If you missed the first episode, check it out before watching the newest installment. It’s on our due diligence for the property at 5536 Rio Street, Charleston, South Carolina.

Episode 1 : Due Diligence for 5536 Rio Street

We just closed on the property last Wednesday, September 17th. The second episode commenced last Friday when we kicked off the renovation.

Here’s a quick list of what you’ll find in the video:

• Meet our partners on the deal, Sean Hall and Eli Sanderlin.
• How the lead came in and a “Must Know” Tip on marketing.
• Why Sean and Eli decided to partner with us on the deal and the value of working together.
• Some interior shots of the property after the initial tear out.
• How the renovation will unfold.
• How we plan on adding curb appeal with Chris Williamson and his crew.
• The Negotiation and another “Must Know” Tip for success.
• Our total repair estimate and time line to get it all done.

(if you are reading this article from your email subscription, you may have to go directly to the blog to see the video)

To give an overview on the deal, here’s what we are working with:

Purchase Price: $58,000

Repair Estimate: $15,000.00

Estimated ARV (after repaired value): $115,000.00

Time Frame for Renovation: September 17th to October 16th

As I stated in the video, it’s crucial based on our exit stategy of retailing the home to finish the renovation by the middle of October. This will give us a solid month to market the property prior to the winter months.

Stay tuned for the next episode!

Popularity: 33% [?]

Here’s the top 3 real estate investing articles of all time here at MustKnowInvesting.com:

1. 59 “Must Know” Tips in Creative Real Estate Investing to Minimize Risk and Maximize Returns

This creative real estate investing article presents tips throughout the entirety of the investing process. Whether you are a beginner, an expert, a flipper, a wholesaler, however you relate to the real estate investing world, you will be provided with some insights into safely maximizing your returns.

There are a ton of links throughout this article to help guide you through the blog to find exactly what you are looking for.

click here to read the article

2. How to Turn a Good Deal into a Great Deal : Creative Real Estate Investing

You’ll learn 7 simple ways to turn a good deal into a great deal such as getting “the stuff,” negotiating seller financing, rezoning a property, and more.

Remember, you never want to make the mistake of “trying” to make a deal work. Either it’s a deal or it’s not! What we’re talking about here are some simple ways to pad the deal for a greater comfort level and profitability!

It doesn’t ever hurt to be on the conservative side of things . . . especially in today’s market!

click here to read the article

3. The Most Costly Mistake You’ll Ever Make as a Creative Real Estate Investor

Here’s a little excerpt:

Have you ever read or heard about a killer deal that a real estate investor did and thought to yourself, “Why in the world would the seller ever accept an offer like that?” or “I could never make that kind of an offer” or “How do you talk someone into that?”

If you answered “yes,” than you have most likely suffered from this common profit destroying tendency. At some time or another, ever creative real estate investor has made this mistake and must always be on guard against it . . .

click here to read the article

Enjoy!

Popularity: 38% [?]

Read this first if you haven’t already, Secrets of Real Estate Investing Success : The Missing Link (part 1).

In part 1 of this series, we identified that profit is the #1 reason why you are in business and discussed the four key focus areas of your real estate investing business’s profitability (marketing, your negotiating / communicating skill set, converting your real estate investing actions into cash, and leveraging through systems).

But, knowing all of that isn’t enough, there’s still a missing link that separates the mediocre majority and the successful real estate investors who are where they want to be!

The missing link is understanding and effectively applying the Pareto Principle, also known as the 80/20 rule, in the key focus areas in your real estate investing business.

The Pareto Principle states that 80% of the effects (results) come from 20% of the causes (actions). This can be applied across the board to almost anything. If you want to learn more about that, just google it.

Alright, you know the #1 reason why you’re in business is for profit, you know the key focus areas to maximize your real estate investing business’s profitability, and that the missing link is applying the 80/20 rule to it.

Not what?

Applying the Pareto Principle to Your Real Estate Investing Business

First, you want to determine where you are as an investor. What are your strengths and weaknesses that apply most to your being a successful investor? Have you bought your first deal yet? Are you struggling to get past your fears of the unknown? Have you been getting the same mediocre results for years and can’t figure out why?

A beginner and an intermediate investor would apply the missing link in very different ways based on their circumstances.

Second, you must gain a full understanding of how your time is spent. This is done by writing down everything, and I mean everything, that you do on a day to day basis during your working hours. Until you can take an educated view of how you spend your time, chances are, you’ll stay stuck at your current investing level. You’ll continue to get the same results you’ve gotten month after month, year after year.

If you think you know how you spend your time, prepared to be blown away. You most likely spend the majority of your time doing unimportant things in a very haphazard way. Not what we advocate if you really want to be successful as a creative real estate investor! (in our creative real estate investing mentoring program, we take each student through a thorough time analysis applied to the key focus areas of profitability in their real estate investing business)

Now that you know where you are as an investor and have a baseline for how you spend your time, you’re ready to apply the 80/20 rule!

