason (to reduce the spread).

If you use the link above it will provide direct access to the order which you can (and should) read.  The information in this order is important to know even if you don’t own rental property.

As a future buyer, you can rest assured that this order will result in many landlords trowing in the towel on landlording and therefore want to sell their property.  I would imagine that most landlords can’t survive 6 months with no rent payments.

When new regulations impact owners of property, investor buyers can often put together great deals as sellers look to flee the market.

A savvy real estate investors pays attention to the shifting market conditions and new regulations that would provide a negative impact on investment properties.  Situations such as these create motivated sellers, which means great odds in acquiring properties with attractive purchase terms.

The upcoming housing market and economic crashes will provide never seen before opportunities to buyers who are ready to buy and are willing to solve problems for anxious sellers.

For those that missed it You Don’t Need a Cash Buyer to Wholesale Real Estate.

This week, we will discuss another popular misconception that involves licensed Realtors.

Some Realtors tend to believe that much of what investors do is somehow shady or illegal.  In my own experience, I have had at least two dozen Realtors tell me that they believe Seller Financing was illegal.  When pressed for more details on why they believe this, they often shut down.

The real issue here is that fear can easily overcome someone’s emotions when they don’t understand something.  Also, when they realize that they should be better versed on a topic than the general public embarrassment kicks in.  If you keep pushing the issue the conversation can go downhill fast.

Rest Assured, Regardless of what your Realtor says, Seller Financing is NOT illegal.

In cases where you are shut down by a Realtor when trying to offer seller financing, you have a few choices to solve the problem.

• Fire the Realtor if they are representing you as the buyer’s agent and find another who is versed in seller financing.
• Move on to another property if the listing agent is the problem
• Write the offer anyway and politely insist that the agents present your offer as written.
• Wait for the agent to fail by the listing expiring due to it not selling and only then go directly to the seller. (Please do not try to go around a Realtor, direct to a seller on a listed property)

It’s important to note that quite often Realtors will make it challenging to proceed with any offers if you go against what they tell you.  To overcome this you will need to build some rapport with the agent in your way so they don’t see you, or your methods as a threat to them.

Larry Harbolt said it best when taught me “Seller’s don’t need cash, they need whatever they feel cash will do for them”

Make no mistake, they don’t want a pile of dirty cash to paper their walls with, all sellers plan to spend that cash on something else they want more.  Your job is to learn what they value more than cash so that you can possibly provide that to them.  In many cases, value can be added by making it easier for the seller to do whatever they intended to do with the cash. 

Here is an example:

Let’s assume the seller has an unpaid medical bill for $20,000.  Because you are a great negotiator you tell the seller that if they give you credit for a $20,000 down payment, you will take care of that $20k medical bill for them.  The seller would then give you a limited power of attorney so that you can negotiate with the medical billing company on their behalf.  You then negotiate that debt amount down to $10k and make payment arrangements directly with the medical billing company.  By accomplishing this, you just cut your down payment in half.  You will only have to give $10k up in order to get the benefit of a $20,000 down payment, see how that works?

This method can be applied to just about any situation if you have built a rapport with a seller and they believe you will follow through with solving their problem.  Does the seller want a boat? Cool! What kind, color, size, etc.  now go find that boat and make arrangements to buy it in such a way that as the buyer, you can get the boat at a steep discount or on terms.  Then, give the boat to the seller in exchange for a down payment.  Presto!  Win/Win created!  Want more ideas?  Take a listen to this week’s episode to learn more...

In most cases, it’s the disclosure of the wholesaler’s fee that brings forth this false belief.  When advised of something they don’t understand, Lenders, Realtors, and title companies sometimes stomp on the brakes halting the transaction progress.  

The simplest way to avoid the drama of having a deal go sideways over your fee is begin with a stable relationship with your buyer.  When you invest time getting to know them and understand their needs, transactions will go much smoother for you.  Buyers work with wholesalers to simplify the acquisition process, saving them considerable amounts of time and marketing costs.  Therefore, when you build a mutually beneficial relationship with them, everyone wins.

In my previous episode, I discussed the practice of finding houses for buyers, not the other way around.  With this arrangement, your fee is covered by the buyer, not the seller.  Such a format removes the seller’s opportunity to object to your compensation since they are not responsible for paying it.  

Traditionally wholesalers tend to be paid at closing, which means their fee is on the closing disclosure.  Having the wholesale fee on the closing statement can be a red flag for title insurance issuers and lenders; instead, draft a separate agreement between you and the buyer, which breaks down the amount of your compensation and how it will be paid to you.  

You can still be paid at closing by the buyer, and such an arrangement does not need to involve the closing agent.  Additionally, you can collect a portion of your fee (or all of it) when you sign the assignment agreement and the buyer.

Another solution (and my favorite one) is to accept monthly payments over time with interest added.  I offer this to my buyers because it means much less cash out of pocket when buying the property.  Such an arrangement means they have more capital available to renovate the home to prepare for resale or rental.  Its good practice to draft a note and mortgage outlining the terms and conditions agreed upon with the buyer.  Once the paperwork is signed, the mortgage should be recorded against the deed so that the loan is collateralized.

By accepting payments; you create a stream of income for yourself while earning interest on the unpaid principal balance.

The truth is that many buyers who are considered “cash buyers” use loans such as home equity or cash-out refinances against other properties they own to borrow the cash they need to buy the wholesale deal in the first place.  How many more transactions could you close if the buyer could use a bank loan to buy the property?  Could more deals get done if you remove all of the roadblocks?

Fact: Wholesalers who learn how to employ creative acquisition options earn far more money than those who only limit themselves to dealing with cash buyers only.

I see lots of wholesalers advertising properties for sale, in some states, they are asking for grief from the authorities.  You see, in most areas, only a Licensed Real Estate Salesperson may advertise real estate for sale that they do not own in exchange for a fee. 

Trying to find the right buyer for a house is far more challenging than finding a house for a buyer.  As a wholesaler, imagine how much easier it would be if you could simply go shopping for a qualified buyer, knowing exactly what they want, how they intend to fund the purchase, and how much they are willing to pay.  This method makes wholesaling EASY so why not do things the easy way? 

Finding qualified buyers can be challenging because there are lots of “tire-kickers” out there.  To make your life easier be sure to qualify any buyer you intend to work with to be sure they have the ability to close.  If a buyer doesn’t have any of their own funds to invest be weary because they may not be able to secure the funding they need to close on your deal.   

Wholesalers, Are you having a tough time finding cash buyers?  Partner up with a hard money lender in your market that has a good reputation.  Introduce them to your buyers so they can be qualified as a buyer.  This step will save you a ton of grief and time sitting alone at the closing table. 

Working with well-qualified buyers who can prove their ability to close will save you tons of time and embarrassment caused by a pretender buyer who flakes out on you at closing. 

As a wholesaler, when you focus on finding houses for buyers you will save a ton of time and energy on marketing because you can refine your efforts to a specific type of property in a specific area.   

There, with that said, let’s dive in, shall we?

When I was young, my Grandpa used to tell me to always keep a silver coin in my pocket.  He gave me my first one.  His logic was that as long as a man had access to “God’s money” as he called it, he could weather just about any financial storm.

I remember as a boy him grumbling about our elected officials of the time, Gerald Ford if memory serves me correctly.  Grandpa was complaining about Federal spending and devaluation of the dollar being a problem.  At the time I was clueless about what he was talking about because I just wanted to focus on my fishing.

When I grew older, a friend told me to trade in my silver and get gold because it was worth more per ounce.  Not knowing any better that’s exactly what I did which I realize now might not have been a smart decision because I had no real logic involved in the choice I made.  Lesson number one of investing for me was to never take advice from people who aren’t willing to learn new things.

In recent years my wife and I invested a great deal of time learning about economics and financial markets.  For us, investing a portion of our cash into precious metals made good sense so that we could insure ourselves against a devaluing dollar.  Gold and silver do continually appreciate over spans of time and look to be not very volatile over the long term. 

For us, it makes sense to hold physical gold and silver bullion as a hedge against inflation as well.

In our journey of learning, we have found several great resources that I want to share with you, links to these books will also be on the Cash Flow Guys Website.

I’ve learned over the years that I need to make sure I am never the smartest person in the room I am in, if I am, I’m in the wrong room.

Here is the shortlist of the people I follow to keep up to date on the state of the economy and all things precious metals:

Mike Maloney GoldSilver.com

Peter Schiff schiffradio.com

Jim Rickards

Dana Samuelson American Gold Exchange Amergold.com

Books:

Stack Silver Get Gold by Hunter Riley https://amzn.to/2ETnu81

Guide to Investing In Gold and Silver - Mike Maloney https://amzn.to/2XRcgYD

The New Case for Gold - Jim Rickards https://amzn.to/3ih86kw

The Death of Money- Jim Rickards https://amzn.to/31qicJ1

Aftermath Seven Secrets of Wealth Preservation in the Coming Chaos - Jim Rickards https://amzn.to/2EZ8w0t

Times are strange right now and are certain to get stranger.  If you never listen to anything else I offer on the podcast, please at least take the time to read about the benefits of investing in precious metals and consider taking action to preserve your wealth.

