All Forum Posts by: Account Closed

Some would say it's a bit long winded Josh, but hey some things take a few more words to explain. I would like to thank all those who take the time to read these long posts.

As always it's a pleasure as well as an honor and priviledge that you have taken your valuable time to read what I thought was important.

See you on the boards, God Bless everyone on your site and I hope everyone takes two steps forward in 2005! Dan

And a great community it is! My pleasure Josh, keep up the good work. Dan

Looking Inside Your Tenant’s Mind
Basic Mind-Reading Report 101 for Landlords
By: Dan Auito (my experience, yours may vary)

This report will give you perspective and understanding in the realm of your tenant’s mindsets and Modus of Operandi. It’s looking at their situation from their point of view as well as your own.

It goes without saying but I will say it anyway. The better you understand your tenants and their personal situation, the better you can serve their needs and your own. Notice that your needs come after your tenants. Always put your tenants’ needs before your own and they will buy real estate for you in return. That’s a fair trade. Take it!

Many cold-hearted, self-serving, money-grudging, wanna-be landlords don’t understand human nature. Let me tell you right now, if you can’t put yourself in another person’s shoes and see a problem from that person’s perspective with empathy, you will fail miserably in the “landlording” business and in life. Wise up!

Fear not. If your not quite sure what I’m talking about, here come the stories and details of how to be loved and adored by those kind people called tenants.

Let me first dispel the horror stories about landlording. If you follow my advice and teachings, you should have very few tales of woe to tell. You’ve heard the stories and they sound like this: Those damn lowlife tenants. They trashed our house, they disturbed the neighbors, they ruined our lawn, they were filthy pigs who never paid the rent on time, they never did what we told them to do and it cost us a fortune to get rid of them and repair our investment once they finally did move.

Well, guess whose fault that is. Yep, it is completely and unequivocally the fault of the so-called person that is calling themselves a landlord. The real name for this type of so-called landlord is uneducated dummy and because of these lazy fools the whole industry gets a bad rap!

There is a plus side to the scenario above and that is this: It sets up a perfect opportunity for you to do the exact opposite of the fools and create for yourself an unlimited market supply of excellent trouble-free tenants for life!

Tenants, believe it or not, are human beings. They are not animals or things to be mistreated, abused or taken advantage of. If you will prepare your rentals as if your mother was going to be moving in, your mindset would be realigned in short order. In effect, you will start looking at it from a compassionate point of view. You will not cut corners. You won’t let things go that need fixing. You will use more care, skill and diligence in preparing that dwelling for another decent human being to begin calling home. That’s what you want to achieve.

You want to provide a trouble-free, pleasurable, aesthetically pleasing, creature comfortable, needs fulfilling, safe, secure, affordable and convenient place to live. When you provide those things and screen the population, it’s like striking gold.

The process of getting good tenants begins in your mind. By that, I mean you have to educate yourself to be able to recognize value and acquire properties that are structurally sound, aesthetically pleasing, physically functional and provide safety, security, affordability, convenience and a feeling of pride in your tenant’s mind.

Sounds like a daunting task, doesn’t it? Well it’s not. In fact it is so simple to achieve that once you understand the process you won’t even have to think about it. It will come naturally to you. I promise you that this is true and I intend to prove it to you as well.

I absolutely guarantee that you can do it. So for now, just take my word for it as being a fact, because it is. Here’s an example of using a motto to align your thought process in relation to all the things I just said. Repeat the following:

Landlord’s Creed
I vow never to rent to someone else,
something that I myself would not be happy living in.
Mansions not included!

Now apply that to every prospective property that you evaluate as a potential rental property investment. Human nature is immutable. We all have basic needs, wants, desires and expectations that include fear. When you remove fear and provide comfort and security, you will own your market.

So what you first have to do before you can be a great landlord is to find great places to rent to other people.
The screening process is also outlined in that book as well. I will hit upon a few things that weren’t touched upon already in the processes in the main body of the book, so here are a few nuggets for you now.

The following observations are done after you have already performed the formal screening procedures. I’m rushing you up to the day that your face-to-face meeting occurs with the tenants who have passed your telephone interviews and have succeeded in getting an appointment with you to see your wonderful rental.

Now, here are some things that your uneducated dummy-type landlords can’t begin to recognize, plan for or evaluate when it does appear before their very eyes.

As soon as your potential renter shows up to view your property, take note of
the time. Are they on time? Can they keep their first promise to you? Can they follow directions? If their late, did they get lost? I’m sure you gave them good directions and also used landmarks like churches, stores or monuments, so they could find you easily. If they can’t follow simple directions, do you think a lease agreement and those directions are going to be any easier? No, they are harder to follow.

O.K. They showed up on time. This says they respect your time, are able to follow directions and are serious about finding a nice place to live. How did they arrive, on foot, by bike, bus, cab, truck, motorcycle or tractor-trailer? Preferably they arrived in a clean, well-kept passenger car that is in a clean condition.

Now who was driving the vehicle? If it’s a couple are they both going to be renting or is your tenant without wheels. Let’s assume your prospect drives up in their own car. It runs fine so you won’t have cars on blocks and a parts yard for a front lawn in six months when they buy more cheap junk to get around with.

