“A truly great mentor is hard to find, difficult to part with, and impossible to forget.”

~ Anonymous

“How can I find a good mentor?”

And: “Why does it cost so much to have one?”

These are simple questions that require a very detailed response. So, to help you peel back the layers of this onion, I want to delve deep into this topic…

Sure, there are plenty of ways to build your real estate investing knowledge on your own, and these can be extremely helpful (so I want to touch on some of these, as well). But there’s something about having a successful mentor that brings a whole new dimension of expertise into your world.

But, for many of us, finding the right mentor isn’t necessarily a piece of cake. And when we do find the right mentor or coaching program, is it really worth our hard-earned dollars to learn from them?

The answer is different for everyone. Luckily, I’m going to give you some insight to (hopefully) help you make the right decision for your situation.

So, let’s get right into it…

Find Yourself

I’m not trying to get all introspective here, but there is something to be said about knowing yourself and your core business values.

If you’re still trying to determine what exactly you want to gain from your investing business (aside from the obvious… money), it might be best to put the mentor search on hold.

First, ask yourself these 4 basic questions:

If you don’t have a clear answer for each of these, it’s time to do some soul searching. You can’t find a mentor who will meet your needs if you don’t even know what those needs are.

As you build your business and become more confident in your identity – but still have a long ways to go, in terms of achieving financial freedom – this is the “sweet spot” where finding a mentor can be extremely helpful.

Determine Your Budget

Let’s face it – anything that is worthwhile and valuable in business will probably not be free. You get what you pay for, in most cases.

That being said, there are also ways to expand your investing knowledge and build a foundation for success without ever writing a check.

So, first… determine what your budget for training, education and mentoring will be. If you want to start out with a shoestring budget, that’s totally fine. Just make sure you define a specific amount of money you want to spend… and stick to it.

Find Value in the Free Stuff

If you’re not willing to shell out cash for a top-notch mentor, there are some DIY methods that can be useful.

Consider these options:

Now, all of these options are fine and dandy… you can learn a ton from these opportunities. But, if you want to go to the next level, and really benefit from some 1-on-1 time with a mentor, you should be willing to pay a nominal consulting fee.

But let’s cover that in the next section…

Understanding the Value of a Mentor

Many financially successful mentors or REI training programs are not willing to give away their services for nothing. That’s just the way it is. If someone has built a profitable business, their time is worth something.

Think about it: you are taking someone’s time that they could be spending on their business. Wouldn’t you want to be paid for that? Or at least have some incentive to help out?

Plus, if you are gaining knowledge and receiving advice that will help you increase your income and build your business, it’s only fair that the person who provides this expertise should be compensated.

After all, you pay for marketing, you pay to renovate or repair the properties you purchase, and you pay any individuals who are doing labor or administrative work for you…

Think of paying a mentor or a coach as another investment in your business. You’re investing in your investing business (yes, I know, that was extremely clever). :-/

One other way to think of it: When you pay a fee for something, you’re more likely to take it seriously. So, when you compensate an investing mentor or coach, you have more incentive to apply your new knowledge and build a successful business.

Now, a word of caution…

I’ve heard multiple horror stories of investors who got sucked into those “free” flipping guru seminars where they were pressured to cough up anywhere from $20K-$50K in order to continue with training.

Don’t ever fall for this gimmick. You should never be investing that kind of money unless there’s an actual property deal in the works – and make sure a deed is involved.

Trust me, even the best of us can make foolish decisions when we’re extremely motivated to succeed. Just don’t commit to anything that you’ll financially regret.

“Courting” Your Mentor

If you make the decision to invest in mentoring or coaching services, your next step will be to find the right person for you.

This is where your core business values will come into play. You want to find someone whose ideology and strategies are similar to yours.

Think of this as dating – or even a job interview – in both cases, you want to make sure the other person (or the company) is a good match for you.

“The delicate balance of mentoring someone is not creating them in your own image,
but giving them the opportunity to create themselves.”
~Steven Spielberg

Once you identify someone who may be a good mentor candidate, it’s a great opportunity to invite them out for coffee or lunch. Tell them you’d like to pick their brain about some investing topics, and you’re really just looking to make connections with other investors.

At your first meeting, you might consider asking some of these questions:

Notice that I threw a couple of personal questions in there.. It’s okay to do this – it will help you understand the person’s core values and what motivates them in life.

Remember: You should be looking for a personality match, as well as a business match.

Another imperative idea to keep in mind: a mentor-mentee relationship should be mutually beneficial.

If you give this person the impression that all you’re going to do is “take, take, take,” they may not want to work with you. Regardless of whether they are being compensated or not, a “take, take, take” relationship can be draining.

So, make sure you are clear about the value that you can offer the potential mentor. For instance, ask them if there’s anything you could help with – or if there’s any value you could bring to their business.

If you’re not paying your mentor, it can be beneficial to volunteer to take on small tasks for them – such as occasionally driving for dollars, fielding motivated seller phone calls or scouting out properties online.

You might feel a little strange doing the “tedious” tasks, but this is one of the best ways to learn about your mentor’s business model and investing strategies.

“Mentoring is a two-way street. You get out what you put in.”

~Steve Washington, COO & Co-Founder, Casentric

Just like a spouse-spouse relationship or an employee-employer relationship, the mentor-mentee relationship is about give and take. Don’t take, take, take and expect the mentor to continue giving.

That’s not beneficial or healthy for either of you.

Be a Standout

My final tip, when courting a potential mentor, is to really stand out in terms of scoring property deals.

If you’re able to find a house (or two) that ends up being a major deal for that mentor, you will automatically earn their respect – plus, they’ll be more willing to take you under their wing and teach you their craft.

The bottom line is this: If you want to get on the fast track to learning the art of investing in the most effective way, having a mentor is essential.

Starting the Search

If you’re hesitating to find a mentor, what is holding you back? Let me know your questions and concerns in the comments section below.

Direct mail campaigns can cost you thousands… so whether you’re launching your first mailing or trying to improve your response rates, you want to know you’re sending out a mailing that’s going to get opened, not tossed.

You want the secret sauce that guarantees direct mail success. And today, I’m sharing 7 strategies flavored with that secret sauce.

But before we dive right in, here’s a quick word to help define direct mail success.

Planning for Success

REI direct mailings typically have a 1% response rate.

In other words, if you send out 100 letters, you can expect to get 1 call. (Don’t get discouraged; just set the right expectations.)

Of course you’re targeting for a higher response rate, but even if you get as high as a 5% response, you would still need to send out 2,000 letters to get 100 calls.

Do the math and send out enough letters to make your mailing worth your time.

Your planning isn’t just about the number of addresses on your list, though. And it isn’t over when you’re done writing your letter either. You also need a plan for taking calls—including a script and a list of answers to questions you’re likely to get.

The last thing you want is to invest in a mailing and then lose a deal because you were unprepared on the phone.

Make sure you’re prepared to take the number of calls you’re likely to get from your mailing. You also don’t want to miss out on a potential deal because you’re scrambling to keep up with calls.

Okay… on to our 7 strategies.

1. Follow the Rule of 7

Potential buyers aren’t likely to call you the first time they hear about you and your business. They want to work with someone reliable, someone they trust. You can build that trust by building brand awareness and following the rule of 7.

The rule of 7 says that a client needs to hear about your business 7 times before working with you… of course, 7 isn’t a magic number, and you will get some calls from a first mailing.

But 80% of your deals will come from your 5th, 6th and 7th interactions with a seller.

These interactions don’t all need to be mailings. Sellers can hear about your business through a social media ad, billboard, bandit sign… and several different types of mailings.

The rule of 7 means that you need to commit to (and budget for) multiple mailings to the same list. And you should think about other marketing methods that list is likely to see—including driving for dollars and knocking on doors.

As a rule of thumb, plan for 6 mailings in 6 months (one per month) to your list… and the mailings should tie together. Your message should be the same, but the pieces can build on one another.

For example, you can begin the second letter: “You got a letter from me a few weeks ago. What’s keeping you from calling me about this offer?”

Then remind the seller about the benefits of selling. In the 3rd letter, you can offer to pay for referrals.

“Early to bed, early to rise, advertise, advertise, advertise.”
                                  ~Ray Kroc

2. Set a Budget that Follows the Rules

When you’re planning your direct mailing, you need to decide:

If you’re on a small budget, there’s nothing wrong with starting small, but don’t just send one or two letters and call it quits. If you do, you’ll miss out on that 80% of your possible deals.

And don’t forget to look at bulk discounts and costs for a few different quantities.

3. Contact the Right People

Even more important than what your mailing says is: who it’s being said to. Even if you come up with an incredibly compelling message, it’s not going to mean anything if it’s not sent to the right people.

The best way to make sure your mailing succeeds is to pay for a list from a list serve or pull county data, but you need to make sure you’re using the right filters to get the right target group.

Use filters like these:

4. Connect with Your Audience

Once you’ve got your list, write a letter the potential seller is sure to respond to. Think about the problems your audience is specifically facing and provide a solution.

Start with your headline or opening. What will make your audience keep reading?

Write 10 headlines or openings and choose the one that’s most likely to keep the people on your list from tossing your letter. Think about the result your potential sellers are really looking for and write an opening focused on that.

In the rest of your mailing, be clear and to the point. What’s in it for the buyer?

Use short, straightforward sentences or bullet points. And keep the mailing simple.

Include a clear call to action. What should the reader do next? Call you? Fill out a form on your website?

Once you’re happy with the message in your mailing, stick with that theme in the rest of your pieces. Again, you’re trying to build brand recognition, so consistency is going to help your potential seller recognize who you are and understand how you can help them specifically.

Make sure your letter is only 1 page and is very straightforward… cut the fluff.

Your goal is to get the seller to call you, and you don’t need to give them every detail of your business in the letter. Less is more here. Give them just enough info to get their attention… and then you’ll discuss the details over the phone.

If you want more content, consider adding a second page with an FAQ focusing on questions that might keep potential sellers from calling:

5. Use the Right Media

Do you want to use postcards or letters? Yellow letters or white? What should the envelopes look like?

Following the rule of 7, you could send a few types of mailings. And sending postcards is cheaper than sending letters, but letters tend to get better results.

Talk to other investors in your area to learn more about what works well with your market. If you’re unsure, stick with letters to start.

Remember, you’re trying to get the potential seller’s attention, and you don’t want them to think your mailing is junk mail, so when you’re making these decisions keep your sellers in mind.

6. Send at the Right Time

You should be sending your mailings about once a month. Know when the real estate market in your area is busiest. Most homes are sold between March and September, so your mailings should include those months.

Everyone is distracted around the holidays, so be mindful of holidays as well, since you’re not as likely to get responses.

7. Experiment… Meaningfully

Keep track of your results for every mailing and make changes as you go. But remember to change 1 thing at a time so that you know which changes make a difference.

Try out a few different types of mailings, different openings and even different features such as stamps on the envelope. Don’t overthink things too much, but always keep improving.

Spending money on direct mail doesn’t equal success. Tracking responses to direct mail and tweaking the mailings = success.

“Marketing without data is like driving with your eyes closed.”
                                 ~Dan Zarrella

Stick with It

The most important part of marketing is persistence. Failure is part of the process, and being told “no” is a part of the process.

Be prepared to tweak, improve and keep asking.

And remember that most of your deals are going to come from the last few mailings, so don’t give up after one or two mailings…

Stick to the rule of 7, and if you feel like you’re just throwing money away, remember that you’re building brand awareness and when you hit your fifth mailing to the same contacts, the responses will pick up.

“Consistent action creates consistent results.”
                     ~Christine Kane

Your Take

What works well for you in direct mail campaigns? Which of these 7 strategies are you going to put into place right away? Let me know in the comments below.

You worry, “What if I don’t know what I’m doing? What if other people are better than me? What if I get laughed at?”

Well, okay, maybe that last one is a little different for adults. But still, the fear of failure can be just as intimidating for adults as it is for children. In many ways, we have a lot more at stake.

When working with beginner investors, I hear some of the same concerns – over and over again.

So today, I’m addressing those fears. Plus, I want to share my insight for overcoming and moving past those obstacles.

After all, none of us are perfect. Even experienced investors struggle with daily doubts. But once you learn more about how to appropriately handle these fears, that’s when you’ll truly be able to succeed as a real estate investor.

So, let’s dive right into it…

Fear #1: Financial Woes

“Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1”
~Warren Buffet

Whether it’s the fear of losing money, not making enough money or just money management in general – real estate investing can bring a lot of financial anxiety into your world, if you let it.

