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Fair market rental value

Fair market rental value is just another step in the process of evaluating your investment property!

Rental values in most areas vary over time, market location, population need, community growth and community cost of living!

Rental values can also serve as an indicator of new and upcoming communities to invest in and serve as an indicator of a declining market.

Fair market rents are generally based on comparable rents in the area of investment but one should use common sense in this evaluation just as one would with comparables to determine the retail value of a subject investment.

We call this "Apples to Apples - Oranges to Oranges" evaluation. The comparable needs to be in likeness and location of the subject property you are trying to compare.

One way to determine the fair market value is to ask a real estate agent in the area for comparative rentals.

As an investor in some areas of investment you can gain more profit from a real estate say not only from the retail side of property but by adding an income approach in the valuation can produce a larger sales price. The income approach, the value of the property is estimated using the income, the property is expected to produce in the future.

You will find that this method is mostly used on commercial and multi unit property types but works well when selling a property that a buyer wants to hold and rent.

You will find a great web site with tons of data free at:
http://www.huduser.org/datasets/fmr.html

"You're never a loser until you quit trying."
By Mike Ditka, Football Player, Coach

Marketing to probate and obituaries can be a wonderful opportunity to investors but for me the key to success is to avoid dealing with the issues of death and to stick to the issues of dealing with the property.

I start my marketing with obituaries followed with probate filings and find it just another effective way to acquire property.

Short of courthouse research you can go to your local library and go to the reference department and research using what is called a Polk City directory that will list if the deceased party owns real estate.

I use a simple letter that has produced great response as follows:

This is the letter that I use.

Dear

I am looking at purchasing several properties at and around ________________________(property address) and would like to talk to you about the purchase of ________________________(property address) if you would be interested in selling.

Thank you for your time and you can reach me at ( )______ - ______________.

Sincerely,
John Michael

Did you know that;

*Having a will guarantees that your estate will go through probate?
*Your exact probate cost is unknown but the average cost of probate is 4% to 10% of the gross estate?
*The average length of probate throughout the country is 13 months?
*90% of all estates of singe-widowed adults age 60 and over go through probate?
*Failure to utilize each spouse's federal estate tax equivalent exemption can cost an estate up to $235,000 in unnecessary taxes?

*****END OF LETTER*****

Keep in mind that that normally you will have to have cash on hand to make this type of purchase but you will find some properties can be obtained through creative strategies.

Using creative strategies does work if only you ask. The worst that can happen is you will get a "NO"! So you get 100, 200 or even 300 no's before you get a "YES" to your creative strategy such as a "NO MONEY DOWN", "LEASE OPTION PURCHASE", "SUBJECT 2", "OWNER FINANCE", or any other creative form of investing!

It only takes one "YES" to profit!

"You're never a loser until you quit trying." By Mike Ditka, Football Player, Coach

In Remembrance of Barney Zick

A farmer went out to sow his seed. As he was scattering the seed, some fell along the path, and the birds came and ate it up. Some fell on rocky places, where it did not have much soil. It sprang up quickly, because the soil was shallow. But when the sun came up, the plants were scorched, and they withered because they had no root. Other seed fell among thorns, which grew up and choked the plants. Still other seed fell on good soil, where it produced a crop - a hundred, sixty or thirty times what was sown."

This is the life of a great teacher and Bernard "Barney" Zick will be truly missed by so many!

I believe it is safe to say that Bernard "Barney" Zick has been vary influential to the success of many investors with his strong leadership and his own articulate delivery of education to so many will be of lasting value to many.

Teaching is a balancing act: placing expectations on the student and becoming engaged with students requires a seriousness of purpose and a playfulness in approach that is more easily described than carried out. In one sense, the balance must be struck between structure and flexibility; in another sense, the balance lies in finding the right mix of instructor-directed learning and student-directed learning and Barney truly had the right mix.

Well done, Bernard "Barney" Zick! Our thanks to you for your lessons and example of what it means to be a great teacher.

You will be truly missed!

