Category Archive: Articles

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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If It’s Stupid and Works, Then It’s Not Stupid!

Bill out door-knocking

Dan has been investing in real estate for six years. He’s frustrated because he’s not able to find deals the way he could a few years back when there was plenty of low-hanging fruit on the market. Dan said his marketing no longer works. He’s one frustrated investor!

Desperate, Dan called and asked to go door-knocking with me. He’d heard that Kim and I had built our real estate investing business square on the back of knocking on homeowners’ doors. Problem was, the thought of knocking on a stranger’s door nearly makes Dan vomit. Isn’t it funny what folks will try when their sinking ship is about to go under?

A few days later, as Dan and I headed to the first subdivision, he nervously mumbled, “Knocking on someone’s door is plain stupid!” I smiled. Dan had himself convinced that he knew exactly what would happen at the first door – we’d get yelled at and the door would be slammed in our faces.

We soon saw a house with a For Sale sign in the yard. We pulled to the curb. I honestly thought Dan would pass out before we made it to the seller’s door. After knocking, I backed up twenty feet into the yard. When the seller answered I said…

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The Power of a Refusal Option

Captain Nimrod!

I hate being an idiot, but when you screw up like I just did, it qualifies me to be the biggest nimrod in the land!

The most powerful document in real estate investing is the option agreement. Sadly, the least used and most misunderstood document in real estate also happens to be the option agreement. Why don’t more folks know how to effectively use options to control property? Probably because there are so few investors who have experience using options.

Most folks have heard of Lease Options, but what about Purchase Options, Performance Options and First Right of Refusal Options to name but a few?

An option is a right, but it’s not an obligation. Let me explain: If you’re selling your house and we sign a Purchase and Sale contract, I’m contractually obligated to buy your property and you’re contractually obligated to sell me your property. If either one of us refuses to perform, there’s a good chance attorneys will get hired – cha-ching!

On the other hand, if I buy a Purchase Option from you, then I have the right to buy your property for the agreed to price and terms…but you can’t force me to perform! However, you ARE obligated to sell me your…

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Never Take Orders From Paint

Jack Miller

Jack Miller was one of my primary real estate investing teachers. He was a wonderful man and an incredible educator and mentor. It’s hard to believe that he went to heaven almost six years ago. Not a day goes by that he and I don’t have a conversation in my head.

Jack was the type of guy who very much marched to his own drummer. One of his best quotes was: Never take orders from paint.

Let me explain: Have you ever turned onto a street, saw the One Way sign and realized that you were going the wrong way? What did you do – an immediate U-turn, right? That’s what most of us would do. But not Jack! Jack would keep going the way he was going and say, “Never take orders from paint!”

Spend a minute thinking about this. Was Jack right or wrong? Now add this to the equation: Jack spent his whole life not taking orders from paint – both figuratively and literally – and he was a very successful businessman!

On the other hand, I spent most of my life doing exactly what was…

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What Makes the Best Rental Property?

Single-family Ranch

Over the past twenty years, Kim and I have bought a wide variety of investment homes – everything from a one-bedroom, one-bath duplex to a six-bedroom, four-bath McMansion. Experience has taught us what makes the best – and worst – rental property!

Jack Miller said: Everything else in real estate is harder than a house. With that said, Kim and I stay away from townhomes, condos, duplexes and apartment buildings. We’re not saying these are bad investments; it’s just that they require a lot of hands-on attention, and our goal is freedom, not a j-o-b.

When it comes to single-family homes, the most in-demand property is a three-bedroom, two-bath home…with a garage…without steps…on a level lot…in a nice, convenient neighborhood. We call these Walmart houses.

Think of a Walmart house this way: Go to a checkout register at Walmart that has ten people in line. You hold up a picture of your investment property and ask, “Who would like to live in this home?” You want eight out of ten hands to go up. Next – and this is the most important question of all – you ask, “Who can…

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What’s the Better Investment – Gold or Trailers?

A guy called trying to sell me gold. He said that I was a fool if I didn’t use every dime I had to buy his bullion. Knowing that real estate and mobile homes almost always out performed gold, I chuckled.

In total disbelief, you’re probably asking, “As an investment, you’re saying that it’s better to own a mobile home (i.e. trailer) rather than gold?” Yes, if by “better investment” you mean one with a much higher yield!

In 1900, gold sold for about $20 an ounce. This would buy you a tailored suit, a nice pair of shoes and a wonderful dinner out. Today, gold sells for about $1,200 and ounce. This will buy you a tailored suit, a nice pair of shoes and a wonderful dinner out. In other words, gold, over the past 115 years, has held its buying power.

