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Many of you know that during the 80’s and 90’s I was a licensed real estate agent and broker who owned a national franchise office. But most real estate agents and investors are surprised when I tell them that once I “saw the light” as a real estate investor, I surrendered my broker’s license because I no longer wanted to work for tips when I could make “real money” as an investor.

Many real estate investors ask:

Should a real estate investor work with Realtors?

Answer: NO!

There are 3 main reasons to avoid using a Realtor if you want to become a profitable real estate investor.

1. Realtors cannot get you a deal dramatically below market value. Realtors list properties near the top price range for that particular market. In addition, once a property is listed, it is available to every investor in the market, and competition for the property will drive up the price. This is not where you go looking for a good deal.
2. Realtors poison your dreams. Successful real estate investors know how to buy property significantly below market value. Most Realtors are completely ignorant of how we function as investors. Realtors are not trained or experienced in finding properties at wholesale prices. An inexperienced real estate investor could be at a disadvantage by listening to a Realtor’s advice and perspective. I can see the so-called “professional” Realtor laughing at them for trying to find wholesale deals, and then telling them they know of a “real deal” where they can get a $100,000 house for a steal…only $95,000! To the inexperienced investor, this Realtor “help” can be career-ending.
3. Investors are better at selling houses. Realtors like to base the sales price on the average price of homes in the area. By comparison, experienced real estate investors understand that if homes in the area are selling for $250,000, and they have just rehabbed a similar home, it is worth more than $250,000 because their house is much nicer than the comparable sales. Plus,most Realtors base sales prices on MLS sales that do not factor in properties sold by owner/investor. They could be missing the highest comparable sales available and cost you tens of thousands in lost profits!

The 3 reasons above illustrate why I am against real estate investors using Realtors to help them buy property… and that’s coming from a former real estate broker!

However, as with most rules, there are exceptions. Let me explain and define the times when I do think using a Realtor is the good business decision.

When should an investor use a Realtor?

1. In a SOFT real estate market. When markets are extremely soft a great Realtor can save large amounts of time combing through MLS looking for the best deals.

2. In a HOT real estate market. A credible Realtor and MLS listing can help create and manage multiple offers. A real estate investor may earn a high net profit even after paying the broker/agent commissions.

   Example: I had just completed rehabbing a house in a lower income area that base on comparable sales had a top value of $125,000. The market was hot and buyers were in a feeding frenzy. Given the upward neighborhood price movement and quantity of buyers, we listed the property at $135,000. We soon had offers coming in from $135,000 to $151,000! And this is for a house worth only $125,000!

3. The other time to use a Realtor is any time they bring you a great deal. Realtors do occasionally find or hear about incredible property deals.

I understand this article may not be well received by Realtors, but then again, I’m known for telling people what they need to hear, not what they want to hear!

If you have a Realtor or broker’s license and want to start real estate investing, be sure to check all of the state’s disclosure and licensing laws. While there are ways to use the license to your advantage, you should realize having a license can kill your marketing when you follow all of the disclosure laws (i.e. - putting “Realtor” or “agent” on an ‘I Buy Houses CASH’ ad will kill your response rate).

Happy Investing!

Author: Gerald Romine

Before I get into today’s message, let me tell you that I am a very spiritual person. Whether one believes in religion or not, we are all seeking something better in life. Your beliefs matter, not the wisdom of this message and how it can help you in your real estate business.

Many of my friends get a kick out of my blog and newsletters because of the exciting headlines, our boldly named website, www.KickAssRealEstate.com, and how that contrasts with the person they know me to be — rather quiet and preferring anonymity. But they also know I’m a businessman.

Let’s start with an ancient proverb:

The wise and moral man
Shines like a fire on a hilltop,
Making money like the bee,
Who does not hurt the flower.
-The Pali Canon (500-250 B.C.E)

In this proverb, Pali is telling of the wise and moral man who shines like a beacon and prospers in the same way as the bee with its relationship to the flower. Bees make money (honey) by working with the flower and the flower is not harmed, but helped in the exchange. Real estate is the same way. By helping people we are able to prosper.

As an example, a few years ago I purchased a house from an elderly couple. The husband was in very poor health. They had no mortgage and owned the house free and clear. The house was a rental in terrible condition with less-than-desirable tenants who wanted to prevent any sale from taking place. I dealt with and resolved every problem. To make the seller’s life easier, I even arranged for the title company to bring the paperwork and a notary to the seller’s home so the husband would not have to go through the physical ordeal of going to the title company.

The sellers knew the home was being sold below market and were happy with the sales price. Their priority was spending the time they had remaining together. I made the transaction as easy as possible for them. After I bought the house and evicted the tenant, we found extensive “new” damage to the property, including concrete-like material poured into the drain lines. Not once did I complain to the seller or even tell them what happened. I’m sure they would have corrected any damages, but I thought it was more important to not disturb them. (As it turned out, I sold the house using the Work For Equity System, http://workforequitypro.com/, and didn’t have to contend with the damage either).

Since then the seller has referred me to a friends and told them they should sell their house to me because I’m fair and hassle-free. No, I didn’t buy their friend’s house, but you can’t buy them all.

A year or two later he seller called me to discuss my buying her personal residence. Unfortunately her husband passed away wanted to move across town to be closer to family. I told her we can do whatever she wants and I could even help get her a moving truck and that she could leave behind anything in the house she no longer wants or needs.

You always hope to buy the house, but it really does not matter because like the bee, I make my money when I help the flowers. And, I’ve found it is a lot easier to have things come to you when you are the beacon then it is to chase after them. Do you understand the difference? It’s not a quick fix but a way of life and best in the long run.

Author: Gerald Romine

Alert: –>> Asset Protection Training Webinar For Real Estate Investors

Please join me on April 30, 2008, 9:00 PM EST for a very exciting live teleseminar with best-selling author and attorney William Bronchick. He is going to talk about a very important topic, which is asset protection. A lot of gurus talk about how to make money, and William Bronchick shows people how to keep it! You will learn how to protect yourself, your business, and your family from lawsuits, taxes and other financial disasters.

