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Smart Real Estate Investing

Every good real estate deal represents thousands of dollars in potential wealth. Knowing about getting that wealth is the key to your success. Here's a quick joke to illustrate why you shouldn't believe everything you hear, even if it comes from a seemingly reliable source:

An elderly man stormed into his doctor’s office steaming mad.

 

“Doc, my new 22-year-old wife is expecting a baby. You performed my vasectomy 30 years ago, and I’m very upset right now.”

 

 “Let me tell you a story,” the doctor calmly replied.

 

 “A hunter once accidentally left the house with an umbrella instead of his rifle. Out of nowhere, a bear surprised him in the woods… so the hunter grabbed the umbrella, fired, and killed the bear.”

 

 “Impossible,” the old man said. “Someone else must have shot that bear.”

 

 “You got it,” the doctor replied.

 

There's an overwhelming number of systems, conferences, bootcamps and coaching programs available for investors.  So don’t be gullible!  Do your homework before making a sizeable investment in your real estate education.  Investing is not as easy as the experts claim.  Many so- called “gurus” prey on trusting novice investors who have cash to spend.  You too can be a successful investor if you work hard and stay focused.  Here are 5 steps you can take TODAY to build momentum in your investment business:

 

1. Go to a few investing seminars, but only a few.

2. Join a local REI club and get out there and NETWORK!
3. Get a mentor.

4. Identify your target market.
5. Put a marketing plan together.

 

Leave a comment about your experience with real estate education programs.  And don't forget to enter your email address above to subscribe to our blog.  You'll get all the latest news, tips and industry information on real estate investing.

 

Cherry Hill Major Rehab Part 3

Have you been following our Major Rehab Video Series?  If not, you're missing the complete overhaul of a Cherry Hill, NJ investment propery we purchased at the beginning of the summer.  Catch part one here and part two here.  The big reveal is coming soon, so stay tuned....

Private Lending Made Easy

We often get inquiries from investors having problems coming up with creative means of financing a property. "I made an offer on a bank-owned property, and now I'm trying to figure out a way to finance the deal without coming up with my own money. I have traditionally gone to banks, which I am trying to get away from doing. I have 3 weeks to come up with $100,000. The house needs $25,000 in repairs and will retail for $200,000.  Any suggestions?"

There are lots of ways to get money to buy real estate without going to a bank. In your case, we can eliminate several options–the common “owner financing” techniques like lease/options and land contracts–because the property is institutionally owned. So what you're looking for here is 3rd party financing that doesn't involve banks and which will be relatively quick and easy to get.

There are two possibilities. The first is to find a partner who wants to put up the money to buy and repair this deal in return for part of the profit. The other is to find a “private lender” who’d like to act as the bank, and finance the deal in return for a fixed return of 10%-15% interest on his money. Of the two, a private lender will give you more control over the deal and a higher overall profit.

A private lender is an individual who has funds in the bank or in a self-directed retirement plan that he’s willing to loan out for good, safe deals like yours. Now is a great time to start cultivating these folks: there’s an awful lot of money sitting around earning 2% because the owner is afraid to invest it in the stock market.

A private lender can act much more quickly than an institutional lender, because he doesn’t need to see reams of paperwork or process an application through an underwriter or board of directors. Most private lenders can close as quickly as they can get an appraisal on the property–and they don’t charge the fees, points, and closing costs your bank does. All you generally need to do to close with a private lender is to prove that the security for the loan–the property itself–is worth significantly more than the loan amount, that the title is clear and marketable (most private lenders do want you to buy a lender’s policy of title insurance for them at closing) and that the property is appropriately insured with the lender named as loss payee.

When you start asking your friends, family, and colleagues whether they’ve got $125,000 to loan out at 10-15% interest with a $200,000 property for security, you’ll be surprised at how many people you know who will jump at the chance for this kind of return. Start cultivating private lenders now–you may never have to use a bank to finance a property again.

At Interstate Properties, we are constantly looking for new private lenders.  The best way to get started is to first become a private lender.  Watch how it works and then buy a property yourself.  Call us for more details or leave a comment about your private lending experience.

