Everyone has a Question

Questions from a potential client

You know what? Something funny happened to me the other day and I was kind of shocked. A potential client of mine was trying to test me. He asked me a question to see if I knew what I was talking about. Here’s the question that was given to me. Question: “When buying Real Estate what are the three biggest mistakes people make?” I was confused for a second because I didn’t expect to hear such a question coming from a client. I knew the answer, so I played it cool and told him this.

• Picking a bad Real Estate Agent
• Picking the wrong mortgage
• Not doing a home inspection

(Note: There are more 7 more mistakes, but I’ll list them on my next post.)

Then I followed up with a Question for him. I asked “When I say Real Estate what one word comes to mind?” Without hesitation he said EXPENSIVE. This is true I said, but it doesn’t have to be. Then I gave him my business card and asked him to visit me at my office to continue the discussion.

What have I’ve learned from this experience? Some clients want to test you, so they will get on the internet and research a few things. When they get on the internet to research a few things, they automatically think they’re and expert on the topics. So my advice is to keep calm and don’t argue with the potential client. You want to win his or her good faith rather then wining the argument and hurting their pride. If you win the argument, sure that’s a win for you, but you will have lost the sale. To turn things around have questions for them to answer and arrange another meeting with them at another time. A second meeting will give you the chance to prepare for that type of client.

Found a Few Houses [Part 2]

Cost Breakdown

Here's an update on the house that I’m currently looking at. I want to flip the house so put up a ruff estimate to see if the property is worth its keep. I made sure to over shoot each expense to make sure that I receive a profit. Plus I want to be safe just in case there are some miscellaneous expenses that come out of no where (its better to be safe then sorry). So far everything works great, but the real challenge starts after I inspect the property. I want to inspect the property before I make an offer simply because I want to know if there is some major damage to the house that might throw of my calculations dramatically.

Here’s my Cost and Profit breakdown Estimate:

Profit Calculation
	Total
Purchase Price of subject house.	$400,000
Estimated Repair costs	$100,000
Closing Costs	$3,000
Commissions and Sales Closing Costs	$21,000
10% Miscellaneous costs	$12,000
Month to Month Cost	$24,000
Grand Total	$560,000
Final Flipped Price	$702,000
Estimated Profit	$142,000

Found a Few Houses

Rehabbing Offer

Wow… I have been very busy lately, but that’s ok. I have been doing some research on a few possible flips. Each house looks very promising, so I will see what happens when I make an offer.

Remember when you make an offer; make sure your offer is a minimum of at least 30% below the FMV (Fair Market Value). The 30% is your margin to cover rehab cost, hold and profit. Before the offer is accepted, inspect the property for what needs to be fixed. Do a visual inspection, and then get some professionals to inspect it after you’re done inspecting it yourself. If you find some things that needs fixing that wasn’t disclosed by the owner, you can post an offer to the owner of 30-40% below FMV depending on the severity of the problem. Once the offer has been accepted, roll up your sleeves, pay the owner and get to work on the project.

Auction Please

Land Auction

Sorry everyone, I missed my post for today, but its ok. I was extremely busy today, I went to a land auction and it was cool. I’ve never went to an auction before. It was a cool experience. I didn’t want to buy anything, so I just wanted to see how things work at an auction. I’m not into buying something I haven’t seen, so no land for me today. A few people there bought some land and one lady won a parcel of land through a raffle. Over all I went there to learn and network with a lot of people. I’m mainly wanted to find people that are serious in doing business with me.

Study, Study and More Studying

Real Estate Exams

I think within this post I’ll share some studying tips for people that plan to take their Department of Real Estate Exams. If you want to become an agent you have to challenge the exams at the Department of Real Estate. I know what’s going on through your mind, is the exams hard? To put it simple, it really depends how you study for the exams. Now with each US state or country there are different laws and regulations, I always recommend doing a little research online to find out what they are. The reason for this, some US states requires different amounts of schooling and exams to be an agent.

