All Forum Posts by: Joey English

Knock on the door of success:

It’s that time of year again. It’s time to evaluate last year, to celebrate your successes and investigate where you need to improve. Once that’s done, you can move on to the all-important task of setting goals for 2017. Are you excited?

Something I love about this time of year is that personal development goes into overdrive. If you’re like me, you’re pulling out books and listening to audios from Zig Zigglar, Stephen Covey, Jeff Olsen and the like. These guys are motivators who have books full of ways to increase self-image and discipline. Their speeches help fuel the excitement needed to attain goals.

Speaking of speeches, I’d like to draw your attention to one you may never have considered as inspirational. Yet it was written by one of the most influential motivational speakers of all time. The author’s name is Yahshua Messiah, and the speech is called the Sermon on the Mount.

Morale was extremely low in the country of Israel when this speech was given. For one, Israel was being occupied by a foreign power- Rome. This situation elicited a lot of fear and unrest. Can you imagine how scary it would be to see the Roman Legion patrolling your streets?

If that wasn’t enough, Israel’s government and clergy had become corrupt. Instead of empowering the people to live life abundantly in the manner Yahweh had commanded, these guys were more interested in elevating their bureaucratic statuses. The people of Israel had been left severely discouraged and in need of hope.

Can you imagine the breath of fresh air it must have been for the first words out of Messiah’s mouth to be, “Blessed are you?” For nine verses He started each sentence with that statement to encourage the downtrodden into believing in themselves and establish their self worth.

He went on to say, “You are the light of the world. It’s impossible for a city to be hidden on a mountain. Nor do they light a lamp and put it under a basket, but on a lampstand, and it shines to all those in the house. Let your light so shine before men, so that they see your good works and praise your Father who is in the heavens.” (Matt. 5:14-16)

Wow! Being the light of the world meant they were so extraordinary the whole world would stop and stare at them! Can you imagine what this type of talk did for their collective self images?

Towards the end of the sermon, He says, “Ask and it shall be given to you, seek and you shall find, knock and it shall be opened to you. For everyone who asks receives, and he who seeks finds, and to him who knocks it shall be opened.” ­ (Matt 7:7-8)

Have you ever thought these verses could be applied to goal setting?

When you define your goals, you’re asking for a specific thing. Next, when you implement a plan of action, you’re seeking out your goals. And once you put in that effort, you’ve knocked on the door of success, which will be opened to you.

Whatever your goals may be, I hope you realize how important you are. You are a child of the Most High, and you were designed to succeed. I hope you re-read the Sermon on the Mount and let Messiah’s words empower you into doing the great things you were meant to do.

This year is going to be an awesome one. We’re going see strong markets, prosperity and the return of hope. It’s time to let our light shine, people. And once America is beaming again, let’s make sure we give thanks to the One who designed us for accomplishment. Here’s to a fantastic year!

I call it Facebook for real estate investors. 

Work to learn, not to earn:

There are concepts that have truly life-altering effects. For us, the idea of working to learn, not to earn was one of them. This notion came from a book we read called “Rich Dad Poor Dad” by Robert Kiyosaki.

If you’ve never read that book, please do. It’ll change the way you look at money, your job and investing forever.

In the book, Robert talks about how he’d chosen jobs not for the pay they offered but for what they could teach him. For instance, he went into the military to learn leadership skills. He also chose different corporate jobs because of their training programs versus the salaries they offered. The purpose of this was to get-real world training from organizations that had proven track records. Robert’s goal was to use this education to help catapult his own entrepreneurial ventures.

Later in the book, he says something very surprising. He claims that working for people for free had made him more money than anything else because the education and the connections he’d made during that time had paid dividends ever since.

Ashley and I have had similar opportunities. One that sticks out in my mind is when we were brand new to investing. We'd attended seminars, we were out door knocking and we were attending our local REIA (real estate investor association) meetings religiously to no avail.

That’s because we had no idea where to start. You see we had no experience, no money, and the bank wouldn’t lend to two newbies with no job history or savings. Imagine that.

