Document 429113

Volume 17 Issue 11
November, 2014
Our Next General Meeting: Monday, November 17, 2014
6:30 pm. Registration; Pre-meetings,
6:55 pm Meet the Vendors
7:10 pm. Announcements from the Board.
Metropolitan Real Estate & Investor's Association
7:30 pm Featured Speaker Dave Corsi
“What every Real Estate Investor needs to know about Foreclosure Investing”
Are you looking to invest in Foreclosures? As the number of
foreclosures in NJ continues to climb, there will be lots of
opportunity for the savvy investor.
The NJ Foreclosure market will be heating up. The wise
investor will need to know how to navigate the NJ and
federal laws that govern the foreclosure process.
NJ Foreclosure Statutes
Timeline of the NJ Foreclosure Process
The different investing opportunities:
Sheriff Sale
Redemption Period
How to avoid the legal pitfalls of being a “Foreclosure Rescue
a Member of:
Inside This Issue
3 President’s Desk: Why is the Grass Always Greener on the Other Side by Phyllis Rockower
4 Taxes: The Number One Strategy to Save Thousands of $ on your Business Taxes by Michael Plaks
5 Asset Protection: Seven Reasons to Use Land Trusts by William Bronchick, Esq.
6 Beginner’s: Will You Survive the First 12 Months? by Jason Hanson
7 Beginner’s: Seven Essential Tips for Beginning Investors by William Bronchick, Esq.
8 Appraising: The Average Appraisal and the Flip by David Whisnant, Esq.
10 Commercial R. E.: Tips for Negotiating Your Commercial Property Deal by Dave Lindahl
11 Credit: Ten Most Common Credit Repair Mistakes and How to Avoid Them by Brian Diez
12 Dealmaking: Structuring an Intelligent Offer in a Stupid Economy by Gregory Pinneo
15 Entities: Single-Member LLC and the Importance of January 1, 2009 by Dyches Boddiford
16 Environmental: Lead Hazards in Housing: the Risk of Salvaged Building Components by FHCO Staff
17 Subject To: The Secret to Protecting Yourself when Doing Subject to Transactions by Sean Flanagan
18 Short Sales: Shadow Inventory? by Mike Jacka
19 Rehab: Rehab Scheduling by David Whisnant, Esq.
20 Finding Deals: Distressed Property; is it a Positive Investment? by Richard Bleuze
21 Finding Deals: The Secret to Finding Motivated Sellers by Bill Cook
22 Foreclosures: Finding Foreclosures by Larry Goins
23 Insurance: What’s the Deal with Title Insurance Anyway? by Larry Goins
24 Inspections: A Home Inspection is an Investment, Not an Expense by Stephen Ruback
26 Partnerships: Considering A Partner In Business – Here’s A Few Tips by William Bronchick, Esq.
27 Commercial R.E.: The Most Profitable Investment in Real Estate by Dave Lindahl
28 Commissions: What to Look for with a Flat Fee MLS Broker by Rob Arnold
30 Credit: Credit Bureau Basics by Wendy Polisi
31 Dealmaking: Opportunities are Found; Deals are Structured by Bill Cook
32 Partnerships: Partnering on Real Estate Deals for the Right Reasons by Jay DeCima
34 The Top Five Reasons Landlords are Afraid to Evict by John Nuzzolese
35 About Co-Signers
36 Why are You a Landlord by
39 It’s Not My Job by Robert L. Cain
41 Appliance Agreement Form by John Nuzzolese
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November 2014
Why Is The Grass Always Greener On The Other Side?
by Phyllis Rockower
Have you ever wondered WHY the grass is always greener on the other side?
Why does what the other person has seem to be so much better than what you're stuck with?
* A better house.
* A faster car.
* A prettier wife.
* Better behaved kids.
* Much more money.
* A dream lifestyle.
And the list goes on and on...
Is it their luck?
Or something else entirely?
Sorry to burst your bubble, but here's the truth:
Their grass is greener because it is fertilized, watered, and cared for.
They focus on it and make it happen.
You don't.
Change that, and you'll change everything.
Start taking care of your business and life and you'll get better results too.
Proper care and feeding is VERY important.
So water it!
Just because grass can exist without much water doesn't mean that it should.
If you want it to look like your neighbor's, then you need to care for it like they do and water it frequently.
Then you'll have thick, healthy, greener grass too.
Get it?
Sometimes things really are that simple. It just needs to be pointed out to you.
The author is the President and Founder of REIC of LA. Reprinted by Permission from the R.E.I.C. of
L.A. News. March 2013. Published by the Real Estate Investors Club of Los Angeles. Phone: 310-792-6404
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November 2014
The Number One Strategy To Save Thousands Of Dollars On Your Business Taxes
by Michael Plaks Posted November 1, 2013
As an investor or business owner, you are always looking for ways to pay less taxes, right? Well, you may be missing
on the most important one of all. It’s simple, it’s right in front of you, and it can save you thousands of dollars! It is
called keeping good records.
What does it have to do with taxes? Everything. Let’s take an easy example. Your beloved non-paying tenant finally
moved out, leaving behind some innovative Crayola artwork all over your walls. In fact, you’re lucky he did leave
the walls behind. Now you must repaint the whole place. You spent almost two days meeting with painters, but the
lowest bid was $1,400. Finally you got a guy asking $1,200. Another half-hour of bargaining later, he came down to
$1,000 – but it must be in cash. Deal!
You do feel good about the deal. You just saved yourself $400, so it was time well spent. Despite your worries, the
guy did show up, and his work turned out decent for the price. You give him an envelope with ten $100 bills, and
it’s finally Miller time.
Ten months later, you bring your shoebox full of receipts to your CPA. Did you remember about that $1,000 cash
job which had no receipt? Oops. Now let’s look at the cost of this oops, shall we? $1,000 worth of labor is missing
from your deductions. In other words, your taxable income got $1,000 too high. On a typical tax return, this creates
$250 extra tax. In other words, you spent several hours trying to save $400 on labor, and then you flushed $250 of
your savings down the toilet. (If you feel that $250 donated to the IRS is money well spent – please accept my
It gets worse. My first example was a make-ready between tenants. What if this painting job was done on a flip
house you’re preparing to sell? Well, your extra tax on the forgotten $1,000 labor could easily be $400 instead of
$250. Yes, you heard it right: the entire savings of $400 that you so diligently negotiated is out the window. How
does it feel now?
And that was with “just” one thousand dollars. If you misplace $10,000 worth of receipts (and I have seen records
worse than that) – the potential cost of your sloppiness is a whooping $4,000. This is four thousand dollars of your
money, folks!
So, before you hire a lawyer to set up fancy tax-saving corporations, before you invest in manuals on creative real
estate taxation, before you take a QuickBooks class – take care of the number one tax-saving strategy: Keep Good
Reprinted courtesy of Michael Plaks. Visit The information and opinions presented in the
above article are general in nature, not intended to address specific tax situation and/or to substitute for
professional consultation, and shall not be considered legal advice. Email: [email protected] or call 713721-3321 The author is a Houston-based accountant, working exclusively with real estate investors. He is a federally
licensed Enrolled Agent who can represent his clients in their dealings with the IRS.
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November 2014
Seven Reasons to Use Land Trusts
by William Bronchick, Esq
The land trust is a very powerful tool for the savvy real estate investor. A land trust is a revocable, living trust used
specifically for holding title to real estate. Each property is titled in a separate trust, affording maximum privacy and
Here are seven reasons to use land trust for titling property to real estate.
1. Privacy. In today's information age, anyone with an internet connection can look up your ownership of real estate.
Privacy is extremely important to most people who don't want others knowing what they own. For example, if you own
several properties within a city that has strict code enforcement, you could end up being hauled into court for too many
violations, even minor ones. Having your real estate titled in land trusts makes it difficult for city code enforcement to find
who the owner is, since the trust agreement is not public record for everyone to see.
2. Protection from liens. Real estate titled in a trust name is not subject to liens against the beneficiary of the trust. For
example, if you are dealing with a seller in foreclosure, a judgment holder or the IRS can file a claim against the property in
the name of the seller. If the property is titled into trust, the personal judgments or liens of the seller will not attach to the
3. Protection from title claims. If you sign a warranty deed in your own name, you are subject to potential title claims
against you if there is a problem with title to the property. For example, a lien filed without your knowledge could result in
liability against you, even if you purchased title insurance. A land trust in your place as seller will protect you personally
against many types of title claims because the claim will be limited to the trust. If the trust already sold the property, it has no
assets and thus limits your exposure to title claims.
4. Discouraging Litigation. Let's face it, people tend to only sue others who appear to have money. Attorneys who work
on contingency are only likely to take cases which they can not only win, but collect, since their fee is based on collection. If
your properties are hard to find, you will appear "broke" and less worth suing. Even if a potential plaintiff thinks you have
assets, the difficult prospect of finding and attaching these assets will discourage litigtation against you.
5. Protection from HOA Claims When you take title to a property in a homeowner's association (HOA), you become
personally liable for all dues and assessments. This means if you buy a condo in your own name and the association asseses
an amount due, they can place a lien on the property and/or sue you PERSONALLY for the obligation! Don't take title in
your name in an HOA, but instead take title in a land trust so that the trust itself (and thus the property) will be the sole
recourse for the homeowner's association's debts.
6. Making contracts assignable. The ownership of a land trust (called the "beneficial interest") is assignable, similar to the
way stock in a corporation is assignable. Once property is title in trust, the beneficiary of the trust can be changed without
changing title to the property. This can be very advantageous in the case of a real estate contract that is non-assignable, such
as in the case of a bank-owned or HUD property. Instead of making your offer in your own name, make the offer in the
name of a land trust, then assign your itnerest in the land trust to a third party.
7. Making Loans "Assumable". A non-assumable loan can become effectively assumed by using a land trust. The seller
transfers title into a land trust, with himself as beneficiary. This transfer does not trigger the due-on-sale clause of the
mortgage. After the fact, he transfers his beneficial interest to you. This latter transaction does trigger the due-on-sale, but
such transfer does not come to the attention of the lender because it is not recorded anywhere in public records. This
effectively makes a non-assumable loan "assumable".
As you can see there are many creative and effective uses for the land trust, limited only by your imagination! Reprinted by
Permission. Visit or call 1-888-587-3253. The author, CEO of Legalwiz Publications, is a nationally known
attorney, author, entrepreneur and speaker. He has been practicing law since 1990, having been involved in over 700
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November 2014
Will You Survive The First 12 Months?
by Jason Hanson August 12, 2008
In theory, this business is easy. Just do some marketing, buy some houses, and make millions before you know it.
Of course, we all know theory is a bunch of B.S. This business is tough and there is plenty of evidence to prove it.
Few people achieve millionaire status or even survive the first 12 months. So how do you survive the first 12
months? Well, I am going to give you the "magic" pill (that's not really magic at all).
The "magic" pill is to just keep plugging along with the end goal in mind. I remember when I first started in
this business, I would attend all of the real estate investor meetings and ask all of the successful folks how they did
it. What was their secret? Their secret was that they worked hard, never gave up and were consistently marketing.
That is my secret too.
This business certainly does not take any genius or above average intelligence. It takes someone who can look
themselves in the mirror and tell themselves that they will never quit, despite all obstacles.
A while back I was out to lunch with an investor friend of mine who was having some tough times with his
business. I asked him what he was going to do and he told me "I am going to keep moving, I looked at the
alternative. The alternative is spending the next 30 years in a cubicle, so right now things really aren't that bad."
I thought that was such a profound statement. Even if you want to quit this business (which we all do at times,
especially in the beginning-I wanted to quit at least once a month) look at the alternative if you do quit. You will be
doing the same job, getting the same results, and you will not be creating a strong financial future for yourself. Even
if you don't want to build a real estate empire, simply buying a few houses will make you a millionaire and give you a
very comfortable retirement.
So when self-doubt creeps in (and it will) and the devil is on your shoulder trying to get you to quit, do the
1. Read the classics "Think and Grow Rich" by Napoleon Hill and "The Magic of Thinking Big" by David
2. Look at the big picture and see yourself 10 years from now with all of your houses and a huge confident smile on
your face.
3. Call your mentor, your friend, or whomever and let them give you some words of encouragement.
4. Remember "Quitters never win, and winners never quit"
If I could reach through my computer and shake some sense into you when you were trying to quit, I would. I hate
to see people quit, especially when I know anyone can do this business. On the flip side, as I always tell my students,
because most people will quit this business, there never really is any competition at the top.
So keep plugging along, read positive books and believe in yourself, because I do.
Reprinted by Permission. Jason R. Hanson is the founder of National Real Estate Investor Month, author
of "How to Build a Real Estate Empire" and mentor to students all across America. Call 800-865-1702 or
visit . Copyright © 2004-2014 BiggerPockets Inc. All Rights Reserved.
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Seven Essential Tips for Beginning Investors
by William Bronchick, Esq.
Whether you are new to real estate, or have reached a "plateau", the following will help "jump-start" your career.
1) Surround Yourself With Like-Minded People
"Creative" real estate is non-traditional, which means that most people don't do it this way. Thus, most people you speak with will
tell you it won't work. If you tell them you heard it in a seminar or a course you bought from a late-night television "guru," they will
laugh and call you "gullible." Attorneys and other professionals will denounce it, because it sounds unusual. Keep in mind that these
people are either threatened by their own lack of success or are looking to protect their own butts.
The first thing you should do its join a local real estate association. A complete list can be found at These associations will help you keep your thoughts in the right place and prove to your
subconscious that it really does work, despite the opinions of the 20/20's, Dateline, 60 Minutes and other self- proclaimed
"consumer watchdogs."
2) Have a Team. Don't wait until you have a deal brewing to find the players. You need to find the following players on your
Attorney - preferably one that does real estate deals for himself as well as others
Title or Escrow Co - stay away from the big name companies; find one that caters to investors. Make sure they understand
double closings, land contracts etc.
Insurance Agent - find one that understands land contracts, landlords, etc
CPA - find one that is aggressive and owns real estate
Mortgage Broker - one that is savvy, creative and experienced with investors
3) Don't Talk to Unmotivated Sellers. This is the biggest mistake I see beginning investors make. They waste time talking to
sellers who are marginally motivated. Even worse, they drive by the house and look for comps without even talking to the seller first!