Now, to prepare for the exams it’s always good to go to your local book store or library to gain the necessary study materials. You want to find a practice exam book for Real Estate. Now the next step is to find a place where you feel comfortable studying. I always recommend finding a place where you feel at peace and with little distractions. Now I understand that everyone is different, so maybe you like a place that’s full of noise and distractions. What ever place makes you study well, go with that and focus on the task at hand. Another important note is the time of day you plan to study, I always like the morning in my opinion. In the morning I feel refreshed and I feel I absorb more information in the morning. Then I review at night to keep things fresh in my mind.

[Cramming and long term reviewing]

I’m a crammer at heart, that’s how I learn, but everyone is different. It took two weeks for me to cram all the information I needed to pass the exams, but remember not all people can learn things at the last minute. If by chance cramming is your style of learning, go with that method. For those who like the long term reviewing method, I always recommend taking a month or two to study the practice exam materials. Take 30 to 60 minutes a day to study the practice exams and at the end of each week review what you have learned. After all of that studying you should be ready to challenge the Real Estate Exams, so schedule your exam date and wish for a passing grade.

Looking For an Agent?

Finding a Realtor or Agent

Well some of you should know that you don’t have to be a Realtor or an agent to do Real Estate investing, but it doesn’t hurt to be one. If you’re not an agent, don’t worry you don’t have to go into Real Estate blindly. You can search for an agent or Realtor to help you with your Real Estate needs. As a flipper it’s very important to have them apart of your team. I know what you’re thinking, how can I find the best agent for me? To find the best agent or realtor you have to interview a few of them. You want to ask them about their experiences and how organized they are. For example, if you want to flip a house you would ask the agent if he or she has experience working with people that flip houses. You want to asked questions to get an idea if they want to work for your best interest. Remember it’s an Agents fiduciary duty to make sure you get the best deal possible, so don’t be stupid…ask questions.

Now to find an agent you can always ask a friend or a family member for a referral, but there is a fifty-fifty chance that the agent might suck. Another way to find an agent is to look at your local Real Estate magazines or news paper. Another way is to look on the internet and do a search for agents or realtors. There are other ways to find an agent, but the ways discussed here seem to be very effective.

As a side note, I’ve been asked if I was a good Agent. To be modest, I’m not the best agent in the world. If you asked me to list a house, I would refer you to another agent in my office. I personally don’t like listing houses; it doesn’t suit me very well. The whole open house thing is very boring to me, so I prefer to be a buyer’s agent, loan agent, or investor. Some agents don’t specialize in everything, so it’s important to search and interview the best agent for your Real Estate needs.

I Have More Tips Coming

I'M BACK

Well I’m back and I’m happy to be back. My vacation/business trip was Fantastic. I went to Vegas to see if I could setup a deal, but I passed on the deal. The numbers I calculated with this deal didn’t work out for me. I wasn’t getting the profit I want with this deal, so I decided to say no all together. I would only get $10,000 in profit, for all the amount of work that needed to be put into the property. The rule I stick to, is at least $50,000 minimum on a flip deal. I tried to give it a chance, but I put out 3 different scenarios to see if I would make a nice chunk of cash for future investments (I was wrong, but that’s ok). Not all deals are good deals, you just have to search again and move onto the next deal.

On a good note, I went to a big Real Estate Convention in Vegas (WOOOH YEAH VEGAS!!!!!). I’ll make sure to post a little scrap book of pictures on my Vegas trip later this week. Anyways it was a lot of fun, I learned a lot of new trends in Real Estate and how I can incorporate all the information into my business to make more $$$$. I also networked with a lot of people that are successful in the Real Estate World. I made a lot of contacts while I was out there and like I’ve said before on one of my tips “always have a business card, it will help you”. I did a lot of business card trading out there and I have a stack of contacts that will help me get started in Real Estate in Vegas. So starting tomorrow I will have a new tip posted, so make sure to keep up with my blog.

Out of Town

Road Trip

Well folks, I’ll be out of town for a while checking out a deal for myself. I’ll be gone for about 5 days, so more postings will come after I get back from my trip. I’m going to do two things this week. One, I’m going to see if I can invest in another state. Two, I’m going to a Real Estate Seminar to keep my skills in Real Estate Sharp. When I come back I will have a whole lot of information to share.

