Real Estate Training
Apr 30, 2009 Investment Strategy
H. Roger Neal® offers real estate training Ohio in the form of his affiliate network, foreclosure and short sale conference. Once in awhile, H. Roger Neal® offers a landlording session at the beginning on Monday and Tuesday. This type of conference lasts the entire week! Students arrive on Sunday for an evening Meet & Greet from 7-9:00 P.M. On Monday from 9-5:00 P.M. is landlording, and continues through Tuesday at noon. Wednesday is the Affiliate Network. Thursday and Friday are Foreclosures, while Saturday morning from 9-12 noon is short sales.As for the landlording part of the conference, this is for both students who want to landlord only or want to flip properties and landlord. H. Roger Neal® does have a home study course called Streetwise Landlording®. This course and seminar teach students how to become streetwise. Everyone in real estate will tell you how savvy their tenants are, so why not be savvy yourself. Tenants have rights, and they know what they are. They also play on your emotions and appeal to your moral sense of right and wrong. Also, they’ll even appeal to your religious beliefs and faith, which go beyond their legal rights as tenants. Taking advantage of the legal system is their legal right, and they’d be stupid if they didn’t take advantage of that, I concede. They should not only know the law, but should protect themselves from unfair and unscrupulous landlords and their practices. On the other hand, there are landlords’ rights as well. You’d be stupid not to know your rights and take advantage of them as well. Fair is fair, don’t you agree? H. Roger Neal® addresses those tenant and landlord rights and integrates them into a unique management style that he calls Streetwise Landlording®. H. Roger Neal® is street smart and advises you to be as well. As for the moral side of landlording, you need to conduct yourself like a business. If you went into the grocery store and stated that you don’t have any money for food, and you’re family was dying from starvation, they would dial 911 before you could even ask for the free food. You could argue that you had a baby who needed milk or she would die. Again, you’d be in handcuffs before you would blink. That’s the harsh reality, I’m afraid. So, why are you expected to provide free housing that costs you $1,500 per month? Well, you shouldn’t. They need to pay rent, or get out. That’s the discipline. That’s the business. I cover all facets in landlording in this real estate training Ohio from acquisition, management, repairs, and sales. Come and enjoy this seminar with me.
What is and how do you use your best argument used in convincing sellers to carry financing?
Apr 30, 2009 Tell Me How
Actually, I have two favorite arguments to sway sellers to think like I do. I appeal to their common sense with both arguments.
1. I primarily look for motivated sellers who cannot cash out. They’ve listed their properties with real estate agents with no success. In most cases, they haven’t even had one showing. These sellers haven’t the foggiest idea of what seller financing is all about. What they do know is that buyers don’t pay and most buyers want 30 year financing. They have heard of balloon payments, and this is truly a seller’s advantage.
2. I begin negotiating through the agent, or directly with the seller, by talking about a quick payoff. This immediately gets everyone’s attention. They immediately begin entertaining ideas of balloon payments. They want to think about it and will call me later.
When we speak again, they express interest of a balloon payment. I say nothing. They continue with a possible 3 or 5 year balloon payment. (I know at this moment that I got the deal.) I state, “No. That’s not what I meant. I meant that I would pay you off real quick.” They ask, “What do you mean?” I reply, “I mean that I will pay you out in 8 years. I’ll make bigger payments and pay you off in that time.” Somehow the eight year payout is exactly what strikes their interest and the deal is made.
Tags: Seller Financing
The City Is The Problem
Apr 27, 2009 Investment Strategy
Until now, property acquisition, buying wholesale, has unequivocally been the landlords biggest obstacle. Now, without a doubt, city code enforcement has superseded that long time problem. After traveling around the country, it is clear to me that the mayors of the country had a serious meeting about how to get even with those evil landlords. It is too much of a stretch to believe that all these cities are moving ahead with the same agenda by coincidence. That’s right, the same agenda. What is the agenda? I’d venture to speculate that it was originally formulated with the purpose of good intentions. They wanted to “clean up” the cities, and that’s admirable. The worst issue: Many cities have already passed legislation whereby property owners are charged $50 for every unit they own on an annual basis. This is a fee paid to the city for the upcoming and annual city code inspection. You heard me right; $50 for every unit, every year. Am I opposed to this legislation because I am a slumlord? No. I’m not a slumlord! However, I don’t feel obliged to pay $50 for every unit every year. That’s nonsense. We’re back to the age old issue of treating landlords differently than all other businessmen. They’re singling landlords out because their rich and evil. Pardon me, but aren’t they the one’s who:
1. Rents to the homeless?
2. Rents through Children’s Services?
3. Doesn’t run credit checks?
4. Rents to those when no one else will?
What amazes me is that it is we who provide housing for indigents and welfare recipients where no one else will. What is to be done? Landlord associations and apartment associations need to hire lawyers to roll back the newly instituted laws. If it hasn’t hit your city yet, it will.
