Category Archive: Articles

Speed, Greed + Ignorance = A Real Estate Investing Train Wreck

The new real estate investor asked, “Bill, can you help me put together a deal?”

“Sure,” I answered. “What kind of creative deal do you need help putting together?”

“It needs to be one of those subject-to deal thingamajigs, combined with a land-trust doohickey,” she replied.

I paused to consider what she had just said. I asked, “A doohickey? Have you ever done a subject-to deal or worked with a land trust before?”

“Not yet. This will be my first time to use either technique,” she explained.

It reminded me of something Jack Miller (God rest his wise soul) once said: Speed, greed and ignorance equals a real estate investing train wreck. So true – especially in this case!

Why is it that new investors think they can take one or two classes and then know all there is to know about real estate investing? Sure, we’re morphing into an impatient society that wants instant gratification, but most things still take a lot of time to master – about 10,000 hours! There’s no single class to take or computer app to get that will allow you to know all there is to know about…

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How to Make $25,000 in Twenty-five days

Lexington Ave Wholesale Deal

There are many reasons why you should become a real estate investor; one is to gain financial freedom by owning paid-for rental homes that provide you with monthly mailbox money. Another is the opportunity to make big chunks of cash by bird-dogging, wholesaling and flipping properties.

Whether you’re a seasoned real estate investor or one who is just getting started, bird-dogging and wholesaling homes to other investors should be part of your business plan.

For example, (and I don’t write this to say “Boy, look at us; aren’t we something!”) a couple of months ago, Kim and I bought a house for $91,000, and then wholesaled it twenty-five days later (without doing any repairs) for $123,000. Our net profit on this wholesale deal was more than $25,000.

Want to know how we did it? Read on, my friend, read on!

What is bird-dogging? A bird dog is someone who…

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Accomplish Tasks!

What does it take to be a successful real estate investor – or a successful anything for that matter? Simple answer: Accomplish the tasks that need accomplishing, and do them whether you want to do them or not.

Right now, I’m beating myself up. My key goal for this year was to get my real estate investing training manuals re-written and published. Guess how many I’ve gotten done? Zippo!

Bottom line: I didn’t do what needed to be done. When this happens to you, how does it make you feel? In my case, I lie awake nights calling myself every name in the book. That doesn’t really help to build one’s self-confidence, does it?

How do you fix this problem? Another simple answer: Block out distractions, focus, and start accomplishing tasks!

When Kim and I first became real estate investors, there was one main goal that needed to get done: I had to get face-to-face with twenty-five sellers each and every week. It was incredibly easy to find hundreds of other far-less-important things to do…like…

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The Tax Benefits of Rental Property

Like many people, Anthony is disgusted with the skimpy 0.1% interest his bank is paying on savings. He knew that Kim and I, like many real estate investors, borrow our purchase and fix-up money from individuals rather than from banks. He called to say that he would fund our next deal if we’d pay him 5% compounding interest.

The phone conversation led to a face-to-face talk over coffee at Waffle House. Anthony and his wife have good jobs and they’re paid W-2 income. In other words, their tax bracket was killing them.

Being the curious sort, I asked why they wanted to be lenders instead of owning rental property themselves…after all, their tax situation screamed: Own rental property! Anthony explained that they’d heard too many tenant horror stories – there was no way they’d ever consider becoming landlords.

I shared that Kim and I had found our next investment deal. It was a three-bedroom, two-bath ranch in a great neighborhood. The purchase price was…

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Would-be Tenants From Hades

Landlords, what’s the best way to deal with tenants who are a pain in the tail and make you want to vomit? Easy answer: Never let them in your rental property in the first place. And how do you accomplish this feat? Read on, my friend – it’s actually pretty simple! But first, a story…

Several weeks back, we had a property go vacant in Cartersville, Georgia. It’s a nice three-bedroom, two-bath home with a two-car garage. Though a good number of applications came in, one stood out above the rest.

The application was neat and complete. The prospects were from Cartersville, so they have a lot of ties to the community. The husband was an experienced contractor who knew how to fix things. The wife was disabled and received a guaranteed monthly government check. They didn’t have any kids or pets and didn’t smoke. They were looking for a place they could live in for the rest of their lives. Looking at the application, there was nothing not to like about…

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Seven Truths of Real Estate Investing

Recently, Kim and I spoke to a group of new real estate investors. The topic was: The Seven Truths of Real Estate Investing. This information is beneficial to anyone who’s thinking about dipping his or her toe into the real estate investing water.

First truth: To be a successful real estate investor, you gotta get face-to-face with sellers on a regular basis and ask Pete Fortunato’s famous question: Why are you selling such a nice house like this? This is the alpha and omega of real estate investing!