Never visit a house before speaking with the seller over the phone.
4) Be Persistent. Anyone who has ever been in sales will tell you that few deals are ever made on the first try. In fact, most deals
are made after contacting a prospect for the fourth or fifth time.
Let me give you an example. I contacted a person in who had a junker house he was thinking of selling. I met with him once and
made him an offer. He didn't like it. Did I stop there? No way! I called him twice a month for the last year. I mailed him two more
offers he rejected. We finally came to an accord and closed.
Have a follow up system like a salesman. I use Symantec ACT!. I allows me to schedule follow ups and keep a running history of
calls and conversations.
6) Keep Educated. "If you think education is expensive, try ignorance." I am not sure who first said it, but I give him credit. You
can lose more money with a mistake than you can learning how to avoid one. Even if you have been at this business for years, you
need to keep up with current trends and laws. As an attorney, I have to go to seminars every year. Some are boring, but I always
learn something that either makes me more income or prevents a lawsuit.
7) Have a Plan. Don't just wander around looking for deals. Have a plan. Make X number of phone calls a week. Spend $X a
month on advertising. Make X number of offers per week. Pass out X number of business cards each day. Eventually, you start to
get "lucky." I mean that facetiously, because luck always happens to those who are at the right place at the right time. If you plan and
persist, you get very "lucky." Reprinted by Permission. Visit or call 1-888-587-3253. The author, CEO of
Legalwiz Publications, is a nationally known attorney, author, entrepreneur and speaker. He has been practicing law
since 1990, having been involved in over 700 transactions.
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November 2014
The Average Appraisal And The Flip
by David Whisnant, Esq.
One of the strategies that is in almost every real estate course involves finding a torn-up and ugly property at a
cheap price, pay someone $300 to clean out the personal belongings of the prior owners (if you even do that much),
and then resell it to a homeowner as a "fixer-upper" with little or no work. This type of deal seems to benefit
everyone. You get a nice quick profit, and your buyer gets the house for a good price.
We love flips and we've done many. However, you should be aware of a potential hurdle that you have to get over
on this type of deal. With the information in this article, you can sell your ugly properties for more money, and to
the correct buyer.
If you are selling the home to homeowners, you generally will need the appraisal by their lender to say that the
house is in "average" condition. This means that the home doesn't have to be cosmetically perfect, but it also can't
be a total wreck. Nor can it have significant repairs that need to be made. Basically, it must be habitable, as a
reasonable person would view habitable.
The "average appraisal" requirement almost sunk a deal for us when we decided to flip a foreclosure that we
bought and sell it "as is." It needed $25,000 in work. With that work, it could be sold for $160,000. We paid in the
80's for the home, and priced the house for $120,000 "as is," receiving a contract the same day.
The house was not perfect by any stretch of the imagination. Problems with the house included broken windows,
rotten exterior wood, no light fixtures (all removed). Some interior doors were torn off their hinges, significant
holes in interior walls, and there was no carpet (only plywood floors) in the den.
We typically would market a home like this to another investor, but decided to try to retail it (selling to an owner
occupant). The house was in a really sought-after neighborhood, and we knew we could get top price for the
property from someone who was looking for a fixer-upper to live in.
The loan process was smooth, and the buyer qualified with no problem. The only condition left for getting the loan
was a satisfactory appraisal, which meant that the house had to be in "average condition" according to the lender.
The appraiser came out to the house and almost killed the deal. The appraiser graded the property as being in
"poor condition." His report stated that all broken glass had to be fixed, that the plywood floor had to be covered
with vinyl or carpet, that the exterior rotten wood had to be repaired and replaced, and the holes in the wall needed
to be patched and painted to match the surrounding walls. He also took issue with the dishwasher, which had been
kicked in, and the central air conditioning, which did not work.
His opinion, and thus that of the lender, was that all of these items had to be fixed before the loan could be made. I
thought this might have been a problem with this particular lender, that their requirements were more rigorous than
most. I called my personal mortgage broker and he confirmed that residential lenders required average condition as
a rule regardless of whether or not the house appraised for the loan value in its current condition.
Of course, I did not want to have to make all of these repairs, and sell if for only $120,000. If I was going to do all
of that, I might as well rehab the house and get the higher money that it would bring fixed up. The buyer whined
and complained, and stated that he couldn't see fixing these items at his expense prior to closing. He didn't want to
invest his time and effort in case the house couldn't close for some reason, which was reasonable.
(Continued on Next Page)
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(Continued from Previous Page)
To make a long story short, I decided that the other appraiser was too picky, and persuaded the lender to call a
different appraiser. Basically we reached the same result, but the a/c and dishwasher did not have to be fixed. We
did have to fix the windows, cover the plywood floors, and perform some of the other repairs. I offered to fix the
windows, and do half of the repairs if the buyer would install the carpet and handle some of the repairs. He agreed
to do so, and we closed.
You can make these deals work out, but do whatever needs to be done to get the average appraisal before putting it
on the market to flip. I know that I could have gotten more money for the property if I had done these repairs
before selling. If I had known this information at the time, it would have put an extra $10,000 in my pocket. It was a
good deal for me at the price it sold for, but doing the repairs would have made the process go quicker, and
probably persuaded some more timid "fixer uppers" to bite at a higher price.
Sometimes It's Better To Sell To an Investor, or Educate Your Buyer on the Right Type of Financing
When we have flip properties that really need a significant investment to get into acceptable condition for a lender's
appraiser, these generally need to go to investors. If you're going to take the time to fix a long list of items, you
might as well finish the job and sell it as a rehabbed property.
Investor loans usually do not require the house to be in "move-in" condition. The downside of this is that most
investors will not pay as much for the house as an owner-occupant might, but if you really don't want to do much
work to the property, this is the way to go.
The total wreck property can be sold to an owner occupant "as is" if that owner occupant gets a property rehab
loan. Under such a loan, the property would be appraised for the value that it would have fixed up, and the loan
would be based on that value with the repair money left in an escrow account to be disbursed as the repairs are
made. In real life, the example would work as follows: the buyer finds a property for $70,000. Fixed up, it would be
worth $100,000. There are $30,000 worth of repairs that need to be done. The loan would be made for up to 95%
of the improved value, or $95,000.
The loan would thus be made to buy the property for $70,000, with $25,000 left in escrow to be disbursed by the
lender after their appraiser verifies that work has been done on the house. As you are probably starting to guess,
these loans are not obtained by many homeowners. These loans are complicated to apply for, and to underwrite.
Most homeowners don't really know about them, much less how to get them. If you are trying to flip a property like
this, getting some information from your mortgage broker on this type of loan to give to prospects is a must if the
house is torn up.
The quick flip is one of the most fun transactions in real estate. You can make almost as much on some of these
then if you rehabbed and resold the property. Generally, a fast nickel is better than a slow dime.
If the property needs repairs, you may want to do a few of them before putting it on the market so that you can get
an average appraisal. In speaking to different appraisers, these requirements are: absolutely no broken out or
boarded out windows, coverings of some kind on plywood floors, and light fixtures in all rooms, or blank plates
over where light fixtures are wired. Exterior rot must also be repaired if particularly bad, as on our home.
If the property is totally destroyed, you might do better to sell to an investor, rehab it yourself, or educate your
owner-occupant on how to get a rehab loan so that the condition of the property doesn't kill your deal.
Reprinted by Permission. The author is an Atlanta investor/attorney .
Visit Also see his articles by visiting
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November 2014
Tips for Negotiating Your Commercial Property Deal
by Dave Lindahl
Successful negotiation skills are an art form and must be mastered for you to achieve your investment goals.
People who put negotiations on the back burner thinking that they'll get by or they'll let someone else handle the
deal will often find that they end up with a whole load of work without the pay off. Here are a few tips for
negotiating your commercial property deal.
Tip #1: Do Your Homework
You'll need to know everything you possible can about the property, the sellers, and any related pieces of
information that forms the big picture in your mind of what you're dealing with. You'll want to be familiar with
facts and figures as much, if not more than, the owners themselves.
Tip #2: Learn to Handle the Negotiations
No one is more motivated than you in getting this deal done. For that very reason, make it a point to brush up on your
people skills and learn to handle the negotiations yourself. The negotiation process is the deal breaker and leaving it in
the hands of someone else who isn't as motivated as you is risky. With that in mind, there is one exception to that rule: if
you have a person on your team (i.e. a real estate agent or lawyer) who is able to successfully handle the deal. This means
you know how they operate and what their competence level is because you've seen it first hand; not because they told
you they're good at it. They also know you; what your goals are and how you would handle any situations that arise
during the negotiation process.
Tip #3: Determine Outcomes before You Even Get to the Table
you begin negotiating your first commercial property deal, have a game plan. Determine what key points you want
to target during the discussion and the outcomes you want. What price do you want; what terms will you settle for?
Are there any changes you want to make in what you originally offered? Be specific. Be up front about everything
you're asking for.
Tip #4: Be Easy to Work With
accommodating, encouraging, and motivating at every opportunity. Help the sellers get settled in before your
meeting and make small talk with them. Convey an attitude of sincerity and empathy. No matter how heated the
discussions get, remain pleasant throughout. People want to work with people who make it easy to work with.
Tip #5: Listen for Clues Pertaining to the Seller's Motivation
Everyone wants the best deal they can possible get. Although it's a dream to have all the terms of your offer
approved by the sellers, it's probably more likely, that you'll have to navigate your way through one or two
obstacles. At this point, it's necessary to listen for clues that will help to bridge the gap between you and the
sellers. If you find that they aren't telling you anything, don't be afraid to politely ask.
Tip #6: Always Create a Will-Win Situation
Both parties need to walk out of the deal feeling that they were the winners. You help to solve their problems and they
help to solve yours. This is where your people skills will come into play more significantly than at any other point in
the deal. Be a person that closes the gap of differences by building bridges. Study personalities and know how much
you can push them without adding so much pressure as to push them right out your door.
Tip #7: Go Above and Beyond
As a
successful negotiator, you'll also want to under-promise and over-deliver. You want to be a "deal magnet" and set
yourself up for future deals. This means going above and beyond what others are willing to do. For example, doing
the small stuff like being on time, delivering paperwork earlier than you said you would, and being extremely
courteous causes you to be remembered. Successfully negotiating a commercial property deal is more than just facts
and figures. The art of the deal involves people skills, bridging gaps, and going above and beyond what you're required
to do. Using these tips will not only land you a successful deal, but it'll also jump start your deal attraction machine.
Reprinted by Permission. David Lindahl, also known as the “Apartment King” has been successfully investing in
single family homes and apartments for the last ten years. He is the author of four popular, money-making home
study courses “Apartment House Riches,” “How To Estimate And Renovate House For Huge Profits,” “Managing
For Maximum Profits” and “The Real Estate Investors Marketing Tool Kit”. David was a featured MREIA speaker
in January 2008. He can be reached at [email protected] and
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November 2014
Ten Most Common Credit Repair Mistakes And How To Avoid Them
by Brian Diez December 15 2008
Here are some of the most common mistakes consumers make when trying to repair their own credit and some tips
on how to avoid them.
1. Closing old accounts
The age of your accounts, types of accounts, and amount of debt used make up a total of 55% of your credit score.
When you close an account you remove that account from the equation. That's usually not a good thing.
Instead it's much wiser to use your old cards once every six months to keep them active. Just be sure to pay off the
balance within 2 -3 months.
2. Using template credit repair letters
The credit bureaus aren't stupid. They keep records of every dispute you make. In fact, they keep records of all
disputes. When they see a dispute often enough (like a template dispute you may find on the internet along with
thousands of other net surfers) they are much more likely to mark that dispute as frivolous; because the odds are the
person using it is either a fly-by-night credit repair service or an amateur.
Once your account has been flagged it will be much more difficult to make any further progress on your credit
report. Use the template to give you an idea of what you need to say, and then put it in your own words.
3. Reviving the statute of limitations
The statute of limitations is the period of time a creditor can sue for a balance owed. The time varies state by state,
but begins on the date of your last payment. Making ANY payment, even 20 years later, will cause the debt to
reactivate and become legally enforceable. Before making any payments be sure to research whether or not the debt
is within the statute of limitations.
4. Not using certified mail
Believe it or not, credit repair is a legal process. Any lawyer will tell you it's not what you know, but what you can
prove that counts. According to the Fair Credit Reporting Act (FCRA) the credit bureaus, creditors, and collection
agencies have 30 days to investigate and respond to your disputes. This is a major weapon in your arsenal because
lenders maintain millions of records. It may be very difficult for them to produce the requested documents.
5. Not disputing in the proper order
When disputing you are requesting the bureaus and your creditors to prove they are following the law to the letter.
If they are not your ultimate recourse is a lawsuit. Your case won't hold water if you don't follow the proper
If you're going to ask for leniency from a creditor, do that before disputing with the bureaus. If you plan to fight a
remark on your report, you must dispute with the bureaus first.
6. Giving up too soon
While you may get immediate results if you have evidence of wrong doing, you can still get good results if you're
persistent enough. For instance, most collection agencies will reply to a request for validation with a template letter.
The letter violates the Fair Debt collections Practices Act (FDCPA). By following up you can leverage their
violation into a deletion or a lawsuit.
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7. Not validating with the creditor or collection agent first
Many consumers are too quick to pay off creditors and collection agents just to stop the harassing calls or in an
effort to clean up their credit history. Before paying any past due debt, you have the right to request validation that
the debt is yours. You'd be surprised how often they fail to comply.
8. Not keeping copies of all correspondence
Every letter you send and receive from a creditor or collection agent can be used to build your case. Never negotiate
or accept offers unless they're in writing. Document EVERYTHING.
9. Validating negative information
Another common credit repair rookie mistake is to validate negative information while trying to dispute the
information being reported. The rule of thumb is the less you say the better. Make them prove themselves to you.
The law is on your side.
10. Not hiring a professional
Credit repair may seem simple. As you can plainly see, it's not. To get fast results far above anything you could ever
do on your own without years of experience, trial and error, and maybe an ulcer, you'd do well to invest a few
hundred dollars hiring a reputable credit repair service.
