Category Archives: Investing Methods

Probate

Probate Investing Adventure Success

Here is an interesting deal that illustrates the mechanics of probate or estate investment home purchases.

 

The Seller (I’ll call him Dave) co-owned this house with his mom, and both had signed on the loan. Unfortunately Dave’s mother died three years previously. Dave allowed the sister to live in the house, but she did not make the mortgage payments which were now 6 months in arrears. Dave is tired of dealing with the house and is ready to sell. But when he and his mother bought the house, they did not purchase with ‘joint rights of survivorship". Had they bought in this manner, if and when either died, total ownership would have passed immediately to the other person.

 

To complicate matters more, Dave’s mother left no will for her estate with six other siblings all awaiting their share. If that’s not enough of an investing adventure for you — the bank is threatening foreclosure so time is of the essence to create a deal. In fact, the bank is not just threatening….the house is scheduled to go to the courthouse steps in three weeks. Why would anyone even try to purchase a mess like this with a short time frame? Well, Dave owes $33,000 + $5,000 in back payments. The house just needs cosmetic repairs totaling no more than $10,000, and the house will have a market value of about $140,000.

 

That leaves approximately a $92,000 margin less expenses until the property sells – definitely worth pursuing as an investor! So lets investigate further

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Web Domain Name Investing

Domain Investing: The Next Real Estate Boom?

A website domain is very much like a piece of property. It is owned by someone. It can be bought and sold, traded or transferred. And just as we’ve all witnessed a nice run up in housing prices over the past few years, good domain names appreciate and can (maybe) fetch enough to put your kid through college – if you know what you’re doing and how to maximize your ROI.

Get Reach Quick? Hardly.

If you Google “domain investing” you’ll see that every Tom, Dick and Louise has written the definitive text on how to make billions trading domain names. Oh, yea? Well, if these guys know how to make money trading domain names, why in the world would they tell you – at any price!

Skip the “get rich quick” approach for a couple of reasons. First, every really great domain name has already been thought of and registered. Okay, maybe there are one or two yet to be created but the chances of you coming up with the next big thing are like zero. It’s just not going to happen.

However, there are ways to make money in domain investing. Let’s look at a couple of investment opportunities designed for aggressive investors. Please, don’t bet the farm on a domain name.

Know the Market

Would you buy a stock without doing some background research? What if you didn’t understand how the stock market functions? It’s tough enough to make money in domain investing without adding market ignorance to the mix. Tag several domain trading websites and track them until you get a feel for what sells for what. Really good names can bring some nice money your way. One example: a domain that was purchased in 2000 for $10,000 recently sold for $65,000. That’s a very nice ROI in any investment arena. Of course, it’s the exception to the rule, which is why it got so much media play.

It can happen, but it might take some time. You’re more likely to make $50 on a domain name trade but it’s fun and it is fifty bucks. Just keep it in perspective and only invest what you can afford to lose.

Buying and Appraising the Quality of Domain Names

There are plenty of sites where domain investors buy and sell names with legs, that is, domains that already have a business attached to them. These are attractive to entrepreneurial types interested in building web-based businesses.

Or, sometimes, you’ll find a great domain name, perfect for your on-line venture, for sale on these domain investing and trading websites. No business attached. You’re just buying the name.com. You may have to bid your way to ownership, or make an outright purchase if it really is the perfect domain name.

Either way, you can hire a domain name appraiser – yes, they really exist – who will run all kinds of diagnostics on the name to see how it would do if you bought it. Or, if you aren’t interested in the name for your own use, you can simply take your chances, register one or a bunch of domains for very little and post (it) them for sale or lease.

Building Cyber Equity

Another way to make some cash through domain investing is to register a “good” domain name and then actually generate some revenue through actual sales, Adwords or some other steady income from the website. You are, in fact, building cyber equity, adding value to the domain name by also delivering a functioning website and even some web traffic.

Think of it this way. There are people who make a lot of money “flipping” real estate. They buy a house that needs fixing up, they fix it up and resell at a profit. Or, so the flipper hopes.

Same deal here. You register the domain name, which shouldn’t cost more than a few bucks, you spend a few Sundays getting hooked up with a PPC or affiliate program (or why not 10 PPC and affiliate programs) and you’ve got cash flow that immediately increases the value of the domain name.