On the call William will cover:

• How to hide your assets from unscrupulous creditors, attorneys and government watchdogs
• How to become legally judgment-proof
• How to avoid liability for title claims
• How to save tens of thousands of dollars using little-known tax loopholes
• How to use land trusts and LLCs for ultimate protection
• Where’s the best place to incorporate your business

And much, more!

IMPORTANT: Please print this packet out and keep it near your desk for the call. Also, take this first page and TAPE IT TO YOUR MONITOR or WALL so you won’t forget to be on the call. You don’t want to miss a single minute!

I look forward to talking to you on the call.

It amazes me how many people spend countless hours finding a deal, fixing it up, and then when they go to sell the house, they become dumber than a box of rocks.

What is the highest paid profession in the world? Sales. No surprise there. If you are selling a house, what profession are you in? Sales. Now, the big question…How much sales training have you had? For most people the answer is, “Little to none.” For those that have had some training, often the training was inadequate (if you want a great course on sales and negotiation get the book by Roger Dawson, “The Secrets of Power Negotiations”). But, right now let’s learn how to make the most of face-to-face negotiations with 4 simple techniques.

Example: You own a home and want to sell it for $X. You’re meeting with a prospective buyer. Inevitably the question of price will come up and there are several things you can do to maximize your position and your ultimate gain.

4 Magic Negotiation Techniques Anyone Can Master

1. The Cringe. This is my personal favorite. The buyer has just made you an offer, now the ball is in your court. Imagine that you just took a big gulp of sour milk and it would be socially unacceptable to spit it out. Your body is repulsed by the distinct sour taste, but you have to swallow the sour milk. Your face contorts, your stomach tightens, your eyes squint and your entire body stiffens and then you swallow the pungent milk and then you make a muffled grunt…”oughhh.”Now, that’s “the cringe” and after the making the muffled grunt you remain quiet.The silence will be awkward, and the buyer will sense your displeasure with their offer. With only one grunt and non-verbal communication you’ve put yourself in a position to negotiate upward for the property. The buyer will likely volunteer a higher price if you give them time.
2. The home is probably worth more than I’m asking: After the buyer has made you an offer, you reply, “The home is probably worth more than I’m asking.” This simple sentence helps establish the value of the home and implies to the buyer that the price is already at a discount and a great deal. It’s a polite way of holding your ground and keeping the price up.
3. Blame your partner: After the buyer has made you an offer, you reply, “I don’t think there is any way my partner (wife, company, brother, dog, etc.) would accept that.” When a buyer wants a house, they are looking for reassurance that things can be worked out. By placing the decision on your partner you are in a much better negotiating position. This is a version of “good cop, bad cop.” You can further add, “I might be able to get them to consider $X, would you like me to try?”Does this technique really work? Well, have you ever been to a car dealer to buy a car? It’s no accident that the car salesman has to go to his boss with your offer. Several times he’ll come back with “I tried, but we just can’t make that work. If you could offer $X I think I could get the finance manager to approve it.” This back and forth process drives the price up and maximizes their gains. They know the game so well that they won’t let you sit with the decision maker because that would cost them money! Now you know this trick.
4. Split The Difference. Many buyers have to make an initial offer so they can feel they have negotiated. If all else fails, and you are willing, you should offer to split the difference between their bid and yours, or the asking price. Often this will be what they EXPECTED and you’ll be able to complete the sale. But, splitting the difference is the last choice. You give away profits you might be able to capture using one of the other negotiating techniques.

There is no doubt that saying a few words, picking the right strategy, or using the right expression can be worth thousands of dollars to you per deal. Imagine the cumulative effect over your lifetime? These techniques and many others are covered in my system, KickAssWholesaling, a complete system for wholesaling houses, and Real Estate Profit Pro, the ultimate system to automate homes-buying in less than 5 minutes. Check them out at www.kickassrealestate.com.

One final lesson. Did you notice that in some places I used the word “home” and in other places the word “house”? This is no accident and an example of smart selling technique. Whenever I’m buying, it’s called a “house” and when selling, it’s always a “home.” Why? Do you live in a “house” or “home”? Which has a stronger emotion attached to it?

So when I’m buying it’s a “house,” because I don’t want the seller hanging on their “home.” I want them to disassociate with the building and calling it a “house” best serves that purpose. When selling, I want the buyer to fall in love with their new “home,” a place where beautiful memories are made. And, in this case a “house” just doesn’t cut it.

Author: Gerald Romine

For as long as I can remember I’ve wanted to go skydiving. Why? For the same reason people climb mountains… because the opportunity is there! The thrill of freefalling from 12,000 feet at 120 MPH and then floating down to earth just has an undeniable appeal for the adventurer in me.

Today would be the day my skydiving dream came true.

When we arrived at the Skydiving Hanger in Coolidge, Arizona, there was an old Cessna 182 (a tiny plane designed to seat 4 people at the most) sitting in front of the hanger. The engine cover was off and it was undergoing some kind of mechanical repair. Obviously, that wouldn’t (couldn’t!) be our plane. We wondered aloud what type of plane we’d be jumping from today.

Our wonderful experience was scheduled for 9:00 AM, and, from what we could tell, the jump crew was in a state of recovery from a fun night before. It must have been a blast — the pilot did not arrive until 11:00 AM, and the state of the jumpmaster’s eyes told us he too had a long and interesting night.

Before we could jump, we had to watch a skydiving video. It details all the disclaimers that have to be signed. The bottom line of the disclaimers: there could be a malfunction with the plane, parachute, instructor, or act of God and you could die.

I remarked to Denny, an attorney, that their insurance must be very expensive. He nodded in agreement. And then I noticed on the title of the disclaimer that the company is “uninsured.” Huh. Interesting. Maybe I’m crazy, but none if this mattered. Why? Because if you go skydiving you’re nuts if you don’t realize that death is a possibility (even though statistics tell us driving a car is far more dangerous).