Bernard "Barney" Zick passed away the morning of July 20th

Funeral Services will be held Saturday, July 23rd at noon:
Rosewood Funeral Home and Cemetery
2602 Old Humble Road
(At the corner of Rankin Road and Old Humble Road)
Humble, TX 77396
281-441-2171
http://www.rosewoodfuneral.com/

Be very, very careful what you put into that head, because you will never, ever get it out.
By Cardinal Wolsey

Using Land Trust "Just another strategy for investors"

Its uses are:
To control or purchase real estate
To protect confidentiality
To limit liability
To help with "DOS" clauses in some cases
Land trusts have been used since the late 1800's in one form or another and became recognized by statute or case law in many states.

A land trust is a vehicle that holds real estate nothing more nothing less.

The trustee has the power to convey or deal with the property at the direction of the trust beneficiary. The beneficiary, on the other hand, retains the power to use, convey, or manage the land and holds any other number of rights as directed by the beneficiary and the trust agreement.

The process in it self is simple:

The owner of the subject real estate transfers title to the property over to the trust by way of deed and enters into a trust agreement with the trustee and a beneficiary agreement with all beneficiaries.

A trust is just an agreement to hold or manage assets by a trustee for the benefit of another. Different types of trusts are used based upon needs and goals. They will vary in use, flexibility, control and asset distribution so I have taken the liberty to share some information about other forms of trust below.

Personal Residence Trust - A personal residence trust involves the transfer of a personal residence to a trust with the grantor retaining the right to live in the residence for a fixed term of years. Upon the shorter of the grantor's death or the expiration of the term of years, title to the residence passes to beneficiaries of the trust. This is an irrevocable trust with gift tax implications.

Qualified Personal Residence Trust - A qualified personal residence trust (QPRT) involves the transfer of a personal residence to a trust with the grantor retaining a qualified term interest. If the grantor dies before the end of the qualified term interest, the value of the residence is included in the grantor's estate. If the grantor survives to the end of the qualified term interest, the residence passes to beneficiaries of the trust. A QPRT is a grantor trust, with special valuation rules for estate and gift tax purposes, governed under IRC 2702.

Living trusts - Are created during the lifetime of the trustor. Property held in a living trust is not normally subject to probate (the court-supervised process to validate a will and transfer property on the death of the trustor). In Washington, because such property is not subject to probate, it need not be disclosed in the court record and confidentiality may be maintained. Such trusts are widely used because they allow the trustor to designate a trustee to provide professional management.

Testamentary trusts - Are created as part of a will and must conform to the statutory requirements that govern wills. This type of trust becomes effective upon the death of the person making the will (the "decedent") and is commonly used to conserve or transfer wealth. The will provides that part or all of the decedent's estate will go to a trustee who is charged with administering the trust property and making distributions to designated beneficiaries according to the provisions of the trust.

To create a legal trust you will need a trustor, trustee, beneficiary, trust property and trust agreement.

You can be appointed as Trustee and run all the day to day business affairs of the Structure or you can appoint another.

The trustee has no personal liability in their capacity so long as they operate within the bylaws of the contract on behalf of the trust.

A trustee normally will act in accord with the express terms of the trust instrument; act impartially, administering the trust for the benefit of all trust beneficiaries; administer the trust property with reasonable care and skill, considering both its safety and the amount of income it produces; maintain complete accounts and records; and perform taxpayer duties, such as filing tax returns for the trust and paying required taxes.

When using a land trust it is best not to name yourself as trustee because A trustee in general must administer the trust property only for the designated beneficiaries and may not use trust principal or income for his or her own benefit. In other words, a trustee is usually prohibited from borrowing or buying from the trust, from selling his or her own property to it, and from using the trust assets as collateral for a personal debt.

While trusts can offer a number of tax advantages, tax avoidance, and provide confidentiality this should never be your sole motivation for using this strategy.
Basic Documentation Process of a trust is:
The Land Trust Agreement
The Assignment
The Beneficiary Agreement
The trust is normally created under the name of the current property owner or the property address.

Trust will also help with:
Protecting Assets From Lawsuits
Protecting Assets From Business Failure
Protecting Assets From Governmental Seizures
Protecting Assets From Tax Troubles
Protecting Assets From Divorce
Trust will simply make your assets private and if set up properly should convince any litigant that, it will be impossible to collect.

