Confessions of a $200,000,000

Real Estate Deal Maker

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  • If you’re buying houses to hold as long-term rentals, you must understand the value of money as it relates to time. Dollars collected or paid in the future are worth a lot less than they are today.
  • When obtaining seller financing on properties you acquire to hold long-term, the strategy is to pay as little as possible each month and push the payments as far into the future as possible.
  • If you are a good property manager, the rent you receive could ultimately pay off your mortgage.
  • When you lose capital in a transaction, you lose the ability of that capital to make money for you and your heirs forever.
  • The most revealing question to ask a seller is: “Why are you selling the house?”
  • Recent comparable sales are your best gauge to a property’s value — not houses that are listed, as these are not sold and cannot be used by an appraiser when the lender requests an appraisal.
  • Zillow.com is an excellent resource for fast information and can be used as a tool to assist you with your negotiations, whether buying or selling.
  • Use Core Logic Real Quest to get fast information while your phone with a potential seller.
  • Flipping houses is the fastest, easiest money in the real estate business.
  • Flipping is done in two ways: Assignment of contract for a fee & Buy and close on a house, then resell it.
  • You must develop a list of people to whom you can sell houses.
  • Use every strategy possible, but don’t overlook MLS or Facebook.
  • Properties that require minimal work are the first choice for rehabs.
  • The best opportunities for resale are houses that attract the most amount of buyers. That would be the price point for first-time home buyers in your local real estate market. Be cautious with expensive houses, because as the price goes up, you continue to limit the number of potential buyers who can afford it.
  • When a seller wants too much, offer to pay that price but use seller financing that makes sense for you. I always will pay full price or more if I can get a zero-percent interest loan.
  • Depending how a seller responds to terms, you can use that negotiation to lower the purchase price to an all-cash sale.
  • Start with how much money you desire per month to support your family and lifestyle, then determine how many free and clear houses you need to produce that income so you never have to work again.
  • Single-family houses produce cash flow, typically appreciate in value and we get tax write-offs known as depreciation.
  • You can buy some houses by taking over people’s debt. This is called buying the house “subject to the debt.”
  • Massive action can turn into massive results, and potentially massive failure.
  • When negotiating with sellers, you should know the outcome for your exit plan. If it’s to flip, or retail, price is most important. If it’s to keep as a rental, terms are more important.
  • We all have limited amounts of money; that’s why using other people’ money (OPM) is so important, as it allows you to conserve your capital to do more transactions.
  • All negotiations start with a conversation, and that’s when you immediately build rapport with the seller. This is the crucial first step. Begin in a friendly way.
  • Be a good listener, but lead the conversation with questions.
  • Use test closes early on to determine price points and motivation.
  • Get the seller to mention price first.
  • Determine what their needs are upfront.
  • Rule number one, never buy property sight unseen. You will regret it.
  • Knock on neighbors’ doors for information regarding the house being auctioned.
  • Knock on the door of the house itself, and determine whether the occupant is owner or tenant.
  • Consider using an LLC taxed as an S Corporation or C Corporation.
  • Corporation for dealer properties. Those are properties you flip or retail.
  • Use a separate member-managed LLC for holding long-term rentals.
  • Set up a 401(k) off your dealer Corporation.