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Real Estate: The Low Hanging Fruit For 2012

2011-12-09T19:21:00.000-08:00

Question for you: What do you think is easier to find right now, a job or a foreclosure? I mean if I were to pay you $500 to go out today and come back with either a job or a foreclosure, which one do you think you'd come back with first?

You know the answer to this. It's far easier to find a foreclosure.

Here's a second question for you then: If foreclosures are so easy to find, and jobs are so hard to find, why don't people go after the low hanging fruit? My guess would be that they don't know how.

If you needed money and walked outside to find a $5 bill on the ground, you'd know what to do, right? If you found a $50 bill, you'd also know what to do, right? Well every day there are hundreds of thousands, even millions of dollars all around you the moment you step out your front door - it's called the foreclosure and pre-foreclosure market. Millions of people in need of money however, don't know what to do when they run into this situation, and it's pretty sad.

When I taught real estate seminars nationwide I was always amazed at the excuses people would make for not taking action. Real Estate is the same as any other profession. If you're a doctor, were you born knowing that trade? If you're a CPA, were you born knowing that trade? The answer is no on both accounts. You knew enough though to say you'd like to learn medicine or accounting, so you set out to learn it.

If you set out to learn how to turn all of the chaos around you into cash, do you think your life might be different? Apple has a commercial that says no matter what you're trying to accomplish, "There's an app for that." Well I'm here to tell you that right now is the most exciting time in history to learn the trade of real estate investing. It's a great time because any millionaire will tell you that more money is made during times of chaos than at any other time.

In short, the more problems there are, the more opportunity there is. You name a real estate problem, and I assure you, "There's a tool for that." Over my twelve year career I have seen some of the following problems:

Properties with no equity
Properties needing repair
People behind on payments
People behind in property taxes
People with property tied up in probate
People who lack property management skills
Sybling disputes over property

For every single one of these cases, there's a tool for it - and this is far from being the only real estate problems in existence.

Our goal in 2012 is to tap into this growing list of real estate problems. This means we will need to pull from the knowledge and resources of many different professionals to accomplish this goal. If you have an interest in being part of our national real estate community, send me your contact information. If you've always wondered how investors operate, it's the ultimate win/win relationship - you can learn the inner workings from a team that's successful in this market, while sharing some of your current skill set. You might be surprised how what you know could be an asset to us!

In the new year, leave the unemployment rates for the other people. Let's go after the low hanging fruit in 2012 and turn these lemons into lemonade!

Sincerely,
Rob

What Vehicle Are You Driving?

2010-06-03T16:43:00.000-07:00

Imagine you're in a car race. The prize for winning is a lifetime of financial freedom. You can live wherever you want, in whatever house you want. Your children can attend the school of their choice. You and your spouse can take vacations anytime you're ready to. You'll never have to complain about a lack of free time or money ever again!

IF you win the race that is.

The other cars in this race are cars that are capable of reaching speeds in excess of 200 plus miles per hour. Their drivers have pit crews - teams of people who are trained for one specific purpose; to make sure their driver wins the race.

Question for you: What vehicle would you drive in this race?

Would you show up in the vehicle you're driving now? You know, your four cylinder vehicle that shimmers whenever you go faster than 70 miles per hour? The vehicle that overheats sometimes, so you keep putting water in the radiator? Would you show up in that one?

You probably know better than to do that. You'd never win. Before I conclude my analogy, let's examine all of the possibilities of you winning this race with the vehicle you currently own. If you pressed on the accelerator really, really hard, would you win the race then?

No, you wouldn't. It wouldn't matter if you pressed the accelerator all the way to the floor. If you only have 120 miles per hour on your dashboard, there's no way you could compete with cars that exceed 200 miles per hour. What if you owned two vehicles and you brought them both to the race? Could you win by driving really fast in one of them, then half way into the race switch cars?

No. Having two vehicles wouldn't change anything. If anything it would probably slow you down even more than driving your one slow vehicle. Okay, where am I going with all of this?

If you haven't figured it out yet, the vehicle I'm talking about is your job, and the race you're in is the rat race. My mentor told me long ago, if you want to get rich, you must first put yourself in a position to do so. What this simply means is that most people will never become rich because they're in the wrong vehicle. I chose the field of real estate and real estate related endeavors because everything generates tens, some times hundreds of thousands dollars. Choosing the wrong vehicle will make it virtually impossible to ever achieve your goals. Let me give you an example...