Remember, 20% of the your current actions are producing 80% of your results. Ask yourself, “How could I change the way that I use my time to produce far greater results? What key focus areas of profitability do I need to focus on based on where I’m at?

The ball is in your court now! What you do is solely up to you. Are you going to be proactive with this information?

Most people will continue to fall into their habitual reactive mode and respond to everything during their day that “happens.” They will work on the things that aren’t important and procrastinate on the things that make THE difference between being a highly successful real estate investor and those stuck in low levels of performance.

The choice is yours!

Popularity: 38% [?]

This post is for the 85% of creative real estate investors who say to themselves:

____________________________________________

“I’m not where I want to be. I want to

Make BIG MONEY Investing in Real Estate!

What am I doing wrong?”

____________________________________________

What’s the difference that makes the difference between mediocrity and success in creative real estate investing? What’s the missing link?

Before we can get to the missing link, you must ask yourself, “Why am I in Business?” If you didn’t say profit as your #1 reason, we’ve got a problem! You are going to need to reevaluate what you’re doing if you care about becoming a successful real estate investor.

“But Patrick, the #1 reason that I’m in business for myself is to give back to my community, help my parents out financially, and eventually, start a nonprofit.”

WRONG ANSWER! These are all terrific reasons to go into business for yourself, but they all hinge on the One Most Important Thing of All, Your Business’s Profitability!

OK, so we’ve established that profit is the #1 reason why you’re in business. To get to the missing link, we must analyze what specific actions make a real estate investing business profitable.

__________________________________________

Key Focus Areas for your Real Estate Investing Business’s Profitability

1. Marketing

Do you have plenty of seller and buyer leads at your disposal? What is your marketing strategy? Do you track your cost per lead, cost per deal?

2. Your Negotiating / Communicating Skill Set

Have you studied sales and negotiating? Do you use a sales system? Do you effectively communicate with sellers, buyers, investors, contractors? How do you handle typical objections?

3. Converting Your Real Estate Investing Actions into Cash

Have you learned the ins and outs of wholesaling, assigning contracts? Do you use lease options as a strategy for selling property at maximum value? Do you know how to flip a house and come out on top?

4. Leveraging through Systems

What real estate investing systems are you using to manage and organize your business?

_____________________________________

Depending on where you are at in your real estate investing career, you will want to focus more on some of the key focus areas more than others. For instance, if you’re a beginner,  the first action that should be taken would be in marketing. If you don’t have any leads, there’s really not anything for you to do, right? No way for you to make any money as a real estate investor.

But, even knowing what the key areas of focus should be for your real estate investing business is not enough. There’s still a missing link! And that missing link is the difference between average mediocre results in real estate investing and Making the Big Money!

Tune in later this week, in part 2 of this post, I’ll be explaining exactly what holds back most investors from ever achieving their dreams and what to do about it!

Popularity: 47% [?]

First off, let’s define “shopper” and make sure we are on the same page.

A shopper is a seller who has contacted every investor in the book to try and get the best offer possible. These people have very little loyalty and aren’t thinking about anything other than what’s in it for me (as if I could blame them). They call every “We Buy Houses” ad in the phone book, the newspaper, on the internet, etc.

BEWARE: A shopper can steal a ton of your time and suck the life right out of you. You spend time researching their property, do a thorough inspection, make them an offer, and . . . nothing. They tell you thanks a lot, maybe I’ll call you after the other five investors have made their offers. You drive home dejected, never to hear from the seller again.

First Line of Defense

The first thing that you can do to combat the shopper is to identify them. This is done by asking the seller a simple question.

“Have you spoken to anyone else about selling your property?”

I ask this question for a couple reasons.

First, I want to make sure that the seller hasn’t already contractually obligated themselves to another investor because we don’t want to step on anyone’s toes. You would be surprised how many times we’ve contracted a property and two weeks later, the seller is signing a contract with another investor. Sometimes they claim ignorance but usually they are just trying to get a better offer. Click here to learn about protecting your real estate deals from contract to close.

Second, I want to know if there is any competition already in the picture. Depending on how the seller answers, you’ll have a pretty good idea if you are dealing with a shopper.

Assimilate Your Battle Plan

Next, you want to gather all the necessary information so that you can position yourself for success.

“Have you received any offers?”

You want to find out if an offer has been made and exactly what that offer was.

If the seller doesn’t want to answer, just tell them, “I don’t mean to be intrusive, it’s just that I don’t want to waste any of your time. I value my time highly as I’m sure you do, and you may already have been offered much more than I could pay you. That makes sense, right?”

Find out what was offered, price and terms, and ask the seller what is most important to them about an offer. You may find out that price is not the number one concern. It could be the time frame or working with a professional company or that it’s an all cash deal. Let the seller tell you.

The #1 Mistake Real Estate Investors Make when Dealing with a Shopper

A shopper’s goal is to collect as many offers as they can. Once you make them an offer, you no longer have a bargaining chip. The seller no longer needs you. Your offer will be used as a baseline for the seller’s future negotiations.

