Today I want to talk to you about making sure you work with the right attorneys and get the right information when it comes to land trusts. Many of my land trust students have gone to attorneys and been told that the strategy is illegal. This is simply not true. Most attorneys are not familiar with land trusts and have very little experience with trusts in general.
Land trusts are legal in every state. They aren’t a special document or exception to the law, they’re a completely legal strategy to protect yourself and your assets.
We use land trusts for many reasons, but one of the biggest ones is for privacy and estate planning. When you pass away, you can help your family avoid the hassle of probate by putting your properties in land trusts. It also keeps you out of the public eye and away from those looking to file nuisance lawsuits for a quick payday.
I once bought 10 houses in 1 week. I paid a paralegal $600 for each land trust, but when I reviewed the paperwork, I realized they were exactly the same contract. The only thing that changed was the name of the property. So why did I pay someone $6,000 when I was able to easily make the new trusts myself on my own computer?
At my land trust boot camps, I give you all the documentation you need to create your trust. All you need to do is fill in the information about your own property and you’re good to go. You don’t need to pay what I did for an attorney or paralegal to create trusts for you.
A land trust is simply a contract. Contracts are legal under our country’s commonwealth law. This is the law that came over with the Pilgrims from England.
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Today I want to talk about something that I fell prey to many years ago. I’ve talked about how I started in the business with no money, no credit, and no experience. I made a LOT of mistakes, and today I’ll tell you about some of my biggest ones.
In 1986, I bought an 8-cabin lakeside resort. I had no idea how to really research or analyze properties to see if they were a good deal. I talked with the seller and they agreed to give me the property on terms. I asked for a list of guests that came through, the expenses, and the income. I believed what the seller told me and pretty soon, I realized some of the info he gave me wasn’t true, and I was in deep.
The guest list the seller gave me wasn’t for guests coming through for a year, it was for the entire time the property had been open. He fudged the numbers for the expenses and lied about how much maintenance was required to keep it running. That property ended up being a huge struggle for my wife and I to maintain, but we did keep it for 10 years.
From those mistakes I made, I learned that I needed to do a much better job of researching any property I was thinking about buying. I thought I had learned this lesson, but another property I bought in 1990 showed I was wrong.
My wife wanted to buy a convenience store during this time, and I thought I knew exactly what we needed to know to buy it. The seller’s CPA provided the numbers and I thought I was set, so we purchased the store. The problem is, even though we made more sales than the previous owner, our profit margin was nothing like what the seller had presented. We struggled with that store for 2 years, with my wife working in the store herself because we couldn’t find quality help.
Don’t believe what sellers tell you when they need to sell a property. When it comes time for the numbers, ask the seller for 4 to 5 years worth of tax returns so you can see the truth.
Don’t try to save the world. You’re already in the business of helping people, but if you try to help every single person you come across, you’ll simply replace them in the quicksand. You can help more people by keeping your business successful than if you’re doing bad deal after bad deal because your heartstrings are tugged.
Make sure to visit my website, LarryHarbolt.com, for all your real estate investing education needs.
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Good Luck and Happy Investing!
I talk to students and other people all the time about the market. So many people are discouraged because they think there are not enough opportunities out there or they’re getting snatched up before they can act. I had this happen to me recently on an 11 unit building I was working to get for another investor.
When the economy is good, it’s a seller’s market. This means the prices are going up, sellers are less flexible, and the money is flowing into the economy, which means more investors. In a bad economy, it’s a buyer’s market. The money isn’t flowing as freely and it means sellers are more willing to negotiate in order to get the deal done.
When I started out as a real estate investor, I had no money, no credit, and was unemployed a lot. I had no money because all the money I did bring in was for my wife and my six kids, who were all selfish enough to want to eat three meals a day.
I got into real estate in that environment with no training, and I learned many lessons the HARD way. I want to share some of these lessons with you today, because many of you might be struggling with these same issues today.