So the car looks O.K. on the outside but how about the interior of the car? Do they smoke and have smashed down McDonalds bags pushed so far into the floorboards that it now resembles carpet? Does this vehicle look like a home on wheels, with garbage bags filled with clothes, a crying baby and a cat in the back window? Watch out if you see this type of telltale evidence. I don’t think I need to paint the picture of what will result if you miss this investigative step.

Pickup trucks with camper-shells can also be loaded to the gunnels with personal effects, including small zoo animals. I encourage you to get a look back there, too!

The bottom line here is people will generally treat your property the way they treat their own, if you’re lucky! So see how they’ve done with their own stuff up to this point and choose wisely based on intuition, gut-feeling and physical evidence.

So the car inspection is over now. How are the appearances of the folks? Are they clean and well groomed? Do they seem to fit the profile of what you had envisioned over the phone interviews or are they 180 degrees out? Have they successfully fooled you or deceived you into believing something else up to this point? Now that they have appeared before you, is it blatantly evident that these persons are con artists?

If you get an uneasy feeling within the first few minutes of meeting these people, don’t brush it off as just some crazy thought. That’s your self-preservation instinct operating and you better listen to it. The book, Magic Bullets will help to protect you, so do not fear. Use this information to protect yourself from the events that lead to horror stories. Don’t give it another thought. Let’s get on with our interview, shall we?

So far they are on time. They have a good clean car and they appear to be honest and decent people who indeed do give you the same impression you developed over the phone. In fact, these people are really more than you expected. Yes, if you’ve done it right that will often be your experience and it is almost always a pleasure and privilege to rent to such high quality individuals.

Have you noticed something about the process here? There has been no mention of race, religion, national origin, sex, age or marital status. That is discrimination based on federally protected human rights and it’s against the law to discriminate on those issues. This includes the handicapped and a few others groups I may have overlooked.

My point is simply this: If they meet all the criteria that makes for a good quality tenant, than you would be ruling out a potentially excellent long-term tenant based on preconceived notions and that is dummy landlording in the first degree! So don’t discriminate on basic human rights issues.

So many people screw this process up. They also make mistakes by choosing management companies to do this highly developed type of intuitive researched and planned-for event. I honestly know of no management companies who can be as thorough as an owner who takes the time to protect their own interests in this way.

I don’t care how much management companies protest about the above statement. The fact of the matter is, they are not you, so they can never find a tenant that satisfies your own personal preferences the way you can.

I like to personally screen potential tenants because in all cases, I have total control and that’s what real estate is all about – control!

Think of the opposite of control. That would be the stock market for the small investor. The way I see it, I don’t want to be on the sidelines rooting for someone else to make money for me or more often, hoping they don’t lose it, steal it or mismanage it to my certain demise.

With the way I approach real estate, it is a 100% guarantee every single time that I am going to outsmart, outwit, outperform, over deliver and under promise to the point that I crush my competition. I am in a league of my own.

My tenants are the winners and they know it, too. What kind of loyalty do you think develops in the minds’ of people that look to me for protection? It stands as a testimony and irrefutable, self-evident, empirical fact that I care enough about the people who have entrusted me with their welfare, their time, their money and their trust to deliver on my promises. My tenants don’t move. They either pass away due to old age or they end up buying it from me when I want to sell it. It happens that way all the time.

So think again when you hear a dummy landlord talking about all the trouble they had and then ask yourself one question. Did they read Magic Bullets before they became a landlord? It’s 100% certain they did not. If they had, then their tenants would have loved them and paid for their real estate time and again, and made them rich beyond their wildest expectations…

Snap out of it! Hey, are you with me? OK, your back. Good let’s get back to reality here. What I do works and the only thing about landlording I don’t like is cashing all those darned checks. I’m not kidding. Bank tellers look at you like your some kind of thief because you have so many checks to cash.

Here are a few things that you won’t find out unless you have been around a while but I’m going to save you from the pain of learning the hard way. Now of course you’re going to do everything right by following my advice in real estate but there are a lot of things I don’t know. Yes, I admit it. I don’t know everything but I do know what I’m going to tell you about next and that is…drum roll, please! Watch out for real estate investment property that comes with existing tenants! Here’s why. In general, the new owner takes the property subject to the existing lease and rights of the tenant or tenants. Most often, whatever existing lease or rental agreement that was made with the previous owner will remain in effect.

What could happen if you don’t thoroughly review existing tenants lease agreements? What if the previous owner rented a unit to his good-for-nothing, drug-addicted brother for $1.00 a month for the next five years? That’s a valid lease. You may take them to court for misrepresentation but it’s going to cost you lost rent, lost sleep and maybe your safety.

Anyway, that’s an extreme example of an intentionally designed below-market rent lease agreement but it illustrates my point. Here’s another. Let’s say you’re getting a great deal and you buy it, and find out the reason the owner sold it to you was because the tenants were very difficult and had him over a barrel. And all the while, they are paying lower than average rents and complaining about everything. Now you get them and you can’t raise the rent and they refuse to move. Here comes your eviction lawyer and you have attorney’s fees and more lost rent to boot.