Great question! a P.I.G is an acronym that stands for Professional Information Gatherer.  

It was way back in 2012 when I first heard the term and decided that I was going to learn more about getting good at getting information. 

Wondering if a seller will say yes or no is indeed an uncomfortable feeling. The fear of being rejected is what keeps many buyers from ever making an offer.  How do we get any deals done without facing a bit of rejection?  Short answer...we don’t. 

I wasted lots of time wondering what someone would say to my offers because I did not make them as often as I should due to fear of rejection.  By spinning my wheels, I watched lots of great buys happen without my name on the buyer’s line.  Sometimes it felt like the only way I could ever get a deal was to outbid all the other buyers. 

Making offers should have a strategy attached to it.  Some teach to use fancy words or psychological tactics, others teach to blanket your local market with offers on everything that’s for sale to see if something pops.  The end result of avoiding the needs of the other party is grief. 

I’m not going to that blanket offers and other tricks don’t work, but in the end, the most effective methods get you to the finish line more efficiently.  When I make offers, the sellers already know what’s coming...no surprises mean smiles instead of frowns.  

Here’s an example:  A guy is selling his house to pay his wife’s medical debts and needs $20,000 to accomplish that.  In my offer, I am going to make sure that his pain point is addressed by my offer, if it isn’t, I won’t make any offer at all. 

When a seller understands and believes that you are listening to them and helping them solve their problems, you will have their attention and focus.  If the deal is all about you, I’d learn to get comfortable with a ton of rejection. 

The more we understand a seller’s situation the better prepared we are to make offers that a seller will accept. 

Many buyers think that all sellers want 100% of their cash at the closing table, yet that’s simply not true.   

Larry Harbolt said it best: “Sellers don’t want the cash, they want what the cash will do for them!” 

In this episode, I cover a few strategies to help you get better at finding problems so that your offers will be the ones that get accepted. 

Those that stick with a winning strategy win, those that don’t, won’t.

100% of the truly financially free people I know got there by using the resources of others to help them to the finish line.

Banks won’t allow you to get there quickly because they are in the business of making money when you buy (institutional lending can be expensive on the origination side)

Hard Money loans are expensive throughout the duration loan cycle by design which is usually because of the short term involved.

The raising of relationship-based private capital is by far the most economical and viable method of achieving financial freedom by acquiring real estate.

I have never met anyone who escaped the rat race by using 100% of their own money to do deals, the same applies to those who use banks to fund their purchases.  If you don’t learn how to raise private money you will likely never escape the rat race.

Many people feel that raising private money is difficult or maybe even impossible for them.  Therefore because they won’t learn how, they lean towards taking out hard money loans if they don’t qualify for bank financing. Sometimes they will negotiate terrible deals for themselves only because they were grateful to “be allowed” to buy anything at all.

When a private money financial friend thinks about doing business with you they tend to focus more on how you will pay them instead of how much you will pay them. Therefore you must fully understand how your deal will earn a profit for both you and your investors.

If you are not consistent in your investor identity people will see you as a hot mess and therefore be less inclined to deal with you.

When we see a wishy-washy person, many people tend to distance themselves from that person because they are not consistent.  In this episode, I discuss how to improve your position from an investor’s perspective which will make your job of raising money much easier.

Before you do any deal, prove the numbers by common sense due diligence.

This does not mean trusting the Realtor or wholesaler that is presenting you the deal.  I am not saying they are lying however they tend to make things appear a bit more profitable than reality will prove.

A wholesaler using the term ARV is the human version of Zillow and therefore is never accurate.

The value of a property is what a buyer is willing to pay for it, period.

When a seller tells you what a property will bring in for rent prove it before you believe it.  A great way of doing this is to look on craigslist for similar properties located in the same area and call them.  The MLS will often be a good resource of rental data for properties that have already been rented.  Tools such as Rentometer will give you a range of rents to consider but keep in mind that much of their data is mined from ads on for-rent properties, thus not a true reflection of what a property actually rented for.

When a wholesaler tells you what a property will sell for once fixed up prove it with an appraisal.  The appraiser should be able to give you a good idea of what the value will be once repaired to good working order.

When a Broker tells you a property is a “great deal” have them prove it with credible data.  You may find that most real estate brokers have little to no experience in any form of real estate investing.  Ask the broker if they own any rentals themselves, most don’t, therefore, be careful who you listen to when you hear the words “great deal”

In this episode, I provide a real-world example of a “deal” that wiped out an investor simply because they did not take the time to verify what they were being told.  Tune in to hear about that mess and at the same time learn what not to do.

As you might imagine, there’s a big difference between being a leader and being “in charge”. 

It takes a ton of courage to assume the leadership role, in fact, Courage is the first of the ten I will discuss this week.  If leadership is not your thing, or you suffer from a lack of confidence, unwavering courage may be a challenge for you.  The good news is that you can bring in someone to lead the company who does possess these skills. 

Being successful as an investor does not mean having all the answers, it means knowing the right people to join you who have those answers.  I believe that these people are around each one of us, and it’s our job to attract them to us. 

Self-control as an investor means avoiding impulsive decisions that are based on emotion instead of logic or mathematics.  Don’t follow the crowd, lead the crowd by example.  Be the person that does all the math, not just the math that forces a lousy deal to appear to be a good one. 

Having a keen sense of justice means treating all parties in a transaction fairly and ethically.  Win/win or no deal is a great mantra to follow and results in faster, more profitable growth. 

Ever dealt with a wishy-washy buyer or seller?  That type of behavior can destroy a deal in a heartbeat.  Ask questions, listen for the answers, then, make decisions and stick to them.  Those that have a tough time making decisions rarely make skilled leaders. 

Investors who operate from the mentality of a servant’s heart often outperform their peers.  It’s very difficult to say no to someone who clearly demonstrates that they have your best interest at heart. 

So as not to spoil the episode right here in the show notes, you’re going to have to tune in to learn more. 

Believe it or not, as a real estate investor you earn based on the sale of ideas and services, not so much the buying, selling, or renting of real estate.  It’s not about the transaction, it’s about what you provide to the marketplace.  Anyone can complete a transaction if they have the opportunity and the means, but few know how to provide the service that brings forth the opportunity and the means.

In the book, Mr Hill mentions the sale of ideas, which happens to be one of the ways I have achieved financial freedom.

In order to master the sale of ideas or services, we must first learn how to become a leader worthy of being noticed or align ourselves with such a leader.

When I was a freight broker, truck drivers came to me because they knew me as a person who had information on where they could find good-paying loads to haul.  Shippers also came to me because I had direct access to some of the hardest working, most qualified truck drivers in the industry.  You see, that’s how I made my money...by selling ideas and information.

Sellers often choose to list a property for sale with a Realtor because they perceive the broker to have access to qualified buyers or know how to effectively advertise in order to capture a buyers attention.

Some sellers choose to sell to a wholesaler based on the idea that the wholesaler will make the transaction quick and painless for them to rid themselves of an unwanted asset.

Either way, a leader is brought in to take care of business...that’s just how life works.  Maybe you are reading this thinking to yourself “I’m not the leader type” Well, that’s ok too...in fact, I discuss that very feeling in this weeks episode.

A listener responded to that episode via a YouTube comment saying:

“The flip side to your argument is that most of us don't want to just be "free". I don't make 10k a month now. But for me to be able to do all the things I want to be able to do, I need to make very close to that. I could live on half that, and pay all my bills but I would not be happy.”

The commenter then deleted their comment so perhaps a lightbulb went off negating the need for the comment to begin with.

In case they are still puzzled, or in the event, you feel the same way, I’d like to address this comment and revisit the core points of that episode from a different angle.

Let’s break down the comment so we don’t miss anything: 

“The flip side to your comment is that most of us don’t want to be just “free”  

As compared to what? Staying in W2 prison allowing the government to steal from you in the form of taxes on your wages? 

Tom Wheelwright wrote in his book Tax-Free Wealth “The average person in a developed county spends 25 to 35 percent of their LIFE working to pay taxes.  That means more than two hours of every workday are dedicated to feeding your government.  And three to four months out of every year are spent solely so that you can pay your taxes.  That adds up to over 13 years in your work life and 20 years in your lifetime...20 years..that’s a prison sentence.”

The listener then said: “I don't make 10k a month now. But for me to be able to do all the things I want to be able to do, I need to make very close to that.”