Tags: City, Code, Enforcement, Landlording, Violations
Get Out Of The Appliance Business
Apr 25, 2009 Investment Strategy
Unless you are entirely furnishing efficiencies, do not supply furniture or appliances in the inner city units. In other words, one bedroom units and up are taboo when it comes to any furnishings. Efficiencies are virtually impossible to rent unless they are entirely furnished with appliances and usually with utilities included. On the other hand, tenants who rent one bedroom units and higher can fend for themselves and come up with something to furnish their units. Appliances for the one bedroom units are indeed difficult, but the tenants do manage to acquire them just the same. On a ten unit building that I own, I have found myself buying at least three refrigerators per year. The tenants have always managed to rip off the door handles. In fact, roaches actually stop refrigerators from working by crawling into the motor area. Anyhow, the refrigerators are either too large or too small. Tenants always want someone else’s when their neighbor moves out. Invariably on Thanksgiving Day, someone’s oven doesn’t work. Of course, they’ve known it for months, but waited until this day to tell you. I did something really smart this summer. On all of the units, one bedroom and up in that ten unit, I sold the appliances to the tenants for one hundred dollars for each pair. I provided receipts and stated, “When they break down, throw them away and the replacements are your responsibility.” Last month, a tenant replaced a refrigerator herself. Granted, she bought a used one, just like I always had, but it wasn’t at my expense. I find that cutting expenses is just as good as raising rent. It’s like the government cutting a program and not raising taxes. My tenants agreed that one hundred dollars for each pair was a good deal. They questioned my motivation. I answered, “I’m getting out of the appliance business; I just rent apartments.”
Tags: Appliance, Landlording
What To Do Before Choosing An Investment Strategy
Apr 24, 2009 Investment Strategy
Real estate investing is a bit more complicated than most people think. I’ve always said that there are more ways to invest in real estate than there are makes and models of cars. You need to look within yourself before choosing an investment strategy. Before selecting just any real estate investment, you need to make a full evaluation and analysis of your current and projected situation, inclusive of your personality, ability, and time constraints. Upon the first thought of investing in real estate, you need to examine yourself from within and your lifestyle as well. Begin by examining your temperament. What are you willing to do, and what are you willing to put up with in the real estate world? If you are hard working, tolerant, and diplomatic, you can become a landlord, time permitting. However, if you acknowledge that you have little, or no, patience, then landlording is definitely not for you. You can, however, buy, fix, and sell the traditional way and not landlord at all. Buy houses that are vacant at closing and never rent it out. Buy it, fix it, and sell it empty. You’ll never have a tenant! Furthermore, how many hours are you willing to devote to real estate investing? If you work 60-80 hours a week, putting any deeds in your name, except your residence, could be a terrible mistake. If you have hobbies that take a tremendous amount of your time, landlording may not be for you either. If you are unemployed and have the time and temperament, you might find that you can both landlord and flip properties. Be sure to limit yourself to learning only a couple of programs at a time. When you get a handle on those, begin learning about other real estate techniques. There are two things to note here. Firstly, if you try to learn too many real estate techniques at the same time, you won’t learn any of them very well. Do learn many real estate techniques, but pace yourself. Secondly, if you learn many, many real estate techniques, you will make money off of everyone who walks in the door. In other words, regardless of the property being a foreclosure, or simply someone wanting to sell, or a burned-out building in a marginal neighborhood, you will be able to accommodate them and not turn them away. Once you have analyzed your personality and blended it with your schedule, then you can more efficiently and properly select your investment strategy and start implementing your real estate techniques. Start by finding a real estate guru who has done all of the hard work of laying out a program/s who you can identify with and respect. Insure that you pick out real estate programs and techniques that you will actually implement. Buying a landlord program while working 60 hours each week doesn’t make much sense to me. Narrow your real estate investment choices down to the ones you have the most interest in and can implement without changing your lifestyle. Begin with the quickest way for you to make money. Add other programs to your repertoire after a good knowledge base has been established. Be realistic and learn only real estate investing techniques that you will really implement. You will be better served learning real estate investing techniques that you will make money on today!
Tags: Guru, Investment Strategy, Landlording
What Is A Purchase Money Mortgage And How Do You Use One?
Apr 20, 2009 Tell Me How
A Purchase Money Mortgage is where the seller:
1. Is a private individual.
2. Has the property paid off, gives a 1st mortgage, conveying the deed.
A Purchase Money Mortgage Assumption is one where you assume a P.M.M. that you had no part in originating.