I'll use one million dollars as our goal since most people consider this a worthy amount. First, let's acknowledge that a million dollars a year is $83,333 per month - which is a little over $19,000 per week. Hold that thought.

The average income for Americans works out to be $52,000 per year. That's $4,333 per month - which is roughly $1,000 per week.

If the average American wants to be a millionaire, how in the world can they ever realistically expect to reach the finish line in this vehicle called a J.O.B when the goal they're chasing is 19 times as fast? In my earlier car analogy, some people think if they just work really hard, one day they'll be rich. That's like pressing really hard on the accelerator in your $1,000 per week vehicle. At the end of the day, it's still only a $1,000 per week vehicle. Some people try to outsmart themselves by getting two jobs. Great. Even if you managed to pull off getting another $52,000 job where you worked only evenings, you'd virtually have no life, and would have only made now $2,000 per week. Still a far cry from $19,000 per week.

There's a concept people talk about but very few people truly understand. It's called leverage. Leverage is the acknowledgement that there are only so many hours in a day one person can work. The solution? Get someone or something to work for you.

This is why I feel sorry for a lot of our real estate students who can afford higher education but decide against it. I feel sorry for them because they'll never cross the $19,000 finish line until they dump that $1,000 vehicle. Real estate is so powerful because it is the someone AND the something all in one! When you buy a property you own something that will attract someone to want to get out and go to work for you! Of course your tenant doesn't see it as going to work for you, but that's exactly what they do when they move into your house. Let's say your house is free and clear and your rent is $1,000 per month. Every day when your tenant goes to work, what are they working for? The answer is, they're working to get money for you!

This means that you get a financial benefit from the forty hours they put in, even though you never personally worked any of them! Leverage is how you win the race. Adding one rental house is like upgrading to a vehicle that has one extra cylinder firing. Twelve properties could very well put you in a new twelve cylinder vehicle.

In Atlanta I also train sales teams. Our sales teams make anywhere from $1,000 to $10,000 commissions for the work they do. Again, I align myself with this vehicle because I feel similarly about sales teams as I do real estate. The first billionaire in the United States, J. Paul Getty once said, "I'd rather have one percent of a hundred men's efforts than a hundred percent of my own."

What vehicle are you driving? Take the question seriously. Your answer could very well dictate where you finish in the race.

Real Estate Options: The Most Overlooked Weapon

2010-04-24T13:18:00.000-07:00

I was remembering a story from one of my mentors who passed away, Barney Zick. He was talking about his first real estate deal.

He was in his twenties when he decided he might give the real estate thing a try.It just so happened as he drove through a neighborhood, he saw a seller putting a for sale sign in the yard. The house was ugly. As it turns out, it was a probate situation.

The sellers' mother had died. She apparently was a horder because when Barney went in,it was apparent that the lady had never thrown anything away. In the house was the original newspaper talking about the sinking of the titanic!

He asked the seller what he was asking for the property, and the seller told him. Barney remembered thinking that's about what properties sell for in the neighborhood. He was brand new to investing so he figured just to be safe, he'd offer something ridiculous. Back then Barney's "formula" was to offer fifty percent of asking price plus $110.11. There's a whole joke behind that, but anyway, the seller sat back, contemplated the offer and said, "SOLD!"

Barney's heart sunk. There's nothing that scares you more than offering the seller fifty cents on the dollar and having someone say "Yes" immediately.

Barney tried to stall and said he'd have a lawyer draw up the contract. The seller said, "I have a contract right 'chere." - and whipped it out on the hood of a car. "What's your name?" the seller asked. Well he couldn't pretend he didn't know that. "Bernard Zick" says Barney. The seller writes in his name. "How much you gonna' give me for earnest money?" asked the seller. Barney, thinking he could still get out of it, said, "Ten dollars." The seller said, "Okay. Ten dollars."

The seller patted him on the back and congratulated him. "You now own the house." he said. Barney wasn't sure exactly what he should do, but he knew if nothing else, the house needed to be cleaned out thoroughly. With the help of his brothers, they filled several dumpsters from all the trash in the house. They repainted and carpeted everything. It wasn't long before Barney was putting a for sale sign in front of the house himself.

A buyer came through. He looked at the house and asked Barney what he was asking for it. He gave the buyer the same original asking price that the seller had given him. The buyer negotiated a slightly lower price, thinking he was getting a steal, and Barney said, "SOLD!"