Understanding your specific freedom number doesn’t mean you need to quit earning once you reach that number.  It means that you won’t have to trade time for dollars any longer because your basic living expenses are coming in every month no matter what…

This means that you will be drastically reducing your tax obligation because of HOW you earn your income and the writeoff’s you are now entitled to.  The first stage of financial freedom also means you can get to your end goal much faster...want or need $10k to be happy?  Ok, do what you just did to get free again which will be easier since now you have so much more free time.

Lastly, the commenter said, “I could live on half that, and pay all my bills but I would not be happy.”

The reality is that achieving a certain monthly figure will never maintain permanent happiness, as you grow emotionally, you will want to enjoy different experiences which will require more money...there’s nothing wrong with that.  The good news is that now that you are free, you have the time you need to enjoy these experiences and the time to increase your earnings to pay for them.

Sorry to disappoint you, but we will not know when the market reaches the bottom until after it is in recovery.

The better question is, why does finding the bottom of a market cycle matter to you?  Do you honestly believe there are more “deals” in this magical place?

Who lied to you by saying the best time to buy is at the bottom of the market?

The best time to buy is when the numbers make sense because you are dealing with a motivated seller or one who does not see the potential in their own asset.

For them, the “asset” may be a liability by being a drain on their wallets.

It does not matter what market you may be in, there are deals to be had in every market.

When we let the popular opinion drive how we do business, we convert what should be a business transaction into an emotional one.

Instead of worrying about public opinion, perhaps we instead focus on finding opportunities which is code for finding people to talk to.

I know that while reading this, you might be thinking “Tyler, I have no money to invest right now”, yep, I hear you, $50 and a few keyboard clicks to head over to PrivateMoneyCrashCourse.com will solve that problem once and for all.

I bet that very few people in your market know what your buying criteria is, what is possible if they did know?  Wouldn’t it be cool if people brought opportunities right to your front door?

Maybe you have yet to learn what your criteria is, and maybe you don’t have a good grasp on what a good deal looks like...that can change by going to HowToMakeDeals.com and taking the free mini course to learn how to analyze deals.

I bet that the people with IRA’s in your market don’t know you offer a service that will help them supercharge their retirement plans by teaming up with you.

What if you focused on income minus expenses equals cashflow and then took that information to a seller’s kitchen table so they too can see how deals are done.

Discussing the market when talking to a seller only makes sense when a crash is obvious, otherwise, avoid the conversation.

The cars were Nissan GTR’s that I later learned can cost upwards of $100,000 more to acquire, even if when used.  The sight of all those cars got me thinking...what if that group of 100 car owners got together and invested together into a cash-flowing asset? 

Well, if they do, the next car could be paid for by that cash flowing asset.   

Imagine being able to buy a $100k automobile without having to pay for it! 

That’s one of the basic principles taught by Robert Kyosaki and the Rich Dad advisors. 

When like-minded people get together, who share the desire to accomplish great things...they often wind up very successful! 

You might be thinking that you wouldn’t be able to take part in the group because you lack the cash...but wait, do you have skills that could be extremely valuable to the group? 

Perhaps you are a skilled negotiator or are willing to learn these skills.  Maybe you are great with numbers and can handle the deal analyzing part? 

The bottom line is that when you spend time around like-minded people and share your shortcomings as well as talents you can accomplish things never before thought possible! 

Take a listen to this week’s episode to expand your mind on how leveraging the power of a group could help you get to where you want to be. 

Everyone seems to think its $10k a month...that’s what most people tell me.  I am willing to bet your number is lower than you might think.  When Jill and I set a goal to escape the rat race, our number was $4000 a month.  It would take that amount every month to cover our expenses.   

We were able to accomplish that with one small deal. 

As we continued to do more deals, the profits from those deals became the insurance we needed to quit our jobs...forever.  Even when I flipped properties or put on my Realtor hat and made a commission, I would divide my payday by 12 to see how it impacted my monthly income. 

As I pushed forth and did more deals, we started dividing by 24, then 36 and later 48 months.  We also saved up 2 years of expenses over and above that so we could sleep well at night. 

Let’s keep in mind I am not asking you to downgrade your lifestyle, nor am I asking you to suffer in any way.  Instead, I am suggesting you add up your monthly living expenses and take a hard look at the expense column. 

If you are anything like me, you will most likely see more going out than you are comfortable with.  The good news is that a few slight changes to that expense column can make giant strides towards becoming financially independent. When (not if) you find expenses that you simply don’t feel are necessary, eliminate them! 

Lots of people think that financial freedom means you must be a millionaire, that’s simply not true.  It’s not about piles of cash, it’s about streams of cash and more importantly, how long those streams will last as referenced above. 

I’d like you to figure out what your escape number is, if you have trouble, book a time slot with me and let me help you sort that out so you can get on the track to financial freedom.  You can do that by visiting CashFlowGuys.com/asktyler 

You can pickup a free copy (just pay shipping) here: CashFlowGuys.com/TrafficSecrets

What do I mean by traffic?  Traffic means driving people’s attention to your sales funnel so that you can offer them your product or service.  You might be thinking, Dude, I don’t need a sales funnel, I am a real estate investor.  I’d have to disagree with you.  In fact, without a sales funnel the failure rate for a real estate investor is quite high!

Why would I say that?  Time is why.  Here’s the thing, our time is limited, we are all busy doing as much as we can to find capital and deals right?  Sometimes we are focused on funding, other times we are trying to find properties to buy, flip, or wholesale all while burning the candle at both ends.

By building a sales funnel, we can harness the power of digital marketing to attract qualified leads to our real estate business so that we can educate them on the services we offer and the value we provide to the marketplace.

An example of the value we provide would be when you help someone learn how to avoid being ripped off in the Wall Street casino by opening a Self Directed IRA.  When someone who lost money in stocks learns that they have the ability to self direct their retirement a light becomes visible at the end of that retirement tunnel.  The person you help then feels compelled to choose you as the person to invest their money in because you have already provided them valuable information.

Another example of providing value would be to teach a homeowner what they need to know to sell their house themselves and therefore avoid paying a real estate commission.  You can even go so far as to provide them free resources to help them be successful, you will find that the majority of people would just rather take the easy road and sell their home to you or have you find a buyer for them.

As Russell Brunson says, people are either moving away from pain or towards pleasure.  It’s our job to identify what our future customers are more focused on and what pain they are experiencing and what pleasure they seek.

Peer pressure often forces otherwise logical people to make illogical decisions that are quite common in the real estate space.

Sellers, Wholesalers, and Realtors tend to paint an unrealistically rosy picture of how profitable the investment will be.

Maybe you don’t want to disappoint those who are pitching you such an amazing deal so you pull the trigger.

It might be that you are so excited about the opportunity to own real estate you skim over the deal without completing a full cashflow analysis.

Sellers of investment real estate know that you as the newbie do not want to be considered a tire kicker, so you do the deal so as not to disappoint the “cool kids”.

Shortly after closing, you find yourself short of cash over the next few months. 

You find this odd because after all, you recently bought a rental property, and it’s rented so where are all those profits?

I’ll tell you where…

Most common cashflow killers that are overlooked or underestimated:

Vacancy Loss:

Sellers would have you believe there is no such thing, yet it’s your biggest cash flow killer. Never underestimate this, in fact, insist the seller show a lengthy track record of stable income if they are unable to prove it, assume the worst.  Find more than one experienced property managers and ask them what is reasonable to expect in vacancy loss

Property Management Fees:

The amount varies by market area, size of the asset, and the manager’s expectations.  Don’t EVER ignore this expense in favor of self-management...that’s a cashflow killer for sure.

Utilities:

“But Tyler, the tenant pays the utilities”:...sure, until they move out.  In many cases, the landlord is paying water, sewer, and trash, sometimes electricity is paid by the owner/landlord.  In the summer, one month of electricity can cost hundreds of dollars because the AC should be kept on to prevent mold build up in humid areas.  The same situation applies in the winter in cold climates, many times the heat (gas or electric) needs to be used to keep pipes from freezing.

Insurance:

It is simply not possible to guess what the cost of insurance will be.

Just because your house is a similar size to the one you are thinking about buying does not mean that the insurance costs will be similar amounts.  Construction type, area, building material, your credit rating, type of rental (short or long term), all impact the insurance cost.

Overestimating Rent Amounts: 

Use multiple data sources to determine what fair market rent should be. 

Use classified ads and calls to other landlords who own properties similar to yours, near yours, and ask what they are actually receiving in rent. 

Check MLS rental data for rented properties (not vacant properties).  Use Rentometer Pro to get specific to your asset type (house or apartment)

Please know that you will not be able to simply raise the rent on day one, regardless of what the seller, Realtor or wholesaler says.

Misjudging rent ready repairs:

Get quotes from licensed contractors for work needed before you get locked down.  Never take the word of those who are selling you the property.