Deal With a Friend

Setting up a deal

Currently I’m working on a project with a friend and he wants to invest into Real Estate. It’s his first time experimenting with flipping houses, so I’m going to guide him through the process. Let’s see what happens, I might make a little cash off this deal for helping him. I told him there are a few things that he has to think about before he gets into this type of deal. For this deal to go through there are certain costs and calculations that have to be factored in, for example:

Cost of repairs- In order to get this, we have to contact some contractors to get an estimate.

Price of the house and offer- We need to know what the seller is offering for the house, so we can make a deal that’s lower then the offered price. I’m shooting for 30% below the value of the house.

Closing Costs- These are costs and fees that are paid when real property changes hands.

Commission Costs- Your agent has to make money some how with this deal. Commission usually ranges from 2 to 6 percent depending on how big the deal is.

Holding Costs- This is the cost that holds the property from the time you buy the property till you sell the property. A good rule of thumb is to have enough for a year.

Profit- I’m sure my friend wants to get paid right? So he would want to calculate how much he is getting back in return from this deal. This will determine if the deal is right for him, so he doesn’t waste time and money.

I only discussed some of these things with him, but there is a lot of other little fee and cost that pops up when doing deals like this. I just wanted to give him a feel for how much he has to put into the deal to make the big bucks in the end.

Just as a side note, I’ll keep posting the progress of this deal from time to time. I want other people to learn from this deal.

Money Money and Emails

Mortgages

You know what? I’ll think I’ll talk about financing a deal, yeah I’ll think I will talk about mortgages. Well what is a mortgage? A mortgage is a written agreement that assure property as security for payment of debt. Just to let everyone know, I did get an email about mortgages. Bill asked “Did I get suckered into a bad mortgage by my agent?” Well to tell you the truth Bill, I don’t know if you did get suckered, it’s possible. Remember it’s your job to read all the contracts and ask questions before you sign your life away. Let me put it to you straight, an agent will present to you different types of loans for you, and then you choose. The agent will let you pick because he or she doesn’t want to be liable for suggesting a particular mortgage, but it’s not like you can’t ask questions about how mortgages work. If your agent is good, then he/she will tell you how different mortgages work then it’s up to you to choose. If that doesn’t work or things seem confusing, go on the internet and look up these types of mortgages and see how they work.

• Fixed rate mortgage
• Adjustable rate mortgage
• Fixed/ adjustable-rate mortgage
• Balloon mortgages
• (FHA) Federal Housing Administration Mortgages
• (VA) Veteran’s administration loans

Remember all these mortgages are setup so the bank will get its cut no matter what, so the more you know the more money you’ll save. If you’re an investor it is very important to know how mortgages work, because some loans don’t work very well at all when it comes to flipping or holding houses. If you don’t know how they work then you’ll most likely loose more money.

Thanks to All

Letter of thanks

Man, I love doing this blog and I hope some of you like it as well. I see that some people are commenting on this blog and it brings me great joy. More and more people are supporting this site and I would like to thank all of you who come here for tips about Real Estate. The more people that come here, the more information and experiences I will have for you. So keep commenting and emailing me.

Quick tip for today:

Finding the owner of a vacant property. Let’s just say that you’re out and about and you come across a nice house. You pull up and it happens to be vacant, nothing in the house and no for sale sign. Well how do you know if it’s for sale or not, you don’t? Now let’s take this one step farther and try to contact the owner to see if it’s for sale. To find the owner you can try this:

• Talk with the neighbors and try to see if you can contact the owner.
• Check with a title company to see if you can get some information. The house might be in foreclosure, who knows.
• You can also go to the county recorders office to find out who the owner is. You can also see other previous owners too.
• There are websites that help locate people, so all you have to do is find out the name of the owner.
• Call the utility companies to see if you can get a name and location of the owner.