Unless you are one of the last investors that the seller is going to meet with, you have little to no chance of securing the deal.

Winning the Battle

“How many investors do you plan on meeting before making a decision?”

This question will help you gage when to schedule your appointment with the seller. If you find out when you are at the property that the seller is still going to meet with someone else, take your time building rapport with the seller but don’t make your offer yet. Let them know that you will start working up your numbers and will meet back up with them after their last appointment.

Your ability to build massive rapport with the seller throughout this process will aide you greatly in your quest for the deal. You will most likely have the most touches with the seller by communicating with them throughout their shopping process.

By positioning yourself to be around at the end of the battle, you’ve got a fighting chance to win the deal! Good luck and may the best investor win!

Popularity: 66% [?]

First, I want you to read this quick excerpt from a previous post, How to Increase Profits by 300% in the Next 90 Days:

“Whether you like it or not, you are a salesman. If you don’t like the sound of that, assign another mental representation to what you think of when you think of a salesman. Everyone is in sales whether they admit it or not. As an investor, you are going to be selling contractors, investors, buyers, sellers, attorneys, accountants, and possibly employees just to name a few, on your ideas every single day! If there was a master skill to success as a real estate investor, I think that it would be to become an excellent communicator. That is really all negotiating and sales is…communication.”

“So my question to you is, “What have you done lately to improve your negotiating and sales skills.“

If you answered “nothing” to the above question, I’ve got an offer for you. Dusty put together an awesome CD about a year ago called “7 Things You Must Know Yesterday about Negotiating Great Deals.” I was rummaging through a closet last week and found one more boxes of the CDs. If you are interested in getting a free copy while we still have some left, click on the link below (all you have to do is pay shipping).

___________________________________________

Here’s what a couple people had to say about it:

“Dusty Keefe just understands negotiation in a way that anyone can pull from. When you hear the WAY that he phrases what he says you will learn, very quickly, the elements of proper style as you are engaging in Negotiations.”

Andrew Turner

“I received the CD with no problems, thank you so much. It’s a great CD!“

Dennis Schreiber

___________________________________________

CLICK HERE: 7 Things You Must Know Yesterday about Negotiating Great Real Estate Deals

Popularity: 42% [?]

Good deals just don’t cut it for me anymore. To do a deal in today’s market, it has to be great! I would suggest that you prescribe to the same philosophy. If you’ve been reading the blog lately, you know that we’ve talked a lot about minimizing risk and maximizing returns. By turning a good deal into a great deal, you are accomplishing both.

7 Simple Ways to Turn a Good Deal into a Great Deal

1. Get “The Stuff” Thrown In

Let your imagine run wild. The appliances, the furniture, TVs, really anything in or around the property that could be thrown in to sweeten the deal are fair game. If the seller seems to be stuck on a certain price or terms that don’t quite do it for you, a 64″ plasma and leather sofa could do the trick. There is nothing wrong with asking.

2. Negotiate Seller Financing

Every bit of seller financing that you can negotiate adds value to the deal (assuming the terms aren’t outrageous). As long as you are working with a motivated seller, this should be your reality in every deal you do. You are the boss here. Give a little on price when it makes sense to get the terms you want. Most investors spend all their time on the price side when the terms side of the negotiation can explode your wealth.

3. Put Less Cash Down

Typically, if you are putting less cash down, you would be compensating a seller with a higher sales price, higher interest rate or shorter time frame. BUT, less cash in the deal can definitely turn a good deal into a great deal.

4. Get Paid to Buy It

Go ahead and decide now if this will be a possibility for you. The naysayers will tell you that this is impossible, but all that they are saying is that it is impossible for them.

I know that it’s possible because I’ve done it. I bought a house a year ago last May, and the seller sends me a check every month, without fail. They owed far too much on the house for me to buy it for what was owed. I offered $17K less than what was mortgaged and bought the house without coming out of pocket. Now, I get a check for right under $200/mo. every month. I have the house lease optioned with about a break even cash flow with $25K in profit on the back end.

5. Rezone the Property

I do not have a lot of personal experience rezoning property, but it can be extremely profitable. There are investors whose entire livelihood comes from contracting properties, getting them rezoned, and flipping them for hundreds of thousands of dollars.

How about that for a way to minimize risk and maximize returns?

6. Use OPM

Always a good way to turn a good deal into a great deal, using other people’s money. Just remember, the point would be to maximize your return on cash. If it makes sense to use some of your own money, by all means do it. But, if you can employ your funds to work harder for you than the price at which you can borrow, use OPM.

7. Sell or Fill the Property Before you Close

I love this strategy to turn a good deal into a great deal. When you have a buyer or tenant lined up for a property before you even close on it, you are positioned to do very well.

Make sure that your purchase and sale contract includes the right to market the property during the contracted period. You should have it built right in.