Taxes:

When a property is purchased, the property tax is often increased to match the purchase price you paid for it if the property was bought for more than the most recent tax value assessment.  Furthermore, if the home was owner-occupied, it’s likely a homestead tax exemption is on the property now which will fall off once title or deed changes hands.  Call the local tax collector and give them the intended purchase price in order to obtain the real cost of taxes once you close.  Don’t be surprised if the taxes increase by thousands of dollars per year.

Here’s how… 

Sellers are suddenly accepting lower offers in fear of getting caught short by a market shift.  They are seeing that in some circles, the belief is that fewer people are buying due to fear caused by the pandemic and the massive spike in unemployment.  The uncertainly can keep many potential buyers on the sidelines, waiting to see how things will play out. 

On the other side, buyers are in fear of missing out on historically low-interest rates that we will not likely see again for decades, if ever.  FOMO is driving some buyers off the sidelines so they can buy before it gets too expensive for them to buy because of interest rate inflation. 

What’s fascinating about this whole situation is that if you remember the 2008 housing crisis, buyers were not panicking, only sellers were.  Because of the imbalance, buyers were able to score great deals due to seller panic. Seller’s back then did not know if they would ever be able to sell their home for a fair price.  That meant properties were sold for pennies on the dollar. 

In today’s situation, with both parties panicking more transactions are getting closed despite the looming mortgage crisis.  Listen in to this weeks episode to learn new strategies to prosper in these uncertain times instead of being a victim of it. 

Let’s talk about you retiring someday...or not.

This means we need to learn a little bit about Social Security and how the system works.  First, Social Security payments come mostly from two primary “trust funds”.  One is called the OASI which stands for Old Age and Survivors Insurance, the other is referred to as “DI” which stands for Disability Insurance.  

According to a recent press release provided by the Social Security Administration on April 22nd 2020, both funds will be out of cash in the year 2035.

That’s less than 15 years away...which basically means you will NOT be able to retire off social security at ANY age.

But Wait...there’s MORE!

In the 2020 Annual Report to Congress, the Social Security Fund Trustees announced:

The asset reserves of the combined Trust Funds increased by $2.5 billion in 2019 to a total of $2.897 trillion. (that’s good)

The total annual cost of the program is projected to exceed total annual income, for the first time since 1982, in 2021, and remain higher throughout the 75-year projection period. As a result, asset reserves are expected to decline during 2021. (that’s bad)

Social Security’s cost has exceeded its non-interest income since 2010. (also bad)

The year when the combined trust fund reserves are projected to become depleted if Congress does not act before then, is 2035 – the same as last year’s projection. At that time, there would be sufficient income coming in to pay 79 percent of scheduled benefits.

Do you trust Congress to “act”?

Before you answer that...consider this....

“The projections in this year’s report do not reflect the potential effects of the COVID-19 pandemic on the Social Security program. Given the uncertainty associated with these impacts, the Trustees believe it is not possible to adjust estimates accurately at this time,” said Andrew Saul, Commissioner of Social Security. “The duration and severity of the pandemic will affect the estimates presented in this year’s report and the financial status of the program, particularly in the short term.”

Whoa...how about that for a wakeup call.  Now let’s dive into the numbers:

Total income, including interest, to the combined OASI and DI Trust Funds, amounted to $1.062 trillion in 2019.

Total expenditures from the combined OASI and DI Trust Funds amounted to $1.059 trillion in 2019.

Social Security paid benefits of $1.048 trillion in the calendar year 2019. There were about 64 million beneficiaries at the end of the calendar year

During 2019, an estimated 178 million people had earnings covered by Social Security and paid payroll taxes

The projected actuarial deficit over the 75-year long-range period is 3.21 percent of taxable payroll – higher than the 2.78 percent projected in last year’s report.

So remind me again why working as a wage slave for the rest of your life is a solid plan?

Who is going to pay you so that you can retire?  Clearly it’s not the Federal Government, heck they admit that themselves in this report.

In learning how to write direct response sales copy, some teach to say “it’s not your fault” to win hearts and minds...but I am not here to sell you trinkets, instead I am here to help you to become financially free so that I won’t have to support you later in life.

If you are hearing the sound of my voice and think that your government or some stranger on Wall Street or even worse, some slimy insurance agent pitching a “be your own bank” scam is going to allow you to retire it will be your fault that you will work until you die.

You must stop messing around hoping someone else will give you money because you “worked for it” in a job for 40 years…

Those of us under 60 must build streams of income today in order to SURVIVE.  You cannot live off credit cards and debt, eventually, it will swallow you alive.

It’s time to take affirmative action towards protecting yourself from financial ruin. 

If you need someone to talk to, book a call with me at CashFlowGuys.com/AskTyler

If you are tired of accepting what is happening around as the “New Normal” and missing out on an opportunity that is right in front of you, please visit MailboxMoneyCourse.com and take immediate action towards charting a new course.

Everyone keeps mentioning this supposed “New Normal” but what does that mean for real estate investors?  The true meaning depends on your own interpretation of what “normal” is.

Let me explain…for me, it’s normal for a seller to accept payments for their equity because I believe it’s the smartest way to sell a property.  Because I believe so deeply in this method of selling real estate I am shocked when someone disagrees.

Because I believe seller financing is a normal thing to do, I find it easy to obtain seller financing terms when I buy real estate.  When I sell real estate I always try to sell it on terms for three main reasons:

1. Higher Sales Price because I make it “easy to buy"
2. I receive a predictable stream of income
3. I can reduce my tax liability and spread out what liability I have over time with a tax strategy. (Read Installment Sale IRS Publication 537)

New Normal could mean it’s an accepted practice to no longer pay rent.

New Normal could mean a shortage of rental housing due to landlords refusing to allow people to live rent-free in their rentals.

New Normal could mean skyrocketing rents due to lack of availability of housing.

New Normal could mean that good people need a clean, safe affordable place to live (and always will) therefore make a policy to only rent to these people.

New Normal does mean that Airbnb is laying off 25% of its workforce globally, but this can also mean that you now have a reason to learn how to be a better marketer and obtain more direct bookings.

New Normal does NOT have to be a bad thing.  All of the recent drama will clear much of the smoke from our eyes so hopefully more people will put a priority on gaining financial intelligence, and then financial independence.  It’s about streams of income folks, stop chasing those piles.  Flipping houses is for the uneducated, buy rentals instead when the numbers make sense.  Don’t know how to analyze a deal?  Go to HowToMakeDeals.com for my free course on learning how to do just that.

Epic deals never get advertised until AFTER they close, that’s because deals are created by a buyer and seller negotiating, not by a Realtor or Wholesaler running an ad.  Therefore, if you are only focused on that which is “For Sale” it’s likely the real opportunities will be missed because of misguided focus.

How to get focused:

What if you chose to ignore what’s “For Sale” in favor of finding problems to solve instead?  The likely outcome would be that you would find it much easier to negotiate with sellers that have true motivation beyond just price.  It’s a motivated seller that will be more likely to consider seller financing provided that the terms offer a practical solution to whatever issue they may be facing.  An example of this would be if a seller had a problem that required say…$25,000 to solve, yet their home was worth $125,000.  You could provide them the $25k and give them payments on the remaining balance over time.  They have a quick and easy $25k and you don’t have to make a mortgage broker rich in closing fees.

It comes as no surprise that gaining the attention of a motivated seller is a huge challenge in today’s busy world.  Although it may be challenging its most certainly in reach of anyone who is known for being a problem solver.  Many years ago I came up with two nicknames for myself, one was “Cashflow Guy” the other was “Real Estate Problem Solver”  As you might imagine, the latter brought better quality seller leads to my front door which allowed me to build my portfolio more effectively than most people I knew.  Cash Flow Guy attracted those looking for funding for their deals which was NOT what I was hoping for.

You see, because I focused on solving problems, I was solution-oriented which attracted people to me who felt I might be able to help them.  When you get sick, you don’t go to an appliance salesman for a checkup…you go to a Doctor because he or she can most likely provide a diagnosis and hopefully a cure to whatever ails you.

Even if you are on day one as a Real Estate Problem Solver I am willing to bet that you know people that can help you solve problems.  The more people you meet that can help solve problems, the more tools you have in your toolbox!

Currently, we are experiencing a global monetary crisis

The oil and gas industry is a mess

The US is in the middle of a mortgage meltdown...

The Stock Market is a train wreck

The current number of unemployed people in America is larger than ever before...

The catalyst to tip the scales is the Global Covid 19 Pandemic!

All of this lends itself to a rough market in real estate, buying confidence is at an all-time low.  When buyer confidence wains, we must work harder to sell big-ticket items.

How you might ask?