While waiting for the pilot to arrive, we filled the time. We talked about real estate investing and then Denny and I found a bench press and did a quick chest workout. Finally the pilot arrived and it was time for the first jump of the day.

I quickly volunteered to jump first. When the jumpmaster discovered I was an “Adrenaline Junkie” he asked me if I wanted to “Drive the Lamborghini” today. Sounded like fun to me! Fast cars are great! I quickly agreed without really understanding what I was agreeing to. Turns out the “Lamborghini” is a smaller, more maneuverable parachute. You come in at a (much) higher speed because there is less drag created by a small parachute.

Most people wear a jumpsuit, but it was over 100 degrees and I chose to wear my street clothes. Soon it was time to board the skydiving plane. Guess what? It was the little Cessna 182 that was now back together. In fact, much of the passenger area of the plane was now literally held together by duck tape! Great confidence-builder!

I jumped into the plane along with the pilot, cameraman, and jump instructor. After a 15-minute climb, we were ready to jump. The surrounding air temperature was a comfortable 60 degrees. The time had come. With a few butterflies in my stomach, I bravely stuck my feet out the door and onto a small metal step. A quick count of, “1-2-3,” and the jumpmaster and I were in a freefall 12,000 feet from the earth below.

We fell forward, positioned ourselves with bellies toward the ground, and were soon traveling downward at 120 MPH. Supposedly the freefall lasts about 50 seconds, but it goes by in the blink of an eye. Finally, the chute opened and I was given the steering controls to the Lamborghini-style parachute. I steered for a few hard turns left, right, and then made a pretty tight corkscrew. As the ride neared the end the jumpmaster took the controls for the landing.

Landings can be dangerous if you don’t slide correctly. You could easily break a leg or ankle. It is tricky to coordinate if you’re coming down at a high rate of speed and you need to quickly lift your legs up, then set your feet down to slide to a stop. Our approach to the ground was fast, and luckily, our landing smooth.

My first skydiving ride took only about five minutes but is an experience I’ll always remember!

So what did I think of my experience? Well, it was not what I expected. I had been looking for an adrenaline rush and instead had a very peaceful experience. An experience I enjoyed immensely and will do again and again. However, I do think I’ll get that adrenaline rush when I finally make a solo jump and have total control and responsibility for the entire skydiving experience.

But really, my biggest and most rewarding triumph of the day was finally making one of my long-held dreams come true.

I’ve had this dream for years and it was finally realized on a random Thursday when I simply decided to take action and make it happen. What did this dream cost? A grand total of $237, with $148 for the skydiving and $89 for the pictures. It’s hard to believe that I waited years before making a $237 dream come true. Lesson: Take action today to make your dreams come true.

I shared this exhilarating skydiving experience with my friends Denny and Ryu. They have my admiration because they came for the experience of venturing outside their comfort zone. (Additionally, Denny is truly terrified of small planes). Ryu had a great skydiving experience and his landing was perfect. He landed like a butterfly, or as Denny put it, “more like a princess.” Denny provided the real entertainment of the day because during his super-fast landing he “tore it up” and left a rut in his wake!

But What Does Skydiving Have to Do With Real Estate?

Everything, if you let it. Think of the possibilities. We all went skydiving and spent the extra $89 to get pictures and a DVD that we can use in our future marketing. With these pictures I’ll be able to put together an outstanding letter campaign that will generate seller leads.

Five Steps to a Successful Marketing Letter

1. Picture - Normally at the top left and designed to get the reader’s attention. Crazy non-standard pictures are great. My skydiving picture certainly qualifies!
2. Headline - The headline is critical to your letter. If your headline does not suck them into your letter it will likely be thrown away.
3. Problem - State or define a problem for customer. For example, their need to sell their house.
4. Agitate - Now describe the problem in detail to get the customer worked up and mad about their problem.
5. Solve - You solve their problem! The solution is your product or services.

Let’s do some brainstorming. Here’s a few headlines off the top of my head that could go along with the skydiving picture in a marketing letter:

For foreclosures:

• Doing nothing about your foreclosure is like skydiving without a parachute! Let me show you how to…
• Warning: anybody that will jump out of a perfectly good airplane is the type of person you should have work with idiotic banks to stop your foreclosure.
• Are you in a financial freefall? Do you need someone with a different approach?
• Are you in a financial freefall? Tell me when to pull the chute!
• Stop foreclosures like a skydiver without a parachute!
• I’ll jump all over your foreclosure!
• I’ll be on your bank like a skydiver without a chute!
• Warning: sometimes situations call for drastic approaches. I’m coming in to stop a foreclosure.

Follow up foreclosure letter:

• I’m looking for you, but it ain’t easy. Will you call me…

For houses:

• Yes, I’m crazy & I want to buy your house!
• I noticed your house and want to make you an offer!
• I’m looking for houses to buy!

You get the idea. Your body copy under the headline and picture builds on your headline. Suddenly you have a story the seller will remember and will actually read. Isn’t this more exciting than a marketing letter or ad that simply says, “I Buy Houses?”

Along with my skydiving-themed letter I’ll create a 3-step mailing campaign and I’ll bet prospects will remember my letters and know I buy houses. That’s marketing. Also in my letter I can introduce other themes: my Marine Corps background, systematic approach to problems, never take no for an answer, no man left behind, and more.

No matter what you want to achieve in your life, it starts with action. Making progress and moving towards your objective happens only when you make up your mind that you are going to do it come hell or high water.

Author: Gerald Romine

Many new investors are looking for a business partner when what they really want is a friend… that is, someone to talk to. And, partnering with the wrong person could be a monumental mistake for your business.