Get your FREE cd, FREE ebook, and FREE coaching call with Brian and learn how to boost your credit
score as much as 249 points in as little as 45 days at Reprinted by
Permission. Copyright © 2004-2013 BiggerPockets Inc. All Rights Reserved.
Structuring An Intelligent Offer In A Stupid Economy
by Gregory Pinneo
What do I mean by a “stupid” economy?
A “stupid” economy is one where by the momentum is moving so fast it is really tough to know where things are at
any particular point of time. Where are values at with single family homes? Can you tell me with any degree of
certainty? I can’t. A stupid economy is one where REO properties are coming back into the market and re-setting
the “value” comparable baseline. The more foreclosures, the more “stupid” the market gets.
When loans are available for every heart beat, or when they are not available at 60% LTV for an 800 credit score
client……this also makes for a “stupid” market. In the lending world, illogical motivations also come into play.
Loss share agreements between the FDIC and banks taking over a failed institution also make the market hard to
read. The lender who has taken over the failed institution has incentive to not touch or modify a defaulting loan
because of the terms of the loss share agreement they have with the Feds. When common sense does not apply, the
market gets crazy until some form of predictability and order returns.
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Let me give you an example. If a bank takes over a failed institution’s loans with a 95% loss share agreement with
the FDIC, the general guidelines of this agreement work like this: let’s say that the loan was for $100,000 and when
the new bank took over the loan it was in a default status. The first thing they know is this: the loss share agreement
will be nullified if they attempt to modify the loan and it ultimately goes still into default. The new bank has
incentive not to touch the defaulting loan in any way, because if they do, the 95% loss share agreement will not
apply to the deficiency.
Now that the new bank will not modify, the loan is foreclosed on and the new bank owns the property. Now they
can sell the property. Let’s say they sell it for $70,000. There would be a $30,000 deficiency of which 95% would be
reimbursed by the FDIC. The bank gets back 70K from the sale, and 28.5K from the FDIC recovering a total of
98.5K out of the 100K loan. They still have the right to sue the borrower for the deficient balance.
What if the lender sells the property not for 70K, but rather for 30K. The deficiency would be 70K and the 95%
loss share would cover $66,500. They would recover 96.5 K out of the 100K, but at a sale price of 30K, this
property would be off their books immediately. Most lenders take this route so that carrying costs and liability are
minimized. Now the sold comp in the neighborhood is 30K, de-valuing all of the surrounding properties.
This is a long way of saying that when banks are going under, and aggressive loss share agreements are being drafted
by the FDIC, the result of this craziness is a “stupid” unpredictable market. The property owner across the street
says to himself, “ that house just sold for 30K, and I am currently paying on a 140K mortgage on a similar house!
Am I stupid! I think I will give this house back to the bank and go buy one for 30K!” This starts round two of the
So when everything is going crazy and nothing is making sense, how do you structure an offer to buy real estate that
will be profitable amidst the stupidity? The following is a list of guidelines and suggestions that will help you come
out of the craziness a winner.
Some are practical and tangible and some are subjective, but all are important when managing a storm of moving
parts and confusion.
Storm Tip Number One:
Know rent comps cold. Rent comps are easier to get a handle on than values. When we know rent comps well, we
can calculate what we are able to pay in the way of principal and interest. A very simple tool is to take 60% of the
gross rent and tell yourself that this is your negotiation target in terms of your principal and interest payment.
If a building has a gross rent of $10,000 per month, in your head shoot for a monthly payment of principal and
interest not to exceed $6000 per month. Working an offer backwards from the rents gives you a way to hold the line
indefinitely, which is the key to survival in “stupid” economic conditions.
Storm Tip Number Two:
No short term financing. All negotiations need to put financing in place for a period that allows the storm to pass.
For me, ten years is a minimum time frame for a cash out when you are setting up a purchase in “stupid” economic
Storm Tip Number Three:
Factor return on a down payment as if you were borrowing the down payment with hard money. With enough
down, everything cash flows, but does that mean we should be putting huge amounts of money down in these crazy
economic times? No is the resounding answer! Set your limit at 10 – 15% down, and pay a return to yourself of at
least three times the going CD rate for your own use of your own money.
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For example, if you used $10,000.00 of your own money as a down payment on a rental house, be sure to pay
yourself three times the going CD rate for the use of your own money. In a 3% CD market, you would pay yourself
$75 a month. Make sure that the cash flow of the acquisition is sufficient to not only pay on the promissory note or
notes, but pay a return on you down payment as well.
Hoping for appreciation to pay an eventual return in a “stupid” market is bad business. Make sure that the offer is
structured so that a return on down payment is calculated into the overall Performa.
Storm Tip Number Four:
Look for properties that are not utilizing all avenues of potential cash flow that the building and location have to
A classic example would be to buy an infill urban multiplex whereby the parking is included in the rent. Separating
the rent from parking usually creates additional overall cash flow. Be on the look out for additional income
producing opportunities that the previous owner had not employed.
Storm Tip Number Five:
In low interest climates great opportunity exists to set up long term, low interest, cost of funds. A frequent
objection to a low interest rate over a long period is peoples thought that interest rates will go up. How do we
acknowledge this, and yet negotiate the best overall rate for our note?
One tool is to set up the interest rate as one that will adjust as time goes on in an upward direction. On its face, this
does not seem like a good idea, however, structured carefully it can be a great negotiation tool.
For example, let’s say that the note amount is $500,000. I might negotiate the first 7 years at 3%, the next 7 years at
4%, and the remaining 16 years at 7%. My payments will always be interest only or more.
What I might do would be to self-amortize the note and pay it off over 14 years, thus never seeing the higher step
up in interest rate. My average rate over 14 years would be 3.5%. Come prepared with long term CD rates and any
supporting comparables to help negotiate interest rate.
Storm Tip Number Six:
Lease/options are a tremendous tool when values are unknown, especially if they come as a “free” addition if you
execute the lease. Be sure to have sub-lease provisions in your lease contract, and be sure to record the option
portion to put a cloud on title. It is also possible to have the lease payment become a credit to the eventual purchase
price, or down payment if the ultimate deal was pre-structured with seller financing.
Having an option to buy the building does not mean you have to buy the building….but you can if you want to.
The key here is this….longer is better. Give the property time to grow in value and with equity over and above your
option price, you have several choices…..all good…..when it comes to your option exercise window. I like to
structure options for 7 to 10 years when ever possible.
Storm Tip Number Seven:
Stay calm. In any storm, staying calm is the first rule. It is easy to get caught up in the overall public uncertainty and
panic. Stay calm. Work the situation. There is great opportunity when you use the power of the storm in your favor.
Allow the strength of public opinion to work for you as you structure your deals. Don’t assume that what would
work for you no seller would do….simply ask the question of proposition. You will be shocked at the results you
will get during these “stupid” economic times.
Reprinted by Permission. The author’s personal portfolio has included the purchase of over 500 units in
over 200 different buildings. In addition, he has conducted more than 500 brokerage negotiations. Visit, call (206) 550-4242 or email [email protected]
Volume 17 Issue 11
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Single-Member LLC and the Importance of January 1, 2009
by Dyches Boddiford
January 23, 2009
If you are confused regarding the single-member LLC (SMLLC) and the Employer Identification Number (EIN),
you are not alone. Plus, the rules changed for 2009, so let’s go over this.
A single-member LLC doesn’t normally file a tax return, unless it has elected to be taxed as a corporation. The
single member shows all income and expenses on the member’s tax return. So, the entity is disregarded for
income tax purposes, but provides a liability shield for the member. This is really the best of both worlds.
Because the SMLLC is disregarded for income tax purposes, no separate bank account and no EIN is required.
However, if the LLC has any employees, it now must have its own EIN separate from its owner for reporting and
paying employment taxes.
Under the old rules, the SMLLC classified as a “disregarded entity” two options for reporting and paying
employment taxes:
- Using the name and EIN of the single member owner, or
- Using the name and EIN assigned to the LLC
The new Treasury Regulation Sec.301.7701-2 states that the LLC, not its single owner, will be responsible for filing
and paying all employment taxes on wages paid on or after January 1, 2009. Even if the employment tax obligations
are reported using the SMLLC’s name and EIN, the single member owner retains ultimate responsibility for
collecting, reporting and paying over the employment taxes.
An LLC applies for an EIN by filing Form SS-4, Application for Employer Identification Number, and completing
lines 8a, b, and c. An SMLLC that is a disregarded entity and does not have or will not have employees does not
need an EIN. It should use the name and TIN of the single member owner for federal tax purposes.
However, if a SMLLC, whose taxable income and loss will be reported by the single member owner, nevertheless
needs an EIN to open a bank account or if state tax law requires the SMLLC to have a federal EIN, then the
SMLLC can apply for and obtain an EIN. If the SMLLC has no employees, it will not use this EIN for any federal
tax reporting purpose.
If an SMLLC has or intends to have employees, the EIN rules are different. If there is or will be employment
tax reporting, both the single member owner and the SMLLC will need an EIN (two EIN’s). If the SMLLC has
already received an EIN for reasons discussed above, then only the owner will need to file the SS-4 and be assigned
an EIN.
These numbers should not be used interchangeably. Doing so can result in complicated problems which could
require the taxpayer's, accountant's, and IRS's resources to correct. Reprinted by Permission. Copyright 2007 Dyches
Boddiford. All Rights Reserved. The Oaks Group, PO Box 505, Marietta, GA 30061. Dyches is a National Speaker has
been a MREIA featured speaker at past meetings. Visit for more information.
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Lead Hazards In Housing: The Risk Of Salvaged Building Components
by FHCO Staff and Bob Zatzke
Although the following article is written for housing providers, this is important information you need to know whether you’re a landlord,
Realtor®, renter, homeowner, or resident. Much of the article is compliments of Bob Zatzke of Vermont Housing & Conservation
Board’s Lead-Based Paint Hazard Reduction Program.
Mary and Jacob had been searching for a door with some character to highlight the entrance to their new home.
They eventually found a raised panel door with a picture window at a salvage yard that seemed perfect. They
especially liked the fact that they would be doing right by the environment by giving new life to piece of an old
1800’s farm house.
The door still had the original paint on it, but the paint was in pretty bad shape. “We thought it was the diamond in
the rough…” explained Mary. The salvage yard offered to chemically strip the paint for a small, added fee, which
they agreed to. Unfortunately, Mary says in hindsight, “We didn’t think to ask about whether the paint might have
contained lead. There were no warning signs or information regarding the possibility the door might contain lead
The chemical stripping process raised the grain of the wood, leaving splinters and wood fibers that Jacob needed to
sand down in order to refinish the door. What he didn’t realize was that, although the chemical stripping methods
remove visible paint, a significant amount of lead from the original paint can leach into the wood itself.
Jacob chose an upstairs room in their house that was still under construction to do the work and spent several
hours power sanding to get the door smooth. Unaware of the hazards, he took no precautions such as wearing a
respirator or taking steps to prevent the spread of dust in the home. As he worked, a fine layer of dust settled
throughout the upstairs and the contamination level grew to very dangerous levels.
A routine mailing to area households from the Health Department made its way to Mary and Jacob’s home. Mary
admits, “I actually sat on the mailing for over a month because I didn’t think you needed to worry about testing if
you lived in a new home…”
When she did follow up and had their children, Naomi and Elijah, tested, the level of lead in Naomi’s blood was
extremely high, indicating toxic levels of lead poisoning. A greater surprise was that Jacob also had a high blood
level but Mary and their son, Elijah, did not.
Mary started making calls and eventually got to the bottom of the problem thanks to a great deal of sleuthing on the
part of the Housing & Conservation Board. “Jacob’s elevated
lead level had come from the dust he inhaled while he was sanding, and Naomi had ingested the settled dust
while crawling around on the floors,” according to Bob Zatzke with the Vermont Housing & Conservation Board.
Bob says the likely reason that Mary and Elijah had not been poisoned was that Mary had not been in the work area
to breathe in the airborne paint dust and Elijah, at age six, spent much less time putting things in his mouth as
compared to his one year old sister, Naomi. Bob explained to Mary that hand-to-mouth behavior is commonly
recognized as the primary means by which small children ingest lead dust, although intake through the mucus
membranes is also possible.
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Mary said, “We were so surprised to learn that even though there was no paint visible, that so much contamination
could happen.” Mary and Jacob threw themselves into the task of cleaning and wet wiping all of the surfaces in the
affected rooms. Luckily, dust samples indicated that the contamination had been limited to the home’s upstairs.
I have to admit,” says Mary, “I was getting pretty grumpy after ten hours of vacuuming with a special HEPA
vacuum from the Housing & Conservation Board in one day.”
All their hard work paid off; subsequent tests indicated the contamination was gone and their home was safe once
again. However, the long-term health effects for Jacob and little Naomi are uncertain. Studies have linked chronic
exposure to even low levels of lead exposure to developmental and neurological problems in humans, especially the
developing bodies of small children. The possible health effects are wide reaching from lowered IQ levels to
reproductive problems and many, many more conditions. The only way to know if one has been poisoned by lead
exposure is to do a blood level test.
Mary’s advice? “People should think twice and ask about lead paint when they buy old building components.”
Anyone who works with older building components or antique furniture, even when the original paint is not visible,
should be aware that lead can cause serious and incurable physiological damage. Although the sale of lead based
paint was banned in 1978, it remains in about 24 million homes according to the Centers for Disease Control and
According to Rebecca Morley, executive director of the National Center for Healthy Housing, “We estimate that
each year, renovation and painting work exposes 1.1 million children to the risk of lead poisoning.”
Epilogue: Several months later, Bob Zatzke checked in on Mary and Jacob and at last report Naomi’s language and
speech skills seemed to be developing normally. As a result of this and other similar incidences, Bob was involved in
moving a proposal for point-of sale warnings regarding lead and salvaged building components into law in his state.
In addition to lead-based paint on the walls or salvaged pieces brought into the home, it has been determined that
about 75% of pre-1978 bathtubs have lead in their glaze and that about 40% of these tubs will have measurable
levels of lead dust when dust samples are collected from the surface of the glaze.
