November, 2013

A Thanksgiving Reminder…


Thanksgiving1For the last 11 years I have been involved with real estate in various capacities, including as a realtor, broker, investor, and trainer. I am extremely passionate about what I do and there are few things that give me a greater sense of fulfillment. My business gives me the opportunity to help people. Whether it’s assisting a homeowner with the sale of their home, saving someone’s property from foreclosure, or helping a buyer purchase a slice of the American Dream, I know that what I do truly makes a difference in people’s lives. For that, I am extremely thankful.

Below is a letter that I wrote to some of my real estate investing students a few years ago. I set aside time every Thanksgiving to read it again, and I am always extremely uplifted and encouraged by my own words. It’s a little longer than most of my posts, but I encourage you to try and carve out a couple extra minutes and read it through to the end. My prayer is that it will bless you in reading it as much as it did for me in writing it. If you get a chance, post some feedback at the bottom about what you’re thankful for this year, in business and in life. And, of course, have a Happy Thanksgiving!

“This past week I was reminded again why I became a real estate investor. Of course I was always excited about the possibilities of earning vast amounts of income and building a substantial net worth. I used to stay up at night dreaming of residual or passive income and the financial freedom that could come from it. But when I really started working on a full-time basis with motivated sellers, I discovered that the rewards reached so much deeper than I could ever imagine.

I still remember my first deal like it was yesterday. My hairdresser (yes, the one from Fantastic Sam’s) told me that her boyfriend was about to lose his house to foreclosure. After meeting with him, I found out that his primary goal was simply to get rid of the house. It represented an anchor to him that was preventing him from setting sail, metaphorically speaking, to the responsibility-free world of truck driving. Within 30 minutes of hello, he had deeded me the house, I had agreed to take over his payments, and we had creaxbox-christmasted a true ‘win-win’ situation. But the winning didn’t end there.

After I fixed up the house, I listed it on the market for $43,000. Within 3 days I received a call from a nice gentleman named Richard who was interested in buying the house. Richard was recently divorced and had sole custody of an adorable 5 year old boy. He had decent credit, but he didn’t have much in the way of a job history, nor did he have any money for closing costs. After some hard work and diligence by my good friend Chris Carter, we were able to get him financed. I paid for all of his closing costs, and just before Christmas, Richard and his son had a place to call home.

I knew that the move had depleted the meager amount of savings that Richard had built up, and so for a closing gift I bought Richard’s son an X-Box and a few games to go with it. I can still remember how his innocent face just lit up when he ripped open the package. As the MasterCard commercials puts it…PRICELESS. So, let’s now factor in the look of excitement on that young boy’s face and the ability to give Richard’s small family a home of their own right before the holidays. Make that a win-win-WIN deal.

Until recently, I had mistakenly thought that there were only 3 winners, but oh how small is my vision! This past weekend I held an open house at one my rehab properties and I thought it would be a good idea to send a postcard to the surrounding neighborhood. My ingenious, entrepreneurial thought was that perhaps they have friends or relatives that may want to live where they live OR they’re renters and would like to own a home of their own without moving their kids to a new school district. Well lo and behold, the neighbors did show up, but it wasn’t to buy. They simply wanted to say… ‘Thanks.’ One after another neighbors came by to let me know how appreciative they were that I had fixed up the house. One of my mentoring students even went by the day after the open house, and they were approached by a neighbor who requested that they tell me thank you as well. So, let me correct myself once again. We investors are in the sf_happythanksgiving3_02business of creating Win-Win-Win-WIN deals.

You see, I had taken the neighborhood eyesore and made it pretty again. Suddenly everyone’s property values went up, along with their own pride in the neighborhood in which they reside. Slowly but surely we as investors are making our streets & neighborhoods, and eventually our states & our nation a better place to live, proving once again that we CAN change the world.

So, on the eve of this Thanksgiving, as we gather around the table in thanks for our family and friends, let us also thank God for our unlimited potential as human beings and the capacity within us to achieve greatness in our lives. Let us all work on the one thing that we have power to change…ourselves. As we ‘rehab’ our mental mindset and view of the world, adopting the golden rule as our mantra, we can make great strides in changing our circle of influence. As we encourage others to do the same, we can eventually raise not just our property values, but our personal values as well. It is then that we can truly change the world, one person (and one house) at a time.

God Bless You All and Have a Happy Thanksgiving!”

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Everything Doesn’t Go Right All the Time – 5 Things You Might Not Know About Real Estate Investing, Pt. 1

Recently on Facebook there was a viral post making its way around news feeds in which people were sharing the 8 or 9 or 10 things that people “might not know” about them. And of course, since my mind is unable to think about anything but real estate, it got me pondering some of the things that new investors “might not know” about real estate investing. So, over the next few blog posts I’m going to share with you a few simple truths about this business that you NEED TO KNOW if you want to be successful.

Number 1: Everything doesn’t go right all the time.

“Come what may, all bad fortune is to be conquered by endurance.” ~Virgil

Carleton-Sheets-450After you attend a seminar, or watch a late-night infomercial, you may get the idea that real estate investing is a FOOL-PROOF way to make money, and that every house is a gold mine waiting to happen. That may be a good story to help sell books and courses, but it isn’t exactly a fair representation of reality. While I’m a very optimistic person, and always try to see the good in every situation, the fact of the matter is that some deals just don’t work out the way you had hoped.