My point is this: Make the seller get rid of bad tenants before you close on the deal. Do a pre-closing inspection and personally walk through the empty apartment, house, condo, trailer or doghouse yourself. Bring extra locks or call a locksmith and have the locks changed the day before closing. An honest seller will not have a problem with that so long as the title company holds those keys until your check is accepted at the closing table.

The lesson here is it’s always better to install your own tenants because you control the process from start to finish. Don’t follow a dummy landlord or by default, you could be a dummy, too!

Remember this too: When you install new tenants, you are generally going to get a higher rent from the property because inflation creeps along and landlords have a hard time raising rents on people. I have seen 10-15 year long-term tenants paying the same price for 15 years. You will go broke if you let that happen.

Adjust your rents accordingly every time you fill a vacant unit and if people want to renew their leases, then inform them of an economic reality that currently exists called inflation, and you are just keeping up with it! The Annual Consumer Price Index may be used as a reference. If they don’t understand, they have an option and that would be to go look for a similar rental to yours at a lower price. If you have followed my advice, this elusive lower rental price will not be found and your tenants will be grateful to you for renting out such a clean place at the new price-adjusted rate.

There is a lot of garbage held out for rent and prices may be lower, but no one wants to live in a pigsty with lime green shag carpet and Brady Bunch orange counter tops, where the roaches tell you what to do.

So the lesson here: Encourage balking tenants to find something comparable to yours at a lower price. If they find it, let them go. Odds are, they won’t. After all I told you, it’s often next to impossible, if you’re a hands-on owner. There is no 10% fee to management companies either. So you can even ask 5% less than investors who use professional management to do their job. So many ways to slaughter your competition…so little time!
:superman:

Pretty much a quick punch out scenario, which may help give you an idea or two. Hope it helps! Dan :idea:

Your Own Homes Improvement Outline
(One for the Ladies)
by: Dan Auito

This report is written for those people who may want to improve or update their own home so along those lines, I would like to give you an overview of the factors that may lead you in creating a more effective and successful home improvement project or plan of your own.

Let me begin by saying what a home improvement plan will not do! I have seen this happen more than once, so I will say this now. A home improvement project, addition, upgrade, remodel, or makeover will not make up for a troubled marriage. So for those that think home improvement may save a marriage, I’m telling you now that it will add more stress and it is a poor substitute for proper counseling.

With that said, when you see a home being sold due to a divorce, take a good look at the house because you may see evidence of a great remodel job. However, the marriage still failed. The scenario above leads into other areas of home remodel, acquisition and selling points. Gentlemen, pay attention here! It is generally recognized that women are responsible for 80% of all decisions on whether or not to purchase a particular home.

So what influences the ladies in their decisions concerning home purchases and remodeling? By far the two biggest items are the kitchen and the bath. If I had to choose one or the other, I believe I would look at which area was in need of the remodel more, while at the same time looking at the costs of both options.

As for the men, what do they want? They would be happy with a large garage/workshop plus a secluded den or office to carry on with business or to retreat to the solitude of a “cave.” Men, as we can see, really don’t spend as much time feathering the nest so as a result we see that contrary to popular belief, men really tend to follow the female’s lead.

Generally speaking, you’ll find that men don’t pay much attention to draperies, window treatments, flower boxes, state of the art appliances, Jacuzzi tubs, well-lit bathrooms, large closets or floral patterns of any kind. They often prefer brown and gray everything, with a big garage, a shed, a sprinkler system and a privacy fenced back yard for barbeques and lounging in private. Men also like low maintenance houses so they aren’t constantly being asked to fix or repair things. If left up to the men to decide, you would find that faucets, toilets, sinks, baths, floors, mirrors, cabinetry, appliances and furnishings would tend to be favored by their industrial strength qualities as opposed to beauty.

Those are general observations and many times they will not apply. However, by keeping them in mind and using the 80/20 rule, they may help in the decision making process. So now using what we know, it would be wise to slant your remodel towards the light and bright feminine side of life. It seems to make sense that if the women are the decision makers then we should let them decide on what really needs attention first!

Let’s look at the kitchen first. Can you paint or refinish the cabinetry and change the knobs and handles to get the new look? Would new Formica laminate over the old counter tops with a matching backsplash do the trick? Maybe a white ceramic sink with a new faucet will achieve the desired effect. Quite possibly you may decide to rip it all out. If that is the case, then paint the walls and consider tiling the floor also. Often times, adding some minor electrical and lighting upgrades will help transform and modernize the entire effort. Don’t forget the new built in dishwasher and plumbing as well.

Custom cabinets, if designed, built and installed by a local reputable cabinetmaker with references and a picture book of previous work done, are often very attractive in price and quality. I use craftsmen with low overhead who work on one job at a time. Often I will ask them to make, in addition to the kitchen, a base cabinet for the bathroom to match, all for one low price. When working with kitchens I always look to see if a wall can be opened up to create a pass through or bar stool counter top. This lets in more light and allows the person in the kitchen to talk with and see the people in the adjoining room. It also creates the effect of a more spacious kitchen.

The bottom line is that a well-lit, light, bright and spacious kitchen, well equipped with modern appliances, plenty of storage space and decorative tiles, paint and window treatments, will add value and appeal to any home’s remodel plan.