The buyer said he'd have the lawyer draw up a contract. Barney said, "I got one right 'chere." He asked the buyer his name, then asked, "How much you going to give me for earnest money?" The buyer said, "Not much, a thousand dollars." It was all Barney could do to keep from laughing.

"Who do I make the check out to?" the buyer asked. Barney said, "Make it out to me." The buyer thought surely he must be kidding. To make a long story shorter, the buyer made the check out to Barney and Chicago title company because that's who he used. Barney didn't know to use title companies when he had bought. He had given the seller his ten dollars.

Now he had a problem...

He was broke. He had no money other than this check made out to him and Chicago title. He went crying to the title company saying he had no money. All he had was this check. A nice lady from the title company sat him down and asked him some questions.

"Do you have a contract to buy the house?" She asked. "Uh huh." said Barney.
"Did you sell the house for more than you bought it for?" "Uh huh." he replied.

She said all they had to do was have the buyer come in one door to buy, and the seller come in one door to sell, then he could come by and pick up the change. "How much change?" Barney asked. "Ten thousand dollars." she said.

The day of closing Barney came by with a paper bag. He thought he could get ten thousand in cash! The lady gave him a check. He immediately went to cash it and asked the teller for all ones. He wanted to see what ten thousand one dollar bills looked like spread all over the floor of his apartment.

As he was laying the money out, his wife came in, opened the door and money flew everywhere! She screamed, thinking he had robbed a store. "Where'd you get all that money?" she asked. "I sold an investment property." he said. "You bought a property without asking me?" she asked.

He said, "No honey. I sold it before I bought it."

I told you that long story just to get to that punchline. Occasionally I get new investors who ask me, "Should I get my realtors license?" and I always tell them probably not. There are several reasons I say no, but it mainly has to do with the fact that agents and investors live in two different worlds.

The principle of selling a house before you buy it is most strongly supported by a tool called an Option. Most real estate investors don't use options much. Why not? Because most investors don't believe that an option is a strong agreement. Bull.

The truth of the matter is, most investors don't use options because most agents don't like options. Most agents don't like options because they don't understand options. They don't understand options because there are maybe three questions at most regarding options on the real estate exam. There are only three questions regarding options on the real estate exam because of one reason...

The broker doesn't make money on them.

A broker makes money on one thing only, deed transfers. When the deed is conveyed, a commission is paid. When a commission is paid, part of that is the franchise fee. There are statutes regarding how a deed is to be conveyed with purchase and sales agreements. However an option is not statutory, it's contractual. If an agent has a property that someone has an option on and that agent leaves the company, how do they track that? It's hard to track, so they don't teach it.

Which is why I don't like to see my students go the route of getting around too many agents. I'd be afraid you'd lose your creativity. Civilians aren't bound by traditions.

Over the years I have used options to sell properties before I bought them. I've used options to avoid expensive transfer taxes, chain of title and seasoning issues, heck once I was even paid on a house that I never bought at all. I was simply paid to go away!

There's almost no deal that I can think of that wouldn't be made better if you'd do it with an option. Shhhh! Don't tell anyone I told you though. I bought a house on the golf course in Stone Mountain this very same way. I've told the story at our real estate Wealth Summits.

We've got a Wealth Summit coming up in Atlanta soon. June 24-26th. Three full days of stuff you're just not gonna' get with your agents' license. In fact, guess who comes to most of our Wealth Summits to learn? Aww that was too easy. You guessed it. Real estate agents.

Get the word out. Education is your greatest asset! Invite your friends to see what we're all about. For the next few weeks until our Wealth Summit, I'll be hosting a FREE real estate investment group. For more info, go here .

Why The Rich Get Richer...

2009-08-12T06:50:00.000-07:00

We've all heard the expression before, "The rich get richer.." Ever asked yourself why that is?

It's really not as complicated an answer as you might think. If you believe in the philosophy put forth by The Secret, what you focus on expands, right? What do you think the primary focus of rich people is?

Wealth; Where is it, and how do I get it?

We're in a recession now. If you turn on the news, read the paper, listen to the radio - they all say the same thing. Gloom and doom. Funny thing though, most of my friends who make the most money are aware of what's being said, but they don't focus on it.

I'm not sure where the quote comes from, but I've lived by it and it has served me well:

"Money never disappears, it merely changes hands."

