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Monday, March 10, 2008
Sunday, March 2, 2008
Real Estate Investing : $14K Wholesale Profit
Property taxes are due at the beginning of each year and if not paid, progressively add up late fees until either the taxes get paid or the property goes to tax sale. We used to mail letters to out of state owners and were contacted by one right before this seller's property was going to tax sale.
The seller didn't have the money to pay the taxes and wanted to sell quickly. We swooped in, bought this beauty, and solved the seller's problems.
Even though this house was only about 1,400 square feet, it needed about $40K in renovations. It had been vacant for a long time and had significant termite and water damage. We did not want to embark on this hefty rehab, so we called one of our investor friends to see if they were interested in taking it off our hands.
Two weeks later, we had a check our hands with a net profit of over $14,000.00! All we did was find a great deal, buy it, clean it out, and sell it for a good profit.
You don't have to get involved with heavy renovations to profit big in real estate.
Tuesday, February 26, 2008
Real Estate Investing : Recruiting Private Money
Finding private investors for your deals is easier than you think. Just make sure to start getting the word out now.
Monday, February 25, 2008
Real Estate Investing : The Transfer Letter
We target properties that have been transferred as one of our marketing strategies. You might be thinking...so, what does that actually mean?
It means that a property's ownership has changed but not through a traditional sale. On the deed, it will usually show a sale price of "$1, $5, $10, $100" or something like that. Maybe someone inherited the property through an estate. Maybe there was a divorce and one of the spouses deeded the property over.
We have had some good success with the list so far. A surprisingly large number of the calls that we get are from people that own the property free & clear. And you don't see that much these days.
There are many different types of mailings that you can do as an investor such as foreclosure, burnt out landlord, probate, out of state, etc. We used to mail foreclosure letters and bought plenty of properties from them, but there was so much competition. Each homeowner usually had a stack of investor mailings on their table when we met with them.
The transfer letter has gotten the phone ringing with free & clear property owners without a whole lot of competition. Give it a try. Just remember that repetition is the key. Mailing once is usually not enough for lasting results.
It means that a property's ownership has changed but not through a traditional sale. On the deed, it will usually show a sale price of "$1, $5, $10, $100" or something like that. Maybe someone inherited the property through an estate. Maybe there was a divorce and one of the spouses deeded the property over.
We have had some good success with the list so far. A surprisingly large number of the calls that we get are from people that own the property free & clear. And you don't see that much these days.
There are many different types of mailings that you can do as an investor such as foreclosure, burnt out landlord, probate, out of state, etc. We used to mail foreclosure letters and bought plenty of properties from them, but there was so much competition. Each homeowner usually had a stack of investor mailings on their table when we met with them.
The transfer letter has gotten the phone ringing with free & clear property owners without a whole lot of competition. Give it a try. Just remember that repetition is the key. Mailing once is usually not enough for lasting results.
Sunday, February 24, 2008
Real Estate Investing : Truth Behind the Due-On-Sale Clause
Buying property subject-to the existing mortgage is a key concept and practice as far as creative real estate investing goes. Most agents, brokers, and other people associated with traditional real estate practices are not privy to this method of buying property. They would probably even tell you that taking over payments on someone's loan is illegal and will refer you to the due-on-sale clause.
The due-on-sale clause "allows" a lender to call a loan immediately due and payable in full if the title to a property changes hands. They are not required to, they just have the option. Lenders are in the business of making money through interest payments from borrowers. As long as a lender is getting paid their monthly payments, they typically would have no reason to ever call a loan due. I'm not saying that it wouldn't happen, but I am saying that it is unlikely.
There are some precautions that can be taken to lessen the chance of a loan being called due. One such strategy is to buy the property into a land trust. If a property is passed into trust for estate planning purposes, the due-on-sale clause is bypassed. After purchasing each property in trust, we send the lender a letter from the homeowner notifying them that there is new management. We give them the property's new mailing address to insure that we get everything related to the property. Even if the lender did a title search at any point in time, it would show that the property was passed into trust.
Even if you buy a property subject-to in your own name or company's name, just make each monthly payment on time and you are probably good to go. I suggest buying your properties in trust though.