Support of Land Trust

Wellenkamp vs. Bank of America (8/25/78) (50 USLW 4916) 73 L.Ed.2d 664, 10 S.Ct. 3014 (1982)

Fidelity FSB vs. de la Cuesta (6/28/82) Regulations Act of 1982 - (FDIRA) (10/15/82) 12 USCA sec. 1701-j-3

GARN-ST. GERMAIN EXCEPTIONS Governing Land Trusts www4.law.cornell.edu/uscode/12/1701j-3.html

This form of investing is another tool to help you as an investor and help your customers as well.

As an investor, you need more than just a few tools in your investors toolbox.

I have uploaded a zip file of land trust forms for your use at http://trice84.tripod.com/reforms/land_trust.zip

Enjoy my fellow investors - to your success!

Example of being creative:

 13 unit complex - Market Value 185K - Asking Price 200K
 12 Units rented @ 315 ea. (rents due on the 1st) & 1 unit to manager
 He owed 50k @ 7% @ 333 mo.

Now the story:
 Conv loan would be at 80% for 148K @ 6 1/8 @ 899 mo. & I would have an out of pocket of 52K

Not a bad deal if I wanted to tie up a credit line and come up with 52K

So I did a Sub 2/Lease option deal

I helped my customer find his pain and solved his need for cash. He had no plans to make another purchase just cash out but if he did based upon his income level he would face a capital gain of 111K from the cash sale (see I helped him find his pain)

All said and done he would have to pay out to the state and the fed's 67K cash money at the end of the year (Pain again) So this is what we worked out together.

 I did a lease option purchase with him for 10 years based upon a 30 year term payment plan @ $1,468 with 5K down.
 He agreed to credit the 5K towards the purchase and $468 of the $1,468 monthly payment towards the purchase.
 So he gets a loan for 148K for 30 years @ 6 1/8 with a monthly payment of $899 pay's off his 1st and gets him mad money of 98k
 So I pay $1,468 per month - my rents are $3,780 - so I get $2,312

This gets better!
 At closing, I got $3,250 in security deposits
 The next day I got $3,780 in rents as he agreed to
 That's a total of $7,030
 Less $5,000 down
 I pocketed $2,030

This is what is called a no money down purchase under a lease option purchase under a sub 2 creative strategy.

I paid him more than it was worth - WHY? The lease option purchase credit.

So in 10 years what would be my pay off be?

 Purchase price $200,000
 Down payment credit $5,000
 Payment Credit $51,160
 My pay off would be $138,840

Now the average appreciation value for this area has averaged 3.8% yearly. I also increase rents $10 per unit every year.

Paid above market value and still walked away with cash in hand.

In 10 years collected $290,840 in income (that includes the current rent plus your $10 a year rent increase for the 12 rented apts). Property will have appreciated to $268,624.28 and with a payoff of $138,840 that leaves $129,784.28 in equity.

Nothing quick about getting rich with real estate

A real estate seminar promoter promised to create 1,000 new millionaires, but so far none are in sight. See what happened to his believers.

By MP Dunleavey = http://moneycentral.msn.com/Content/contributors.asp#Dunleavey

Like a lot of people these days, Marjorie Stark wouldn't mind making a little extra cash -- or even a lot of it. So when she attended an information session for Robert Allen's "Creating Wealth Through Real Estate" seminar in New York last year, she was more than willing to pay $2,495 for Allen's intensive three-day course on real estate investment strategies.

Concerned about not having enough to retire on and wanting to pass along some wealth to her kids some day, the 62-year-old New York City educator said to me then: "I am convinced that real estate is the way to go."

I was there that night, too, and I could scarcely resist the mouth-watering idea that those three days could make me rich. As the guy leading the session announced: "We are on a mission to create 1,000 new millionaires in 12 months!"