Well...Understand this...People will always want a deal and in this episode, I’m going to discuss how you can deliver them a deal while still keeping much of your profit in your pocket.

When you bought your home you should have gotten an appraisal, now is a great time to have it reappraised if the construction work is finished.  If not finished, put together a statement of work to inform the appraiser of what is to be finished and when.  A good appraiser can use this info to complete your appraisal.

Next, hire a Rockstar Agent to Sell it for slightly below appraised value.  A good Realtor who is an expert at marketing will use the appraisal as a tool to attract lots of buyers hoping for a great deal, even in these troubled times.

Insist on high-quality professional photos along with twilight photography if it is a pretty house.  Your agent should already have one they use, ask for examples from previous listings.

Insist on a professional quality video walkthrough, the photographer can often do it for you but sometimes they refer the video portion out, regardless, it will go a long way towards attracting people to your home.

Insist on Facebook and YouTube Paid ads run by an expert in the field, this should be a no brainer.  You need to get a ton of eyes on this property in order to get it sold.  Most agents are not Ad Savvy so ask for proof of prior campaigns.

Consider offering seller financing.  This makes it easier to buy your home by attracting a larger pool of buyers.  Yes, I know you need your money yesterday but you can sell the note after closing to an investor at a slight discount.  If you work with a note investor upfront they will likely walk you through how to structure the deal to make the note more desirable to buy.

Whatever you do SELL NOW

A forbearance is defined by Google as “the action of refraining from exercising a legal right, especially enforcing the payment of a debt.”

Note that the above definition says nothing about forgiving debt, instead it involves the lender’s ability to choose to refrain from taking legal action.

Many borrowers are being told by the “Facebook Expert Team” that they can call their lender and then be able to skip a couple of payments.  The reality is that although the lender may agree to avoid using legal remedies to collect a couple of late payments, however, those payments remain due and can be demanded in a short as a couple of months!

Imagine thinking you were off the hook, and then you get a bill in the mail for several months mortgage payments that are all due NOW or face foreclosure.

In many cases, a borrower can ask that the lender place the missed payments at the end of the loan, therefore extending the maturity date of the loan.  If you choose this route, be sure to read any agreements that are in place before you sign them.

Be sure to fully understand what you are agreeing to and if anything is unclear, consult with a local real estate attorney in your state to be sure you are protected and making a smart decision.

Note: In some cases where a lender forgives a portion of your debt such as is common in a short sale, you might be taxed by the IRS on that amount.  Hiring a CPA to consult you in this arena could save you a ton of money. 

Although we are in unprecedented times, I can’t stress enough how important it is to communicate with your creditors.  Most mortgage companies have plans in place to assist you in tough times if you ask them.  Simply stopping payments and refusing to communicate with them certainly wont make the situation any better.  Ignoring the situation won’t allow it to go away, instead it will mostly like get worse if ignored.

If you lost your job, apply for unemployment assistance as soon as possible, there are several programs recently voted into law to help people during these tough times. Unemployment does not need to be paid back (unlike a loan) and therefore are a better choice for many Americans.

Whatever you do, please try to avoid debt at all costs!

After getting caught in the Google Black Hole myself I figured this way was easier.

That link is: CashFlowGuys.com/Bailout

I'm sure you have noticed the misinformation out there about what is going on in the world right now.

For Pandemic guidance, follow the World Health Organization and CDC.

For many Americans there are lots of benefits available from the stimulus package.  I’d suggest you read the table of contents to see what may apply to your situation.

Although we are in troubled times, I ask that you avoid taking on debt during this crisis unless it is necessary.

Many of the options offered by the SBA are forgivable yet certain conditions apply.  Be sure to read those sections of the bill to be sure the terms are crystal clear to you.

There are better ways to put cash in your pocket besides borrowing money from credit cards and such. (Think eBay)

Before borrowing money, research what grants may be available to you at SBA.gov

Let’s begin with the mortgage process. A borrower goes to a Mortgage Originator to obtain a mortgage. Once closed, the loan is handled by a Servicer, which may or may not be the same company that originated the loan. The borrower submits payments to the Servicer, however, the Servicer does not own the loan, they are simply maintaining the loan. This means collecting payments and forwarding them to the investor, paying taxes and insurance, answering questions, etc. While they maintain or “service” the loan, the asset itself is sold to an aggregator or directly to a government agency like Fannie Mae (FNMA), Freddie Mac (FHLMC), or Ginnie Mae (GNMA). The loan then gets placed inside a large bundle, which is put in the hands of an Investment Banker. The Investment Banker converts those loans into a Mortgage-Backed Security (MBS) that can be sold to the public. This shows up in different investments like Mutual Funds, Insurance Plans, and Retirement Accounts.

The Servicer role is very critical. In order to obtain the right to service loans, the Servicer will typically pay 1% of the loan amount upfront. The Servicer then receives a monthly payment or “strip” equal to about 30 basis points (bp) per year. Because they paid about 1% to obtain the servicing rights and receive roughly 30bp in annual income, the breakeven period is approximately 3 years. The longer that loan remains on the books, the more money that Servicer makes. In many cases, the Servicer might want to use leverage to increase their level of income. Therefore, they may often finance half of the cost of acquiring the loan and pay the rest in cash.

As you can imagine, when interest rates drop dramatically, there is an increased incentive for many people to refinance their loans more rapidly. This causes the loans that a Servicer had on their books to pay off sooner…often before that 3-year breakeven period. This servicing runoff creates losses for that Mortgage Lender who is servicing the loan. The more loans in a Mortgage Lender’s portfolio, the greater the loss. Servicing runoff, or even the anticipation of it, can adversely impact the market valuation of a servicing portfolio. But at the same time, Lenders typically experience an increase in new loan activity because of the decline in interest rates. This gives them additional income to help overcome the losses in their servicing portfolio.

But the Coronavirus has caused a virtual shutdown of the US economy, which has created an unprecedented amount of job losses. This adds a new risk to the servicer because borrowers may have difficulty paying their mortgage in a timely manner. And although the Servicer does not own the asset, they have the responsibility to make the payment to the investor, even if they have not yet received it from the borrower. Under normal circumstances, the Servicer has plenty of cushion to account for this. But an extreme level of delinquency puts the Servicer in an unmanageable position.

In the Government’s effort to help those who have lost their jobs because of the Coronavirus shutdown, they have granted forbearance of mortgage payments for affected individuals. This presents an enormous obstacle for Servicers who are obligated to forward the mortgage payment to the investor, even though they have not yet received it. Fortunately, there is a new facility set up to help Mortgage Servicers bridge the gap to the investor. However, it is unclear as to how long it will take for Servicers to access this facility.

But what has not been yet contemplated is the fact that a borrower who does not make their very first mortgage payment causes that loan to be ineligible to be sold to an investor. This means that the Servicer must hold onto the asset itself, which ties up their available credit. And with so many new loans being originated of late, the amount of transactions that will not qualify for sale is significant. This restricts the Lender’s ability to clear their pipeline and get reimbursed with cash so they can now fund new transactions.

This week, due to accelerated prepayments and the uncertainty of repayment, the value of servicing was slashed in half from 1% to 0.5%. This drastic decrease in value prompted margin calls for the many Servicers who financed their acquisition of servicing. Additionally, the decreased value of a Lender’s servicing portfolio reduces the Lender’s overall net worth. Since the amount a lender can lend is based on a multiple of their net worth, the decrease in value of their servicing portfolio asset, along with the cash paid for margin calls, reduces their capacity to lend.

Question...Now do you see why it is important to to learn how to raise private money to fund your real estate purchases?  Youcan due that right now at PrivateMoneyCrashCourse.com

The Fed’s desire to bring mortgage rates down isn’t just damaging servicing portfolios because of prepayments, it’s also wreaking chaos in Lenders’ ability to hedge their risk. Let’s look at what happens when a borrower locks in their mortgage rate with a Mortgage Lender. Mortgage rates are based on the trading of Mortgage-Backed Securities (MBS). As Mortgage-Backed Securities rise in price, interest rates improve and move lower. A locked rate on a mortgage is nothing more than a Lender promising to hold an interest rate, for a period of time, or until the transaction closes. The Lender is at risk for any MBS price changes in the marketplace between the time they agreed to grant the lock and the time that the loan closes.

If rates were to rise because MBS prices declined, the Lender would be obligated to buy down the borrower’s mortgage rate to the level they were promised. And since the Lender doesn’t want to be in a position of gambling, they hedge their locked loans by shorting Mortgage-Backed Securities. Therefore, should MBS drop in price, causing rates to rise, the Lender’s cost to buy down the borrower’s rate is offset by the Lender’s gains of their short positions in MBS.