Popularity: 68% [?]

Have you ever read or heard about a killer deal that a real estate investor did and thought to yourself, “Why in the world would the seller ever accept an offer like that?” or “I could never make that kind of an offer” or “How do you talk someone into that?”

If you answered “yes,” than you have most likely suffered from this common profit destroying tendency. At some time or another, ever creative real estate investor has made this mistake and must always be on guard against it. Without further ado. . .

Don’t Think for Other People!

Here’s an example when we didn’t think for the other person and came out on top.

A motivated seller gave us a call. She owned a mobile home in North Charleston. Our primary business is not buying mobile homes, but our motto has always been, “We do deals.” So, whatever it is, if it’s a deal, we’ll take a look at it. The home was in good shape and the owner wanted a cash offer so we gave her one. We offered her $9K. And the seller owed $36K!

You may be thinking that our offer doesn’t make sense, but who ever said that you had to offer a seller more than they owe. She went through a credit union and got a personal loan for $27K to pay off her title loan. That’s how bad she wanted out.

We bought it for $9K, had the carpets cleaned, and financed it to someone for $24,900 with $3K down! Had we thought for the seller, we never would have made that offer in the first place.

4 Sure Signs That You’re Thinking for Other People and Losing a Ton of Money in the Process

1. You Get Your First Offer Accepted

My business partner, Dusty, is a master real estate investing negotiator and does his best never to think for someone else. He prides himself on the fact that he has a method to not only negotiate price but terms as well. Typically, most investors only negotiate on price but there is much more to deal structuring than what you pay for a property. How you structure paying for a property can turn a mediocre deal into a grand slam!

A lead came in about a year ago from a seller who owned a property free and clear. The seller was already asking a reasonable price so we knew there was a great opportunity here.  Dusty took the seller through his normal negotiating process and low and behold when Dusty made the offer . . . the seller said, “OK.”

Even though we got a good deal under contract that day, I remember talking to Dusty when he got back from the appointment, and he was not too happy with himself. When you get your first offer accepted, you know that you left money on the table, and the culprit was most likely thinking for the seller.

2. You Don’t Ask for What You Want

Only you can be the judge of this sure sign that you’re thinking for other people. Maybe you didn’t ask for the terms that you wanted in the deal or you didn’t ask for the seller to include the appliances, fixtures, or the boat sitting in the front yard.

Children have an amazing capacity to continually ask for what they want regardless of how many times they have been told “No.” Think back to when you were a child and harness that ability.

3. You Consistently Make the Same Profit on Your Deals

Have you done several deals now and seem to make around the same profit in each deal? Even if you are a seasoned pro, there is an average profit that you make per deal.

Find out what your average profit is and determine to make more on your next deal. You may have gotten comfortable and stuck in your ways. You may be thinking for other people and have an established profit # in your head that you “should” make per deal.

Every deal that we do is looked at on a “deal by deal” basis. Depending on the terms of the deal, the location of the property, condition of the house, etc., we determine our bottom line and make an offer we feel will be rejected.

4. You “Try” to Make a Deal Work

“Trying” to make a deal work is a dangerous thing to do. This usually occurs when you become emotionally attached to a property, the seller’s situation, and you start thinking for the seller.

It must be black and white! Either it’s a deal or it’s not. Run your numbers and keep your thoughts on what makes sense for you.

Popularity: 61% [?]

As creative real estate investors, there are many strategies that we can implement in our businesses to minimize risk and therefore . . . Maximize Returns!

When I first wrote down the idea for this post, I had a few things in mind to list and then something happened. I started to realize how many of the things that I do regularly are done for a specific reason. And that reason is to Minimize Risk and Maximize Returns!

Many of the suggestions and tips that I’m about to share with you were learned due to hundreds of hours study, and years of experience investing full time in the field. So hold on tight because this is going to be hot!

59 “Must Know” Tips to Minimize Risk and Maximize Returns

1. Become a Wholesaler

Some wholesalers close on a property and then immediately turn around and sell it. Others never even close on it in the first place. If your goal is to minimize risk, this is the strategy for you. Find a motivated seller, contract the property, and assign it for a wholesale fee. You can easily make $5K to $10K if you’ve got a good deal and sometimes much more.

Check out these two posts to learn more about real estate wholesaling strategies:

How Flip a House for a $14K Wholesale Profit without Rehabbing It

How to Start Investing in Real Estate Without Spending Money on Marketing

2. Use OPM

If you’re not familiar with the term, get used to hearing it. I’m talking about Other People’s Money. Doesn’t matter whether it’s a hard money lender, Bank of America, or your Uncle Bob. Leverage is powerful! Learn how to use it!

Check out the Real Estate Investment Financing Strategies category.

3. Build a Guerilla Marketing Plan

A Guerilla marketing plan is a low-to-no cost real estate investing marketing plan. There are a bunch of ways to get motivated sellers on the phone that don’t cost an arm and a leg. There’s a book by Jay Abraham on the subject that’s pretty popular.