A year later, Stark isn't any closer to being a millionaire. She hasn't bought any new property nor made any money on real estate -- except for the rental property she owned before and bought "the hard way" (with cash and bank loans). She even admitted that when she saw Robert Allen's newest venture was in vitamin sales, "I thought I was going to puke. I was very disillusioned."

But Stark is undaunted and still believes there are fortunes to be made in real estate. She just enrolled in another seminar at a local college on how to buy distressed and foreclosed properties, she says. "With a full-time job, I'm not sure how I can do it, but, boy, am I itching to go!"

There's something about real estate
Stark is not alone. The National Association of Realtors = http://www.realtor.org/rodesign.nsf/pages/HomePage?OpenDocument doesn't track independent real estate investment seminars or how many people attend them, but their allure springs eternal like the get-rich hopes of those who sign up for these courses.

The odds of winning are not high. Robert Allen's "1,000 new millionaires" never materialized in the last year, for example. Allen operates what's called The Enlightened Millionaire Institute. Its Millionaire Hall of Fame Web site = http://www.millionairehalloffame.com/ lists only 50 millionaires (defined as having generated gains averaging $2.6 million). A spokesman admits not all of them exclusively used the Allen method of real estate investing. (And, in a disclaimer, the site notes, "No information has been verified or authenticated. Results vary. All successes are subject to one's own knowledge and effort.")

Despite all that, the Robert Allen Institute = http://www.robertalleninstitute.com/ still conducts two or three seminars a week in different cities and says it reaches about 1,200 people each month. (That's 1,200 x $2,495 = $2.99 million a month, in case you left your calculator home.)

Allen is just one of dozens of artful salesmen who preach fancy financing, "no money down," flipping properties quickly and numerous other strategies to get rich buying and selling real estate.

And the question all this preaching raises is, do these investment techniques, systems and strategies really work? Can they actually make you rich? After all, would people keep trying it if it couldn't be done? Or are hundreds of thousands of people simply seduced by expert sales pitches and swindled out of hundreds and sometimes thousands of dollars?

Weighing the evidence
Like so many things in life, it depends on whom you talk to. Or whose Web site you believe.

John T. Reed is a real estate investment coach himself, based in Alamo, Calif. He's also a self-appointed watchdog for this industry. He keeps the most exhaustive list I could find = http://www.johntreed.com/Reedgururating.html of dozens of so-called gurus, along with reviews of their techniques, books and other products.

Although Reed's Web site = http://www.johntreed.com/, where you also can buy his various books for $29.95, reads a bit like he has a chip -- a very big chip -- on his shoulder, he was recommended by the National Association of Realtors as a serious investigator in the industry. Not that he's against real estate investment, or some of the reputable folks who teach their own hard-won wisdom. But those have been degraded by "the endless parade of B.S. artists coming into the real-estate-investment-advice field. It is an embarrassment to the good people in the business."

And many people believe his grousing is justified. Norm Bour is the host of "The Real Estate and Finance Hour" on KLSX in Los Angeles, a top talk radio station. He's worked in real estate as a mortgage lender and describes the proliferation of real estate seminars, workshops and scams as "a major pet peeve."

"Case in point: foreclosures," he begins. "Real estate in California has gone berserk in the last few years so people are looking for foreclosures to buy." The idea being you can buy a foreclosure more cheaply than other property and potentially gain a windfall when you sell it.

But, as Bour notes, "You can count on one hand how many actual foreclosure properties there are (for sale). Yet there's no lacking of people who are offering real estate foreclosure lists." One might pay $35 for a list, but it may be peppered with properties in other states. "It's not fraudulent, but it's certainly deceptive."

The shady gray area
Well-known personalities like Robert Allen or Carleton Sheets = https://www.carletonsheets.com/ , who have extensive marketing organizations, are a little different, Bour says. "They offer some very solid basics, but the number of people who can do what they propose is very small -- because they make it sound so much easier than it is."

That's what Josh Kelinson, a freelance advertising consultant in New York, found when he and two friends tried to follow the Sheets method.

The three pals pooled their resources to master what Sheets preached, which is similar to the Allen method: buying property with no money down (or some other creative financing method) and flipping later on for a profit.