If you didn’t grow up being exposed to real estate investing (and, let’s face it – most of us didn’t), learning about the financial aspect of this profession can be daunting.

Your financial fears may include:

Right about now, you’re probably thinking, “Well, great. This is just making me feel worse.” But my goal isn’t to scare you more – it’s to point out the fact that your fears are NORMAL. Your fears are not unfounded.

In fact, if you don’t have some sense of fear when it comes to real estate investing, that’s probably cause for concern.

So, let’s continue outlining some of the fears you may be feeling, and then – you’ll turn this thing around and help you feel positive and excited about your future as an investor.

Fear #2: Finding the Right Deals in the Right Markets

This fear is a 2-parter. As an investor, finding property deals is a HUGE contributing factor to your success. At the same time, you can find the best property ever – and if it’s in the middle of the worst market ever – you probably won’t succeed.

When you find the right property in the right market, however, that’s when the magic happens.

So, let’s break down some of the finer details of this fear:

But as you start to become more and more familiar with your target market, you will be able to almost instantly identify which properties are (or are not) good deals. The process will become virtually automatic for you.

So, take heart! Practice makes perfect.

Fear #3: Tenants

I could just leave it at that: tenants.

There’s nothing that strikes fear into the heart of a property owner quite like the nightmare of a bad tenant. Whether it’s a needy tenant (cue the “I need a lightbulb changed in the kitchen” phone call at 9 p.m. on a Tuesday) or a destructive tenant (why – just why – would you attempt to mount a TV on the wall without the proper equipment?)

What’s even worse: investors who put up with terrible tenants just to avoid the headache of looking for a replacement tenant. These types of investors are willing to tolerate a tenant’s bad behavior and don’t increase rent with the changing market – for fear of the tenant leaving.

One pearl of wisdom that I want to offer concerning tenants is: It’s not always financially feasible for beginner investors, but one of the best solutions you may find is to hire a property manager or a property management company.

You might be surprised to find how affordable this strategy can be. Plus, the time that you will save (by allowing the property manager to take care of minor tenant needs or complaints) can be entirely worth the investment. That’s valuable time that you can be using to scope out new property deals.

So, hiring an experienced and trustworthy property manager can be an ideal way to minimize your fear of tenants. This is especially essential if you plan to invest in markets that are located outside your community or outside your state.

Fear #4: The Unknown

“Fear of the unknown is the greatest fear of all.”

               ~Yvon Chouinard, founder of Patagonia

This one is pretty obvious. But anything that involves a significant amount of money, risk and the unknown is going to cause fear.

As a beginner investor, you may feel intimidated by experienced investors, and believe that you’ll never be able to have the level of knowledge and expertise that they possess. But you’d be wrong to think that…

None of us came out of the womb ready to invest in real estate. We have all had to build our knowledge from ground zero.

So, the key here is: Don’t let your fear of the unknown rule you. If you let this overpower your mindset, you will never achieve success in this industry.

Even the most prepared, organized and skilled investor in the world is going to have fears when it comes to doing a deal.

The difference between successful and unsuccessful investors is simply their attitude toward those fears.

When you’ve done your research on a potential deal, studied the market and secured the necessary finances, it’s time to take action. Don’t back down. You have to learn to trust yourself and your instincts.

Now that we’ve taken a look at some of the greatest fears for new investors, I want to give you a few more tips for overcoming these concerns, so you can really take charge of your business and achieve the success that you desire.

Conquering the Fear: As Easy as 1, 2, 3

As an investor, I’ve found that the ability to overcome your fears really comes down to 3 essential practices. If you embrace these, and work on them continuously, you can quickly eliminate the fear that may be holding you back.

1. Be smart about financial risk

1st: never invest with your emotions. Always rationalize every property deal before going through with it. Never give in to greed or fear, because that will just lead you down a bad path.

2nd: research EVERY cost associated with an investment. Consider the vacancy cost, maintenance budget, tenant risk, etc. Also think about how these will impact your cash flow. Prepare for the worst, and you will be ready if it happens.

3rd: always have a backup plan. Don’t place all of your finances into one deal, with the hope that it will work out. Have a safety net and contingencies already in place, so you can rest easy. All of us experience financial failures every once in a while. Just make sure you have the reserves in place to make sure it doesn’t destroy your business.

2. Create a solid support system

I recommend building an emotional support system that includes family and friends, but also other REI professionals. This will give you the resources you need to express your concerns and to receive helpful feedback.

No one is successful on their own. The wealthiest people in the world didn’t reach that point by themselves. If you really want to succeed, you need the emotional support.

“Don’t let anyone rent a space in your head, unless they’re a good tenant.”

          ~Anonymous

It’s also critical to surround yourself with fellow investors whose business models and work ethics you admire. Because you are who you hang out with. By spending time with successful investors, their habits and methods will eventually “rub off” on you.

Long story short: carefully choose the people who will emotionally, mentally and professionally impact your mindset.

3. Be a lifelong learner

Take some time to sit, think and write down the parts of your investing knowledge that you want to improve. Be honest about your shortcomings and areas where you lack expertise. This first step is HUGE for overcoming your fears, because it makes the unknown known.

From here, you can devise a plan of attack…

Join your local REIA, read newly released and popular real estate investing or entrepreneurial-focused books and attend industry-related trainings. Find an experienced REI mentor who is willing to simply give you advice, and make sure you study market history, trends and forecasts in your area.

There is so much to learn… you could spend all day discovering more. Obviously, you want to leave plenty of time for finding property deals and managing your current properties, but this component of self-education is essential to your investing success – so make sure you carve out enough time for it.

The Only Thing to Fear…

…is you.

You have the power to succumb to your fears or to overcome them. Everyone will experience small failures time and time again. But you cannot let these obstacles break your spirit. Learn from them, move on, fall forward.

No matter what you fear most, a positive mindset, a passion for learning, a strong support system and the ability to assess financial risk will go a long way in easing those fears.

Have confidence in yourself.

Every investor – even the most successful of us – started where you are. If you give it your best effort, you won’t be disappointed.

Taking Charge

What are your top concerns and fears, when it comes to real estate investing? Which strategies have you used to overcome those worries? Let me know in the comments section below.

For property owners who want to ultimately realize more profit from a real estate deal or who are looking for regular payments, owner financing is the way to go.

For buyers who might not qualify for a traditional mortgage or who are looking for more flexible financing, owner financing can be a magic bullet.

And if you’re willing to get really creative, using a wrap-around mortgage and a private lender can generate passive income and set up a win-win-win situation for everyone involved.

But let’s start at the beginning and define owner financing.

What Is Owner Financing?

When a buyer and a seller work out an agreement where the buyer pays the seller directly for the property over time, they have worked out an owner-financed deal. These deals do not involve banks, so they don’t require the same inspections and approvals; the terms are very flexible.

As a real estate investor, you might find yourself in a situation where you want to buy a property with owner financing, or you might choose to sell a property this way.

Let’s look at the pros and cons to both the buyer and seller, plus some unique strategies you can use to set up these deals.

A Win for the Seller

Sellers consider owner financing for a variety of reasons:

Or maybe it’s hard to find an agent who will list the property because it’s just not worth that much and won’t bring in much commission, so a traditional sale isn’t a great option.

Since buyers don’t need to jump through the same hoops as they would to qualify for a traditional loan, your pool of buyers for the property is much bigger. If you’re willing to negotiate a deal with no down payment, that attracts buyers as well.

Since owner financing doesn’t involve a real estate agent, there are also no fees. And there’s no cost for an inspection. In other words, no closing costs, and more money in the seller’s pocket.

The seller also starts taking in a steady monthly income. For sellers who don’t need the cash up front, this is a huge benefit.

And because the terms are flexible, sellers can negotiate the sale price and interest rate that works for them. And the seller and buyer could renegotiate as needed down the road.

Sellers can negotiate terms that get them the full property value if they use owner financing. It will take longer to realize the full value, but sellers can receive what the property is worth if they’re able to collect monthly payments rather than a lump sum.

A Win for the Buyer

As a buyer, why work with a seller instead of a bank?

For both sellers and buyers, the financing is much more flexible. You can negotiate the terms that work for you, including the amount of monthly payments, interest rates and down payments. Keep these 4 costs in mind as you develop your offer:

1. highest offer: no down payment, highest monthly payments, 0% interest
2. middle of the road offer: small down payment ($1,500), slightly smaller monthly payments, 0% interest
3. lowest offer: large down payment with small monthly payments, or purchase the property for cash

These deals typically have a 5- to 15-year term, but you can negotiate whatever terms work best for you.

You can also come up with more creative terms that work for both parties, such as interest-only payments for the first year or a 5-year term with a balloon payment at the end. When making offers, keep the term options straightforward, but don’t be afraid to think creatively.

And don’t be afraid to ask for 0% interest. Just ask for terms where you pay the seller “until paid.” In other words, your payments go toward the principal, not the interest. If they’re not interested, just negotiate a number that works for you.

These deals are also flexible in terms of closing; they can close much more quickly.

Buyers can also avoid extra costs in some situations, such as escrow taxes and insurance, depending on any existing mortgage and the terms of your deal.

What Do I Do with a Seller Financed Property?

Rent-to-own is a great option for a seller-financed property. You can collect a down payment and use the rent to make your own payments, with a difference that makes the deal a good one for you.

You might also want to add the property to your rental portfolio.

Be Aware

Owner financing does involve a few risks. Before diving in, make sure you understand the potential downsides so you can avoid an ugly situation.

Keep the transaction professional by hiring a third party to collect payments. Make sure you have a plan in place if the buyer isn’t holding up his end of the deal; you don’t want to get stuck with months of overdue payments and no resolution in sight.

Strategy for Owner Financing

If you’re looking to buy a property using owner financing, target absentee or out-of-state landlords with 50%–100% equity in their properties. They’re used to collecting rent checks and might not be interested in receiving a lump cash payment for the property.

You can also look for both single-family and multi-family properties or apartment buildings. With these criteria, you can easily get a list of property owners to contact and start sending out direct mailings.

If your marketing explains the benefits of owner financing, you’ll start getting calls from sellers ready to discuss the details and set up a deal.

Wrap Arounds and Owner Financing

If the owner has a mortgage the seller can’t pay off, one option that makes the sale a great deal for the seller is to wrap the buyer payments around the existing mortgage.

For example, if Shorty Seller was asking $125,000 for a property that he owed $70,000 for, Ivan Investor could set up a wrap-around mortgage. Ivan would make the payments each month for the current $70,000 mortgage. And when the deal balloons in 5 years, Ivan would pay Shorty the $55,000 difference between that mortgage and the $125,000 Shorty was asking for the property.

Now, Ivan doesn’t actually take on the $70,000 loan in this deal. He’s just making the payments. Shorty gives Ivan a contract for deed, which gives Ivan control of the property. Ivan gets the tax benefits. But as far as the bank is concerned, Shorty is still responsible for the loan. And Shorty keeps the deed for the property; Ivan has just got the contract.

All this changes once Ivan makes the last payment. At that point, the property belongs to Ivan Investor.

Word of Caution: Mortgages sometimes have terms that require the balance to be paid if the property is sold. If you’re considering a wrap-around mortgage situation, get some legal advice.

Consider the possibilities available if you approached owner financing with a private lender. If you purchased a property with funds from a private lender, then sold the property using owner financing, with the right terms everyone would win.

The private lender would earn interest on their investment. You would earn a monthly profit based on the difference between what the buyer is paying you and what you owe your private lender. And the buyer gets all the benefits of an owner-financed deal (easy to qualify, lower down payments, lower closing costs, quick close).

Again, a final word of caution…

Many states regulate deals of this sort and deals that are made based on borrowed money. And your private lender needs to agree to wrapping the mortgage when you sell the property using owner financing.

Always, always, always consult a legal advisor before doing deals like this.

Your Take

What creative deal financing strategies have worked well for you? Let me know below.

“One man’s trash is another man’s treasure.”
~English proverb

The ability to determine which risks are worth the – well – risk.

Investing in low-priced properties (I’m talkin’ $30K and under) is one area of risk that you may or may not have considered. Depending on the housing prices in your market of choice, investing in these types of properties may not even be a possibility.

But if this sounds interesting to you, make sure you keep one thing in mind: When you invest in ultra-affordable properties under $30K, you are increasing your risk. Plain and simple.

Depending on your area of the country and local market, properties at this price point may:

• Be located in a neighborhood that’s considered “bad” or dangerous
• Have a long list of major repairs that could break your budget
• Be difficult to rent out; which could result in irresponsible tenants

And here’s the big BUT…

BUT, if you handle these super-affordable property deals correctly, you can create steady revenue streams that set you up for success. In the long run, you may even achieve your ultimate financial goals.

