You have, no doubt, heard of this expression.  And you like the concept.  But do you understand what it actually takes to create a genuinely win/win scenario in which both parties leave the table content?  Well, it all starts with intention or motive.  True win/win is generated when mutual respect abounds.  Both parties must be legitimately concerned with the welfare of the other.  Neither can enter a negotiation with bad intent.

Sometimes, I have seen negotiations where one of the parties arrived with the wrong intent and, by the time it was all over, they had changed their tone completely.  This comes from inaccurate perceptions and ideas that can be slowly worn away by a negotiator who is truly skilled in the art.

As a leading real estate mentor, I teach my partners to recognize the psychology behind everything people do or say.  There is often a good reason for certain behaviors and developing the ability to identify these is a great asset to the real estate investing professional as well as everyone else inhabiting the planet.  I have always found human behavior to be fascinating and as a result have studied the subject intensively.  What I found is that there is not only a reason for most things people say and do, but there are very constructive ways in which we can be a positive influence…even during a negotiation.

I like Steven Covey’s principle which states: “Seek first to understand, then to be understood.”  Everyone wants to be understood!  When people don’t feel understood they act alienated and that can kill a productive negotiation instantly.  Becoming a good listener is one of the first habits we should form.  Of course, this is a life lesson.  But in the business world, without the ability to listen empathically, our effectiveness will be marginal.  It is truly amazing how much we can learn when we simply “shut up” and listen.  Often we pick up information about the other party that is essential to putting the deal together.

In my mentorship program, the psychology of the deal is a subject that comes up frequently.  The principles of basic human conduct and thinking are timeless, and somehow apply to each negotiation we set out to complete.  With that being said, it should become more obvious now, how a true win/win deal is accomplished.  Negotiation is an art and mastering it is something I believe we must all learn sooner or later.

Ideally, in an “up” market you should own as much as you can leverage and dream about your assets growing while you sleep.  There have been times when we could go to bed knowing that we would wake up $100., $1000., or more, richer….without lifting a finger!  That is the magic of leverage and real estate investment at its best.

However, those markets come and go.  And unfortunately, the present market is far from that!  Nevertheless, there’s hope for those seeking to break into the wonderful world of real estate investing.

The following two strategies can be employed during the present market, which will hone your real estate investing skills as well as enable the savvy, alert investor to save for the next up market in the future.  You can either fix & flip properties or wholesale properties for an even quicker, lower risk proposition.

Now, back to the road to wealth.  Owning your own income properties, otherwise known as “landlording,” is what has made emperors, kings, and Dukes.  Why even the Queen of England’s family is a major landlord.  Historically, wars have been fought over income-producing real estate.

Today, the tax advantages alone that come with real estate ownership are hugely due, in no small part, to the fact that most of the lawmakers own income property.  Thus, the laws are slanted in favor of property owners.  That’s the way it is.  Why fight it?

Owning your own income producing real estate is the real road to wealth.  Stay tuned for more tips on building your financially free future.

Left under the ominous shadow of the megabanks is the bruised and tattered small real estate investor.  The large lending institutions have brutalized the businesses of many small investors who were only out to turn a modest profit from turning a polished property…something the banks wouldn’t typically do.

It used to be that whenever we would hear about an REO we would get excited.  Since they were so uncommon an investor would feel like they had struck gold….not any more, though!   The term “REO” represents more of a retail proposition rather than a bargain.  Lenders have been flexing their muscles and held out far longer than logic would dictate until the market stagnated to the demise of the industry as a whole.  I personally know once-successful Realtors® who have been forced to file bankruptcy as a result of the stranglehold the lenders have placed on their escrows.  Repeatedly, escrows fall off and they need to start over again.

From my experience and continued research, I can confidently claim that without the investor, the real estate market would be an entirely different ball game.  Over the last 2 years it has been the investor that has kept the market somewhat alive.  There is still a large segment of the buying public who will not touch a home that is not in pristine shape.  That’s just human nature.

