Real Deal REInvestor Network

This isn't a blog with a special 'how to', or a quick technique to make a million.  I just wanted to write and say how thankful I am for my life, family and everything I have learned by being part of this community.  There are so many social networks out there, and places to 'learn real estate investing'.  And after years of investing, reading courses, networking, etc.  I really believe more than ever in the whole concept of Acres of Diamonds.  (If you haven't read that book, go download it for free in the download section.  Right now!)  The idea of tapping and tapping because you are sure that with the next tap you will find that vein of gold in the rock, or that quartz-encased prize of a diamond, is so true.  It's the vision that keeps you working at the rock, enduring the heat, the sweat and discomfort.  And what's even better, is that the vision is Real.  
 There are many times in my investing career that I have wanted to give up.  Many deals don't work out, and many people and 'mentors' aren't what I thought they would be.  Sometimes just the pressures of life felt like too much (and they will feel like that again, probably tomorrow!).  But the great thing about continuing to tap, tap, tap is that I look back at how far I have come and I recognize how much larger the diamond is that I have been going after- and it is amazing.  And it has now become more fun.  Most days I truly enjoy the adventure of it, learning and growing and doing things that even some of my closest friends would not believe...but the vision is deeply planted in my heart and spurs me on.  (And my friends will get to enjoy the fruits of it, even if they weren't always helping me 'tap'. ) So I am very grateful to this community, to Rick Melero and Danny Welsh specifically, and to the people here who have been so inspirational and have dug beside and with me.  I am thankful to be pursuing visions that not long ago I could not have imagined, and so glad that I did not ever give up.  And congratulations to all of you here for pursuing your dreams also...may you find your vein of gold or buried diamond, and I am here to support you, too.  Have a Happy Thanksgiving!

Have you ever gotten an email with a great catch line about a Fantastic Live Event...Free with Purchase of our Product!!!???  And you thought to yourself, "I could use more training, and I think this could be a great deal"...so you bought the product and eagerly awaited details of your Live Event.  You get the date, time, place...flight booked, hotel booked, childcare lined up and spouse on board (or not-).  The date arrives, and you're on your way, woohoo!  You fly in, dump your bags in your hotel room and hurriedly get to the venue with notebook in hand, ready and eager to learn.  The first speaker comes up and you are about to jump out of your seat with excitement.  You listen attentively for all details that will help you get your business off the ground, for any new bits of wisdom to help get you going in the right direction.  "Ok, maybe I'll write that one down.  What was it?  Well...maybe with the next speaker."  And after being advised, cajoled and herded to the back of the room, you see that the speaker has many products on display you can buy for "$1,995.00".  Hmmmm.  On to the next Speaker, who manages to also get through the next cleverly-crafted talk and come up with yet another product to sell.  By the end of this seminar, you are left wondering why you flew all the way out here when you could have just listened to a webinar and bought a product, with less hassle?!
Does this sound familiar?  I am not writing this as a slam against anyone who holds a seminar, but as the real life experience of so many of us in this industry, including me.  And to say that although these types of scenarios are very common, there actually IS some irreplaceable value in going to a live event, with real, live people.  In this age of Facebook, Skype, internet, Twitter, conference calls and every Virtual Way of Meeting and disseminating information known to man (all of which I personally am a fan of, by the way) there still is no way to replace meeting face to face, in person and in real time.  Yes, it takes a lot of effort and coordinating of schedules, time off work for some, childcare coordinating for others (ask me how I did a recent event with my kids...) and yes, money.  Here's the thing, though- if you actually go to an Event that provides Real Value- as opposed to a SEll-a-Thon, it is worth every bit of cash, effort, coordinating, sweet talking the Boss or Spouse, you can give.  The Momentum it builds is priceless.  The way that it can open your mind to new or renewed goals, expand your horizons and help you build a team is like nothing else!  
At the recent Orlando 2-day Event, there were several speakers and a lot of great information given out.  For Free.  And I could not find a Course at the Back of the Room to save my life.   There was even a little Karaoke thrown in there on Saturday night for good measure.  But what I left with was more than the great information I was taught- I left with a clear vision of how to grow my business and what direction to take it- how to do it, and knowing that I would not be alone!  There were plenty of people that would support my efforts, and whose efforts I will support.  Was this worth all the hassle getting down to Orlando?  You Bet it was.  And lucky for all of us, this won't be the last one.  Got questions?  Feel free to message me here, or email me.  I'll give you the scoop on what we learned at joamick@gmail.com.  Trust me, you do not want to miss an event held by this community, and neither
do I!! http://realdealopportunity.com/
 