Next, lets look at remodeling the bathroom. Here again, we look to the feminine side as the women seem to spend more time here then the men. So with the ladies in mind concerning the upgrade, I will often bite the bullet and rip it all out, the tub being the only exception! If I can leave the tub in, the job is easier, faster and cheaper. However, if I am looking at an olive green or yellowed chipped up and rusting ceramic eyesore, than a new fiberglass insert with a sliding glass door is going on my list of items to buy at the local Home Depot.

Jet tubs are the in thing, so I won’t rule them out as a possible upgrade. This decision again is based on the female as most men don’t take candlelit bubble baths or require a pulsating massage. Walls are painted with Sherwin Williams semi-gloss paint which creates an excellent moisture barrier to the walls. With regard to walls, by adding tile or laminate half-wall wainscoting to the lower three to four feet of the wall, you’ll add a nice touch. Since you have torn out the old toilet and base cabinet, now is also the perfect time to rip up the old vinyl and put down ceramic floor tile before the new fixtures are installed.
New lighting, mirrored vanity cabinets, G.F.I. electrical outlets, wallpaper borders, towel rings and bars are usually the finishing touch. Even a man can appreciate coming home to a spacious, clean, modern, functional and aesthetically pleasing kitchen and bath. One final note here: Be sure to caulk everything when you’re through. You’ll want to protect your new investment from rotting, from the inside out. Dampness and wood eating insects are your homes worst enemies.

Now with the kitchen and bath out of the way, what do you feel is next? I myself spend on average about seven hours a day in the bedroom, so I tend to go there next. Once again, the closet is of importance to the ladies so I will look to paint that bright white, upgrade the lighting and install a closet organizing system to maximize the space that is available. A tip for the guys! Put in a shoe rack for the ladies, as most of you wouldn’t even think about that little upgrade.

Once the closet is done, I’m back patching and painting the rest of the room. Another smart thing you can do is to let the female decide on what color of Sherwin Williams brand satin super paint they would like to have applied. I always make sure I get enough paint to do the ceiling as well because when you’re on your back, you will be looking at it. Once the walls and ceiling are done, the ceiling fan with light kit and dimmer switch go in. Then the baseboards are prepared for installation before the carpet goes down. Usually I paint them a shade darker than the walls and tack them to the wall about one-half inch above the floor.

Now that the paint is put away, it’s time to install the plush carpet and a dense quality pad beneath it. In order to really bring the room together you will need to take a paint swatch or chip to the carpet dealer to choose the carpet color that really sets off the walls and base board trim. As for final touches, those include mini blinds, a curtain, and decorative switch plates and receptacle covers. A solid core door represents today’s modern standards with a keyed lock set for security, so I will add that factor in too. Just add candles and you’re done!

As for the rest of the house, I will choose one-color paint and use it throughout all the remaining areas that are to be lightened and brightened. Earth tone, eggshell or tan sand colors are a neutral favorite of many, so unless you have a floor that is going to clash with it, earth tones are a safe bet. Speaking of floors, I will follow appraisal rules that tell me wood is better than carpet, except in bedrooms. And tile is better than vinyl. With that in mind, I will use tile and Pergo flooring everywhere else. Once the tile and wood are installed, I never have to replace it and maintenance is a breeze. The appraiser also looks upon wood and tile as an upgrade, so at the earliest opportunity, they are getting incorporated in my plans.

There you have it! A general Joe homeowner remodel job, but what about the infamous addition? With this consideration, you’ll have many more options to weigh, so let’s take a look at some of the pros and cons of adding square footage.

When does it make sense to add square footage?

#1. Is it physically possible, legally permissible, and financially feasible? Will the new addition serve your intended purpose to the maximum extent?

#2. Does the current floor plan, layout or design of your home allow for a smooth
flowing traffic pattern in, out and through the proposed addition?

#3. Will your lot size accommodate a larger dwelling and will the neighborhood
surrounding your home support the higher value that you expend?

#4. How long do you intend to stay in the house that this upgrade is planned for?
Five years from now, will the addition return, dollar for dollar, the money you
have spent to the sales price of the home if you sold it?

#5. Are you prepared to deal with draftsmen and plans development,
contractors, building officials and permits? Will you mind living on a
construction site for about 6 months? Are your finances in place with an
additional 10% set aside for cost overruns? Has everyone agreed upon what
this addition should look like and the purpose it will serve?

Let us say you have considered the above and would like to continue towards the improvement. From here, we should consider the economic principle of what is called progression. Example: You have a 2-bedroom, 1-bath home, located in a neighborhood of more expensive 3-bedroom, 2-bath homes. In this case you could, with more certainty, add another bedroom and bath and expect to be able to realize or achieve the value from the addition’s expense as the more expensive homes around you will tend to pull the value of your home up along with theirs.

Now the reverse is also true, so you must consider the opposite case that is called the principle of regression. That says that if you over-improve beyond the value of the homes that are surrounding you, then those lower value homes will tend to keep the value of your home in the lower price ranges. So putting it another way, try not to pass the point of diminishing returns. In essence, saying that you can only improve so much before you reach a point where, for every dollar you spend, you will receive less of that same dollar back when you sell.