One of the ways my team has fought back is by making things happen with private money.  This is, in fact, a productive way of profitably operating our REI business while boycotting the Godzilla-like banks who leave a wake of devastation everywhere they go.  Private money has helped many of my students and clients to make things happen quickly and without sterling credit.

Of course, as a leading real estate mentor, I teach and employ a proprietary system in which we can get around the lender-generated mine fields.  We could stay and cry about the changes being made or we can be proactive and change with the times.  In my company, we have chosen the latter.

Real estate investing will never be the same, but does it ever remain the same?  No.  Like every industry, there are always changes-some good/some bad.  Nevertheless, the wise investor will roll with the punches.  This is a great reason why buying many of the REI programs out there isn’t wise.  Methods don’t last forever, so get a qualified mentor with decades of experience who can adjust with the changes the market brings.  Be open-minded and ready to make changes yourself.  Only the strong survive!

Now about real estate wholesaling:  One necessary asset in the business of wholesaling real estate is an up-to-date cash buyers list.  This list consists of buyers with ready cash or the ability to access quick cash for a purchase.  Since the Wholesaler is assigning a contract, it is imperative that the buyer has the ability to close quickly.  If you are a Wholesaler, you want only those buyers who can and will move quickly to close on your purchase contract so all your efforts are not lost.

Additionally, these individuals are likely serious professionals who can be allies when you are looking for partners, investors or even a favor like getting contact information on a local vendor or tradesperson.  The important thing to remember is that without serious cash buyers at your disposal, you are out of the wholesale real estate business!  Without an active list of cash buyers you could easily see your efforts to find and secure deals go to waste.  Don’t let that happen to you.

As a real estate mentor I encourage my new students to start building their lists long before I send them out writing offers, or even prospecting sellers.  It is a matter of not “putting the cart before the horse.”  I continue to hear of would-be wholesalers prospecting deals without having an adequate list of qualified buyers in their arsenals.  You know what happens to these people?  They end up having to leave their deals behind because they have no one to buy their contracts!

In my mentorship program my students are my partners, so we allow access to our complete cash buyer list.  This enables them to get their deals optimum exposure.  It sure beats having to beat the bushes for a buyer at the last minute!

So, learn the value of a solid cash buyers list.  Think of it as your business’ client list.  Without clients, you’re out of business.

Like many who live outside Michigan, when I first considered Detroit as a potential market to invest, I had concerns. The headlines for several years have been highlighting the downward spiral of the car industry, and my initial reaction was that I should “stay out.” The same can be said for many into real estate investing who also shared the “stay out” of Michigan mentality. Upon further review however, I discovered those that told me to stay away were people who had never invested in Michigan. What I found was that when meeting people who were successfully investing IN Michigan the story was quite different.

Is Detroit going through some very tough times? Yes. And that is precisely why there is an opportunity. For example, when the construction industry was booming, heavy equipment such as excavators, loaders and the like could only be purchased at retail prices.  When the construction market collapsed, suddenly you could buy those same pieces of heavy equipment for pennies on the dollar. That was an opportunity for those who had the means to take advantage and buy while the market was down. As for what a piece of excavation equipment can do – it’s utility – it’s value to earn income – never changed.  The only thing that changed was the cost to own them was less for the smart investors. The same can be said for these properties – their utility – their value to earn income from rents – is solid specifically because the purchase prices are ridiculously low. Why are the prices lower than market value? Because we bought them from banks in trouble, who needed to get them off their books regardless of their loss. Investors are snatching up the properties in droves.

There is a demand for quality rental properties. The demand comes from the influx of individuals who have lost their homes to foreclosure; others who have relocated to the area but may not know where they want to live; and individuals who do not have adequate credit to qualify for mortgages in today’s tight lending environment. This is a market to buy and hold onto the property.