A few years ago I purchased a home from a motivated seller whose wife had some kind of terminal disease, and they needed to sell quickly in order to get her the necessary treatment she needed. We came to terms on a price that everyone was happy with, and it seemed like all was well with the world. That is, of course, until the title search revealed an additional lien that had to be paid off. It cost us a few thousand more dollars to purchase the home, and by itself would have been just a bump in the road. Unfortunately, it was just the beginning of a long trail of tears.

Without boring you with the entire story, let’s just say that we could have been filming “The Money Pit, PaThe-Money-Pitrt 2”, except this sequel starred me instead of Tom Hanks. Everything that could have gone wrong did go wrong, and we were looking at a very meager profit once we finally got the property listed. And then came the septic inspection. After another $7,500 to switch the faulty septic tank over to sewer, we were able to BARELY squeeze out a profit and move on with our tail between our legs to the next deal.

The moral of the story? That “testimonial” didn’t quite make it to our “Success Stories” page on the website, nor would it have been featured on the late night infomercial. The simple truth is that renovating houses is fraught with risk. It should only be approached in a very conservative manner, with all of the necessary inspections and meticulous number-crunching that you would do for any major investment. Though I’ve had PLENTY of success stories renovating homes, and have made a ton of money investing in real estate, the truth is that everything just doesn’t go right all the time.

barry-bonds-record-home-runThis is the reason why I admonish my students to always start their investing careers with wholesaling, which has virtually zero risk. This allows them to learn the ins and outs of the business, and build a war chest of money with which to invest, without putting themselves and their families in a vulnerable situation. It’s also why I always tell new rehabbers to be overly cautious on their FIRST rehab….because it is imperative that it’s a HOME RUN. If it’s not a SLAM DUNK (tired of the hackneyed sports analogies yet?), it’s very unlikely that you will ever get to deal #2, 3, 4 and beyond, which could end up costing you hundreds of thousands of dollars.

Need a perfect example? I recently ran into a former investor working at a minimum wage job. He had been super gung-ho when he first got into investing, and was so over-zealous to get started, that he made some ill-advised decisions on his first 1 or 2 deals. I had advised him AGAINST buying both of them, but he felt that they were viable investments. Unfortunately for him, he was incorrect, and those “errors in judgment” were the last 2 properties he would ever buy. Due to that experience, he and his wife are now COMPLETELY turned off to the real estate business, thus causing him to miss out on the opportunity to create an enormous income and vast amounts of wealth for his family.

                                                ——>>>>>  “Know When to Walk Away”

                                                ——>>>>>   “The Role of Fear in Investing”

Please don’t misunderstand this word of caution as a negative commentary on real estate investing. I have had way more successes than failures in this business, and believe it is undoubtedly the best (and fastest) way to build wealth. I absolutely LOVE the real estate investing world, and my family has enjoyed the fruits of it for many years. I just want YOU to love it as much as I do, and to experience the same level of success (and well beyond!). But if you go into business with the wrong mindset and unrealistic expectations, you could exit just as quickly as you came in. And that would be a travesty.

So keep LEARNING, READ a lot, LISTEN to your mentors, ASK questions, SAVE your money, and BE PREPARED for some things to not go right some of the time. If you commit to those principles, you will be well on your way to a tremendous amount of success and prosperity in the real estate investing business, and any other entrepreneurial endeavors you may pursue. Here’s to your success!

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Vampire & Zombie Foreclosures – The Spooky Side of Real Estate

HalloweenLast week on Halloween, millions of little “ghosts” and “goblins” went door to door begging for sugary snacks from neighbors, in what has become a very popular annual tradition.  Though I don’t personally celebrate the holiday, I realize I am definitely in the minority, as the National Retail Federation reports that annual spending on Halloween has risen 54% since 2005 to a staggering 6.9 billion dollars.  But while those candy-grubbing munchkins and their parents were bilking their neighbors out of those billions of dollars, a much scarier phenomenon was occurring right under their nose.  Unbeknownst to these trick-or-treaters, many of the doors they knocked on were “vampires” and “zombies” themselves.

Vampire foreclosures refer to homes that the banks have taken over through a foreclosure auction, and yet the previous owners still remain in the home.  According to RealtyTrac, nearly 47% of all foreclosed homes are vampire foreclosures.  Sometimes this occurs because the foreclosure is caught up in litigation from homeowners who think they were illegally foreclosed upon.  However the most common scenario is that the bank just hasn’t gotten around to evicting the homeowner due to the massive glut of foreclosures on their books, or they simply don’t want to take on the expense of maintaining another vacant home.

—>>>  Short Sales – A Great Source for Rehab Inventory

—>>> The Five Stages of Foreclosure Grieving


Zombie foreclosures, on the other hand, are homes that are still owned by the distressed property owner, but they have vacated the home with the impression that the foreclosure was imminent, and that they needed to find a new place to live.  However, in judicial foreclosure states like Florida, it can oftentimes take 5 years or more to finalize a foreclosure.  Homeowners who have mentally moved on, are learning that they are still in fact on the hook for property taxes, homeowner association fees, etc…potentially causing even more financial harm to their families.

There is a huge opportunity for creative real estate investors to cash in on the vast number of zombie foreclosures, while also helping distressed sellers minimize the impact to their personal finances and credit rating.  Through our direct mail and other marketing methods, it’s imperative that we explain to these “zombie” homeowners that they could still be responsible for expenses related to their home until it is foreclosed on by the bank, and that ignoring the problem will not make it go away.  A savvy short sale investor can help expedite the sale of the home, which in turn will minimize the expenses and potential financial harm incurred by the current homeowner.

Have you incorporated this message into your marketing campaigns?  If so, we’d love to hear how it’s working for you!  Take a minute and share your thoughts in the comment section below.

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