How to succeed in real estate. A discussion.

[Adam King (MI) 1]

Hey all,

This post is for everyone that is having a hard time with real estate. Whether you are beginning or having issues with moving to the next level. Instead of giving up we need to try to see some of the things we are blinded by.

This is for all of us. So I suggest everyone takes the following to heart. This is powerful information and my way of giving back.

 

Investing 101

 

Number one; know your abilities and liabilities.

 

Are you an "A" investor? I.e. someone seasoned with a bag full of tricks that you can pull off at any time? I am talking about a bag of tricks that you have developed into proven applicable systems? Deals that you can reproduce and are set up to do so.

 

Are you a “B” investor? Someone how has done much, can pull off just about anything, but still has huge room for improvement? I.e. you’re ready to try anything, but you know it will more than likely be a bumpy ride the first few times?

 

Or are you a “C” investor? Someone who just got started, has a ton of information at your disposal, but hasn’t done much with it? Someone who is still lacking the ability to choose which is the best direction to take?

 

Here’s where we all go wrong.

 

I have an associate right now that is interested in short sales. They have purchased all of the necessary materials, gone through the boot camp training and can answer just about any question I throw at them. They have all of their marketing in place (very little) and a game plan.

 

Here’s the problem.

 

I had them fill out a questionnaire to find out where they were with their abilities and liabilities. They scored high with knowledge and information. But get this, when it came to experience and financial ability, they were ZERO! What does that tell me? It tells me their destined to be at the wrong place at the wrong time over and over.

 

Here’s a simple fix.

 

Find out whether you’re an A investor, a B investor or a C investor and work accordingly. What this will do will help you get a better vision of your strengths and weaknesses. This will in turn allow you to understand your “limits” while negotiating with a seller.

 

If you’re an A investor, you will get more deals than anyone. This isn’t just because you’re experienced, it’s because you can GIVE MORE with total confidence.

 

If you’re a B investor, you will be able to have a brighter future, but will inevitably lose out on deals that you cannot support with your abilities. You will also need the faith of knowing you can do it before you do. Bumpy or not you have promise.

 

And finally, if you’re an A investor there’s something you need to learn. Here it is in plain English. Try to follow along….

 

Negotiating as an “C” investor.

 

Hi, I am calling about the house, is it still available?

Yes it is.

Great, can you tell me about it?

Sure, it’s a 3 bedroom etc etc.

Great, what are you asking for the property?

We’re asking $140K.

Great, what’s it worth?

It’s worth $160K.

Great, are you willing to do terms?

What do you mean by terms?

Sound familiar?

 

Here’s a quick note: Sellers are all motivated to an extent. No one feels good about the asking price. NO ONE! WE as sellers ALL want to sell. We WISH the right person came along. We ALL worry that our price is too high and we ALL pray we can get it. So, does the C investor get that deal? Probably not. And why not? Because they are missing a VERY important aspect of the negotiation. Working to get the seller what “they” want. Do this and you’ll have more deals than you know what to do with.

 

Here’s an example. Negotiating as an A investor.

 

Hi, my name is soandso, I’m calling about this house. Are you still looking to sell?

Yes.

If you don’t mind, I would like to ask you a few questions to see if I can get you want you want.

Sure, go ahead.

If you don’t mind me asking, why are you selling?

We have just built a house and don’t want two payments.

Wow a new house huh? Have you moved in already?

Actually we are in the process. We closed a couple of weeks ago.

Great, must be exciting. Do you have a bridge loan on the house or are you already situated with your financing?

Oh no, we closed with a new mortgage. There’s no bridge loan.

Great. So, is the new house bigger? Is that why you moved? Or were you tired of the location?

We had a baby and needed a bigger house. The old house is great, but a little too small for us.

I’m with you there. I’ve been through the same thing with my family.

So, what is your intention then? To make sure you’re not making two payments? Or do you have plans with the money from the sale?

Both, we definitely cannot afford two payments, but we also don’t want to lose the equity we have into the house. We have made a lot of repairs.