As an investing strategy, mobile home parks are not known for their glamour (looks), but for their cash flow (substance!).  It's amazing how we can overcome our apprehension and hang-ups about  investing in a MHP when faced with a great investing opportunity.  Now, there are some beautiful mobile home communities; beautiful landscaping, paved roads, new homes that are well-kept.  But that's more the exception than the rule.  Recently I was speaking with someone I used to repair the HVAC at a rental property, and he was sharing a story about a friend of his who had the opportunity to buy a MHP, and asked Charlie if he would like to go in on it with him.  Charlie hesitated and then declined the offer, thinking he did not have several hundred thousand dollars to invest, and was not exactly thrilled at the prospect of owning 'trailers'.  The investor decided to go it alone and buy the park himself.  About 20+ mobile homes, not too many other details.  But he did call Charlie later to tell him that the seller was highly motivated, and he got the whole park for about $40,000.  At this point, Charlie- not knowing any of the numbers (OE, NOI, upside potential anyone?) was already kicking himself.  "If I'd have known that, I'd have written him a check for 20 grand on the spot!" were his exact words to me.   What changed his mind?  The price, of course.  That mobile home park looked at little shinier, a little brighter at that price!  And although you never know a deal until you really look at the details, I thought he was probably right in that he had made a mistake.  So what's the moral of the story?  Never mistake Substance by going for Looks;)  As an investor, the key is in the numbers.  There are a lot of incredible deals out there, and you have to keep your eyes and ears open to catch them.  Don't let your built-in biases hold you back.  You could miss the opportunities that can change your life.

Think you should get an award for your highly-honed multitasking prowess?  Think again.  Here's a quick read from Julie Morgenstern, organizing genius, whose advice is much appreciated by those right-brained among us (me!)...
"Studies have shown that it takes your brain four times longer to recognize and process each thing you’re working on when you switch back and forth among tasks. This means that if your day is a random free-for-all in which you hop from task to task, your work will literally take much longer because of the real time you lose switching gears.             Think about it: If it takes you 10 minutes to get oriented to a new task every time you switch gears, and you switch gears 10 times a day, that’s over 1.5 hours of wasted time. Not only does multitasking have a quantitative impact on your day, it can also damage the quality of your work. Science journals have determined that managing two mental tasks at the same time significantly reduces the brainpower available to concentrate on either one, ultimately damaging the quality of your final product. Severe multitaskers experience a variety of symptoms, including short-term memory loss, gaps in their attentiveness, and a general inability to concentrate.               
 A powerful way to minimize the time lost to switching gears all day long is thegrouping of similar kinds of tasks. The pattern can be as simple as paperwork in the morning and calls in the afternoon or quiet work in the morning and interactive activities in the afternoon. Or, you could organize your day around your core responsibilities, setting aside two hours for creative work, one hour for financial tasks, and five hours for people management every day. If you were in business for yourself and had complete control over your schedule, you could devote one day to administrative tasks, one day to marketing, and three days to client service."
So, still think you're awesome to be multitasking?  It explains a lot as I pursue time-blocking.  Although, as a mother of three, multitasking will always be a part of my life.  Impossible to avoid all interruption, but I deeply appreciate the time lost when switching tasks and it explains a lot about my short-term memory loss!  How about you?

 

Following is an article by Gary Ryan-Blair which I found really helpful, and I hope it helps you, too!  It is very basic and to-the-point about our habits.  They either move us toward or away from our goals!

"Let's begin with FIVE painfully obvious truths:
Truth #1 - Successful people have successful habits.
Truth #2 - Unsuccessful people have unsuccessful habits.
Truth #3 - Habits are behavior, and behavior never lies.
Truth #4 - Your habits determine your past, present and future.
Truth #5 - If you want change in your life, you must change your
habits.

NOW, let's do a simple fill in the blank exercise to determine how
well your current habits are serving you.  Here's a health related example with two possible answers:

-    My health, exercise and eating habits have...turned me into a
firm, energetic and unstoppable powerhouse.

-    My health, exercise and eating habits have...turned me into a
flabby, lethargic and unmotivated person.

Now, take a few moments to answer these questions regarding your
habits.

1.   My savings and spending habits have...

2.   My sales and marketing habits have...

3.   My relationship habits have...

4.   My parenting habits have...

5.   My time management habits have...

6.   My demonstrated leadership habits have...

7.   My communication habits have...

8.   My work habits have...

So, how did you do?  Are your habits helping or hurting your performance?  The one true path to success and happiness in life is to change your behavior by replacing your bad habits with positive habits
that move you in the direction that you want.  It's easy:   if you keep doing what you've been doing, you'll keep getting what you've been getting, so change your behavior.

