My Momma Even Said it Was Too Good To Be True!

Actually my mother-in-law, it sounds better saying momma though. My mother-in-law approached me in May looking to invest $100,000. She had the money in a CD and uses the money to pay for her monthly health insurance premium. The CD rates had dropped dramatically and if she renewed she wouldn't earn enough to pay the premium. She's on a fixed income and has to earn at least 3% on those funds to have enough to pay the bill. She asked me what to do. How bad is it when you have to scramble to find an investment paying 3%?

I explained to her what we did and how she could earn at least 8.5% on the money or could use the money to do wholesale deals. Initially she was thrilled because she would be more than doubling what she made last year. Then the inevitable occurred. She started asking family and friends. They acted predictably, just like the media. They told her that it was too good to be true. They told her that it was too risky. They told her that there was no money in Real Estate and that she'd be making a huge mistake. She ended up investing half the money in a CD and the other half as an unsecured personal loan at 6% to, of all people, one of the family members that said the Real Estate (which, by the way, is a secured investment) option was too risky. Unbelievable!! She'll most likely never see that money again. I pray that when that time comes, I will be compassionate enough not to gloat and say "I told you so."

Back to the deal I had found for her. I found two brick ranches in Metro Atlanta. One was a 3 bedroom/ 1 bath, the other a 3br/2ba. We found another investor who decided it was an amazing deal. He purchased the homes for $14,300 and $14,742. He choose to have us try and wholesale the deals rather than rehabbing them and renting them. We ended up selling both homes for him in less than 30 days. The sale prices were $24,000, the other for $24,375. That would be a gross profit of $19,333. I'll admit, it does sound too good to be true. But it is not. We find deals like this every day. We had a bit of luck, being able to sell them both in such a short span, but it is not that uncommon. Most of our investors choose to do the rehab and rent the homes. Those homes would each rent for at least $900/month. One of the homes had around $15,000 in rehab, the other around $9,000. If the investor chose that route, he would have had $53,042 invested total in the two homes, generating around $1800/month cash flow. Not too shabby. Considering the homes will most likely be worth $90,000 in 3-5 years, I'd say a very smart investment.

Moral of the story, DON'T BELIEVE THE HYPE! These deals are real and are out there. Those who take advantage will be reaping the benefits, while everyone else will be scrambling to earn their measly 3% in a CD. I hope you will be one of the few that get in the game and take advantage of these amazing deals.

Where are all the good deals?

Over the weekend I gave some thought to where to find all the good deals. I've found that all the best deals we find come from the MLS listings. People are telling you to go after short sales, go to auctions do this do that. Blah, blah, blah, blah. I don't understand why you would do any of that. The deals we are buying and finding are bank owned properties. It doesn't get better than that. If you buy from the bank, you are buying from the source. I see short sales listied in the MLS everyday. They are still priced high. I've gone back and done property history reports on deals we've purchased and found that most of the ones we've bought were once listed as short sales prior to being foreclosed. We just made an offer on one that expired on July 1 and was listed for $89,900 as a short sale. We're getting it for $24,900 as a foreclosure. That is quite a difference, wouldn't you agree. What can you do with an extra $65,000 in your account? If you follow my advice, you can invest in two or three additional deals.
My experience with banks is horrible. Have you tried contacting them these days? I have, and I've waited on hold for hours trying to get through. We own a dozen rental properties which we've aquired steadily over the past nine years or so.We buy and sell as the market dictates. We have several right now that we are upside down in because of the falling house values in the market. I've attempted to reach the Lender with the intention of doing a short sale. I've had absolutley no luck. My intent is to sell these and use that money to get into better deals. We have homes that have $125,000 mortgaged against that rent for $1100 per month. Great deal at the time. Now that is a horrible deal in this market. In the Metro Atlanta market, we're gettting deals under $45,000 that all rent between $900 and $1200 per month. The point is that, the banks do not have the man power to handle the flood of calls they receive each day. They get calls from people wanting to modify their loans, do short sales, make payment deals, you name it. You wait on hold and finally get someone who can't help you. The banks have no choice but to foreclose because they cannot properly assist their customers. Thats why the foreclosure, bank owned REO is the only way to buy these days.
I suggest, you find a good Realtor in your market, tell them what you are looking for and buy some deals. Tell them to stay away from short sales, you don't have the time to waste dealing with these. Tell them to stay away from auctioned homes, they have the prices artificially inflated because all rookie investors bid on them. Most of these auctioned deals get put back on the MLS anyway because they winning bidder typically cannot close. You get a rookie investor bidding these deals up, who think they can go get a loan and buy the deal with no money out of their pocket. Not in this market! You need cash or funds from your IRA or 401k. We'll get into that in another time. The point is that we see deals go off the market and at some point they come back. We just saw one that we lost to an auction in April. It was listed in the MLS for $34,900. We offered $29,000 for it. Didn't get it, the listing agent told me it had been moved to an auction site. Guess what, it came back on the market last week. It wasn't listed for $34,900. It was newly listed for $24,900. We bid and got it for $21,000. The banks have no clue what they are doing. If you are patient and don't get personal with these deals, you'll come out ahead. We got that particulat deal for $8,000 less than we committed to just 3 months prior.
This market is amazing and will continue to be for awhile, not forever though. There are many fortunes that will be made here during the next 18 months or so. I hope you "get off your Donkey" and get in this game while you can make yours.