Investment Property Feature of the Week: Reduced Buildable Lot in Deptford, NJ

 

193 Andaloro Way is a residential building lot, 50x150.   Needs a 10 foot frontage variance.   Existing house is a tear down.  Nice family neighborhood.  Property is in Deptford Twp. and has a Westville mailing address.  Call Pat Bowen (856-979-3484) or Dave Hargrave (856-625-2229) directly for more information.  
 

Purchase Price: $18,900

Taxes: $2,268

 

Watch Video Here

How to Cherry Pick Great Deals from Your Desk

The most successful investors sit in their desk chairs and "cherry pick" the very best deals from the very best leads that called them. They didn't chase after deals, they don't call agents, they don't call on FSBO signs – they relax, in full control knowing that their phone will ring several times each week with a great deal – worth $10,000 to $25,000 to them. How do they do it?  It's the secret "M" word that everyone says "oh yeah, I've heard of that", but rarely do investors do it well. The M word is: Marketing. Marketing. And more Marketing.

 

There are 3 simple key components to making your phone, or your answering service's phone ring with great deals. Every week.

1. Multi-prong approach. Diversify and have lots of small marketing techniques or campaigns going at once. For example, send out direct mail postcards, and do some bandit road signs, and do some doorknob flyers, a few small billboards, some Bankruptcy or pre-foreclosure leads and a newspaper ad. Do at least 2 or more of the above, so that when one technique slows down another is still bringing 'home the bacon'.

2. Have a lead script & formulas, so you can make a 'rough offer' right over the phone. You'll need a short script of questions to ask your incoming caller/sellers to figure out the details of their house & life situation. You'll also need some cheat sheet so you can make a quick guestimate of repairs and plug it into a proven formula to generate an approximate or rough offer—right over the phone. If the seller says 'yes or maybe', then go visit the house to firm it up and get the contract! If she says 'no', then try to overcome any objections OR move on to the next lead call – no time wasted on your part anymore, chasing bad leads all over town!

3. Repeat. Repeat. Repeat. Continue to implement your Step #1 stuff – repeatedly. Do your direct mail, flyers, signs, again and again and again. In the same areas.. Research has shown that it takes the average consumer 5 impressions, or viewing of your marketing before they start to feel as if they know you and trust you. That's when they'll call you with a slam-dunk deal, already pre-disposed to doing business with YOU!

Implement those 3 steps above and we guarantee you you'll have hot leads flowing right into your phone and you can make offers right back over the phone, so that you can cherry pick BIG money makers while you sit at your desk. This is how we bought dozens of houses without running ourselves crazy, and still having time for our family, friends, relaxing, vacations, etc. You can too!

Cherry Hill Rehab Project Part 2

Here is the second part in our Major Rehab series.  You can see the progress made in just a few short weeks... 

Investment Property 101: Cherry Hill Major Rehab, Part 1

In this weekly series, we'll take you through the actual renovation of an investment property we purchased in Cherry Hill, NJ.  Yes, that is fire dripping from one of the bedroom walls.  This is ground zero of the rehab process.  Take a look.....

The Two Most Powerful Words In Any Negotiation

How many times have you put in all the hard work to find a motivated seller only to walk away from the negotiation knowing you could have done better? You did all your homework and due diligence before you met with the seller, but still you didn’t get the best deal possible.

I’ve watched hundreds of investors negotiate deals and find that almost all of them (except the most successful ones) chase the deal in the closing stages of the negotiation. This means that they give the final power to say yes or no to a deal over to the seller. These investors leave the negotiating table knowing that they’ve missed out on thousands in profits, but not knowing what they could have done differently. If only they knew the two most powerful words in any negotiation: "What if?" "What if" is so powerful because it commits you to nothing and commits the other side to everything.