And that's exactly what I'm going to tell you to do--just change!

I want you to look at your results year to date, right now--today
and determine what habits you must change in order to secure a
better tomorrow.  Don't procrastinate as that's a destructive habit that is
definitely not worth repeating as it bears no desirable fruit and
WILL lead to regret and missed opportunity.
Create a New, Better Version of You!"
 
So basically, if we want success- or more success- we need to do the actions needed to create it!  Habits take about 30 days to create.  So study your habits, figure out which ones need to be changed or thrown out altogether, and consciously create new ones that will lead you toward your goals.   This is something I am personally working on, since in the end, we are completely responsible for our own failure or success!  Whether we are 18 or 80, it's great to know that we can get on the path to success, and stay there.

I am a wholesaler of single-family houses is South Carolina, and have used or held to (or been held to!) various philosophies of selling the properties.  Basically, they break down into two categories:  "Never, never, never disclose your buy price or your profit.  And never, never, never give a sale price."  And conversely, "Set a system for how much profit you will make, and stick to it.  Disclose, disclose, disclose to your end buyers."
  So, you may wonder how this works, why there are such disparate theories and which one works better?  Well, based on my experience,  here ya go.  First, there is merit to the idea of not disclosing your contract price.  Some buyers will tend to want to nickel and dime you and resent your profit- although in my opinion, the work is in finding and negotiating the deal!  I have been asked many times by buyers, or potential buyers, what my buy price is and most of the time I do not disclose it.  I have on several occasions done a simultaneous close, or had 2 separate closings, so I could keep my profits to myself (temporarily!) and held a closing together.  When you don't disclose your contract price, and allow people to make offers on the property rather than setting a sales price, you leave room for more profit along with letting the buyer decide how much the house is worth.  Not a bad philosophy.
  On the other hand, there is the theory that you should disclose everything to your end-buyer:  the sales price and a flat-rate profit that you as the wholesaler make.  This would definitely limit the amount of profit you make on each deal, with no margin to increase profits on a per-deal basis.  The end buyer always knows how much you make, and what he can pick up the deal for.  On the surface this does not seem like a great idea.  But what is it that wholesalers struggle with on a regular basis?  What is it we need the most to make deals work?  The answer is Buyers.  Consistent, regular buyers.  And probably the best way to build up your supply of regular, consistent buyers is to make sure they always know what they are getting!  They will always know that you give them the best deals you can, that you are completely upfront and that you leave the vast majority of profit for them as the rehabber, landlord, etc.  This builds your reputation as the go-to person for fantastic wholesale deals in your area, and you will rarely (once you know your area and ARVs) if ever leave you with any unsold inventory.  
So, in the end it's up to you as the individual wholesaler to decide how you want to run your business.  But to have a business that can start running with less of You in it- it's always best to systematize.  Take your pick, but I'm going with the disclosure method in my business.
 

The beauty of reading books written 100 years ago or so, is that we can look back at 'old' ideas and give them credit for what they are:  timeless truths.  The Art of Money Getting, but P.T. Barnum is just such a book, and along wiht a few others, is a must-read for every entrepreneur.  It is really amazing to know that wisdom and principles are just that- they don't change over the years and they apply to us all.  One of the oeverall themes that Barnum goes in depth about is that 'getting rich' really is somethings that is done over time, through clever ideas and imagination, combined with great integrity of character.  He talks about making the sacrifices to lead a life that is directed at our own goals, and not keeping up with the latest styles, the Jones's or anyone else.  In the language of his day, he describes people wanting to 'look rich' rather than taking on the character of people who actually are rich, and making the sacrifices to get there.   The irony is how he describes very accurately how people would spend money they really didn't have to drive the 'latest coach', or wear the latest fur wrap- keeping up an appearance of wealth without the substance.  He even goes on to say how Americans are 'too superficial'...making me want to flip to the introduction page to check the date this was written!  You could literally insert, 'BMW' or 'Gucci' into some of these sections and viola- it's the 21st century.  People haven't changed much in the past 100 years.  A friend recently told me about a business that rents out designer clothes- so in essence, people can now look wealthy who actually aren't.  Hmmm, sound familiar?  Along with this, Barnum advises against buying things on 'store credit', but rather using no credit and living below our means.  That philosophy sure would have kept us out of trouble!  He also suggests using extra money, or money we can do without and investing it in things that produce a return- like land or education.  So, what makes these principles so hard to stick to?  They require discipline, humility and sacrifice.  Simple as that.
   The author goes on to describe a lot of others traits of success, as well as failure,  including developing a character of perseverance, not giving into emotions or failures, needing to systematize our businesses, focusing like a laser to hone our efforts, and not doing drugs!  Yes, this was an issue even back then.  he talks about letting our money work for us, rather than us working for it.  "Money is in some respects like fire; it is a very excellent servant but a terrible master.  When you have it mastering you...it will keep you down in the worst kind of slavery."  He also encourages respecting our customers, marketing our businesses- (ever heard of the magic 7 touches before someone buys?  He said it.)- keeping our integrity, and loving what money can do for humanity rather than loving the money itself.  This is a relatively short book, but completely jam-packed with great information.  It goes against all the current, and popular, get-rich-quick themes.  Personally, I am learning to build the character it takes to be a good steward of the riches that are coming my way.  I actually have this as a daily affirmation.  I know there is no shortcut to riches, but rather learning the principles and applying them that end up paying off.  I have learned in the past few years to put extra money into expanding my skills, and into investments that yield a return rather than on 'more stuff'.    I am still learning to value a dollar, a being humble enough to live below my means- regardless of how much money I make.  This is a tough one, since I naturally love to 'fit in' and be a part of a group.  But it's a pill I swallow anyway, knowing that thinking long-term and thinking in terms of what's really best for my family is the path I will take.  I am also working on perseverance, since I am a short-term goals gal by nature.  For anyone out there who wonders if it's worth it to read this 28-page book, the answer is Yes.  It is great advice for how to live, accomplish goals and make something of ourselves that really matters.