Older claw foot tubs, like well-appointed front doors, are another popular retro salvage yard item. A fair housingspecific note… Although lead poisoning is especially serious for young children (including unborn infants), the fear
of possible lead poisoning or liability does not give housing providers the right to deny or discourage families with
children from pre-1978 homes or apartments. Familial status is a protected class under federal fair housing law and
doing anything to deny or discourage otherwise qualified families with children away from a home you’re selling or
renting is patently illegal.
If you have specific lead questions, would like copies of lead materials currently available, or want to know more
about blood lead level testing, contact the National Lead Information Clearinghouse at 800/424-LEAD or the
Leadline in Oregon at 503/988-4000 or
As a housing provider, you also need to be sure you’re current on all of the government’s federally mandated lead
disclosure requirements! Read the section on “Legal Requirements” at
For a medical journal article by the Centers for Disease Control and Prevention on lead exposure and furniture
refinishing visit:
Reprinted courtesy of the Fair Housing Council of Oregon. Email: [email protected] or call|
(503)223-8197 or Hotline (800) 424-3247 Ext. 2
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Due Diligence And Underwriting Guidelines
by Scott Britton
Due Diligence is a term used to refer to researching and verifying the accuracy of information. This is nothing more than
checking things out to your own satisfaction. I love that word diligence, but you won't hear this term bantered about by
the get-rich-quick crowd or slick salesmen.
The truth of the matter is this: due diligence requires work!
This is not a matter of trust as much as it is a matter of doing business the right way. If you were playing cards, you
should want the deck to be shuffled and cut. This keeps everyone honest. Due diligence is the same thing.
Many investors are extremely lazy when it conies to this issue. Maybe it's the work aspect, or maybe it's the trust aspect—
or both.
Here's an example of what I'm talking about. Recently, there has been a lot of interest in the “Go Zone.” There are
several tremendous tax benefits associated with investing in this post-Katrina zone. This has attracted investors from all
around the country who want to take advantage of these benefits. Money has been pouring in.
Several offer buying trips in the “Go Zone.” They load up a bunch of out-of-state investors and ride them around and
sell properties to them. Many have invested their hard earned money. Many have been disappointed in the results they
have received.
All of their disappointment could have been avoided if they had done their due diligence.
These people, I would assume, trusted the information provided to them by these sales teams. Properties represented as
renting for $1,500 a month were not questioned. No rental market survey was ever done. Information was accepted as
being accurate without verification.
Purchase prices were based on these rental figures.
Sure, there were appraisals involved, but we all know you can buy an appraisal for just about any number you want.
Many of these properties are sitting vacant because the rents being asked are too high. Some have bitten the bullet and
put tenants in their properties at market rents. And when the investors try to sell these properties they will discover what
the properties are really worth.
All this could have been avoided by performing a rental market survey (easy enough to do) and checking and verifying
comparable market sales from an independent source. And yes, this requires some work. But better to find out before
you invest your money. This applies to all aspects of business as well as buying property.
You could also look at this as a qualification process. If someone you are doing business with puffs the numbers, you
may want to take a hard look at why you are doing business with him or her. If the numbers check out, you may have
found someone you can establish a long-term mutually beneficial relationship with.
I learned a lot about conducting due diligence from the paper business. When you sell notes and mortgages into the
institutional market, these buyers perform their due diligence on every deal. It's part of the program. They verify
everything. It's not just a matter of banging numbers into a calculator. It's not just a matter of yield. And it's certainly not
a matter of trust. It's simply part of the process of conducting business.
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Due diligence is akin to buying insurance on your transactions. It requires a little work but you will be surprised at the
interesting things you can learn in the process.
Underwriting Guidelines
I doubt there is a real estate investor in existence who hasn't become frustrated with a lender's underwriting guidelines.
Sometimes they seem arbitrary, if not capricious. It's easy to make comments like, "They just don't understand this
business." Or "Stay out of the banks, they are bad for your financial health."
Yet, these underwriting guidelines exist for a purpose. The purpose is to keep the lender from making bad financial
decisions. Look at what has happened in the last ten years with some of these underwriting guidelines from mortgage
lenders. They have been manipulated from the aspect of what do we need to do to make more loans, not from the aspect
of sound financial decisions.
Over the next few years, you will see underwriting guidelines from lenders tightening up. [Editor’s Note: keep in mind that
this article was written about four years ago!] This is akin to closing the barn door after the cows are out, but nevertheless, you
can expect it to become harder and harder to obtain financing through conventional means.
There are two other areas concerning underwriting guidelines you should pay attention to. The first involves owner
carry-back notes and mortgages. As financing becomes harder to obtain for our buyers, owner financing will become
more prevalent.
There are factors you should take into consideration when selling with owner-financing to give your paper the highest
value. You don't have to start from scratch here to develop your underwriting guidelines. If you plan on selling all or part
of these financial obligations, it becomes important to know from the person or organization who will be buying this
note—what gives it value.
Each of these note buyers has his own underwriting guidelines. There's very little variation from one to the other. The
rules of the road are pretty much consistent from one buyer to the next. You will see a lot of overlapping of what they
will and won't do. Remember, all notes are not created equal. Just because the note says $100,000 at the top, doesn't
mean it's worth $100,000.
Secondly if you are originating loans or investing in notes and mortgages, it pays to have our own set of underwriting
guidelines to keep yourself from making bad decisions. Otherwise, you run the risk of being sold on doing something
that may not be in your best interests.
Down payments, credit scores, loan-to-value ratios, alternate sources of repayment, job stability, personal stability and
type of security all play a big role when your money is at risk.
The above underwriting guidelines put us back in the due diligence mode, don't they? We have to do some work in
checking out each and every deal to make sure it is as represented, and then value it according to your own underwriting
guidelines (these should be based on the resale market).
Few of us have enough historical or statistical information to develop our own independent underwriting guidelines, but
conventional lenders and institutional note buyers do. There is no need to reinvent the wheel. Consider adopting some
or all of the underwriting guidelines from these markets. It will help you get up to speed quickly, while giving you
confidence in your due diligence.
This is also true of the new loan products that will be coming on the market to replace the various toxic loans of the last
ten years. Qualification and underwriting guidelines will change. You will want to stay abreast of these things.
We all have a lot to learn as we move forward. Qualifying, Due Diligence and Underwriting Guidelines can help us make
more money, become more efficient and avoid costly mistakes!
Reprinted by Permission. Visit or email [email protected]
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Distressed Property; Is It A Positive Investment?
by Richard Bleuze
May 8 2009
Distressed Property is defined as property that is either in a dilapidated state or is owned by someone who is facing
financial hardships. With the housing market down and many people facing foreclosures, many investors are turning
their attention to investing in Distressed Property. It should be noted that not all distressed sales are a good value,
and those who are hunting for bargains should keep some very important points in mind.
When a house goes on the market advertised as distressed property, it will draw a lot of attention. Most people who
are looking to buy this type of property usually buy it then sell it for a profit. The more people looking for
distressed property for sale, the harder it is to actually purchase one. A serious buyer must be diligent about seeking
out distressed property by scanning the Internet and newspapers to find out the circumstances behind the sale.
If you are lucky and are able to purchase a distressed property, you need to know or have an idea about where the
housing market is headed and what the property values are in the area. When you own a distressed property, you
will probably spend some money fixing it up. You want to be sure that the housing market is on the rise so that
when you are ready to sell the property, you will recognize a profit. You must recognize that if the housing market is
in a weak state, you may not make the money back that you invested.
You must also make sure that the home that you are purchasing doesn't have liens placed on it that will become
your burden. If the owner had problems paying the mortgage, he or she may have left other bills unpaid, so make
sure you clarify this before you sign a contract.
It is always wise to use a Realtor® to help you identify deals for you. Searching the Internet is a good option, but
some Internet information might be out-of-date or incorrect. A Realtor will have an updated MLS listing that will
give you the most current information available. Work closely with your Realtor because with distressed properties;
time is very important. A buyer must close on a date that is specified by an agency and can't close after this date
without facing stiff penalties.
Make sure that your finances are in order so that your Realtor can submit an offer as quickly as possible. Once the
offer is submitted and accepted by the seller and you, the Realtor will submit a ratified contract to the lender and
closing agent to begin the process of the real estate transaction.
If you do plan on renovating and reselling the home immediately, make sure you keep detailed records of any
expenses having to do with the purchase and repair of the property so that you can use them as tax deductions. And
because the property is distressed or foreclosed, consider hiring a lawyer as your closing agent.
A good real estate attorney will take care of any problems that may arise at the closing and handle any special
addendums or contracts that are issued by the bank.
Richard Beuze sells real estate in the San Gabriel Valley (about 12 miles South of Los Angeles).
Visit Reprinted by Permission. Copyright © 2004-2014
BiggerPockets Inc. All Rights Reserved.
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November 2014
The Secret To Finding Motivated Sellers
by Bill Cook January 14, 2010
There ain’t no secret; it just takes a lot of hard work!
Think of it this way: What is the secret to finding gold? There’s no secret to that either. You get a pan, go to a
riverbed and start panning for gold. When you first start panning, it’s kind of fun.
But six or seven hours later, when you’re hot, wet, your back hurts, and you’d rather be anywhere else than bent
over in a streambed, trying to find gold is no fun at all!
I know, I know! What about all those guys on TV who tell you how easy real estate investing is? What about all the
millions they claim you can make in a snap? Think about it for a second. Exactly what business are those gurus in?
Is it real estate investing…or are they selling real estate investing courses?
Back in the California gold rush days, who made the big, easy money? The miners out panning for gold or the
scallywags who sold worthless claims to those poor suckers?
Don’t get me wrong. There are GREAT real estate investing teachers out there: Pete Fortunato, Dyches Boddiford,
John Schaub and John Adams, to name but a few. At the same time, for every great teacher, there must be about
100 scallywags who wouldn’t know a real estate investing deal if it bit them on the bottom!
Here’s how to find motivated sellers:
1. Make sure everyone around knows that you buy houses.
2. Print some cheap business cards that say what you do and continually pass them out around town.
3. Get a cheap set of magnetic signs that say what you do and put them on both sides of your car.
4. This is the technique that scares most folks to death: stop at every house you see with a For Sale sign in the yard,
pull in, knock on the door and ask Pete Fortunato’s famous question: Why are you selling a nice place like this?
You probably think most homeowners will get angry, hurl insults at you and finish off by slamming the door in your
face! This couldn’t be further from the truth. Most sellers LOVE having someone…anyone show an interest in
buying their house.
Fact is, I’ve been knocking on seller’s doors for more than 15 years. In all that time, I can’t remember anyone
slamming a door in my face!
5. Call the folks who have a House For Rent or House For Sale ad in your local paper.
6. Link up with a top-notch Realtor® who understands how to work with real estate investors. Realtors, because of
their FMLS system, are able to help you find motivated sellers.
Hope these six hints help to make you a better, more successful real estate investor.
Bill and Kim Cook live in Adairsville, Georgia and have been successfully investing in real estate since
1995. They’ve been writing their weekly real estate investing newspaper column since 2003. Reprinted by
Permission. Copyright © 2004-2014 BiggerPockets Inc. All Rights Reserved.
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Finding Foreclosures
by Larry Goins
The real estate investment market is ever growing as a place where investors are trying to cash in on great deals and
investment opportunities that will eventually pay off as lucrative investments. Although many investors turn to
rental properties, still others have become involved in the world of wholesaling and flipping houses. With the right
advice and a little help from other investors and real estate agents, flipping houses can be an extremely lucrative
business. Even if an investor only starts off small spending a few minutes or few hours a day searching for homes
and then putting time into repairing that home, this can pay off with a large output of cash.
Although there are many excellent opportunities for homes for sale to flip on the market, these homes may be
flooded by offers from real estate investors and may be difficult to compete with when first getting into the flipping
An unsuspecting place to begin the investment search is in foreclosures. Basically, foreclosures are homes that have
been seized by lenders or government agencies, such as Housing and Urban Development (HUD), because a
homeowner was unable to make loan payments, tax payments or insurance payments on the home. From here the
lender or government agencies will hold a special auction or a special bidding session where potential buyers and
investors can try to purchase that property.
The best bet when becoming involved in foreclosures is to find a real estate agent or broker who you enjoy working
with. Although some foreclosure processes will allow for an individual investor to go in and purchase the property,
others will require an agent who is knowledgeable about the business to be present at an auction or bid closing.
Most real estate agents will also be able to tell you the best places to begin searching for foreclosures, as they are not
always available on the main realtor websites in the area.
When deciding to search for foreclosures, it is also important to find a home inspector who you trust to tell you the
honest truth. Many investors who regularly purchase foreclosed homes will tell you that the best option for
foreclosures is to have an investor inspect the house before placing a bid on the home.
Note that foreclosures are sold “as is” meaning no repairs will be made by the lender or government agency selling
the home and a homeowner is no longer in the house to make repairs to that home before closing. Once you have
already placed a bid on the home, it may be too late, as you may be stuck with a real money pit that could take more
than your budget allows to fix it up. So be sure to have the home inspected before beginning the bidding contract
part of business.
Although it is helpful to have a real estate agent help with finding foreclosures and seized properties, this should not
stop an investor from searching on their own. If you work a full-time job elsewhere and do not have the time or
energy to invest in searching for foreclosed homes, you may want to consider making friends with real estate
investment scouts.
Often, scouts are investors who will search for houses, put an initial contract down on the house and then sell the
contract to an investor who want to spend the time and money fixing up the house. The investing scout will simply
make a few thousand dollars with the difference in contract prices, but the real money is left up to the flipping
investor, who can make thousands of dollars on a home that was way below market value, simply by shaping up the
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Other great places to independently look for foreclosures are in county court records for divorce hearings, family
estate hearings, and bankruptcy hearings. Often a notice of a foreclosed house will be made available with that legal
information. From here you can contact the county to find out where the house is located or when an auction will
be held to sell the foreclosed property.