Would-be investors mistakenly think they can succeed using nothing more than a computer. Real estate investing is a people business, not a computer business! Nothing takes the place of sitting at the seller’s kitchen table and asking lots of questions so you can discover the seller’s uncomfortable circumstances. After all, how can you structure an offer that is likely to be accepted by the seller if you don’t first fully understand the seller’s problem?

Second truth: Success comes slowly…very slowly! Kim and I were active investors for five years before we started feeling comfortable about what we were doing. It was another five years before we began feeling confident with our deals. And let me tell you, there’s a huge difference between…

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David Tilney: A Landlord’s Landlord

David and Mary Tilney

The vast number of mom-and-pop real estate investors who own rental property amazes us. Consider this: About 63% of Americans own their home. This means that 37% – if they want to keep a roof over their heads – are tenants paying landlords rent each month. We’re talking about 334 million tenants, folks!

Here’s another interesting fact: Most would-be landlords never buy their first rental property because of their unfounded fear of tenants. We’ve all heard the horror stories: Tenants who trashed the house; tenants who didn’t pay and refused to move; tenants who “adopt” 43 dogs and all the fleas accompanying them!

When someone shares one of these landlording nightmares, we ask one simple question – and it’s one you should ask as well: Did that landlord ever take a landlording class? Ninety-nine percent of the time the answer is: No!

Another fact: Landlording is a learned thing, not a born-knowing-how-to-do-it thing. Can you imagine learning to fly without ever taking a lesson? You might get the plane in the air, but when it comes down – and it most definitely will come down – the chances you’ll walk away from the crash are…

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Student Loans: Friend or Foe?

We regularly meet with folks who are in danger of losing their homes because they can’t afford to pay their mortgage due to the amount of consumer debt they owe. One of the most common (and largest) consumer debts we see is student loan debt. Get this: 5.9 million homeowners under the age of forty pay over $250 a month for student loans!

The politician who invented the phrase “student loan” was an incredibly devious marketer…as well as a manipulator of the facts. It’s my guess that several of the big banks were included in this lending scheme.

Why do I call this a lending scheme? Simple: if you get a mortgage, what is the only thing the money can be used for? To buy a specific home, right? How about an auto loan – a specific car, right? But with a student loan, the money borrowed can be – and often is – used for ANYTHING…to buy a motorcycle, to go on lavish vacations, to buy a plasma-screen TV, etc. And that’s exactly what too many “students” do with the borrowed funds!

In the end, many students owe the bank $50,000 or more! And here’s the sad part – a good percentage of these “students” never get their sheepskin. This means they start adulthood with no degree and…

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How to Destroy a Child’s Ambition

photo

I was at Stephen and Carol Softin’s house talking real estate. We’ve been good friends for many years. Stephen told a story about his son Mack. It both broke my heart and made me angry. How does this story affect you?

The Softins spent some quality family time at the beach earlier this year. Several of the days, Stephen took Mack out for long walks on the beach for some solid father-son time. Mack was 11 years old and in 5th grade.

Stephen explained that if Mack knew how to add, subtract, multiply, divide and work with percentages, the world would be his oyster. Understanding basic math is one of the primary building blocks all successful entrepreneurs need.

Know that Stephen and Carol are entrepreneurs, not nine-to-fivers. They are real estate investors, and they have a thriving internet business.

To make the beach-walking lesson more meaningful, Stephen used one of Mack’s teachers as an example. Stephen figured the teacher worked ten months out of the year to earn $35,000. He asked Mack how much that was a month. Mack correctly answered…

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Stick With Quality Contractors

Crack Kills!

In the school of hard knocks, we regularly learn new lessons – and are continually reminded of old ones. An example of this is a blow-up we had two days ago with a contractor.

Let’s begin with this scenario: You need some repairs done to your rental property. The deck needs some work, the walls need painting, and ceiling fans need to be replaced. You have a choice between two contractors. The first guy quotes you $2,500, which includes all material. The second guy will do the job for just $500, but you must provide all materials, which will cost $1,000. Which contractor would YOU choose?

Here’s some additional information to help you make your choice. The first contractor is forty years old, experienced, has a stable family life, drives a paid-for pickup truck that’s neat as a pin, and has all the tools he needs to do most any job. The second guy is also forty and experienced. However, he’s going through a divorce – and has girlfriend problems! His truck barely runs, is in danger of being repossessed, and is a cluttered mess. As for tools: Some he has, many others he doesn’t.

Two more things to consider: Both contractors tell you the job will be done in three days. And it looks like you’ll save $1,000 if you go with the second guy.

So which one did YOU…

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