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When speaking to the uninitiated about the innumerable benefits of investing in real estate, a common response I get is: “well, I don’t want to be running out to unclog a tenant’s toilet at 3am.”

I wonder if they think that I want to? That some masochistic part of me thrives on the phone waking me from a dead sleep, and driving across town to find out precisely which foolish article my tenant has tried to dispose of in entirely the wrong manner.

The truth is, I don’t get those calls. Ever. My tenants do not even have access to a phone number that will wake me up while I’m asleep at night.

There are a couple of ways to accomplish this. The first is to sell properties on lease-option or with owner financing rather than simply renting them. There are many other advantages to these strategies, but because in either case your occupant is a “homeowner in training”, it is no one’s problem but their own if their little boy decides that the toilet is right where his Matchbox Car needs to go in the middle of the night. With these methods, responsibility for repairs is passed on to the occupant. Think about it- when your toilet overflows, you don’t go calling Wells Fargo and complaining, do you? (Check with your attorney about which repairs state law make you ultimately responsible for, but it never hurts to try to get your tenant to do it willingly).

The other method is simple- hire a good property manager. Let him (or his handyman) take those late night calls. Yes, it costs money to hire one, but a good property manager can be worth his or her weight in gold. Besides, real estate investing is a numbers game- when evaluating a potential investment property, you will look at your probable income (by studying what similar properties nearby rent for), and add up all expense, such as debt servicing, an amount to set aside for both major and minor repairs, vacancy, and yes- property management. If you aren’t going to use lease options or owner financing, and are not possessed of the temperament necessary to manage your own properties and still sleep at night, this is an expense every bit as important as those previously mentioned. If the property’s income cannot “afford” property management, best you either keep looking or decide if the property offers enough additional benefits of ownership to justify paying the negative cashflow out of pocket.

Lou Gimbutis is director of education at the Metrolina Real Estate Investors Association, which provides education, mentoring, and networking for real estate investing in the Charlotte region. He can be contacted at [email protected]. For more information, visit www.MetrolinaREIA.org.

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Are you putting off a big decision or a big life change because you are afraid of what could happen? There is incredible power in defining and getting clear about the worst-case scenario, the nightmare that you’re too afraid to look square in the eyes.

The point is this: We often avoid taking action because of our fear of an unknown but terrifying set of events or circumstances. Define this nightmare scenario, live it in your mind, or even test it in real life. You may find that you could probably figure out a way to survive, if not thrive, even in this worst-case scenario.

I often joke with my wife and say, “Well, you like camping, don’t you? Worst case if this whole real estate investing were to completely implode, at least we’ve got our tent.” That of course wouldn’t be pleasant, but it brings lightness and freedom to my current endeavors by imagining us surviving even with a total outward failure.

Many people stay in jobs, circumstances, or even relationships that are stifling, miserable, or boring. Why do they stay? Security? Comfort? Health insurance?

Are you giving up a potentially amazing future by staying on a path that is reasonable, socially acceptable, and the normal way of doing things?

I’m not saying it’s right to stay or to go, but you owe it to yourself to explore and imagine what life would really be like if you took that leap. Instead of saying, “If only …” or “I would, but I can’t because …,” try imagining how you could succeed if you did try.

Optimism doesn’t require foolishly believing everything will turn out OK. Optimism is looking the difficult reality squarely in the face, and then using your fortitude and imagination to find a way to shape reality to your liking.

When I’ve done this imagination exercise in my own life, I’ve come to the incredible conclusion that inaction – staying in my current, safe, comfortable path – is riskier than taking the leap.

The nightmare scenario might be painful, uncomfortable, and embarrassing, but I could survive. The upside of taking action, however, was so amazing, life changing, and liberating that the risk of staying in a stifling present was not even an option.

So what about you? Are you willing to do the difficult self-analysis of examining your current situation compared with your possible futures? Define the nightmare, and then make a choice with open eyes.

Chad Carson is a member of Metrolina REIA (metrolinareia.org), which provides education, mentoring and networking for real estate investing in the Charlotte region.  Chad also writes about real estate, money, and life at coachcarson.com.