You may also want to do your own personal searches with places like the Fannie Mae Foundation, the IRS who
often lists foreclosed real estate for sale, as well as the Veteran’s Administration who lists VA homes that have been
Once you have determined that you will invest in foreclosures and have begun looking for foreclosed houses,
before placing a bid on a home or even asking for an inspection, it is best to know exactly what your budget. If you
are willing to spend $100,000 total on a home, including repairs, then you will need to look for homes that are
selling for $70,000 but will need no more than $25,000-$30,000 worth of repairs.
When considering how much you will spend on the home overall, you will also want to consider how much of a
profit you will make, once the home sells. This will require getting together with your real estate agent to do a
market analysis of the area and determine exactly what well-maintained homes sell for in the area.
Reprinted by Permission. For more articles on real estate investing, to sign up for a free newsletter and
listen to free weekly training teleconferences. Visit to find free forms,
documents, EBooks, Downloads and more. Also visit for investor
financing. You will also find wholesale properties for investors and can sign up for notification of new
available properties at
What’s The Deal With Title Insurance Anyway?
by Larry Goins
I get asked this question a lot. Title insurance is purchased through your attorney and insures that if there are any
title defects found at a later date such as a long lost heir that shows up telling you to “get out of his house” then the
title insurance company would handle the problem and not you. It is important to tell you that just because the
lender that loans you the money to buy the property has title insurance doesn’t mean that you have title insurance.
To cover yourself you must also purchase an owners title insurance policy. Your attorney will usually offer an
owners policy to you at the time of closing. If you elect not to get an owners policy, then the title insurance would
only cover the lender for the loan amount and not you or any equity you have in the property. I have done it both
ways but if I have a deal with a lot of equity in it or a property that I will be keeping for a while I definitely get an
owners policy. With an owners policy, the title insurance company will defend your title to the property in addition
to the lenders interest in the property.
I have also been asked that if an individual can purchase title insurance and the answer (at least in NC and SC) is no.
In order for a title insurance company to issue a policy the attorney must first conduct a title search. This is where
the attorney or an abstractor physically goes to the county courthouse and conducts a search of the subject property
and the current owner. They will find every lien, judgment, mortgage, notice of interest, etc. that is on the property
or against the owner. When the abstractor completes the search the attorney will then prepare a title opinion. This is
a multi-page document of the attorney’s opinion of the legal owner of the property, the current mortgagee or lender
of the property, any liens, etc. This is what the title insurance company uses as their information to issue the title
policy. This is why an individual cannot buy title insurance without an attorney. Reprinted by Permission. For more
articles on real estate investing, to sign up for a free newsletter and listen to free weekly training teleconferences,
visit where you will also find free forms, documents, EBooks, Downloads and more.
Also visit for investor financing.
Volume 17 Issue 11
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November 2014
A Home Inspection Is An Investment, Not An Expense
by Stephen Ruback
Squeezing dimes to blow dollars seems to be a popular game these days. Negotiate the price of a house in $500 and
$1,000 increments, or more, then turn around and spend hours looking for a $25-$100 cheaper inspection. If you
are looking for a cheap drive-by inspection to meet some paper work requirement, or just to make someone else
happy, don’t even bother. That way you can save the whole amount.
When you spend a hundred thousand dollars, likely much more, for a house, wouldn’t it be sensible to verify the
condition of your purchase? Will you pony up a percent or two for special financing considerations without much
thought or calculation, but choke at less than one third of one percent to insure you are buying what you think you
are buying? People do it all the time.
What’s in a good inspection?
A fresh, unbiased perspective – just the facts without emotional attachment.
An experienced eye for red flags and signs of present challenges and/or trouble to come – by a seasoned
professional intimately familiar with all of the systems in a house.
A good communicator – the ability to help you understand what the conditions are and their potential
impact on your finances.
A forensics practitioner – putting the details together for a more holistic overall picture, otherwise known as
a “systems” approach.
Additional insight for protecting your investment – providing information about important findings along
with reasons why they are important and how they can affect your future.
Alerts to present and potential safety hazards – this can be lifesaving information you otherwise might have
missed until it was too late.
An inspector is your point person, looking for potential problems. For those with significant financial implications
you will need to consult with specific specialists to secure real number costs and more detailed analysis of
For example, the inspector may observe the AC system is not working properly, then you will need to consult with
a licensed AC person to determine the precise problems and costs of repair/replacement. Keep in mind most
systems have a finite design life. Systems do wear out. With a bit of neglect, this can happen sooner rather than
later. In a thorough inspection, you will also learn a few things to help you prolong the life of your investment.
Expense or Investment?
So, how does this make a thorough inspection an investment? Any item that has virtually no chance of improving
your bottom line is an expense. Anything that has a real chance of positive return is an investment. The vast
majority of inspections reveal one or more ugly surprises that, undiscovered, would have cost the buyer many times
the inspection cost. It’s that simple.
The AC blows cool, but is at the end of its life, and needs work, uh-oh.
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The heater does not work and the repairman says it is dead and beyond recovery, do you have an extra two
or three grand lying around?
The roof covering happens to be three layers deep with wood shingles at the bottom and the insurance
company says they won’t cover the roof, oops.
The plumbing is badly corroded in several areas and about to demonstrate a new concept in water damage,
then the insurance company says “normal wear and tear” or “lack of maintenance,” sorry.
Inadequate attic ventilation and insulation can cost you hundreds of dollars a year in excess utilities, oh well.
Unsafe/improper/inadequate wiring can cost thousands to repair – at best, easy come easy go.
The bomb in your house, disguised as a water heater, could actually go off, tsk tsk.
The kitchen vent hood does not vent cooking fumes outside, just blows them back in your face, surprise.
The furnace/water heater flue vents happen to be set up to generate generous amounts of carbon monoxide
whenever they are operated, do you enjoy headaches, nausea and near death experiences?
Most of the conditions above have the potential for serious, expensive auxiliary damage if left to their
own devices long enough. A good inspection can only be described as an expense when the house has no ugly
surprises. I saw one once. The rest of the time it is an investment that pays serious dividends. Sometimes it will be
one or more big ticket items, other times it may be a host of little items that add up to significant money. Most of
the time it will be a combination.
Getting best value
A thorough inspection takes time, at least an hour per 1,000 square feet. The report should be clear, simple and to
the point. Always plan to be present for the inspection. A written report is a poor substitute for a detailed hands-on
explanation in real time. A modern house is an expensive combination of complex systems utilizing a wide variety
of technologies – never hesitate to ask questions if you don’t understand something, especially “why.”
A good inspector is also a good teacher, willing to take the time to explain the hows and whys behind the
observations. This may take a little more time, but it pays dividends in your ability to protect your investment.
A savvy seller will arrange for an inspection before listing the house. That leads to avoiding more ugly surprises that
blow deals. One blown deal costs more than several inspections in time and money lost – then the seller still gets to
pay for the needed repairs.
When selecting an inspector, the thoroughness and quality of work far outweigh the price. Too low a price may well
mean a higher cost – after you move in. You never really get more than what you pay for – sometimes less, but
never more.
By the way, new homes also need a thorough inspection.
Reprinted by Permision. Stephen Ruback is a licensed Professional Inspector; member of TAREI, and HAR;
approved by TREC as a Professional Home Inspection Instructor. In addition, he has earned a BS in
engineering from Trinity University, is an author of several books and teaches a variety of self-empowerment
courses. For more information, call 832-489-1071, visit or email [email protected]
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Considering A Partner In Business – Here’s A Few Tips
William Bronchick, Esq.
There are many advantages to partnerships. Smart use of a partnership may allow you to do more deals from a
financial and time standpoint. It also spreads out risk and liability. It’s part of the “Two heads are better than one” or
‘There is safety in numbers” theories. However, approach a partnership with caution and due diligence, especially if
you’re new at any type of business venture! If you pick the right partner it can feel like it was “heaven-sent” but if
you pick the wrong partner or partners it can make the business venture a tough road to travel. Some if the
disadvantages can be dissimilar work ethics and styles, honesty and trust issues, time consuming power struggles
and poor communication styles.
When picking potential partners it is important to ask yourself a few questions and have some specific parameters in
mind for the partnership:
Why do I need a partner? You may want a partner for their credit or funding a project, their skills and
expertise, their business contacts or many other reasons. Before you become partners you should check one
another out to make sure you have complimentary work styles and a thorough understanding of the project
or business including return on investment, duties, communications, and other pertinent items. You should
pick a partner or partners that can bring something to the table such as skills you don’t have or contacts you
don’t have but need for the project or business. If funding will be an issue then the funding partner(s) needs
to bring proof of funds to the table from the start.
What will I give up in return? With every upside there is a downside. You will dilute your profits with a
partner but on the other hand you may be able to leverage your money and time better because it allows you
to complete more projects. In addition, if you are a control freak and insist on micromanaging every aspect
of a project or business then a partnership may not be a good fit for you.
Do I have other options? Can I rely on a mentor or advisor? Can I hire the missing components by using
the services of an attorney, accountant, contractor, lender, consultant or another? In most cases you will
find that in single projects such as joint ventures that possibly hiring the right professional or borrowing
money yourself (if you can) might be a cheaper alternative than some sort of split with a partner. In a long
term business obviously there are many other factors that come into play.
Is this business short term or long term? There are a lot of differences between selecting a partner for a
short term joint venture or a business that you plan to run for many years. For long term businesses, you
really need to select the right partners because it is a lot like being married to someone! Many folks will start
out and work with a person(s) in a joint venture or two, find that they are a good match and want to build
on their previous successes, so they become partners in a long term business. Having the right paperwork is
important and in addition to all the initial set-up paperwork, for a long term business you will want a
Buy/Sell Agreement in case things don’t work out down the road and possibly “Key Man” life insurance
policies in case something happens to one of the partners along the way.
Reprinted by Permission. Copyright 2014. Visit or call 1-888-587-3253. The
author, CEO of Legalwiz Publications, is a nationally known attorney, author, entrepreneur and
speaker. He has been practicing law since 1990, having been involved in over 700 transactions.
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November 2014
The Most Profitable Investment In Real Estate
by David Lindahl
Having rehabbed over 520 properties and owning over 1100 multi-family units in my real estate career, I have and
continue to do it all! When I first started in the real estate business and got my marketing going, I knew that every
potential seller meant a possible $20,000 profit for me. I also quickly realized that there were many different ways to
do a deal, and some deals could only be done a certain way.
If I hadn't learned the technique needed to do a particular deal, then I would wholesale it. I've never liked
wholesaling (even when I could make a quick $10,000 — 20,000 doing it!) because I always knew that there was a
much bigger payday waiting down the road and I wanted it. Why give up the cow only to go searching for more
So I became a "Transaction Engineer." I learned how to rehab, how to do "subject to," lease/options, short sales,
pre-foreclosures, buy, flip and hold multi-families, master lease/options, equity sharing, tax credits and more. I
wanted the big paydays and I was willing to learn what it took to get them.
The more deals I did, the more I realized that I was getting much bigger paydays from doing a particular transaction
that was far more profitable than anything else I was doing. All of us want to get wealthy quickly and easily, and if it
could be done by doing less deals, that's the way I wanted to do it.
That's when I came to the realization that there were certain deals that brought me in ten times the amount of profit
as the other deals, even though I was doing the same amount of work and taking the same amount of time.
From the fattening of my bank account I realized that there is one investment that is far more profitable than
anything else in real estate investing. The most profitable investment in real estate today, is buying, selling and
holding multi-family properties.
Did you know that you could buy a multi-family building using the same no-money-down techniques that you use
buying single family properties? I'll bet you didn't know that there were even more creative ways to purchase multifamily properties than there are for single families! Think about it. When you are dealing with single-family
properties, you're usually dealing with the homeowner, someone who is emotionally attached to the property.
When you are dealing with a multifamily property, you are usually dealing with an investor. Just like you, investors
care about the numbers. Would you now agree that investors are more apt to do creative deals?
Successful people profit from the mistakes of others. I learned that doing a multi-family deal took just as much
effort as doing a single-family deal, but there is one big difference: There is an extra "0" at the end of the profit
check when I closed the deal!
That means that the single-family property that I flipped made $20,000 with the same amount of effort I was
flipping multi-family properties and making $200,000! As soon as I realized this phenomenon, I focused more of
my marketing on multi-family properties! When you start getting those big paychecks you'll realize that you don't
have to work so hard; you'll have more time (a lot more time) to do what you want, where you want, when you want
and with whom you want!
Most people have a goal of making $1,000,000. If you were flipping single-family houses with an average profit of
$20,000, you would have to flip 50 houses ($1,000,000 x $20,000) to reach your goal. How long do you think that
would take? A year? Two years? Five years?
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If you were flipping multi-family properties, you would need to flip only five properties ($1,000,000 x $200,000)!
How long do you think that would take?, Certainly a lot less time! And remember, it takes just as much work to flip
a single-family house as it does to flip a multifamily, but as you can see by the numbers, it really is going to take you
ten times the amount of work and time if you want to earn a million dollars flipping single-family houses!
Here's another bonus. Sometimes when you flip a single-family property you hit a home run and make anywhere
from $40,000 - $100,000 and more. When you hit a home-run with a multi-family property your profits are in the
$400,000 - $1,000,000 and more range! That's one deal, same amount of work! How many of those do you have to
do before you stop worrying about your retirement?
A student of mine, Rose Morris from Columbus, Ohio, is going to profit over $2,000,000 on her first large multifamily deal! One deal! Justin Anderson from Augusta, Georgia will profit close to $900,000 when the sale is
complete on the multi-family that he's flipping!
Does this mean if you're flipping single families that you stop immediately and go after only multi-family properties?
Heck, no! You can if you want, but I still flip singles, but not as many as in my early years, though. Why do I
continue to do it? Because I can! I’m not one to pass up any good deal, and I like getting those small chunks of cash
coming in for $20,000 - $30,000 a pop, but I focus most of my time on multifamily properties because I learned the
more multifamily deals I do, the more and better choices I have as to how I can spend my time!
Heed these words: the faster you start flipping multi-family properties, the faster you're going to become
wealthy. I will already say "You're Welcome" in advance for those of you who take the advice of someone who has
been there and done that!