A good rule of thumb to use is to try to get at least two dollars of increased value for every dollar you spend. Once you begin to approach “break-even,” then you should consider maintaining what you have as opposed to adding to it. A simple way to say it: Don’t over-improve!

Another watchword to know is super-adequacy. That would be like putting gold faucets in a mobile home. It’s overkill and too high-end for the properties overall value, so the final decision on remodeling and additions comes down to balance and a happy medium being reached. Also, take into consideration the cost, aggravation, the net gain, the need for improvement, the improved quality of life, the suitability to all occupants taste, needs and desires and in the end the ability to receive a higher sales price.

I choose to remodel more often than add-on because it goes much faster and the profits role in quicker too. If I need more space to live in, I simply remodel the house I’m in and rent it out for top dollar, and then get an equity line to buy a bigger house! When remodeling my own home I will attempt to do everything myself, aside from building cabinets or rewiring electrical circuits. As with everything else, if I get in over my head, I will concede defeat and call in an expert to finish what I started while I learn where I went wrong by watching them finish it up.

Here are a few parting shots that you may or may not know:

Painting everything inside and out is the greatest value producing
improvement that you can make on a dollar for dollar return basis. When
painting, ensure you buy the absolute best paint available, as it is true that the
expense of painting lays in the application of the paint not the paint itself. So
if you have to apply two coats because of an inferior watered down paint then
the cost just doubled in time and the added paint needed to get the job done.

This next tip alone will save you the cost of this entire book and here it is.
Without naming any names, whether it be the manufacturer or the distributor
of the product, there is a problem out there with what used to be considered
top brand, quality paints. It has been said that some manufacturers have
thinned out their paint and left their good name on, all in the name of allowing
certain retailers the ability to sell hundreds of thousands of gallons a month at
what appears to be a bargain price. Unfortunately, the consumer is fooled by
the name and ends up coming back for more paint when they find that it takes
more of the thinned out product to get complete coverage.

I, for one, as you can well see by now, am a real fan of Sherwin Williams
brand, super paint. This blend is so superior in my mind to any other paint
available to the little guy, that I refuse to use anything else. I have applied it to
exterior walls located in the worst conditions and climates and ten years later
its still as good as the day I put it on. The elasticity, color and protection are
still in place with absolutely no chalking, cracking or deterioration of any
kind, The same goes for interior paint as well. The coverage and wash ability
are unmatched!

I also would like to say Sherwin Williams has not paid me to say one word
of this. It is for your sole benefit that I harp on it to the degree that I do, as it
burns me to no end to see trusting people get ripped off and not even know it!

But wait! It gets even worse. As if to add insult to injury, the retailers don’t really even shoot for the highest profit margin on the paint. They make their profit when you start buying all the tape, rollers, trays, brushes, handles, scrapers, sand paper, buckets, screens and new fangled gadgetry along with a host of other products that may be required to finish all phases of the job at hand.

Has anyone ever told you that? If you doubt it, take a viscosity cup and run the super paint through it and then do the same with the other paint. After this test, you will need no further proof of which paint is going to save you time and money in the long run.

Well, enough said. I hope you get the point on paint. Now another thing you can do to improve your home substantially is landscape it. Landscaping, if done right, can add up to 30% to the value of your home. I prefer to plant shrubbery and low maintenance hardy plants and trees of all types. A few flowers to add color and my job is done.

Back to the addition. If you decide to add a room or two, it has also been proven that you can save about 30% here too by being your own contractor. I would encourage you to get a book titled, “How to Be Your Own Contractor,” as it will often take an entire book to give you a proper grounding on the subject. Just know this! It is entirely within your realm of ability to tackle the over site and scheduling that you would pay that 30% to the general contractor to do. If you feel up to the task, get a book and be vigilant. In the end, you will have that new addition at a significantly lower price.

This is one way to kind of see the order of it all.

The Professional Investor’s Plan
The art of using high-leveraged activities

Strategy as defined here would be the science of planning and directing exactly how you intend on proceeding to maximize your profit potential through investing in real estate. Without a sound strategy and consistently executable tactics you may find that the result of the long, hard efforts have only led you to frustration and a less than sought after result.

Here I would like to make just a few suggestions that will hopefully save you from wasting years of hard effort only to learn in the end that had you invested using a better strategy, you would have realized more profit, happiness, satisfaction, control and free time as a result.

I’m not going to make you wait to find out the secret, so here is the crux of this technique. FIND’EM, DON’T FIX’EM! It sounds easy, doesn’t it? Please continue reading to get the full flavor of this topic. There are a few steps to follow if you are to succeed in using this method and you will really need to understand before you go and do it. I need to stop here and take into consideration the new investor who doesn’t have a war chest of greenbacks to get started with.

If you’re just beginning or starting out with a small amount of capital then you will most likely have to find’em and fix’em on the first one or two properties. By finding them and fixing them, then selling on your own, you will limit the amount of initial expense that you incur. Naturally you will keep more of the profit as a result. The trouble with this technique is that you eat up valuable time that could be more profitably spent on finding more great deals!

