The following are notes from our July 1st graduate coaching call.

Real Estate Agents:

We need to find the best investor minded agents to work with. The key is we need to pinpoint who really has the experience with other real estate investors. We want to ask the agents we find how many deals in the past year they have helped other investors in either buying or selling. One way to find a good agent is by asking for referrals from other savvy investors at investment club meetings.

Creative Mortgage Brokers:

We want to work with a mortgage broker that has the mentality to get the loan for either ourselves or for someone we might be handing a property to. We want a broker that can find loan programs from many different sources. One that is motivated enough by the commission to even find new loan programs they haven’t worked with in the past to get a deal done. A creative loan officer at the bank can only be as creative as the loan programs their bank offers. We can find referrals to creative mortgage brokers at the real estate investment clubs too.

Rentometer.com

We can search for a particular address and zip code using this website. If we have found a potential good rental income property, we can load in the address, guess on the rents that could be collected and let the website determine what are the actual rents in the area. It calculates this based on comparable rents in the area. This can be a great tool to use to see if a property has the potential to cash flow. One would also want to talk to a property manager to verify rents as well.

Costestimator.com

We discussed how by going to servicemajic.com we can find a free back way into costestimator.com. This website can be helpful for us to determine the estimated costs of any rehab project based on the details of the room, project, how high quality of the project and by zip code. This is can be a great aid in analyzing the repairs of a potential property. At servicemajic.com we click on the project tools link. Followed, by the estimate link. We then click on Kitchen Estimator link for example. This will now allow us to link to costestimator.com. From here we type in the zip code and start estimating repairs. Ultimately we would want a free estimate from a local contractor if we are proceeding further with a property.

Merlindata.com

This website allows us to pay a fee for a skip trace. A skip trace can be used when we need to find the owner or relative of a vacant property. Merlindata.com guarantees that we don’t have to pay if they can’t give you information on a verified link to the property. The standard skip trace can cost from $25 on up based on what information we need to find out?

We need to have the best people on our team so it is best to ask the right questions and get the right referrals to the most experienced team.
These websites are free and allow us to become more savvy real estate investors. We will have to pay a fee for a skip trace on Merlindata.com These websites can help us be more productive in analyzing properties.

Inv Club

Working effectively with Partners

• This might initially scare you
• Keep an open mind
• It is not working with some stranger; you will become friends with them and it won’t be so scary

Why work with partners?
• Source of money
• Source of knowledge and expertise
• Diversify risk
• Source of deal flow
• Source of credit

How to work with partners?
• Can own property jointly in your names
• Set up entity – management agreement sets forth rules

Structuring deals
• Simple cash loan
• Equity split
• Hybrid deal

Simple Cash Loan
• Partner lends money and is paid a percentage interest rate
• Try and defer interest payments

Equity
• Partners split equity and ownership of the deal
• Don’t give away the farm

Hybrid
• Cash loan for interest
• Equity split

When to use what strategy?

Cash only

Pros:
• Getting cash the least expensive to you
• Don’t have to share the equity

Cons:
• Cash payment required to investor
• May not have the cash
• Not sharing risk
• Deal goes bad, you still owe the money

Equity

Pros:
• No cash expense
• Share risk
• Deal goes bad you don’t owe anything

Cons
• Giving up valuable piece of deal

Hybrid

Use this strategy when getting resistance from potential investor or you feel more comfortable with this structure. They may be concerned about giving you cash and not getting immediate return so you can offer some cash payment combined with a small piece of equity. Conversely, they may not want immediate cash; they may want a piece of the deal, so you can give them a smaller piece of the deal and some cash payment.

You decide what is going to work best for you and propose deal and negotiate from there.