A higher page rank will also increase the value of a domain name, so some SEO work may pay off big time when the sale is finally made. If you buy a domain name and simply park it on some host’s server, you aren’t taking full advantage of your investment, even if it’s only a $2.95 domain registration fee. Put the domain to work for you and chances are, you’ll increase its value at the time of sale. And make some extra bucks while waiting for sale day.

Buy Domain Names in Bulk

Once again, take a little time to learn about domain name registrations. There are plenty of sites that’ll give you a significant break on registration when you register in bulk. Some players in this market register 1000s of domain names at a time for maybe a buck or two per registration. Then, they market their inventory. Very risky and not for the faint of heart.

Know What You Need to Know

So, if you don’t know much about domain name investing, take the time to learn – to learn how to construct a simple website, to generate income from sources other than direct sales, although if you do have access to a useful product or service, why not use the site for direct sales as well. It only increases the value of your domain name when you can show you’re making $50 bucks a week as an affiliate site for the XYZ company and $100 a week selling products.

Is Cyber Realty In Your Future?

It is if your expectations are reasonable, you don’t invest more than you can afford to lose and, most importantly, you learn the rules of the game – everything from how the market operates to how to build equity in a domain name.

If you think of a domain as a “place” just like a home, the market dynamics are similar. The difference? People need a home. They don’t need to spend $5,000 on your really cool domain name. In other words, domain investing isn’t a needs-driven marketplace.

Remember Beanie Babies?

Basic economics 101: a market is only strong as long as its investors believe in the market’s ability to make a profit. Just a few years back, people were buying up Beanie Babies for investment, spending hundreds and even thousands of dollars for a stuffed toy! Visit eBay today to see what Beanie Babies are selling for. The market in plush collectables lost faith in its ability to generate a profit and the bottom fell out. Overnight!

Anything, including a domain name, is only worth what someone is willing to pay for it. And in the case of domain names, supply far outstrips demand so you better have a good product. Preferably one that’s earning some income.

And if you get an attractive offer, take it. It’s pretty unlikely that you’ll find another buyer willing to pay bigger bucks for that domain.

It is a market – domain names – but it’s a fickle market, it isn’t needs-driven and there’s always more supply than demand. Still, by taking a few simple steps, you can add value to a domain name and actually make a few hundred bucks.

No, it won’t get your kid through college, but it might pay the air fare to get her there.

 

 

 

 

Probate

When The Power Of Attorney Fails

The estates of the elderly, their finances, medical situations and their property are often abused. A

The problem with Durable POA is that it relies on assumption; the assumption that the agent will honor your wishes. The longer a person remains incapacitated, the less likely that the remaining relatives will bring issues to the surface. Details about checks being written over years, management of finances and care of property all fade away with time. It is not a simple issue that our families love us.

A real life example exemplifies why Living Wills and Durable Power of Attorney does not protect your assets or protect the inheritance that you expect to bequeath to your heirs, as in the case of George Ferrara in 2006 as ruled upon by the New York State Appellate Court.

In 1999 a stock broker named George Ferrara willed his life’s savings to the Salvation Army. In January 2000, the ailing George Ferrara signed a POA over to his nephew Dominic. George Ferrara signed a form that said that the agent could make “gift” payments to the nephew Dominic Ferrara. By the time George died, the account was empty and there was no money left for the Salvation Army. When brought before the court, the court ruled that the “agent” must act in the best interest of the principal. It is fantastic that the court ruled this way, but there was one big problem: The money was already gone. Herein, lays the dilemma.

If the agent does not act on behalf, the POA and the basis of the intention of the principal are just a smoke screen. In the case of George Ferrara’s assets, they certainly were not protected in the manner of original intention. In reality, the assets of George Ferrara were not protected with the original intent of George Ferarra.

Wouldn’t a Living Will have helped George Ferrara?

A Living Will is a legal document that specifies in advance any life-sustaining measures a person refuses to undergo if there is no reasonable expectation of recovery. Typically, a person may refuse the use of feeding tubes, respirators and cardiac resuscitation. The Living Will makes an incapacitated individual’s treatment preferences known in a set of limited and specific circumstances and serves as a guide in medical decisions. This Will has power over the Medical or Durable POA and conveys the wishes of the principal.

A Living Will has power of the principal while they are alive and their Last Will and Testament enacts upon death. The problem is that only the Durable of Power of Attorney authorizes movement of property and finances, and this is at the digression of the agent.