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Editor’s note: This is the second of a two-part column. The first appeared Sept. 23.
“You need money to make money”: This is the most powerful hypnotic lie for most investors.
For most of my students this is the biggest barrier they need to break down. This is the single most powerful belief preventing your success.
I know: I believed it for a very long time myself. I thought, if I don’t have money to invest, how am I going to buy a house or rental property?
However, I am living proof that you don’t need money to make money. I had no money when I first started. When I say no money, I mean no money. In fact, in my very first deal, I didn’t have the $4,000 in closing costs needed to close the deal. I took out a cash-advance credit card loan to pay for it.
Yet today, I am a well-established millionaire. You can be too. You just have to disregard the belief that you need money to invest.
“The money is the easy part; if the deal is good enough, the money will find you.” It’s true. There is so much money out there. Just because you don’t have money, doesn’t mean the guy next to you doesn’t, either.
If you are analyzing your deals the right way; if you are writing offers the right way and the deal works, the money is the easy part. I know that may be hard to believe, but I want you to really work on believing that money will find you, once you have a good deal.
Where is the money? At your local Metrolina Real Estate Investors Association, in Charlotte. (www.MetrolinaREIA.com). In this group, there are millions of dollars available to lend for good deals, such as hard-money lenders, private lenders with money drawing near zero interest in IRAs and savings accounts, etc. They want to loan you money for good deals. They need you.
Success can be the result of good communications. Every word you use, every phrase you speak has an impact. That impact can be negative or positive. The words you use, the way you dress, how you hold yourself, your body language and the tone of your voice will all determine how many deals you do.
Sellers want you to be the expert. They want you to be their problem solver. They called you to help them. To help, you must listen to determine their pain. Solve the pain, and you will close the deal.
Chris McClatchey is a national speaker and Education Director at the National REIA and a longtime friend of the Metrolina Real Estate Investors Association, which provides education, mentoring, and networking for real estate investing in the Charlotte region. He can be contacted at www.myrealwealth.com. For more information, visit www.MetrolinaREIA.org.

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Editor’s note: This is the first of a two-part column. 

  1. pl. hyp·no·ses (-sz): An artificially induced altered state of consciousness.

Real estate hypnosis is the artificial induction of believing the “rules” of real estate don’t change. That well-established principles of real estate must be followed or you risk failure. Real estate hypnosis is an industrywide belief that success can only come by doing what other successful investors have done in the past.

In other words, real estate hypnosis is teaching all investors to do the same thing. It’s setting forth artificial guidelines that must be followed and therefore, we as investors lose the very essence of what makes investing in real estate so great: creativity.

Throughout the course of history, the people who are remembered are the people who did things differently. They bucked the trend. They did things society or industries told them couldn’t be done. They sang songs and played music the “public” didn’t approve of. In other words, they diagnosed the hypnosis society was imposing upon them and did things their way, despite the potential backlash.

Do you often wonder why you haven’t done a real estate deal? Do you want to do more deals? Are you frustrated because there is so much competition with other investors? Would you like to find deals other investors don’t know about? If you answered “yes” to any of these questions, you have to get rid of your real estate hypnosis and start doing things differently.

Don’t know where to start? Well, let’s start from the beginning. You may have heard other investors say, “You make your money when you buy.”

Truth is, price is irrelevant. What if I told you that you could pay the full asking price and still be massively profitable? What if I told you that you could offer more than the asking price and still be massively profitable? Most people look at price as the single most important item when deciding to buy or sell a home. I couldn’t care less about the price. I want the seller focused on the price, so that I can focus on what I want: terms.

What if the seller insisted on $100,000 for the investment property? And you felt it was only worth $85,000? Offer $100,000, payable at $694.45 for 144 months. The seller got what they wanted and you got the terms you wanted. Everyone wins.

Chris McClatchey is a national speaker and education director at the National REIA and a longtime friend of the Metrolina Real Estate Investors Association, which provides education, mentoring, and networking for real estate investing in the Charlotte region. He can be contacted at www.myrealwealth.com. For more information, visit www.MetrolinaREIA.org.

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I have known about Parkinson’s Law long before I studied it.  In college I always had too much on my plate between a grueling football schedule and difficult classes. Yet, I almost always achieved my best grades during the busiest times, like football seasons.

Focused, intense attention for a short period of time often trumps extended, lazy attention over a long period of time.

How do you use this law in your life and business?

Use a timer

Set the timer on your watch or phone when you do an activity.  Give yourself a set amount of time to finish, and push yourself to get it done during that time.

Batch similar activities together

Don’t check email or make calls constantly throughout the day.  Do it once or twice per day, and limit how much time you have to complete it.

Eliminate distractions, interruptions

If you’re working on something important, turn off the cell phone, get rid of notifications, close the door, and put a “Do not disturb” sign on it. Decide to focus on one thing and one thing only until it’s complete.

Once you’ve applied some of the practical tips above, I also recommend that you journal on some of these awesome questions that Tim Ferriss offered in the book “The 4 Hour Work-Week” to bring both Parkinson’s Law and the 80:20 Principle home:

*If you had a heart attack and had to work two hours per day, what would you do?

*If you had a gun to your head and had to stop doing four-fifths of different time-consuming activities, what would you remove?

*What are the top three activities that you use to fill your time to feel as though you’ve been productive?

*If this is the only thing you accomplish today, will you be satisfied with your day? I use a variation of this question daily.