Wow, what a great time we had in Orlando this past weekend!  A group of us from the MMM Challenge team went to Orlando, driving and flying from far and wide- one even came from Singapore.  It was a great weekend of getting to know people in person who have been Skype, phone and email friends.  Rick Melero did an incredible job teaching us commercial investing from a building that he and his investing group are buying.  There is nothing like being there in-person, and being in an actual property that is part of a deal- working the numbers and learning how a commercial deal works.  There are a lot of theories out there about investing, and a lot of people with "head knowledge".  But it is a different thing to get your hands dirty and get into deals, and hear and somewhat experience the reality of one.  Rick Melero and Danny Welsh are both known for their generosity in sharing very solid investing/marketing advice, but they go beyond just giving information.  They really make an incredible effort to share things that will really help us succeed- cutting out the "fluff" and giving the tips that truly help.  Well, the weekend wasn't all numbers and classrooms- by the evening we got to head out to the Latin Quarter for dinner and some dancing...many really showed some serious moves, and some showed moves that may not be legal in all 50 states...but regardless it was a ridiculous amount of fun! By the last day we got some incredible tours and lessons in how to  work some great deals in luxury investing as well as affordable, and there will be some fantastic investing triumphs to come from it.  I can truly say that if you get the chance to learn from Rick Melero (and Danny Welsh, who we missed) then it is well worth the time.  He believes in pouring out his best for people, and really delivered.  Watch for videos of the event to come!