Still, this investing strategy in one that requires a lot of research, planning and careful choices before you will see the results you’re hoping for. So, let’s take a look at some aspects of investing in low-priced properties that can make you successful.

Location, Location, Location

If real estate investing is a hyper-local business, then investing in properties less than $30K is a hyper-hyper local business.

Not only is the neighborhood important to consider but you also need to think about how the houses differ from block to block.

This is why I wouldn’t recommend investing in ultra-affordable properties unless you are local to the area and know it WELL. This is usually not the type of investing you want to do from another city or state.

Most likely, the properties you’ll find for less than $30K are going to be in C-class neighborhoods – or worse. Just a few steps across a street can switch you from an “okay” neighborhood to a “bad” one.

So be aware of this as you scout out potential property deals.

On the Lookout: How to Find These Properties

If you’ve made the decision to invest in ultra-cheap properties, you’ll want to have a solid strategy for finding the best ones.

At this price point, properties are often either snatched up immediately or left to sit on the market for months and even years. So, it’s important to find the best ones before other investors do – and to avoid the “duds” that are financial disasters waiting to happen.

It’s critical to network as much as you can. Talk to EVERYONE about the types of homes you invest in – your:

You never know when someone may stumble upon a property deal that might be the perfect fit for you. Make sure you’re the first person they call!

For properties under $30K, I’d also recommend browsing Craigslist daily – if not several times per day. As I mentioned earlier, if you don’t act almost instantly on these properties, you might miss out.

To Buy or Not to Buy…

Once you’ve found a potential deal, obviously you need to do your due diligence and determine if it’s the right fit for you (as you should do with properties at any price point).

The first item on your checklist should be ensuring that the neighborhood and area is safe. No matter how cheap a property is, if it’s in what we call a “war zone,” it’s just not worth the risk.

I’ve gathered a couple of helpful tips from fellow investors that I’d like to share with you. These are insightful pieces of advice that I think every investor should consider.

First of all, when you look at the sale history of the property, be sure to also consider the tax rates. Plenty of smart investors have screwed themselves over by purchasing a property where the annual tax is the same as 3 months (or more) of rent payments. This is just too high of a risk to take, considering that you’ll also need money for property maintenance throughout the year.

Next, do a thorough – and I mean thorough – analysis of the repairs that will be needed to make the property safe, habitable, presentable and desirable to the types of tenants you want. As a general guideline, never plan to spend more than 10% of your purchase price on repairs and renovations.

So, for a $30K property, you’d want to spend no more than $3,000.

If you realize that major repairs are needed – roof, HVAC, foundation, etc. – that’s probably your sign to bow out of the deal. A new HVAC system, for instance, is going to cost roughly the same for a $30K house or a $300K house – it doesn’t matter. Don’t get yourself caught up in major repairs that are going to leave you in the red zone.

If everything checks out, and the property seems like a wise financial decision, you’ll be ready to look for potential tenants.

The Third Degree: Finding Tenants

Now, with any property you plan to rent out, screening tenants is essential. But with these ultra-affordable properties, a very thorough screening is especially crucial.

In fact, you might even want to run test ads on Craigslist before you even make an offer on the property. (Keep in mind, this could cost you valuable time; but it could also spare you from making a bad decision). By running a test ad (“seeking tenants”), you can quickly determine the housing demand and rental rates for the area.

Then, once you’ve received an accepted offer, you can start thoroughly screening your potential tenants. Again, this is not something that you want to rush through. Finding a loyal tenant who respects the property and pays their rent on time is GOLD – it’s a process that deserves time and effort.

One final piece that you want to have in place – before investing in properties under $30K – is a highly reliable team of people (property manager, contractors, etc.) that you can count on.

Building a Strong Team

No matter how thoroughly you screen your tenants, with properties at this price, you’re probably going to run into difficult people who cause you some grief.

Enter… the experienced and skilled property manager. If you don’t have the ability to manage the tenant and property yourself, this is someone you HAVE to invest in. A good property manager will ease a great deal of your tenant-induced woes.

You also want to have a trustworthy contractor (or several) who you can rely on. Virtually none of the properties at this price point will be move-in ready. Build a solid relationship with a contractor who you know will do high-quality work without charging you an arm and a leg.

It’s also a good idea to form a reliable relationship with a lawyer, as well. (And again, this is the case with any property investment you make – but especially for those that will be rented out to tenants).

Once you have these people “on your side,” it will make the somewhat risky investment in a low-priced property much less hazardous.

Show Me How

While it can seem pretty daunting to venture into the world of investing in ultra-cheap properties, know that you can be successful – you just need to be smart.

I’m always interested to hear stories about real investors who have boldly gone where no other investors have gone before… and succeeded.

So here are a couple of real-life scenarios that I think you might find to be helpful, especially when deciding if investing in inexpensive properties is right for you.

Investor #1 buys homes at a variety of price points in his market, a larger city. His cheapest property yet was purchased for only $3,400. It was owned by the city, and was in a C neighborhood (but not dangerous). The city estimated that the home needed approximately $16K in repairs, minimum, but the investor only put about $10K into the house.

The investor went the Section 8 route, and rented the home for middle $600s/month. In the end, he estimates that he’ll see about $50K-68K minimum return on his investment over the next 10 years.

Now, this is probably a rare example of how a property that cost the investor only about $15K turned into a very profitable decision. But, it’s not impossible!

Check out this other scenario:

Investor #2 bought a HUD property, located in a solid B neighborhood in a small town, for just over $32K. He put $12K into repairs and upgrades (for a total investment of $44K). He was able to find a good tenant immediately, and rented the home out for $700/month. In just over 5 years, he’ll make his money back, and be taking in 100% profit from there on out.

This investing strategy can work well in cities or small towns/rural areas. But keep in mind that – regardless of the town size – the neighborhood has to be the right fit.

Summing it Up

Just like any investing niche, this strategy of purchasing ultra-affordable homes is not for everyone.

If you’re a brand-new investor, for example, you probably don’t want to take this chance. It will probably take several years of experience in your unique market before you’re familiar enough with the industry and the area to make this type of investment.

Also, if you’re not willing to deal with tenants, and don’t want to hire a property manager, this – again – is not a good idea for you.

But, if you know your market well, and are willing and financially able to take somewhat of a risk, this could be a perfect way to branch out. After all, you’re spending less on the property, so the opportunity for financial gain, if the house and tenants are managed properly, is HUGE.

How Low Can You Go?

What was the lowest-priced property you ever bought? What factors went into your decision to make the investment? Let me know in the comments section below.

But how does wholesaling work, really? And how do you do a deal that even Maria would proudly teach her Von Trapp kiddos as the do-re-mi of investing?

Let’s start at the beginning.

What Is Wholesaling?

A wholesaler is like a matchmaker. For a fee, they connect great real estate deals with eager investors.

Sounds easy, right?

Here’s an example…

Whitney Wholesaler puts bandit signs all around her farm area, telling everyone who reads them that she buys houses. Harry Homeowner calls Whitney and tells her he really wants to sell; he’s been getting foreclosure notices.

Now what?

Here’s where different people will tell you different things. Let’s continue with just one scenario for now…

Whitney checks comps, meets with Harry, and tells him she wants to make a deal for $55,000. She writes up a purchase agreement, stating that she (or someone she assigns the agreement to) will buy the property for $55,000 within 30 days.

Whew! Whitney’s got a great deal. Now all she needs is to make a match with a cash buyer. She’s got a list of buyers, so no problem. Barry Buyer answers Whitney’s call and says he thinks this is a great property for him. He’s definitely willing to buy it for $62,000.

Woohoo! Now Whitney’s made a match. She writes up an assignment contract that gives Barry the right to purchase the property. Barry can’t wait to flip that property.

Then the title company comes in and processes all that paperwork, and Whitney Wholesaler gets a check for $7,000.

What a day for Whitney the Matchmaker.

But Wait…

At this point you might have some questions:

1. What if Whitney can’t find a buyer?

2. What’s all the hype about this scenario? I’ve heard wholesaling is illegal.

3. Well this sounds amazing. How can I make $7,000 in one deal?

Let’s start with the “what ifs.”

No Risky Business

When you do a deal, of course you want it to be one that’s going to make you money and isn’t putting you at risk in any way.

So what if you do a deal like Whitney’s… but you can’t find a cash buyer? Are you stuck with the deal?

If you sign a purchase agreement, then yes, you’ve agreed to purchase the property.

This sounds risky. But it doesn’t have to be, for a couple of reasons.

1. Buyers Wanna Buy

If you’ve got a solid list of cash buyers (or one or two really reliable buyers) and you know what they like, you can be pretty confident that they will want the deal you’re offering.

Not sure? Show them the property. You want to be careful that they don’t cut their matchmaker out of the deal here, so you can give them the relevant property information (condition of the house, bed/bath count, square footage, neighborhood) and the amount they would pay without giving them the property address.

Do this before you sign an agreement with the seller. If your cash buyer is really interested, get everything settled with the seller, and then set up your assignment contract with the buyer. This isn’t a risk-free system, but it will relieve some of your worries.

2.You Set the Terms

If you don’t agree with the price the homeowner wants, to the point that you feel uncomfortable signing a purchase agreement because you don’t think you’ll find a buyer, you don’t have to sign. Refer the buyer to your real estate agent.

No $7,000 check here. But remember not to think only about getting a check…

If this seemed like a bad deal in the first place, you’re saving yourself a headache. You’ve helped the homeowner, so you might get a great referral from them that does turn into a deal. And you’ve helped your agent. You definitely want your agent to love you, so this a huge plus.

If you do feel good about a deal and move forward with a purchase agreement, some wholesalers will tell you to avoid risk by including an escape clause. This clause states that you aren’t under obligation to buy the property. Yes, escape clauses are a good idea—if the property is destroyed in a fire or a flood while under contract you need to be able to walk away.

But here’s where we need to consult grandma…

Grandma’s Rule

When you do a wholesale deal (or any deal), treat the homeowner like you would treat your grandma. If you do your deals that way, everybody wins.

But what does Grandma’s Rule really mean?

1. Be Honest

No matter how you do the deal, be honest with all the people involved. Don’t be afraid to tell the homeowner you’re making money on the deal. You can even tell them how much you make.

Remember, you’re matchmaking, and you’ve got a fee. If the homeowner has a problem with that, they always have the option to walk away.

2. Don’t Hide Your Terms

Go through your contract with the homeowner. Be clear on the steps of the process and, if you do include an escape clause, explain that.

If dragging your grandma into this seems a bit over the top, then think about this as a referral system. You want each person you deal with to be eager to refer you. And they’re much more likely to do that if you’re honest and clear the whole way through the process.

Okay now, thanks, grandma. On to the next question.

Is This All Legal?

You might have heard about wholesalers getting fines for doing wholesale deals. Or maybe you’ve just heard that wholesaling isn’t an above-board business.

Here’s why some people say you can’t wholesale without a license: A broker must have a license. And the question turns on whether you think a wholesaler is a broker.

Different states have different legal definitions for brokers, but they generally state that a broker is a person who sells or buys real estate for a profit, or who negotiates the sale of real estate for a profit, or who markets a property for profit.

So is the wholesaler a broker?

It depends on whether you think the wholesaler is selling a property or selling the ownership of a real estate contract. And given that marketing a property is often included in the definition of brokering, it depends on how you advertise the deal.

To wholesale properly, you advertise the contract, not the actual property. You’re selling the contract.

Ok, so what does that mean for you?

1. Get a Lawyer Friend

You should always get legal advice before doing a deal. Don’t make decisions based on what I say in this post without talking to someone who knows your state (and federal) laws.

But keep in mind that lawyers will give you different answers on this question of whether a wholesaler is a broker.

2. Be True to Yourself

Make sure that however you do deals and whatever kind of deals they are, you’re comfortable with them. Consider how you would answer someone who asked you to explain how you handled a deal, whether that was a legal authority or a relative of a homeowner you worked with.

Always work with integrity and you can be confident in all your dealings.

3. Use a Double Close

You do have another option to close these wholesale deals: the double close.

If we go back to our example and turn it into a double close, Whitney would buy Harry Homeowner’s property. Then, in the same day or maybe the same hour, Barry Buyer would purchase the property from Whitney.

Now there’s no haggling over whether Whitney was selling Barry a property (one she didn’t own) or selling him a contract. Clearly she’s selling him a property, which clearly she owns.

But what if you don’t have the money for that? There are transactional lenders you can use (for a fee) to get access to one-day funds.