Also, there are several posts in the Marketing category that go over low-to-no cost marketing techniques. Check them out.

4. Join a Mastmind Group

Andrew Carnegie taught the power of a Mastermind Group to Napoleon Hill, and Hill penned it in the classic book, Think and Grow Rich. If you haven’t read it and care about your financial future, buy the book this week.

As far as a Mastermind Group goes, find like-minded individuals that you can bounce ideas off of. Meet regularly to discuss your experiences, hardships, and successes. This will provide valuable insight into both your business and yourself.

5. Log Your Tenant Communications

When you end up in front of a judge (notice I did not say if), the more organized you are, the better chance you have to come out on top. The judge can pretty much make decisions to suit their personal liking so it’s a great way to minimize risk by knowing exactly when, where, and how you ended up in court with this tenant. Some judges are more tenant friendly, some more landlord friendly.

6. Build a Good Contractor Team

I have heard about and personally experienced bad contractors. I’ve been given estimates for things that didn’t need repairing, had a contractor get paid and never be seen again, and had contractors that stole supplies right off the job site. As a matter of fact, I just filed a judgment against a contractor a couple weeks ago who owes me a few thousands of dollars.

OK, I’m done with my rant now. There are also many excellent contractors. You may have to look hard but we’ve built an excellent team of good quality trustworthy contractors over the years.

Check out a recent post from one of our contributors, Wil Christenson, How to Find Great Contractors for Your Real Estate Investing Renovations.

7. Order a Title Search

My mentor, Louis Brown, said to always buy title insurance. I am a proponent of doing what experienced successful investors say so this one’s coming from Lou.

8. Get Everything in Writing

With your contractors, investors, tenants, partners . . . everyone that you do business with. Write down the terms of your agreement! Determine what will be paid for any products or services rendered prior to them being provided.

You can infinitely improve your chance of building longterm professional relationships by adhering to this often ignored nugget of wisdom.

By foregoing this easy and intelligent tip, you’re putting much more at risk than you realize.

9. Learn How to Utilize Options

Options can be used as a great way to tie up property with minimal risk. Since an option is a unilateral agreement, you can choose whether or not to exercise your option and close on the property. The only thing typically at risk is the option consideration that you put down which doesn’t have to amount to much. That will be determined by your negotiation skills.

10. Buy it Cheap Enough where you Could Flip it and Come out on Top

Flipping property is the most expensive way to sell real estate. Between purchase costs, the renovation, holding and marketing costs, and the costs associated with selling any property, profit can disappear pretty quickly. And we haven’t even talked about the tax consequences!

If you analyze a property and you could flip it and come out on top, that’s a safe bet.

11. Hire a Good Accountant

Knowing the bottom line in every deal you do is vitally important. If you are set up properly, an accountant can provide you with a wealth of valuable information so that you know how to maximize the returns from your portfolio.

12. Buy Properties with More Than 1 Bathroom

One bathroom houses have always taken us longer to fill with a tenant than houses with more. If you are looking at buying a 1 bathroom house, look for a way to at least add a half bath. You’ll be kicking yourself when your 1 bath house is sitting vacant for months at a time if you don’t.

Two or more baths is ideal and makes for a much more marketable house.

13. Utilize Technology

The Internet and technology are changing the way business is done at a faster rate than at any other time in history. Staying current and knowledgeable on the applications of technology to real estate will put you ahead of the old timers that are stuck in their ways.

You will be minimizing your risk of getting left behind by utilizing technology in your business.

14. Get a Professional Opinion of Value

This could be from a real estate agent, an appraiser, or some other knowledgeable real estate pro.

Check out this post for some tips on valuing property.

15. Be Able to Survive the Worst Case Scenario

This could correlate to many different scenarios.

For Example: Let’s say you find out there’s $15K worth of water and structural damage on one of your rentals, the tenant stops paying you rent and you start the eviction process, and it takes you 6 months to get it fixed and rented out again . . .

Could you Survive?

16. Use a Good Closing Attorney or Title Company

A good attorney or title company could save you many thousands of dollars and headaches. If you are looking for someone that is creative real estate friendly, I would suggest asking people in your local real estate investing association. Referrals have always provided much more value to our company than pulling out the phone book.

17. You are NOT the Owner . . . You Work for the Owner

As soon as someone knows that you are the decision maker in relation to a property you own, you have given up a valuable position of leverage. Whether it’s with tenants, contractors, or buyers, you’re best off if you “have to consult with your partner” or “have to run it by the owners.”

18. Have Sellers/Tenants Sign a Lead Based Paint Disclosure

I’ve never had any problems in any of our properties with lead based paint but many people have. This is a standard form used for most real estate transactions.

19. Learn How to Evaluate Property on Your Own

Knowing how to evaluate a property on your own gives you an advantage. You do not have to rely on someone else’s opinion, and you’re not on their time. By doing your own evaluations, you will be able to know quickly if you’ve got a deal on your hands. And time is of the essence when working with motivated sellers.