If George Ferrara had his affairs set up differently, he could have prevented the movement of his assets so that his last wishes could have been honored.

When presented in this light, one conclusion is apparent. You should understand ALL of your options before signing anything away. Having said that, POA’s are important and necessary. As you investigate your options, each state has their own technicalities when it comes to Durable POA’s and/or health care proxies. Trustmakers is available to enlighten you with opportunities that will protect your assets and your bequest in a coordinated effort with your Estate Planning. We believe that you should know all of the options before making such an important choice in life.

Stay well and be protected.

Wholesaling

Help for Your House Flipping Fear

How many times have you let fear stop you from doing what you wanted to do? We all think we’re beyond that. However, the truth is, fear stops everyone at some point in their lives. Think back to a specific incident in your life where you were so intimated by the “what ifs” that you completely talked yourself out of your idea. Have you ever convinced yourself that obstacles were insurmountable and there was no point in proceeding?

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Foreclosure

Using the Post Office to Automate – Faster Easier Marketing more for less!

Many Other investors often ask me what is the best way to do direct mailings, and whom they should use as a service provider.  (This article is geared to those who are not using the provided websites used with our system found at www.Realeflow.com/duncan)

To answer that question, it largely depends on depends on how often you are mailing, how frequently, and to whom. However, when you do larger mass mailings to large groups of people, one of the best, easiest, and most cost-effective methods of direct mail is using the United States Post Office website.  The first time I used it, I was shocked at how simple, easy, and cost-effective it was for direct mailing to a list.

Once you visit the United States Post Office website, you can surf around and view all of their services.  To get directly into the direct mail function, you can visit www.Click2mail.com and register for a username and password.  Once you have done that, it walks you step-by-step through a wizard from the home page.

The first thing you need is your document, which you can either upload or create directly on the website.  I prefer to upload documents that I have already created.  I usually create the document in Microsoft Word or Publisher, and then save it as a PDF file.  From there, I can directly upload the PDF and make any necessary edits to the document directly through the website.

Once I have approved the document, I can then upload my list.  I simply have a list in Microsoft Excel, and it automatically uploads all of the names and addresses.  I can do the whole process in less than fifteen minutes.

Once my list is uploaded, I can select a few more options, and my postcards are printed (two-sided) and mailed within 48 hours!  It’s an amazing tool to use if you like direct mail.  If you’re a real estate investor, you don’t have to just use these for Pre-Foreclosures.  You can also use them for out-of-state owners, vacant properties, or any other types of lists that you can think of.

As I mentioned earlier, the most recent mailing I did was to a large group of Pre-Foreclosure prospects.  Specifically, there were a group of 368 homeowners who were 90 days past due on their mortgage.  That’s right; these homeowners hadn’t even been served with a Notice of Default yet.

I mailed out a 4X6 postcard to each one of them for a total of $111.39.  That included printing and postage, for an average of $0.30 per card, including postage AND printing.  I’ve done a lot of direct mail in my day, and this one is a great deal.

I would encourage you to visit the USPS website www.Click2Mail.com and learn more about their great direct mail service.

**** If you want to find out more about how you can get lists of homeowners who are either 30, 60, 90 or even 120 days late on their mortgage, please contact EZ Data Group Lists. (ask for Dave Hurlbrink to get special pricing for my students.)

Tax Liens

Hot to Get Tax Lien Sale List for Free

I use www.NACO.org to find tax sale property lists online for tax lien and tax deed sales. This only works for counties that have this information online. For counties or states that do not have this information online, you can either call the tax collector and ask how to get the tax sale list or you can buy the tax sale list from a tax sale list provider.

To go to the county’s web site, first go to naco.org and click on the link to find a county. This will bring you to a page with a map of the United States. Click on the state that you are interested in and you’ll be taken to that state’s web page with a list of all of the counties in the state. Find the county that you are interested in and click on that link. You will be taken to the NACO page for that county. Click on the link to the county on the top of the page and you will go to the county’s web site. Note that this will only work if the county has a web site.

Once you’re on the county’s web site, look for a link to the department or county office that is responsible for conducting the tax sale. For most states, this will be the county treasurer or county tax collector. Once you get to the web site of the person or department that conducts the tax sale, look for a link to a list of tax sale properties. For larger counties, you can usually find this online. The exception to this is the counties in the Northeastern states. A lot of the Northeastern states do not have county tax sales. Instead the tax sales are conducted by the municipality, so instead of looking for the county web site, in Vermont, New Hampshire, Maine, Rode Island, Connecticut, Massachusetts, and New Jersey, look for the municipal tax collectors web site – not county web site. New York has both county and municipal sales in some counties.