4. Get Licensed

Licensing will probably cost you a couple thousand dollars, but this avoids the whole issue altogether. You’re a broker, so you can advertise as well as buy and sell property, no problem.

Again, talk to your lawyer about the best steps to take at this point.

Your Very Own Paycheck

Okay, all this sounds good. You love the idea of helping out your “grandma,” and you love the idea of getting a $7,000 paycheck. So now what?

It’s time to advertise.

If you’re going to be that wholesaling matchmaker, you need to go out looking for people who need matches. Whether you’re more of a bandit sign person or a direct mail person, start looking for Harry Homeowners who want to work with you.

Cultivate your list of Barry Buyers, too. Make sure you’re ready when you get that first phone call so you can do those wholesale deals with ease.

Your Take

How do you set up your wholesale deals? Share your thoughts and tips below.

“Nothing important was ever achieved without someone taking a chance.”
~H. Jackson Brown, Jr., author

But, like me, you might be curious as to why an investor would choose to flip mobile homes. Maybe there’s something we don’t know, right?

After all, the business would have to be lucrative… otherwise, why would anyone choose it?

So, after doing my research and chatting with some investors who are highly skilled in this area, I wanted to offer you some insight. Even if you decide that flipping mobile homes is definitely not your cup of tea, it can be helpful and interesting to learn about various property types and strategies that other investors pursue.

To start off, you should know that mobile homes tend to lose their value very quickly. As a result, flipping mobile homes is generally a higher-risk investment strategy than flipping what we call a stick-built (non-manufactured) home.

On that same note, increasing the value of a mobile home is also more difficult than improving the value of stick-built homes. Because you are limited in the improvements that can be made to a mobile home, you can only add so much value.

Plus, you need to take into consideration the park or land where the mobile home is located, which can significantly impact its value. Just like other homes, mobile home parks can vary from “desirable” to “avoid-at-all-costs.”

Still, with enough research—and a methodic approach—you can develop and implement a successful strategy for making significant profits from flipping mobile homes.

So, if I’ve piqued your interest, read on to discover some beneficial techniques and tips for flipping mobile homes. (I promise, it’s worth the read.)

Begin at the Beginning…

First, just a few words on understanding your ROI for flipping mobile homes…

Understand that—just like any property—flipping a mobile home requires a great deal of due diligence. Don’t dive headfirst into a deal until you’ve done your research. It’s especially important to understand the market trends in your neighborhood or city of choice.

The Good News: Mobile homes offer square footage prices that are a fraction of what they would be for non-manufactured homes. And, mobile homes can appreciate significantly in value if they are kept up (and especially if they are permanently installed).

And one final tip…

As you consider venturing into this area of investing, you may also want to seriously consider living in the mobile homes while you flip them (if this would work for your life/family). By doing so, you can save a ton of dough, and make a more significant profit.

Doing Your Due Diligence

You might be eager to get started, but you’ll want to spend plenty of time preparing for your investment.

Before you buy, consider these tips:

Once you’ve scored an awesome deal on a mobile home, you’ll be ready for the fun stuff…

Rehabbing Like a Boss

When it comes to renovating a mobile home, you’ve got to stick to the budget.

I repeat: Stick. To. The. Budget.

Whatever budget you determine, prior to starting repairs or renovations, don’t exceed it.

Because you’re working on a property that isn’t stick-built, it’s unlikely that exceeding your pre-determined budget would be wise.

It’s also important to do as much of the work yourself (if you can). This will save a boatload of money.

Word of Caution: Make sure you hire a professional to complete any work that’s more specialized. Understanding the balance between “I can do this myself” and “Heck no, I need an expert for that” is essential.

Now, if you’re accustomed to investing in traditional, stick-built properties, your automatic instinct will tell you that higher-quality materials and appliances will add BIG value to your mobile home.

But, in most cases, this isn’t true.

The value of most mobile homes won’t increase much with higher-quality materials. Because this isn’t a permanent property, it’s best to stay with the basics and avoid the high-end stuff.

Really, your main goal is to improve the cosmetic appeal of the mobile home. So, consider these smart, cost-effective options:

This will give you enough for a basic, cosmetic rehab. If you have any major items that need repairing (such as plumbing, electrical, HVAC, etc.), calculate those costs separately. (And, if at all possible, avoid investing in mobile homes that require those major repairs, in the first place.)

Once you’re satisfied with your rehab work, you’ll be ready for next steps.

Finding Your Ideal Buyer

If you’re planning to list your newly flipped mobile home, it’s important to come up with a conservative asking price.

This is NOT the time to get overly ambitious with the listing price. As I mentioned before, you can only increase the value of a mobile home so much. If you’re asking an outrageous price, buyers will avoid your listing and opt for a brand-new mobile home (which won’t cost much more).

Your target buyers will be:

Instead, look for buyers who are working-class, financially responsible individuals and who haven’t yet had the income level needed to stop renting and buy a traditional home. Many of these folks would be happy to own their own mobile house, rather than continuing to throw their money at a landlord every month.

If you decide to accept monthly payments from an interested buyer, you will likely find several worthy candidates who are willing to pay your full asking price (if not more) for a newly renovated mobile home.

Structuring a fair repayment plan will allow you to choose from a variety of qualified buyers, rather than struggling to find an all-cash buyer. And, as we all know, more buyers equals a faster sale.

To determine how much to charge, consider comparable apartment rent prices…

For instance, if a mostly updated, nearby 3 bed/2 bath apartment rents for $1,000/month, you’ll want to charge anywhere from $900 to $1,100 (which includes lot rent) for your mobile home.

The pricing is crucial.

If you’re selling the mobile home for a monthly payment that’s comparable to apartment rent prices in your market, you’ll create an attractive and enticing option for people who are eager to buy.

Bringin’ it Home

I would be remiss if I didn’t mention that one of the most important parts of this entire process is overcoming the stereotypes and stigmas associated with mobile homes.

While mobile home parks are often given a bad rap, the reality is: there are many parks throughout the country that are respectable (and even desirable) places that working-class, retired or traveling individuals love to be.

Regardless of whether you invest in stick-built homes, mobile homes or a combination of the two, understanding your local market is KEY.

When it comes down to it, flipping mobile homes can be a smart way to make money and build your business as an investor. If you are informed, prepared and willing to work hard, you can make this a very profitable venture.

Going Mobile

Have you flipped a mobile home (or know of an investor who did)? What challenges and rewards did you (or they) experience?

But do you ever wish you could make more on a wholesale deal? After all, you’re not doing anything to increase the value of the property, so you’re limited in how much you can really make, right?

Wrong.

And now it’s time for a sandwich.

Welcome to the Sandwich Deal

It is possible to make 4x or 5x what you would make in a typical wholesale deal, if you think outside the box.

Any wholesale deal is like a sandwich: The seller and the buyer are two slices of bread, and you connect them with your sandwich-filling goodness.

Usually, the “sandwich” doesn’t last long… you set up a contract with the seller. You sell the contract to the buyer. The deal is done.

But imagine the possibilities if you formed a more long-term relationship with wholesale leasing.

When you offer a seller a wholesale lease option, it’s still a wholesale deal. You (the investor) don’t own the property, you own the contract. But instead of finding a buyer for the property, you find a rent-to-own tenant for the property.

Why Is This a Good Deal?

Sellers love this option because they can set the price for the deal. This is especially appealing for sellers who don’t have much (or any) equity in the property, because they can get the full value of the property back.

A particular group of buyers also loves this option, and this is where wholesale leasing is most different from traditional wholesaling… but know this: It’s critical that you find the right buyer and that you help them through the whole process in order to make this deal successful.

The best buyers for wholesale lease options are people who don’t quite qualify for a mortgage, but who are on track to qualify soon. If you target the right properties, you’ll have no trouble finding potential buyers, and the price and terms will be a win-win for both the seller and the buyer.

Wholesale leasing is also a win for you. You don’t own the property, so it’s a low-risk deal. It’s a relatively easy investment. Since the seller gets to set the price, you don’t need to negotiate. And you don’t need any funds to do these deals.

Wholesaling this way does involve a bit more long-term work than traditional wholesaling because you need to make sure the buyer is supported through the whole process of renting to own, but given the significant increase in your profit, that little bit of extra work is definitely worth it.

Profit? What Profit?

How does this actually make you more money?

It depends on the deal option the seller chooses…

After you talk with the seller and get the basic information you need, you should make an offer with at least 3 options, showing the seller how much they can make with each option. Your options should look something like this:

Option 1: Cash Offer

The cash offer is a traditional wholesale model. It gives the seller a comparison point for the deal. This is going to be your lowest offer.

In this case, your profit is the difference between your deal with the buyer and your deal with the seller.

Option 2: Sandwich Lease Option

With this option, you offer the seller a lease to the perfect tenant—you. You are responsible to pay the rent and cover maintenance and repairs under $500. To do this, you sublease to another tenant-buyer, but you stay in the middle.

Offers like this typically have a term of about 5 years, but the tenant-buyer can always choose to buy more quickly.

This is going to be a higher offer than Option 1. That’s because in this scenario, you have 3 paydays:

Option 3: Lease Option Assignment

The lease assignment gets the seller the highest price. In this case, they can choose how much they want to ask for the property. Lease option assignments typically have a minimum term, for example, a minimum of 2 years.

This is more like a traditional wholesale deal, except that you look for tenant-buyers instead of other investors to purchase the property. Unlike Option 2, when you do a lease option assignment you do NOT stay in the middle. The seller can make more, but they also take on more risk.

Like a traditional wholesale deal, you make a profit up front, through the 3% option deposit collected from the tenant-buyer when they move in.

How Does this Actually Work?

Let’s go through the steps of a wholesale lease deal so that all of this is clear…

Step 1: Find a Seller

You’re looking for a property people want to buy. That means you want to find properties in nice neighborhoods in good school districts. They should be in the median price range for the area.

Your ideal seller doesn’t have much equity in the property. The easiest way to find these sellers is to look for them in for rent and for sale by owner ads online. You can look at for sale by owner sites and at sites like Craigslist. You might also try your local newspaper’s website or printed classified ads.

Once you’ve got a list of potential sellers, follow your marketing plan to contact them and send them an offer. You don’t need to spend much time on the phone with them; you just need some basic information in order to make an offer.

Find out about the seller’s situation… Is the seller current on the mortgage? Would they be consider renting the property? If the seller is motivated and interested in renting, it’s time for Step 2.

Step 2: Contract

Remember, with wholesale lease options you don’t need to do any negotiating. Send the seller a simple letter with clear options. You don’t even need to meet the seller in person. Just make sure the seller understands how each option works.

Once the seller chooses one of the options you’ve offered, get the paperwork in place. Work with an attorney to make sure you’ve got all the necessary details in your paperwork.

If you’re not doing this deal in person, you can use a notary to get all your documents signed. Make sure you don’t start making payments until you’ve got a tenant-buyer in place. Then it’s time to move on to Step 3.

Step 3: Find a Buyer

Rely on your marketing plan here. Use whatever methods you’ve found most effective, whether that’s Craigslist, bandit signs or online advertising. For example, you might put a sign on the property that says:

“Rent-to-Own. Only 3% down to move in. Call 555-5555.”

However you market, make sure you’re targeting the right buyer.

Screen potential buyers to make sure they have a realistic chance of being approved for a mortgage within the terms of your agreement. Do a background check. Also, use your 3% option deposit to confirm that the tenant-buyer really is serious about the deal.

Step 4: Final Paperwork

Once you’ve found a buyer, make sure you get all the paperwork in place. Have an attorney take care of or review all your contracts.

Make sure both the seller and the buyer understand how the contract works. If the seller chose the lease assignment option, make sure the seller accepts liability for the deal.

Set up the deal so that a third party collects rent and pays the mortgage. The tenant-buyer will be protected this way, and if the deal is a sandwich deal with you in the middle, you won’t need to worry about this happening each month if you’ve got someone taking care of the rent and payment for you.

Step 5: Follow Up

The goal of this wholesaling method is that the tenant actually buys the house. This goal doesn’t change once all the paperwork has gone through. Make sure the tenant-buyer has support to reach the goal of purchasing the property.

If the tenant-buyer needs to repair their credit, make sure they get into a good credit repair program. And make sure they have the contacts they need, such as a broker who can help them buy the house.

A Final Note

Wholesale lease options do require some extra legwork, but that doesn’t mean you need to break a sweat over every one of these deals.

Find team members who can make each step easy to execute. Establish a relationship with an attorney you trust. Find someone who can collect and distribute payment. Maybe even hire some property scouts to find the kinds of properties you’re looking for.