*What will happen if you don’t do this? It helps to judge the importance of activities.

Exploring your answers to these kinds of questions can lead to major breakthroughs.  They force you to use your imagination and push yourself beyond your comfort zone.

When you ask the questions over and over, your mind will continue to surprise you with insights.  Slowly but surely the answers you come up with will change your relationship to work and to time.

Lou Gimbutis is director of education at the Metrolina Real Estate Investors Association, which provides education, mentoring, and networking for real estate investing in the Charlotte region. He can be contacted at [email protected]. For more information, visit www.MetrolinaREIA.org.

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Wise use of your time is critical as an entrepreneur and investor. We all have more projects than we do time in the day.

But the traditional phrase “time management” never struck me as extremely helpful. Management to me means getting more efficient at organizing and dealing with the thousands of stimuli in your life.

Efficiency is nice when needed. But I also like the idea of elegant efficiency. Economy of effort. Purposefulness. Focus. Space. Creativity.

If you are frustrated because you are always busy and rarely get everything done, the solution is not just to become more efficient.  Efficiency is creating 500 filters and labels to process the 1,000 daily emails, 98 percent of which are not important.

Effectiveness, on the other hand, is only checking and responding to the emails that matter most and delaying or eliminating what matters least.

The 80:20 principle states that 80 percent of the wealth and income is produced and possessed by 20 percent of the population.  However, this ratio applies to other many other things.

With our rental properties I discovered, for example, that over 80 percent of the problems from our tenants were coming from less than 20 percent of our properties.  Guess which ones we decided to sell? Rent collecting has now become much less of a hassle.

With our real estate acquisitions, I discovered that we spent 80 percent of our time trying to buy short sales, yet they represented less than 20 percent of our revenue.  We eliminated that strategy and spent more time on more productive ones.  Our income increased as a result.

With my personal time in the business, I discovered that talking to qualified sellers was by far the most valuable, effective, money-earning use of my time.  I was good at it, and it was one of the hardest parts of the business for other people.  So I began measuring the success of my day by how many seller conversations I had. I also began creating systems to leverage my time, like lead generation from direct mail, ads, and other marketing.  The result was the purchase of many more deals than before.

With my personal life, I realized that a huge part of my long-term happiness was a result of time invested in certain activities, like exercise, reading for pleasure, and spending time with my wife and family. So I’ve gotten better at scheduling these activities first. I’ve also learned to eliminate less important activities like TV, useless meetings, and unimportant phone calls or emails.

If you do this 80:20 exercise, I promise you that you’ll find obvious improvements. And if you really follow through on the lessons you learn, you can transform the results in many areas of your life.

Lou Gimbutis is director of education at the Metrolina Real Estate Investors Association, which provides education, mentoring, and networking for real estate investing in the Charlotte region. He can be contacted at [email protected]. For more information, visit www.MetrolinaREIA.org.

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Editor’s Note: This is the second of two stories.        

Why all this focus on the underhanded gambits of tenants? Are the majority of people applying for my rental properties out to trick or deceive me?

The answer, my friend, is absolutely not. The majority of tenants that will apply for your properties are decent, honest, hardworking folks.

The problem is that their unethical counterparts move around a lot, thereby making your chance of encountering them greater than their proportion of the tenant pool would indicate.

So onward to preparing you for additional “tricks” Forewarned is forearmed

Crowded house

Some tenants may try to move additional occupants into your property. Beside the fact that the state has legal limits for how many adults may occupy each bedroom, and the additional problem of having people in the house whose criminal histories you have not had a chance to review, there is an unavoidable result of too many people occupying your property: increased wear and tear.

The math is simple. If there are twice as many people living in the property than were intended, the toilet is being flushed twice as often, twice the bacon grease is being poured down the kitchen sink, twice as many feet are walking on the carpet, causing it to wear out twice as fast – you get the picture.

The solution is to have your rental application require that every vehicle that will be parked there be listed, and the lease state that if additional vehicles occupy the property beyond a certain timeframe, the rental rate will retroactively increase. Check with your attorney for specifics.

Last month’s rent

Some tenants will attempt to use their security deposit as their “last month’s rent” when moving out. This is common, and many landlords overlook the glaring problem with agreeing to this arrangement” You no longer have a security deposit.

If damage is done to the property, you are unlikely to uncover the full extent of it until after your tenant has vacated, taking with them the money you should be holding against the need to make repairs.

You will not do this very many times before figuring out that it is a win/lose situation, and you are not the winner.

 

Lou Gimbutis is director of education at the Metrolina Real Estate Investors Association, which provides education, mentoring, and networking for real estate investing in the Charlotte region. He can be contacted at [email protected]. For more information, visit www.MetrolinaREIA.org.