When I started in real estate, I felt completely out of my depth. I had no idea how to make an offer, analyze a property, or even understood the process. I just knew I wanted to buy houses! Over the years I managed to put together some amazing deals, even without formal training, because I HAD to. Every investor is going to make mistakes, but it is helpful to learn from someone who has already made quite a few so you can learn from them and avoid them yourself.
Here are some of the lessons I learned the hard way:
Some sellers want checks coming in every month instead of cash, like another social security check to help them in their old age. That check could mean the difference between three meals a day or crucial medication for many people.
Others don’t want cash because they know they’ll burn through it; some people just can’t handle large lumps of sums of cash. You also don’t need a large down payment for many properties. Don’t assume every seller wants cash; they have to use the cash for SOMETHING, so find out what it is.
Back in the 1990s, I bought a convenience store. I asked the seller for the numbers: income, expenses, etc. He gave me numbers but they were WAY off, and it ended up being a real struggle to keep that store going.
Bottom line: don’t take anyone’s word for it, DO YOUR RESEARCH.
When I came to Florida, I started working with a real estate agent, because I didn’t understand this new market. He convinced me to only look at lower price properties and to make offers on every property in that price range at 50% of the asking price. I didn’t buy many properties with this strategy, but one I did ended up costing me quite a bit. It had a lot of problems, including a $5,000 assessment for hooking up the residents to the city sewer line. In the end, I lost money on that house.
Just because you buy at a discount, it doesn’t guarantee you’ll make a profit.
Here’s a secret: instead of a down payment, use that money to pre-pay several months of mortgage payments. If I don’t have to make a payment for months and get a tenant in there, I can build that money back up pretty quick.
If you don’t have the property, ask for a moratorium on the payments or defer the first payment so you have time to fix up the property first.
Let them know that you’re working on getting things straightened out; don’t avoid them. Keep in contact so they know you’re not blowing them off.
If you don’t know what you’re doing and the other person is in the same boat, then you just have two people who don’t know what they’re doing. Most likely, you’ll end up doing all the work and the other person will still want half of the profits. All three of my partnerships didn’t work out, and now I know I could have done it by myself because that’s what I ended up doing anyway!
You can use things like cars, boats, or anything else instead of cash in a deal. If the seller will accept it, it’s fair play. Find out what the seller wants instead of cash and trade it to make an amazing deal. Bartering is still alive and well in today’s market, so use it to your advantage.
Don’t be a fool; be a THINKER.
Make sure to visit my website, LarryHarbolt.com, for all your real estate investing education needs.
Also, please make sure you leave me a review on your podcast player so I know I’m continuing to provide you with quality content.
Good Luck and Happy Investing!
I've been seeing an issue recently with some of my investing students: they’re bringing deals to me to look over as we work together, and many of these deals have no way of making money. These students are just desperate to either put a deal in their pocket, or more often, they feel deeply for the seller and want to help them.
The problem is, even though what we do as investors is a service-based business, we can’t sacrifice our own livelihood to help every seller we come across.
One of my pet peeves is when people can’t pull themselves out of their own head to think big about their business. I came from a family of dairy farmers and we didn’t have a lot of money. But I developed a mentality, despite my surroundings in rural Michigan, of thinking bigger than the people around me
Today I want to talk about a conversation I had recently with a stock market enthusiast. They were dumbfounded when I told them I didn’t invest in stocks and had no interest in doing so. My father lost money in the stock market during the Great Depression and lost almost $100,000 OVERNIGHT. The "expert" I talked with insisted stocks were going up and up and up, but markets eventually correct themselves.
Today, I want to talk about something critical to your financial future: the time value of money. What this means is that a dollar today is more important than a dollar in your future. A dollar today can help you purchase what you need right now, as opposed to the dollar coming later.
If you want to have any success in real estate investing, you need to listen up to today’s episode. Recently I went to the mall to pick some things up, and as I was walking across the street from the parking lot to go inside, a car came at me. It was a younger person, and instead of waiting for me to cross, they just swerved around me and high-tailed it out of there. They didn’t say “Excuse me,” “Pardon me”, or even “Go to hell.”