If you can’t find the tax sale list that you want online, you can always buy a list from a tax sale list provider. Even if you can find the tax sale list online for free, you still may want to purchase the list from a tax sale list provider. That’s because the list that you get from the tax collector does not always have the information that you need. Frequently it will only have a parcel ID number, owner name, and amount due. What you want to know is what is the address of the property, what is the assessment and value of the property, what type or class property is it, and how big is the property. All of this (and sometimes even more information) is included in the detailed list that you can get from tax sale list providers.

Tax Liens

Left Over Tax Liens

I get a lot of questions from people  that want to know how they can purchase tax liens or tax deeds through the mail and internet. They specifically want to know about left over tax liens and tax deeds. These are tax lien certificates or tax deeds that are ‘left-over’ from the tax sale. In other words no one bid at them at the sale and they were struck of to the county, state, or municipality. In most states if the delinquent tax property is not sold at the tax sale, it is struck of to the county or municipality. A few states allow the assignment of tax lien certificates or tax deeds to investors. There are pros and cons to purchasing leftover or assignment liens or deeds from the county.

 

On the positive side, there is no competition; you don’t have to bid against other investors. For liens and redeemable deeds, you may be able to purchase a lien or deed in which the redemption period has already ended, or is close to being over, in which case you may wind up with the property. For some deed states, since the county, state, or municipality has already taken title to the property, you may not have to go through a title clearing process (quiet title or title certification process). You’ll have to check with the county to find this out.

 

On the negative side, leftovers are usually not worth bidding on in the first place and that’s why they were not sold at the sale. In smaller counties, and in states where the tax sales are conducted by the municipality (New Jersey, and the New England states) there is usually nothing worthwhile that is left over. To find leftover tax liens or deeds, you have to go to counties that have very large lists (a few thousand properties) to begin with. And you’ll have to sift through a lot of junk to find good properties.

 

Sometimes you can find a diamond in the leftover tax sale list. I know a couple of tax lien investors in Arizona who do this regularly as well as a couple of tax deed investors (in Texas and Pennsylvania) who have done this. With more and more people becoming interested in tax lien and tax deed investing and going to the auctions, there are less leftovers available than there used to be. My advice is to use extreme caution and be extremely rigorous with your due diligence when purchasing leftover liens or deeds. I also believe that investing long distance in leftover liens or deeds is a mistake if you do not have someone that can physically look at the property for you.

 

Tax Liens

What you need to know about Tax Lien Lists

If you are going to be successful at tax lien investing, you have to get good information. Many people rely on the free lists from the county or municipality. Some people use the tax sale list online on the county treasurer’s or tax collector’s web site along with information about the sale and information on how to register for the sale.

I find that most publicly available lists do not always have the information that you need to do your due diligence on the properties. Many times you will find these lists do not even include the property addresses. It usually does include the property tax ID number, the amount owed, and the owner of record; some lists may include the annual taxes. Some pertinent information that is usually not on this list will help you to do your due diligence on the properties is: The address of the property; the property classification – is it a farm, residential, commercial, or raw land; the type property – how it is zoned; the property assessment and annual taxes; the last sale price of the property; and mortgage information.

The good news is that you can get all of this information if you buy a detailed list from a tax sale list provider. I find that tax sale list providers that specialize in one state or area of the country do the best job of providing timely and meaningful lists. They are sometimes more thorough, since they are covering a smaller area, and they are more knowledgeable about the information that they provide. I’ve seen national providers frequently leave out one or two counties in a state or only list it when it’s to late to do proper due diligence for the sale.

Two of the smaller list providers that I recommend are LienSource.com – for New Jersey, Nassau County NY, Washington DC, and Florida; and ArizonaTaxLiens.com for Arizona.

For most other states you may be able to get the list online in excel format and then cross reference the parcel or tax ID number with the assessment data that you may also be able to find online. When you can’t find this information online – on the county tax collector’s or county treasurer’s web site, you may have no choice but to buy your list from a national tax sale list provider. In this case you can try taxsalelists.com.

Wholesaling

Real Estate Science for Wholesalers

Wholesaling can be broken down into a simple formula. Here is our formula for a successful wholesale real estate business.