Click on the link in #14 if you want further info on this one.

20. Don’t Quit Your Day Job . . . Yet

Relying on monetizing your real estate deals for your sole source of income can be quite challenging. If you have a good income and your doing deals to make extra money and build wealth, you will be in a great position to do so.

21. Learn Creative Deal Structuring Strategies

Creative deal structuring spans from doing subject to deals, to structuring owner financing notes payable over time, to using the little know concept of substitution of collateral, to bringing in private investors to fund your deals, and the list could go on and on. You can be as creative as you want in the contracting, financing, renovating, and selling phases.

Ask yourself continually, “What’s another way that we could structure this deal?”

22. Have Multiple Exit Strategies

DO NOT enter a deal if you only have one way out of it! Why do you think so many of the speculators that bought preconstruction deals when the market peaked are losing their investments to foreclosure. They banked on one thing and one thing only . . . Appreciation! So the market fell out and so did they.

Check out the post, Real Estate Investment Financing Strategies : What is Your Exit Strategy for more info.

23. Do What Experienced Investors Tell You to Do

Maybe it’s built into human nature to not want to listen to people and to forge our own path and make our own decisions. Well, if you’re just getting started, fight this tendency!

It is much cheaper to learn from the mistakes of others rather from the school of hard knocks! Do exactly what successful investors tell you to do.

24. Define Your Niche

This will skyrocket your chances of success as a creative real estate investor. You will make it much harder when starting out by buying a couple properties in the hood, a few nice houses in nice neighborhoods, multi-family property, a beach front condo, and a mobile home park. You get my drift anyway.

My company’s niche is single family homes in nice areas, in good condition, with an ARV between $150K-$175K. Depending on where you are located in the country that price range may sound like a war zone to you, but it all depends where you live. Here in Charleston, South Carolina, there are many areas within a 30 minute drive that fit into our niche.

25. Write Small Earnest Money Checks

Between $10 and $100 is customary for our company. Most real estate professionals (agents) typically do 1% of the purchase price. But we’re creative real estate investors so we do things a little different.

26. Use Sandwich Least Options

I first learned about this concept through Peter Conti and David Finkel’s book, Making Big Money in Real Estate without Tenants, Banks, or Rehab Projects.

This has never been my style since you don’t get the deed but there seems to be people doing it successfully. And this technique definitely limits risk.

27. Bring in a Financial Partner

My first year investing we found an excellent financial partner. An additional bonus was that he had been doing renovations himself for years. He would put up a loan for 80% of the ARV, and we partnered with him on the deal. He not only financed the deal for us but also managed the renovation. It was an excellent set up for us as beginning real estate investors, and it was also a great way for him to leverage his way into more deals. A true Win-Win relationship.

28. Hire Qualified Contractors

This can be challenging when just getting started but not impossible. Here’s three tips to help you out:

1. Don’t accept the cheapest bid.
2. Get referrals from other investors.
3. Don’t pay for work yet to be completed (a material draw is OK but you may want to buy and deliver yourself).

29. Process Tenants Credit Applications

You shouldn’t expect every tenant to have stellar credit because if you do, you will have a major vacancy problem. At least, that’s been my experience. For awhile, we qualified our potential lease option tenants strictly by down payment and didn’t even pull their credit, but we have changed that now.

A credit report can tell you a lot about someone if you know how to read it. And if you don’t, get a mortgage broker to show you how.

30. Use an Investor Friendly Purchase and Sale Agreement

As a creative real estate investor, you want to make sure that you are well protected. Make sure your purchase and sale is rock solid and very investor friendly.

The best contracts that I’ve ever come across are Louis Browns. And no, I’m not making any money if you click through and buy any of his stuff. I’m telling you it’s the best because it is.

31. Lease Option Your Property

There are some big differences between a standard tenant renting from you and having a tenant buyer in one of your properties. Lease options are our primary exit strategy with our properties for many reasons.

Check out 3 Reasons Why Lease Options are Our Primary Real Estate Investment Selling Strategy.

And for some marketing tips, 10 Great Ways to Find Lease Option Tenant Buyers.

32. Limit the Cash You Tie Up in Your Properties

Less Cash in Deal = Greater Return on Investment

More Cash in Deal = Greater Risk

33. Find a Great Property Manager

It can be a great experience to manage your first few properties on your own but property managers are worth their weight in gold. We manage all of our lease options and have a couple different property managers handle our rentals. Typically, you can expect to pay 10% of the gross rent to property managers. We pay one of ours 8% and the other 10%.

34. Secure Financing that Works with Your Exit Strategy

I’ve written an entire post on the subject here so no need to be redundant.

Check it out, Real Estate Investment Financing Strategies : What is Your Exit Strategy

35. Negotiate Seller Financing

First off, NEVER use the terms “seller financing” or “owner financing” when negotiating with homeowners.