One of his pals took the seminar, another bought the 8-CD set, etc. Thus inspired and determined, they tried to buy a building suitable for five apartments in Massachusetts, not far from where they'd all grown up.

Kelinson says the actual experience of trying to buy an income property proved eye-opening. "We spent a ton -- and I mean a ton -- of time on it. There was the approval process, the paperwork, getting lawyers." It took two to three hours a day, not including weekend travel time and unexpected snafus. "I found it impossible to do with a full-time job."

Ultimately, the project bogged down because of a major zoning problem. The building was in an area zoned for three apartments, and the building had been illegally converted into five apartments. The zoning authorities refused to grant an exception to the rules. Then, the building owner refused to return their deposit. The three were out $35,000.

Still, Kelinson doesn't feel misled or duped by the Sheets method, and he and his friends are sure they can make it work with their next deal. "There are a lot of other things out there that are scams, but this definitely can be done," he says.

But investing in real estate is not nearly as easy as it looks, he says. "Make sure you have the time to do it," he advises wannabe investors. "If you don't allocate the time, it probably won't work."

We want the system to work so much
And therein lies the fundamental appeal, and ultimate trouble, of get-rich-quick (GRQ) strategies. "It's the jackpot mentality," says psychologist Patricia Farrell, author of "How to Be Your Own Therapist.= http://shopping.msn.com/search/detail.aspx?pcId=14939&prodId=1987899&ptnrid=18&ptnrdata=1101040329" Just like the schmoe who buys a winning lottery ticket -- every once in a while, someone, somewhere really does use these edgy real estate investment techniques to make millions.

"It's not the principles that are flawed," says Bour. "It's the simplicity and ease that are overstated."

Most of these courses are so seductive, Farrell says, because they operate according to a tried-and-true principle of behavioral psychology called the variable ratio reinforcement schedule. Basically, people (and rats) will persist in doing something, even with little or no return, if they are given the tiniest bit of hope of a coming reward.

So the fact that some people do succeed at "no money down" strategies acts like a financial aphrodisiac for all those watching, waiting, hoping.

So could the Starks and Kelinsons of the world be next? Is it just a matter of reapplying the Robert Allen/Carleton Sheets techniques until they work?

Mark Wilson, one of the millionaires created by the Robert Allen Institute, would say yes. The president of Southeastern Housing Partners in Hickory, N.C., Wilson started investing in real estate in the late 1980s. "We were doing OK, but nothing to write home about."

Then in 2002, after hearing Robert Allen speak, Wilson paid $5,000 to join a one-year intensive coaching course. It changed his life, his business and, above all, his cash flow, he says. Although he'd read Allen's "No Money Down" in college, the seminar focused more on another Allen signature strategy: developing multiple streams of income (from rentals, rehabs, buying foreclosed properties, commercial properties, etc.). Now, Wilson says, he's about to close a deal that will put his net worth at $8.5 million.

He believes anyone can make big bucks from real estate if he or she is willing to take action -- not just sit on the sofa listening to tapes.

Before you sign up, count to a million
Of course, Wilson admits that it was easier for him to take the Robert Allen techniques and run with them. He had a lot of experience in real estate already. Most people, Bour points out, don't have those skills. And few people have the time or the diligence to acquire them. ("Some skill sets you need to have -- and the course can't teach it to you," agrees Kelinson.)

Bob Underwood of Stafford, Va., is one person who can testify to the fact that investing in real estate is not for those steeped in fantasy. Underwood bought an e-book from yet another author and teacher by the name of Joe Crump. http://www.realestatemoneymaker.com/

Crump, who hails from Indianapolis, teaches a no-money-down technique, but he told me that he does it "legally and ethically."

Underwood, 43, has a wife and family and a full-time job -- and no time to muck about in real estate with no return. He paid Crump about $500 for one-on-one coaching in 2002 and, after a rocky start, has managed to buy three properties in the last two years. He's sold one of them, made about $10,000, after taxes, in the process and is hoping to rehab and sell another this year.