States vary on the assumption aspect.
For example:
In Ohio
If it says it is assumable, it is.
If it says it is not assumable, it isn’t.
If it says nothing about it, it is.
In Oregon
If it says it is assumable, it is.
If it says it is not assumable, it isn’t.
If it says nothing about it, it isn’t.
Purchase Money Mortgages are used when buyers and sellers want to use seller financing to consummate the deal. Buyers similar to me like it because they can enjoy purchasing property without going to the bank and jumping through hoops with a bag of money. Also, the interest rate and the down payment are dictated by the buyer and seller. Furthermore, buyers are not exposed to all of those ridiculous inspections, fees, and closing costs. Sellers like it for the quick sale. In addition, rather than paying income taxes on a huge amount of income, sellers essentially income average. In other words, sellers only pay taxes on income receive that year, rather on the whole amount. In fact, in many cases taxes aren’t even paid on the entire amount collected during the year.
The Installment Sale Income, Form 6252
Midway down the form you’ll find the GROSS PROFIT PERCENTAGE (G.P.P.). This is the percentage amount of the principle that you will pay taxes on.
For Example.
If the G.P.P. is 50% and you’ve collected $10,000 that year on the principle, then $5,000 is tax free!
The other $5,000 reaches the front of your return and is added to your income.
Investors who retire from real estate have only one logical choice: The Installment Sale Method.
Investors like me who enjoy income from notes, Fast-Flip®, and who want to avoid taxes have two choices: 1031 Tax Free Exchange & Installment Sale Method. All other sales involve heavy tax burdens. Unless and until the capital gains tax is rectified, Installment Sales Income is the best game in town! The Purchase Money Mortgage is sweet for the seller, and sweet for the buyer.
Tags: PMM, Purchase Money Mortgage
Real Estate Investment
Apr 17, 2009 Investment Strategy
When you tell someone that you’re going to invest in real estate they automatically think that you’re either going to buy-fix-sell, or you’re going to be a landlord. And, that’s probably what you think as well without any clear real estate strategy, or techniques. Furthermore, real estate investors feel they must make a choice between landlording and flipping. (Flipping is buying and reselling as fast as you can.) As for me, H. Roger Neal™, I perceive landlording as the mashed potatoes and flipping as the gravy. Those who understand my landlord program do not understand why I flip. Likewise, those who understand my flipping programs don’t understand why I bother to landlord. It’s easy to understand, really: They both make money. Landlording affords me the opportunity to generate monthly income on a steady basis and, once established, I need only maintain it. With landlording you will need down payment and repair money. Sometimes, when there is not seller financing, you will need the wherewithal to obtain bank financing. Furthermore, you will need time to manage and make repairs. Once you have the properties bought, proper management and repair in place, this could work for you. Flipping, on the other hand, allows me to buy and sell many properties without the cumbersome task of adding them to my portfolio. Furthermore, flipping needs to be done on a regular basis to keep cash sums coming in. Consequently, you’ll need to be constantly networking to keep the deals coming in. Insofar as buying real estate to fix and sell, that is another totally different animal. You need to examine how much time you have to devote to the repairs required. If you plan on making repairs yourself while working a fulltime job, it could create many problems in both your home life and your ability to perform at your job the next day. If you plan on hiring everything out, beware of serious employee theft issues. Vandalism after they’ve left the premises is another consideration. Hiring the right person to oversee the project is paramount. Also, I don’t recommend more than one major project at a time, regardless of working a job, or not. Why would you flip real estate? You can flip just about anything! My policy is to not let any good deals get away. Whether you have money or not, whether you are too busy with a full time job or not, there is no excuse for not capitalizing on every good deal found. With some methods like H. Roger Neal™’s $1 DOWN, you can flip any real estate, anywhere, at any price. Now you’re beginning to understand what you’re up against in the real estate investment world. So should you invest in real estate as a landlord, as an investor who fixes and sells, or just flip properties with H. Roger Neal™’s $1 DOWN program? Well, that’s something for you to figure out after weighing all the options and variables. Just saying that you’ve decided to invest in real estate is certainly not enough in the thought process department to get started. Now you know there is a bit more to it! Let your conscience be your guide as to what your time constraints and financial abilities are. Develop a real estate strategy and use techniques that make sense for you. Be realistic about the course you choose. Have fun, and go make a lot of money!
How Do You Get Sellers To Take Only $1 With The Option Contract?