Cash Flow is What Matters

I had a nice chat last week with one of my investors from the Midwest. He invests in Atlanta and has many associates who only invest in their local markets. I had to ask, WHY? If you are a Real Estate Investor, why would it matter where you invest. Shouldn't you be looking at cash flow, cap rate, equity, stuff like that? He told me that they felt they had to be able to put their hands on it and touch it. That concept confuses me. Why would you want to do that? We hire property managers to manage the properties. We have contractors to handle any maintenance issues. We have video to be able to see the property. If you own stock or a mutual fund, do you go to the front door of the company to see it? No, you look at the prospectus and look at quarterly reports. You're only interested in the bottom line, is the fund or stock performing. That is the same way to look at Real Estate. It is an investment, you invest because you expect it make you money. You do not invest so you can drive by and say "look, I own that." I see investors every day looking at deals in California or New Mexico spending $150-250k on deals that rent for $1200-1500 per month. They look at these deals because they feel comfortable because they know the street the home is on and live in the area. We have deals in Metro Atlanta that are literally $35-55k that rent for $900-1100 per month. Do the math. You can triple your cash flow by simply investing in the Metro Atlanta area. I urge you to treat Real Estate Investing just like any other type of investing you may do. Look at the deal. Look at the numbers. If you do that, take the emotions out of it, you'll make a ton of money and be successful. There's never been a better time to get in the game and expand or start your Real Estate portfolio. Find an experienced agent to find you deals and get started. We find money making deals everyday. They are definitely out there waiting for you to pull the trigger and start making money. Good luck and please feel free to contact me with any questions you may have., I'd love to help you.