Network, Network, Network

Networking

I hope your credit is clear, because it’s time to discuss growing your Real Estate Business (Networking style). Yes, it’s time to roll up your sleeves and do some major talking to everyone you know. Networking is a good way for finding business, I know because I do it all the time. Just the other day I talked to this guy at the book store, and I looked at what he was reading and I made a comment. He turned to me and said, “Oh you read this book?” I answered him back with a strong yes. It just so happens, he was reading a book about business, so I asked him what type of business he was into. He told me and after that I had a good conversation about what he does for a living. Then I gave him my business card. He looked at my card and smiled, he told me that he always wanted to get into Real Estate.

As you can see Networking is good, I created path for business in the future or immediate future. I know what you’re thinking, who should I talk to and how can I start? It’s easier then you think, so here are a few people you can add to your network.

• Friends
• Family
• Co-workers
• Attorneys
• Accountants
• Neighbors
• Doctors
• Realtors
• Anyone that can help you grow your Real Estate business.

All you have to do is talk, listen and tell them what you do for a living (Real Estate). These people can help you in many ways, such as direct business, work for you or referrals. Now that you know what to do, get out there and talk to people.

Better Credit Please

Credit Talk

I know that some of you are very motivated to get a house, but what if you don’t have a good credit score? How would you get a house? So let us talk about a few tips to up your FICO score. Please keep in mind; I’m not a credit consultant or professional of any sort. I always urge people to see a professional about upping their score, but here are some tips that worked for me.

Stay current with your bills and maintain a low balance- This is the good old fashion way of keeping your credit in check. I know it’s hard to keep a low balance especially if you love to spend money on useless things, but try anyways. Just pay your bills on time, your credit will go up and stay up.

Sometimes it’s good to consolidate- This is good, but don’t always try to move one credit card to another, to another, and to another. Just keep things simple, and do it once or just pay those stupid things off. It’s better to pay them off, believe me.

See a credit counselor- If your debt is out of control, a credit counselor will help you get your credit under control.

Pull your credit- Only do this once in a while, not all the time. Remember every time you pull your credit, your score drops. Don’t get me wrong, it’s good to see where you’re at in terms of credit position, but don’t pull the thing all the time. Once every 4 to 5 months is good rule of thumb.

Big Investments [Part 2]

Being Organized for Investments

Within this post, I would like to make reference to my last email from Jim. He talked about having a big investment portfolio, hence my next topic of discussion (Getting Organized). To keep track of your big investments, you have to get organized. It's essential if you want to keep making the big bucks, right? Of course, no one want to run around like a chicken with its head cut off. Being chaotic with your investments is like asking for failure, so being organized is the way to go.

Keep a daily Planner- I always recommend, having a Blackberry cell phone. Those things are great in every way. They’re great for keeping track of your day to day activities, but if you can shell out the cash for it, or you’re not tech savvy, you can always count on a day planner book (old school hand written day planner).

Get Business Cards- Business cards are very powerful, I’ve once sealed a deal just by having one on hand. They let people know you’re serious about your business and people can contact you long after you meet them for the first time. They're a great way to network with people you want to do business with. So a business card is essential for being organized.

Have an Office- You don’t have to buy office space; you can setup shop at home if you like. You just need a place to stay productive and focused.

Cell phone- I always recommend having two cell phones, one for business and the other for personal. I always believe in keeping business separate from personal matters, plus things stay more organized if you have your business contacts away from personal contacts.

Computer- This is the number one must have to stay organized, but be for warned, always make backups for everything. Computers do crash sometime, so don’t be a victim of losing work because of it. Over all, this will save you time and money, because of the power of emails, fast networking, and information gathering.

Books and news papers- Always stay current with what’s out there in the Real Estate industry. The more you know the better you are, so knowledge is power.

