Today’s episode is one of my more exciting ones: making money out of thin air. It’s not a hoax or a scam, but a viable way to create deals without taking money from your own pocket. It’s never really about the numbers or the asset: every deal is built on the foundation of a promise. A buyer creates a formal promise to a seller that they need to fulfill, and that’s where every deal begins.
There are different types of promises that we make to sellers when we create a deal for their property. We use promises such as:
Once you understand that EVERYTHING you do is a promise, then you’ll understand your integrity is on the line. In negotiations, you’re showing the sellers that you’re a person of integrity who can keep your promises. That’s how the best deals are made.
Don’t forget to visit us at LarryHarbolt.com for all your real estate education needs.
If you’d like copies of the forms we mentioned in the episode today, visit LarryHarbolt.com/ThinAir.
Good Luck and Happy Investing!
Over the past few weeks I’ve had several investors come to me and tell me that they can NEVER get sellers to give them seller financing terms. For me that makes no sense: I have plenty of success in getting seller financing terms on the properties I buy, over 30 years in fact. So today I’m going to help out those investors who are having little to no success in negotiating seller financing terms on their deals.
I’ve talked with some investors who are buying upwards of 35 houses A MONTH. They already have a network and a system of lenders that allows them to pay cash for each house. This podcast isn’t for them; it’s for those investors that don’t have the cash or the network to scale their business yet to such a high level.
Cash is never the only way to buy a house; I’m living proof. Even if you have money, eventually that money runs dry and your business shrivels up. So why not just save that money for other deals and negotiate seller financing terms whenever you can?
For all your real estate education needs, visit me online at LarryHarbolt.com.
Good Luck and Happy Investing!
Every investor has to ask themselves this question sometime: “What the heck should I be buying to build my portfolio and cash flow?”. For some people, what they care about most in an investment property are:
Most investors DON’T think about some of these important aspects of the property that could seriously impact your bottom line:
In the end, you need to decide how hard you want to work and how much you want to spend on each of your houses. Be mindful and do your homework on EVERY SINGLE PROPERTY you come across. This is how you’ll make more money on every deal you do. Otherwise you’ll make some costly mistakes.
For all your real estate education needs, visit me online at LarryHarbolt.com.
Good Luck and Happy Investing!
What is your attitude about becoming a real estate investor?
I hate to bust your bubble (actually, no I don’t), but it takes a LOT of hard work to become successful in this business.
Do you really want to put in the work? Are you willing to knock on doors, talk to neighbors in the street, and sit down at kitchen tables?
Most new investors today are lazy. They aren’t dedicated enough to put in the hours, blood, and sweat to make those goals a reality. They want their easy, comfortable lifestyles and aren’t willing to work outside of the usual 9-5.
Do you know when sellers are usually out of the house? 9 am to 5 pm. So why are you expecting to contact them when they’re out at work themselves?
You have to be willing to burn the midnight oil in order to succeed. When you make that change, you’ll have a market all to yourself.
For all your real estate investing education needs, visit LarryHarbolt.com
Good Luck and Happy Investing!
Today want to emphasize just how important it really is to take a step back and think your entire deal through. When you look at a house, what exactly do you see?
Do you just see bricks or siding and a door?
Or are you seeing a cash-flowing asset that can supplement or replace your income?
Every property is a tool to build wealth and improve you and your family’s lifestyle. It’s important that you see MORE than just dollar signs with each opportunity you come across. You need to think about the exit strategy for each deal.
Remember: “Until you know where the back door is, you don’t go through the front door.”
For all your real estate education needs, visit LarryHarbolt.com.
Good Luck and Happy Investing!
I’m seeing too many people overpaying for properties today, well after the Recession hit the real estate market in 2008. Today’s market conditions are what we call a “seller’s market”; home prices are going up and keep rising. Most investors don’t qualify for conventional financing from banks, so they’re finding other sources of funding with higher interest rates. Another issue is that properties are only staying on the market for a short time. Before the downturn investors could put in a full-price offer, but were rejected because sellers knew that the next day they’d get an even higher offer.