Because of this mentality, I have never been in a panic. The quote always forces me to ask myself the questions, "Where did the money go? Who's holding it now?" - which in turn changes my focus from the hysteria of the news, to seeking the answer to my question.

It's a weird thing to say, but I will go on record to say that when I look back on my career, the worse the economy got, the more money I made. I don't say that in a bragging way. It's just something I've noticed.

I taught real estate investing seminars nationally for three years. I got to know my market pretty well during that time. I knew students were worried about the market so I created a system I knew investors were begging for.

I won't get into my entire history, but I think the reason for my constant improvement is because with every market "failure" my focus turns to finding a solution that will be immune to the previous weaknesses - making my ideas better.

THIS is the reason the rich get richer. Focus.

Coincidentally, I've noticed that people who struggle financially have more of a focus on what is being said on television, radio, in the newspapers than rich people do. Focusing on gloom and doom of tends to put people in "protection mode".

One group plays to win, the other plays to prevent loss.

It's no wonder the rich get richer. They came to win!

Over the last decade I have memories of friends of mine who when forced to sink or swim, swam - when they didn't even think they could.

Adversity isn't always your enemy.
Change your focus...
Many times, it makes you stronger.

Feel free to comment, re-post, or re-tweet.

Why I Left McDonalds Today...

2009-06-25T12:57:00.000-07:00

Hey remember my email about free stuff?

Well another real world example of that hit me today at McDonalds. First of all,I don't really eat at McDonalds. I just like to go to different restaurants that offer free wi-fi. It's more fun to get out of the house and meet people than working from home. Once, I even met an old student who wanted me to coach them. It worked out great for him and for me too! But back to McDonalds...

I usually go to this place called Panera Bread company. They sell more than bread of course and the food is pretty good. I go there first because they have free wi-fi, and secondly because of this; there are a lot of professionals who hang out there. I always meet someone.

But Panera is quite a distance from my house. Today I decided to change up a little bit. I decided to go to McDonalds. I asked about their free wi-fi, and the manager gave me a free coupon code to enter. I entered the code and quickly noticed the coupon said it was good for up to one hour. Hmm I thought.

Looking around, I also noticed there weren't any business people in there at all.

I got my coffee and checked email for a while. An hour goes by fast when you actually have things to do on the internet. It wasn't long before my connection was done. I packed my stuff and headed to Panera. As soon as I got there, there were people already on their PCs, eating and working. There were just more benefits of eating at Panera than there were eating at McDonalds - so I left. I decided to surf and look up some case studies on the benefits of offering free wi-fi at a restaurant.

Schlotsky's - a sandwich shop, did a survey and found that six percent of their customers rated having a computer as "critical" in their decision to choose the restaurant. Six percent may seem like no big deal, but Schlotsky's serves 250,000 people per year - so just having wi-fi would bring another 15,000 customers to their chain. The average customer spends $6 in Schlotsky's, so the addition of wi-fi brings the chain an additional $90,000 in income!

In marketing terms, this is called "risk reversal" - where a company makes it so easy to do business with them that it's a no brainer. Some mistakenly think it's a waste of money to offer something free. Don't tell that to Schlotsky's. You'd be amazed at the amount of new customers you'd get simply from implementing risk reversal in your business.

Do you like this blog? If so, share it, or re-tweet it with the link below. You have my permission to use it. Just give me my props.

(Cool lesson : "props"= credit, or acknowledgment)

Internet Marketing: Is It Morally Wrong To Influence?

2009-04-05T18:59:00.000-07:00

This is a conversation that rears it's head nearly every time there's a conversation about marketing - in particular, the psychology of marketing.

I was listening to an interview that a friend of mine conducted regarding a popular marketing product. The man being interviewed said that the product was great, but he didn't think he'd use all of it's techniques because he felt to do so would be a contradiction of his morals.

In talking with one of my sons,I showed him a few websites and explained how each of the companies were making money behind the scenes. At some point during the explanation of this, my son chimed in and said, "Sounds manipulative."

I thought this would be a fun topic to tackle. This isn't a blog to tell you it's either right or wrong to feel the way you feel. It's more to have an honest discussion about the behavior of people, and what we tend to do with that knowledge.

Let me first say I understand what people mean when they call a marketing tactic "manipulative" or "sneaky". Nobody likes the feeling of someone "getting in your head". I remember hearing a story about grocery stores once. Apparently, grocery stores place the kiddie cereal on the bottom shelves. Why? Because children are small - store owners want the child to be able to see the high priced cereal and beg their parents to buy it.