One deal Underwood did alone, the next was with a partner. He says there's no cookie-cutter method that works. What works, he says, is getting out into the market, investing the time to learn about the business, not neglecting your wife and kids (or day job), learning from your mistakes, making friends and getting advice from others as you move forward. Slowly, steadily and not particularly wealthily.

"Remember, you have to pay capital gains (taxes)" on the profits, he says, "so it's not a lot of money in the end."

But that, of course, isn't what people want to hear. "People are lead to believe that all you need is the right plan and you'll make a million, that if you use this system you'll be rewarded," says psychologist Farrell. "They don't realize that the possibility of getting that big reward is so remote."

**End of Article**

My thoughts: Learn the trade before you jump - Seeking unbiased direction on Gurus and Courses can be most difficult at best, as it becomes subjective to:

It's based upon if the student liked the teacher or not.
It's based upon if they where successful or not.
It's based upon if the student even had the aptitude to even understand the lessons.

You and only you can make this decision and it's done by research.

I'm not talking posting in forums as you will get so many varied opinions you will never get what you are looking for. I would suggest taking a step back and set in your mind on two or three strategies of real estate investing.

The best way to do this is use the REI forums and search subject matter by reading all post on the subject of interest and evaluate your own abilities and make a determination if you have the ability and means to do it.

Next research your public library on the subject, study the materials, and if it still peaks your interest

Go to a used bookstore and study even more materials on the subject and if it still peaks your interest seek out the teacher that reaches you deep down inside, the one that speaks to your mind and heart but before you take the plunge for the mega course order the cheapest item they have book, ebook or course and if it works take the mega course.

I have people who want to take my mentor course all the time but many can not even get past the application process! I look at it this way - why let them spend their hard-earned money on something they can not do or are simply not ready to do! They loose and I loose! Simply not a WIN - WIN

You need to seek a teacher that can speak to your inner person not just make you feel good, a teacher that has a passion for their students and most importantly a passion for your success.

I do speaking for one Guru who's only passion is the money, not the deals, not to help students but to profit from their lack of education. Many ask why I teach his people? My reply is vary simple because I know that what I teach is sound and if I reach a student and they apply their newfound knowledge they will be a success.

I am not trying to plug me at all so please do not mis-read this.

Education works like this:

The university that I went to had some of the best professors around so I chose the best professor for a subject from his credentials, facility, staff and student recommendations and I failed - he did not reach me so I had to repeat the same class but with another professor with less credentials, not liked well from facility, staff and students but you know what, this guy brought it home for me - his teachings clicked with me and I learned more from this one man than I ever did with most of my professors.

So, let me boil this down!

Finding the correct teacher, guru, course or book is all about trial and error! Welcome to the world of real estate education.

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Go to http://jmichaelrei.com and click on free gifts

Let me share a little about my self and some may get a better understanding of what I'm about.

I love healthy debates and healthy disagreements as one can learn from them.

I believe that real estate investing is not one size fits all! Some learn from one teacher and others learn from another even if it is on the same subject!

You will find that my methods of investing to favor the creative side of investing and less on the conservative side of the industry.

I have been in the industry for over 20 years and have worked with many of the real estate guru's known by most of us and do to the limited amount of information provided to students in 1999 I decided to taken on the industry with more knowledge to empower investors to become more successful in the art of real estate investing.

I invest using Sub 2, Land Trust, Lease Option, Owner Finance, 1031 exchange, No money down, Using investor funds for purchase and the list goes on. Yes I have done the conservative type of investing and continue to do so but I have more fun with the creative side.

I enjoy working with pre foreclosure homeowners!

Over the years I have bought and sold commercial and residential properties.

I have also owned many businesses:
Laundry Mats - Retail Stores - Flea Markets - Convince Stores - Arcades - Rack Merchandising - Mystery Shopping Company - Auction Centers - Answering Services - Vending - And the list goes on.