Headline followers say that it may take “a really really long time to see any sort of return.” The key has to be to purchase a property with positive cash flow, which these properties have, and to buy it when its entry price is at an all time low, which these are. Why this model works is you are buying a property that gives you returns NOW.  You don’t have to wait years for a return; only a couple weeks until the next rent payment is due.  Unlike California, Florida, Nevada, Arizona and other markets, there was never a housing boom in Detroit.  It didn’t experience the rise and has remained rather stable over the years.

Prices could very well go up when the credit market loosens up and home owners are able to secure their own financing. Meanwhile you as an investor don’t need to rely on that, and if you choose to be the bank, can most likely sell your property for a nice profit and carry the note on as a seller finance. There is a buzz about town as various philanthropic organizations pool their resources to help “restore southeast Michigan to a position of leadership in the new global economy.” There is energy and excitement surrounding the Riverfront, Eastern Market, Tech Town, Aviation Bakery, Indian Village, the DIA, Campus Martius, Automation Alley, and the list goes on and on.

“Urban Bulldozing” is a common topic these days in Detroit.  This is an initiative whereby the city is looking to take out several thousand homes in blighted areas. This is a great idea simply from the supply & demand perspective.  Every home taken down is one less available, and automatically increases the value of every other home.  This means that there is new money going into the area… revitalization is underway. Here are a couple of pictures I snapped of this development this week. Home sales prices for this new development will range from $122,000 to $225,000.

The place to go to get an idea of the types of properties and rents would is the “Michigan Housing Locator” which is run by the Michigan State Housing Authority.  There you can enter an address and radius and it will show you all available properties, and their rents, and if they do or do not accept Section 8. This is also where the property should be listed to access all housing authorities’ prospective tenants.

So in conclusion, the two strongest strategies are 1) Seller finance or 2) When the lease expires either raise rents to fair market value or replace with a Section 8 tenant at fair market value rents.  The easy answer to “Why Detroit” is this… the numbers simply work there.  The rent you get relative to the low price you pay nets you high positive cash flow, and you own a property that the greatest number of people in the nation can afford on any single day, in good times or bad.

A tradition as old as business itself is that of seeking to bid on desired products or services. It simply means the highest bidder wins the negotiations. Our culture is colored with scenes of rapidly talking auctioneers amusing their audience as they moved countless dollars of merchandise with the sound of the gavel. Big nationwide auctions have recently made headlines but what is actually better for the average short sale investor…REO or bank auctions? Let’s examine the pros and cons for each.

Purchasing a property via auction frequently entails a commitment to all outstanding debts including unexpected liens and other judgments in addition to those for which the auction is taking place. By purchasing a bank owned property you will typically have assurance of clear title or at least a complete awareness of other fees or liens due.

Property sold at auction frequently has tenants or prior owners still in place, causing new owners to engage in immediate action in order to take possession. Bank owned properties have often evicted former occupants thereby eliminating the need for out of pocket legal expenses. Just keep in mind, this is changing and some short sale investors have encountered squatters. On the other hand, depending upon your plans for the property, having paying tenants may be a strong positive. Personally, I have never favored inheriting tenants. Be careful!

Auctions require advance funding to be in place while bank owned properties may actually offer added terms or beneficial interest rates in order to move a non-performing property off their portfolio. Since it can cost a lot of money for a bank to keep a property on their books, one way they entice others to purchase is by negotiating the terms of the finance offers. This is especially true in areas where lenders may be limited by the number of homes they can release on the market (ie, federal regulations prohibit “dumping” in certain neighborhoods – often the same ones where many non-performing loans were originally written). By offering highly favorable financial terms, banks are able to shift properties off their books without continuing to drive down prices.

The bottom line is that short sales are one of the best bargains of all but don’t underestimate the value in bank owned properties. Auctions are a lot of fun but not always indicative of the best value especially for those just starting out or who only intend to purchase one or two properties. People often behave irrationally at auctions because of the competition and frequently make decisions based on emotion. In my company we aid cash house buyers to acquire investment properties either with all cash or by providing funds from our private lenders. Financing in this manner allows the cash buyer to leverage his/her money so that they can do more deals.