   There's a lot of confusion in the real estate investing world for how to evaluate the true value of a property, specifically in this case, single-family homes.  When we first start investing we can find that inaccurate values can cause either a loss of credibility for us as wholesalers when we over-value a property we are selling, or a loss of profit if we undervalue it, and both are unwanted outcomes!  
   The first house I sold wholesale was an older brick single-family house in Columbia, SC.  I got a lead from extremely motivated sellers who lived out of state, who had been taken advantage of by several local contractors and decided to cut their losses.  They wanted $10,000 for the house, and would pay the back taxes and closing costs out of that amount.  I figured I could make that work, and if I couldn't, I didn't need to be an investor!  So I got the contract and immediately called an investor I knew who did a lot of rehabs.  I had valued the house at around $115,000 based on a few houses just a couple doors down that each sold for $120,000 and were a little bigger in square footage.  I found their sales prices on Zillow.com, so I felt pretty confident.  I knew my house needed a lot of work in the kitchen and outside, but was in good shape for its age (old!).  I asked $45,000 for it from the investor, who immediately began talking me down on the price.  I then talked to another investor who contacted me (there were quite a few after I placed an ad) and we looked at the house together.  He asked how I had arrived at my value, and I showed him the other 2 houses on the same street.  He then informed me that those were new houses, built in an old style in keeping with the community.  Whoops.  So, the more realistic value of my house was around $95,000.  Fortunately for me I had such a low contracted price, I really couldn't lose, but I got the lesson quickly.  I ended up selling the house for $27,000- and then that investor resold it for $33,000!  Here is the lesson in valuation:
1.  Use Zillow.com  as a free service, but never trust their "value" of the property.  When the address pulls up the property, click the "comparables" button- which is the best use of this site and shows what has sold around your house.  Know the square footage, beds/baths, year built and location of your property (On the railroad tracks?  Near a highway?  In a neighborhood or bordering a neighborhood?).
2.  When you check the comparables,  get them as close in square footage, beds/bath number and year built as you can to your own property.  Zillow also shows when they sold, how much they sold for and how far away they are from your house.  Aim for a sold date within 6 months if possible, and under .5 miles away- but the closer the better.  Also look at the map to see if the comp houses are across a major barrier- like a highway running in between your house and the comps,etc.  That will affect how much you can value your property for.  If the comp houses are all in a neighborhood, and yours is just outside of the neighborhood, then it will most likely be valued lower, depending on the comp properties.
3.  Tax value:  you can go to your county website (if they have one) and check the property's history there, and what your county has it valued at.  Those are notoriously inaccurate, and used to be on-average, too low.   Now it is much trickier due to the market bubble in many areas, but also depending on whether your county has recently reassessed its taxes.  In my county, for example, all the properties were recently reassessed and the values went up.  For some properties I have checked, the values are very comparable now to market value, but for others, they are over-valued.  Use the tax site to know how much the taxes are, and the past purchase prices of the subject property.
4.  You can pull surrounding addresses on the tax assessor site to compare properties to yours, and check for whether your property has been updated if it's older.  For example, when the details of the structure are listed, you can see if 'electrical' is standard, below average, etc.  If subject property is 'below average', then you have a good idea that it will need to be updated and can share that information with your buyers for accurate repair estimates.  Always check the property yourself, however, because tax records have a way of falling behind what has actually been done to upgrade the property!
5.  Make friends with a realtor or two.  They can access the MLS, which can give you the listing information, sales history, comparables- the whole shabang.  They can be really helpful, especially when you want to get an accurate history of the property so you can negotiate the best deal with a seller.
  Just remember, learning to value correctly and accurately is a crucial skill in real estate investing, and can make or break some deals.  Get some basics under your belt, and then get out there and put them into practice- which is always the best way to learn!

    

On my last blog, I told you why I am getting into mobile home park investing- doesn't sound flashy, but can produce some great cash flow.  At the end of the day, that's what it comes down to.  Remind me to tell you about working in some real value to the community using government funding on a later blog, but for now- let's talk pros and cons...
   There are a lot of mobile home parks in the U.S., and the states with the most are California (surprise!), Florida (no surprise), Texas and North Carolina.  A friend of mine recently sent me a link to a list of a lot of mobile home parks in South Carolina.  This state is not very populous compared to many, but boy are there a lot of  MHPs:  around 630 just on this directory list!  Out of this list, I am sure there are a few in my area who want to sell and will do so with some or all owner financing.  Buying a mobile home park with owner financing, producing cash flow on the first day by buying based on current and real numbers, and then adding value to increase revenue, only makes sense.  Along with this, here are a few other pros to MHP investing:
-affordable housing:  people always need that, in a great or bad economy!
-average expenses or operating costs for MHPs are generally less than for apartments:  35-40% of gross income, vs. 50-60% with aparments.
-low er turnover rates in parks where the land is rented out and the homes are owned by the occupants.  On average, people will stay for 25 years or more, and then sell the home on the site rather than going through the expense of moving it.
-the increase of rental rates, for example $15, $20 is nothing compared to the expense of moving a mobile home to anothe site ($2,000-$4,000 for singlewide and doublewide, respectively).  With apartments, tenants can just pack up and move at will if rents increase, causing a higher turnover rate.
-lower operating expenses due to  the decrease of maintenance costs:  no painting, cleaning, fixing as with apartments.  With MHPs, the park owner only has the expense of the common areas and utility connections!
-quicker depreciation:  apartments depreciate based on the actual buildings, over 27.5 years.  MHPs depreciate over 15 years, based on the roads, water and sewer  lines, utility poles, ect.  This has good tax benefits.
-easy to buy and sell new and used homes right there in the park!
As for the other side of these, there are not too many, in my opinion and are typical of any type of real estate investing.
-shady sellers with less than accurate numbers:  who doesn't encounter this with type of investing?  You really have to get in and get accurate numbers, talking personally with some of the renters and doing regular forms of due diligence.
-reputation of mobile home parks:  some investors may not take a lot of pride in owning a mobile home park, feeling some of the "stigma" associated with it.  The cure for this is to make sure the parks are well-run, clean and that homeowners keep their properties up well.  It's all about how it is approached, and making our own way with our reputation as investors, in my opinion.
There may be more cons, but this is it for the list, for now.  These can be great, cash-flowing investments when done right!