Category Archive: Articles

One Step Beyond

Pete with Waffle House coffee mug

In September, Kim and I are bringing Pete Fortunato to town. Pete is the BEST creative deal structurer and funder we’ve ever met. He has been one of our primary real estate investing teachers since the late nineties. If you are a regular reader of our column, you’ve heard me quote him hundreds of times. There’s simply nobody else like Pete!

Here are just a few of the quotes that I jotted down the last time I took Pete’s One Step Beyond seminar.

“Every deal you do is a seed for another deal.”

“If you do a good deal with someone, they’ll want to do more deals with you because you’ve proved yourself to be honest and competent.”

“How do you know whether it’s a good deal? Each party is happier after the deal has closed.”

“Most of the time a yellow pad is the best thing on which to draw up an agreement. Then take what’s on the pad and type it up in the form of a contract.”

“Opportunities are found. Deals are constructed. So don’t go out looking for deals. Instead, look for opportunities!”

“Opportunities are born out of someone’s uncomfortable circumstance. You find out what this is by asking, ‘Why are you selling such a nice house like this?’”

“When you present an offer and the other party begins to cry, either your offer is really good or really bad.”

When dealing with an attorney or realtor: “Your traditions are not laws of nature. Why should I let your traditions affect my transactions?”

“It’s inconvenient to be physically alive but financially dead.”

“Real estate is a thinking man’s game, not a running man’s game.”

On Thursday, September 10, Pete will be teaching at our North Georgia REIA real estate investors meeting at the beautiful Hilton Garden Inn in Cartersville, Georgia. Because we are closing our group at the end of December, this will be the last time…

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Be Hard on the Problem and Soft on the Person

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An investor who owned four rental properties for the past three years called for help. He was at his wits end. Because he hated tenants so much, he was seriously considering dumping all of his rentals! By the way, this is not an uncommon feeling for new and inexperienced landlords to have.

When we met to discuss his situation, he let me hear a recording of a conversation he had had with a tenant a few days prior…and I use the word “conversation” with reluctance.

The tenant consistently paid rent six to ten days late. This sent the landlord into orbit. Over the phone, the landlord screamed at the tenant, “You are a liar, an idiot and you’re totally worthless! Pack your crap and get out of my house right dang now!” And from there, the landlord’s words really turned foul. I felt sorry for the tenant and angry with the landlord.

The landlord knew he had lost his cool and crossed a very serious…

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Stay the Course

How do you succeed as a real estate investor? How do you succeed as a person? Simple: Stay the course!

But what course? Whose course? Heck, how do you know if you’re even on the right course?

Your course begins with an idea – YOUR idea! What feels right to you? Answer this question: What were you put on earth to do? Ever thought about this? I mean, after all, you’re here for a reason, right? What’s that reason?

For eighteen years, I sold Electrolux vacuums door-to-door. It paid me a lot of money. Only one problem: I wasn’t put on earth to sell vacuums door-to-door. So why didn’t I quit much sooner? Because everyone around me told me that I’d be a fool to walk away from the huge money-earning potential Electrolux offered.

Think about that. I kept doing a job that I hated because of someone else’s dream. It wasn’t my dream. How sad!

Fortunately, at twenty-four, I discovered something incredible. I realized that I loved everything about real estate investing. Sure, it took me eleven more years to build up the courage to leave the safety of Electrolux and become an investor, but at least I eventually…

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My Top 10 Landlording Lessons

Rental House

Kim and I have been managing rental property and tenants since 1997. We still own the very first single-family investment property we bought way back then.

Between then and now, we’ve made every landlording mistake in the book. We’ve bought bad rental properties, rented to awful tenants, and we let tenants get three or four months behind in rent.

Here’s the important thing to remember: With every mistake we made, we learned what not to do. And with everything we did right, we learned what to do. That said, here are the top 10 landlording lessons I’ve learned over the years. I’ll be going over these in great detail at our August 13 real estate investors meeting in Cartersville, Georgia.

Number 10: Take the magic nickel. Why own rental property? If you flip a house, you make a dollar. The only way to get another dollar is to…

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Are Your Property Taxes Too High?

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Are your property taxes too high? If they are, and if you live in Bartow County, where were you last night? Where was your voice? Where was your outrage?

My mother taught me early on that silence is a form of acceptance. Folks, at last night’s Bartow County School Board meeting, the silence was deafening!

If your property taxes are too high and if you don’t speak out at the public government hearings, then you lose your right to complain. Instead, just step up to the window and pay the nice lady what you owe without one complaint!

Since 2006, Kim and I have fought our property taxes 132 times. We’ve won 112 times. That’s an 85% winning percentage. I don’t say this to brag; I say this to let you know that you can fight your property taxes and win! Just know that it’s a learned thing, not a born-knowing-how-to-do-it thing. And it begins with standing up and speaking out!