That makes sense, I don’t blame you. So, what are you plans with the proceeds? Are you in need of the cash right now? Or are you looking for a secure return or “cash flow?

Wow, we haven’t really thought of that, what are you thinking?

 

TURING POINT

 

Here’s the scoop. This is what most of us don’t really get when we start.

 

Reasons for negotiating

 

Hi, my name is soandso, I’m calling about this house. Are you still looking to sell? (Getting to the point as to not waste time)

Yes.

If you don’t mind, I would like to ask you a few questions to see if I can get you want you want. (Letting them know you are looking towards their best interest. This puts you above the rest of most other “investors”. It also lets them know may be “the one”)

Sure, go ahead.

If you don’t mind me asking, why are you selling? (Getting to the point of their motivation)

We have just built a house and don’t want two payments.

Wow a new house huh? Have you moved in already? (Finding out if they are able to carry two mortgages.)

Actually we are in the process. We closed a couple of weeks ago.

Great, must be exciting. Do you have a bridge loan on the house or are you already situated with your financing? (Getting an idea if they have equity in the property or if it’s been used up or not)

Oh no, we closed with a new mortgage. There’s no bridge loan.

Great. So, is the new house bigger? Is that why you moved? Or were you tired of the location? (Reverse psychology to get them to explain their issues with the old house)

We had a baby and needed a bigger house. The old house is great, but a little too small for us.

I’m with you there. I’ve been through the same thing with my family. (Rapport builder, but BE HONEST)

So, what is your intention then? To make sure you’re not making two payments? Or do you have plans with the money from the sale? (Question of proposition. Staying in control but not “selling” them on an offer they are not interest in or cannot accept.)

Both, we definitely cannot afford two payments, but we also don’t want to lose the equity we have into the house. We have made a lot of repairs.

That makes sense, I don’t blame you. So, what are you plans with the proceeds? Are you in need of the cash right now? Or are you looking for a secure return or “cash flow? (What can I do for you? This is the point of no return. You have the seller interest because again, of your question of proposition.)

Wow, we haven’t really thought of that, what are you thinking?

 

This finally puts you in the driver’s seat. At this point you have NOT even asked what they owe, what they’re willing to take or even what they’re asking!!!! This is what puts a seasoned investor in such a position of leverage. So let me ask you this; why are we all PUSHING SELLERS?!

 

Ask questions of proposition. Continue to be of service and build a relationship of trust. If you miss out on the opportunity to do either of these you will lose 100% of the time. It must always be in the seller’s best interest to want to work with you. I almost ALWAYS get deals where I’m in the middle. This is because I have earned the seller’s trust and confidence. But when I cannot be there, it is a lot harder to get the deal. This applies to CAs by the way. If the seller is motivated a CA is a done deal before you even ask about price. But if you’re not willing to put yourself in the position to even find out the true intentions of the seller, and you’re not able to follow through but with only one strategy, then you have some things that need to be worked on.

 

This is the ultimate goal of investing. There’s something to be said about making money, but having a seller blown away about how you structured and executed a deal is another thing.

 

If you intentions are to only do CAs, you need to find sellers that fit that criteria. If you are an investor that only does short sales, you are always looking for a discount. But if you have an inconsistency that labors on your abilities to help the seller, it’s time to make a change. Trying to do short sales when you are in a full time job, have not tried to build a team and have no money, you are inevitably going to be frustrated. Even if the seller says yes you’ll be wasting your time. This is the greatest lead cause of failure in this business.

 

And for the record, the top negotiation could have gone several different routes. If there was a lot of equity and your intentions were of cash flow, then you could have tried total seller financing. This could have been what the seller was ultimately looking for. They didn’t want to walk away from equity, but could have made it clear they didn’t need a bunch of cash up front. Even if they did, if you were set up to give them cash and do terms you could still have had a hell of a deal.

 

Keep you focus on service and of your abilities. It’s not just about the market we’re in. It’s just not about our abilities or liabilities, it’s about putting it all together to come to a common ground so we can create a realistic business. Sellers want to sell, we want to buy. The only thing that stands in our way is how we can structure and fulfill the service we offer. The rest is menial.