For example, imagine you are negotiating a lease option on a nice 3-bedroom house. You’ve done most of your negotiating and your in the final stages of closing the deal. Rather than making an "offer" like "Mr. Seller, I’ll pay you x dollars for your house, instead ask a what if question. "Mr. Seller, I don’t know if I could do this, but what if I were able to pay you x dollars for your house, is that something that would work for you or probably not?"

Notice the subtle difference between these two ways of making your offer. When you make a formal offer you have given all control over the deal to the other party. You’ve made an offer; they get to say yes or no. When you qualify your offer using the "what if" phrasing you aren’t really making a formal offer. Yet once the seller agrees to your what if offer, the seller has committed himself to saying yes! This is your way of never making an offer until the seller has agreed to accept it.

Think of it this way: Imagine you the Investor are a baseball pitcher. The seller is the batter who is waiting for you to pitch the baseball (the "offer".) Once you as the pitcher have thrown the ball (i.e. made your offer) you have given all control over the next step to the batter (i.e. seller.) The batter can either choose to swing or not. Wouldn’t it be nice to be able to fake throw the pitch to see if the seller was going to swing before you ever released your offer? That’s exactly what using this phrasing does for you, it commits the seller to swing for your offer before you ever officially make it. Only when the seller says yes to your “what if” offer do you follow-up to close the deal.

To close the deal after the seller has agreed to your “what if” offer try a phrase like, "So if I am hearing you right, Mr. Seller, what you want me to do is to make you payments for 5 years and then cash you out at the $275,000 we discussed, is that right?  It is. Well I’m not sure if I could do that, but if I could, are you sure that would really work for you?" Notice how you still continue to play the reluctant buyer right until the very end and the agreement is finalized on paper. You can even play out one more powerful technique here at the end to make sure the deal closes with higher authority.

"Now Mr. Seller I want to make sure that before I ask my partner to go along with this deal that you’re sure this a fit for you and you want to do this deal. So you’re absolutely sure that you feel this is a win-win deal? OK, in that case let’s put what we’ve just agreed to down on paper." And now you get to pull out your agreement and finish up the detail work. Put this simple yet highly effective strategy to work in your next negotiation and you’re sure to get a better deal.

Investment Property Feature of the Week: Cosmetic Rehab in Clementon, NJ

 

Watch Video Here

 

59 Chews Landing Road is a 4/5 bedroom 1 bath home has great potential and needs minor cosmetic work only.  Sheetrock and carpets should be replaced in a few rooms. Has finished walk up attic and partially finished basement. Is vacant on lockbox, call Pat (856-979-3484) or Dave (856-625-2229) directly for lockbox number.  

 

Purchase Price: $88,000

Rehab: $22,000
ARV: $175,000

Taxes: $4,507

Five Ways to Profit from Every Meeting with a Seller

You can make a profit from the deals you find, even when the deals aren't a fit for your real estate business. Here are five tips to make sure you get paid for your time.

1. Sign Up the Deal!

 

This is the most obvious way to profit from every appointment you make.

 

2. Turn Your "Junk" Into Gold

 

Take the people you meet who just are not a fit for you and refer them to people in your network who can profit by the referral. This builds value into your referral network. For example: You meet with a seller who really would do better to refinance the house. You simply say, "I can see it's not a fit for me to buy this house. Your best option really is for you to refinance the property. Here's the number of a great mortgage broker I know [give him the number], and if I remember, I'll ask her to give you a call next week to see if she can help out." Then pass the seller's name and phone number on to your mortgage broker. Over time this will encourage your mortgage broker contact to pass leads to you, such as buyers whose loan fell through. There is a motivated seller now!

 

3. Get Information on Local Market Conditions

Use the meeting to get information for the resale market and for the rental market. Find out:

• What are rental and resale prices like?

• How long are properties staying on the market?

• What types of properties are most in demand and what types are least in demand?

• What is the perceived market conditions according to the sellers?

4. Learn From the Appointment

This is the ultimate way to leverage yourself. What went well with the appointment? What will you do differently next time as a result of what you learned on this appointment? Make sure you take five minutes and debrief yourself in writing!

5. Future Deals

Follow-up, follow-up, and follow-up with all of these sellers.