Here is what I am saying. If you spend your day painting a property, how much have you saved or earned? Let’s say a painter at $30 an hour multiplied by eight hours equals $240 dollars a day. You, in effect, have given yourself a new job that pays $30 dollars an hour. Instead of painting, let’s say you hire the painter so that you can go hunt down another bargain property with a $20,000 margin of profit. Let’s also assume that it takes 100 hours of effort to find, fix and sell this property; $20,000 divided by 100 hours equals a $200-per-hour rate of pay. Don’t do $30 when you can do $200!

By doing the first property using your own time and labor, you may get most of that $20,000 dollar profit when you sell, but it will generally take you an average of three months to do it, or 480 hours. That boils down to $41.66 an hour and you can’t look for more great deals. What this will do is give you the capital to pay someone else to do the labor on the next one. Once you have your nest egg you can begin to pay up to $5,000 for the labor to include materials. Now you let the lower wage scales do the dirty work of cleaning, repairing, painting and installing new fixtures and you no longer spend your more valuable time doing the low paying labor jobs, so now you can quite feasibly make $20,000 and spend $5,000 to do it. This leaves you with $15,000 profit divided by 100 hours, which equals $150 an hour or five times the pay of the painter! Don’t be a laborer if you don’t have to be.

I hope you see how it pays to find them rather than fix them. Granted your going to have to learn this higher skill of finding and evaluating good deals, however, throughout “Magic Bullets” I’ve given you at least 150 ways to find those deals, such as from bandit signs, newspaper ads, bird dogs, professional search services and so forth. You have the ammunition to launch a campaign that will yield plenty of these deals.

Once you find what appears to be a motivated, distressed or disinterested seller, your next skill set will be to evaluate the property to insure that a profit will result if you do proceed. Here again, you’re focusing on plumbing, electrical, foundation, structure, roof and location, as the rest will generally be cosmetic repairs that can be done quickly and inexpensively in an effort to realize the true value without going broke!

Once you have some accurate figures concerning a probable sales price, the cost of materials, labor, marketing time and transfer costs you can project your profit. Will it yield $20,000 or more in 90 days? It should! If not, then you may consider passing on the deal and continue the hunt for another property that does satisfy your strategic objectives. Side note here: Often when you walk away from deals like this, they end up coming back to you later when the sellers can’t sell. You’ll have an opportunity to lower your offer to an amount that will satisfy your objectives and it will usually be accepted at that time.

Let’s assume that you have found and evaluated the property. Now you will need to negotiate the sales contract and buy this property for the lowest possible price. By having your own offer sheets, sales contracts and financing in place, you can move swiftly to acquire these moneymaking assets. As there are so many creative ways to finance real estate, I’ll only touch on a few here: owner financing, subject to existing loan, leases w/ option to buy, H.U.D. 203k rehab loans, conventional bank loans, assumptions, all cash, etc. You will see what type of financing can be used as the deals begin to take shape. Just be prepared to use the method that will work when you make your offer. Hint: It helps to be pre-qualified and if possible to have equity lines available to tap into if necessary.

Now that you have found, evaluated and acquired the property, you will have to affect the repairs. I did not say you would have to do the repairs yourself, remember? Here is where you play Mr. or Ms. General Contractor; by hiring licensed and bonded professionals who come highly recommended you begin to pass off the labor issues back to the lower earning wage scales so that you can get back to finding more good deals.
Note: One trick to getting good workers and companies is to ask appraisers who they would recommend for certain jobs if they needed work done. Appraisers know a lot about value, folks! They seldom steer you wrong so build your network through their referrals.

Another way to save money is to begin getting familiar with local suppliers of all types of construction materials. I’m not talking truss members and cinder blocks but you will have to create your repair list often, otherwise known as a punch list. You can create this list of items that you will need to fix or replace in a few short hours. By using your notes from your initial evaluation, you’ll be half way home. These items may include tile, vinyl, carpet or wood for floors, toilets, faucets, sinks, tubs, vanity cabinets, mirrors, towel bars, light switches, electrical receptacles, light kits, ceiling fans, knobs, handles, locksets and paint to make the property look and smell new again. Now you can spend another eight hours shopping for and scheduling the dates of delivery and installation for the larger items but that is where your labor ends and you revert back to the supervisory role of periodic inspections to insure the laborers and contractors are getting the job done on schedule.

Up to this point we have done four things: We have found, evaluated, acquired and are repairing. With these steps behind you, the next step will be to start the marketing efforts to find a buyer for this beauty. By pricing it right and advertising it for sale to the entire market of potential buyers, the word will get out. You can help that word get around by using newspapers, yard signs, corner signs, word of mouth, flyers, fact sheets, neighbor alerts, network partners and a host of other avenues of approach that can almost guarantee you a steady stream of buyers when the time to sell is near.

So you have found, evaluated, acquired, repaired and marketed the property. Now the final step is to get the sales contract signed and a closing date scheduled. This should all be accomplished in about 90 days and you will have cleared no less than $15,000 as a result. Your results may vary – it could be lower, and quite possibly could be higher depending on how good you are! I’m giving you the overview here. You will be doing many tasks along the way that are not being explained in depth here.

You will have capital gains taxes. However, when you keep every receipt and use a C.P.A. to do your taxes, the process will be fairly painless. This work will pay very well regardless of that fact. By having two or three of these rehabs going on at any one time and having just one closing a month, you should be making over $100,000 a year, after Uncle Sam gets his.