Check this out, Real Estate Investment Financing Strategies : How to Get Seller Financing

This is just a small primer to the subject. My business partner, Dusty Keefe, is the man when it comes to negotiating seller financing. You may not have noticed it yet but we just added an “Ask the Expert” page on the site. If you’ve got any burning questions, let us know.

36. Stay Abreast of Real Estate Law

By networking with local investors you will most likely here about any new legislation that would affect your business model. You can also ask your accountant to update you when they hear about new laws.

37. Buy Property in a Modest Price Range

This may seem vague but I will use an extreme to illistrate.

For Example: If you get a good deal on a 1.5M luxury home and buy it for 1M, that’s great and all but be careful. Consider the worst possible scenario. When you are dealing with properties in higher price ranges, you have a much smaller pool of buyers and your equity spread can disappear in a hurry.

38. Learn as Much as You Can About the Things You Delegate

When you hire out work that you do not know how to perform yourself, you stand a chance to get taken advantage of especially when you are a beginner.

Writing this reminded me of the first 5 or 6 heating and air estimates that we got from various contractors our first year investing. Every house that we bought “needed” an whole new unit. Didn’t matter who we asked or what the unit looked like. We finally wised up and learned some things about heat and air units.

39. Have an Asset Protection Strategy

There are many different approaches advocated across the industry. We are partial to using land trusts to protect our assets.

If a tenant ever slips and falls at a property we own and goes to an attorney to seek out their options, they will reluctantly find out that the only thing the trust owns is that one house. Unless the tenant has a lot of money they want to blow, the attorney wouldn’t have any reason to take the case.

Read up on these two posts below for more info:

Utilizing Land Trusts for Asset Protection as a Real Estate Investor Part 1

Utilizing Land Trusts for Asset Protection as a Real Estate Investor Part 2

40. Bring in a Credit Partner

Don’t have good credit, just find someone who does. You can provide the expertise, time, labor and management in exchange for someone else’s good credit.

41. Find a Mortgage Broker You Can Trust

I hate when you barely get it out of your mouth to a mortgage broker about a potential loan, and they are already telling you that they can get it done. All that I want is someone who will honestly give me a breakdown of what the options are and the likelihood of each.

With the mortgage industry changing the way it has lately, I can sympathize with them a little bit, but this has been going on as long as I’ve been in the business. Find a mortgage broker that levels with you and doesn’t promise the world.

42. Stay on the Real Estate Investing Sidelines, Don’t Invest, and Cling to Social Security

Not something I suggest but it would reduce your risk as an creative real estate investor. Real estate investing is definitely not for everyone. This is evidenced by how many people get in and barely get back out.

It amazes me the number of individuals I’ve seen “give it a try” over the years. By not committing to their real estate success, they are committing to its failure.

43. Use a Rock Solid Lease Agreement

As a landlord, you deserve to be protected to the utmost and that’s what a rock solid lease will do. I already told you who I think has the best paperwork in the business so if you missed it, you’ll just have to read the post again.

44. Know How to Protect a Deal while it’s Under Contract

In a recent post I stated, “If you do not know the secret to protecting deals you’ve contracted, it is not a matter of whether or not you will lose a deal to another investor, it’s a matter of when.”

Check it out, How I’ve Made Hundreds of Thousands of Dollars with this Creative Real Estate Investing Secret.

45. Be Flexible and Open Minded

You will especially need to adhere to this tip if you didn’t follow #8. Soooo, prepare to be flexible. A close minded person will not see the abundance of opportunity throughout the market. By opening your mind to an infinite amount of possibilities, you stand to profit from an array of areas throughout your business.

Remember: It’s risky to be rigid to a specific plan or way to go about business. Couple that with close mindedness and you no longer have any options.

46. Buy Property Way Under Value

This may sound like common sense but don’t forget about how many speculators entered the market during its peak and based their decision solely on potential appreciation.

Check out Our Buying Criteria.

47. Have a Well Connected Attorney on the Team

We have been in court plenty of times for evictions but have fortunately steered clear of lawsuits. People are so quick to file suit for anything these days.

I remember reading about a survey that was done at the turn of the 19th century and again several years ago. They asked people the question, “If you were to get rich, how would you do so.” At the turn of the century, the number one response was to build a business. Recently, it was to sue someone.

In other words, get a good attorney!

48. Give Yourself an Out in Your Purchase and Sale

This is very simple. Write in the special stipulations, “Subject to partner’s approval.” No one ever said that your partner had to be a person. Maybe your partner is your dog and if you end up not feeling good the deal, neither does Fido.

49. Commit to Being a Lifelong Student of Creative Real Estate Investing.

In addition to books, seminars, and courses, there are a tremendous amount of resources on the web.