Q-L + Q-H + R-S + B-L + R = Big Dollars.   What does this mean? Let us tell you.

The Q-L stands for quality leads.  In order to be successful as a wholesaler you need to find sources of leads that are quality houses.  Quality leads that is; that means that there motivated sellers.  You want to have a seller that’s not trying, that doesn’t necessarily need to sell.  You don’t want that seller that’s just kind of testing the water to see, “Oh maybe I can see what I can get.”  Or, you know, you need the motivated sellers.

A lot of real estate investors fail because they don’t deal with enough motivated sellers and that’s what we mean by quality leads.  A quality lead really equals a motivated seller such as a bank or someone in pre-foreclosure or a HUD property or an old landlord that’s burned out.  You want to have those quality leads coming at you every day, every week because those are the deals that are going to make you the most money.  Motivation = Money.

Q-H, which is quality houses It is important to have quality leads from motivated sellers but you don’t want to have junk.  You don’t want to have houses that are not going to be marketable to your back end buyers.  You’re going to want to houses that are your bread and butter type houses.  You want to avoid houses that are slanted to the left or houses that are what’s known as functionally obsolete.

So you don’t want houses like that or houses that are too small.  You want bread and butter houses. Houses that you are proud to represent. This is an area where some wholesalers make a mistake thinking that just because they found a deal where the numbers may work that they automatically have a good house.  A bad house is not going to sell because your investors aren’t going to want to junk.

And remember when we say  mean these houses are going to need to some type of work.  They’re going to need some degree of fix-up whether it’s minor – paint and carpet, or whether it’s a full blown rehab where the roof and air conditioning system and floor boards are messed up.

Most of the houses you’re going to wholesale are going to be your fixer uppers or your handyman specials.  There not going to be your pristine houses in great condition and that’s because there’s a lot of equity in the houses that need fix up. As a result of this rehab, your end buyer’s going to be able to create that equity as they fix the house up.

S= System.  You need a repeatable system.  You need something that you can do day in and day out.  That’s going to be your success.  You want to have a steady stream of customers coming in and out and they can only do that if their systems internally can be repeated.  Treat your wholesaling business like Mcdonalds. You as a wholesaler want to  be able to set yourself up where you can put your business on auto pilot and systemize it where your doing the same thing  over and over again until where it becomes really on auto pilot.

So it’s very important to be successful and to be in a business where you can make $10,000 dollars from one deal every 30 days and then build this into a six figure or even a seven figure business.  You need that repeatable system.

And then B-L.  B-L is your buyer’s list.  Your buyer’s list is your gold.  It allows you to be able to find a, you know, when your out there looking for your houses you can say, “Oh yeah I know that John Smith would like this house.”  Or, “I know that Sally would like this house.”  When you are out looking for houses you’ve already have a-determined what your buyer’s want because your tuned into them and developed that list.

Your goal should be to have a hungry list of buyers waiting for your next deal. Having this allows you to be able to make offers with confidence knowing that you’re going to have a buyer to wholesale to right away. One of the main reasons for our success has been our ability to develop our buyers list because part of our success is really attributed to knowing what our customers want and having the relationship with  them. And that’s the one thing that you as a wholesaler really, really need to focus on is that list of buyers.

R is very critical as well,  R = your resources.  These are your people on your team from the closing your closing attorney, your real estate agents, your contractors, etc. that you can refer out to your buyers..  You cannot be successful in this business or any business at all without teammates, without having people around you that compliment you. These people can also be a part of your internal team i.e. an assistant or a birddog  that’s out there looking for deals for you.

A big part of our success is really attributed a lot to our people internally and then our real estate.  If we couldn’t do the amount of volume of business that we do without our real estate agents or without our closing attorneys being able to get deals done quickly when we need them to.  So it’s really key to have the right resources in place, have the right team.


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Lease Option

Getting Tenant Buyers Qualified

Question I am often asked in how to get lease option tenant buyers qualified


Question: How can I get my better tenants qualified for a mortgage even though they have very poor credit histories for the most part? These houses are currently privately held deeds with no mortgage what-so-ever. Any assistance would be greatly appreciated.

Answer: Getting Tenant-Buyers qualified is like trying to get the mud off of pigs. It may seem like a steep hill to climb but you can do it. Tenant selection is going to be your first priority.

Continue reading Getting Tenant Buyers Qualified →