Oh boy! Now we are on a hot topic. Who runs the financial world besides who we would consider the 3%ers? Everyone knows that 3% of the population earns 97% of the income available to make. Why? Because they are doers. Understand, however, that they don't run as much as we think they do. THE BIG THREE are: 1. the Government 2. the Banks 3. the Insurance industry
My job as an investor, in this market or any market for that matter, is to figure out how to be a part of THE BIG THREE. I think it is a process of elimination. How likely is it that the average real estate investor becomes a government official or at least puts themselves in a position to write policy? Not very. How likely is it that the average real estate investor starts an insurance agency or franchises an Allstate office like my uncle did back in Maryland? Again not likely.
Drum Roll Please.................
By process of elimination the only position available in THE BIG THREE is to be a bank. Why is it likely? Because, if you are an active real estate investor, you have access to masses of cash and credit from your private investors, your credit partners, and your colleagues. Believe it! You can be the bank. No more sulking about the points you pay on this loan and that loan. All you need to do is put yourself in position to do the same things the banks do and it is all perfectly legal.
1. Line up Your Private Money
If you are not actively soliciting private money and you call yourself a real estate investor, HA.
You have to have private money to fund the deals you want to hold. Why would you use your own money or credit when you can use someone else's. Send out solicitations to your friends, co-workers, and family. They call that the Warm List. You will be surprised about who will be interested in what you have to offer. Just let everyone know that you can give them a return between 9% and 12% on their private monetary investments and all of the funds will be secured by Real Estate. They will love that because most people have their money sitting in banks and in non-performing investments, losing to inflation and taxes. Show them that there is a better way. We are going to call these people LENDERS.
2. Set up Your Private Money Division
Our title attorney calls this the Loan LLC. You can set up an LLC specifically to handle the private money transactions of the lenders you solicited above. The attorney will also be able to set up the paperwork, notes, options, terms, and any other specifics to your private money needs. You tell them what you want, pay, and they will take care of the rest. The idea here is that when you solicit private funds, you never touch the money personally. It always goes into title/escrow and it is disbursed according to the terms of the deal. Now you are ready to roll.
3. Too Hot for TV
Everybody knows an investor who needs hard money. EVERYBODY knows an investor that needs hard money. Well guess who is a hard money lender now? You that's who. Use the private monies you borrow at 9% and loan at 5 points and 12-14% for 6 month terms. Turn the private funds 3 times in 24 months and watch your pockets get FATTER!! If I'm lying...I'm flying. Now you are the bank and you control your own income. Analyze the deals as if it were your own and if it makes sense loan on it and collect.
As you can see the Lender loans to you and your Loan LLC lends to the borrower. What great things you can accomplish as a professional middle man. If you turn more you make more. It is plain and simple. The hard money division of your real estate investment business is NOW OPEN. You can thank me later or sign up for "the what and the how" real estate investing program in Dallas, Texas where I teach all of these strategies for creating wealth. So, I encourage you to take action on this one my fellow investors.
Blessings to your Real Estate Investment Successes,
Milton B. Yates
www.miltonyates.com
Tuesday, October 16, 2007
The Secret to Short Sales...This works ANYWHERE!!
Let's start off by defining what a short sale is. A short sale is when the bank accepts a lesser amount than what is owed by a borrower as full settlement of that borrower's debt. So if you were to purchase a short sale, you would be buying "short" both the market value and the mortgage's principal balance. Short sales are not for the faint of heart and they do not convert overnight; however, they make for very healthy profits if executed correctly.
If you haven't established a down-line in your real estate investment business, you are new to investing, your time is not blocked correctly, or you aren't that confident yet; STOP. LOOK. READ. Lesson #1 on short sales is that you don't have to do them. It is very time-consuming to get the lead, call the lead, convince them that they have no equity and could potentially be upside down, call the bank, submit the packet, show up for the Broker Price Opinion (BPO), wait for the counter, play poker with the loss mitigation department, and MAYBE get an approval. Don't get me wrong. If you are able to get that approval then you will certainly make tons of money from the deal, if you follow the "system" I talked about in another article. But you don't have to do all of that work.
Just like with the REO properties, find a hungry Realtor who is looking for business and have them scrape their 180+ listings for pre-foreclosure situations. Have them convince the sellers to agree to sell for what they owe and let them contact the bank to negotiate a short sale if necessary. You in turn, fund the deals with private money, hard money, or cash, and the realtor gets a property sold that would in most cases be sitting for another 180+ days. Not all of these deals will end up as short sales. Some of them will end up being GREAT BUYS without going through the bank. At the end of the day, with or without a bank type purchase, the agent gets theirs. That's all they want anyway!
Note: Banks love working with LICENSED professionals. The Realtor will have a much easier time effectively communicating with the loss mitigation departments at these banks, then you will as an investor. So now you should have a couple of effective ways to use agents as bird dogs and you just sit back and raise private funds to put on all the deals that agent gets approved. It's a Real Estate Investment Business on Auto-Pilot and it's almost better than THE REAL ESTATE INVESTOR IN A BOX product my business partner and I have put together as a "Done for You" service to the lazy investor. You can be a successful Real Estate Investor without ever buying or selling a home. Think about it. If you have questions about that you need to visit my site at www.miltonyates.com.