Reprinted by Permission. David Lindahl, also known as the “Apartment King” has been successfully investing
in single family homes and apartments for the last ten years. He is the author of four popular, money-making
home study courses “Apartment House Riches,” “How To Estimate And Renovate House For Huge Profits,”
“Managing For Maximum Profits” and “The Real Estate Investors Marketing Tool Kit”. David was a featured
MREIA speaker in January 2008. He can be reached at [email protected] and
What To Look For With A Flat Fee MLS Broker
by Rob Arnold, ABR, CPL, CRB, GRI
What is Flat fee MLS, discount MLS, MLS-only listing? Whatever you want to call it, it is the process for consumers
to list their property into the local MLS and the related internet sites like for a few hundred
dollars with the consumer doing the bulk of the work. This sort of listing also offers the buyer's agent a commission
of 2-3% or more if they procure a buyer for the property.
I want to describe things to look for in a flat fee MLS broker. If you do a Google internet search, you will find out
there are many of types of services available out there. Some will charge you nearly $1000 and some charge as low
as $100. I have even seen some that will advertise for free in the hopes of getting the seller to eventually become a
future buyer. If you pay a high amount, you deserve to get many additional perks and lots of customer service. If
you pay next to nothing for this service, expect to get next to nothing in perks or customer service.
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Obviously price is a big factor to be shopping for. Beyond price there are basically three main things that you
should be looking for in a flat fee MLS broker.
1. Does the firm have a local office where I can meet someone? Or, in the alternative, can they send someone out
to meet with me? Most of these type of firms only do business with you via a 1-800 phone number or the internet.
You should at least have the ability to get them to sit down with you in person for an hour or so either at thier
office or at your house. They should also be able to provide you with a basic idea on pricing your property and on a
marketing plan to get your property sold. If they are totally hands off and will not give you any advice on proper
pricing and marketing, it would be a good idea to steer clear of them. Your goal is to sell your house, not to let it sit
in the MLS indefinitely.
2. Does this firm allow me to upgrade my listing to a full service listing? Will they help me with paperwork,
negotiations, or the closing, if later on I do not feel comfortable with the situation? If the answer is no or that they
will refer that work out to some other company, then you are probably getting short-changed. If the firm does not
allow you to upgrade your services, the reason may be that they either do not want to bother with giving you these
services or that they are not competent enough to even provide them. Watch out.
3. What sort of perks are provided for the money you are paying?
(a) A real basic thing is a For Sale sign. Other Realtors often steer away from MLS listings that have a For Sale By
Owner sign in the yard.
(b) Initial pricing and marketing advice. I already discussed this above.
(c) Phone calls and emails from Realtors® and customers regarding your listing. Listings get lots of these contacts.
The MLS typically says for any Realtor® to call the owner for all negotiations, but often they still call the listing
broker. Is the firm servicing these phone calls and emails or are they ignoring/deleting them? Guess what happens
when you hire someone to service your listing for $75?Odds are, they are not going to service it. You definitely need
some sort of balance here.
Shop around for your Realtor® like you would for anything else. No Realtor®, whether it be full service or flat fee
MLS, can guarantee to sell your property at a reasonable price. So make sure they are giving you choices on what
they can do. If the firm you are talking with tells you "6% is it, take it or leave it." Or even better "My commission is
non-negotiable." Well guess what, there are hundreds of firms in most cities that you can call. And they all are
aggressively competing for your business. What you charge for services matters. In fact it is typically the #1
consideration to most consumers.
Not everyone needs to be baby-handled by a full-service Realtor®. Just like not everyone needs to go to the
emergency room for every medical problem they have - some people can buy over the counter medicines, so people
can go to a walk in clinic, and some people have a family doctor.
One quick story: I was in a GRI real estate class in Orlando a few years ago with about 100 other Realtors. We all
got to go around the room and say our name and firm. One Realtor® said she was with Assist-2-Sell (a franchised
full service discounter). About half the class "booed" this person. The instructor actually had to tell the class to be
quiet because there are federal anti-trust laws that protect these alternative models. A sad day!
I do fully believe the current real estate recession is going to usher in a new age of flat fee MLS and alternative real
estate models. You would not believe how many Realtors® (and mortgage brokers and title companies) I talk to
that are doing all sorts of creative things to bring in a few dollars right now. The market is changing and the six percenters are a dying breed.
Copyright © 2007. Sand Dollar Realty Group, Inc. All rights reserved. Reprinted by Permission. Rob
Arnold is a Florida managing real estate broker and licensed mortgage broker. Call 407-389-7318, 877-3897318, visit or
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Credit Bureau Basics
by Wendy Polisi June 9, 2009
In today's real estate market, it is more difficult than ever to qualify for a mortgage. With delinquencies on the rise,
your credit score needs to be good, if not stellar, for lenders to approve your loan.
Still, most people don't understand even the basics of a credit report or what exactly a credit bureau is. Even
seasoned investors are confused on many of the details of how credit works.
This brings us to the most basic credit question of all. What exactly is a credit bureau?
Basically, a credit bureau is a giant record keeper that stores information on almost every adult in the United States.
Information includes addresses, employer and most importantly, payment history.
Some people think that when something on their credit report is incorrect, the credit bureau is to blame. Many
times, a lender will hear the statement "Experian isn't reporting my car correctly."
This isn't true! Your lender is the one reporting incorrectly.
The credit bureaus collect information, but they do not confirm anything. What they report is simply the data that
creditors supply them with. This means that a creditor can report anything to the credit bureau and it will appear on
your report, regardless of whether it is accurate.
It is estimated that between 40 and 70% of credit reports contain errors. These errors can lead to increased interest
rates, credit denial and even job denial.
Because without your involvement, your credit report is simply a large compilation of unverified data, the federal
government has numerous consumer protection laws in place.
The most important of these to understand is that the only time the data in your credit bureau is confirmed is if you
file a dispute with each of the three credit bureaus.
When this happens, the creditor has 30 days to prove to the credit bureau that the item is accurate. If they fail to
verify the item as accurate within this time frame, the item is required by law to be removed from your credit report.
One of the most important keys to keeping your credit score up is consistent monitoring of your report. There are
many great services to help make this easy, but the most important key is consumer knowledge and involvement.
Wendy Polisi is Vice President and co-founder of Finance the Dream. Finance the Dream helps
American's realize the dream of homeownership by offering Lease Purchase, Lease Option, Rent to Own
and Owner Financed homes throughout the country. For more information on the program or on credit
repair, please visit: Reprinted by Permission. Copyright © 2004-2013
BiggerPockets Inc. All Rights Reserved.
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Opportunities Are Found; Deals Are Structured
by Bill Cook January 28, 2010
Folks new to real estate investing think deal structuring is a pretty cut-and-dry, unimaginative process. You find a
house, make an offer, apply for a mortgage and then buy the property. Simple, right?
If it was so easy, why would an investor waste his/her time and money joining a local REIA (Real Estate Investors
Association) or attending real-world, how-to-structure-it-creatively seminars? I think Pete Fortunato, one of my
long-time teachers, says it best: Opportunities are found; deals are structured.
Let’s look at how we took an opportunity a local bank recently brought us and structured it into a deal.
The bank had foreclosed on a property in Calhoun, Georgia. It was a cedar-sided, three-bedroom, two-bath ranch
that had been built in the early 1980’s. The house was in a good, solid neighborhood. It needed a $10,000 rehab.
The bank said that a few years before, the property had appraised for $140,000.
At the property, Kim and I discovered the house was vacant, the doors were locked and the key was nowhere to be
found. The only way in was through the investor door. In other words, my 50-year-old butt had to shimmy through
a teeny, tiny unlocked kitchen window, fall into the sink and then crash onto the floor. Kim howled as I slammed
face first onto the tile with a loud thud!
Shana of Bernie’s Mountain
We determined the CARV (Conservative After-Repaired Value) of the property was $95,000.
Now, stop for a second. How would YOU structure this deal? Here’s how we structured it:
We began with our exit strategy: what we would do with the property after buying it. We would rehab the property
and then either: 1) Sell it for $70,000, or 2) if we didn’t immediately find a buyer, lease/option the property to a
tenant-buyer. If the tenant-buyer made on-time payments and took good care of the property for 13 months, we’d
owner-finance the property to the tenant-buyer with a 30-month call built into the Note.
Now, for our offer to the bank: we’d buy the property for $40,000. We also needed to borrow $10,000 to pay for
the repairs. Because we were $50,000 light of having the $50,000 we needed to do this deal, we’d do a Deed-forNote deal with the bank.
With a Deed-for-Note deal, the bank gives us the Warranty Deed (ownership of the property) and we give them a
$50,000 Note secured by the property.
Here are the Note terms we requested: A 20-year amortization with a 5-year balloon. Monthly payments (principal
and interest) of $300/month at 6.01% interest. A built-in 2-year loan extension with pre-agreed-to terms and
conditions. Also, we wanted the Due-on-Sale clause removed from the Security Deed.
We asked the bank to pay all closing costs, as well as for an owner’s title insurance policy.
Is this similar to your deal structure? Do you still think deal structuring is a cut-and-dry, unimaginative process?
Bill and Kim Cook live in Adairsville, Georgia and have been successfully investing in real estate
since1995. They’ve been writing their weekly real estate investing newspaper column since 2003. Reprinted
by Permission. Copyright © 2004-2014 BiggerPockets Inc. All Rights Reserved.
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Partnering On Real Estate Deals For The Right Reasons
by Jay DeCima
My personal investment strategy has constantly changed over the years as I've discovered what works, what
don't and how to "tighten-up" my deals to maximize cash flow. I've always felt that investing alone is better
than splitting the pie and sharing my profits! However, I have had several excellent partnership ventures
over the years. And I must tell you this, when they work, you can achieve your financial goals many times
faster than doing deals alone. But remember, I said when they work-that's the tricky part. Partnerships are like
marriages - there are some good ones that last a lifetime and many that don't last till they're paid for! Like
marriages, partnerships stand a much better chance of working and lasting if the partners are selected for the
right reason. When I talk about partnership investing, I don't necessarily mean you should form a legal
partnership. I'm talking co- ownership or two investors owning real estate together for the purpose of
making money.
Why Would Anyone Want a Partnership?
There is only one good reason I know of to take on an investment partner. It's when you don't have enough
financial horsepower to do the total deal by yourself. Most often, it's financial assistance you need. However,
there might be other legitimate reasons. Equity sharing and timeshare contracts are two examples of
partnership investing. Both arrangements are specifically designed for investors who can't purchase the
whole "enchilada" themselves, or at least they don't think they can!
Do not take on a partner because you want companionship!
Always ask yourself these questions: Do I really need a partner or do I just think I need one? Is it wise for
me to split my profits with someone else? The answers should be very clear before you look for a partner.
Every so often I hear about a "lonely investor" who apparently doesn't have enough confidence to buy real
estate by himself. Generally this type of person lacks courage. He wants a partner for moral support. That's
not a good reason to form a partnership. It's like the guy who thinks he's better oft crashing in an airplane
with 100 people aboard rather than crashing alone. Take my advice here, do not take on a partner because
you want companionship. Partnerships are tough enough when you have a good reason.
Partnerships Must Be Based on Mutual Needs.
Consider the want-to-be investor who knows just enough about real estate to be dangerous. He has more
guts than it takes to fight a mountain lion, but not enough cash to use the pay toilet at the bus depot! Nine
out of ten times, this joker will attempt to convince someone with money that by simply joining together,
they'll both end up millionaires. Nearly always they both end up broke instead! Stay away from people who
have million-dollar ideas, but no money!
My first thoughts when anyone approaches me with a partnership proposition are -What's in the deal for
me? What's the risk to me and what assurances do I have that a partner will do what he says? One question
you should always ask yourself is -What's the most I can lose if I do this deal? Naturally, I'd be very
concerned that my partner and I shared equal risk!
Partnerships Can Solve Your Money Problems.
Developing partnerships to pool individual resources, knowledge and experience can provide an excellent
vehicle for acquiring wealth at a much faster pace than would otherwise be possible. I've discovered that in
most successful partnerships, the partners themselves will often have very little in common with each other
except for their desire to make money together. Sometimes an accountant will team up with a carpenter or
handyman. A doctor might select a contractor, or a school teacher with extra hours and mechanical skills
might work very well with a real estate broker.
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Sometimes the best way to find investment partners with the particular qualifications you
need is by advertising in the Help Wanted ads of a local newspaper. Many folks would like
to create a profitable partnership, but don't have any idea where to start! The first thing
you must determine is what can you provide to the partnership! Will it be investment
capital, your time or the specialized skills you possess. Write it down on paper, then
advertise for a partner. There are many people looking for what you have to offer, but if
they don't know you exist you must speak up and let them know.
The Courting Period Requires Honesty.
The biggest mistake for no money partners to make in trying to entice a person with
money is to oversell and overstate the benefits the money partner is supposed to receive. If
I were to show you all the proposals offered to me and added up all the profits I've been
promised over the years, I'd need to rent the Bank of America headquarters building to
store all my money. Fortunately or unfortunately, whichever way you view it, I didn't
invest my money, so I'll never really know for sure. I can tell you this much' however, a
very high percentage of the deals went bust!
Jay's Rules for Finding a Money Partner.
My "no-compromise" business rule for finding an investor with money when I need
financial help is the same rule I use for landlording. I call it my 60/40 rule. It means I'm
willing to give more than I take! I've always felt that broke investors should be willing to
give up at least 60% of the partnership benefits in order to attract the money. This means
if I'm the broke partner, I'll be content with taking 40%
of the deal for myself.
Always ask yourself this question about the partnership. Who could most likely make it on
their own-the partner with or without the money? I think it's clear-the party with the
money will always have a much greater opportunity than the one who's broke.
Reprinted by Permission. The author, known to many as “Fixer Jay,” is a seasoned real
estate investor with more than forty five years of hands-on experience. Nearly half of the
time has been devoted to his specialty: fixing up run down houses and adding value. Many
years ago, Jay began teaching others about his moneymaking strategies at seminars and at
his popular house fixer camps, in Redding, CA. Visit
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The Top Five Reasons Landlords Are Afraid To Evict
by John Nuzzolese
Many landlords are so afraid to evict a tenant that it costs them far more in the long run that it would to just bite the
bullet and go through with a legal eviction.