University Studies
Psychology - Marketing/Advertising - Civil & Criminal Law
Work History
USAF - Hostage negotiator, Bank Branch Manager, Bank Loss Mitigation Manager, Retail Loss Prevention Manager, Credit & Collection trainer, OSI, Guest Speaker and Trainer in real estate investing

Some of the Real Estate Investing courses I have taken over the years are:
AD Kessler - Al Lowry - Bill Bowen - Bill Bronchick - Bill Gatten - Carleton H. Sheets - Charles Givens - Claude Diamond - David Finkel - Ed Beckley - Ernie Kessler - I.G. Williams - J.P. Vaughan - John Adams - John Beck - John Behle - John Burley - John Locke - John Schaub - John Ulmer - JP Vaughn - Lance Young - Larry Burkett - Larry Holder - Larry Pino - Lonnie Scruggs - Robert G. Allen - Robert Irwin - Robert Kiyosaki - Robert Shemin - Ron LeGrand - Russ Whitney -Ted Thomas - Wade Cook - Wealth Builders - Just to name a few.

In 2004, I had the privilege of training 750 new real estate investors in the art of investing both in a seminar setting and mentorships (180).

The simple point is I may just know one or two things about this business but I also understand I will never know anything and this is why I continue my education - I treat real estate investing just like a professional athlete - I train in season and out of season!

I through the grace of god and an outstanding support staff buy and sell real estate predominately in 19 states now!

It takes a lot of work, long hours and a great team in place to reach this level.

For me I have nothing to prove to anyone as my life is good and RE has been good to me and has allowed me to help 1,000's every year who face foreclosure!

The life of John Michael

By being creative, you can play the game of real estate investing by using what is called Option's investing.

This is just one technique of the Option's strategy of investing but can be a power tool in your investors toolbox to help you control more real estate and build wealth.

An option is an agreement to you from the seller that gives you the exclusive right to buy a property during a specified time and at a predetermined price but does not obligate you to make the purchase - This is why it's called the Option agreement.

You option to buy - You option not to buy.

Option investing works when you want to control more real estate with limited out of pocket cash or credit and works if you:

Have no credit!
Can't pay cash!
Can't get a loan!

I call this the "SWEAT OPTION".

The sweat option works well if you have the ability to do the repairs yourself.

Your key's in making a deal like this are:

You need to know the basics of real estate investing
You need the forms to make this happen
You need to know the market area
You need to know the laws in your state
You need to know how to determine the value of the subject property
You need to know how to do a title search

Most importantly you need to know how to find sellers that are motivated enough to work with you on this strategy of investing.

I recommend that you farm out your market area looking for properties that are what we call in the industry FSBO's (For Sale by Owner).

Go to your local library and start your research by looking at old newspapers starting with newspapers that are 90 days old and work your way through the FSBO's section making a list of possible deals. Working on a list of 30 or so.

Call and see if the property is still on the market, if so make an appointment to see the property! You will find that none owner occupied properties work the best and you are looking for properties that can not compete well with other homes do to repairs that need to be done.

Let's say the seller has a property that is worth $100,000 after the repairs.

I like using a 5% rule for repairs - If the value of the property is $100,000 after repairs, I do not want to spend more than $5,000 or 5% in repairs.

I would negotiate say an option purchase price of $80,000 for a period of 6 months or more and in the option agreement to perform the repairs at my cost to be my consideration for the option of purchase or should I say the $5,000 in repairs, materials cost and labor to be considered as credit towards the purchase of the property (My down payment) and what ever monthly payment we agree to and credit amount of that monthly payment. So let's say we agree to pay $600 a month with $100 a month credit towards the purchase.

You start you're repairs and complete them in 30 days or less and let's say you purchased $1,500 in materials.

Now you place the property on the market because you have the option to purchase "You have taken control of the property with your option".

Let's say this deal has taken you 90 days from the beginning to the end.

You find your buyer let's say at a great deal of $95,000 - $5,000 below market value at this point you would simply exercise your right to the purchase option and do a simultaneous close.

Now let's run the numbers

Your option purchase was $80,000
Your option credit of $5,300 (Repairs, materials cost, labor & monthly credit)
Your purchase price after credits $74,700
Your buyer purchase price of $95,000

Leaving you a gross profit of $20,300

You had out of pocket material cost of $1,500
You had 3 payments of $600 each with $100 for the credit purchase with an out of pocket of $1,500

Carrying cost of $600, (Real estate taxes $300 &$300 Utilities)
Advertising cost $300
Closing cost $1,300

Your net profit $15,100

You simply took control of a $100,000 property for $3,900 (payments, materials, utilities, and advertising) and turned a profit of $15,100 in 90 days!