Apr 13, 2009 Tell Me How
Not a week passes when at least one investor doesn’t question the difficulty of writing up an option contract. They don’t understand why sellers would take such a ridiculous amount to tie up their properties. Simply, it’s standard in my contract and I don’t make an issue of it. Once the seller agrees to the option, you take out the contract and fill out the particulars of date, seller and optionee’s names, address of property, price, and term. You put the contract in front of them and they look for what they get and how long your option is for. You point out at the top that the one dollar is to make the contract binding and enforceable. They’re not going to back out now. It’s feasible to consider that you tell someone in your initial contact that you want the option for one dollar and they’d tell you to get lost. Perhaps that is what causes the confusion. In this case: Timing is everything. You want to make this disclosure at the very end, after they’re sold on your service!
What Is A Land Sales Contract And When And How Do You Use One?
Apr 13, 2009 Tell Me How
A Land Sales Contract (L.S.C.) is used by many investors when they do not have an assumable loan and they want to provide financing. This is the wrong way to use a L.S.C.
Here’s how that works:
1. The seller keeps the deed.
2. The seller and buyer into a L.S.C. where the buyer takes over as owner and makes a payment to the seller, keeping the seller still liable on the mortgage.
Problems:
1. If you file the L.S.C., which protects the buyer, the mortgage company could find out and call the note (foreclose).
2. If your buyer obtains insurance and you (the seller) cancel yours. The mortgage company is essentially alerted and could check the courthouse for any filings.
3. If the payment is made by the buyer to the financial institution, the mortgage company is again alerted.
4. If the buyer pays the seller and the seller doesn’t pay the mortgage, it could be a serious problem.
5. If the L.S.C. isn’t filed, the seller could obtain liens and mortgages on the property without the buyers permission or knowledge. This is real bad for the buyers.
6. If you have a fire at the property and the seller has the insurance, you could be out of the loop. If you are the one on the L.S.C. and you carry insurance you must list your seller as the mortgage holder. The insurance company will make out the check to you and your seller. The seller won’t like endorsing the check and getting nothing for it.
7. If you buy L.S.C. and your seller files bankruptcy, it is a serious problem.
8. When you go to sell, the deed holder may need to sign something. You will need to find them and they need to sign. That could be two different problems. The right way to use a Land Sales Contract is one where the seller is allowed to enter into the agreement. This can be done when the property is paid off or when there is an assumable loan. Under these circumstances, there is no cause to configure the L.S.C. to accommodate concealment from the bank fearing foreclosure, against your wishes. Myself, I find my conservative views surfacing most when it comes to L.S.C.’s and balloons. I am adamantly opposed into buying under either situation. When selling, I like them both. My every waking moment is spent eliminating drawbacks and making a better investing atmosphere for myself. I do everything I can to be as risk-free as I possibly can. If I could buy from a seller who I really trusted, and it was paid off or assumable, it wouldn’t really be an issue. In the real world, you just can’t outright trust investors you don’t even know. Should you decide to go ahead with becoming a buyer under L.S.C. circumstances, I would at least insure that the contract is allowable by the lender. When I have a property paid off, I decide between a Purchase Money Mortgage and a Land Sales Contract based upon the equity and the buyers’ financial status.
For example:
If I have a large equity, I prefer a L.S.C. because foreclosing is easier.
If I have a real strong buyer, I prefer getting rid of the deed.
Tags: Land Sales Contract
The Missing Link
Apr 12, 2009 Now That's Funny
After undertaking 109 new units with a horrendous vacancy factor of 74% units with five evictions, (Who’s counting?) I needed to employ spot labor to clean out the units. When I say clean out, I’m not referring to running the sweeper and using SOS pads. I mean actually removing all carpeting, furniture, and almost all appliances. I didn’t use my technicians for that detail, I used spot labor. How do I find these guys? Well, they find me. I’m like a magnet. All I must do is start making a pile in the rear of any building and they are drawn to it requesting work. My favorite line is where they state, “I can do it all!” Nothing scares me more than that. I hired four of these guys for the clean-out, and one who could do it all was hired to hang replacement doors. I walked him to where an entry door had been removed and the new solid core 36″ X 80″ door rested. I said, “There it is. Start hanging.” Needless to say, he spent more time learning by watching others hang doors than he did actually hanging doors himself. The other four spot labor personnel were more appropriately assigned. They worked like horses day in and day out, rolling up the carpets and neatly stacking them in a very long dumpster to conserve space. (Each load was $275!) We joked around a lot in order to make the job go easier. We exchanged jokes all week and laughed about television talk shows. On one occasion when no one was kidding around, I stated that I was the unknown Beatle, the fifth Beatle. Not thinking that anyone would take me seriously, I continued with the fairy tale. I told of how if I had just blended in and wore my hair like the other Beatles, I wouldn’t be here with them. I went on to explain how my life would have been much different. I got up and walked away. Later, one of my real workers said that as I walked away one of the other guys remarked, “He’s the missing link!” Now that’s funny!
