All Forum Posts by: Tom Goans

Patrick, that depends upon state law. It is not correct in Texas or Colorado.

Byron, have you reviewed Bill Gulley's profile? This person can give you tremendous guidance and a wealth of information based upon a long history in the lending and real estate industries.

While some of us share our thoughts, he provides facts and experience.

It is true, knowledge is power. So is experience. Spend as much time as possible learning and associating with like-minded people. I have always found the knowledge and lessons learned from mentors who have been in the business for a long time is the most valuable.

Knowledge in the oil field will keep you safer. The same is true about the real estate investing business.

Here is a story of what actually happened that may give you some insight as to the value of a partnership.

My father, an old time real estate investment and development pro, joined a partnership with two other old time real estate investors and developers and an extremely successful salesman. The four of them bought large blocks of turnkey vacant land lots within a Colorado ski resort at wholesale. They would then sell the lots for a profit - tippling their money with each sale. They built up the business to produce close to $1million per month in sales.

All had the ability and money to do this on their own. Yet, as a team, each brought something very valuable to the table and were a very power and successful force. Much more so than they would have been separately. The partnership actually included two very successful salesmen, one had once worked for Zig Ziglar. One partner was a former bank executive.

The team had money, knowledge, experience, a long history of success, and powerful connections. They were making more money than the ski resort.

Greed is your enemy. Knowledge and experience is power.

You have overlooked many, many considerations long before thinking of how much money to bring to the table.

At the very least, how much money do you need to put into the property?

Recently I met an amateur investor who bought a hotel for what he thought was half price - $700,000. The hotel is a nightmare and a huge money pit. He was unaware of the huge black mold problem he had. The fire alarm system not only did not work, it was too out of date to meet current code requirements. The list of deferred repairs is pages long.

In the past year, he has invested more than $100,000 into the money pit and barely made a dent. Realistically, it would take about $1million more just to get the property back to good, not excellent, but good condition.

He is out of money, borrowing money from his wife, not paying vendors, not paying contractors, not paying employees, not paying taxes, not paying state required business fees ... the list goes on and on.

This is just a small example, and just one example of the expenses involved in ownership, which is why what you need to bring to the table is a very small issue.

One of my mentors has this rule of thumb. If you have $100,000 to invest, only invest $50,000 due to the large number of unforeseen costs you endure.

If I may offer one heads up, some states require you store the personal property for a certain number of days, generally 30. Some state approved lease contracts refer to this.

If your property was not damaged and the only issue is their personal property, consider your self lucky. I can tell you a number of stories.

Here is an interesting one. I had not heard from the tenant in several weeks. The rent was delinquent. I lived in another city. On my next trip to visit the rentals, I dropped by this property. No one was home. I put the 48 Hours to Vacate notice on the door. A week or so later after no word, I went back to the property and entered. The house was fully furnished, including all their clothes. The oven was on and there was a partially eaten pizza on the living room coffee table.

I never did hear from them. My next trip to the property all the furniture was gone from the living room. A note was left from the rent-to-own company. They broke in and took back their furniture.

To add to what Karen correctly mentions, there are many new Federal laws, including those created by the Dodd Frank and S.A.F.E.

You will not sleep at night once you begin to realize all the pitfalls, rules, and regulations. A bank C.D. may not provide a return, but you will sleep better at night.

There are many ways to achieve success. My idea is only one, it may not be correct or incorrect.

I am aware many sales directors encourage scripts. My grandfather and father, and main mentors, always encouraged me to have casual conversations. It lowers the defenses and brings out the truth ... such as you seek ... is the seller really motivated. Having a casual conversation may bring out not only if they motivated, but what motivates them. The latter is the huge issue. Are they talking to you in anticipation of a huge and unexpected payday, or do they need to raise some money, or are they fed up with ... ?

Talking to a concerned friend helps to bring out the real truth. How can I help you solve your concerns? How fast do you need me to act?

Just the method I was taught. It does not work for everyone.

K.I.S.S. There are more great opportunities out there than you have money or time. Seek these out and you will make much more money with less hassles and aggravation.

If you are trying to out smart the system, or if it is fast, easy money, you are probably considering a very bad investment opportunity riddled with many problems. Before you know it, all your money is going to lawyers. You might as well buy the new Benz for them now and safe yourself the hassle and aggravation.

Invest in a very good professionally designed website.

Avoid scripts. It is more important to come across as a qualified individual with an interest. How many times did you hang up on someone reading from a script?