Look at it this way you can make it a cash purchase at $80,000 and take control of one property or be a little creative and take control of the same property for less than $4,000. Both conservative and creative deals work in the world of real estate investing.

Many investment opportunities are simply passed up when we as investors fail to "Think out of the box"!

In the world of real estate investing "CASH" is king, but the hard fact is not all of us have the cash, credit or even financial backing to do a deal so what can you do?

Do you just give up?
Do you forget becoming an investor?

Truly the choice is yours, if you give up because of the lack of funds you will simply never fulfil your dream! You simply let the lack of keep you down!

When one has a dream - follow the dream! You are the one that can turn a dream into reality!

Remember the movie "Field of Dreams" BUILD IT AND THEY WILL COME!

This is not just a movie, It's a reality see: http://www.fieldofdreamsmoviesite.com/distance.html

Do you have that small still voice telling you to go the "DISTANCE"?

To be a success in real estate you need to:

Dream your dream
Put your dream down on paper
Set up a business plan around your dream
Set up short and long term goals around your dream
Join a Real Estate Investing Club
Research and Study postings at real estate investing forums
Search out real estate investing books at your local library and study them
Search out used bookstores for real estate investing books
Search out the laws in your state to determine what you can and can't do as an investor

Once you have completed the above you are now ready to take your dream to the next level.

Search out two or three real estate investing strategies you want to use that fall into the 9 steps I've listed above.
Now you need to take some courses and or seminars on your strategy of choice!
Learn how to use contracts and what types of contracts are used in your state.
Network with any one having anything to do with real estate!
Find someone willing to mentor you!
You must know your market area
You must understand your market area
You need to know the IN's and out's of what form of investing you plan to do

The above are just some simple steps to turn your dream into reality!

The Reality of a dream and what "Thinking out of the box" can do for you!

Independence, MO - 3bdr - 2 bath - 2 car garage / Seller had a job transfer & had to move ASAP.

1st Mortgage $60,599
2nd Mortgage $15,386

I bought the house Subject To! Owner gave me a WD and I started making the payments of $368.41 on the 1st mortgage & $130.88 on the 2nd mortgage.
I sold the property for $89,900 on contract for Deed in 60 days
$3,500 down & $604.12 @7 1/2% for 30 years
My Return: Paid -$998.58 Down payment +$3,500 = $2,501.42 (Half to owner)
Payment =$499.29 * Contract Payment =$604.12 * Positive cash flow $104.83 (Half to owner)
In my pocket $252.13 up front & $52.42 per month x30 year = $18,869

Why Would A Seller Sell To Me - The seller was motivated

I found his pain and provide him the best solution
I actually increase his credit score
I gave him $1,250 cash in pocket
I make all his payments
I send him a check once a year for $629

You still can profit on deals that have no equity by knowing what the average rents are in the area and if they exceed the mortgage payment, you can great a positive cash flow.

I did this deal on a property that had a retail value of 497k in California with an appraised value of 562k and the monthly payment was $3,426.31 and she owed 510k and the average rent's in the area pulled $4,750 and it cost me $10, 800 to bring her current and I gave her another $5,000 for the deed.

$10,800 to bring current
$5,000 for the deed
$5,700 for carpet and paint
$750 for other cost

Total out of pocket $22,250 to take control of a 500k plus property based on appraised value

I did a lease option for 5 years at a lease option purchase price for $549,000 with 25k down and $4,500 a month with 25k towards the purchase and $500 a month credit towards the purchase of the home.

This produced me with $2,750 from the down payment
I get $4,500 a month less monthly payment of $3,426
Leaving me with $1,074 less admin fee of $250 with a positive cash flow of $824

By thinking creatively, you too can succeed as a real estate investor.

"When you arrive at your future, will you blame your past?" By Robert Half, Entrepreneur, Executive