By Julie Broad
The main reason my husband and I were able to build a multimillion-dollar real estate portfolio in less than eight years is because we found a few trustworthy partners.
After we made two purchases, one of our partners became preoccupied with a rapidly growing business he had recently started. It got to the point where it would take weeks to get in contact with him. After a few years of struggling to make the partnership work, we agreed to split up. We figured it would be an easy split. We owned two rental units, so we each could take one. Except we both wanted to own the same unit, and we couldn't agree on how much more that unit was worth!
So we decided to use what is known as the "I Cut, You Choose" method. In other words, to break up the partnership as though it were a chocolate bar. One partner would cut the "chocolate bar" in half, and the other partner would get to choose which half they wanted.
This is a simple yet fair way to divide up just about anything. If you're the one doing the cutting (in this case, figuring out how much it would be worth to get - or not get - the more desirable unit), you want to come up with two options that are as even as possible... because you get the one the other party doesn't choose.
We let our partner establish the terms of the deal. Meanwhile, we set a range for what we would be willing to pay to get the more desirable unit. When his number came in higher, we selected the option of selling him the unit for that price.
We didn't get the unit we wanted, but we did sell it to our partner for more than we had been willing to pay for it. Our partner bought the property he wanted for the price he'd determined to be fair. We were all happy.
Our other partnerships are strong, and we don't expect to have to split up any properties in the near term. But if we do, we have a good system to use.
[Ed. Note: For more insider strategies for getting started as a real estate investor, sign up for real estate expert Julie Broad's free monthly newsletter. Get your free report for making money with real estate here.
Real estate is a great way to make money - even in this economy. But it's just one of many strategies you can use to reel in big profits. Learn how to get your hands on over $17.3 million in money-making ideas right here.]
Larry Potter
http://www.fastbuyerloans.com
Tuesday, March 24, 2009
Wednesday, March 18, 2009
Foreclosure Investing: How to Wholesale
By Jeff Adams
As a real estate investor, you can stand to make serious amounts of money. But these days, with 5.4 million Americans behind on their mortgage payments and pending home sales dropping, you might think real estate is a bad bet.
Not true.
I've made over 350 real estate deals in the past 14 years - many of them in this terrible market. And in my experience, one of the best ways to cash in on real estate is by wholesaling foreclosures.
I remember one house that had a value of $1.9 million but had been standing vacant for four years. I ended up buying it for $1.2 million and wholesaling it for $1.5 million. In just a few days, the seller was relieved of a crushing financial burden, the buyer was patting himself on the back for getting a great bargain, and I was on my way to the bank with a check for $219,797.58.
In real estate, wholesaling means entering into a contractual agreement with another party for the purpose of purchasing a property, and then assigning your interest in that contract to another investor in exchange for compensation.
The business of wholesaling is not just a trend in the real estate market. It is progressively gaining momentum and popularity with both new and experienced investors. No license is needed, so just about anyone can do it. Plus, turnaround time is quick. The basic idea is to get in, get out, and get paid.
Foreclosed property is especially attractive to wholesalers because it's owned by a bank, not an individual. The bank wants to get rid of it as soon as possible - and that gives the investor an advantage.
The foreclosure process varies depending on whether the state is judicial or non-judicial. In judicial states, foreclosure requires legal action; non-judicial states do not deem it necessary.
In non-judicial states, the borrower can grant the power of sale directly to the lender. After the borrower fails to make several payments on his loan, the lender files a Notice of Default (NOD) and the foreclosure process is put into effect. After about three months, the lender files a Notice of Sale (NOS). The property is now in control of the bank - listed on its books as Real Estate Owned (REO) - for 21 days until the actual foreclosure sale.
Depending on where the property is in the foreclosure process, you can buy it by approaching the homeowner directly, purchasing it at a public auction, or buying it from the bank.
Approaching the homeowner directly gives you the ability to negotiate terms and offers the potential for huge profit margins. But you have to deal with title, liability, and legal issues.
Public auctions, too, give you the potential for huge profit margins. But, again, there are some significant negatives. For one thing, you have to make the purchase with cash (unless you are purchasing from a real estate disposition company, such as the auctions you see put on by USHomeAuction.com and HudsonandMarshall.com). For another, the property is sold "as is." If you want to have it inspected by a professional, you have to incur that expense before you even bid on it.
The profit margin can be substantially higher when you buy from a bank. You can (usually) get the property inspected after you've made the deal and void the contract if the inspection uncovers anything seriously wrong. Plus, there is no need to worry about title assignment or other legal issues.