Here is a short list of a few websites that I check out regularly:

RealEstateInvestor.com

BiggerPockets

theREIbrain

TheCreativeInvestor

Bryan Ellis FreeRealEstateTraining

JP Moses Real Estate Investing Tips Blog

Scott Roemermann’s REI Blog

50. Get a Great Agent on the Team

A good real estate agent can bring a lot of value to the table. I have always been all about delegating everything that I possibly can to professionals. I consider myself to be a professional investor . . . not a professional real estate salesperson. I do not want to do what they do.

And like Robert Kiyosaki says, “Don’t be like most people who want to stiff people who offer their services to you in the asset column and overpay people that serve you in the expense column.“

You get what you pay for and that’s why you should pay the professionals that serve you well.

51. Call Tenants References on Their Application

Even though people typically put down friends and family as references, you would be surprised. Call their references and you’ll save yourself many headaches. It’s an easy thing to do so just do it.

52. Buy Property where the Rental Rates Support Your PITI Payment

Going back to that worst case scenario thing again, if you have to hold a problem property, at least the rental rates support your monthly payment.

53. Have the Property Inspected

This could mean getting it inspected by a general contractor, home inspector, pest control company, etc. There are plenty of real estate investors that buy property site unseen, but I don’t recommend this strategy if you want to minimize risk.

54. If you Plan to Flip a Property, Have the Ability to Hold it if Need Be

If you are financially able to hold any property you buy indefinitely, you’re in a great position. This may not always be possible but it will greatly minimize your risk.

55. Network with Local Investors

There is about a 90% chance that there is a local group of investors that meet on a regular basis in your hometown. Investors usually have one of two mindsets. There are those that think that every other investor is their competitor and then there are people like me, who think of every investor as a potential partner.

We have worked with most of the active investors in our community and get a ton out of it. We’ll pass a deal on to one of our investor friends for a wholesale fee, and then they’ll fill one of our properties with a tenant that doesn’t fit what they have available.

WIN-WIN!

56. Have Your Closing Attorney Hold the Earnest Money When Contracting Properties

Our contract specifies that earnest money can be paid by check or promissory note, both of which are held by the closing attorney of our choice. Remember, we are the ones putting everything on the line to help all of the motivated homeowners out there. Protect your interests first!

57. Buy Property That Has At Least 3 Bedrooms

2 bedroom houses have ALWAYS taken us longer to fill or sell than 3 bedrooms.

The majority of households cannot live in that small of a house. I like to always position myself so that the majority of the marketplace wants what I have, and the majority of the marketplace doesn’t want to live in a 2 bedroom house.

You can easily minimize your risk in creative real estate investing by taking this tip. If you come across a 2 bedroom that looks like a great deal, get creative and see if there is any way to add that coveted third bedroom.

58. Pay Sellers Their Equity Over Time

Does this remind you of another one of the tips that we’ve already gone over?

I hope that it does. If so, you’re on the fast track to building massive wealth through real estate.

59. Hire a Creative Real Estate Investing Coach or Mentor

I have been in several real estate investing mentoring programs since I got started and continue to educate myself on a daily basis. It’s a never ending process in my mind.

Having a mentor who has seen the ups and downs of the market and that has made the mistakes necessary to become successful is invaluable. In the real estate investing game, one mistake can mean losing tens of thousands of dollars or one tip could mean $30K in your pocket next month.

Check this out if you think that a coach could benefit you. There a many programs available on the market. Find the one that is right for you.

_________________________________________________________

Well, that’s it for the 59 “Must Know” Tips in Creative Real Estate Investing to Minimize Risk and Maximize Returns. If I missed anything, please add it to the comment section. Let’s see how many more you can come up with.

Popularity: 100% [?]

I want to tell you one of the secrets that creative real estate investors use to negotiate “No Money Down” deals. And it’s really simple but for some reason, often forgotten. Once I learned it, my mind was opened up to so many more deals.

Let’s say you meet with a homeowner that is selling. Your goal is to structure a “No Money Down” deal because you already have a couple renovations in progress and want to keep your cash on reserve. By the end of the negotiation, the homeowner will not sell unless they get $15,000.00 for their equity at closing.

What do you think…is it still possible to get a “No Money Down” deal?

I hope you said, “It depends.” Just because a homeowner wants some money from closing doesn’t mean that there isn’t potential for a “No Money Down” deal. You still have someone that you can negotiate with to make it happen…The Lender!

If the deal is good enough, a hard money lender would give you all the money necessary to purchase, renovate, hold, market, etc. so that you do not have to come out of pocket. Most hard money lenders will do loans from 65 to 70% of ARV.

You could also bring in a private investor to put up the cash for the deal. If you are buying it subject to, you wouldn’t even have to borrow that much money.

Remember, when structuring deals, there are two different parties that you will be negotiating with: the Homeowner and the Lender. Successful negotiation with either of these parties will achieve your goal for a “No Money Down” deal.

Related Posts

Safe or Risky : No Money Down Zero Down Real Estate Investing

Fact or Fiction : No Money Down Zero Down Real Estate Investing

Popularity: 42% [?]