Have you ever been to a real estate auction? Most investors there have no real limit or budget and constantly overpay. You MUST know your numbers! If you don’t know the numbers, don’t buy it. Without that information, done accurately, you will continue to lose money in this business.
Sometimes, when I’m bored, I’ll watch one of the popular flipping shows on HGTV. These so-called “experts” are just guessing at the numbers, without really understanding their own market or the neighborhood of the property they’re looking to buy. They’ll either offer full asking price or just under, and they ALWAYS end up paying beyond their rehab budget and go beyond their original timeline.
This is because they DID NOT KNOW THE NUMBERS. They just guessed and ran with it, throwing dollars at the deal and assuming they would make a huge return. That rarely happens, if ever.
STOP OVERPAYING FOR PROPERTIES!
Visit us at LarryHarbolt.com for all your real estate education needs.
Good Luck and Happy Investing!
Today I’m covering all the nuances and steps for the "wrap-around mortgage". A wrap-around mortgage is a loan arrangement in which an existing loan is retained, and an additional, larger loan is then created around it. The new lender agrees to make payments on the existing loan, which usually has a lower interest rate than the new loan being added. In the end, the rate on the new loan produces a higher yield than the old loan currently attached to the property.
If you want to truly build wealth and create freedom for you and your family, then you need to learn and understand how to analyze a deal. I'll be sharing just a few of the steps to get you started on the road to your first property.
Today I want to talk to you about getting out of your house, off your computer, and out into the world. Deals aren’t only to be found in meetings or over the phone; you need to actually take the time to talk with sellers on their own turf. This is where you’ll find sellers who could use your help and opportunities to help your family and grow your wealth.
Door knocking is almost a lost art among investors today; however, it’s still a powerful and effective tool to finding sellers who may not know they want to sell. One of the best in the business is Bill Cook, a former Kirby vacuum salesman. He takes groups on property tours and actually knocks on houses in a neighborhood in a demonstration; many times the homeowner will let the entire group of over forty people in!
Knocking on doors can be dangerous, especially for women; if you feel unsafe on your own, then bring someone with you as a buddy, especially in rougher neighborhoods. I prefer to find unloved homes that clearly need repairs and help. If the occupant isn’t the seller but a tenant, you can usually find out from them (they might need reassurances that you won’t kick them out after buying the property, however).
If you see older people working in their front yard, make sure to stop and talk with them. Ask them about the neighborhood, compliment their home, and build that rapport. Older people who have been in the neighborhood for years will know who is looking to sell, and you just might get a deal out of it.
Need practice negotiating? Go to a yard or garage sale. Find something cheap and negotiate with the seller and get it cheaper. This is training you can’t get in a guru’s class or an expensive seminar; it might cost you a dollar if you buy the item, and you always have the option to walk away. This is a fantastic, no-pressure environment to get you into the negotiating mindset.
Visit LarryHarbolt.com for my investing courses and resources to take you further in your investing career.
After my recent podcast on the inner workings of the Subject-To deal, people have been asking me relentlessly about how to do “Lease-Option” exit strategies in their deals. Today we’re going to cover how you can do your own Lease-Option deals, or as it’s more commonly known, the “rent-to-own”.
If a property has been on the market for many months, it has a mortgage, and the seller doesn’t live in it, then there’s a good chance that the sellers are making two mortgage payments. If they’ve renovated the property, you’ll often find that sellers are reluctant to put in tenants for cashflow if they can put it on the market and sell it for top dollar. But if it sits on the market for months, they’re continuing to lose money every month it doesn’t sell. This is where the Lease-Option comes into play to help ease their financial pain and help you gain control of the property.