When you’ve got a solid team in place, you can do even more deals.

Whatcha Think?

Have you done any wholesale lease option deals? What do you wish you would have known before you started? Let me know below.

“Direct mail is already the nation’s leading advertising medium because of its effectiveness in targeting, and because it is so measurable. This improvement only enhances its effectiveness.”
~Matt Spahn, Fortune 50 and start-up marketing and media executive

But the reality is: If done well, creating and sending direct mail pieces can be simple, extremely cost effective and beneficial to the growth of your business. You just have to spend the time necessary – up front – to make sure you’re doing it right.

Today, I want to share some insightful strategies to plan, create and mail postcards or letters that will bring you the best results (whether you’re looking for cash buyers, motivated sellers or both).

A major factor in this process is really dedicating time to the pre- and post-work involved, so I’ll cover that too. So, without further ado, let’s get into it!

Determining a Budget

This may seem like a no-brainer, but when it comes to direct mail (or any marketing technique), you need to determine a budget – and stick to it.

At first, I wouldn’t recommend spending boatloads of money (obviously), until you get your technique down. Direct mail marketing is truly an art – you can’t just throw a piece together willy-nilly and send it out to everyone and their brother. (Well, you could, but that would be pretty useless).

So, figure out how much (per month) you want to spend on direct mail. Be sure that you can commit to at least 12 months of spending this amount. You don’t want to blow $5 grand over the course of your first 3 months, and then realize you can’t afford to send anything else out for the rest of the year.

Whether it’s $200 or $2,000, choose your number wisely and commit to it.

Creating Your List(s)

This step, just like every other one in the direct mail process, deserves time and research. I would never recommend choosing a zip code and sending out a piece to every address in that area.

Would this be a super fast way of doing direct mail?

Yes.

But would it lead to property deals?

Unless you get randomly lucky, probably not.

Instead, you need to narrow down your recipient list to include only the people who have a possibility of being interested in your services.

So, as you get started, ask yourself these questions:

Now, depending on who you’re targeting, you may be able to pull a lot of info from your county clerk of court website (where you can browse public records). Some lists, however, will require more work on your part. But overall, you will probably want to target one (or several) of these l, depending on your main goal:

You’ll probably have ideas of other lists you want to pursue, depending on the buyers or sellers that you’re targeting.

And, even with these lists in hand – it’s best to narrow down your recipient selection even more. Make sure the properties you’re targeting are located in the areas you’d actually be interested in buying or selling a property in.

Now, this might sound like a lot of work, and – let’s face it – it is. But, keep in mind that the more time-consuming a mailing list is to put together, the better your response ratio will be.

Think of it as studying for an exam. If you put 20 minutes into studying, you’re probably not going to do so well. But if you spend 2-3 hours studying, you’ll reap the benefits.

Time is money, my friends. Put enough time into crafting a specialized mailing list, and you will likely score more property deals in the long run.

Creating the Message

Now, if writing isn’t exactly your forte, you might feel a little uncomfortable with the idea of creating a message for your direct mail pieces. But, really, you don’t need to be a Shakespeare or a Stephen King.

You just need to think carefully about what you want to say on your postcard or letter.

Remember, your message needs to capture the reader’s attention within 1-2 seconds; otherwise, the recipient will immediately throw it away. So, your message needs to be impactful and to the point.

The “to the point” part is extremely important… no one’s going to waste time reading a novel. In as few words as possible, explain who you are, what you do and how your services can benefit them.

A couple of additional tips:

Remember, keep it short, and make sure your contact info is prominently displayed. If you have a website, include it as well.

Making it Pretty

Now, this part is a little easier…

You don’t need to be a graphic designer; you just need to make sure your piece stands out. So, whether it’s adding color, having a handwritten message on the envelope or on the letter or postcard itself, using an oddly shaped postcard, or adding ANYTHING to make it seem more like a letter from a friend (rather than an advertisement) will work.

Whether you print the piece on your own, or order it from a print shop (probably a better option), just make sure the quality is high.

Determining Your Mailing Strategy

Even when you have a masterfully written, eye-catching, amazing piece of direct mail – and you have an awesome mailing list full of leads – you still shouldn’t send them out randomly.

To get the best results, make sure you have a mailing strategy. In this case, timing is everything. You want to make sure you stay top of mind with your leads, but you also don’t want to inundate them with constant mailings that drive them nuts.

Once you’ve determined a specific mailing list (say, probate, for example), mail to that group first. Then, follow up with them by sending another (different) piece 3 months later. All in all, you should send them a letter or postcard about 3-4 times per year.

So, an example schedule might look like this:

Don’t send out a direct mail piece without having a long-term plan. Sending one random piece, and then dropping off the face of the earth, will not make a good impression on the leads you’re targeting.

No matter what type of schedule you decide on, stick with it!

One other important note to keep in mind: Depending on which area of the country you live in, you may want to take a break from mailings during the winter months. People tend to buy and sell houses much more frequently in March through October, and a message sent to them in the dead of winter might not make much of an impression.

On the other hand, you may want to send out seasonal pieces during those months (for instance, a “Happy Holidays” card in December). This increases your brand awareness – and your credibility – without making you seem like a “selling machine” who only cares about making money. Just something to think about.

Tracking Your Results

Now, this is one of the most important steps in the entire direct mail process. If you don’t track the results of your direct mail pieces, you will never know how effective they are – and if they are worth the money you’re spending.

So, I repeat: Always. Track. Your. Results.

The easiest way to do this is to include a unique email address or phone number on your postcard or letter. This way, when you receive a phone call to that number or an email to that email address, you will know that the person saw your direct mail piece. Make sure you track all of this info in a spreadsheet.

Or, if you want to get more sophisticated, you can have a unique URL on your postcard that brings people to a specific page on your website (a landing page with more info about you). Then, using Google Analytics, you’ll be able to easily see and track where the views of that webpage are coming from.

And, of course, when people contact you, keep track of your responses (for instance “left a voicemail on 6/21;” “sent an email on 7/15;” and so on. Follow up regularly, but don’t harass people. (Obviously, you know what to do, but I just wanted to throw that out there.)

An Underappreciated Marketing Method

With time, you will begin to see patterns of which mailing lists are working well for you and which aren’t. Depending on how many deals to get from these marketing pieces, you will also be able to determine your ROI.

Remember that knowing how to “do” direct mail well is involves a constant learning process. Something that works well this year might not be effective next year, for instance. Or a particular mailing list might bring you spectacular results one month, and no results 3 months later.

It’s all about trial and error…

As time goes on – and as you track your results – you will intuitively know the best approaches for your specific market, mailing list, and so on. And you’ll be able to apply this knowledge to create marketing campaigns that bring you the best results (aka motivated sellers and/or buyers).

Getting Started

What questions do you have about creating and sending an effective (and creative) direct mail piece?  Let me know; I’d be happy to help!

Plenty of people have strong opinions about this common question. So how do you figure out what’s best for you?

The Real Issue

It all comes down to money…

The question you need to answer is whether you can benefit your investing business financially with a real estate license.

Now, some people will tell you the real issue is that most deals investors do are illegal without a license. In fact, the Ohio Real Estate Commission said as much in one of its newsletters. But that doesn’t mean investors automatically need a license.

Usually, these kinds of comments are made by people in traditional real estate deals, including real estate agents. They find investing deals puzzling… because they’re not traditional deals. But there’s nothing wrong with getting creative to set up a deal that works for everyone.

Wholesaling, for example, is NOT illegal when done the right way.

Come to your own conclusions about your investing options. Read the laws in your state. Talk to a real estate attorney (or several of them) to get their take. And set up a business model that you’re comfortable with.

SO, back to the real issue: money. Just how can getting licensed make you money?

#1: Access to MLS

That magical land of the MLS… Of course, you might already be finding out about deals on the MLS through an agent you’re working with. But if you can access the MLS yourself, suddenly there’s no wait time…

There’s no relying on someone else to tell you about new deals. That instant access might very well bring in a deal you wouldn’t otherwise have spotted in time.

You can easily search for properties. Plus, you’ve got access to all kinds of data about a property. Suddenly, finding comps is a breeze, and you don’t have to sweat over pulling tax records and other property records.

Plus, if you’re using a fix & flip model, you can list your properties for free on the MLS. Since most property sales are done through the MLS, this is free marketing. What’s not to love, really?

#2: Networking

A real estate license gets you invites to events you might not even know about as an investor. The more people you know, the easier it will be to get your investing deals done.

Plus, these are the kinds of events with people who know real estate. Be on the lookout for like-minded people and you’ll have new opportunities to get deals done.

#3: Make Some Extra Cash

As a licensed agent, you can set up a friends and family plan. Got a brother who wants to upgrade to a house with more square footage? No problem. You can help him with that transaction… plus make a little bit of pocket money with the commission on the deal.

You won’t be pulling in as much per deal on these smaller transactions, but at least you might have some say on the location of your next family Christmas party.

Plus, commissions can bring in some extra spending money, which is never a bad thing.

You can also look at commission money as an opportunity to fund your investing deals. Got a fix-&-flip deal coming up? Save that commission money to cover part of the repairs and cut down on your loan amount.

#4: You Keep the Commission

As a licensed agent who’s also an investor, you get to keep the commission you would have otherwise paid to a different agent. How great is that?!

If you’re investing in a $100,000 property and the agent is making 3%, you just saved yourself $3,000!

Plus, a selling agent’s commissions tend to be higher (around 6%). And that’s on the property after you’ve added any wholesale fees or finished your fix & flip.

So that property you bought for $100,000 might now be $180,000 after some renovations. That’s a commission of almost $11,000 you’ll be saving! And between the two closings, your savings total $14,000. Cha-ching.

That $200 for a license is looking pretty good, am I right?!

Obviously, that does mean you’re doing more work on the deal in acting as the agent, but you can always outsource some of that work to virtual assistants.

#5: Make Money on Referrals

If you’re a licensed agent and someone refers a deal to you, you can’t pay them a referral fee…

But if you make a referral as a licensed agent, the person you referred can pay you part of the commission. Easy money.

#6: Gain Control

With your license, you enter the world of negotiations.

You will be able to write offers and work directly with listing agents to finalize a deal. You’ll also be able to work directly with lenders, appraisers, home inspectors and attorneys.

More work?

Yes.

But these are details you would be keeping track of anyway. You save the time of having to discuss an issue with your closing agent and wait for a response.

#7: Pick Up Tips

You will need to spend about 100 hours to get licensed, plus any continuing education hours (this is usually something like 12 hours a year).

Now, you might not learn practical skills on how to fix & flip a house. But there’s always plenty to learn. You might be surprised what tips you pick up and how they benefit your business.

This is especially true if you’re just starting out. You’ll learn the fundamentals of real estate through the process of getting your license.

#8: Earn Credibility

People like to see a license. Remember those complaints from agents I mentioned earlier? If you’re licensed, you’re on level playing ground with those agents and they’ve got nothing to complain about.

Plus, the other people you work with who are outside of the real estate business will see your license as a sign that you’re an investor they can trust.

#9: Become a Leasing Agent

As a licensed agent, you can also be a property manager or leasing agent for commercial and residential properties.

If that fits your business model, it’s an opportunity for an additional income stream. Another cha-ching.

But What About…

Okay, that’s a long list of benefits. But aren’t there some downsides to getting a license?

Yes, and we’ve touched on a few already. But let’s go through a few more…

More Liability

As a licensed agent, you always need to disclose that you’re licensed. Plus, you’re expected to uphold a code of ethics. That means you’re opening yourself up to potential complaints.

Is this a bad thing?

I’d say no.

You want to do all your deals with integrity, so this is just a way to be held accountable to what is probably already your standard of doing business.

It’s Not an Investing License

The licensing process will give you plenty of info on the paperwork to get a deal done. You’ll learn about the legal and financial aspects of real estate deals.

This isn’t training on how to market your business, how to talk to sellers and buyers or how to flip a house…

But, it will give you foundational information on the business.

And even going through the process of getting licensed will probably get you some new contacts… in this case, it’s not so much about what’s being covered in the study material as it is about building your knowledge foundation and bringing long-term benefit to your company.

Studying? No Thanks

If you’re thinking you’re done with school and studying and all that book business, you’ve got a problem. All investors need to be learners.

Why?

First, if you decide not to get licensed, you still need to take time to understand what that means. Read (yes, read) any legislation about real estate transactions. Make sure you’re not just talking to other people about what they think—read the rules for yourself.

And if you want your business to grow, you should value learning. That doesn’t happen only through reading, but so many exceptional investors have written down (or recorded) their thoughts, just so you can learn from them. If you’re not a reader, that’s what audiobooks, videos and webinars are for.