 

And for one last “kick in the pants”. If I gave you $10K to find me a property within the next 14 days or you would lose it, what would you do? Think about your negotiations with the sellers that would be involved. How would they sound? What would be different than other negotiations that failed? Can you see the difference here? I have been given that opportunity and passed with flying colors. And all I can remember was that what I offered was the true security of a buyer. Again, we’re all waiting for that one buyer to come along. So, what’s it going to be? Are you going to keep trying to get people to see it your way? Or are you the one they have been looking for to take care of “their” problems?

Think about it,

Adam

[Doug Pretorius (ON) 9]

The short version: Get some cash and credit and go buy the damn thing.

[Craig 0]

The short version: Get some cash and credit and go buy the damn thing.

 

Doug:

 

I am in the process of doing Lease/options with a Rehabber. He will buy houses to my market then instead of giving them to an agent we will do the CA thing. At this time he has 14 properties he needs to move. He fully undersatand Lease/options but he is into rehabbing not doing the Lease/options. Once this system starts working its a win win for both him and myself. Not to greedy but the system is very very important.

 

You should find someone with this same need to get you over that hump.

 

Some do, some don't, so what, NEXT.

 

Craig

[Steve 0]

Doug,

 

It's quite disheartening to see the one person who got me involved in creative real estate is calling it quits. You convinced me that this does work up hear, and I did hammer out a deal. Yes our market is tougher to make things happen, but that doesn't mean it's impossible. Keep your eyes open for possibilities, and not just CA's. I found a distressed owner whose dumping a 13 unit building and we're getting a 100k in equity. The person I'm assigning to is going through the appraisal process right now. If everything checks out, then there;s a fat $8500 cheque waiting for me at closing. This owner has another property as well he's given to me, and I've think I've got another buyer as well, not as much equity, but a 5k assignment fee. I've got these deals and buyers through networking at the club I go to, and I'd probably be in your mind frame as well if I didn't have these people to support me. There are lots of people there doing assignments, L/O, rehabs, and other no money down strategies. There's another meeting on Wednesday Doug, I want to see you there, e-mail me and I'll give you the details.

 

Steve

[Jason (AL) 1]

Good words to follow there, Steve.

 

I agree, you can't force a creative deal on every seller and situation.

If sellers don't see anything in it for them, then they're not going to play ball...no

matter how well you think a certain creative solution might work.

 

Just become one of those "A Investors" as Adam likes to refer to.

 

 

C ya later!

[Adam King (MI) 1]

The short version: Get some cash and credit and go buy the damn thing.

 

Doug, without getting into all of the drama, I see two things that you lack. (Keep in mind I do not mean disrespect one bit by what I'm about to say. Quite the contrary, I am posting this because I care for you.)

 

Problem one. You need to build a business. I have never to this day seen even one investor make it alone. Even the ones that continue to do deals left and right hit a wall. No one moves ahead on their own steam. Think of Marco on this one. He's gotten rich because he built a team etc etc. I know from your posts and your website you are not socially active. If this changes so will your wallet.

 

Problem two. You lack ability to cross the finish line because of problem one. This in turn gives you what I call "the beginner's curse". This isn't that you're a beginner, but the downside of not running this like a business is a bad attitude. And if I'm wrong on that one someone, should get me a pair of glasses and allow me to reread your "calling it quits" post.

 

You have tremendous talent and knowledge of this business. And for the record, feeling shitty about yourself once in a while is totally cool. I know that you posted because you need clarification and support. And here it is.

 

My post was to try to allow people to understand what life is like on the other side of the success coin. And it ain't about the money. It's about the fulfillment of getting results that are welcome by everyone. And that takes team work. Whether it's with the seller or with the partners that help you to accommodate the acquisition.