The no job bit wasn’t actually true; I was still doing hit-or-miss construction jobs – mainly painting and pressure washing- and Ashley was working for a hospice company. I had no 1099s to show, however, and Ashley didn’t have a W2 because she had been with the company for less than a year. At the time, it felt like we were staring the path to financial freedom in the face, but we just couldn’t leap onto the trail.

That was until a guy named Mike Tarpey approached Ashley and me with a proposal one night at a REIA meeting. Tarpey was an avid Lonnie dealer as well as a private lender. His proposal was that he would teach us how to do a Lonnie Deal, and even bring us in as 50-percent partners in exchange for me painting his house.

We gave him an emphatic “Yes,” and we got out of there before Tarpey could change his mind!

We were so excited. This was it. This was the big break. Ashley and I were going to get real-world experience, be part of a deal with a successful investor, plus get to learn all the ins and outs of how to do the deal – all for painting a house.

We did the deal. I painted the exterior of Tarpey’s house and he taught me everything I needed to know on how to do Lonnie Deals.

To date, Tarpey and I have completed more than 30 transactions together. We’ve done tons of Lonnie Deals, flips and even rentals together. As a matter of fact, Tarpey was the lender on our very first flip.

I’d have made around $4,000 simply to paint Tarpey’s house. By working to learn, not only have we made 100 times more money than that, but we’ve also formed a lifelong friendship with a truly great guy and a successful investor. That part of the deal is priceless to me.

Working on Tarpey’s house gave Ashley and me the opportunity we’d been looking for, and I think we proved Kiyosaki right when he said, “You’ll make more when you work to learn and not to earn.”

If you do the same, you’ll be amazed at how quickly you’ll find success.

How to make your top offer:

When you’re looking to buy an investment property, it’s important not to get emotional while evaluating the deal. Let me warn you, failure to keep your emotions in check will cost you big time. Ask me how I know.

One of the worst deals Ashley and I ever did was a result of us leaving our excitement unchecked. When we were new investors, we wanted so badly to do a deal that when an opportunity presented itself to us, we threw ourselves at the so-called “deal”- That was a big mistake.

We bought two trailers in a package deal; one of which had significant fire damage. We immediately sold the other trailer for a modest gain, but kept the burnout thinking we could rehab it ourselves and sell it on an installment contract.

To make a long story short, we lost our tails and I literally almost lost a finger. Thankfully, we found someone willing to take on the burnout and relieve us of all our, uh, excitement.

Some of the best lessons you’ll ever learn are the ones that hurt the most. Doing a bad deal doesn’t make you a failure – not learning from it does. If you let it, the education from a bad deal will make you a better investor so that next time you won’t make a similar mistake.

We learned on that trailer deal to take emotion out of the equation. This ability turned out to be very important when we started going to the foreclosure auction to buy.

Case in point: I was at the auction recently and got into a bidding war with another investor. Did you know that when you’re buying at auction you don’t have to make bids in increments of thousands or even hundreds? You can bid just one dollar more. You’d be surprised how many properties have been bought this way.

As the bidding war drew to a close, my competitor started getting excited. The bid that won him the house was $3,000 more than my previous bid. I congratulated him, and he went off to do the paperwork with the auctioneer.

I admitted to some of the guys standing there that I’d reached my top offer, and my competitor could’ve won for $1 more than my last bid. They asked me how do you calculate your top offer. This is what I told them.

Every time you’re considering a property to purchase, you essentially have two exit strategies: you want to either keep the property or sell it. So in order to find out how much you can pay for a property, identify which exit strategy you’re going to use and work backwards.

If you’re going to sell it, the first thing you need to know is how much it’ll be worth after it’s fixed up. Knowing that, subtract all your expense like the rehab costs, holding costs (things like taxes, insurance and utilities), approximately how much interest you’ll pay and finally, your profit. The result is your top offer.

Here’s an example: you find a house that’ll be worth $100,000 fixed up. You estimate it needs $20,000 in repairs and you’d like the same in profit. You’ll need to pay your investor $5,000 for using their money, and you figure holding cost will run $5,000. (Tip: your holding cost should include an extra $2,000 as an “oops factor”. This is for all the things you’re not expecting.)