Now think about what happens when MBS prices rise or improve, causing mortgage rates to decline. On paper, the Lender should be able to close the mortgage loan at a better price than promised to the borrower, giving the Lender additional profits. However, the Lender’s losses on their short position negate any additional profits from the improvement in MBS pricing. This hedging system works well to deliver the borrower what was promised while removing market risk from the Lender.

But in an effort to reduce mortgage rates, the Fed has been purchasing an incredible amount of Mortgage-Backed Securities, causing their price to rise dramatically and swiftly. This, in turn, causes the Lenders’ hedged short positions of MBS to show huge losses. These losses appear to be offset, on paper, by the potential market gains on the loans that the lender hopes to close in the future. But the Broker-Dealer will not wait on the possibility of future loans closing and demands an immediate margin call.

The recent amount that these Lenders are paying in margin calls is staggering. They run in the tens of millions of dollars. All this on top of the aforementioned stresses that Lenders are having to endure. So, while the Fed believes they are stimulating lending, their actions are resulting in the exact opposite. The market for Government Loans, Jumbo Loans, and loans that don’t fit ideal parameters, have all but dried up. And many Lenders have no choice but to slow their intake of transactions by throttling mortgage rates higher and by reducing the term that they are willing to guarantee a rate lock.

Furthering the Fed’s unintended consequences was the announcement to cut interest rates on the Fed Funds Rate by 1% to virtually zero. Because the Fed’s communication failed to educate the general public that the Fed Funds Rate is very different than mortgage rates, it prompted borrowers in the process to break their locks and try to jump ship to a lower rate. This dramatically increased hedging losses from loans that didn’t end up closing.

It’s been said that the Stock market will do the most damage, to most people, at the worst time. And the current mortgage market is experiencing the most perfect storm. Just when volume levels were at the highest in history, servicing runoff at its peak, and pipelines hedged more than ever, the Coronavirus arrived.

Lenders need to clear their pipelines, but social distancing is making it more difficult for transactions to be processed. And those loans that are about to close require that employment be verified. As you can imagine, with millions of individuals losing their jobs, those mortgages are unable to fund, leaving lenders with more hedging losses and no income to offset it.

Fortunately, there are many smart people in the Mortgage Industry who are doing everything they can to navigate through these perilous times. But the Fed and our Government needs to stop making it more difficult. The Fed must temporarily slow MBS purchases to allow pipelines to clear.

Lawmakers need to allow for first payment defaults, due to forbearance, to be saleable. And finally, the Fed must more clearly communicate that Mortgage Rates and the Fed Funds Rate are not the same.

We have faith that the effects of the Coronavirus will subside and that things will become more normalized in the upcoming months.

Stock Investors...Losses come from only two events, the sale of a stock or the permanent closure of the business in which you own stock

If you are invested in companies that have solid histories the stock prices will rebound once consumer confidence is restored.

If you are a buy and hold real estate investor do not sell now!  Instead, wait for markets to rebound.  If cashflow is low maybe you can refinance for a lower rate or if you have paid down equity refinance for a smaller loan balance which will reduce your payments and therefore increase your monthly cashflow.

Another way to increase cashflow is to offer additional ametities if it makes financial sense to do so.  An easy way to to buy a washer and dryer and lease it to the tenants.  Adding a storage building can also be a huge profit additon.

If you are a house flipper, it’s time to get to work finishing your projects and get those properties listed and sold.  DO NOT SELL THEM YOURSELF (unless you are an expert at marketing homes for sale).

Consider reselling the flip property as is before making improvements.  Now is not a good time to speculate because the number of available buyers are decreasing daily with every news report.  People are confused and scared and the confused mind always say no.

If you have uninvested funds sitting in a 401k plan from a former job, transfer that money into a self directed IRA.  The massive benefit of a self directed IRA is that you CONTROL what you are invested in.

If you have no control in what you are invested in you are exposing yourself to loss of money.

A word about buying, everyone is asking me if they should stop buying, my answer is :it depends…

I would buy if the numbers made sense after allowing for 30-40% economic vacancy, meaning non income producing units or period of time without any income from the asset.  Outside of that don’t buy until you can structure a deal that leaves plenty of meat on the bone.

Raising private money becomes much easier when your financial friends get more choices.

There are five types of appreciation:

Found, Forced, Phased, Inflated, Passive

I dive deeper into how to use these in my Private Money Crash Course which you can find at PrivateMoneyCrashCourse.com

It’s important to note that we can only control three of the five.  The two we cannot control are inflated and passive.

Inflated Appreciation is what many people refer to when they mention hyperinflation.  When supply and demand are not balanced, appreciation will increase or decrease.

When there is more demand then there is inventory “inflated appreciation” occurs.  That’s what many markets are experiencing now across the US.

Be very careful in basing investor returns or gains on the inflated appreciation.

Passive Appreciation is what occurs with the ebb and flow of market conditions.  It’s what's derived from timeline trends. There is nothing you can do to improve it, (besides maintaining the asset), it “happens”.

Found Appreciation comes from undiscovered opportunity.  When I discuss focusing on doing deals when a property is not for sale, this is what I mean.

Found appreciation happens when you negotiate a deal worth $200k down to $150k.

Forced Appreciation happens once improvements or repairs increase the income or resale value.

House-flipping is an example of forced appreciation as is apartment syndication.

The net income of an income property determines its value.

Phased Appreciation occurs when the value increases over time after finishing value-added improvements.

Example:  Let's say you buy an asset with a buildable vacant lot attached.  Later, you build more rental units on that lot which increases its value.

Another Example: You buy an existing building and then add more rentable spaces.

In the northeast, many old factories are being converted to high-end rental housing.  This is another example of phased appreciation.

In the south, larger homes are being converted to ALF's (Assisted Living Facilities).  Once converted the value of the home skyrockets.

The bottom line is that the value changes over time.  You can use these future values as profits that you can share with your financial friends.

Take the time to educate the prospect about these types of appreciation.

Private money investors often focus less on what their return will be and more on where it will come from.

When potential an investor understands how the deal will earn its profit, "yes" is easier to achieve.

This week I made a post in the Cash Flow Guys Community Facebook page asking people to share with me the hurdles they were struggling with when it came to raising private money.

The post received several great responses which inspired this episode.

Below are some of the most common responses:

Self-doubt can be overcome by understanding how to structure or “underwrite” a deal to be sure it is profitable. 

Many folks I run into don’t really understand the “how” of deal structure. 

They don’t really know what a good deal looks like. 

Instead, they tend to just a deal by its initial asking price and don’t go much farther than that.

A while back I decided to build a fix for this problem, you can get that fix FOR FREE at HowToMakeDeals.com

Its a four-part video course (soon to be expanded) to help busy people learn the ins and outs of breaking down deals and structuring deals for solid predictable profits.

Fear of asking for money was also a popular reason. 

I remember struggling with this one quite often, for me it felt crippling.

Here’s the good news... If done right, you should never have to ask anyone for money. 

Money should be asking to do business with you.

In my Private Money Crash Course, I teach an easy to learn and simple to present method of explaining deals to your financial friends.

Once you learn this system, you can use it over and over on any deal that provides income.

My method makes it easy to lay the cards on the table so that everyone can see what’s in it for them.

The end result is people asking you to consider helping them invest their money with you.

Fear of losing someone’s money is caused by not truly understanding how your deal will support itself. 

Lack of confidence in this area can rip you apart emotionally which is why I made the HowToMakeDeals.com free course.

When you have an overwhelming fear of losing someone’s money that usually means your deal is purely speculative which triggers your “risk nerve”.

Fear of rejection was also popular, however, consider this...if investors are coming to you asking for help investing their money, where is the rejection here?

Imposter Syndrome is the final one that many new investors feel since they have not done a deal, or maybe their first deal tanked they are not “real” investors. 

Feeling like an imposter leads directly to withdrawing which holds you back from doing anything that could be construed as forwarding motion.

One of the best ways to overcome this is to bring more experienced team members into your deal to help you gain credibility and lessen the likelihood of expensive mistakes.

To get started with my Private Money Crash Course, simply go to PrivateMoneyCrashCourse.com right now.

In this episode I will discuss how we can learn to make offers on investment property without offending the seller.

In the beginning I would refuse to make offers in fear of upsetting the seller or their agent.  I looked at lots of properties but spun my wheels when it came time to writing offers.

Then, when I mustered up the courage to make an offer I got shot down. 

I thought about this perplexing situation a bunch, and then it hit me…

Understand this….You can’t control the emotions of another person, but you can control the release of a trigger…and I was releasing triggers like crazy!

More sales have started with the salesman’s mouth closed than when it was open.

Eventually I learned that if I didn’t trigger them they won’t get offended. 

To work through this problem I began to focus on communicating effectively by asking well thought out questions to learn more about the seller’s situation. 

When I got shut down I did not make offers on those properties.  When I got my answers, I then made offers on those properties.