Sure, all the TV and radio commercials claim that gold is an incredible investment, but the truth is gold preserves wealth – it tracks inflation, and inflation is nothing more than an invisible tax! If you seek growth, then you must invest your capital in something like…

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Simple Simon Met a Pieman

Zeke selling pies

A thing that really annoys me is seeing a bum at a busy street corner with a beat-up cardboard sign that reads: Will work for food! Many times, I’ve stopped and offered a day’s pay for a day’s work. Thus far, none have accepted my offer – this is why I use the word “bum.” A bum wants something for nothing.

Last week, I was in Charlotte, North Carolina. On the street corner next to where I was getting gas stood a sixteen-year-old boy holding a sign seeking money. But he and his sign were like nothing I’ve ever seen! His sign combined work with lots of style.

Zeke was his name. He was selling $7 pies – sweet potato or bean. He had a large cooler on wheels next to the sidewalk filled with his pies. And here comes the style part: He was wearing a black tuxedo, white tux shirt, red bow tie and patent leather shoes. He was one sharply dressed dude! I was totally impressed! (NOTE: On our website, you can see a picture of Zeke selling pies.)

Unable to stop myself, I walked over to Zeke, handed him a ten-dollar bill, bought a pie, told him to keep the change, and walked back to my car to top off my gas tank. While filling up, I watched Zeke sell eight more pies in only ten minutes – with each person handing him a $10 bill and telling him to keep the change.

Do the math: Zeke grossed…

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Need a Real Estate Investing Coach?

Pete, Jack and Dyches!

Do you need a real estate investing coach or mentor? Do you know the difference between the two? I didn’t until I researched this column.

A coach is an expert who trains someone learning or improving a skill – it’s very hands-on. On the other hand, a mentor is a wise and trusted advisor – not nearly as hands-on as is a coach!

Why am I writing this column? Several times a week I get calls from investors asking to be coached or asking how to handle their high-dollar coach who isn’t doing what he/she promised. Bottom line: I’m writing this to help you know what to look for in a coach because there are coaches and then there are coaches!

In 1995, when Kim and I got into real estate investing, coaching wasn’t popular. Instead, we had an old fashion thing called teachers. Our three primary teachers were Jack Miller (God rest his wise soul), Pete Fortunato and Dyches Boddiford. As we got to know them, these three wise men also became our mentors who we could call for deal-structuring advice.

Back to the question: Do you need a real estate investing coach? I think a good coach will help you learn about investing much quicker than if you went at it on your own. More importantly, an experienced coach will keep you out of the pitfalls that swallow up most…

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How Do We Fund Our Deals?

Image 1

Since we don’t use banks, how do we fund our deals?

Do banks have money to lend? Think carefully – this could be a trick question! Don’t banks “borrow” the money they lend from their depositors? And why do depositors keep their money in the bank? Because it’s the safest place to keep it, right? But is it really?

What interest rate is your bank paying on savings these days – 0.3%? And what is the current rate of inflation…something like 4%?

Here’s a broad-brush picture to help you understand what’s really happening. You put $10,000 in the bank earning 0.3% interest. One year later, your nest egg has grown to a whopping $10,030. But let’s not forget about inflation. In reality, after you factor in inflation, the actual buying power of your $10,000 dropped by 3.7% to $9,630! What – you LOST money?

Inflation is called the “invisible tax.” You can’t see it, but you sure can feel it every time you walk in a store!

Sure, the days of banditos like John Dillinger, Baby Face Nelson and Pretty Boy Floyd are long gone, but they were replaced by something far more sinister:…

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When Deal Making, Don’t Rely on Email

Emails can shock you!

This has been a very painful, lesson-filled week! Because of a single misunderstood email, I lost a nine-year friendship with a couple that I love very much. In addition, I was booted out of a real estate investing mastermind group that I had been a part of for nine years. Ouch!

I “said” one thing in my email but they “heard” something completely different.

What does this have to do with investing? Everything!

These days, too many real estate investors rely far too heavily on websites, emails and text messages when they’re constructing deals or working through tenant problems. Listen up: Real estate investing is a face-to-face people business – not a computer business! Nothing takes the place of meeting with a seller and asking Pete Fortunato’s famous question: Why are you selling such a nice house like this? Hearing and seeing how a seller answers this question is everything – itis the backbone of deal making!

If you rely on emails, here’s a demonstration of how easily a potential deal can…

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