If you have a real estate home business you are likely procuring distressed investment properties.  The expression “distressed” refers to the situation of the seller that has created an opportunity for you to acquire a lower-than-average purchase price.  Inevitably, though, in these situations we encounter “distressed” conditions in the physical sense as well.  This means that some form of rehabilitation must occur before it is ready to place back on the retail market.

Assuming you don’t personally wear the tool belt, you will have to hire construction professionals to get the needed work done.  There are some essential elements to the process that as a real estate mentor I always advise be checked off your list.  As far as any skilled work that is performed, you will want to see the proof of a State Contractor License, Liability Insurance, Workman’s Compensation Insurance (if they have employees) and references.  Of course, once you have these documents on file it won’t be necessary to go through this again except to update them as necessary.

There are other considerations, too.  For example, what if there is a disagreement between you and your Contractor?  The following document will greatly help to avoid that down the road and leave you with a clear title so you can quickly sell your property with ease.  First, before you hand them their fist check, get an IRS W-9 form filled out and signed.  The information contained therein is important at the end of the year.  If you don’t get it now, you may never get it.  Trust me!

Second, you must have a contract.  Anyone who thinks they can operate without one is simply being naïve.  Carefully spell out the scope of work to be performed, terms of compensation, precisely who provides all tools and materials, penalties for failure to meet deadlines, obligations for insurance and liability, and agreement on how changes (change orders) are made.  In my REI mentorship program I stress covering these issues well in advance of commencement of work.  Contractors are notorious for overlooking these types of details.  Don’t leave any matters about the scope of work and payment terms to chance!  These topics will all be addressed in a good contractor agreement.

Third, avoid complications at escrow by getting a signed final lien release from your Contractor before he/she gets final payment.  In fact, the typical procedure is to get progress releases as (actually before) each progress payment is made.  This means that the Contractor is waiving their rights to put a mechanic’s lien on your investment properties on account of some conflict.

In most cases, with single family residences, rehabs don’t often require such involved projects.  In fact, I teach my students that rehab should rarely be more involved than simple repairs and cosmetics.  That is simply basic “real estate investing for beginners.”  In a future article I will address the differences between “rehab” and “remodel.”

This expression is common among most sincere folks contemplating starting their own real estate investing business. In this article, I want to discuss this mindset and analyze the pros and cons therein.

As with any new venture, it is always wise to first weigh the costs involved. Furthermore, without a plan our vision of financial freedom through real estate investment could be doomed from the start. For that reason we want to listen intently to what any real estate investment expert might advise. Consider:

If we apply the “buy low, sell high” principle we must buy in a market climate when the majority don’t see the need to buy. The truth is that your decision to buy would have to be the unpopular decision at the time. This is just as true when a real estate investing expert chooses to sell. They may feel that it is time to sell (high) while the masses are still in buying mode.

Whether you buy foreclosures, short sales, or any other type of investment properties, these will likely be distressed in one form or another. Otherwise, your competition will be intense. In my real estate investment mentoring program, I teach that the better a house “shows,” the quicker and higher it will sell. My students know how I feel about properties that look and smell poorly. They will tell you that it is the ‘look and smell of opportunity.’

Of course, it takes vision to identify opportunity amidst clutter and filth. However, learning this technique will make you a lot of money. In my business, we wholesale properties in their “as-is” condition to savvy cash buyers who have a trained eye like we are discussing. If a cash home buyer wishes to acquire any of our properties my students are taught to be coaches for those who have not yet learned to identify opportunities out of distressed real estate.

The “everybody’s doing it” idea is strong reason to do the opposite. When the U.S. economy took a “bearish” turn I remember Warren Buffet saying that it was ‘a good time to get some great deals.’ Rather than whine about falling values, the REI experts get more aggressive about acquisitions, knowing that the right time to sell at a profit will eventually come.