The more I spoke with people and asked questions instead of making statements, the more offers I began to make and soon followed offer acceptance!

Remember, you can win more friends with your ears than your mouth.

Pro Tip: Ask open ended questions over the phone, not by text, email or social media.

Before calling smile before you dial and stay smiling, it will come through on the phone.

Understand why the property is priced where it is which happens by asking good questions.

Asking good questions must be followed by good listening for the answers. 

Once I began to focus more on them, than on myself I noticed people stopped being offended because they could tell I was invested in them and wanted to help where I could.

I promise you if you start making practice calls today the process will not be painful for long, but every day you wait prolongs the pain in the process.

We have been suckered into believing that a property that is for sale can be “off-market” and therefore supposedly a “good deal”

Let’s apply some good old fashioned logic to this.

If more than one person in a given market knows that a property is for sale, it’s “On Market” regardless who controls the transaction

An off-market property is not in any way, shape or form for sale.

Example: A listing broker with a “pocket listing” has something for sale that is not listed on the MLS this is not an “off-market property” because its for sale.  It cannot be off-market and for sale at the same time.

Example: A wholesaler who has an assignable contract between themselves and a seller who plans to assign their rights in the contract at closing does not have an off-market property because they are trying to sell their interest in a contract that will facilitate the sale of a property.

Example: A wholesaler who has a PSA who intends to double close the transaction does not have an off-market property because they are marketing it for sale.  It cannot be off-market and for sale at the same time.

I find that people also focus on off-market because they think they can make better use of limited resources and therefore make their money have more buying power.  If you are price shopping and not getting seller financing there is no better way to shop than as a real cash buyer.  No cash?  You can learn how to raise money, the first step in doing that is to keep it simple and go to PrivateMoneyCrashCourse.com to learn how to raise money the easy way.

Let’s Talk About Pocket Listings:

Wikipedia says the following:

In the real estate industry in the United States, a pocket listing or hip pocket listing is a property where a broker holds a signed listing agreement (or contract) with the seller, whether that be an "Exclusive Right to Sell" or "Exclusive Agency" agreement or contract, but which is never advertised nor entered into a multiple listing system (MLS), or where advertising is limited for an agreed-upon period of time.

The reasons for a pocket listing may vary from the need for privacy or secrecy to discrimination, and some sellers may have their own reasons for not advertising a listing in conventional ways, including wanting to sell only to certain types of people. Several legitimate marketing strategies can also lead sellers to choose pocket listings. Pocket listings can be very appealing to buyers who seek exclusive opportunities. Other legitimate reasons for a seller to decide to do a pocket listing include the potential for a faster, smoother transaction when the listing agent has buyer clients who may be interested in the property. It can reduce the need for many showings to strangers.

Perception:

Many buyers think that what they are told is an “off-market” or “pocket listing” must be a great deal already. 

This is FALSE.  In fact, recent studies have shown that in many cases the supposed “off-market” properties often sell for more money than properties listed in the MLS.  This is mostly because of the perception that people have.

REO or foreclosures - same deal, as a matter of fact, I used to sit Bank-Owned Foreclosure open houses specifically because they received more traffic than traditional open houses did.  My signs were bright yellow with black colored font to capture your eye.  I have the word “Foreclosure” in HUGE font size to grab your attention (by the way, we call that a “hook”.)

I hope that after listening to this episode you will be empowered to make batter deals and better prepared to tune out the hype and the FOMO that many buyers face when it comes to buying a rental property or any sort of real estate for that matter.

This episode is quite different from any other episode I have done before, because... I “started ugly” as Chris likes to say.  Starting ugly for this episode all began with a phone call, with no expectation of an answer or any idea of the conversation about to happen.

For me...starting ugly is about not putting much thought at all into the limiting belief of “what if I fail?  Instead, I have learned to think more about “what if I succeed?”

The book is a parable about allowing yourself to take imperfect action in order to overcome the many roadblocks we face in getting started on a new idea.

Today, my idea was to call Chris (without him knowing in advance) and begin to interview him about his book and to discuss his event multimedia conference called Podfest.  Lucky for me he answered the phone!

But...what if he hadn’t answered the phone?  I mean heck... I was already recording...Would I have looked stupid to my listeners?  Perhaps they might think I was a little crazy for recording all that but life would have gone on anyway. 

What about you?  Are you willing to start ugly?  Are you willing to pick up the phone and call a seller whom you have never spoken to before?  I sure wasn’t, but once I realized that the sellers wouldn’t bite it started to become a little less taxing on me.

I also used to worry about looking or sounding stupid, and now I realize that most folks are too distracted to notice whatever I did to look stupid in the first place.  Listen in to this episode for lots of solid gold nuggets that Chris gives us in this interview.

Fun Fact: It was Chris and his community at Podfest that is the reason the Cash Flow Guys podcast became reality.  I was slated to attend a Real Estate cruise when Chris invited me to his special event and pretty much insisted that I attend.  It was that invitation that changed my life forever.

To learn more about Podfest, and grab your ticket while supplies last, go to PodfestExpo.com today

Most folks only focus on trying to buy what’s for sale.  That’s cute and all but what happens when another buyer has the same idea as you?  A bidding war that’s what!  Speaking of bidding wars and auctions, who really wins those anyway...the highest bidder?  I think not, the highest bidder often overpaid.

You can only pay what an asset can afford to pay and the only way to determine that is to spend time speaking with motivated sellers.  When you focus on finding problems instead of properties you will quickly realize that your deals will become much better because you are providing solutions to the seller instead of trying to be the highest bidder.

In this episode, I give away a solid gold idea that will help you and a select group of people you know do ten times the deals you are now...listen in to find out what that is.

Keep in mind that I don’t mean that sellers always say yes, quite the contrary, however, my success level of putting together profitable deals right from the start is much higher than most.

Another question I ask is “Do you have any idea why the property has not sold yet?”  You’d be surprised how often I receive a very honest answer.  Having a seller go through the process of openly admitting they are priced too high goes a long way towards getting them to reduce the price themselves, without any help from me.  Additionally, they often begin to unconsciously focus on the negatives of the property, therefore mentally diminishing the property’s value.  When I experience this happening I know its time to wrap things up and get this deal inked on paper.

In this episode, I give you many reasons and methods of how to ask this question in ways that make it easy for the seller to answer.  Knowing what the seller’s plans are for their equity once a property is sold can mean a simple negotiation that results in seller financing or a lower cash offer if they need cash fast.

Be careful assuming what a seller needs and wants, doing so will almost always result in you giving away more than you have to.  Instead, when the time is right, ASK this question and then use the answer to craft a great deal that will be easy for the seller to agree with.

When you learn to use the seller’s answer to show them the opportunity for benefits from selling to you that no one else discussed with them you separate yourself from the herd in regard to your negotiations.  The seller believes you care about them and their problem which is demonstrated by you taking the time to learn more about their situation instead of just making lowball cash offers like everyone else.

Remember this, most investors are sheep, by that I mean they follow the crowd and do and say what everyone else does.  If you are part of that flock you will waste a bunch of time being led around the prairie while the savvy investors are off in the corner making deals happen.

Need more leads to practice on?  Head on over to CashFlowGuys.com/OFA to take the 30-day challenge and learn how to source more leads than you will ever need.

I am a huge believer in win/win or no deal as a mantra, the only way to structure a win/win deal is to fully understand the seller’s situation so your offer will heal their pain.  A seller with no pain needs to wait for a retail buyer who falls in love with the view or the living room drapes.  You as an investor need not bother making offers to unmotivated sellers, its a complete waste of your time and their time.

Asking about the acceptance of “payments for equity” instead of seller financing or seller funding is a much better way to discuss this sometimes uncomfortable topic.  Please understand that this topic does not need to be uncomfortable, yet we sometimes tend to try to predict the future thus having preconceived notions over how a seller will react.  Its these preconceived notions that result in the discomfort surrounding this line of questioning.

As Larry Harbolt teaches us, “Seller’s don’t want cash, they want what the cash will do for them.”

Phantom negotiating is the term I use to describe the use of psychology to impact how someone views something.  In this instance, when I engage the seller or Broker in conversation about what repairs they honestly feel are needed it changes their view of the subject property.  I ask them about the details of why they feel the repairs are needed and what they feel the cost would be.

You see, when the seller mentions it, the topic is no longer taboo to them because after all, they brought it up in the first place.  That said, don’t belabor the topic because you must maintain good flow in the conversation for it to be fruitful. During the conversation, when the opportunity strikes, we can always circle back to the topic to get the answers we need or in this case to “plant the seeds”.

No matter what cost the seller says (even if ridiculously low) don’t let them feel you disagree at this stage.  The point here is to let that number they spoke sink into their subconscious and do its work to reduce the seller’s impression of the value of the property.