Let's face it. Evictions are not a pleasant part of the business. Collecting rent on time is. Having your rental property
cared for by a tenant who pays the rent is essential to being a successful landlord. But what about when things don't
go so well? When tenants don't abide by the agreements made in the lease?
I always say, "It is better to have NO tenant, than it is to have a BAD tenant." I say this because I would rather have an
empty rental property than one with a deadbeat loser who:
a. doesn't have the integrity or responsibility to honor his agreement,
b. is stealing from me and my family for every day he gets away with not paying the rent,
c. is costing me time and aggravation in managing a hopeless tenancy.
Most landlords can't afford to be good Samaritans who provide free housing. The rent needs to be paid or they will
lose the property they worked so hard to acquire in the first place.
So What Are The Top 5 Reasons Landlords are Afraid to Evict?
1. Fear of the Unknown
I've noticed that landlords who have never experienced evicting a tenant in court before will do whatever it takes to
avoid the eviction process, even at greater cost to themselves than an actual eviction would cost. I've also noticed
that landlords who have evicted a tenant in the past are more willing to evict again when it needs to be done.
Experienced landlords know that evictions should be started immediately, once the tenant cannot cure his default
on the agreement.
2. No Attorney
"I don't have an eviction attorney" and "an attorney is too expensive" are common excuses for not starting an
eviction. In reality an average attorney's fee for an eviction is tiny compared to the huge rent losses many landlords
take on because of the fear of eviction. The LPA's Attorney Directory can help find and qualify lawyers for eviction
and the Landlord Association Directory can help refer a local attorney used by landlords near you.
3. Horror Stories
We have all heard horror stories about evictions and bad tenants. It is part of the business. Most of the horror
stories I hear are stories filled with foolish mistakes made by inexperienced or unprofessional landlords. Yes, an
eviction can take many months or even years if the landlord is not willing to face the situation and handle it
professionally. Some landlords I know have lost their rental home(s), or quit the business because of the fear of
retaking control of their property through legal channels when they could have easily handled things more logically
and professionally and saved their properties. Try not to take advice from people who have not learned from their
failures in the rental business. Listen to those who have done or are doing it successfully.
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4. Believe the Tenant Are you a good guy like I am? Do you like to give everyone the benefit of the doubt? Have
you ever been promised rent money that just never seemed to come through? I have. Over and over. The stories
were always so convincing.
One time, back when caller ID was new, a tenant who had been stringing me along for months called to say he was
going to be delayed again with the rent and that he was in New Jersey on a job. His rental was on Long Island.
Normally, I'd have believed him without question and naively would have expected some money coming. The caller
ID revealed he was really calling from his home on Long Island. I went to visit him just to confirm and sure
enough, he was home!
Is it hard to believe that your tenant (a churchgoing person) would lie to you? The eviction courts are FULL of
them. The late Nick Koon, a landlord mentor of mine once said, “If you want to survive as a landlord, You cannot
run your business from your heart. You have to run it from the head.”
5. Tenant Threats Some tenants are mean nasty people. Some are bullies. Some just get nasty when they feel
threatened themselves. Whatever the reason, don't let tenant threats bother you. If you are threatened physically,
report it to the police immediately. If they threaten to damage the property, they have just shown their true colors
and given you even more reason to do a swift eviction. Whatever the tenant threatens to do, it is either a police
matter or an eviction matter. I know one landlord who had a tenant live free for five years because the tenant
threatened that he would report the "illegal" basement apartment to the town zoning board. This landlord was
foreclosed on and the bank evicted both the owner and the tenant together. Wouldn't that landlord have been
better off calling a lawyer the first month the tenant didn't pay?
Copyright © 2000-2013 The Landlord Protection Agency, Inc. All Rights Reserved.
Reprinted by Permission. Visit, email [email protected] or call (516) 483-4785
About Co-Signers
Author Unknown
Some landlords require cosigners (sometimes known as guarantors) on rental agreements and leases, especially when
renting to students who depend on parents for much of their income.
The co-signer signs a separate agreement or the rental agreement or lease, under which she agrees to be jointly and
severally liable with the tenant for the tenant's obligations — that is, to cover any rent or damage repair costs the
tenant fails to pay. The co-signer retains responsibility regardless of whether the tenant sublets or assigns his
In practice, a co-signer's promise to guarantee the tenant's rent obligation may have less value than at first you
might think. This is because the threat of eviction is the primary factor that motives a tenant to pay the rent, and
obviously you cannot evict a co-signer.
Also, since the co-signer might be sued separately in either a regular civil lawsuit or in small claims court, actually
doing so — for example, if a tenant stiffs you for a month's rent — may be more trouble than it's worth.
Editor’s Note: I recommend that a co-signer own his/her house, in New Jersey, so that if necessary, a
lien can be placed against the his/her house.
Reprinted courtesy of the Shawnee County Landlords Association, Topeka, Kansas. From March 2012
Call 785-266-4818
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Why Are You A Landlord?
"Why are you a landlord or why would you want to become one?" The following answers below are statements by landlords
nationwide on the popular Q & A forum. Read on to be inspired and encouraged about your real estate business.
I am currently in college. I became interested in real estate in high school and started doing research on how
the whole landlord thing worked. I bought my first rental after my freshman year of college. After getting
the first one rented and seeing that I really could do this and how much I enjoyed it, I moved away from
thinking of real estate investing as a side investment and started working on making it my profession. I have
been acquiring rentals since then as fast as I can and still maintain appropriate reserves and when I graduate
in December I anticipate being able to support my lifestyle from landlording alone.
It is a great business to be in, make sure you do all the research ahead of time and know how the real estate
market is in your target location, what all the real estate and landlord tenant laws are, how taxes work for
real estate, etc. -- Kyle, IN
Why? FREEDOM!!! Retired at 41. Should have been sooner but the job was paying very well. My dad
started at age 55 when forced out on early retirement. In the next several years he became wealthy, traveled
(and fished!) the world, and when he died 13 years ago, left a tiny empire which supported my mother
beautifully for 10 years and now provides cash income for my generation. All from a handful of crummy
little rental houses. -- Brad 20,000, IN
It was the only thing we could think to do to provide for our retirement. The stock market wasn't working
(for us). At least landlording is something we can wrap our heads around and (somewhat) control. I like that
it keeps my mind active, my brain busy. I am sorry I am missing the convention this year. -- Wendy, NC
Got into landlording in order to diversify investments. Back in 2000, stocks had had a long strong run, and I
didn't feel comfortable putting more money in that direction at the time. Searched for and found
the Q & A forum. Read, read and read some more. Bought a foreclosure. That worked
out well, so we repeat over and over, and life is good. I thank all the contributors to this forum for an
education that is unequaled. I have "dodged many a bullet" because of the wisdom and experience of
contributors to the Q & A forum over the past twelve years. Lots of work, along with the regular job, but I
think it is worthwhile. -- Bill, Texas
I bought my first house when I was in my early 30's. I worked at General Motors and they were trying to
retire out a bunch of guys in their 50's. Lots of them said they couldn't retire because they couldn't afford to
(despite years of making an excellent income) because they had kids in college and weddings to pay for. I
swore that wouldn't happen to me, so I bought the first house to be my oldest child's college education fund
(even though I was single at the time and had no plans to have one in the immediate future!). Planned to
buy a second house eventually for my second child's college education. Never imagined I'd like it and would
end up making a living out of landlording. Life is a funny thing. Illini Fan, OH
So Pookie and I can travel to Costa Rica when WE want to with the kids. To go to a Reds game anytime I
want. To wear shorts, flip flops, and no shirt on Tuesday at 10:30 am every week. To play golf any time I
want. Never miss a kids game or practice. To help people live in decent housing. To prove to my kids the
truth of education. Freedom. -- Lee, IN
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I kept thinking it would be great to have a rental property. The rent would buy a house for me, and
eventually I'd own it after it paid for itself! Figured it make for a nice nest egg. So, one day I just did it. That
house appraised two years after I bought it for more than double what I have in it. I added a few more over
the next couple years. Now I am shifting my focus to cashflow and finding funding to purchase these
houses. Don't get me wrong, the houses I have were great investments, but I don't make much on them. I
hate my job, and I want out of it. You think the government is hard on landlords??? Try driving a truck for a
living! I want a nice row of Monopoly houses to feed my family and send my kids to college. Hoping to
learn more about my new focus at Landlord Convention. -- 574-Brad, IN
I left my country very young and worked in countries where inflation got so out of hand that it made rich
people very poor because they had all their money in cash. So when I got here in 1992 with no money but
big dreams I started to buy real estate because I thought it was good against inflation. If you buy good
properties with fixed, low interest rates, and inflation happens your rents will go up and you will be sitting
pretty good in the future. -- Jose, CA
In my very early 20's, I always wanted to do landlording as a side business. I figured a little work and a little
money could build over time. A few years later I bought my first multi. A lot of work and a lot of money
later, up to 24 now, and hope to add 18 more by the end of the year. Hope to quit the day job in five years
or less. -- Alex, IL
I'm a landlord because my plans for becoming a rock star didn't work out. OK, I'm a landlord because now
is the time to buy, hold and rent, although the days of buy and flip are rapidly returning, I think, followed in
about 3-4 years by buy and build new for retail sale. I follow the cycles. We may or may not hold rentals
long term as I get older. -- LL, AZ
It's this simple--There is no better investment now, after losing a million in the stock market I switched to
real estate. Much better. Now is a unique time, in my area you can buy a single family rental with 20% down
and cash flow on day one, and at age 59 this is the first time I have seen this. Buy as many single family
rentals as possible now. -- Steve, CO
I want to be rich. Rich people have options. Options = freedom to do what you want with your time. That
may sound selfish, but think of it like this. Freedom allows me to serve God and my fellow man rather than
slaving away at a desk just so there's bread on the table each month. Who is selfish? The man who works
hard in his spare time and retires at age 40 and then can volunteer and/or take up charitable causes, or the
man who watches TV every night and weekend and must stay at his desk job until 65 just to keep the lights
Time is our most limited resource. We each only have so much. Like others here, I've talked to many 50something-year-olds who are counting the days until they can retire at 65, some at 67 due to Social Security
changes. Times are changing. Soon Medicare will be bankrupt (or it already is...we just don't know it yet
thanks to the FED printing money), and I don't trust the government or an employer to provide for my
golden years. So in short, I want my golden years to start when I'm in my 40s, and I want them to be on as
solid a footing as possible. Plus I love using a chop saw and Sawzall. And who doesn't enjoy nail guns?
-- Sid, MO
To quote my dad "Wanna make a million dollars? Borrow a million and let someone else pay it back."
Looking for my first house at age 25, Dad pretty much "made me" buy the one with the upstairs mother-inlaw suite. I had a couple roommates but it really didn't work out. Then a friend of a friend wanted his own
apt. and suddenly I had a real "tenant." He paid 75% of my mortgage. Suddenly, I "got" it! Then I used the
equity and paid $24K cash for a mobile home around the corner. $500/month in rent: you do the math (I
still own both, by the way). And away we go..... The mobile home is paid for (obviously); have a duplex that
is 4 years away. Another 7 years and my own home is (I think) 9 years away. This is my retirement fund. I've
been self-employed in another area for 17 years. -- Blue, IL
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I want freedom. To travel when I want, sleep in when I want, and go to the movies in the middle of the day.
I don't want to wait until my sixties to get my days back. After doing a few flips, I lucked out and found an
under thirties landlord and her husband that owned maybe about 15 rentals (and growing) that they had
bought, rehabbed, and rented themselves. This was their only job. They worked very hard at it, but their
goal was never to work a corporate job. She mentored me. I've built up several rentals and hope to "retire"
in another 3 to 4 years. Twelve paid off rentals is my goal. -- Jules, MO
I have been self-employed most of my adult life in other careers which were one hassle after another. If you
think a deadbeat tenant is a pain, wait till you have a deadbeat 100 million dollar corporation that stiffs you.
Try collecting from them in small claims court. Good luck!!
Even with 12 single family homes on auto-pilot, I find that Landlording is virtually hassle free...Well not
really. I do get a cramp in my right hand sometimes from endorsing 12 checks each month, but other than
that I really love this business. -- Roy, AL
I tried working once for a living and didn't like it. Once the mind expands it never goes back to its original
size. -- Dan, FL
My rentals are my retirement income. In the late '80's I started building new homes. Homebuilding worked
out very well for me. It gave me the cash to do some other things. As I got older I noticed that the banks
were only paying about 1-2% on my money. I found a townhouse that cost me $35K and rented for
$450/mo. That was a whole lot more than the bank could pay, so I started investing my cash in townhomes.
These townhomes are my retirement income. They will be cash flowing for my heirs long after I'm gone,
but between now and then, they afford me a pretty nice lifestyle. It's all for the retirement! -- OKHMBLDR,
I closed another business and needed a way to develop a new stream of cash flow. I went to many Real
Estate Investment club meetings in my area and listened to those people. They were talking about buying
low end properties, fixing them and renting them out. Many did it without any cash, and some even used
credit cards to buy their first property. Once fixed and rented, many of these properties threw off $300 or so
per month in income, and the mortgage was getting paid off by the tenant. I was a handyman and gave it a
try. I now have 10, and I have to say that this is a GREAT semi-retirement. I used my cash from the other
business, so I own all of them without a mortgage.