Making Money While You Sleep

How would you like to have a real estate business that made money while you weren’t even thinking about real estate or your business? The way you can create this type of business is by leveraging other people’s time and utilizing various marketing and advertising strategies. Most new investors are going to spend a significant part of their own time working their business. This is not a bad thing, in fact, it is critical that new investors, and seasoned investors for that matter, spend a lot of time researching potential markets, sourcing deals, evaluating properties, etc. The problem is there is a limited amount of time in each day and, at times, you may feel like you’re running yourself ragged or spinning your wheels.

You need to create a business where other people and your marketing efforts are working for you. Once you’ve created this environment, your business is going to be moving forward and progressing when you are out to dinner, watching television, sleeping, spending time with family and friends and when real estate is the farthest thing from your mind.

So how do you do this?

Firstly, you want to have the mindset of not doing everything yourself and understand the importance of having other people help you in your finding and sourcing efforts. There simply are not enough hours in the day for you to do everything through your own efforts.

Secondly, put other people to work. You will want to have real estate agents that understand what your buying criteria is out in the market looking for deals for you. This is their job, so it should be relatively easy to get agents working for you. A great way to find agents that understand investors’ needs is through real estate investment clubs. It won’t hurt to call local real estate brokers and talk with the desk or floor agent but you may have to educate them a little more on how investors work and what you specifically need and want them to do for you. It is important to be prepared before you talk with an agent so they don’t view you as a waste of their time. Agents are compensated when deals close and will be weary of working with you if you have no idea what you want to do or accomplish or haven’t thought through an investing strategy. It will be to your advantage to have thought through some potential investment areas, price ranges, what kinds of properties you are interested, your financing alternatives, etc. This will let the agent know that you have put some thought into your business and are serious about pursuing opportunities and will increase the likelihood of them being excited about being on your team.

Bird dogs are also another great source for helping you find deals. Bird dogs are simply people that you can have out in the market place looking for deals for you. You will compensate these individuals on the deals they bring you.

Thirdly, establish and utilize different marketing strategies extensively. The idea behind marketing is to get your phone ringing and to get other people bringing you potential deals and creating deal flow for your business. As deals start coming in from other peoples efforts and not just your own, you will be able to focus your time more on evaluating and closing on deals and not out finding and sourcing deals. Start by establishing a marketing budget. Decide how much money you can reasonably set aside and commit to growing your business through marketing. Then establish a 12-month marketing plan. Decide what kinds of marketing you are going to do on a monthly basis and then commit to spend the dedicated funds and execute on your strategy. Your marketing plan can include distributing flyers, creating car magnets, sending out direct mailers, putting up signs in heavily trafficked areas, creating and distributing business cards, networking and marketing yourself to other investors or potential sellers, etc. It is important to have a long-term view of your marketing efforts. You may not get an immediate response from your efforts; be consistent and persistent with your marketing and overtime you will see positive results.

Once you start leveraging other people’s time and implement an aggressive marketing plan, your business will grow significantly faster than if you rely solely on your own efforts. There just isn’t enough time in the day to do it yourself.

In short and in conclusion, you do not have to do everything yourself and you shouldn’t be doing everything yourself. Put in place a system and strategy of leveraging other peoples’ time and efforts. As you do this, your business will grow more quickly, you will do more deals and will free up a significant amount of your time to focus on other aspects of your business or life.

Posted by Carter Brown

Use Real Estate agents effectively. All the deals you do will not involve real estate agents but they can and should be a valuable part of your business. Be prepared when you call and speak with an agent that you are considering adding to your team. Demonstrate to them that you have put some thought into your business and are fully dedicated to being a successful investor. Think about various strategies you are interested in, consider different market areas you are thinking about targeting, put some thought into your financing alternatives, etc. Showing an agent that you are serious about investing will increase their desire to work for you and do a good job. Your agent will not get paid until you close a deal, so the closer you are to making offers and doing deals the more excited an agent will be to get to work. Do not sign an exclusivity agreement with any one agent, but rather work with a few different ones. The most valuable service an agent can perform for an investor is finding deals and the more agents you have looking for deals for you the better.

Posted by Carter Brown