When was the last time you bought something from Wal-Mart for $10.00, $20.00? Chances are... never. Studies have shown that people tend to buy more if the product is priced at $9.95, or $19.95 - funny how that one nickel difference can change human behavior. Deceptive, right? I wonder.

Is it deceptive because the technique was used to get money? I remember my college telling me to include a cover letter with my resume because it increases the odds my resume would be viewed, and therefore I might get a job. I didn't feel manipulative though. I thought it was just what you have to do if you want a job.

Have you ever made an attempt at some sort of communication with someone only to have someone else tell you you were going about it all wrong? Did you continue to exude your ineffective behavior, or did you then tailor your behavior to produce the result you desired?

Outright lies and misrepresentations of the truth are no doubt sneaky, and manipulative. Those who engage in this behavior surely cross the line of morality.

What types of influence define manipulative behavior? Is it just the types that involve the receipt of money? Or does anything done with the intent to get a result from you qualify? I'm asking.

I may be going out on a limb here, but I'd venture to say I don't mind being "influenced". For me, it's all about the experience. How did their form of influence make me feel? Did it feel pushy? If so, then I hate it, and it feels manipulative. I bought a time share once... I've never felt so "tricked" into a situation in my entire life. It definitely wasn't enjoyable for me. I think I bought it so I could get the heck out of there. I felt like I was being held hostage!

On the flip side there are many services I didn't think I wanted or needed, but now use as a result of someone showing me the benefits of using them. In hindsight, on some level I'd have to say I'm thankful to whomever it was - who knew just what to say to me. If it weren't for their influence, my life might be a bit more unorganized and stressful.

Post your comment on this topic. I'd like to hear your opinion!

Backends: Massive Cash Creation! (pt. 1)

2009-03-21T17:42:00.000-07:00

I never considered myself a Marketer, but instead a Real Estate investor who used marketing to sell my properties. From an entrepreneurial standpoint we're all into marketing on some level, but there's a big difference between people who sell stuff and those I'd call Marketers.

This is not a put down whatsoever of people who just have a single product or service to sell. Heck, I lived in that realm for years before I started having an appreciation for the unique subtleties of marketing. One of the first of these subtleties that intrigued me was a very simple concept, but one that often goes overlooked. It's called your backend.

To simplify, all a backend is is the sale that occurs after the sale. There's thousands of different applications for a backend sale, but let me tell you about one that I thought was pretty interesting. It's a story about Robert Allen.

In case you're unfamiliar with him, Robert Allen is one of the most well known Real Estate investors on late night tv. I had the opportunity to meet with Bob in Orlando, when I taught as an instructor for his institute.

One of Bob's first books sold over 900,000 copies. By publishing standards the book was a success. You may even think, "Hey, that IS pretty cool!", and it was. However Bob noticed a critical mistake during the selling of that first book. He never left a way for his readers to get in touch with him! While that may seem like no big deal to some, it was a HUGE deal from his perspective - he understood the principle of the sale that was to come after the sale.

By the time he wrote his second book, it was a failure and a success at the same time. The title of his book wasn't as attractive as his first one, so it only sold 60,000 copies. From a publishers standpoint the book was a failure. But was it a failure? Hmmm.

By the second book, he had learned to insert more ways for his readers to contact him (over thirteen, if I counted correctly). Since his book was sold nationally, it stands to reason there would be people in different states who wanted to learn more about the strategies discussed in his book. Bob created a backend product - a Real Estate seminar for those readers. The cost? $5,000.

Remember, Bob Allen's book had only sold 60,000 copies... but here's what's so exciting: out of the 60,000 people, five thousand people gave him $5,000 for his seminar! Do the math on that. TWENTY FIVE MILLION. The backend product made more cash than the book that was a failure! In fact, the backend product made even more than the book that was a success. A LOT more!

This is just one technique that is often overlooked when an entrpreneur markets a product or service. Is the product or service your selling a one shot deal, or can you envision a complimentary product or service - a backend product that comes after the first sale?

I've leveraged many of these subtleties in my business at various points with awesome success. Landlords are the worst when it comes to one shot deals. When I leased my properties, I used to do what every other landlord does - when the tenant asks what the rent is I'd just say $950 (or whatever the price is). How amateurish (is that a word?) I thought later. Do you think McDonald's would ever let you walk out of their restaurant with just a hamburger without asking you if you want fries with that? No. But we do all the time...