Many highly trained or experienced investors never even touch the property. They simply find great deals, handle some paperwork and sell it for less than they could get if they spent more time on it. These people are leveraging their time and techniques to squeeze out the maximum profit in the shortest possible time with the least amount of effort. I don’t condone being a paper pusher and taking advantage of other people’s ignorance or misfortunes by doing paper trades. I personally have a hard time finding value in deeds done by using such methods. This is why I have given you a value-driven road map to follow in this brief report. I sincerely hope that you will create value for those that depend on you to deliver in an honest and caring professional manner. Happy hunting!

Just a few more methods of finding properties, hope they help. Dan :idea:

Finding the Deals

• Place this classic ad in your local paper’s real estate section to appear on Sunday: If you can afford to run 7 days a week, then you won’t miss any sellers who need to act fast, Negotiate with the newspaper for a better rate.

I buy properties.
Will pay a fair price w/small down pmt.
Quick closings call (your name) @555-1212

• Start calling for “sale by owners” out of the classifieds and ask them all the questions you can up to the point that they have had enough or you find that it is not of interest to you or to schedule to meet them at the property to further investigate. Note: If they are difficult to talk to on the phone, they may be difficult in person – brace yourself!

Your script to use when talking to sellers (see breakdown for insights):

1. Do you own the property?
2. Why are you selling?
3. How long have you owned it? How old is it?
4. Are there any problems with it?
5. Can you tell me a little about the property?
6. When can I see it?
7. Whatever else you want to know, ask!

Breakdown

I. Do you own the property? If yes, now I know to go further.
If no, well who is the owner?
The following are possible answers with some possible conditions:
1. Out of town owner – unfamiliar with current market conditions
2. Incompetent to negotiate – power of attorney
3. Passed away/executor of estate – quick sale, legal authority
4. Real estate broker or organized selling entity – it may be overpriced.
5. Bank officer or foreclosure agency personnel dept. – lower your offer
6. Sophisticated lease optioning reseller/investor – big bad wolf! Are you alpha dog material? Are you smarter than the wolf?
7. Yes - go to the next question

II. Why are you selling? These are some of the biggies:

1. Divorced – Often 2 parties must agree, distress sale, “don’t wanters”, bad memories
2. Death – Executor, quick sale, high emotions, be considerate, tactful, caring
3. Relocation – quick sale, quick closing
4. Downsizing, “empty nesters” – maybe will agree to owner finance? Ask.
5. Moving to larger home – they will wait to get their price; price may be high due to new demands but not always.
6. Looming foreclosure – willing to negotiate, takeover payments, make up delinquent payments
7. Have a new home, need to sell this one – quick and in a bind
8. Was a rental, I’m tired and want to cash out! Probably sophisticated but may be a serious “don’t wanter.” Hint: Ask if they have any more rentals for sale!

The more you know, the better you can solve for the problem. Ask subsets of questions to understand more fully.

III. How long have you owned it? How old is it?

1. A long time – possible large equity, maybe owner financing, ask!
2. A short time – no equity, a reseller, rehabber (fixer-upper), divorce, transfer, lost job?
3. After 1978 – no lead-based paint disclosure required
4. Before 1988 – financing may be fully assumable, ask!
5. 30 years or older – inspect electrical, plumbing & heating closely, professional home inspection is a must!
6. How many people have owned it? Why did you buy it?
7. 50 years or older - difficult to finance
Statistically, people move on average every 5 years.

IV. Have there been or are there any existing problems that you know of?

1. “Well, yes, it has _____.” - you must decide if you want to deal with it.
2. “I don’t know”, “I’m not sure”, “I don’t think so”, just little things – get a signed disclosure statement and a home inspection. They may be concealing defects.
3. “It’s not mine” – go back to the first question if you missed it or they lied.

These questions begin to either interlock with previous questions or contradict them. Use these questions to cross check previous questions and answers, to develop your gut feeling, get clarity and root out deception! (Use all your scripts with this in mind.)

V. Can you tell me a little about the property?

This is the catchall. When you ask this question, be quiet and let them fill the voids of silence. Bite your tongue, ask open-ended questions that get them talking. You’re not looking for yes or no answers. You want their rambling life story. With this question, you may get the whole story, the true facts behind the sale. It’s one more chance to get them to volunteer information. Invoke the ASK principle and learn more – probe! What, why, where, when, how, who, anything else I should know? Ask.

VI. When can I see it?

1. Schedule it for daylight hours and don’t go alone. Bring a knowledgeable assistant for evaluation purposes and safety.
2. Try to see it as soon as possible! If it’s a good deal, it will be sold before you ever get there. Don’t get beat - push to see it quickly!
3. Schedule as many as you can and see more than one while you’re out if possible. Don’t forget your street finder, newspaper, notes, offer sheets, phone and flashlight.
4. Call the reverse listing phone operator. If you have a phone number, they will give you the address. Use your street finder to go straight to the property and see it immediately. Beat less educated hunters.

Don’t get sucked into an auction atmosphere.

VII. Ask anything you want. If you have any further questions that need to be answered, now is the time.

P.S. If you are selling, have your answers ready and be prepared to answer
The same questions, as they will be similar to the ones you asked above.