Now is a great time avail oneself of the many distressed situations out there to purchase and hold properties as rentals for at least 12 months to avoid short term capital gains. The market will eventually turn around but then the competition for properties will be fierce. Don’t wait. There’s no time like the present.

For a while now you have been hearing about everything “green.” This is the new buzz word for the decade to come. Of course, “green” refers to anything that, in a very broad sense, is environmentally friendly. So, whether you are a real estate investment expert or just launching your “real estate investing for beginners” venture or you are a real estate investment expert, how can you utilize the “green” trend? Better yet, how can moving with this trend prove profitable for your real estate home business?

The answer is to do “green-habbing.” Yes. There are a variety of rebates, tax incentives and credits for those who rehab their investment properties in this manner. While it is usually more expensive to purchase “green” materials, in the long run it will be cheaper because of the many government programs designed to attract environmentally friendly projects. In my opinion, if you don’t mind dealing with the pace of government agencies, you can effectively profit from such an approach.

No doubt the utility bills will end up less for the end user and the indoor air quality will be less toxic than in recent traditional rehabs. For these reasons it is clearly the socially responsible thing to do with real estate investment properties.

So, what kind of methods do I advocate in my real estate mentoring program? First, commit to the learning process and profitability will follow. Secondly, for those who know their buyers/end users, it is advantageous to use this option as a selling point. Third, look for rebates on everything you need to purchase for your rehabs.

Every day more and more suppliers and contractors are opening up to the concept. Before your next project, do a little research to see the viability of building your own “green team” of suppliers and trades people. I feel that those real estate investors who take the initiative now will have some unique opportunities as we move into the next decade.

Track your results. Some things work very well while others, you may not wish to offer in the future. See what sells and what doesn’t. Certain communities are more in tune with the “green” mindset. If you have one of these communities in your area, strongly consider “green-habbing.” It could be one of the more lucrative decisions you make this year.

Are you a real estate investor and are looking to maximize your returns in this wacky market?  More and more real estate investment experts are opting to go offer lease option contracts to selected tenants of their investment properties.

Today’s market climate has bred a near-perfect opportunity for those operating a real estate home business to create profits and help families to reestablish their homeownership status along the way.

Let’s examine some of the benefits of pursuing a lease option contract with your tenants:

· This is a quick way to sell your property at a fair price without waiting for tenants to leave and you then go in and prepare it for sale while it sits vacant.  Tenants under this agreement can simply move in and instantly take a pride of ownership approach to the care of your property.

· You won’t have to pay commissions to realtors.  As a rule, most of those fees can be avoided.

· You are creating a win/win situation for you and your buyer/tenant.

· You won’t have to worry about the losses of another vacancy.  Under this arrangement your buyer/tenant is responsible for maintenance.  If they chose to leave the option payments as well as down payment they paid you will be forfeited.  There’s your security.

· Never have to worry about late payments.  I like to include the contingency that all is lost if they are late…even one month.

· The buyer/tenant may not qualify for a mortgage loan at present.  This provision allows them time to build their credit in order to get qualified so they can complete the purchase.  In the meantime, you are collecting better-than-average rents.  In fact, your buyer/tenant may have been a homeowner for years and is faced with credit issues from a short sale of their family home.  Getting any ideas on how you might advertise??

Lease options are yet another reason I love real estate investing so much.   It’s also part of my real estate mentoring program as a profitable exit strategy.  Remember, you do not need to guarantee today’s prices for a transaction that actually closes in two years or more in the future.  The agreement can be made to settle the price at “fair market value” when they actually enter escrow.  Those numbers can easily be determined if your property is located in an area where there are multiple examples of “like kind” homes from which comparable values can be drawn.

While the real estate market bounces around bottom this year, it will be to your advantage to actually close the sale of your property when values have already started inching up.  The family you are helping, too, will benefit from an excellent opportunity for equity growth from the day they take title.  It’s fun creating win/win deals…isn’t it?