When you are making an offer on a bank-owned property, you can write up the offer in the name of a land trust, and then simply assign your beneficial interests in that trust to your wholesale buyer. Or you can write the offer in your own name and, at the bottom of the contract, include this clause:
"Vesting to be determined at close of escrow."
This allows you to take title in any entity, including your wholesale buyer's name. The reason you want to do that is because banks will not let you assign your contract to a specific person. If you put "and/or assigns" on your contract, your offer will not be accepted.
The deal is now complete, and you can go on to the next one that is just waiting to be found.
[Ed Note: Jeff Adams is a self-made multi-millionaire who has bought and sold more than 350 properties in the last 14 years. Over the last 10 years, he's found and sold his deals using the Internet. You can get more of his advice and his free course for a limited time by visiting www.ForeclosureProfitSystem.com.
If you can't (or don't want to) take on real estate investing full-time, Jeff's system of attracting buyers, sellers, and investors with automated websites can still help you make big profits by leveraging the power of the Internet. Get all the details at ETR's upcoming Profits in Paradise wealth-building summit. But hurry! Our Early Bird Discount ends today at 5:00 p.m. Eastern.]
Larry Potter
www.ATicketToWealth.com
As a real estate investor, you can stand to make serious amounts of money. But these days, with 5.4 million Americans behind on their mortgage payments and pending home sales dropping, you might think real estate is a bad bet.
Not true.
I've made over 350 real estate deals in the past 14 years - many of them in this terrible market. And in my experience, one of the best ways to cash in on real estate is by wholesaling foreclosures.
I remember one house that had a value of $1.9 million but had been standing vacant for four years. I ended up buying it for $1.2 million and wholesaling it for $1.5 million. In just a few days, the seller was relieved of a crushing financial burden, the buyer was patting himself on the back for getting a great bargain, and I was on my way to the bank with a check for $219,797.58.
In real estate, wholesaling means entering into a contractual agreement with another party for the purpose of purchasing a property, and then assigning your interest in that contract to another investor in exchange for compensation.
The business of wholesaling is not just a trend in the real estate market. It is progressively gaining momentum and popularity with both new and experienced investors. No license is needed, so just about anyone can do it. Plus, turnaround time is quick. The basic idea is to get in, get out, and get paid.
Foreclosed property is especially attractive to wholesalers because it's owned by a bank, not an individual. The bank wants to get rid of it as soon as possible - and that gives the investor an advantage.
The foreclosure process varies depending on whether the state is judicial or non-judicial. In judicial states, foreclosure requires legal action; non-judicial states do not deem it necessary.
In non-judicial states, the borrower can grant the power of sale directly to the lender. After the borrower fails to make several payments on his loan, the lender files a Notice of Default (NOD) and the foreclosure process is put into effect. After about three months, the lender files a Notice of Sale (NOS). The property is now in control of the bank - listed on its books as Real Estate Owned (REO) - for 21 days until the actual foreclosure sale.
Depending on where the property is in the foreclosure process, you can buy it by approaching the homeowner directly, purchasing it at a public auction, or buying it from the bank.
Approaching the homeowner directly gives you the ability to negotiate terms and offers the potential for huge profit margins. But you have to deal with title, liability, and legal issues.
Public auctions, too, give you the potential for huge profit margins. But, again, there are some significant negatives. For one thing, you have to make the purchase with cash (unless you are purchasing from a real estate disposition company, such as the auctions you see put on by USHomeAuction.com and HudsonandMarshall.com). For another, the property is sold "as is." If you want to have it inspected by a professional, you have to incur that expense before you even bid on it.
The profit margin can be substantially higher when you buy from a bank. You can (usually) get the property inspected after you've made the deal and void the contract if the inspection uncovers anything seriously wrong. Plus, there is no need to worry about title assignment or other legal issues.
When you are making an offer on a bank-owned property, you can write up the offer in the name of a land trust, and then simply assign your beneficial interests in that trust to your wholesale buyer. Or you can write the offer in your own name and, at the bottom of the contract, include this clause:
"Vesting to be determined at close of escrow."
This allows you to take title in any entity, including your wholesale buyer's name. The reason you want to do that is because banks will not let you assign your contract to a specific person. If you put "and/or assigns" on your contract, your offer will not be accepted.
The deal is now complete, and you can go on to the next one that is just waiting to be found.
[Ed Note: Jeff Adams is a self-made multi-millionaire who has bought and sold more than 350 properties in the last 14 years. Over the last 10 years, he's found and sold his deals using the Internet. You can get more of his advice and his free course for a limited time by visiting www.ForeclosureProfitSystem.com.
