Many beginner real estate investors don’t know how to find properties that show signs of opportunity because they are only looking in the normal listings. You have to drive through neighborhoods and look at the houses that show opportunity. "Pretty houses" normally aren’t going to be a good investment. So you must pay attention to the homes that need work.
It seems like so many of my students and followers of my podcast have been falling into the default thinking, which is giving the seller all cash or borrowing money to finish the deal because that’s what the seller wanted. However, they didn’t ask all the questions that I give in my training materials to find out what the seller really wanted.
In today’s market, a lot of investors think subject to deals are the answer to everyone’s problem. It’s not illegal but some of the problems associated with these deals are:
Most people aren’t trained to look for opportunity. They are taught to do things a certain way and follow that "formula." Many years ago, I used to spend so much time building spreadsheets to analyze properties that would give me ultimate information that I thought I needed. The problem is those spreadsheets didn’t make me a dime to feed my family. I have found that people who love building spreadsheets are wasting time doing what they like to do instead of looking for deals that has a chance to make money to pay their bills. If you spend time doing everything except what you need to do, you’ll never be a successful real estate investor.
For those who want to be able to make deals without having to get financed through a bank, there are different ways to do this On this episode, I share the steps every investor should take in order to never step into a bank.
When learning how to negotiate, there’s a very important lesson. You need to know how to talk to people. Every day when you get up and run your business, everything is a negotiation. Even though this is a lost art, you must learn how to build a rapport and bond with a seller.
Today, I want to talk about some things that I’ve noticed that’s going on in the real estate market. These things are making me think of the downturn of the real estate market in 2005, 2006 and 2007. Listen as I share what I'm noticing that could possibly make the market decrease again.
As most of you know, I like to be creative with seller financing deals. So I’m going to share some insight on what I look for when trying to find ways to be creative. For the deal to be successful, it has to have certain criteria. Not every house on the market will work. But there are some sellers who will be able to take payments from you.
Today, we're going to talk about how to be successful at seller-financed deals. First, one of the most important things is to pre-screen the seller. If you want to be successful at seller-financed deals, you have to discover right away if they are going to be willing to take your proposal. A few simple questions is all you need to know if the seller is motivated or not.
Subject to deals is one technique that you can use as a real estate investor. Many people don’t understand this method that violates no laws. Subject to is a term used to acquire a property that already has an existing mortgage on it but the person buying the property does not become liable for the existing mortgage debt. This is also known as taking the property subject to the existing mortgage.
As I look back over my nearly 40 years investing career I believe the major reason for my success is the fact that I have always been an expert in the areas where I looked for properties to buy. Almost every day, I was in the streets looking for opportunities. I was looking for opportunities other investors were not seeing. I knew where almost every unloved property was located in the areas where I buy houses.
Today, we're going to talk about how conformity is why many people today aren't successful. It is ruining our chances at a better life. Do you remember how when you were graduating from high school, you had dreams and plans about how you were going to change the world? Then, life set in. That's the problem. Most people end up getting a stressful job they don't enjoy that takes up so much of your time. They are told when they can take breaks and micromanaged. This type of job ends up souring many people because it puts such a limit on what you can do.
Almost every week I talk to an investor who went to a wholesaler training. But apparently whoever taught the training lived in another area where people have more money and fewer smarts. Because those beginners end up paying too much for a property when they buy it from a wholesaler who’s looking for someone who doesn’t know what they’re doing to take the property off their hands. I’ve seen it too many times.
Today is a real treat because I will be talking with one of my friends and mentors, David Tilney. In my opinion, he's the best there is in the business. He will be sharing from his 40 years experience of being a landlord. A lot of people are scared of being a landlord because of the negative stories. But David will explain how it can be a great experience as he reveals 11 things tenants want from a landlord.
When I first started, I didn’t have tons of cash to put down on my first investment properties, and I worked directly with the sellers to purchase their property. That was back in the early 1980’s when there were less resources for financing than there are today. Now, even if I had unlimited funds at my disposal, I would still purchase property the exact same way I did, and continue to do to this day.
I don’t purchase properties from the Multiple Listing Service (MLS). I purchase from older owners who don’t live in the property and own it free-and-clear. But I know that many of you still worry where to get the money for down payments on your investment properties, and that’s what we’re going to talk about today.
The first thing you have to do in any negotiation to purchase a property is ASK. There’s no reason why you shouldn’t ask if the seller will take payments for their equity for their property. It doesn’t matter if they don’t trust you yet, because you’re just asking for a chance to show them that you are a person of your word. Open up to them and you’ll be surprised how many sellers are willing to work with you.
Another strategy I would use is to postpone the payment. This was especially helpful when the property needed to be renovated. I would ask the sellers for a delay on the payments so I could get the property ready and put tenants in there. In one case, I immediately moved in a handyman who rented the property from me while he fixed the property for me, and in the six months we pushed back the first payment, I was able to collect the down payment money.
If that wasn’t possible, I would turn to a “financial friend” to supply the down payment money so I could close on the property. Once the tenant was in the property, I would collect rent and then pay back the financial friend.
Also working with the financial friend, you can pre-pay a certain number of mortgage payments in the beginning. For example, you could pay 24 months all at once and then not owe anything until the 25th month. This will leave you only the payment to your friend during that time. You can give your financial friend a better investment than just letting their money sit in the bank account, and the seller is happy to have some money to start with. Everyone is happy.
You can also put the down payment on the back end of the loan as a few extra payments at the end of the life of the mortgage. Any dollar you can save today is a dollar you can start putting to work somewhere else.
Did you know you can TRADE to pay your down payment? If you have a vehicle, equipment, etc. that can be valuable to the seller, why not use that as a down payment and save your cash? I once had traded a Chevy truck to a brick mason who needed it for his business. I didn’t need the truck and I got more than the blue book value off that mortgage.
These are just a few creative strategies when you think you can’t afford a down payment on a potential investment property. You don’t NEED money to MAKE money in this business; that’s the beauty of it!
Be sure to head on over to my website, LarryHarbolt.com, for more tips and tricks on how to become a better investor.
Also, please be sure to tell a friend about my podcast and leave a review on the podcast player you’re listening to right now. Your reviews tell me what information I can provide that will be valuable to you.
Today I want to talk about something I see as a huge problem for everyone just starting out in the real estate investing business. Too many people don’t understand what information they need to get from the seller in order to be successful in this business.
Today I want to talk to you about lessons I learned when I was a pipefitter in the construction industry. I worked at many nuclear powerhouses, and the one thing we were told was "Plan your work and work your plan."
Today I’d like to talk about an easy you can begin to increase your income, and that is by creating a list of goals. One of my best mentors was a man by the name of Jim Rohn. Jim changed the way I thought about my goals and my business. He pushed us to put a list on the wall in our office that we could see every day. He called this our "Silent Seminar".