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You Had Me At Hello

2009-03-18T16:44:00.000-07:00

I was sitting here trying to think of what I'd been feeling lately when I log on to Twitter. I'm relatively new to the whole social media wave, so you'd think I'd be ecstatic to have nearly one thousand followers already... but I'm not.

In reading other people's blogs and updates, I stumbled upon a blog written by Chris Brogan, a fellow Twitterer. It struck a chord in me and frankly, between his blog and Perry Belcher's youtube video, it actually became the inspiration for this blog.

Cold... is the word for how I'd been feeling on Twitter, and I couldn't put my finger on it until I had read Chris's blog on robot behavior and I said, "That's it."

That's what I was feeling... like I was at a party with a lot of phony people, and I was looking for someone who was down to earth to talk to.

If you're already on Twitter, then you know it's pretty commonplace for you to follow someone, only to receive an automated response that says something like, "Thanks for the follow... check out my [Fill in the blank]". In the beginning when I received these responses, I just brushed it off. It's like the junkmail at home - I've learned to deal with it as long as there's some real mail in my box that's for me. Lately though it's been the equivalent of going to your mailbox, stuffed to the rim with stuff you need to throw away.

Social media is supposed to be the new wave of the future, and the irony is that there is very little about it that is social. Before it sounds like I'm pointing fingers, I'll have to confess that I too fell into this category of sending cold robotic responses to people. Enamored by Twitter members who have a huge following, I wondered how they managed all of those relationships. One answer kept popping up. Tools.

Gotta have tools right? Auto responders, auto follows, scripts, and templates. It reminds me of Real Estate, where I tell my students not to get so caught up in the bricks, mortar, and contracts that you forget that behind every deal... is a person. Same goes for Twitter, and life really. Every follower on Twitter is a person. I had used tools to deal with people for the most basic thing imaginable - communication. I auto followed them in case I didn't have time to follow them back. When I auto followed though, I couldn't remember who I neglected to actually speak to. I only used my auto follow feature for about a week. Today I disabled it.

Who cares if social media is the next big thing if the motives aren't sincere? By no means is this experience unique to Twitter. Long before there was a Twitter, there were sites like GetHuman.com where they post how to get through the automated voicemail trees of big companies so you can actually talk to a human being.

An acquaintance of mine brought something to my attention that I hadn't thought of. "Maybe the economy is making marketers become more aggressive." he said. Perhaps. Whatever the reason, it may be worth noting that the word marketing is largely comprised of the word market - which is supposed to be what other people want. The way social media is being applied today however, it may as well be called meketing.

While I have met a lot of great people on Twitter, personally I don't think I want thousands and thousands of followers anymore. At least not for the sake of having numbers. I always follow more people than are following me. So from now on, if you see that there are waaay more people following me than I am following, do me a favor... don't follow me yet. Rest assured that I'm answering my followers personally (No machines. Just lil' ol' me.), and will need time to catch up so I can greet you personally. Thanks.

I mentioned Perry Belcher's youtube video earlier. Giving credit where credit is due, he gives the best explanation of what social media is supposed to be that I've ever heard. Watch his video.

I'm debating how to handle my relationships with people on Twitter now. I'm not doing anything fancy. No autoresponders or canned messages. No mention of my profession, blog or websites. I'm simply greeting people the way we've greeted each other for thousands of years.

I simply say hello.

Now THAT'S a message worth re-tweeting.

The Good Side Of The Real Estate Crash

2009-03-11T13:30:00.000-07:00

I remember the words of my real estate mentor like it was yesterday... "Don't sell everything you get your hands on!", he used to say. Despite his words of wisdom, it fell on deaf ears. As we watched the market crash, it was interesting to see how investors began to change - from the novice to the advanced.

The Good Old Days

We didn't sell everything we got our hands on, but heck ... it was darn near everything. Cash ruled. Even as I teach investing seminars nationally, I hesitate to tell our students about the benefits of renting a property that's been bought the right way as opposed to just selling one.

There's nothing sexy about management. Everyone wants to talk about the "big check" they got from flipping this property or that property. If we couldn't impress you with the size of the check, we'd impress you with the speed with which the money came. I still remember puffing my chest out when I sold a house on a lease option and got $9,000 down on it. The tenant later moved out, and he came back to me a year or so later and gave me $17,000 down on another house, apologizing to me for the confusion before. On both of these deals I don't think I had them on the market for more than a month or so. Ahhh those were the days... when you could sell anything... and so we did.