The first question to ask yourself is, “Why do you want a partner?” Here are two valid reasons:

1. To overcome our shortcomings. This includes:
   

   Knowledge Money Skills

2. To divide the workload or risk.Unfortunately, most people ask somebody they “like” to go into partnership. On the surface it seems like a good idea, but is it? What does the other person bring to the table? Do they have something you don’t?

If all candidates possess the same or very similar skills (plus a smile), then you probably don’t need them, and they don’t need you. But, if you have the knowledge and time, and they have the money, then that’s another story.

Before you partner, make a list of each person’s strengths and weaknesses to ensure you complement each other. Two people that like each other and have the same skill sets are actually likely to have problems working together. Why? Because both people will want to do the same things, avoid the same tasks, and think they could do the other person’s job better. But, two people with different skills will work together well because both people will be working on their strengths and their partner covers their weakness.

When you look at most people’s real motivation for a partnership, it is often about money, or lack of it. In these cases, you would be much better off to find private financing on your own versus forming a partnership with someone who is broke.

In the Ultimate Real Estate Investing System we talk about obtaining private money and have a simple system for getting it. You might want to review private money options before getting into a partnership you’ll regret. If you do get into a partnership make sure you have a written agreement!

Author: Gerald Romine

Back in 1992 when I started real estate full time, I was flying by the seat of my pants. I had read a few books and thought I understood real estate investing, but looking back I realize much of my success was based on blind luck.
Now, I understand the importance of asking the right questions. I will share one of the most important questions you can ask any seller. It’s great because it cuts through all the BS and forces them to respond. Please, use this question every time you are talking with a seller.

“If I were to pay you all cash and close quickly, what is the least you would accept?”

When talking with a seller it’s important to find out what the seller wants and after building some rapport with them, this is THE Question to ask.

After asking the question, your silence is critical to force the potential seller to answer. Some sellers know their bottom line, and quickly share it, while others may be completely shocked at your question and/or may not know the answer themselves.

If you don’t ask the seller what they want, how could you possibly know what to give them?

Author: Gerald Romine

When is the last time you looked at your real estate loans to see if they are in times with the market? Are you paying 8%? Do you have ARMS with low interest rates that could be adjusting up? Do you have 80/20 seconds on rentals or your own house that is at 10%? Many people do and NOW is the time to do something about it.

Interest rates can still be obtained below 6% and if you have higher rate loans now is the time to refinance into lower rate fixed loans!

Today’s Tip: Look at your current loans and refinance if you can turn and ARM into a low rate fixed or if you can significantly lower your fixed interest rate.

Looking For A New Real Estate Loan Loan?

Then now is the time to check out the Zillow Mortgage Marketplace. In a nutshell Zillow has turned the loan application process upside down and it is to your benefit. Simply go online and fill out a completely 100% anonymous SHORT application that does not require your name, SSN, or phone number and lenders compete for your business.

Talk about powerful. This means that our loan is being bid on by lenders and we have the power to choose the winning bid. As a consumer you have to love that and with these interest rates you may be able to increase your cash flow several hundred dollars per month just my restructuring your debt.

Author: Gerald Romine

Last night I went down to Buffalo Wild Wings to watch the UFC fights. I’m a big fan of mixed martial arts and was hoping George St. Pierre would knock out the cocky Matt Serra.

Then out of th blue a friend of mine who’s a real mover and shaker in the Phoenix real estate market joins our table. In no time we’re talking real estate and here’s the news I want to share.

Cody is killing it in this so called down market. Right now he’s got 60 short sales going at one time! That’s a crazy number to be working and the reason Cody can pull it off is because he understands the market, the lenders, and how to work the numbers.

Cody’s buying properties at 50 cents on the dollar and recently took a HEALTHY payday to allow somebody to take a property over subject to.

The point I want everyone to see is the real estate market is a phenomenal opportunity for real estate investors that take action. The market is not good or bad…. it’s what you do with the opportunity!

And speaking of opportunities in the last matchup St. Pierre wasted his and was KO’d by Matt Serra. St. Peirre took a beating and learned a lesson because on this night he turned the tables dominating
Serra until the referee stopped the fight in the second round before Serra’s ribs were broken from some brutal knees!

George St. Pierre took advantage of his opportunity and took home the championship and a very nice payday. A few months back he was knocked out!

Many real estate investors are in the same boat. Awhile back they may have made mistakes and been “knocked out” by the real estate market. But today is a new day and hopefully you are taking advantage of your opportunity. The real estate market is right. The time is now. The question is if you are going to fight?

Author: Gerald Romine

It’s here! The time has finally come to sell your house. You want to do everything you can to maximize your profit and sell as quickly as possible. Here are a few ideas to help you find a buyer and close the sale for the highest price possible.

1. Is your house ready to sell? Don’t even think about putting your house on the market if there are still little things that need to be done. What seems “little” to you could be a deal-killer to your prospective buyer. One of the most important things you can do is prepare the outside. Most home shoppers are going to drive by and if they don’t like what they see on the outside, you’ll never get them to see the inside of the house.
   
2. Stage the inside of the house. Have you ever looked at a model home in a new subdivision and noticed the home had a cardboard TV, silk plants, towels, candles, shower curtains, potpourri, etc? The only reason they prepare or “stage” a model home this way is because it helps them sell houses. You need to “stage” your house too. If you are creative and resourceful you can do this for less than $500. A nice plus is that you get to keep it all anyway.
3. Magic in pricing. Modeling your pricing strategy like the auto industry is smart business. While the real difference between a $9,995 car and $10,000 car may only be $5, the difference in the mind of the consumer is HUGE. You’ll never see a car dealer make this mistake. If you’re selling a house for $243,000 that’s not much of a difference than selling a house for $249,995.
4. Easy to show. People buy houses based on emotion. If your house is not easy to gain access to, your buyer is likely to fall in love with another house that they can visit quickly and easily. Whenever possible, have a lockbox on the house and make it easy for the buyer to get inside and see your beautiful home.
5. Attract the buyer with a flyer. You need two flyers, Make sure the buyer can pick up a flyer about your house when they walk through it or drive by. Imagine they are looking at 15 houses in one day then later that night they are going to make a decision to buy a house. After looking at 15 houses, the details become foggy, but if they have your flyer with pictures and details about the house it will jar their memory and increase the likelihood of a sale. Your second flyer is a financing flyer. It has great terms listed and details how they can own the house for “only $1299 per month.” The goal of a financing flyer is to sell them on the concept of a low monthly payment and make them forget about the price.