Big Investments

More Real Estate Questions

Hey, I’m starting to be surprised with the emails that I’ve been getting lately. They’ve been trickling in little by little. My next question comes from Jim and he said this…”Is it really necessary to have a big investment portfolio? I get scared just thinking about it.” –Jim

Well to put it to you straight, it is a scary thing, but it doesn’t have to be. When you invest, you want to take your time and build a portfolio that best fits your financial goals. If two to three houses are your goal, then stay with that until you can handle more. A larger portfolio can produce more for you if you manage it correctly, but try not to over leverage. One good thing to do is seek guidance from a person that has a huge investment portfolio. Generally, someone that has twenty or more houses.

I’m really glad that these emails are coming in. Honestly, this next question has nothing to do with Real Estate, but I’ll answer the question anyways. “When are you going to put more content on the blog and why yellow on the car?”-Kim.

Well there will be more content; I always save the best content for last. As this blog grows, so will the content. Thanks Kim for the email and you’re right, yellow is not my color.

A New Investor asked

Emails from a new Investor

I had an email from one of my viewer and she asked me about investing. This is what she asked “I don’t really have any money for an investment, but how can I get in on a Real Estate deal?” –Jill.

Well, to answer that question, there are many ways to setup a Real Estate deal. I’ll talk about one for now. One way to get into a real estate deal (especially if you don’t have money) is becoming a Bird Dog. To put it straight a bird dog is a deal finder. They go out and find a Real Estate deal then they had over that deal to an investor for a fee. This is a good way to gain a little capital, so you can make your own deals.

Just to kill two birds with one stone, I had another email from another person asking about finding investors. This 2^nd email is closely related to Jill’s question, simply because you need an investor lined up if you want to be a bird dog. Here are some ways to find an Investor:

• Join a local Real Estate investor’s club-Get to know these people, they’re a big help.

• Put an ad in the local newspaper- investors can contact you with this method

• Real Estate forums on the internet- investors can contact you with this method too

• Referrals from Realtors or Contractors- These people know who’s a major player in the Real Estate game.

I’m glad I got some emails. It gave me a chance to interact with some people that are new to Real Estate. I would like to thank them for their support of my blog (Thanks Jill and Dave).

For the Investor

Helping People in Pre-foreclosure

There are many people that are facing pre-foreclosure and many of those people would like to keep their house. Investors have the power to help the keep their house or they can be cruel and kick them out. I personally don’t condone that method, but some people are monsters and would do anything for a buck. I, myself, would like to help people keep their homes. The more you help people the better returns you’ll get. There are ways to keep them in there home. Here are a few examples:

• A loan modification (Refinance)-This can help especially if there is equity in the house.

• Forbearance- This is a repayment plan offered by some lenders. You have to be current in order to be in forbearance and you have to prove financial hardship.

• Talking with the bank or lender- Sometimes talking with the lender can help, there could be other payment plans offered to help the situation.

• Chapter 13 Bankruptcy- This is a method that I see as a last resort, simply because it can destroy a person’s credit for a long time.

If these methods don’t work then the owner would want to sell the house. At this point I would sell the house and try to put the buyer in a smaller house or a rental.

I Can't Believe It

I can't believe that this is happening so soon. I want to keep this site going, so I'm asking people to help out. I hope people can find it in their hearts and donate $2 to help keep this site alive. If you don't have the cash, that's ok, but at least donate an article you wrote about real estate and I'll post it(No need to worry, you'll have credit for the post). I want to keep teaching people about Real Estate, so please help out.

What's a Short Sale?

Short Sale

A short sale is a program that is offered by a bank that helps release the borrower from their debt. A short sale represents a solution for a homeowner who cannot pay his mortgage and wants to walk away from the property without destroying his or her credit and financial profile through a foreclosure or bankruptcy. The reason why the banks do this kind of sell rather than foreclosing is because the banks want to save time and money. The banks don’t want to spend time fixing up the property to get it ready for auction. A quick sale to another buyer is faster for the bank.

For a short sale to take place, you need to have a few things ready:

• A property owner that is willing to sell the property
• A contract offer to buy the property
• Value and costs associated with sale of property
• Total of loans against the house
• Legal assistance
• Accountant
• Contact the lenders
• Proof the seller is incapable of paying the mortgage
• Short sale package from the bank