Lessons From The Crash

But should we have sold everything? Since properties sold so readily, it also made for a scenario where investors paid more because the odds of them getting "stuck" were minimal. Remember the days of the 70 percent LTV? You laugh now. Back then that was a good deal. You probably wouldn't touch a property at a 70 percent LTV now. Now, even if you could get it for 50 percent LTV, you're still probably a little nervous, right? You want the lowest possible price. The price that makes you feel that even in the worst possible scenario, you'd be able to sleep at night. So what's new?

Shouldn't you always approach a deal this way... from the standpoint of the worst case scenario? I sometimes cringe at all of the properties I bought "subject to" for darn near retail value just because I could get them for free.

Has the market made me more cynical? No. I'm still excited about real estate! What the market has done is force me to look where most people don't. Before the crash many people looked to foreclosures, but few understood terms or shortsales. Now there are waaaay too many people in the foreclosure and shortsale arena. That's precisely why I have liitle interest in it. Where do I focus then?

Taxes and Terms

After the seminars slowed down a bit, I ran into an old friend of mine who was wholesaling properties in the Atlanta area. In 2007, he was using a unique way to find his wholesale deals - via the property tax rolls. We had lunch one day as he told me he had more leads from the county than he could possibly handle himself. He offered to pay me handsomely if I could help.

I'm glad that I did! We worked together for more than a year. The more deals we worked, the more my eyes opened to the myriad of overlooked opportunities in tax sales. I prefer tax sales to foreclosures and short sales because it doesn't take up your entire life like a shortsale can. No BPOs, no packages to wait for, no waiting to see if the bank "approved" your offer. Just do your due diligence, show up for the sale and bid. Can't you "just bid" at a foreclosure sale too? Sure you can, but there's a few things about the tax sale that I like better.

First, it's not as advertised, so even if people show up for the tax sale, they usually won't bid because they don't know what they're bidding on, or how you found the list of what's going to sale. Second, tax sales are less desirable than foreclosures because of the redemption period. Investors want to work on the property right away. When you win the bid at a foreclosure, you can. When you win the bid at a tax sale, you can't. In Georgia, you have to wait a year and a day before you can do anything to the property. So that makes it unattractive to most would be investors.

But what if that wasn't really true? What if you could buy properties at a fraction of the cost (many times less than bank sales), very few people bid on them, and you could fix them up or rent them immediately? What if you could not only buy them, but buy them without your own money? No, I'm not talking about private lenders. I mean what if the government actually funded your investor purchase and you didn't have to pay them back? Wouldn't that be cool?

Well that's exactly what can happen when you play in that space. And that's just scratching the surface. We'll explore this in more depth in some of my future writings.

I've always been a fan of terms because as a general rule, people are too lazy to figure out terms. Terms are the moving parts that make up a deal. In essence, it's deal structuring. Lease options, Subject to's, Wrap arounds, Options, Inverted mortgages, Leaseholds etc. are all examples of terms deals. The possibilities are endless, and that's what I ike about them. Many times I've bought a property right after someone said there was no deal there.

What The Crash Was Good For

In essence, the good side of the market crash was tenfold. The first thing it did was shake most of the wannabe investors out of the game. Believe it or not, most of the newbies are the reason for the inflated property values. A seasoned investor would not overpay.

Just as the market shook out inexperienced investors, so too was the fate of fly-by-night mortgage brokers. The only ones left are the brokers who were conservative to begin with - sticking with lending principles that have always been sound.

The most important lesson for us though, strikes to the core of what investing is supposed to be - wealth creation. True wealth for the real estate investor comes from owning the asset, not selling the asset. Hence the advice, "Don't sell everything you get your hands on!" In this economy, it's back to basics... because it's tough to sell, the market forces us to own the asset for true wealth - which means rental property, and keeping the market in check by sticking with time-tested property valuations.

The Road Ahead

What is the future of real estate? The answer will be different for everyone. I know a lot of my friends who started out with me have now filed for bankruptcy. Some have moved on to other industries, and those who were just playing with real estate in the first place, have gone back to their day job. In the end, no matter what field you're in, remember one immutable truth...

Money never disappears. It simply changes hands.

Your goal should be to always find out who is now holding the money. Learn what they know, and you'll hold the money too.