What amazing manners!
If you don’t have manners, you will get NOWHERE with sellers. When you sit down with people to talk with them, if you don’t have manners they will already be closed off to you. It doesn’t matter what age you are, you need to understand basic etiquette to win their approval. It’s about being mindful of their feelings and showing respect for them inviting you into your home and of their time.
Another big issue of etiquette: if you are going to be late, make sure you call and let them know that you’ll be late. This is showing that you respect the fact they took time out of their day to talk with you. They didn’t HAVE to do this, but they liked you enough to do it. Make sure you don’t disappoint them.
Without basic manners, your negotiation is going to go straight down the toilet. It’s not hard to be nice and show courtesy, and it’ll get you FAR in this industry.
Make sure you visit my website, LarryHarbolt.com, for all your real estate investing education needs.
Good Luck and Happy Investing!
Today’s episode is a little something different for all of you. I’ve got my good friend Tyler Sheff in the studio today with me. For those of you who don’t know, Tyler at Cash Flow Guys produces this podcast, The Real Deal Podcast with Larry Harbolt. We’ve been working together for about a year and found we had a mutual passion for helping people in our market. Tyler and I are both non-gurus who want to educate the real estate investing community honestly, without the sketchy bullshit many are putting out there today. I've been investing for 38 years, almost FOUR DECADES. There’s not a whole lot I haven’t seen yet!
Today I'd like to talk about an issue with real estate investors that I hear a lot about: how to get their properties free and clear as soon as possible. I, personally, don't care as much about this, as long as the properties cash flow every time. My tenants are paying for the debt service (the mortgage) on the property by paying rent every month.
One of my favorite teaching moments was telling a group of young entrepreneurs that I loved being in a business where I could study 24 hours a day, 7 days a week, and never know it all. They were horrified, but it’s the truth: you can’t learn everything about real estate in an instant. There’s just too much.
Today we’re going back to the basics: what you need to create your plan and get started in real estate investing. I’m going to walk you through what you need to accomplish in the next 30 days to get you on your way to making money in this business.
More and more people are getting into the market of real estate investing, but as the investing base grows, so does the number of “new” gurus. A lot of these gurus have a few deals under their belt and are pushing their students into getting started as a wholesaler. There’s nothing wrong with being a wholesaler, but the misleading part is the idea that wholesalers will make bank in this area of investing.
A wholesaler is someone who gets a property under contract, then turns around and sells that contract to another investor for a profit. They are being paid for putting the deal together, and once they get their profit, they’re out of the deal entirely. Sometimes a wholesaler will “pre-hab”, such as painting, landscaping, or putting on a new roof, to increase the value for the new investor who will take the contract over. I, personally, do not do “pre-habbing”; if I don’t want a property, I don’t want any more money than necessary tied up in it so I can assign the contract and move on to a deal I DO want.
If you’re buying, selling, and rehabbing a property, that is NOT wholesaling. Wholesaling is meant to be a way to get cash to pay your bills, build capital, or make a profit on a property you don’t want for yourself. There is ALWAYS a cost to using money, no matter how you use it. Guaranteed.
If you need help to get started in real estate, check out my online courses, the Cashflow Blueprint and the Cashflow Foundations. You can find them at my website, LarryHarbolt.com.
Good Luck and Happy Investing.
Today I’d like to talk with you about something I think a lot of people are failing at in their investing business: naming their land trusts. Please note: I am NOT an attorney, but I do present a live event a few times a year where I teach people how to protect their real estate assets by placing them in a land trust.
I believe every investor who plans on keeping a property long-term should learn how to create a land trust. Once you know how, it takes very little time, effort, and money to put one together. The land trust can protect you from bottom-feeders, but it will NOT excuse you from paying your taxes to Uncle Sam.
There are two reasons to have your property in a land trust:
If you’d like to attend my next Land Trust event, visit LarryHarbolt.com/events/category/bootcamps/ for all of my upcoming bootcamps and live events.
Don’t forget to visit me at LarryHarbolt.com for all your real estate investing education needs.
