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% [?]

Investing in apartment buildings has always intrigued me but has never been my focus. My company’s niche has been buying single family houses between $130K-$170K ARV. But, I did acquire a couple small apartment buildings early in my career, and there are definitely some advantages to investing in apartment buildings.

This seems like a popular topic amongst investors, and since I’m no expert at buying apartment buildings, I found someone who is. His name is Matthew Martinez. Matthew is the author of 2 Years to a Million in Real Estate, the founder of one of the largest real estate investment associations in the country, and has been interviewed by The Wall Street Journal, Money Magazine, and The New York Times. CNN even called him a tycoon in the making!

Matthew’s second book, Investing in Apartment Buildings, is due to be released in November. Here’s a small excerpt . . .

The Dwindling Middle Class

I’d be remiss if I neglected to implore you to act now rather than waiting and planning to begin at some time in the future. My argument for taking action immediately is outlined in this introductory chapter. Primarily, I’m convinced that the middle class—families with incomes between $40,000 and $200,000 a year—is shrinking at an alarming rate as a result of the financial burdens of our time. If you classify yourself as middle class (based on this definition), you, too, should be alarmed, but I’ll explain how investing in real estate can help.

There are three distinct socioeconomic strata in the United States, and the chasm between the upper and lower groups is becoming increasingly more pronounced every day. As the income gap between these two groups widens, it highlights the inequality between those who have achieved financial prosperity and those who find themselves caught in a perpetual cycle of financial instability, poverty, and lack of opportunity. Sociologists refer to this demographic divide as the “haves” versus the“have-nots.” Both of these groups are growing in numbers, but primarily at the expense of the middle class.

Burdened with excessive credit card debt and facing a precarious job market that has been severely stunted by the subprime debacle, the credit crunch, recession, the Iraq war, terrorism, and several recent natural disasters, the middle class is desperately trying to survive in this unstable environment. However, given the current economic climate, its future seems anything but prosperous. In fact, those who continue to classify themselves as members of the dwindling middle class are finding that their wages have stagnated and that their chances of reaching greater financial prosperity are seemingly negligible.

 

That got my attention whenever I first read it. And now for the solution! (oh yeah, click here to download a couple chapters from the Investing in Apartment Buildings book pre-publication)

 

The Solution: Passive Income

Most individuals start investing in real estate because they perceive it as a path to wealth and financial freedom that will permit them to no longer need to work a day job. You can achieve financial freedom by creating a passive income stream that is large enough to cover your ongoing expenses, or you can achieve it by having a large enough “nest egg” to enable you to live off the proceeds from the interest earned each year. Income-producing real estate (specifically from apartment buildings) can provide a healthy income stream for you and your family during good times and bad. Apartment buildings are unique assets that can generate significant passive income for the rest of your life. Passive income is the profit created from rental activity and is one of the primary benefits of owning such valuable assets. One of the goals of multifamily ownership is to buy apartment buildings and manage them properly so that they generate a profit each year (i.e., they have positive cash flow). When you achieve a stabilization of your portfolio, apartment buildings can provide a sufficient financial cushion and protection should you fall victim to any of life’s less favorable “chances.”

I recently met with the owner of a 50-unit apartment complex. He was 82 years old and quite frail because he had suffered a stroke a year earlier. He had owned the property for 30 years and had paid off the mortgage. Since it was generating $15,000 in positive cash flow each month, he was able to sleep well at night, knowing that his wife could live off the income from the property should he pass away. This is why passive income from apartment investing is so coveted.

 

I suggest if you have an interest in learning how to buy apartment buildings, download the free chapters from the book. Investing in Apartment Buildings looks like a great addition to any real estate investor’s library. You’ll feel the same way after you read the free download.

Popularity: 49% [?]

We’ve decided here at MustKnowInvesting that we want to take your creative real estate investing education to the next level. And how else would we do that than by showing you exactly what we do on a regular basis in the field . . . in the real world!

Check out the video below for a preview of what’s to come. We are going to take you into our daily real estate investing experience and walk you through what it’s like to be a full time investor.

Some of our investor buddies, Sean and Eli, just contracted a deal recently on Rio Street in North Charleston, South Carolina, and they want to bring us in as partners in the deal. Often times, local investors will bring us in on deals because of our expertise in negotiating, deal structuring, financing, renovating, etc. There are limitless ways to create value in this game so always bring an open mind to the table.