The Lease-Option allows the tenant to lease the property now and gives them an option to purchase the property at a later time under a certain set of circumstances. This gives you, the investor, control of the property and the option to put it under your corporation or a land trust down the road when you exercise your option.
For a FREE copy of my Lease-Option cheat sheet, go to http://www.larryharbolt.com/leaseoption.
Many investors have unfounded fears about Subject-To deals; specifically, they usually have no idea what a Subject-To deal even involves! My goal today is to break down the confusion around this deal structure with old-fashioned knowledge. If you have the education, then you can use this strategy as a tool to acquiring more deals.
A “Subject-To” deal is defined as the acquisition of a property that already has a pre-existing mortgage. However, the person buying the property does not become personally liable for repaying that debt. This is the opposite of “assuming” a mortgage, where the buyer would take over the mortgage payments of the property they are purchasing and therefore becoming personally liable.
Remember: If you take a property Subject-To, YOU ARE NOT RESPONSIBLE FOR THE PREVIOUS FINANCING!
You need to make sure you have all the proper paperwork for the deal, including a Purchase Agreement and any documents if you’ll be putting the property in a Land Trust. You can learn about land trusts and how to structure your properties to best protect them at my Land Trust Bootcamp coming up in November.
For more information on my Land Trust Bootcamp from November 11-13 in Tampa, Florida, click here: http://www.larryharbolt.com/landtrustbootcamp.
For your own copy of my cheat sheet that walks you through Subject-To deals, visit larryharbolt.com/subject2.
Today I’m talking with my audience about taking full advantage of your real estate investing education. Most beginning real estate investors believe the least expensive option for education is at real estate investor’s meetings; this is completely untrue. Many of these meetings simply peddle a product from a traveling guru.
I learned from the “School of Hard Knocks” and made a LOT of mistakes while learning. You have the luxury that you don’t have to do stumble around in the field; you can find fantastic education from top-notch investors.
You need quality information, from people who teach quality material. You need to decide what your budget is for education; if you don’t have a large budget, then there are resources out there that are incredibly affordable and can get you started right now.
You need to use your education, wherever it comes from, to find deals in the market that has significantly less traffic than other people. You should be talking with sellers and making multiple offers; remember, you’re working towards a deal that’s good for your family and that is good for theirs.
Also, remember that networking is CRITICAL. You need to be making contacts and talking with other investors. These will be the people you’ll ask for advice, talk to about your market, or work with on deals you don’t want to keep but know they’ll want.
If you want real, affordable education, then take a look at our Cashflow Blueprint course at http://www.LarryHarbolt.com/Blueprint.
Today I’m covering a topic that I hear from everyone all over the country. These are the various roadblocks that stand between people searching for a better way than their 9-5 jobs and the reality of that dream. No one knows this better than me; I’ve experienced every single excuse and reason imaginable:
I worked seven days a week as a pipe fitter when my kids were young, and after every work day I barely had the energy to come home, eat, and collapse in my bed. My kids also had extracurricular activities and family functions I had to attend and didn’t really want to miss. However, many people who want to become investors use this as an excuse.
It’s hard to believe now but when I began, I had no idea what to do or say to every seller I contacted. Every conversation felt like “do or die” for me, with the pressure of supporting my family.
Even though I had children and a wife to feed, I was often laid off and between jobs during my first years in real estate investing. I made ends meet with unemployment checks and part-time work until I could find another full-time job. You can image this did not create an outstanding credit score.
A big hurdle for me when I began was the false mindset that you can’t start investing in real estate if you don’t have any money. It was unbelievable to me that sellers would offer seller financing terms and happily take payments instead of a lump sum of cash.
My first 16 years in the field, I went into each deal with no knowledge under my belt. I call this the “trial and terror” method; it was scary but I kept going. Eventually I got education and learned more than my one way of investing, pushing me to be more than a “one-trick pony”. Getting education is key and will unlock your potential, and now you can get it relatively inexpensively to get you going.