So as not to spoil the episode, you will have to listen in to learn the rest of the topics I covered this week.

When I make calls to find out information about properties we are interested in buying I am sure to record each and every call for my own use.  In every instance when I playback the recording I hear new information that was already told to me once, but I swear I never heard it before.  If you start doing this you will be shocked to learn how much you were told but did not hear.  There are tons of apps that allow you to record your calls, just remember that unless they recordings are for your own exclusive use, you must get the other part’s permission to record.  If the other party denies permission, you cannot make recordings to be distributed.

As the saying goes, “We Get More Bees with Honey” it’s important to ask these questions in a conversational way so that the seller does not feel drilled by a wartime interrogator.  If you weave them into the conversation while remaining focused on listening to the seller’s situation, we will be better prepared to make offers that are easy for the seller to accept without much consideration.

Word on the street is that an acceptable response rate on direct mail is around 2% which for me is simply unacceptable.

If you have been paying attention, you have heard me say that I am studying the art of writing sales copy from people like Jim Edwards, Gary Halbert, Dan Kennedy, Eugene Schwartz to name a few.  This week I just finished Dan’s book called “The Ultimate Sales Letter” when I had an epiphany I felt I needed to share with you.

I discuss this in greater detail during the episode so be sure to listen in to grab those nuggets and put them to use immediately.  After all, how many “We Buy Houses” letters or postcards are you willing to pay for?

PS: A GREAT way to start learning is to grab a free copy of Jim Edwards new copybook at CashFlowGuys.com/CopyBook

As you can imagine, it takes lots of $100 bills to make $10,000, in fact, it takes one hundred of them every month to add up to $10,000.  That sure sounds like a bunch of work, doesn’t it? 

Here’s the good news, you don’t need anywhere near 100 doors or properties to escape the rat race.

Too much focus on “scaling” can be a recipe for disaster.  Instead, let’s get focused on a small win to gain proof of concept.

First,  focus on learning what the realistic rent amount is for a property based on its current condition.

Not in rentable condition?  Then you can’t pay a price that reflects it being in a rent-ready state.

How to do the math on this?  Listen in to this episode to learn more on how to quickly break down the deal to determine a Go/NoGo

Andy brings TRUCKLOADS of value (skip them nuggets, we’re talking TONS) to this episode in more ways than I could possibly mention.  The info in this episode applies to anyone who pays for insurance on anything at all.

In true value loaded fashion, Andy has a free eBook for Cash Flow Guys Listeners that can be had on his website AllCityAdjusting.com

In this episode, we will discuss the real estate investor’s biggest waste of money.

“We Buy Houses” is dead..we ruined it by overusing it matching with a sketchy reputation of those who do use it.  To many sellers it says “I am about to get lowballed” or maybe those “We Buy Houses People Are Sketchy”, either way, its no longer a worthwhile message to put out to the universe.

Building relationships is the key to get to the closing table and beyond.  To effectively build relationships, know, like and trust are the ingredients.  To build relationships we have to overcome any opportunity for a negative assessment of what we are offering and the simplest way to accomplish that is to avoid those situations in the first place by modifying your marketing message.

Untargeted marketing is a colossal waste of money and time.. In fact..it’s the #1 money waster for real estate investors.

If you use the same copy like everyone else, the same subject lines and titles, the same descriptions of what you offer, how can you expect to be any more successful than the next investor?

When I was learning how to build funnels and market myself effectively I invested very little time in my titles or subject lines and most of my time in the body of what I was writing.

I couldn’t figure out why my copy did not covert well.

I had no title, no subject line, nothing to grab the reader’s attention.

What if, instead of “We Buy Houses” you used “How To Find A Good Buyer Fast In As Little As One Week” or “How To Find A Qualified Home Buyer Today”

Then give them a place to go to get that information in exchange for their contact information.

In this episode, I give specific examples of better sales copy you can use to convert motivated seller leads and find financial friends to raise private money from.  Much of what I have learned came from reading my new favorite book (link below), you can get a free copy if you pay a couple of bucks for shipping by using my affiliate link at CashFlowGuys.com/CopySecrets

This week I discuss how I came to this realization and how I have used this realization to become a better investor.  Along the way, I added to my arsenal of tools by creating a deal review form in addition to my #1 method of knowing if a deal was worthwhile or not.

I added this special bonus to my free Mailbox Money Deal Analyzer course that you can grab by visiting http://cashflowguys.com/mailboxmoney

Remember, when it comes to getting great deals, we must begin with a motivated seller and a problem we can solve, otherwise we are just stabbing in the dark.  When we invest time, resources and capital into making deals to the unmotivated, we are guaranteeing ourselves future disappointment.

In 1992 could have bought a house on the water in Madeira Beach, FL, needed a dock, needed yard work, but the inside was ok (liveable). I was 22 years old and fresh out of the Army after 5 years of service

Although as a Veteran I was entitled to a VA zero down VA home loan, I did not qualify for one due to my lousy credit at the time.  I passed on the opportunity all together because I figured the bank would simply say no.

It never occurred to me to simply ask the seller if they would take payments for their equity..even if it had occurred to me I likely would have dismissed that notion by assuming the seller wouldn’t do that for me.

I had the opportunity to buy that house for $75,000 (asking price) which would have meant a mortgage payment somewhere around $550 a month after factoring in taxes and insurance.

I later learned that someone bought that home for $65,000 with no money down, 20 year terms at 5% interest which for me would have meant a payment about $100 less than I had figured originally.

I passed on that because I thought it was too much hassle and responsibility to bother with.  In this episode, I dive into that notion and discuss what I learned from that mental lapse and also what I lost from simply not taking action.

That first house would have set me up nicely, even if it had not been such a great deal right out of the gate.

It took me many years to discover that what was really holding me back was fear of the responsibility of success.

Even in a slow market there are usually plenty of things for sale to look at especially when you cross classes and property types.  In today’s distracted world this can often lead to overwhelm or information overload that almost always ends in the buyer shutting down in a state of confusion.  The next thing we usually hear is “there just isn’t any deals” which is rarely the case.

In my Mailbox Money Program I teach to get this part decided first, before you do anything else.  Once you take the time to realize that the customer you are most prepared to serve is someone like you, things take a turn for the better.  You might reflect back on a time that you were a bit scattered, and by doing so you will quickly see how time could be wasted and efforts misdirected.

There are three types of Investor Identities that tie to asset classes.  In the multi-family space they assign letters to them “A, B, C and D” (“A” being the “best”), yet the same type of description can apply to all asset classes.

In this episode I explain the characteristics of each of them in detail to help you decide which one you fall in.  Once you decide where you land, use that decision to best suit the needs of people more like you.  By applying this logic you will save yourself a lot of time and aggravation by being able to quickly and efficiently zero in on helping those you best identify with.

Business Credit...

Business Lines of Credit...

Whatever you choose to call it, It’s nothing more than a piece of cheese on a mousetrap!

It will keep you in financial prison AND can land you in Real Prison.  In this episode, I discuss this very slippery slope and what happened to David Gaylord of Rochester, NY. (Spoiler alert: It’s not a pretty picture).

As the economy continues to get life breathed into it by the smoke and mirrors of the Fed, one thing for certain is that irrational exuberance will lead many Americans into making financial commitments that they simply cannot afford.

In this episode, I dive into America’s latest dumb thing to do in regard to borrowing money and abuse of credit.  Many claim they are doing this to “Build their business” while in reality, if they need a credit card for that they have no business to begin with.

In any deal in which I am involved, I focus my energy on why the Seller is selling and more importantly, what they intend on doing with the money.  In this case, the Seller’s plans were to secure a more passive investment arrangement with the proceeds of the sale.  She wanted a return that was secure and would outpace inflation.

What I heard right there was music to my ears, listen-in to hear how we broke this deal down and created a true win/win for the Buyer AND Seller.

This topic came up this past week when talking with friends.  One of my friends just celebrated a 15-year anniversary with the same employer. What she received as a “gift” for that 15 years of hard work was the ability to order a present (read trinket) from a catalog.  This episode isn’t about what her employer should or shouldn’t do to recognize her dedication in service, instead of its to help you see the lost opportunity cost that you suffer each and every day.

How much do you really need to earn to leave your w-2 job?  Most people I ask this question to tell me the same answer…$10,000 a month will do the trick.  Will it though?  Could you escape the rat race for less?  The majority of American workers absolutely can!

The average W2 American works from January till May every year just to pay taxes, mindblowing huh?  I bet that if you look at last year’s tax return you will see similar figures on yours.  This means that you really don’t need to fully “replace” your paycheck, you just need to build up your passive income to meet your true net income to escape the rate race.  For most Americans, that means you can escape the rat race by earning somewhere between 50% to 70% of your current income.  How do you accomplish this?  Well, how about listening to this week’s episode to find out :)