In the video, I open with a few details about the deal, speak with one of our contractors about the necessary repairs, and walk you through what renovations we plan on making and why.

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

In the coming weeks, you’ll see the deal unfold as we close on it, renovate it, and finally put it on the market for sale.

Stay tuned for the next episode . . .

Popularity: 58% [?]

Last Tuesday night, my business partner, Dusty Keefe, spoke at the Charleston Real Estate Investor’s Association on “Utilizing Trusts for Asset Protection as a Real Estate Investor.” Unfortunately, I could not make it sense I was presenting on the recruiting private money webinar that night (which went Outstanding!! if I could say so myself). But . . . one of our buddy’s video taped it for us and we’re going to share a clip with you from the other night!

If you aren’t yet privy to the power of trusts in real estate investing, check this out. Dusty covered a ton of content ranging from the players in a trust (the trustee, beneficiary, successor trustee, director, etc), the differences between land trusts, personal property trusts and living trusts, some of the many benefits like getting your name off public record, avoiding probate, protecting yourself when buying subject to, avoiding seasoning problems, transactional privacy, and much more.

Here’s what some of the attendees had to say about it:

“I was very impressed by Dusty’s knowledge and his willingness to share it. Hope he’s available at other meetings for questions once I have a grasp on his information. Thanks Dusty for your brilliance!”

- Sheryl Greenberg

“Dusty, your presentation was unbelievable, and it was packed with valuable information and tips. As I told Patrick, you all should be commended for all the free information that you are willing to share in order to help others succeed. Thanks for taking the time to share your knowledge and experience about land trusts with the group, and I look forward to learning more from you in the future. The group is lucky to have you and Patrick as members.”

-Bryant Pearson

“Dusty did do a wonderful job of explaining and trusts. I have always been somewhat confused by these and to date have never used them because I wasn’t really sure how. Thanks to Dusty I now have a greater understanding and am planning to begin using trusts on future purchases. Greatly appreciate Dusty’s time and willingness to share information.”

-Karen Rapchick

“Dusty did an excellent job. He stepped to the plate (with very little advance notice) and clobbered it. He really opened my eyes to different approaches; the info was priceless. Thanks again!”

-Rob Robinson

Dusty’s spoke for over an hour but here’s a short clip on the benefits of transactional privacy with land trusts and how Walt Disney used this technique to lock up over 28,000 acres for pennies on the dollar.

If you are interested in gaining access to the entire lesson, all you have to do is sign up for the email updates on the site.

This is just the tip of the iceberg as far as trusts go. Just so you know, this kind of information usually costs thousands of dollars and you would get it from someone less knowledgeable than Dusty. Dusty has studied asset protection, specifically, using trusts in real estate for many years. Enjoy!

Popularity: 60% [?]

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% [?]

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.

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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.

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First and foremost, I do not recommend real estate investing without leaving your home from the start. For most people, one bad deal early on could put them right back out of the game. For me, it was a goal to eventually have a system set up that could buy houses without me ever seeing them without leaving the comfort of my home. And I mean without EVER seeing them. I have bought, leased, and sold houses that I have never once laid my eyes on. Maybe your thinking that I am an idiot for doing so but just give me a moment to explain.

One of our coaching students came across a woman that was behind on payments and facing foreclosure. Our student wanted to partner with us on the deal in exchange for our help to put it all together. The property was in Phoenix and the market out there was still really hot. At that time, not only had I not seen the house, I had never even been to Arizona.

After analyzing the deal, we decided to do a short sale on the property. It was a good property in a nice neighborhood but definitely needed some TLC. We talked our student through the process of contracting the deal and getting all the correct paperwork signed. And we made sure he contacted all the right professionals for our due diligence.

We ended up getting an acceptance from Countrywide to buy the house for around $120K and found a buyer before we even closed on it. We wound up netting over $50,000 profit on a house that I had never seen in a state I’d never been to . . . allll from the comfort of my home!

How’s that for real estate investing without leaving your home.

And I’m not taking any more of a risk than the average investor. Whether I leave my home to visit a property or send a team of professionals through it, I am doing the same due diligence. I am gathering the same information to evaluate whether or not it’s a good investment.

I am going to be doing several posts on the subject. If there is any particular question you want answered about real estate investing without leaving your home, drop us a comment.