Yesterday was an interesting property tax day. It began with a drive to Gordon County to turn in a property tax appeal. I met with…

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Two Pay Checks Away From Being Broke

Moped - Beer

Sure, there are reasons – good reasons – to not own rental property: tenants, vacancies and repairs to name three. But have you ever spent time thinking why owning investment real estate might be a good idea?

This week, my father-in-law was rushed to the hospital with what doctors thought was a massive stroke. When the ambulance arrived, he was taken directly to ICU where a ventilator was inserted, and to prevent further injury, medicine was used to induce a coma.

That was last week. Kim and I have lived at the hospital ever since. Gotta tell you, an ICU’s waiting room is full of interesting life lessons.

Also in the waiting room is a young man’s family. The twenty-year old was in a motorcycle accident. One of the family members told me that the accident victim will recover physically, but financially he’s in a lot of trouble. She said that he’ll probably lose his job, home and car. On top of that, a couple of the family members, because they don’t have any savings, find themselves between a financial rock and a…

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Be 100% There!

How important is it, when meeting with a seller, buyer, renter, realtor or contractor, to be totally focused on that person? If you’re not paying complete attention to what that person says and how he or she says it (tone of voice, hand gestures, body position, eye movement), isn’t there a good chance you’ll miss critical information that’s being shared with you?

The number of people who are not 100% there during a meeting has become epidemic – and is a major pet peeve of mine! If you’re over fifty years old, you already know what I’m talking about. Baby Boomers grew up without cell phones, emails, and text messages. Heck, we didn’t even have phone answering machines!

Here’s an example of this epidemic at work. A real estate investor needed help structuring a deal and asked for an hour of my time. He drove up from Atlanta and met me at the Adairsville Waffle House.

As we discussed his deal, every two or three minutes he looked down at his lap and typed something on his cell phone. He wasn’t typing meeting notes; his writing pad was on the table. I finally asked him what he was doing. He was answering emails and text messages as they came in. What?!?

I said, “Hang on, I need to take care of a problem.” I got up from the table, walked out the door, got in my car and drove back to the ranch. A few minutes later, this guy called and asked…

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How to Work Pre-Foreclosures

This is what the Bartow County foreclosure auction looked like in 2013

Going to the foreclosure auction was the best place to find real estate investing deals from 2009 through 2012. Talk about lots of low-hanging fruit. It was common to buy a nice three-bedroom, two-bath home in a solid neighborhood for $35 a square foot. Then in 2013, the cheese moved. Buying on the steps was no longer the best place to get deals.

Let me explain: In April 2012, there were close to two hundred properties advertised for foreclosure. At the auction, there were only five investors bidding on those two hundred properties. Talk about shooting fish in a barrel. One year later – April 2013 – there were less than eighty properties advertised with more than fifty – that’s 50 – investors and hedge funds bidding on that handful of properties. Suddenly, because of the increased competition, winning bidders found themselves paying $80 to $110 a square foot for a house. This was a huge year-over-year price increase!

Did this mean that all the great deals had disappeared? No, it simply meant that to find great deals, investors had to look somewhere else – like buying properties pre-foreclosure.

What is buying pre-foreclosure? In Georgia, the foreclosure auction is held on…

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Avoid the Certainty of Poverty

Had a good conversation with an investor friend about the financial collapse of Greece. The country is so broke that not only can it not repay its loans, it can’t make its note payments either. What’s Greece’s solution to this financial meltdown? They want to borrow even MORE money!

It’s crazy for anyone – including a country – to believe that the way to get yourself out of a financial hole is to dig it even deeper! Yet that’s exactly what Greece – and way too many American families…and America herself – is doing.

Jack Miller, my long-time teacher until he joined the other angels in heaven, taught us how to avoid the certainty of poverty. He also shared what he had learned from Warren Hardin: It’s inconvenient to be physically alive but financially dead.

Pete Fortunato, another of my long-time teachers, said that to avoid poverty, an investor/businessman must play both offense and defense. You play offense by building income, creating a surplus between what you bring in and what you spend, and by acquiring and controlling assets. You play defense by avoiding, limiting and eliminating expenses.

I know, it’s hard to save and even harder to…

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No Seller Wants Cash – EVER!

No seller wants cash - EVER!

Just got a call from a realtor. She represents a homeowner who needs a quick sale. The realtor said, “Bill, my client will only consider an all-cash offer. We’re not interested in any of your creative razzle-dazzle deal structures, understand?”

Kim and I get a lot of calls like this. I’ve learned not to say, “No seller wants cash – EVER – ya dingbat!” Saying such would ruin the relationship and destroy the possibility of meeting face-to-face with the seller.

So what do you think? Do sellers really want cash or could I possibly be right?

In this situation, what if I immediately agreed to pay the seller’s $80,000 asking price – in cash? There’s only one condition: The seller must put the $80,000 on her kitchen table, cover it with plastic wrap, and once a month the seller, realtor and I will get together and marvel at the big stack of money.

Sure, this is a silly stipulation that no seller would agree to. But why – since the seller is getting exactly what she wants – wouldn’t she…

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