Today, I want to talk about my fears with investing in real estate, not that I have very many. But recently I was asked what my great fear was about the economy and the real estate market going into a future real estate crash like we experienced in 2008. I don't know if that's going to happen. I think we're seeing places going up continuously just like we did in 2005, 2006 and 2007. Money is available. Most people can get some type of financing. There is a shortage of properties in the MLS. I don't know if it's going to be like we had in 2008 but is there going to be a crash?
In this episode Larry discusses the importance of buy and hold and being a landlord as compared to being a hamster on a wheel working as a “wholesaler”.
With that said; also think of this as planting a garden, your properties are the seeds.
The tenants got to work for you each month in order to bring you money, this should be remembered when making decisions on how they need to be treated. Larry believes in treating his tenants like “clients”.
Many new investors believe that they themselves need to be able to “afford” the mortgage which is simply not true. Landlord mindset should dictate that the tenants pay your mortgage, not you.
Larry also discusses how the tenants that occupy all of his properties have provided his retirement income while at the same time paying off the loans on these properties which in turn creates equity in them.
Welcome again, real estate friends! Today I’d like to talk with you about the Six Weakest Points of Investing; faux pas made by beginner and experienced investors alike. This is simply because of a lack of understanding of why: why you’re looking at the deal, why you’re interested in buying it, and why it could be profitable.
Don’t forget to visit me at LarryHarbolt.com for all your real estate investing educational needs.
Good Luck and Happy Investing!
I’ve said it once and I’ll say it again: you have to know your numbers to be successful in this business. Here are the 12 most common mistakes I see investors make when beginning to analyze a deal:
Don’t forget to visit us at LarryHarbolt.com for all your real estate investing education needs.
Good Luck and Happy Investing!
One of the KEY tips I can give any real estate investor, new or seasoned, is to LEARN ABOUT YOUR MARKET. It doesn’t matter where you live or where you’re investing, you’re going to adjust and adapt. This is going to help you create your own market and eliminate your competition.
People always focus on “buyer’s markets, seller’s markets,” etc. These aren’t really factors in your investments if you understand your market and take the time to talk with the seller. For example, a flip can be one of the riskiest investments out there if you don’t understand the area. Flipping without all the facts can lead to market speculation, which is DANGEROUS. Stock marketers speculate, but investors shouldn’t; otherwise you’ll lose your shirt.
Make sure to head over to LarryHarbolt.com for all your real estate education needs.
And don’t forget to fill out my quick survey and let me know what you want to learn at LarryHarbolt.com/CheatSheet.
Good Luck and Happy Investing!
We're continuing from our last podcast episode, where we discussed how you can create a marketable promissory note that can then be sold for cash. This is a lifesaver for the investor short on cash, and it's all based on fulfilling your promises as a business person.
In every seller financing transaction you'll ever do in your investing career, you'll need to understand the concept of clauses. There are specific ones we need to include in our Purchase Agreement and in the final note. One of the most important is the "Right to Refusal" clause.
The "Right to Refusal" clause says that if the holder of the note decides to sell that note to someone else for a discount, they would have to contact YOU first. You would then be given the opportunity to purchase the note at the discounted price, or refuse. If you can come up with the money, why not exercise your right?
Another crucial clause is the "Exculpatory Clause". This one isn't as well known and you may not meet too many gurus who even understand what it is. This clause allows you to purchase any property WITHOUT personal liability. The liability is limited to the property itself and will not extend to you. If you don't pay, then they simply take the property and can't come after you.
You also need to understand if you're a "Mortgage State" or a "Deed of Trust State". Depending on where you live, the standard deed will either be a mortgage or a deed of trust. Most investors like deed of trust based on how quickly they can make their money back. However, you can still make money in a mortgage state, but it will take more time.
This is only a few of the clauses you'll need to truly create a market all of your own. For a FREE download of sample documents, visit LarryHarbolt.com/ThinAir.
For all your real estate education needs, visit me at LarryHarbolt.com.