Popularity: 31% [?]

Have you ever heard the phrase, “Don’t miss the forest for the trees?”

For awhile, I never quite understood this one. I kept hearing it in speeches and seeing it in books though, and come to find out, it refers to the tendency to get caught up in the details and miss seeing the big picture. Well, this is exactly what happened when we first got starting as beginning investors.

We were the type of beginning real estate investor that devoured every piece of information we could get our hands on. Shortly after buying our first couple investment properties, we were looking into more real estate investment buying strategies and caught the short sale bug. Short Sales were one of the hot fresh topics that a bunch of gurus were professing in their books, courses, and CDs. So, we bought a short sale course by Dwan Bent-Twyford. It was a very simple course but was enough to get us started, and ultimately, do our first few short sales.

One of the short sales that we were working on was a house in Hanahan, South Carolina. The seller had a gambling problem and was losing his house to foreclosure. He was very depressed every time I saw or talked to him on the phone. The reason I tell you this is so that you will know the types of people you will be working with. Most people facing foreclosure have gone through some very difficult times so be ready to empathize with them.

Being that we were engrossed in the mindset to short sale anything and everything, we put together a short sale package and commenced negotiations with the bank. If you know anything about short sales, you know that they can take awhile. A couple months passed, a couple offers got rejected, and we hadn’t made measurable progress. The seller was getting harder to contact and restless. He had already accepted that he was going to lose his house and get nothing from the sale.

One day when reviewing the file, I ran the numbers again. It looked like there was chance that there may be enough equity just sitting in the deal if we were to buy it subject to. I ordered reinstatement figures and viola! We had a deal! We were barely able to keep the seller interested in seeing the sale through. Needlessly negotiating with the bank for months almost cost us $30,000.00.

We were so caught up trying to do a short sale that we didn’t notice that it was a deal as-is. All we had to do was close on it!

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Popularity: 21% [?]

What is a Preforeclosure Lead?

When I talk about preforeclosure leads, I am talking about a seller lead who is in foreclosure but has not been foreclosed on yet. The lifespan of a preforeclosure lead is from the first step in foreclosure, when the lis pendens is filed, to when the property is sold at the court house steps. The time frame varies greatly from state to state anywhere from a few weeks to several months.

If you are interested in working preforeclosure leads, a good first step would be to familiarize yourself with your state’s foreclosure process. Depending on your state’s foreclosure time frame, you will want to cater your investment strategy to coincide with it.

2 Great Things About Preforeclosure Leads

1. Motivation - Believe it or not, being in foreclosure doesn’t always guarantee that a homeowner is motivated to sell but often times this is the case. A homeowner doesn’t have a whole lot of options depending on the time frame because if they wait too long, they are liable to get nothing. If the homeowner isn’t motivated yet, it’s your job to help them understand they should be.
2. Unlimited Deal Potential - Whether or not a seller has equity, it’s got deal potential because of the possibility of doing a short sale on the property. Banks will consider taking less than what’s owed on a property when in foreclosure. Banks are in the business of lending money not collecting houses. Equity or not, you’ve got your hands on a potential deal.

Preforeclosure Leads Fall into 2 Categories

1. Enough Equity As-Is
2. Short Sale Required

Enough Equity As-Is

Your plan of action should be to get in front of the homeowner as quickly as possible. Facing foreclosure can be a very emotional process. Often times, sellers end up making a decision on the spur of the moment. You want to be there when this happens. With enough equity in the house and some motivation based on their financial circumstances, this has all the right elements for a deal.

Typically in these types of situations, our buying strategy is to take over payments on the underlying financing until we sell the property and our primary exit strategy is through lease options. Cash offers can be very effective too.

Short Sale Required

Your first mission is to disqualify a short sale lead. Short sales can be laborious time consuming drains on your life energy. They can also be extremely profitable.

A good short sale lead is in “short sale condition” and/or has inferior liens. “Short sale condition” means that a case can be made to the bank that the house is worth less than what’s owed. Whether or not a house actually needs extensive repairs, it should at least look like it does. An inferior lien is any money owed to a creditor after the 1st mortgage holder. This could be a 2nd, a judgment, a tax lien, etc. If one of these conditions is met, you’ve got a good lead. If both are met, you’ve got a great lead!

Popularity: 24% [?]