But seriously, don’t make this decision based on how much you hate studying.

It All Takes Time…

Yes, getting your license takes time. Filling out that extra paperwork takes time. And as an investor, you should always be trying to do what makes you money.

As I said at the beginning of this post, that’s really the heart of the issue…

Will making the investment of getting licensed make you money?

Take a look at your business model. How will getting your license increase the number of deals you can do (including new kinds of non-investment deals you might consider doing)? Does that offset the costs?

There’s no one right answer to this question.

What’s Next?

If you’re still not sure whether you want to get your license, look up the licensing process or talk to a licensed agent-investor in your area.

How much time is involved? What’s the cost?

Remember, this is going to vary from state to state.

Your Take

Are you licensed? What helped you make that decision? Tell me about it below.

With some thought, you might wonder if developing a website for your REI business is even worth the time and money.

The answer, in 99.9% of cases, is a resounding… YES.

If your goal is to grow your business and maintain a profitable venture, a website is one branding/marketing technique that cannot be compromised.

So, does your website need to look like it was designed by a top-notch developer and written by an expert marketing professional?

No. (Although, those are huge bonuses.)

The main goal of having a website is simply that… to have a web presence.

By having another platform where interested buyers or sellers can learn more about you, you’ll be marketing yourself to people that you would have never reached otherwise.

When it comes to building your web presence, you don’t need to spend a ton of time or invest a ton of financial resources. But, you can if you want to. That’s the great thing about creating a website – it can be as simple or complex – or as cheap or expensive – as you want it to be.

So, I want to cover the various aspects of building your web presence – as well as the different ways you may go about doing this. Let’s get started!

From Square One

Really, when it comes to building a website, you can make this as simple or as complex as you want…

If you have a small budget and just want something that serves a very basic yet functional purpose, you can do that. If you want something that’s very impressive and will take some time and money to develop, you can do that. If you want anything in between – guess what? – you can do that.

It’s important to consider:

1. Your overall business goals

2.  Your budget

3. How much time you want to spend on the development of your website

4. The main purpose of your website/what you hope to gain from it

5. Your long-term plan for maintaining and updating your website

Take some time to think through each of these items and write down your plans. Once you have a clear picture of what you’re hoping to achieve, you’ll be ready to select a domain name.

Choosing Your Domain Name

This initial step is one that you should take some serious time to think about. Choosing your domain name (such as www.JPMoses.com) is a huge decision. Here are a few things to keep in mind:

Some examples of awesome domain names are:

Putting Everything into Action

Now comes the fun part… creating the website and getting it up and running.

There are so many different ways you can go about this. (And I could probably write an entire book about all the options.) But, for today, I want to present 3 routes you could choose to create your website.

Let’s take a look at each one…

Option #1: Using a Template

If you’re operating with a shoestring budget, and you’re hoping to complete your website as quickly as possible, you might want to consider purchasing a website template. In a nutshell, this is when you purchase the basic layout/design of a website, and then you can make minor adjustments or customizations.

Sites like WordPress, Wix and Squarespace are just a few options of good places to start. Of course, you’re going to want to research your options thoroughly. Just type “real estate investor website templates” into your internet search engine to get started.

Option #2: Using a REI website with lead generation services

Using a lead generation website/service that is created specifically for real estate investors is another great option for building your web presence.

These services – such as OnCarrot or LeadPropeller – have predesigned website templates (similar to Option #1), but they also offer the added services of built-in Search Engine Optimization (SEO), lead generation services and tracking, information security and much more. Many of these systems offer different levels of services, depending on how much you’re willing to pay.

Option #3: Using a Professional Developer to Create a Custom Site

You’re going to need to get your wallet out for this one…

Professionally designed websites will cost you a pretty penny. But, as the saying goes… you get what you pay for. This option will give you complete control over the look and functionality of your website. Plus, your website will look entirely unique… which is a great way to attract attention.

Creating Impactful Content

Regardless of which option you choose, every REI website has a similar goal: to tell people about your business, and to spark their interest in working with you (whether it’s buying your property, selling you a property, doing wholesale deals, etc.).

Make sure your website isn’t cluttered with outdated content or bogged down by long paragraphs of text that no one wants to read.

The main goal of your website is to get people to contact you. So, make sure you have:

Building a Social Media Presence

While creating an effective and eye-catching website is important, you also need to make sure you’re active on social media – this will really bring your whole web presence together.

At minimum, you should have a Facebook profile and a YouTube account. Just a quick word about both:

Create a goal for yourself (such as posting on Facebook 3 times per week or uploading a video to YouTube twice per month) and stick with it. The exposure you’ll gain from your social media accounts will probably surprise you… and it should lead to some awesome property deals.

The Moral of the Story

Just like any marketing technique, the development of your web presence can be done 100 different ways – in terms of how much you want to spend, what you’re trying to accomplish and how much time you want to invest.

I hope this post has given you a good starting point for developing your own web presence. It really doesn’t have to be an intimidating prospect, and it’s an extremely valuable way to build your brand, establish credibility in your market, and – ultimately – support a successful investing business.

Now, It’s Your Turn

Have you looked into options for starting your own website? What challenges are you facing so far? Found any secret tips you can share?

“The only strategy that is guaranteed to fail is not taking risks.”

~Mark Zuckerberg

It’s important to remember that every property is unique. There’s no way to say for sure if an REO will be a good deal or a bad deal; it’s all about the amount of effort you put into familiarizing yourself with the property and the process of purchasing it from the bank.

Just like any property type, REOs certainly have their pros and cons. It’s up to you to distinguish the good deals from the duds. And, if you don’t feel prepared to do so, I hope I can shed some light on the topic today to help you make smart, informed decisions.

First, let’s take a quick look at how REOs work…

REOs are properties that the bank (or lien holder) obtains through a foreclosure sale (or, in some cases, through the deed in lieu foreclosure process). If the bank obtains the property through a foreclosure sale, this typically means that there weren’t enough bids at the foreclosure auction or the bids were not high enough for the bank.

In general, banks prefer to sell their properties to owner-occupants, if possible. Most will also prefer cash offers, and will require a higher down payment amount from investors. (Seems unfair, right?)

It’s also important to keep in mind that the bank is not trying to be your friend; they are trying to make the biggest profit possible. And even if you make a decent offer, banks are notorious for stalling—in an effort to elicit an even better offer from another interested buyer.

So, if I’ve officially scared you away from REOs, don’t stop reading here! There’s a lot more to be said about this property type. If you want to get a good idea of whether these houses are the right fit for your investing business, you need to see the whole picture.

The Good Stuff

There are some definite perks that you can benefit from when investing in REOs, such as:

The Bad Stuff

Every investing strategy has its ugly side. Here’s what to watch out for, if you choose to invest in REOs:

Next Step: Finding REOs

If you want to explore the idea of investing in REOs even more, you might want to start searching for deals in your market.

Check out these strategies for finding REOs:

Additional Strategies: When to Go the REO Route

When it comes down to it, assessing potential REO deals is like assessing any other property deal… you need to do your due diligence to determine if the payoff is worth any potential risk. Some REOs will be amazing deals and others will be the “avoid at all costs” types.

There are a few factors that—in general—may indicate a good REO deal. (Now, of course, these won’t apply to every single case; but they are good initial indicators to look into the property in more detail.)

First, if you find an REO that has been sitting on the MLS for a long time (30+ days), this could be a potentially awesome deal, because the bank is probably highly motivated to get rid of it. If you’re able to make a decent offer, you should have a shot at scoring the property.

Also, you might have good luck making offers on REOs that are located in markets or towns where there is a lot of real estate activity. Most traditional buyers won’t be interested in REOs if housing inventory is high in a specific area, which gives you the chance to be one of only a few interested parties (if not the only interested party).

Another thing to keep in mind: less experienced investors will probably be unlikely to put in offers on REOs (especially those that are priced high), because the amount of money required upfront is probably not do-able for them…

So, if you have adequate cash and some experience with REOs, you will usually have less competition when bidding on a higher-priced REO.

Rock ‘n’ REO’ll

If you’re ready to start pursuing REO deals, make sure you take ALL of these factors into consideration.

You can gain some very impressive assets, if you handle these transactions wisely.

Just be prepared:

Getting Started

If you’ve purchased an REO, what has been your experience? If you’re still on the fence, what questions or concerns are holding you back?

So, as a real estate investor, have you thought about investing in markets outside of your state or region?

Some investors think remote investing sounds like a truly horrifying prospect. Between the perceived risk, expense and fear of the unknown, it’s true that this type of investing isn’t for everyone.

But, for many of us, this can be a lucrative, game-changing opportunity to grow our businesses. And the success of your remote investing business all comes down to 1 single factor…

There’s nothing mind-blowing about this, but it’s so crucial that I want to talk more in-depth about it.

And here it is…the not-so-secret secret to building a profitable remote investing business is:

Having a reliable team on the ground.

Let me repeat: You NEED a reliable team on the ground.

If you rush through the step of building a team of trustworthy and experienced professionals (real estate agent, property manager, inspector, general contractor, etc.), you WILL set yourself up for failure.

In the end, remote investing really isn’t a high-risk venture—if you do your research and build a successful team in your chosen market.

So, let’s take a look at the prep work you’ll need to tackle if you’re serious about making this a profitable aspect of your REI biz…

Hit the Books

Your first step in this process (even before building your dream team) is to research, research and research some more. And then, after that, you need to research again.

Am I coming through clearly?

You can never be too informed when it comes to learning about markets that are out of your immediate area or state.

In fact, this is important even when you invest in your own area. Just because you are physically in a city, county or state, doesn’t mean your financial risk is less when you take on an investment property. Your knowledge, skills and team members are the factors that determine whether or not you’ll succeed.

And the good news is: We live in the wonderful age of the internet, folks!

You can find out a ton about a specific city, town, community or neighborhood with a few in-depth internet searches. Gather information about the obvious factors for the area:

Regardless of whether you’re buying a property in your own town or across the country, you’ll probably find the most valuable information online—which is awesome news if you’re interested in investing remotely.

Check out online resources such as:

You’ll need to be as thorough as possible with your research. Find out the particular neighborhood’s crime stats and rental rates (if you plan to rent the property) and the property’s tax info.

Another beneficial site to check out is Rentometer, which will give you rent estimates on nearby properties, so you can get a better idea of the monthly income you can expect if you decide to rent it.

Keep detailed notes of all your research; even if you don’t make an offer on the property (or make one but it’s turned down), the information could be valuable when looking at other properties in that area.

No matter where you’re investing—your backyard or 1,000 miles away—if you are informed, you can move forward feeling confident.

Another crucial factor for feeling confident?

That on-site team I mentioned before. Let’s take a look at a few of the key players…

Proficient Property Manager

If you plan on taking in rental income, you cannot invest remotely without a highly reliable property manager who is physically located in your remote market of choice.

An awesome property manager (or property management company) will be your eyes and ears at your property. They will help keep the tenants happy and your investment property in good shape.

This is one person on your team who you probably want to meet in person. Make a trip to your remote market of choice and interview several property managers until you find the right one. You’ll know the good ones by how nicely kept their managed properties look, their client retention and how well they vet their subcontractors.

In the end, you need someone you can trust wholeheartedly. It’s nice to be able to look that person in the eyes, at least once.

Now, you may be thinking, “I don’t know, is it really worth the money to hire a property manager? Isn’t that going to cut into my profit a ton?”

To that I say: Most property managers will charge you 6%-12% of your monthly rental income. But, my friends, your time is extremely valuable—and this service, if you can afford it, will save you so much time.

You can say goodbye to:

Save your time for more important, impactful tasks like finding new properties and sealing new deals. Leave the property management to the professionals.

In fact, you might even save money—in the long run—if your property manager is able to avoid any of the legal fees, property vacancies and property damage that you might have experienced handling everything solo.

Reliable Real Estate Agent

If you’re not going to form a strong, solid working relationship with an agent in your targeted remote market, you may as well scrap this idea right now. Truth.

An experienced and capable agent who you can rely on is an essential member of your team.

An agent will not only help you find properties of interest, but they can also physically walk those properties for you.

So, how do you find an exceptional agent?

Well, if you have a property manager nailed down already, ask them for their recommendations of the best agents in their area. They’re probably going to have several they work with regularly and will know which ones to recommend.

Once you have a couple of options, make sure you interview those agents carefully (over the phone). Take super-super-thorough notes about their experience, the types of properties they typically buy/sell and the neighborhoods they are most active in.