Follow these tips and you’ll be sure to sell your house for top dollar in the shortest time possible.

Author: Gerald Romine

Real estate investing is changing in the United States and throughout the world. A few excerpts from a recent USA Today article:

“10 years ago, eBay changed the world, sort of by accident.”

What’s next?

Where does eBay go from here? (Meg) Whitman shifts into her presentation persona. First, she says, eBay will keep expanding worldwide. Today, in about 15% of transactions, the buyer and seller are in different countries. “I’d be surprised if that’s not 50% to 60% 10 years from now,” Whitman says.

“And think about what that means for eBay and the world - about connecting the Third World with the industrialized world.”

EBay is one massive online garage sale and the news that in about 15% of the transactions buyers and sellers are in different countries is unbelievable. Simply amazing!

So what does this have to do with real estate? EVERYTHING, and that’s the point. Right now the world and how we do business is radically changing before our very eyes. Yet most people do not see the changes. They choose to only see the things directly in front of them.

While the U.S. dollar is losing value, the Euro and other currencies are becoming stronger. That means that U.S. real estate becomes an attractive bargain for European citizens. Combine that with the statistic that 15% of eBay buyers and sellers are in different countries and you might see a different future for American real estate.

We have seen this before. Remember when the Japanese yen was strong, and the “Japanese were buying everything” because U.S. Investments were seen as a steal? We’re likely to see an influx of foreign investors into American real estate and it will start with larger commercial properties and trickle down into residential. Actually, we are seeing that this movement is already in full swing!

Another benefit of a weak U.S. dollar is the increase in tourism. When the currency exchange favors foreigners, they are able to buy goods and services at a discount and this encourages travel and spending. For those in real estate, this translates to increased property values in tourist hotspots. For example, renting flats (condos used as vacation rentals) has long been popular in many parts of Europe and the world and could become common in many popular U.S. tourist locations.

Although I keep my eye on the big picture, I actually run my real estate business much like a fisherman approaches fishing:

“The ocean has a high tide and low tide, but all I really care about is whether the fish are biting.”

-Gerald Romine

The same thought translated to real estate means I take what the market gives me. Keep your investing simple and the profits will follow.

Author: Gerald Romine

Yep, if you’re wholesaling houses it has something in common with prostitution. Further, I’d like to show you how to benefit from this comparison. Whew, I feel the controversy coming, so if you’re offended, stop reading now. Otherwise, no whining and complaining!

Great, you’re still with me and I’m about to share a valuable lesson that will make you a lot of money wholesaling houses.

Let’s assume you’ve put a house under contract and you’ve got prospective buyers calling you. Inevitably you’ll get a few who want to try and negotiate your wholesaling fee. It doesn’t matter how great your deal is, they will want to know how much you’re making and try to cut your fee. You’ll recognize them right away because they try to dictate the terms of your deal and are generally a pain in the butt before they have even seen the house.

So, how do you hold your ground and get your price without cutting your fee? There are several ways. This is one of the most direct. I’d recommend using this technique on the crass buyers that annoy you from the start. It works because this gives them only two choices; they are either in or out. Here’s what you say,

“Look, I’m wholesaling a house and it’s a lot like prostitution. I’m more than willing to lift my dress, but you have to pay the fee. Either you want the house or you don’t.”

Now, I know this is an “off-color” example, but I use it to make a strong point. I know you’ll remember this much better than if I told you to hold your guns and get your price. Same message, but this example is so much more memorable!

When wholesaling your houses as a real estate investor, always remember to leave enough profit in it for the buyer to make their money too! Also, you don’t want to get in the habit of discounting your price to the wholesale buyer because it will set a precedence, and once set, that buyer will expect you to discount the price on every deal. A very dangerous standard to set. Stay firm.

Author: Gerald Romine

Buying properties in pre-foreclosure can be the most profitable segment of a real estate entrepreneur’s business! Unfortunately, it is also the most misunderstood. Hopefully, this article will shed some much-needed light on pre-foreclosures and how and why you should become involved.

How does the foreclosure process work? When a person buys a house, they normally have a small down payment and obtain a loan from a bank or mortgage broker for the balance of the purchase price. This loan is secured by the property in the form of a mortgage or deed of trust. If the lender does not receive their payments, they may file foreclosure to recover their debt.

The foreclosure process allows the lender to foreclose on any liens or encumbrances in order to take the property and become the legal owner of record. This allows the lender to resell the property and recover the original loan amount, plus expenses associated with the foreclosure. The foreclosure process can be lengthy depending on the state, but up until the public auction, the homeowner owns the property and has several options available to avoid it.

It’s important to realize when talking about pre-foreclosures, we are talking about acquiring the property any time before the public auction sale. The sooner you contact a homeowner in pre-foreclosure, the more time you have to structure a deal and purchase the property yourself.

A common misconception is that people buying homes in foreclosure are taking advantage of another person’s misfortune. This is simply not true. The lender made a loan in good faith and the borrower agreed to repay the loan. If the borrower does not make the required payments, they have broken the agreement and the lender must protect their financial interests. They may foreclose on the property as agreed to by all parties when the loan was originally made. Any time there is a foreclosure, the borrower has broken the terms of the agreement, and your intervention solves a problem the homeowner created.