To take advantage of our new Cashflow Blueprint course, visit us at LarryHarbolt.com and click on the course on my front page.
Larry talks to his audience today about how to determine which exit strategy is the most effective for every deal you come across. When joining a group of his fellow mentor Robyn Thompson’s students on a bus trip to view properties, Larry noticed that instead of taking notes of needed repairs and renovations, most students just sat back and watched the scenery. They weren’t analyzing the properties or figuring how that property fits into their own investor identity. They weren’t asking any questions, let alone the right ones.
Some of critical questions you need to ask yourself are:
These questions are critical to understanding how to make money from almost every deal an investor comes across. An investor needs to understand the desirability of the neighborhood, the age of the property itself, and the condition of the streets and sidewalk in front of the home.
For more information about Robyn Thompson and her real estate rehab course, you can visit her website at http://robynthompson.com.
Today Larry is joined by Cynthia Schmidt, landlord and creator of the “Collect Back Rent” system. This system is a must for anyone who is a landlord or looking to become a landlord by walking them through the eviction and judgment process so even when your tenant doesn’t pay, you still get your money. Currently there is over $19 billion in outstanding judgments, and over 70% of those judgments are easily able to make their way into the landlord’s pockets.
Many landlords forget that their business is a BUSINESS and let their tenants take advantage of them with excuses. Landlords need to be firm with their 3 Day Pay or Quit notices; this protects them from losing their income and from tenants who are only too eager to put off paying their rent for as long as possible.
Landlords are spending their time following the lead of their tenants instead of vice versa. If you allow your tenants to slide constantly, this will only end up hurting you with your lenders, sellers, and financial friends who you’ve promised their return every month.
The “Collect Back Rent” system teaches landlords the proper procedure for their state, including the 3-day notice, how to file evictions, and how to recover your money in the discovery phase in court. The system includes your individual state’s procedures and paperwork.
To find out more about the Collect Back Rent system, visit Cynthia’s website here: http://www.larryharbolt.com/collectnow
Time is not an infinite resource; we only have so many hours, days, months, and years. Today Larry teaches the audience about how to wisely budget your time so you’re more effective in your investing and making the bigger monthly checks. Unlike what the traveling gurus will crow at the top of their lungs, real estate investing is not a part-time, high profit field. It requires long hours and working times outside of the normal 9-5 so you can access the sellers who work those 9-5 jobs.
A large part of using your time wisely is having a thorough understanding of your target market, whether it’s commercial, single family, multi-family, etc. You need to understand what materials are going to be well received by your market or you’ve wasted time AND money.
The key to getting the best bang for both your buck and your time? Understanding your incoming tenants or buyers, and that real estate investing often demands hours outside the norm. But that’s when the greatest rewards are earned.
Time and struggle can be good teachers but they also can be a horrible way to learn. As I look back over the past 38 years I think to myself, that was the life I had chosen, but the way I thought I had to do my chosen business could have been done much faster and easier to get me to my dreams.
Stop struggling no matter where you are in your learning curve and find and work with a successful mentor who can help you get the stress and struggle out of your life quickly. Why not get smart now instead of wasting years and alter lose the precious years simply because you were too independent and wasted good years when you didn't need to. You really need a good mentor to help you get to where you want to go, get one today.
There is more to cashflowing from a property than just purchasing it outright or even seller financing. Two of the highest investing strategies are the lease-option and master lease techniques, especially when a seller is reluctant to do seller financing terms.
Lease-options and master leasing a property comes with plenty of benefits: you’re not responsible for the many of the expenses that can come out of the rent, leaving you with a bigger monthly cashflow. Another perk of these lesser known strategies is the ability to flow with the market; if the property doesn’t bring in tenants after a certain period of time, you have the ability to just walk away once your lease is up.
Today Larry stresses the importance of treating your business… like a business! Real estate investing is unlike any other career; one person can make a huge impact in their community and in the lives of the families who they work with, and it’s easy to forget that you’re doing this for your own livelihood. Just like with any sound property, a solid foundation of financial self-discipline is going to keep your business afloat for decades to come.