So $100,000 minus $20,000 in repairs minus $20,000 in profit minus $5,000 in interest minus $5,000 for holding costs means you can pay no more than $50,000 for this deal.

If you do this for every house, and stick to your top offer, your emotions will never delude you into agreeing to a bad deal, even in the heat of a bidding war.

@Bo McMahon, I am doing my research on it currently. I'm more interested in the systems Joe built in podio than his wholesaling strategies. Not that I wouldn't use them, but I'm more of a flipper. 

From what I have read about him, he has apps for lead management, administrative activities, property management and even rehab management. I tried building some of that stuff myself in podio with little success. I built them but they were not effective or efficient. I'm just not educated enough it to do it well. 

I'm thinking for a flat $500 to have the podio apps and the training on how to use them, will be well worth it. Other CRM's I have seen have a monthly fee (often $100/month). I'll let you know if I go with it and what I think. 

If I forget, please check back with towards the end of January. I should have a good feel for it by then. 

@Cedric Stout, Are you currently running Joe's podio Apps? 

I need to clarify what you are asking Justin. If you are buying a house, say subject to someones existing mortgage, and you put the property into a land trust, since a sale did occur, you are in violation of the due on sale clause that may be present in the original mortgage and note. Therefore the lender may call the note due should they chose to. I say "may" because they probably won't call it due as long as you keep the payments current. 

If you already own a property, however, and you're moving it into a land trust for asset protection, the answer is no. There was no sale to violate the due on sale clause. You just titled it over to another entity that you control. And since their lien is higher in the chain of title than when you deed it over to the trust, it's of no concern to them because their security deed keeps them protected. 

Most banks want to get paid, they don't want a property. 

Does that answer your question?

You need to protect your assets, trust me:

When people are getting started in real estate, they often assume they need to form an entity like an LLC or an S corporation first thing. The two main reasons for this are to protect their assets from lawsuit and to take advantage of certain tax breaks.

In my opinion, due to formation and maintenance costs, neither of these entities are necessary for beginner investors. If you aren’t doing enough business to utilize the tax advantages, those benefits are moot, and if you have no assets, there’s nothing to protect.

But there’s a third entity that offers great asset protection and cost very little to form that you should consider. It’s called a land trust.

In order to explain a land trusts, I’m going to ask you to picture the armored cars that pick up bank deposits. Armored cars are designed to securely move and protect things of value. They have super-thick walls that make it nearly impossible for would-be thieves to see what’s inside.

Now an armored car needs a driver and a dispatch operator to tell the driver where to go and what to do. In the same way, a land trust needs individuals in place to perform similar tasks.

The driver of the land trust is called the trustee. He is charged with making sure the normal business of owning a property is carried out and does so at the direction of his dispatch operator.

The dispatch operator of a land trust is called the beneficiary. They’re the ones who direct the trustee where to go and what to do with the property. They direct the trustee to do everything from buying, selling and even taking out a mortgage on a property.

The beneficiary has a perk to their job: they get to enjoy the benefits of whatever valuables are hidden inside the trust. If a rental property is in there, that means they get to enjoy the cash flow and tax advantages associated with the property.

Part of what gives a land trust its armor is the anonymity associated with it. Both LLCs and corporations require you to register the entity and its officers with the Secretary of State, which are on public record for anyone who wants to look. Once someone finds the entity, they can then determine what assets belong to it. This is what pro bono lawyers do when they’re deciding if they’ll take a lawsuit case.

Land trusts, on the other hand, are a paper entity. That means information about the trustee, what properties are held in the trust and the identities of its beneficiaries are all private information. And just like the armored car, once your rental property is placed securely within the walls of a land trust, no “would-be thief” will be able to see that it’s in there. And the only thing of public record is the deed that titles the property over to the trust.

On that deed, you can see the trustee, the land trust’s name and the legal description of the property. To search the public property records, you have to do so by name. And since each land trust has a different name, even if they have the same trustee, it makes it nearly impossible to link multiple properties to other land trusts.