When facing foreclosure, many homeowners bury their heads in the sand, hoping it will just go away. No action by the owner ensures losing the house in foreclosure, a severely damaged credit profile, and a loss of all equity in the home. When dealing with an owner in pre-foreclosure it is important to explain the benefits to them of avoiding foreclosure:

1. Protecting their credit profile. A person in foreclosure is often overwhelmed with battling life-changing events and has multiple financial challenges. By working with an investor, it may be possible to stop the foreclosure and start rebuilding their credit profile or prevent their credit profile from getting worse. In today’s credit-conscious society, a damaged credit rating negatively affects everything from buying a car to getting property insurance.
2. Protecting their equity. When a home is foreclosed, all of the equity is lost. That includes any down payments and other money contributed to principal. By working with an investor, it may be possible to recover some of the equity and prevent the foreclosure.
3. Rebuilding their life. The pressure and strain of a foreclosure affects all areas of a person’s life. Under such pressure people often become depressed, are unkind to loved ones, or make poor personal and business decisions. Stopping the foreclosure allows a person to remove an albatross from their neck and start getting their life back on track.

For the real estate investor there are many ways to financially profit. It can also be a great feeling to help people move on with their lives. If not for investors, lenders would foreclose on most properties and the homeowners would lose all equity and have a foreclosure on their records. Investors provide the vital role of helping homeowners salvage some equity, can often help the homeowner’s credit, and help people start rebuilding their lives. Unfortunately, many homeowners will not see or understand the vital role investors have, but it is not uncommon to receive thank-you letters after stopping foreclosures.

In order for an investor to be involved, there must be a profit, or there is no reason to be involved in the first place. When working with sellers, we let them know up front we expect to make a profit, and for us to make a profit we need to be able to stop the foreclosure. There is no charge for our services and the only way we make a profit is if we can stop the foreclosure. By being direct, the seller understands our incentive and motivation and this helps establish trust and rapport. When dealing with pre-foreclosures there are 3 main ways to profit:

1. Purchase the property from seller at a discount. Many times, a seller is willing to sell the property well below market value because they recognize it is better to cut their losses and move on instead of hanging on and going down with the ship. If the seller has enough equity, we can structure a purchase so they receive cash at closing, the balance of their equity in payments, or a balloon payment due at a later date.

   This can be a good option for sellers with enough equity. Unfortunately, in today’s society the majority of sellers owe close to the value of the property and when an investor takes into account acquisition costs, sales costs, holding costs, and repairs there is not enough equity in the property for an investor to make a profit.

2. Take over the loan and make up back payments. When a seller is in foreclosure it is possible to buy the house from the seller, take over the loan, and make up the back payments. The advantages for the seller are that the foreclosure is stopped and the property is sold to an investor who will make the payments. A drawback for the seller is that the loan remains in their name until paid off by the investor or a third party at a later date.

   The process of buying a home and taking over a loan in another person’s name is commonly referred to as buying a property “subject to.” In such a transaction, the title of the property transfers to the new owner, but the loan remains in the seller’s name. Lending institutions frown on buying properties “subject to” and include a due-on-sale clause stating the lender can call the loan due upon a transfer of title. In practice, lenders rarely enforce a due-on-sale clause and are more interested in receiving timely payments then enforcing the loan-due clause.

   Selling “subject to” is not without risks to the seller since the loan remains in their name and if payments are not made, their credit can be affected at a later date.

   The benefits for the investor are that they can acquire a property with little money out-of-pocket, no loan costs or appraisal fees, and their credit is not affected or put at risk by the loan they are taking “subject to.” This is a powerful investing strategy unknown to most investors. It is one that should be used by ethical individuals. Like many powerful tools, it has the ability to be used for good or bad. When purchasing “subject to” properties there are documents that must be signed for the protection and understanding of all involved.

3. Discount the loan(s) from the lenders. Commonly referred to as a “short sale,” this is nothing more than negotiating with the lenders to accept an amount less than they are currently owed. Why would lenders discount their loans? There are a couple of reasons:

   a) Lenders do not want to own properties. If a borrower does not pay the loan, a lender’s recourse is to foreclose on the property. If the property is not bought at public auction, the lender becomes the new owner of the property. Lenders are in the business of loaning money, not owning homes. When a loan is not being paid, it is considered a non-performing asset and affects their lending ratios. Also, as owner of the property, the bank becomes responsible for property taxes, insurance, association fees, Realtor commissions, and closing costs. Things they do not want to deal with managing.

   b) “Cash now” is better than “cash later.” Many times a bank would prefer the certainty of accepting a discount instead of unknown holding costs, liability, and unknown sales price at a future date. The bank understands that a discounted offer today could actually net them more than a higher potential future offer when considering the closing costs, Realtor fees, and lost opportunities of lending money based on their ratios.

Whether buying a property “subject to” or attempting a short sale, you want to complete many of the same documents. Since short sales can be a lot of work before we begin, we hold title to the property “subject to” before negotiating with the lender. Experience has taught us the painful lesson of working months on a project and having everything worked out with the lenders, only to have a previously cooperative seller change their mind and refuse to complete the transaction. Trust our experience on this.

The following documents are necessary:

• Standard Purchase and Sales Agreement & Escrow Instructions:
  This document details the terms of the sale.
• Authorization to Release Information:
  This document allows us to contact the bank, discuss the property and the loan, and work out payment/payoff arrangements.
• Letter of Agreement and Addendum:
  This document clarifies that we will do our best to stop the foreclosure, but cannot and do not make any guarantees. We will not make promises we are unable keep.
• Warranty Deed to Trustee:
  This document conveys ownership of the property. Must be signed before a notary.
• Agreement and Declaration of Trust:
  This document creates the land trust. A land trust is nothing more than an entity we use to title the property and keep our name off public records.
• Notification Letter That Trustee is Making Payments:
  This letter is used when taking property “subject to” and notifies the lender that payments will be coming from a trustee.
• Escrow Letter:
  This letter instructs the lender to apply to funds in any escrow account to the loan balance when the loan is paid in full. There is no guarantee the lender will comply with the instructions and they may send the escrow proceeds to the original borrower.
• Special Power of Attorney:
  Applies only to the property and is used to handle any situations that may arise. Must be signed before a notary.
• Residential Real Estate Disclosure:
  Discloses any defects in the property and prevents parties from saying, “I did not know about that defect.” Complies with state law.
• Hardship Letter:
  When dealing with foreclosures, the lender normally requires a letter from the borrower explaining their hardship and why they are unable to make the payments.
• Financial Statement:
  Before discounting a loan and taking a known loss, the lenders will want to review the original borrower’s financial statement and make sure the borrower does not have the ability to repay the debt now or in the foreseeable future.