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Editor’s Note: This is the first of two stories. 

Poor property management can take one of the most stable, secure and profitable investments you can make and turn it into a feat which is, as Earl Nightingale was wont to say, “More difficult than trying to juggle two skunks and a bobcat.”

The majority of people you will rent your investment properties to will be decent, hard-working, honest folks.

The problem is that the other category of tenants moves around more frequently, so you have a disproportionately high chance of having one of these “professional tenants” apply for your property.

Here are some of the most common “tricks” they will use to muddy the waters of their past history and therefore current stability.

Falsified rental history

If done cleverly, this can be very difficult for the untrained landlord to detect.

A common technique is to list their rental history for a long period of time as “living with relatives.” This is a favorite of the unscrupulous and unsavory because it is very hard to verify. A slight variant is use of an address at which they have never lived and giving you the name and cellphone number of a friend or close family member. Both of these techniques can be easily overcome by pulling credit reports and seeing if the address history on their credit report matches that which they have listed on your application.

Do not hesitate to look up the phone number of the person who actually owned each property listed on their credit report at the time they listed it as a residence (a good application will grant you permission to do this) and ask the true owner if they did indeed rent to that person. I have uncovered some disturbing rental histories with this technique.

Disguising applicant

Some renters will attempt to put the lease in the “good applicant’s” name. With this technique, your applicant will attempt to apply for only one adult, saying either that they want the lease in only one of their names or that the other person is just living with them for a “little while.”

Don’t fall for it.

I require permission to pull credit and criminal history for every adult that will be living in the property. No exceptions.

Best that you know who will be residing in the immensely valuable asset that you are “loaning” to your applicants. If they balk, there is almost certainly something they do not want you to see.

Lou Gimbutis is director of education at the Metrolina Real Estate Investors Association, which provides education, mentoring, and networking for real estate investing in the Charlotte region. He can be contacted at [email protected]. For more information, visit www.MetrolinaREIA.org.

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Introducing our newest member benefit… Realeflow! @NationalREIA has announced their partnership with Realeflow, the country’s largest real estate investing software company!

Here are just some of the benefits Metrolina REIA members will get from our newest partner:

  • Free 30 Day Trial of Leadflow or Realeflow Lite
  • Discount on normal monthly pricing after the free trial period
  • Version upgrades with more users, websites, and leads

Compare the normal package pricing with the member discount price, and the savings are obvious!

Leadflow plan – $49/month, now $7/month

Basic plan – $99/month, now $39/month

 To access the link and get these amazing discounted prices, log into your account on Metrolina REIA, go to the member area, and click on the Library. The link is located in the “Benefits” section and can only be accessed by active Metrolina REIA members.

 

Click here for an easy-to-read infographic from Realeflow, detailing the steps of completing a real estate transaction: http://realeflow.com/wp-content/uploads/2016/06/Investor-Lifecycle.pdf

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INVESTORS’ CORNER: How to achieve true financial security

Quadrants

Do you know what security means?

The word originally comes from two smaller Latin words – se meaning “without” and cure meaning “care.” So, the essence of security is being without care.  It’s a state of mind where you are free from anxiety.

Entrepreneurship and financial intelligence are the financial “wings” that allow us to fly when landing on life’s boughs that are too slight.

You can have a good job or even a lot of money in the bank, but that alone will not bring you financial security. Good jobs can be lost quickly.  Money invested can lose value quickly.

If you want true financial security, you have to let go of the traditional ideas of how to be secure.  You have to leave the nest and learn how to fly where few others are willing.

If you have a “secure” job, don’t take it easy. Think of yourself as an entrepreneur who hustles and shows up daily to “sell” your valuable service to your employer.  Continue to improve your skills and make yourself so valuable and helpful that your employer can’t help but keep you.

But even with that wise approach to a job, you need more.  You need to start saving money and then learn to invest it wisely. You can and should get advice from others, but learn to be the CFO of your own life. You are the one who depends upon the investments, so you should be educated enough to make intelligent decisions. And at some point, take Robert Kiyosaki’s advice and begin moving to the right side of the Cashflow Quadrant.

The right side of the Quadrant is the realm of business owners (entrepreneurs) and investors.  To have the security and freedom of wealthy entrepreneurs and investors, you have to become a competent entrepreneur and/or investor for yourself.

The good news is that spreading your financial wings like this has been done before. There are examples to follow, like my case studies. There are good books to read, like “Cashflow Quadrant.”  With financial education, good mentors, and persistence you can achieve financial security and freedom for yourself.

Chad Carson is a member of Metrolina REIA (metrolinareia.org), which provides education, networking, and networking for real estate investing in the Charlotte region.  Chad also writes about real estate, money, and life at coachcarson.com.

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