The due-on-sale clause "allows" a lender to call a loan immediately due and payable in full if the title to a property changes hands. They are not required to, they just have the option. Lenders are in the business of making money through interest payments from borrowers. As long as a lender is getting paid their monthly payments, they typically would have no reason to ever call a loan due. I'm not saying that it wouldn't happen, but I am saying that it is unlikely.
There are some precautions that can be taken to lessen the chance of a loan being called due. One such strategy is to buy the property into a land trust. If a property is passed into trust for estate planning purposes, the due-on-sale clause is bypassed. After purchasing each property in trust, we send the lender a letter from the homeowner notifying them that there is new management. We give them the property's new mailing address to insure that we get everything related to the property. Even if the lender did a title search at any point in time, it would show that the property was passed into trust.
Even if you buy a property subject-to in your own name or company's name, just make each monthly payment on time and you are probably good to go. I suggest buying your properties in trust though.
Thursday, February 21, 2008
Real Estate Investing : Using Google Earth
For those of you who have never heard of this tool before, Google Earth is a program that uses satellite imagery software to create an aerial map of the entire world. It is truly amazing!
It can be used to scout out and research properties anywhere in the world from the comfort of your own home.
We recently had a lead come in that looked interesting. I knew that the asking price was significantly higher that other homes in the area and it made me curious. I typed the property address into Google Earth and zoomed right in on the property. As I zoomed in closer, I realized that there was a dock in the backyard and that this house was on the water! I called the owner and asked, “What are you doing right now”? I was sitting on the back porch of this home negotiating with the owner within 30 minutes of the lead coming in.
As it turns out, the guy inherited the house and just wanted to get rid of it. He didn’t even owe a thing on this beautiful home that fell into his lap. I ended up buying this home for significantly less than what he was asking and got some owner-financing thrown in for good measure. We were able to turn this lead into an amazing deal that yielded us a couple hundred thousand dollars the day we closed on it!
Download Google Earth for free.
You can practice by Google Earthing your personal residence to see how the program works. You can even use this software now to look out into the universe and zoom in on stars and constellations or to take your own virtual tour of the Grand Canyon! Have fun with it, and I hope it helps your business like it did ours.
It can be used to scout out and research properties anywhere in the world from the comfort of your own home.
We recently had a lead come in that looked interesting. I knew that the asking price was significantly higher that other homes in the area and it made me curious. I typed the property address into Google Earth and zoomed right in on the property. As I zoomed in closer, I realized that there was a dock in the backyard and that this house was on the water! I called the owner and asked, “What are you doing right now”? I was sitting on the back porch of this home negotiating with the owner within 30 minutes of the lead coming in.
As it turns out, the guy inherited the house and just wanted to get rid of it. He didn’t even owe a thing on this beautiful home that fell into his lap. I ended up buying this home for significantly less than what he was asking and got some owner-financing thrown in for good measure. We were able to turn this lead into an amazing deal that yielded us a couple hundred thousand dollars the day we closed on it!
Download Google Earth for free.
You can practice by Google Earthing your personal residence to see how the program works. You can even use this software now to look out into the universe and zoom in on stars and constellations or to take your own virtual tour of the Grand Canyon! Have fun with it, and I hope it helps your business like it did ours.
Tuesday, February 19, 2008
Real Estate Investing : Plant Some Seeds
If you were a farmer, each spring would be a time of planting. Throughout summer you would tend to your crop. And if all went well, you would reap your harvest in the fall.
In order to reap a harvest of good deals and profit in real estate, you have to do the same thing. Plant seeds, tend to your crop, and harvest when the time is right.
Here's 3 steps to get its done:
1. Tell everyone you know that you are a real estate investor and start talking to sellers. Now your planting some seeds.
2. Follow-up with your leads. Just think of it as if you are tending to your crop. Often times, we make offers and they do not get initially accepted. But the fortune is in the follow-up. We have bought a bunch of houses from sellers' that we followed up with. Also, by telling everyone you know that you are an investor, you will get some great referrals for contractors, agents, mortgage brokers, attorneys, etc.
3. Now it's time to harvest. If you got the word out and followed up with your leads, you've found a deal and are ready to assemble your team. Use those resources to "harvest the crop."
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