If you can't (or don't want to) take on real estate investing full-time, Jeff's system of attracting buyers, sellers, and investors with automated websites can still help you make big profits by leveraging the power of the Internet. Get all the details at ETR's upcoming Profits in Paradise wealth-building summit. But hurry! Our Early Bird Discount ends today at 5:00 p.m. Eastern.]
Larry Potter
www.ATicketToWealth.com
Tuesday, March 17, 2009
How to Close A Subject-To Deal
Contributed by: Jason Hanson
A lot of people ask me questions about how to properly close a subject-to deal. A subject-to deal is closed just like a traditional closing where you go to a closing attorney or settlement company. I would never advise closing a subject-to at the kitchen table. There are just too many things that can go wrong. Plus, if you ever have a problem and end up in court, you want to be able to show a judge that you went to a closing attorney and had a neutral third party take care of everything.
So here is how it breaks down: You will sign all of the paperwork with the homeowner at their house (this includes the contract and any addendums that don’t need to be notarized. Anything needing to be notarized will be taken care of at closing). Once you have all of the paperwork signed, you will fax it to your closing attorney, just like you do with every other closing. Your attorney will do a title search and prepare everything for closing. On closing day, you will meet the seller’s at the closing office, sign all of the paperwork and you will then own the house.
It’s that easy and simple. By the way, on a $250,000 house, closing costs should run about $3,000 (this is for the state of Virginia, every state is different). And, here is the “tactic” I use to get sellers to cover all of the closing costs so that I can literally buy a house for nothing down and sometimes get a few dollars back at closing. I tell sellers that we’re not Realtors and do not charge any commissions to sell their house. And that they are only responsible for the first $3,000 in closing costs. If closing costs are any more than that, our company will cover the rest.
Now, if you get a seller who really has no money, or they refuse to pay any closing costs at all, then I would certainly not lose a deal over $3,000. However, if you don’t ask for the $3,000 up front then you will never get it and it never hurts to ask.
So, when you are negotiating any deal at all, remember to ask for as much as you can, because all a seller can do is say “no”.
Larry Potter
www.ATicketToWealth.com
A lot of people ask me questions about how to properly close a subject-to deal. A subject-to deal is closed just like a traditional closing where you go to a closing attorney or settlement company. I would never advise closing a subject-to at the kitchen table. There are just too many things that can go wrong. Plus, if you ever have a problem and end up in court, you want to be able to show a judge that you went to a closing attorney and had a neutral third party take care of everything.
So here is how it breaks down: You will sign all of the paperwork with the homeowner at their house (this includes the contract and any addendums that don’t need to be notarized. Anything needing to be notarized will be taken care of at closing). Once you have all of the paperwork signed, you will fax it to your closing attorney, just like you do with every other closing. Your attorney will do a title search and prepare everything for closing. On closing day, you will meet the seller’s at the closing office, sign all of the paperwork and you will then own the house.
It’s that easy and simple. By the way, on a $250,000 house, closing costs should run about $3,000 (this is for the state of Virginia, every state is different). And, here is the “tactic” I use to get sellers to cover all of the closing costs so that I can literally buy a house for nothing down and sometimes get a few dollars back at closing. I tell sellers that we’re not Realtors and do not charge any commissions to sell their house. And that they are only responsible for the first $3,000 in closing costs. If closing costs are any more than that, our company will cover the rest.
Now, if you get a seller who really has no money, or they refuse to pay any closing costs at all, then I would certainly not lose a deal over $3,000. However, if you don’t ask for the $3,000 up front then you will never get it and it never hurts to ask.
So, when you are negotiating any deal at all, remember to ask for as much as you can, because all a seller can do is say “no”.
Larry Potter
www.ATicketToWealth.com
Thursday, March 12, 2009
Invest in Your Education
You've heard it from Michael Masterson: You can increase your income by expanding your expertise.
Take courses that maintain or improve your employment qualifications. It's not only a good self-investment, it can help lock in job security - which is more important than ever these days. And the cost of this education and training is tax deductible.
The deduction can be taken as an optional deduction or as an Education Tax Credit. Choose the one that gives you the greatest tax benefit.
Larry Potter
www.ATicketToWealth.com
Take courses that maintain or improve your employment qualifications. It's not only a good self-investment, it can help lock in job security - which is more important than ever these days. And the cost of this education and training is tax deductible.
The deduction can be taken as an optional deduction or as an Education Tax Credit. Choose the one that gives you the greatest tax benefit.
Larry Potter
www.ATicketToWealth.com
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