Back to hunting!

• Look at bulletin boards, local papers and small independent publications. This goes for every publication you get. Make sure you get one of the first copies off the press. Go to the facility that houses the presses and get your copy before the ink has a chance to dry. Let no one beat you to the punch.

• Better yet, advertise yourself and get people who are thinking about selling to call you before they actually tell the world through an ad.

• Look at the legal section of the newspapers. Contact heirs, attorneys and sales in the garage or estate sale sections. Also, 20% of people who have garage sales are planning on moving soon. Ask about the house or their neighbor’s homes. Always keep your antenna up!

• Your odds of success increase when you choose large population centers and remain in the market constantly on the lookout for your type of deal.

• Look for vacant houses, run down, fire-damaged, abandoned, with city notices evident. Talk to the neighbors of these homes. They usually know who owns it and what is going on. They have an interest in seeing it restored to beauty. It sure is a shame you can’t look in the mailbox to see who is receiving mail at the property in question – wouldn’t that be easy?

Don’t be afraid to walk up to a property and look in a window to confirm that it is indeed vacant. Don’t endanger yourself by getting bit or shot! Use common sense. Contact out-of-state owners through property records, by letter and/or phone. Leave your cards on the door!

• Oreo stands for Other Real Estate Owned. Make friends with your local lenders and let them know you are the one to call when they have a foreclosure looming or in progress. Hint! If you will Pre-qualify with lenders beforehand they may call upon you sooner. Pre foreclosure then Auction, if not sold at auction then it goes back to lender as O.R.E.O.

• Again, watch the local paper for foreclosure auctions, tax sales, HUD and VA listed properties. Note: Auctions held in bad weather where the property absolutely must be sold, are your best chance to limit competition and get property at rock bottom prices, due to the fact that there is no low limit on what can be accepted (no reserve) you may win big.

• Real estate agents are going to try to sell you something! When you approach them be very specific with them and tell them to only call if they have an absolute steal. Ask agents to give you those expired listings, since they couldn’t sell them. Suggest a 2% commission if they will assist with closing the paperwork after you make the deal with the seller on your own.

• Don’t be so selective. If the property is an absolute steal, lock it up and sell it to somebody who does like to work with that type of real estate. Condos, trailers, residential lots. Get the option and hand it off to another buyer. Look for distressed sellers in addition to distressed property.

• Post fliers everywhere – colleges, laundromats, shopping centers, bowling alleys, public bulletin boards, churches and local businesses. Wherever large numbers of people congregate, give them a chance to give you a lead on a hot deal. (I.e. I pay $500.00 to you at closing if I buy a house that you told me about! Do you know anyone who is selling property? Please call [your name] at 555-1212.) Print quality business cards.

• Join organizations of all types. The sky is the limit. There are so many –just pick the ones that you would be interested in truly being a member in and let it be known you pay bounties for consummated (closed) deals.

When you use headhunters, leave out no one. Property managers, moving companies, relocation services, neighbors, landlords, tenants, the mailman, the paper boy, gardeners, landscapers, service technicians, pest control people, friends, acquaintances, relatives and other investors. You name it! Everyone should know they can make $500.00 if you end up buying a property they tell you about – enlist your army! On commission, only pay when you close the deal! Give each of your soldiers stacks of your cards for exponential growth.

A special note here: Water, Gas, and electric company personnel who shut off
utility meters can be very good bird dogs, when it comes to finding property that
is in trouble or vacant. give them those bounty cards below.

• I suggest you have at least 10,000 business cards made with your offer of the $500.00 bounty and hand them out in stacks to everyone you can.

• As you grow, you might consider T.V., radio, phone books, billboards, street benches, bumper stickers, bigger commissions. Use your imagination.

• Put up signs telling people you buy real estate.

• Make multiple lowball offers on overpriced properties and walk away. Don’t deposit earnest money but they may stew on your offer and call you a month later accepting your deal. Leave the offer with them.

• Older people should not be left out. They are very valuable informants. They know everything and need people to talk to! Listen to them.

• Go to free seminars on real estate. Not only to learn about real estate but also to capture names and circulate amongst real estate minded people. Once you have their names, call your own club meeting and network to prosperity. Find your mentor here.

• Go to where people are buying those “by owner” signs. Ask them what they are selling. Follow them home and get the first look! Be first or lose the deal.

• Try offering 15% less than what you intend on paying. You never know – they may accept it. If they don’t, you can still negotiate up to 15% more and get it for what you originally were willing to pay. Any higher, walk away but leave the offer on the table (the offer stands).

• Make your offer easy for the seller to understand. Get the option to buy but use a contingency to protect yourself. Iron out the details later but lock it up now!

• Buy from sellers who tend not to care: seized, foreclosed, tax sales, corporations, non-profits, disinterested heirs, probate attorneys and private auctions.

• Try just helping someone to sell his or her property even if you don’t want it. Be a friend and offer to help for nothing in return. You will be amazed at what happens when you sincerely try to help with no thought in mind of making money. This is a magic bullet in disguise.

Those are some of the basics of advertising and finding the opportunities to buy real estate below market. The old saying goes, you make your profit when you buy, not when you sell.
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