Remember: The agent you choose will be your representative in any purchase transaction. Make sure you choose someone who aligns well with your goals and understands your preferences!

If you choose an agent before settling on a property manager, you can also ask your agent for property management recommendations in their area. Chances are they’ve worked with one (or several) before.

Champion Contractor

This one is pretty straightforward, so I won’t spend too much time on it: If you’ve selected a property management company, they typically will have contractors and subcontractors of choice. So, really, the work is done for you.

If you prefer to find your own general contractor, obviously you want to interview your candidates before making a final decision…

It’s always helpful to browse their reviews online, too. Make sure you choose someone who will do high-quality work for reasonable prices. Sometimes, it’s worth a little extra money to pay someone who you know will do the job right the first time.

Now, aside from a GC, you’ll also need some skilled specialists—located in your remote market—who you can rely on (plumbers, electricians, HVAC professionals, roofers, foundation repair experts, etc.). So take some time to research these as well.

Again, your property manager will probably have each of these professionals on speed dial, so they can make excellent recommendations.

Ready to Rock

Have you invested remotely? Let me know your experience in the comments section below. If you haven’t ventured into this opportunity yet, what else would you like to learn about successful remote investing?

Ingenious Inspector

Another person you need to be able to trust completely is your inspector. After all, they are the best source of firsthand information regarding your property. You can’t be there to inspect everything; but they can.

If you’re buying older homes, especially (but really, this can apply to any property), make sure you understand zoning codes in your remote market, and figure out which of the home’s past repairs/upgrades were permitted. Know which aspects of the property will need to be brought up to code.

Choose an inspector who will take their time and do an awesome job. If they are in and out of the house in 30 minutes, that’s not a good sign. Find someone who is willing to explore every single nook and cranny. You want the guy or gal who crawls into every crawlspace, ventures into the attic in 100+ degree temps, tests the outlets and lights, and examines each door and window.

In the end, you need an inspector who can give you a crystal-clear depiction of the property—someone who is very familiar with how investors like to flip homes is also a bonus.

Other Dream Team Pros

As your remote business grows, you’ll probably be adding paid team members, such as:

The Bright Side

When you think about it, remote investing really isn’t any more risky than investing in properties in your own area. In either case, if you do your research and have an amazing team in place, you’ll mitigate most of your risk.

One benefit of remote investing is that it helps you diversify your portfolio…

If you have properties in 3 different areas of the nation, for instance, you’ll be less likely to suffer financially if one of those markets starts to decline—because you have the other 2 to fall back on.

Even if the real estate market where you live is a thriving one, the opportunities you find there might not align exactly with your long-term goals. By selecting a remote market, you can choose an area that fits perfectly with your timeline, budget, property preferences and needs.

So, when considering joining a local REI club, you might be wondering, “Is it worth my time?”

The answer, in most cases, is a resounding YES!

Today, I’m going to tell you all the reasons why…

But the overall gist is this: Local REI clubs will present you with resources and opportunities that you’re not going to find anywhere else.

Let’s dive right in…

What Qualifies as a REI Club?

So, first off, let’s put a definition on this.

According to Wikipedia (I know, legit resource, right?), REI clubs are:

Clubs formed by individuals who want to invest specifically in real estate.

Mind blowing, right?

Okay, so while that definition is pretty obvious… all you need to know is that some REI clubs are non-profit and others are for-profit groups.

Some may be fairly informal, while others (such as Real Estate Investing Association “REIA” clubs) are more structured groups, as they usually have membership guidelines, rules, etc. A group could be an extension of a national organization, or it could be entirely unique to your location.

But every REI club has something in common or, if it’s a good club, it should have this quality: They have a value that you cannot put a price on.

So, let’s take a look at the specific benefits you can expect when you join a REI club.

Education

“An investment in knowledge pays the best interest.”
~Benjamin Franklin

People in many professions have opportunities for ongoing or continued education. These may be in the form of conferences, seminars, courses or more. Why should you, as an entrepreneur, be any different?

Even those who excel in their businesses will always benefit from continuing education in their field. Those people who seem to “have it all together” (you know who I’m talking about) can learn a great deal from a good REI club.

On a casual level, an excellent REI club will have local speakers (such as other investors or experts in relevant industries). This will give you the opportunity to hear success stories (and hopefully some disaster stories too) from people who started out just like you.

On a bigger scale, your REI club should also bring in some more prominent speakers, on occasion. These may be investors who have built highly successful businesses, started their own coaching or mentoring programs, etc.

In all cases, the presentations or seminars offered through your REI club will give you valuable, first-hand exposure to experts who you may not have met otherwise. And, since these groups often allow time for informal conversations/networking before or after the speaker’s presentation, you should have a good chunk of time to ask the speaker your burning questions.

These one-of-a-kind learning experiences can’t compare to REI books, online courses, etc. (although those things do have their own value). The information that you’ll glean from personal interactions with these local and national experts will be immensely beneficial for your own business.

Networking

“If you want to go fast, go alone. If you want to go far, go with others.”
~African proverb

The educational component of REI clubs ties in closely with the next advantage of these groups: The awesome networking opportunities.

I think the word “networking” gets a bad rap sometimes…

When most of us hear the word, we imagine a conference or career fair of some sort, with nervous people walking around in business suits, making small talk and wishing for dear life they could be at home on their couch watching Netflix instead.

You won’t experience this negative stereotype at most REI clubs. In fact, many of them are casual environments. You should feel comfortable and welcomed – and there shouldn’t be any pressure to be stuffy or formal.

By attending REI club meetings, you’ll meet a variety of investors. This will give you multiple opportunities to schmooze with:

I should also note that finding partners for joint ventures is a great way to diversify your portfolio and to pursue deals that you wouldn’t be able to handle – financially and/or in terms of management, rehabbing, etc. – on your own.

Support & Motivation

“We rise by lifting others.”
~Robert G. Ingersoll, 19th-century U.S. lawyer

I think one challenging aspect of being an investor – especially when you’re first starting out – is that it can sometimes feel isolating.

You may have friends and family who are heading to their “regular” office jobs every day, working 9-5 and enjoying their work-free weekends. A lot of times, it can be difficult for an investor – whose “typical” day is all over the place – to relate to these individuals. (Not that you can’t have friends with traditional jobs – I sure do!)

But my point is: It can be refreshing to meet with like-minded people at your REI club, who are facing career challenges and victories that are similar to your own.

Plus, it can be highly motivating to cheer each other on and to encourage one another through the failures and mess-ups (we all have them).

You may even find a mentor at your REI club, who you can rely on for wisdom and advice. And, as you become more experienced, you can return the favor by mentoring a newbie investor. The great thing is – regardless of whether you’re the mentor or the mentee – there’s a lot to be gained from the relationship.

Local Knowledge

“There are two kinds of knowledge: local and universal.”
~Ursula K. Le Guin, novelist

The knowledge that you gain from REI groups about your local market is something that you’re probably not going to find online (at least, you might never come across it online).

When local laws/policies that affect real estate investors are changed or created, you’ll most likely hear about these first at your local REI group. It can save you a lot of headaches if you know the information right away, as opposed to finding out about it halfway through a rehab, for instance.

Other examples of info you might hear at REI clubs are:

• The houses on Chestnut Street are having issues with leaking basements.
• Contractor Joe Schmoe is known for doing cheap, faulty work.
• A new Walmart and Home Depot are going up on the east side of town.
• The Taylor Park neighborhood is starting to go downhill; two people were arrested there last week.

…you get the point. Hearing this type of information can be incredibly beneficial as you look for property deals in your local neighborhoods.

The Downside?

Every good thing has a downside (doesn’t it?)

In the case of REI clubs, really the only downside is that you may need to pay membership fees (depending on how the club is structured).

Now, as with anything in life, you get what you pay for. Expect clubs that have higher membership fees to be bringing in top-notch experts and speakers. If you find that this isn’t the case, move on to another group.

Most groups will charge between $50-$200 per year, which – in the grand scheme of things – is nothing. Considering that you’ll likely find several property deals through connections at your club, the membership dues will more than pay for themselves.

Watch out for groups that are charging an arm and a leg. This is usually a bad sign. REI clubs are designed to be informational and educational in nature. Anything that has an extravagant price tag is probably not in your best interests.

Also, make sure it’s not a “club” that promotes the leader’s specific program, books, software, etc. that they just want to sell you. Those types of events might be helpful, on rare occasions, but they don’t offer the benefits that you’re looking to get out of a genuine REI club.

Sign Me Up!

That’s really all there is to it. This topic certainly isn’t rocket science. If you’re able to put some time – and maybe a little bit of money – into joining and attending a REI club, you’ll most likely gain knowledge, emotional support, motivation, resources, connections, and much, much more.

What has been your experience with REI clubs?

Let me know (the good and the bad!) below.

In reality, property scouts (that term just sounds so much cooler than “bird dogs,” in my opinion), can add a TON of value to your team – and ultimately to your business.

By doing the preliminary work of finding properties and motivated sellers, property scouts can save you a lot of valuable time, and bring in deals that really increase your profits.

So, when it comes to recruiting and training property scouts, I think it’s really important to take the process seriously. The more effort you put into finding and teaching these individuals, the more benefits you’ll ultimately reap.

Today, let’s take a look at what you’ll need to find, train, and retain the best of the best.

Who to Look For

When it comes to finding property scouts, there are two camps of thought…

1) It’s better to hire people who have real estate experience (agents, mortgage professionals, etc.) OR

2) It’s more strategic to hire people with very little real estate experience and who are ready and willing to learn.

This is totally up to you. Sometimes, people with real estate experience will dive right in and have the expertise you’re looking for; other times, it can backfire, because they already have their own preconceived notions about the market and it may take some time for them to understand how to do things “your way.”

If you choose to go the non-real estate expert route, you may decide to hire college students, stay-at-home parents, or other individuals who are looking to make some money on the side.

Either way, make sure the property scouts you choose are HIGHLY motivated individuals who are excited to start their work. Expertise isn’t necessarily a requirement for this job, but enthusiasm is.

They should also be receptive to constructive criticism, and willing to learn how they can improve over time. It’s a huge bonus if they have a genuine interest in real estate, and are hoping to venture into a similar career in their future.

How to Recruit

When you’re ready to hire a property scout, it’s time to place some good-old-fashioned ads. (Except, maybe nix the “old-fashioned” part – it’s time for something more modern.)

You might want to put out some info on Facebook, LinkedIn, or even at your local REIA groups, explaining that you’re hiring. If you have some popular newspapers in your community, this could be another route.

But my mostly highly recommended method would be to place an ad on Craigslist. These are my favorite categories:

Make your ad exciting, down-to-earth, and enticing. It’s also important not to give away all of the information about yourself and the gig. Create something that will make readers curious enough to visit your website and read more.

Here’s a good example:

Earn $2,000+ a Month Finding Houses in Your Neighborhood!

I’m a local real estate investor who is looking to hire someone (to start immediately) who can scout properties for me in the Atlanta area. No real estate experience is necessary, and I will provide all the training you need. You must be local, but there’s no need to come into an office – work remotely! This is a great way to earn extra cash and learn about real estate in the process! Visit my website to learn more. www.JoeSmithInvesting.com

Make sure your ad is a reflection of YOU, and keep it simple. And now, you’re ready to rock and roll!

If you end up needing to post your ad multiple times (in order to find the right person), just remember to keep your content unique. Craiglist’s filters will ghost your ad (translation: remove it) if you post the same exact thing too many times… especially if you’re posting from the same computer and/or same email address. So, each time you post, you want to change up your text a little bit – and maybe even use multiple email addresses or computers just in case.

How to Win Them Over

Now, there are SO many components to an investor’s website (it would take me a long time to cover them all). So, today, I want to focus specifically on your website’s landing page and registration page – which are the two most important pages for recruiting property scouts.

Once an interested person clicks on the website link in your Craigslist ad (or Facebook, etc.), they should be directed to your landing page. The landing page should offer more information than your ad, but still shouldn’t give away every single detail. When creating this page on your website, keep these pointers in mind:

On the registration page, provide information along these lines:

You get the idea.

Someone who goes far enough to submit their contact information is probably fairly serious about becoming a property scout. Remember, they were “funneled” through your ad, then your landing page, then your registration page, and still decided to submit their information.

From here, you’ll want to select a few of the most promising candidates, go through some brief interviews, and then make your final selection(s).

How to Train

You’re on to the next step – congratulations! It’s time to train your new property scouts.

Now, training might sound like a time-sucking, annoying prospect. BUT – if you have prepared thorough training materials in advance, you will actually need to spend very little time – if any – actually training your new property scout.