When preparing a short sale, lenders require a short sale package before they will consider accepting a discount. We recommend you provide the following documents:

• Cover Letter:
  A letter requesting a short sale and why the lender should consider your offer.
• Authorization to Release Information
• Standard Real Estate Purchase and Sale Agreement
• Hardship Letter from Borrower
• Financial Statement From Borrower
• Proposed Closing Statement (HUD1):
  All lenders want to see a HUD1 so they know their bottom line and to ensure the seller is not receiving any compensation.
• Opinion of Value:
  We recommend you provide the lowest comparable sales in the area.
• Estimate of Repairs:
  Most properties need repairs, and if you expect the lender to discount, you need to detail the necessary repairs.
• Notice of Trustee’s Sale:
  The actual foreclosure notice should be included. This subtly lets the lender know you understand the foreclosure process.
• Color Photos:
  Supply the lender with photos of all problems on the property. This helps the lender justify accepting a lower price for the property.

Short sales provide a great opportunity for creating equity and can be done without risking your cash and without using your credit.

By negotiating discounts with the lender, you can create a situation where the property can be purchased well below market value. Then other investors will purchase this opportunity from you and close the transaction with cash!

Everyone wins: the seller has the foreclosure stopped and may receive some of their equity, the lender receives a negotiated amount of cash at closing, the investor that purchases the property is able to buy at a below-market price, and you receive a well-deserved profit for your negotiating skills and ability to put the transaction together. And of course, you can always buy the property yourself.

Author: Gerald Romine

A Deed in lieu of foreclosure is a deed instrument in which a mortgagor (i.e., the borrower) conveys all interest in a real property to the mortgagee (i.e., the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.

The deed in lieu of foreclosure offers several advantages to the lender but is a bad deal for the borrower. Advantages to a lender include a reduction in the time and cost of a repossession, and additional advantages if the borrower subsequently files for bankruptcy.

The principal advantage to the borrower is that it immediately releases him/her from most or all of the personal indebtedness associated with the defaulted loan. However, a deed in lieu of foreclosure is reported to the borrowers credit and has the same effect as a foreclosure. The simple translation is with a deed in lieu of foreclosure the lender gets the property back saving the time and expense of a foreclosure and the borrower’s credit is marked for 7 years with the equivalency of a foreclosure.

In order to be considered a deed in lieu of foreclosure, the indebtedness must be secured by the real estate being transferred. Both sides must enter into the transaction voluntarily and in good faith. The settlement agreement must have total consideration that is at least equal to the fair market value of the property being conveyed. Generally, the lender will not proceed with a deed in lieu of foreclosure if the current fair market value of the property exceeds the outstanding indebtedness of the borrower.

Because of the requirement that the instrument be voluntary, lenders will often not act upon a deed in lieu of foreclosure unless they receive a written offer of such a conveyance from the borrower that specifically states that the offer to enter into negotiations is being made voluntarily. This will enact the parol evidence rule and protect the lender from a possible subsequent claim that the lender acted in bad faith or pressured the borrower into the settlement. Both sides may then proceed with settlement negotiations.

Neither the borrower nor the lender is obliged to proceed with the deed in lieu of foreclosure until a final agreement is reached.

Summary: A deed in lieu of foreclosure is a good deal for the lender but the borrower is left with a foreclosure/foreclosure equivalent on their credit file. A deed in lieu of foreclosure offers no tangible benefit to the borrower.The best alternatives are a short sale or Arizona homeowners may be able to just walk away.

Author: Gerald Romine

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When doing a short sale the debtor may receive a form 1099-C for the amount of the lender’s losses. This is considered loan forgiveness in the eyes of the IRS and the lender may issue a form 1099-C.

If the debtor has other assets such as savings and is not insolvent, the debtor may end up being responsible to pay ordinary taxes on the amount of the 1099-C.

If the debtor settles a debt with a creditor for less than the full amount owed, the debtor may be required to report the forgiven debt as regular income, with certain exceptions. The forgiven debts include money owed after foreclosure or property repossession or credit accounts are not paid. Exceptions noted below.

If a lender forgives or writes off $600 or more of a debt’s principal (the amount not including interest or fees) the lender must send the debtor and IRS a Form 1099-C at the end of the year. When the debtor files tax returns for the tax year in which the debt was written off, the IRS requires that the amount is reported as income.

Warning: The debtor may not receive this form from the creditor even though the creditor submitted the form to the IRS. If the creditor does list the income on their tax return and the IRS has the information of the transaction on file, the debtor could get a tax bill or, worse, an audit notice.

There are several exceptions stated in the Internal Revenue Code. For example, you do not have to report the income on your tax return if the write off of the debt is intended as a gift, you discharge the debt in bankruptcy, or you were insolvent before the creditor agreed to settle or write off the debt. Always encourage the debtor to consult qualified tax and legal counsel to see if these circumstances apply.

It is important to realize the tax implication is only on the amount of the forgiven debt.

Example: The lender is owed $150,000 and agrees to accept a $100,000 short sale. The amount of forgiven debt is $50,000 and the most the lender could report on a 1099. Assuming the debtor was in a 15% tax bracket the tax consequences would be $7,500.