Obama

So much has been said about Obama. I sense that many that got duped into voting for him are starting to realize the mistake they made. I believe he was elected for a reason. I believe the reason is to open our eyes before it is too late. Maybe God wanted this so we can step back and take a look at the direction the Country is headed. We need to get back to our roots. This Country was founded on Freedom. This Country was founded as a Christian Nation. It seems that with everything that is going on, we are headed in the opposite direction of both. The purpose of our Government is not to own companies like General Motors, not to run our Health care System and not to control over 50% of the GDP. Government, Federal Government was intended to be small. Instead of being small, Obama seems bent on making it as large as possible. He wants Power and Control of as much as he can get his hands on. Why do you think he always attaches a dire sense of urgency to everything. He wants legislation passed without it being read. He got away with the Stimulus being passed that way, I pray that will be the only item passed that way. Thank God some Democrats are actually beginning to see where he is trying to lead us. We are on the verge of bankrupting the United States and he wants the Senate to pass the Cap and Trade and wants to commit Trillions more to Health care reform. We do not have the money to do it. When Obama urges citizens to tighten their belts, he should include the Government as well. Our deficit this year is going to be more than quadruple what the previous record was. Quadruple. That's right, it is projected to be over $1.4 Trillion. Do you know what a Trillion dollars amounts to? We need to cut the budget, lose all the Pork. We need to cut taxes and encourage small and medium businesses. All these bailouts have amounted to nothing but wasted tax payer dollars. Let capitalism work. When a company fails, let it go away. If there is a need for what they provided or produced, another company will jump in and take its place and operate more efficiently and be profitable. The Government does not need to waste taxpayer money on poorly run companies. That is how capitalism works, supply and demand at its best. Survival of the fittest, not survival of who gets the most Stimulus money. The Obama administration is trying to make companies that earn a profit look like the bad guys. Are you kidding, where would we be without profitable companies? Profitable companies create jobs, they spend on Research and Development. Profitable companies are what has made this country great. Why would we want to make the Government any bigger? What has the Government ever been in control of that has been run efficiently? The IRS? The United States Postal Service? Medicare? Social Security? Everything they have their hands on is a financial mess. If anything we need to get rid of some of the things they have control of. I think UPS and FEDEX would be more than capable of delivering the mail. As far as the IRS, can you say Fair Tax. That is an entirely different issue. With all the issues we hear about Medicare and even the VA hospitals, why on Earth would we even consider a Government run Health care System? How stupid does he think we are? I like it the way it is. Don't get me wrong, it may need some tweaks here and there, but those tweaks need to be in the form of legislation, not control. Legislation directed at Insurance Companies may be what is needed, not the creation of a Federally controlled monster.
I do not see how small businesses can be expected to provide Health Insurance to all their employees. Most small Mom and Pop businesses have a hard enough time keeping their doors open at all. Minimum wage just went up to over $7 an hour. I used to own several small businesses and I'll tell you first hand, payroll is a killer. Add benefits on top of that and what's left? If Obama had his way, everyone would work for monster companies like Walmart, GM, Bank of America and Home Depot. They would all belong to Unions, all be on Federalized Health care and all be as dependant on the Government as possible. He doesn't want entrepreneurs to be successful. He wants us to be like Europe. Look at Europe. They have no population growth, they have no religion. Their centralized medicine has not worked. Heck, look at Canada for that matter. Canadians cross the border to get the medical care they need. They come here, why would we want to create a system like they have? It makes no sense. We need to change our focus. Our Economy will only thrive if fueled by low taxes and interest rates. We need to trim the deficit and cut spending. We need to pass smart legislation that helps the private sector, not that tries to destroy or control it. The Middle Class needs to stand up and demand this from Government. The Middle Class has the Power to elect Candidates that share their ideals and will represent their best interests, not the best interests of a large Government. I pray we take a hard look in the mirror and open our eyes before it is too late. It's not too late, we've already seen a glimpse of hope in the response to the Health care debate. Let your voices be heard. Your elected officials will listen if enough speak out.

5 Great Investments Other Than Stocks????

I just read an article that suggests five investments other than stocks that the author considers great. She thinks that junk bonds, commodities, currency, hedging Treasuries and cash are great investments. What is her definition of great? These all seem like safe investments to me. I don't think you can expect any double digit returns from any of those any time soon. Cash is paying what, 2.5%? Last year commodities rose only 5.8% despite corn and wheat setting record prices. Currency trading is very risky and very complicated, something I would not recommend to a novice investor. Besides with all the government bailouts we're seeing worldwide, how is money a good bet. These governmennts are going to print more money, whenever that happens you can bet inflation will follow and your money will be worth less. Junk bonds, hmmmmm, we've been there before. All the government stimulus/spending will not make a bad company into a good one. I'd stay away from junk and municiple bonds, too risky for me. To me the only Great Investment out there right now is Real Estate. She does mention Real Estate in the article but says it is too risky because she thinks there are too mnay homes on the market right now. That is why it is such a great investment. Prices are so low due to all that is on the market. People need to live somewhere. We find deals every day that have over a 20% cap rate. When you can get in for around $40,000 and receive over $1000 a month in rent, isn't that a great investment? What is it going to take for these people to realize that this is the best Real Estate market for investors that we've seen, period. You can buy for pennies on the dollar and the rents have not gone down. We rent section 8 all day. We get paid by the government direct deposit every month on time. What else could you ask for? Invest in Real Estate today, you won't regret it. It really is the only GREAT Investment out there right now, especially in Atlanta.