Blessings to your Real Estate Investment Successes,
Milton B. Yates
www.miltonyates.com
If you haven't established a down-line in your real estate investment business, you are new to investing, your time is not blocked correctly, or you aren't that confident yet; STOP. LOOK. READ. Lesson #1 on short sales is that you don't have to do them. It is very time-consuming to get the lead, call the lead, convince them that they have no equity and could potentially be upside down, call the bank, submit the packet, show up for the Broker Price Opinion (BPO), wait for the counter, play poker with the loss mitigation department, and MAYBE get an approval. Don't get me wrong. If you are able to get that approval then you will certainly make tons of money from the deal, if you follow the "system" I talked about in another article. But you don't have to do all of that work.
Just like with the REO properties, find a hungry Realtor who is looking for business and have them scrape their 180+ listings for pre-foreclosure situations. Have them convince the sellers to agree to sell for what they owe and let them contact the bank to negotiate a short sale if necessary. You in turn, fund the deals with private money, hard money, or cash, and the realtor gets a property sold that would in most cases be sitting for another 180+ days. Not all of these deals will end up as short sales. Some of them will end up being GREAT BUYS without going through the bank. At the end of the day, with or without a bank type purchase, the agent gets theirs. That's all they want anyway!
Note: Banks love working with LICENSED professionals. The Realtor will have a much easier time effectively communicating with the loss mitigation departments at these banks, then you will as an investor. So now you should have a couple of effective ways to use agents as bird dogs and you just sit back and raise private funds to put on all the deals that agent gets approved. It's a Real Estate Investment Business on Auto-Pilot and it's almost better than THE REAL ESTATE INVESTOR IN A BOX product my business partner and I have put together as a "Done for You" service to the lazy investor. You can be a successful Real Estate Investor without ever buying or selling a home. Think about it. If you have questions about that you need to visit my site at www.miltonyates.com.
Blessings to your Real Estate Investment Successes,
Milton B. Yates
www.miltonyates.com
All You Need to do is FOLLOW THE SYSTEM!
It is inevitable that if you go outside of the system, there will be SERIOUS turbulence in your business. If you were given guidelines to go by, and you decided that you wanted to add a little extra, chances are you shot yourself in the foot. Stay within the guidelines and do not buck the system. This will always hold true. Anyone that thought there business was different or anyone who thought their employees were different, can tell you that a system is nothing to ignore. There was a reason it was put in place and systems generally have a proven track record of success before they are used by many.
So there is a system of investing that is very simple, but somehow people decide to put a little twist on it and they end up with not so good deals. Check out the formula here: "We generally offer between 70 and 85 percent of the market value less repairs. Market value is determined by the average of the properties sold in your subdivision, with the same specs, that have sold in the last 180 days." I am very unsure WHY investors ask whether a property valued at $___ and listed at $____ is a good deal. The system is in the formula.
Unless you have personal goals that prompt you to make decisions that would otherwise be considered careless investing, stick to the formula. You may ask, "When do I offer 70% less repairs?" Offer 70% as a cash purchase. If the seller wants the loan out of their name and they want a cash deal or new financing then 70% less repair is the maximum you would pay for that property. AND NOT 70% of the listing price, 70% of the value determined by a comparative market analysis aka CMA or comps. Between 71 and 85%, offers should be made leaving the existing financing in place. We like to call these "subject to" purchases because they are transactions subject to the existing financing. "Is this an assumable mortgage?" Absolutely not. Assuming a mortgage originated after 1979 is illegal. When you purchase a property "subject to" existing financing you are simply taking over the payments. As the investor, you are taking title to the property but the loan (trade line) stays in the seller's name. The maximum offer "subject to" would be 85% of market value less repairs.
Stay within this system and deals will see very quickly whether to pursue or walk away from a deal.
Blessings to your Real Estate Investment Business,
Milton B. Yates
www.miltonyates.com
So there is a system of investing that is very simple, but somehow people decide to put a little twist on it and they end up with not so good deals. Check out the formula here: "We generally offer between 70 and 85 percent of the market value less repairs. Market value is determined by the average of the properties sold in your subdivision, with the same specs, that have sold in the last 180 days." I am very unsure WHY investors ask whether a property valued at $___ and listed at $____ is a good deal. The system is in the formula.
Unless you have personal goals that prompt you to make decisions that would otherwise be considered careless investing, stick to the formula. You may ask, "When do I offer 70% less repairs?" Offer 70% as a cash purchase. If the seller wants the loan out of their name and they want a cash deal or new financing then 70% less repair is the maximum you would pay for that property. AND NOT 70% of the listing price, 70% of the value determined by a comparative market analysis aka CMA or comps. Between 71 and 85%, offers should be made leaving the existing financing in place. We like to call these "subject to" purchases because they are transactions subject to the existing financing. "Is this an assumable mortgage?" Absolutely not. Assuming a mortgage originated after 1979 is illegal. When you purchase a property "subject to" existing financing you are simply taking over the payments. As the investor, you are taking title to the property but the loan (trade line) stays in the seller's name. The maximum offer "subject to" would be 85% of market value less repairs.
Stay within this system and deals will see very quickly whether to pursue or walk away from a deal.
Blessings to your Real Estate Investment Business,
Milton B. Yates
www.miltonyates.com
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