This provides me with all of the cash I need to live on. I am on my own schedule, have no one to answer to,
except the tenants, and I have found it very rewarding. I take a crummy property, fix it up as close to new as
possible (new kitchens, new baths, new paint, refinished hardwood floors, etc. and I am proud of the
product I produce. My tenants, so far, all seem to appreciate the condition of the properties, since many of
them are the first tenants I have put in the property (7 years or more). When they call me with a problem, I
usually go immediately to fix the problem. I have found that immediate customer service causes the tenant
to want to stay in my properties, since so many landlords sadly ignore their customers. I have no problem
fixing a clogged drain, etc., even though the lease states that it is the tenants’ problem. I figure that a happy
customer is FAAAAR better than a vacancy. This business is not easy, but, as I said, it gives me freedom,
and I really enjoy it! -- Jeff, PA
After 41 years of marriage I got divorced and had some rentals dumped in my lap. Didn't have a clue what I
was doing, but bought and read everything I could, joined Jeffrey Taylor's website, and am finally getting on
my feet with it (it's been almost 4 years). Most of the property was in bad shape, and I can't so much as
change a doorknob, so it took some time and lots of money, but I've traded up and now have some really
nice property. Was told by everyone to hire a property manager, which I did, until I realized they were two
months behind in paying me my rent. I took it all back and am on my way to building the business! -- Suzy,
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For retirement. My husband and I are in our mid-50s. He works at a very good job and I own a small
company. We are in our high earning years and have a paid off house with lots of disposable income. Rather
than buying fancy cars or a more expensive home with a mortgage, about three years ago my husband and I
purchased our first small rental house for cash, then two more. Now we are using a self-directed IRA to
purchase more. We already have one more and hope to purchase about 6 more for a total of 10 properties.
The return on our rentals since we paid cash is only about 9%-10%, but with CDs we could barely make
1%. We buy 2-3 bedroom single-family homes and fix them up very nicely. Our residents really don't call us
that often as things run pretty smoothly. We kind of look at fixing up these homes as our art. We really like
making an old house look as shiny and new as possible.
At first we looked for the total dogs, but we realized we may have spent too much to fix them up. Now we
really try to find houses which just need cleaning up and some cosmetic changes. In our area there is not all
that much difference in price between a money-pit and a pretty nice, slightly neglected home. In finding a
value we look at the sales price plus the cost of the fix up before we make the purchase. This means we
sometimes pay more initially, but we believe it is a better overall deal for us in the long run, plus less work.
One more thing. We used to do everything ourselves. Now we have found some good handyman types to
do most of the fix up work. We then go in in the last week or so to clean up the property and put on the
finishing touches. We want to have a fun life, not just be slaves to our rentals. Life is short. -- Beth, KS
Reprinted by Permission. The above tips are shared on the website and in the Mr.
Landlording newsletter from landlord contributors, real estate advisors and authors. To receive a free sample of
Mr. Landlord newsletter, call 1-800-950-2250 or visit their informative Q&A Forum at,
where you can ask landlording questions and seek the advice of other rental owners 24 hours a day.
It's Not My Job
by Robert L. Cain
Ron knows the law. He can quote it chapter and verse. Ask him about any individual piece of the code, and he can
cite it for you. Ron knows his contracts. He can tell you every last clause that’s in them and what it means. Ron
knows all that because he wants to make sure he doesn't have to do a lick more work than he has to.
The trouble is, Ron is a property manager. Property owners have entrusted him to manage their properties. They
expect he will collect rents, keep track of expenses, and send them a check every now and then. They also expect he
will see that their properties are taken care of. That's what they thought a property manager was supposed to do.
Ron knows differently. He knows the law and each clause in his contract. He's fine with collecting rents and keeping
track of expenses because the law that he knows so well says he absolutely has to. He's also fine with sending a
check to the owners every so often. The law says he's supposed to do that, too, along with an accounting.
But Ron's favorite phrase is "It's not my job." He knows what his job is because he knows the law and his
management contracts inside out. When his clients hired him on, Ron said he would inspect the properties every
two or three months and see that things that needed fixing got fixed. He said he would keep them informed about
anything they needed to know about their properties. Trouble is, nowhere in the law or the contract is there
anything remotely close to that language. And Ron knows the law and his contracts like the "Cheers" reruns he
watches all day on TV and the 17th level of World of Warcraft that he has reached because he plays it incessantly
when "Cheers" reruns aren't on or he is trying to figure out the best way to avoid doing any kind of work.
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Here's a case in point. Ron had a management client who had to move to Los Angeles for work and couldn't sell his
house. This client had spent thousands of dollars making his yard an Asian garden showcase. Buddha statues hid in
strategic places around the yard. Asian plants decorated each corner of the property. And the Koi pond held fish
worth thousands of dollars.
When Ron took over management, he assured his LA-bound client that he would pay assiduous attention to the
property. He also told his client that any new tenant he found would maintain the yard with the same care as the
departing owner. You know where this is going.
Six months later the yard is a disaster. All the Asian foliage is gone. The Buddhas are still there but hard to find
midst the weeds. And the koi? They all died because the pond's pump broke so the filter couldn't filter, and the
tenant never said anything about it. As if it would have done any good because it wasn't Ron's job.
When the owner came back to town to inspect the property, he discovered the disaster and fired Ron on the spot.
Ron's response was "It's not my job," when asked why he didn't deal with the problems with the property. Ron had
not done an inspection since he had taken over management. After all, it wasn't his job.
Are all property managers and property management companies like that? Fortunately, no. Many do take their jobs
seriously and look out for the best interests of the people whose properties they manage. They know the law, too,
but they also know their fiduciary responsibility.
It doesn't matter what the law says; it doesn't matter what the contract says; when someone promises to take care of
someone else's property, he or she takes on the responsibility to do it not just right but more than right.
In every state where property managers must be licensed, they are required to exercise a fiduciary responsibility to
their property owners. West's American Law Encyclopedia describes fiduciary responsibility like this:
"A fiduciary relationship encompasses the idea of faith and confidence and is generally established only when the
confidence given by one person is actually accepted by the other person. Mere respect for another individual's
judgment or general trust in his or her character is ordinarily insufficient for the creation of a fiduciary relationship.
The duties of a fiduciary include loyalty and reasonable care of the assets within custody. All of the fiduciary's
actions are performed for the advantage of the beneficiary."
Watching "Cheers" reruns and playing World of Warcraft all day might seem to interfere with carrying out fiduciary
responsibility. Even more, repeating the phrase "it's not my job" when faced with a decision about when Ron
should deal with a problem in one of the properties he manages, definitely doesn't meet the criteria for carrying out
his fiduciary responsibility.
Property managers, the good ones, the ones who owners stick with and swear by and recommend to their friends
and families, think first about their responsibilities to the owners of the properties they manage. No one has to tell
them about fiduciary responsibility because they automatically will do what is necessary to protect the interests of
their owners. They believe everything having to do with the condition or circumstances of any of the properties
they manage falls under the fiduciary responsibility banner.
If you are in the market for a property manager, you certainly don't want Ron or one of his ilk who are
competing with Ron for "Worst Property Manager of the Year." When you interview a property management
company with the idea of managing your properties, you might ask what their view of fiduciary responsibility
is. Their answer is important. If the first words out of the manager's mouth are "the law says," run for your life.
If the manager begins explaining how he or she takes that responsibility seriously and tells a story or two about
how he or she kept an owner's property from falling into disaster, pay attention.
Reprinted by Permission. Copyright 2011 Cain Publications, Inc. Robert Cain is a nationally-recognized
speaker and writer on property management and real estate issues. For a free of the Rental Property
Reporter call 800-654-5456 or visit
Volume 17 Issue 11
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November 2014
Premises: _____________________________________________________________________
This Appliance Agreement addendum is made this __________ day of _____________________,
20____, and is added to and amends that certain agreement by and between
____________________________________________________________ as Tenant(s) and
_____________________________________________________________as Landlord(s), which
agreement is dated __________ day of _______________________, 20____.
The dwelling may contain various appliances, such as:
(Included = √ or New)
Stove _________________
Washer ________________
Refrigerator ____________
Dryer _________________
Dishwasher ____________
Air Conditioner _________
Wall Oven _____________
Pool Filter ______________
Microwave _____________
Auto Garage Door Opener __________
Garbage disposal ________
Trash Compactor __________
Dehumidifier ___________
Ceiling Fan __________
Tenant shall assume responsibility for care, minor repairs and maintenance. If appliances are equipped with manuals
and/or warranty papers, Tenant shall not lose or discard these documents, and will be responsible for their return.
Repairs resulting less than $125.00 shall be deemed minor repairs. Should Tenant neglect maintenance
responsibilities, Owner or agent may assume them on Tenant's behalf and any expenses incurred by Owner in
connection therewith shall be additional rent (added rent), payable to Owner on demand.
If Tenant does not agree to be responsible for the appliances, but rather use his own, he may request that Owner's
appliances be removed from the premises. All washer/dryer installations must be approved and authorized by
Owner in writing. Tenant agrees to replace all water supply hoses to washing machine that show any signs of wear
every year. Tenant also agrees to turn off water supply to washing machine when it is not in use.
The parties have entered into this Agreement on the date first above stated, and acknowledge receipt of a copy
____________________________________ _______________________________________
____________________________________ _______________________________________
Copyright © 2009 The Landlord Protection Agency, Inc. All Rights Reserved. Reprinted by Permission.
Visit, email [email protected] or call (516) 483-4785
Volume 17 Issue 11
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November 2014
Vendor/Sponsor Table of Contents
Accounting Services
Samuel S. Fisher
Construction & Renovations
44 911 Restoration – David Oknin
Financing Services
Residential Home
Home Staging
Stage 2 Style
44 Metro Homes & Insurance
Investment Services
No Current Vendors
Pest Control Services
Pest Plus Pest
Home Buyers
No Current Vendors
Legal Services
Fein Such Law, Harry Fieland, Esq.
No Current Vendors
Real Estate Agencies
No Current Vendors
Energy Services
No Current Vendors
Home Inspections
No Current Vendors
No Current Vendors
Member Discounts
44 Kiuken Brothers
Ricciardi Brothers
Paints & Supplies
PC Richard & Sons
Paints & Supplies
Residential Screening
No Current Vendors
Title Agencies
No Current Vendors
Our Vendors & Sponsors support us and help us maintain our low membership dues.
Please contact them first when you need a product or service.
Bjorkenson, Chris
Dittman, Ron
Gorman, Michael
Grubr, Jared
Hartman, Mark
Jangtey, Tenziuy
Janusz, John
Volume 17 Issue 11
Lisoski, Ron
Meyer, John
Peckham, Jason
Starcev, Tony
Taylor, Jake
Taylor, Yines
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November 2014
Volume 17 Issue 11
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November 2014
Do We Have Your Correct Email Address??
In order to ensure that you, as a MREIA Member
are Receiving Our Emails.
MREIA periodically Sends an Email with a Link
to click on when you receive the email.
Thank you so much,
MREIA Board Members
Harry Frieland, Esq.
Fein Such Law Group
Email Address:
[email protected]
Samuel S. Fisher & Associates
Certified Public Accountants, LLC
100 Bayard St, Ste 311
New Brunswick, NJ 08901
Tel: (732) 846-1700
Fax: (732) 846-1788
Volume 17 Issue 11
Mailing Address
7 Century Drive
Parsippany, NJ 07054
Telephone Number:
(973) 538-4700 ext. 3394
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November 2014
For More Information please call Mark Kapsky at: (201) 602-9488
Residential Home Funding
100 Lanidex Plaza, 2nd Floor
Parsippany, NJ 07054
Telephone Number: (201) 602-9488
Email Address: [email protected]
Volume 17 Issue 11
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November 2014
Our 102 Years of
New Store Location: Route 70, Brick, NJ
PC Richard & Son offers discounts on appliances to MREIA members.
Please contact Nick Zampetti at (201) 343-8629 for complete details,
or e-mail [email protected] and request additional information.
At the MREIA General Meetings
there is a Wealth of Information
That is worth even more than
The cost of Your Membership
Volume 17 Issue 11
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November 2014
Volume 17 Issue 11
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November 2014
Your Board of Directors
Dan Schwartz
(201) 791-4639
[email protected]
Vice President
Murray Kane
(973) 476-9528
[email protected]
Secretary/Past President
Nick Zampetti
(201) 343-8629
[email protected]
Bob Mularz
No Tel# Yet
[email protected]
Dan Schwartz
(201) 791-4639
[email protected]
Past President
Frank Barillari
(732) 240-2050
[email protected]
Audio/Visual Chair
David Leidy
(201) 965-3288
[email protected]
Legislative Awareness Chair
David Corsi.
(732) 923-1410
[email protected]
Lending Library Chair
Angela Fan
(201) 889-9026
[email protected]
Meeting Site Chair
Nick Zampetti
(201) 343-8269
[email protected]
Membership Chair
Peggy Martini
(201) 410-5017
[email protected]
Registration Chair
Chuck Martini
(201) 410-5017
[email protected]
Vendor Chair
Scott Linde
(732) 777-6857
[email protected]
We are a not-for-profit Real Estate Educational Organization and a member of
The National Real Estate Investors Association.
The elected and appointed officers are unpaid volunteers.
We do not render legal, accounting, tax, investment or other professional services either through the Metro or at general meetings. We disclaim all
liability for actions (or inactions) taken as a result of any communications between the Board of Directors, appointed officers and the membership.
We do not officially endorse any product, project, person or organization. Before making any investment decision, you are urged to seek advice
from qualified and competent professionals and to use due diligence before using any product, services or ideas presented in the Metro or at general
meetings. At times the Board may take particular positions or points of view on matters regarding the real estate industry. Said positions do not represent solicitations.
Our speakers are permitted to sell any products or services they may have to offer our members or guests.. The opinions expressed by the speak-
D o you enjoy spending hundreds or even thousands of dollars buying real estate books and CD s? Som e courses are valuable to have as a perm anent part of your personal
reference library. H owever, not all inform ation available m ay m eet your individual goals. TH EREFO RE, last year we created a Lending Library for your convenience and
FREE to all M REIA m em bers. O ur goal is to help educate and to guide you in m any areas of real estate, such as creative financing, negotiating techniques, landlording,
renovations, asset protection, etc.
To use our library, there are guidelines that you m ust agree to:
You m ust be a current M REIA m em ber.
O nly one book or m aterials m ay be checked out at a tim e.
An item borrowed m ust be returned within thirty days. N on-attendance at the next general m eeting is not an acceptable reason for failure to return the m aterials.
If not returned, the book/m aterials loan is considered LATE. Your credit card will thereupon be charged a $15 late fee.
If you do not return the item borrowed after two m onths, your credit card will be charged the retail value to replace whatever was borrowed. You will then be
the owner of whatever you have not returned.
5. See Angela Fan, Lending Library Chairperson, at a general m eeting.
The above guidelines are necessary so that all m em bers will have access to all of the books/m aterial being offered.
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November 2014