Each property has to pay for itself, and has to be able to sustain its own existence by making enough for the debt service, taxes, and upkeep. He suggests pulling the annual costs, such as clean-up after a tenant moves out or the property taxes, in monthly increments so you’re never accidentally spending what you need to pay the government. By focusing on pulling out your expenses first before you take your cashflow, you’ll save yourself quite a few headaches during your investing career.
When you’re trying to buy a property, it’s critical to create multiple offers. Just throwing cash at the problem will end up costing you quite a bit in the end.
However, if the seller wants to retain control of the property so they know payments will be made, there are still a few options to create cash flow from the property:
Give the seller every opportunity to help you make money.
Holding costs are CRITICAL when calculating the total cost of a potential deal. These numbers have to be considered from the day you acquire the property until the day you sell it.
The traveling gurus and flashy seminars that crow about their students’ big checks in the tens of thousands never tell you about how much of that was actually eaten away by holding costs while they held it. Here are a few of the holding costs you need to consider:
Today Larry walks us through the ten essentials to creating a winning real estate deal. The key points he covers are:
A deal isn’t a deal until the repair costs of the property are taken into account. No matter what kind of investing you do, you need to have a quality team of contractors and tradesmen on speed dial before you purchase any asset. You also need to be taking a turn around the property yourself and comparing it to the neighbors, in terms of aesthetics, amenities, and overall condition.
Before you even go inside the house to speak with the owner, take a look at the outside. How does the roof compare to the neighborhood? Is the siding in good condition? Are there any visible foundation weaknesses? Do the windows need to be replaced? Take inventory of this before you step a single step inside that door.
Once you’re inside the house, start taking stock of the interior: What is the condition of the walls? What materials are they constructed from? Is there mold or mildew, indicating a moisture problem coming from the roof? Is the wiring out of date and needs updating? This is only a small sampling of the many possible repairs and issues that can come up in any home in any area. Make sure you properly vet all the costs to repair and update the house or property to ensure you get top dollar either in rent or when you resell the property down the road.
Where can you find reputable contractors and tradesmen? Ask at your local REIA, your mentor, or other fellow investors. Those in your local market should know who does the best quality work that will bring you the best return on your investment.
Bottom line: Don’t be afraid to ask for help.
Real Estate Investor Associations (REIAs) seem like the ideal place for beginning investors to learn the fundamentals. However, these associations function more as a networking space where most of the attendees are significantly less successful than they appear. These members are desperately trying to find a deal and not concerned with educating themselves or you. That’s why you’re better off attending quality, specialized training and finding yourself a knowledgeable mentor.
Finding good quality education and mentors is a challenge in itself, however. There are plenty of “drive-through” gurus who come into town like the circus and are just as flamboyant. They promise the pie in the sky and expect you to pay with the stars. Many of these gurus aren’t really training investors; they’re training worker ants to go out and find deals for them to continue to fill their pockets.
Should you pay a mentor? Absolutely; an educator who has been in the field and is giving their time to help you has earned that right to be compensated for that time. However, it certainly shouldn’t cost a small fortune. These mentors, like Larry, are happy to share their time as a way to give back to the investing community. They will teach you by walking you through the process, and you will learn by actually doing. This is your key to success in our industry and our business.
Price is not the deciding factor in any deal, no matter what the gurus out there try to tell you. Basing your buying decisions on price will end up costing you much more than you thought you saved in the end. By thinking beyond price in your deals and not considering the critical factors such as holding costs, you will get burned.
Focusing on price can also tempt you into markets you don’t understand. There are plenty of companies who will crow about the profits they can make you when you invest in their market, but how do they make that profit? What is the house like? What kind of neighborhood is it? Without the ability to see the property yourself, you’re driving blind into potential disaster.