So, how do you do it? Let me explain…

Now, you’ll want to customize this to your own preferences and business model, but – in general – here are the 3 components of a good training program:

The key to successful emails is to break down topics into small, easily-understood segments. Remember, this person may have ZERO real estate knowledge. Start with the absolute basics and work your way up to more complex topics later in your email sequence.

Your emails should be specific but pretty brief. Don’t write a novel – because it could become overwhelming for the property scout. Instead, include hard-hitting, helpful, and concise info, and then include a link to the “members only,” password-protected section of your website, where the property scout can access your training manual and multimedia materials.

While your training emails should be brief, your training manual should be very detailed. This is where your property scouts can find more information on the topics they would like to learn more about. Divide your training manual into clearly defined sections, so it’s easy for your property scouts to find what they’re looking for.

A few sections to include in your training manual might be:

The multimedia training materials are awesome for two main reasons:

Full Speed Ahead

And there you have it… you’ve now successfully hired and trained a new property scout. As you can tell, this process really requires a lot of upfront effort on your part. You need to take the recruiting process and the development of your training materials very seriously – and devote the necessary time to each.

Once you have a solid recruiting process and informative, engaging training materials in place, the rest will be easy-breezy. You’ll soon be reaping the benefits of having a well-trained, motivated property scout on your team.

While that was a lot of information to chew on, I’m sure there are a million other ideas out there. What are your tried-and-true tactics for finding and training property scouts?

Good news—you can. But is multifamily investing really every real estate investor’s dream? And how do you find the multifamily property that’s sure to be a win for you and your private money lenders?

Before we dive into the steps to apartment investing success, we need to start with the pros of investing in multifamily properties.

First, The Money

Of course, the most obvious (and attractive) pro is the money. If you’re collecting rent from ten families or 50 families or 100 families, you’re going to make more money than if you’re collecting rent from one family in a single-family home.

But it’s not just about the number of rent collections. There’s the multiplication factor. If you’ve got one tenant and you raise the rent 3%, that doesn’t add up to much for you. But if you have 10 tenants and you raise all of their rent rates 3%, your cash flow is going up by hundreds instead of tens. And consider what happens when you have 100 tenants and you raise the rates even 1%.

Your tax benefits also multiply. You can apply depreciation, including the depreciation of each set of appliances in each rental unit, to your cash-on-cash return (they sure don’t last forever). All of that adds up to a huge tax benefit.

Your maintenance and repair bill goes up with a multifamily property. But you’re also only maintaining one roof, one boiler system, and so on. And the cost of one roof split between 10 rental units is no big deal compared to one roof and one rent check.

Easy Peasy

Multifamily properties can be passive income generators (even more so than a single-family property). Why? Hire a property manager to take care of your property for you and suddenly your multi-million-dollar investment is generating income every month and you’re totally hands off.

Multifamily properties also tend to be less market dependent, so your investment is likely to continue generating the return you’ve been looking for without much variation (and more than likely an increase in value that will generate even more of a return).

Okay, all those benefits sound great, but how does this work practically? It’s time for the Steps to Multifamily Success.

1. Talk the Talk

When you jump into the multifamily investing business, you need to know what you’re doing….or at least sound like you do.

Spend time talking with other investors. Read as much as you can. Learn the terminology for multifamily investing so you can impress a broker and navigate multifamily investment conversations confidently.

And if you are new to multifamily investing, make sure you’re not going it alone. You should have people around you to ask questions and learn from, whether they’re other investors or mentors.

2. Learn How to Comp It

What makes a good multifamily property investment? One right answer is always location. Plus, a property needs to make sense compared to the comps.

Calculate the value of the property accurately. For smaller multifamily properties (such as duplexes) figure out the loan-to-value ratio. For larger properties, figure out the capitalization (cap) rate. The cap rate is the net operating income divided by the cost of the property.

Find a few similar multifamily properties near the property you’re considering and call the property manager to ask a few questions. Ask about the rent prices, vacancy rate, and any recent improvements. This will give you a few different insights. First, you’ll get an idea of how much you can probably charge; is that going to bring in enough of a profit?

Second, if the vacancy rate at the comp properties is high, you might need to rethink your investment. Maybe the location isn’t what you thought.

Third, recent improvements will give you an idea on what kinds of features renters are looking for. This is particularly important because the best kind of multifamily property to buy is an underperforming property.

If you can find a property that’s got plenty of potential but is being sold at a discount, you’ve got an opportunity to add value quickly. Maybe the long-term property owner hasn’t made any improvements in years and the vacancy rate is high. You can bring that down with some updates, especially if you know what’s attracted other local renters.

3. Where’s the Money?

As with all deals, you need to determine how you’re going to pay for your investment. There’s bank funding, and then there’s private money.

Keep it professional, in both funding situations. If you’re making a pitch, know your market research, know the property, and be ready with information from any property inspections. You want to be an expert, even on your first deal, as much as possible.

And as with all private money deals, networking is key. If you’re going the private money route, set up those relationships before you’ve got your first deal in play so that you’ve got people to call as soon as you’ve found a property. And get a system in place early to keep track of those relationships. Keep calling and checking in on investors.

At the multifamily property level, deals will run into the millions. This opens up a new opportunity for your private investors. You might find some investors at this level (investing half a million or a million) who want to be more involved. These could be retired or semiretired professionals who’ve always been interested in real estate but haven’t had the time.

With this group, consider setting up a more hands-on approach. Act as a coach to provide training on multifamily investing, offer guidance on setting goals for wealth generation, host private events such as guided tours of multifamily properties with explanations of the features you look for in a multifamily deal, and offer exclusive access to any new deals that come your way.

4. Persist…But Don’t Perspire

It’s normal to spend more time hunting for multifamily deals than for single-family properties. There aren’t as many out there, so it’s going to take more patience to find the right deal. Don’t sweat it if you’re not finding as many multifamily properties. Keep networking (look for relationships that might get you inside info on multifamily properties about to hit the market too) and hold out for the right deal.

5. Hire Talent

Once you’ve found that multifamily property and closed on it, turn the operation over to your property manager. This really should be a passive income generator, so take the time to hire someone you trust to run this property for you. Don’t try to do it all yourself or you won’t be able to continue to scale your operation. Remember how much time it takes to find a multifamily property and get started looking for your next investment.

But do stay in touch with your property manager. Keep them accountable and check in regularly to make sure your priorities are their priorities.

6. Pocket Some Pennies

Every property is going to break from time to time, so make sure you set aside some funds for unexpected repairs. Plus, plan for updates you know need to happen, like a new roof, plumbing work, or new windows.

Build some cushion into your initial funding; make sure you’ve got any early repairs and maintenance covered. Then, when you start collecting rent, set aside some of that (a good rule of thumb is 10% of what you expect to collect) to cover improvements.

Time to Hear from You

Do you have any multifamily properties in your portfolio? What’s been the secret to your multifamily investing success? Let me know below.

That dreaded word… Financing.

(Wait, what did you think I was going to say?)

Financing your real estate investments is an essential part of your business. But it can be a tough and confusing process.

Especially as a new or new-ish investor, finding ways to fund your property deals can feel overwhelming. Most investors don’t start off with a huge chunk of change that can be used for an all-cash purchase. So the only other option remains… finding the financing solution that will work well for you.

When it comes down to it, you have 3 primary options:

Just like a portfolio of various property types creates a strong business, various financing options also typically foster a more profitable business.

So, let’s take a quick look at each of these 3 financing choices, so you can get the gears turning in your brain…

What’s the Big Difference? Hard Money vs. Private

You’ve probably heard the terms “hard money lender” and “private lender” used interchangeably. So let me clearly define what I’m talking about here.

A hard money lender is either a person or a company that is in the business of financing property deals (in other words, this is their primary business – to fund deals). They operate from a business standpoint, and their business can only be sustained if they continue to fund successful real estate transactions – as opposed to a private lender, who is looking for personal opportunities for financial growth.

Hard money lenders also finance deals based on the property itself. Private lenders, on the other hand, might finance a deal more so because of their relationship with you – the real estate investor (of course, that doesn’t mean they don’t consider the property too, but the relationship is usually the dominant determining factor).

Hopefully that’s clear as mud. To summarize:

Now, let’s get into more detail.

Hard Money Lenders

A few other characteristics of hard money lenders can be:

Hard money lenders, in general, will be more flexible with their lending guidelines than a traditional lender. They typically don’t use a “one-size-fits-all” underwriting system, and will evaluate deals on a case by case basis.

On this same note, they usually lend based on collateral, not based on your credit score/income/etc. So, if you don’t have a pristine credit history, this won’t matter as much to a hard money lender; they’re more concerned about the value of your collateral (the property itself).

Also, because they don’t follow a rigid underwriting process, they usually make quick decisions – meaning you aren’t waiting forever to find out if they’re interested in financing your property deal.

The disadvantage? The cost, obviously. Those super-high interest rates could become a nightmare for unprepared, inexperienced investors.

The bottom line: Hard money loans can be ideal for investors who fix and flip properties, because you’re not holding on to the property for an extended period of time. Once you increase the value of the home, you can quickly sell it and pay off your high-interest, short term loan – and have a good chunk of profit to walk away with.

Private Lenders

Anyone who you personally know who is willing to lend you money for a property would be considered a private lender. It could be your doctor, your former co-worker, a guy you bump into regularly at the gym, your son’s soccer coach, or your wealthy great aunt Bertha – you get the idea.

They might lend you money because they have past real estate experience and are interested in your work, or they simply have extra money and are ready to multiply it. In any case, they are using their own personal money.

One advantage of working with a private lender is that they’re the most likely to be lenient and flexible with you, should your timeline or circumstances change. A hard money lender or conventional lender will often drop you in a hot minute if you have any roadblock along the way, but a private lender will probably be more patient.

Another huge benefit is the expertise your private lender can share. Even if they don’t have past real estate experience, they are financially successful – and have probably held prominent roles in their companies (or even started their own business). The connections and knowledge they can provide you will be invaluable as you build your investing business.

The downside of private lender? Because they are investing their own, hard-earned money, they may expect to have a significant amount of control over the decisions concerning the property. Still – by outlining your expectations upfront, you can avoid any uncomfortable misunderstandings that might jeopardize the relationship with your private lender.

The bottom line: Private loans can be a great choice for a variety of investing situations – whether you’re looking to fix and flip, buy and hold for rental income, or a combination of the two.

Conventional Lenders

And now, at the opposite end of the spectrum, we have conventional lenders – such as banks and mortgage companies. These often get a bad rap with investors, but there are some situations where a loan from a conventional lender is a great choice.

One of the most significant advantages of working with a conventional lender is that they know the industry inside and out. They have all the connections you could possibly dream of: title companies, agents, appraisers, and more. Plus, local conventional lenders will know your market well, which means they could potentially help you steer clear of areas where investing might not be as profitable.

Plus, with a conventional lender, you’ll likely get a good interest rate (although they are higher for investors than for owner-occupants). If you plan to keep a property long-term, this means your rental income from tenants could far exceed your mortgage – maximizing your cash flow.

Now for the bad stuff… conventional lenders can be painstakingly slow when it comes to approving you for a mortgage. As an investor, it’s highly likely you don’t have time to waste – and the slower pace of a conventional lender could jeopardize your chance to score an awesome property deal.

They’re also not lenient – like, at all. If your credit score, income, etc. doesn’t fit their guidelines, you’re probably not getting a mortgage from a conventional lender. Another roadblock you might run into: many traditional lenders have a maximum # of loans that investors are allowed. If you own more than 10-ish properties (the exact number varies state to state), you’ll be hard-pressed to find a conventional lender who is willing to finance your next property.

The bottom line: Conventional loans probably won’t be your #1 source of financing, but they do have their merit. If you plan to hold onto a property for many years to come, a conventional loan with a low interest rate could be a good fit for you. As long as you can establish a positive cash flow, you’ll be easily able to pay off your loan and still make a solid profit.

Finding Your Finance Solution

In the end, your choice of a lender will depend on your business model, the property itself, and your long-term goals. As I mentioned before, many investors benefit from using a combination of private lenders, hard money lenders, and conventional lenders.

Just make sure you do your due diligence and never make a decision in a rush. It doesn’t matter if your lender is ABC Mortgage Corporation or great aunt Bertha – you should still ensure that the lender has a trustworthy reputation and a proven track record. Because, if you can’t rely on your source of funds, you can’t continue to run your business. It’s as simple as that.

How About You?

What has been your experience with private lenders, hard money lenders, and/or conventional lenders? Comment below to let me know the pros and cons I might have missed.