 

Everyone one this site knows that I have NEVER used my own money or credit on an investment property. The only thing that has made me different from you (God knows you have as much knowledge) is that I built a team back in 02. This is why I have had so much success. It's about turning the faucet (Proven system) on when the bank account goes low. There is no luck, there needs to be no motivation from a seller and finally, it is under my control because I can be of service.

 

I really hope this rattles something lose. Usually after making a post like this people thank the writer and show appreciation for their ideas and efforts. Instead everyone is trying to comfort you. Can ya feel the love?

Regards,

Adam

[CS1977 0]

Thanks Steve for that reply.

 

Doug, I think most of us would probably agree with him...we hate to see you give up

[CS1977 0]

Thanks Steve for that reply.

 

Doug, I think most of us would probably agree with him...we hate to see you give up

 

 

Just saw Adam and Jason replied at same time as me. I would just like to add that I always read thru old Dealmakers Cafe posts cuz they are great and Doug is all over them....so this is also why this makes me sad...if that makes sense.

[Doug Pretorius (ON) 9]

Relax, guys! I'm not quitting real estate! I'm just quitting working with sellers.

 

Look, we can't be good at everything, and we don't need to be. You don't NEED to ever see or speak to a seller to invest successfully. If you want to, if you like to build rapport and negotiate and problem solve and you can find a steady stream of sellers willing to accept your help, that's great I'm sure you'll make plenty of money.

 

But I can't. I don't think there's any shame in admitting that. There's only one reason why I've tried so hard to buy with seller financing and that's because it holds out the promise of buying an unlimited number of properties without the need for credit partners.

 

Instead of continuing to beat my head against a wall, I'm simply shifting my focus back to buying conventionally with partners if necessary. Which is, if I'm reading you correctly, exactly what you're saying about team-building, Adam.

[megabucks41 0]

Wow I haven't felt this much closeness since I went Dierect with Amyway or was it AL Williams darn you guys are just to great this entire post has given me a warm fuzzy feeling, I just don't know what to do but just go get therapy LoL you folks at the naked investor are way to great You couldn't find this much support from any job I could care less what kind of job it is.

[MichaelC 160]

. . .this entire post has given me a warm fuzzy feeling. . .

You sure it isn't the tequila shooters that are making you feel that way??

[tlpadil 0]

The short version: Get some cash and credit and go buy the damn thing.

 

Doug, without getting into all of the drama, I see two things that you lack. (Keep in mind I do not mean disrespect one bit by what I'm about to say. Quite the contrary, I am posting this because I care for you.)

 

Problem one. You need to build a business. I have never to this day seen even one investor make it alone. Even the ones that continue to do deals left and right hit a wall. No one moves ahead on their own steam. Think of Marco on this one. He's gotten rich because he built a team etc etc. I know from your posts and your website you are not socially active. If this changes so will your wallet.

 

Problem two. You lack ability to cross the finish line because of problem one. This in turn gives you what I call "the beginner's curse". This isn't that you're a beginner, but the downside of not running this like a business is a bad attitude. And if I'm wrong on that one someone, should get me a pair of glasses and allow me to reread your "calling it quits" post.

 

You have tremendous talent and knowledge of this business. And for the record, feeling shitty about yourself once in a while is totally cool. I know that you posted because you need clarification and support. And here it is.

 

My post was to try to allow people to understand what life is like on the other side of the success coin. And it ain't about the money. It's about the fulfillment of getting results that are welcome by everyone. And that takes team work. Whether it's with the seller or with the partners that help you to accommodate the acquisition.

 

Everyone one this site knows that I have NEVER used my own money or credit on an investment property. The only thing that has made me different from you (God knows you have as much knowledge) is that I built a team back in 02. This is why I have had so much success. It's about turning the faucet (Proven system) on when the bank account goes low. There is no luck, there needs to be no motivation from a seller and finally, it is under my control because I can be of service.

 

I really hope this rattles something lose. Usually after making a post like this people thank the writer and show appreciation for their ideas and efforts. Instead everyone is trying to comfort you. Can ya feel the love?

Regards,

Adam

Adam, what kind of team did you build in 02?

 

tomas