This anonymity is a massive line of defense. Without knowing who you are or if you have any assets, a pro bono lawyer is not going to waste their time coming after you. And that protection only costs the recording fee to deed the property into a trust, assuming you know how to set a land trust up of course.

If you don’t know how to set one up, you can either pay a lawyer to do it each time or you can learn to do it yourself. After seeing many attorney’s scratch their heads after a few easy trust question, I decided to take a course by Dyches Boddiford to learn how to do them myself. Something that I appreciate and admire about the courses I’ve taken from Dyches is that when he writes his manuals, he writes them so that they stand alone. I’ve taken his live seminars as well as his home study courses. With both, I’ve felt competent and prepared to go and start the new skill I just learned. So just so you know, if you buy one of his home study courses, you can be confident the information is as thorough as a live class – and he offers a home study course on land trusts.

John D. Rockefeller said, “Own nothing, but control everything” and that’s what makes land trusts so great for protecting your assets.

“I could just kick myself”

Is what the lady said as she teared up and turned away from me standing outside that rental house. It was early evening, just after she and her husband had gotten off of work. With her back turned to me so I didn’t see the tears fall, she said, “I just didn’t know people like you existed.”

I was at a loss for words.

You see, this couple was going through a hard time. Their house was up for foreclosure in two weeks and they were trying to sell before the auction all while trying to find somewhere to move in a market where rental houses were few and far between.

Needless to say, they were emotionally worn out.

Their predicament was not of their own doing. When they bought their house in 2013, they bought it well. Their purchase price was well under appraised value in a desirable subdivision. Their payments fit, and they’d bought with a really a low interest rate – they did everything right.

But something happened in 2014. The Affordable Care Act took full effect, and employers had to figure out how to comply with the new regulations and expenses while maintaining their businesses. For our couple, this meant fewer working hours.

The husband had been at his job for more than 10 years working 40-plus hours a week. The wife confided to me that after her husband’s hours were cut, the loss in wages added up to more than their house payment each month. They couldn’t hold on.

What made the wife tear up was that we had the best looking rental house they’d seen on the market. But we were priced higher than they could afford. As we were talking, I suggested we could do a deal together. I suggested we could come down on the rent in exchange for buying their house.

She exclaimed, “You could do that?”

The answer was yes! Because we’re investors, we have the capacity to make deals happen that other real estate professionals can’t.

As it turned out, however, the deal wouldn’t work. To keep from being foreclosed on, they’d listed the house and found a cash buyer who was basically going to purchase their house for the amount they owed on their loan. They were set to close the following day. This deal meant these folks would receive no money from the sale of their house.

Had they met me before hand, we would have paid them $300 a month in rent credits to live in a great house; plus we would have saved their credit from the foreclosure hit.

She told me that she didn’t know people like me existed.

That has me bumfuzzled. We advertise our “We buy houses and mobile homes” slogan everywhere. We have T-shirts; we have vehicle lettering; we advertise at gas stations, banks and we even send out mass mailings. Somehow we’re not reaching the people we need to help.

I was talking to another investor, who’s good at marketing, and he suggested that the “We buy houses” catchphrase may have some negative connotation that we’re unaware of. He relayed stories of people saying they thought his signs were a gimmick. He seemed to think that this mentality stemmed from some crooked investors who had taken advantage of people during the housing boom.

I need help with this. We’ve got to make an adjustment in our marketing and I don’t know what to do. It doesn’t feel good when people are tearing up in front of me because they didn’t know I exist – especially people I could’ve helped.

So I need your feedback on this one – How can I convey the message “We buy houses” in a better way?

You should definatly have your Mom and Dad talk to there custiodian to see what options are avavilable to them. I am not aware of state restrictions that would limit them from taking a loan from their 401k. But their custodian should be able to clarify that and give them their otpions. 

Another idea would be to covert their traditional 401k to a self directed 401k. These have a lot of flexibilty that may be able to help your Mom and Dad grow theirs more quickly. 

Here is a good book about self directed 401ks. http://assets101.com/product/solo-401k/  

Let me know if that helps