By comparison if the property was sold at public auction and brings $100,000 the lender could seek a deficiency judgment against the mortgagor to recover the $50,000 shortage, plus foreclosure expenses. The short sale is the much better alternative.

Note: Arizona Residents May have a better option. Click Here For Details.

Author: Gerald Romine

A deficiency judgment is a judgment lien against a debtor, defendant or borrower whose foreclosure sale did not produce sufficient funds to pay the mortgage in full. This option may or may not be available to the lender, depending on whether they have made a recourse or non recourse loan.

The fuller, statutory definition as defined by New York is: “the whole residue, or so much thereof as the court may determine to be just and equitable, of the debt remaining unsatisfied, after a sale of the mortgaged property and the application of the proceeds, pursuant to the directions contained in such judgment, the amount thereof to be determined by the court as herein provided.

The plaintiff’s attorney (in other words, the bank’s lawyer) must make a motion to receive such a deficiency judgment. Otherwise, the amount gained from the sale shall be deemed the full amount owed, and the plaintiff has no right to collect the additional debt. However, if the parties (mortgagor and mortgagee) have already agreed in their mortgage or promissory note, then the debtor could be liable for the full amount.

A debtor who has a deficiency judgment should see an attorney for possible remedies, including bankruptcy, an exemption from creditors,an appeal, or a motion. As with all legal research sources on-line, Internet users should take caution before applying such advice to your own case, and perhaps should consult an attorney.

Example: Upon Default by the Mortgagor a lender Forecloses on the mortgage. The unpaid balance of the loan is $102,000. The property is sold at public Auction and brings $80,000. The lender then seeks a deficiency judgment against the mortgagor to recover the $22,000 shortage, plus foreclosure expenses.

Deficiency States

Legislation enacted during the Depression still restricts the availability of deficiency judgments in several states. In some jurisdictions, deficiency judgments are prescribed in certain situations, while in other states, they are limited to the amount by which the debt exceeds the fair market value of the property. Waiver, the intentional relinquishment of a known right, of the benefits conferred by anti deficiency legislation contravenes public policy and is ineffective.

In non-deficiency states like Arizona a lender is unable to pursue any type of a deficiency judgment. Concerning foreclosures non-deficiency states are advantageous to owners in foreclosure because the lender is unable to pursue the deficiency judgment. (If you live in Arizona and want to walk away from an upside down house visit www.overforeclosure.com.)

The good news is many lenders do not pursue deficiency judgments because someone that has lost a house to foreclosure is a poor candidate for collections on a deficiency judgment.

For more information on foreclosures and how to complete short sales visit www.kickassshortsales.com.

Author: Gerald Romine

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The last two weeks have been hectic. First I attended the “Underground Internet” event to learn the latest cutting edge tactics being employed on the web. While there I was so impressed I joined an elite Mastermind Group that has some of the sharpest minds alive that are using the internet in amazing ways.

Last week I was in Nashville at a huge event on marketing. Speakers included Gene Simmons, George Ross from Donald Trump’s Apprentice, Nido Qubein, Dan Kennedy, and the sexy Kristi Frank.

Gene Simmons is still blowing my mind. From coming to the country as an immigrant that does not speak English to becoming the lead singer of the rock band KISS is almost nothing compared to what he has done in business. Gene does not look at KISS as a rock band at all… he sees KISS as a BILLION DOLLAR Rock Brand. Huge Difference.

Gene went on to share his viewpoints on immigration, marriage, business and being a “powerfully attractive man.” (You had to be there to get that one). What came through the most was Gene Simmons sincerity and that he not only understood business but the value of people and delivering more than is expected.

George Ross was insightful and entertaining. His background as an attorney and real estate negotiator are amazing. He’s negotiated over 700 BIG deals and he made the joke about how all the deals he’s done mean nothing… but fire one nice guy on Trump’s show and all of a sudden your famous. There’s a marketing lesson for real estate investors!

And then there is the always sexy and delightful Kristi Frank from Donald Trump’s Apprentice. Kristi may have been fired in episode 5 of the 2004 smash hit Apprentice but she has done a remarkable job of turning 5 Apprentice appearances into celebrity status with speaking appearances, endorsements, and a soon to be released business product for women. Of all the people to pass through the Apprentice she’s taken that small opportunity to turn it into a lasting career.

To be continued…

Author: Gerald Romine

Marketing is everything! Right now I’m in Nashville Tennessee attending a marketing super conference with some of the brightest minds in marketing. The key note speaker was KISS Superstar Gene Simmons! Gene is known as the Wildman with the famous long tongue who has been rocking out worldwide for over 30 years!

Gene is an international marketing machine fluent in many languages and I took a huge amount of notes. But, the single most important thing I took from Gene’s keynote talk was “I have a virtual office. There are no buildings. Those days are gone!”

The next thing that happened is Gene Simmons called a guy out of the audience and had him read Gene’s busy schedule. Then Gene said that’s his office, no staff, no secretary, just Gene. An important lesson!

Last week I listened to Tony Hsieh, the man behind Zappos.com, who has built a massive online shoe business and a whole lot more. Yes, shoes! Now Zappos is working on being a billion dollar online company. Who would have thought a shoe company could do such things without a bricks and mortar storefront! Yes, the days of bricks and mortar are gone!

For real estate investors this is great news. As people get used to conducting business online it becomes easier and easier for homeowners to deal with virtual real estate investors. Before the modus operandi was a buyer invested time and energy to look at houses, make offers, and negotiate deals. With virtual real estate investing investors can make offers based on the financial numbers then only invest time to look at the house(or have somebody else look at it) if the offer is accepted… or if they are a virtual wholesaler NEVER look at the house!

Life just keeps getting better and better! You have to love the opportunities brought to us by this country and technology!

Author: Gerald Romine

PS - You would have been shocked if you heard everything Gene Simmons had to say about business. This guy really gets it. Tomorrow it’s George Ross from Donald Trump’s “The Apprentice”. Can’t wait.

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