Think and Grow Rich
Think and Grow Rich
The Science of Getting Rich
The Science of Getting Rich

Matt Napier's Real Estate Warning to InvestorsSince the beginning of the Great Recession, there has been a debate on cash flow between real estate investors, many of whom learned some tough lessons when the Recession began (including myself). Specifically, the debate is: What kind of deals should you focus on and how is your money best used!? Should you focus on creating equity or focus on creating solid income and cash flow?

You may be saying that they don’t have to be mutually exclusive. While that is correct, many investors tend to focus on either building equity OR cash flow. To me, the decision of what kind of deals to focus on is made easy if you boil it down to one thing- how much money do you need right now to live the lifestyle that you are already living (provided it’s already a decent standard of living) and do you already have enough cash flow to live off of on a monthly basis? If you do not have enough to live off of, do NOT focus your efforts too heavily on equity build up. Instead, focus on cash flow (quick flips, wholesaling, and only rentals that will generate strong cash flow); investments that will put cash in your pockets within 1-9 months.

One of my mentors when I got into real estate investing nearly a decade ago, Del Hinds, who headed the SCREIA, made a point of continually telling me not to focus too much on gaining long-term equity, until I had enough to live on today. His famous words still haunt me- YOU CAN’T EAT EQUITY! I also had another mentor that swore to me, you better have a sure fire exit plan and back up strategy if it doesn’t work. I will explain that more in a minute, but for now, let’s talk about Del’s words. At the time, I thought that he just had a different approach to investing, but he was 100% correct. Although I’d built up a significant pile of equity in properties, that was slowly being squeezed out each month when the Recession hit and since I didn’t focus on strong cash flow from the beginning, the $100 to $150 I was making per property on gross rents (before expenses) barely covered basic maintenance and vacancies, meaning my true profit per month on rentals was close to zero.

This serves as a warning. If the economy goes into another recession (which is certainly possible given the lack of fundamental improvement in the economy and massive spending by our government) and you do not have more than enough cash flow to live on already and are focusing too heavily on equity, change your focus… FAST. Focus on wholesaling, rehabbing, and flipping properties, or if you do buy rental properties, ensure that you have at least 30 to 35% cash flow after PITI payments plus a 10% allowance for vacancies and a 10% allowance for repairs (I actually look for 50% net cash flow now). Just because there are enough properties with potential equity that we can buy all day long right now, don’t buy too many properties too quickly if the strong cash flow isn’t there, and if you’re choosing not to re-sell them right away. Your equity may get squeezed out and you may be stuck with a property that you can’t sell for what you thought, and then you’re holding onto properties that aren’t cash flowing well enough to make it worth your time. You’re one of the smart ones though; you know to focus on cash flow, and thus, you will be a successful investor.

Matt Napier

With nearly a decade of experience in specialized niches of real estate, Matt is considered a highly knowledgeable real estate investor in the Charleston, South Carolina area. Matt has dedicated himself to learning highly specialized skills which allow him to find high-return real estate investments for his clients and his investment company, The Napier Organization. His company offers high-return investment opportunities to select individuals and funds, secured by real estate. In his free time, he enjoys coaching new real estate investors on the technical details of real estate investing.


While many people mistakenly excuse lack of productivity during the holiday period, NOW is the time when you can get out in front and gain some serious strides on the competition.

When I was in real estate, most of my colleagues went into hibernation mode in December. Since many people do not buy or sell houses around the holiday season, they rationalized taking it easy—big mistake! I did exactly the opposite, kicked it up a notch, and seized a huge market advantage.

Three Ways to Knockout Your Competition in December:

1 - Fill up your January calendar
This was my greatest advantage... CLICK FOR MORE

 

In only 5 minutes a day, 5 days a week, 260 times a year I can help you level up your success and transform your life:

real estate investor systems are a necessity

In this post I’m going to tell you about the importance of having a system for keeping track of your leads and how doing so allowed me to buy a house that I had been trying to buy for over 8 years!

Do you have a stack of listings and other leads printed out and sitting on your desk?

Did you plan on eventually going through them and following up with sellers and agents to see if there has been a price change or if the sellers have become more motivated?

Do you ever get around to that or do you keep crossing it off your To Do list without actually doing it and moving it to a day one week or even one month from now?

Join the club!

It’s horribly inefficient and we lose lots of deals because of it, but dang it, it seems like we are just wired to do it that way.

What most investors do with the leads they receive

most investors keep deal information written in unreadable chicken scratch

Most investors will get a motivated seller lead and write it down in their handy dandy notebook. This is where the chicken scratch will be laid down as deal analysis is done and recorded…usually in such a way that it makes it nearly impossible to decipher what was written, even just one day later.

I’m sure you know what I’m talking about. We are usually in such a hurry just to figure out whether the lead has the potential to be a real deal that we don’t concern ourselves with how we are managing that information. We aren’t thinking about how we may need to keep that information more easily available and organized for follow up purposes.

There are full notebooks sitting in my office that span back to at least a couple years. I haven’t thrown them away because I can’t bring myself to, just in case a seller calls that I had spoken to before.

It’s crazy.

Even if I do get a call from a seller that I had spoken to before, and if I use those notebooks to find the information I had written down before, it would take hours to find it!

Not only that, I’m not sure I’d even be able to decipher what I had written down, so it would all be a huge waste of time!

I’ve used notebooks to record lead details, but I also have a “system” that I use that makes it possible to quickly and easily find this information whenever and wherever I want to. More on that in a minute…

Why that is bad…really, really bad

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If you’ve been marketing to motivated sellers for any length of time, you probably know that up to, and possibly more than, 50% of deals come with follow up instead of during the initial negotiations.

This means that most investors are leaving deals on the table…lots of deals!

Time has a way of motivating people to sell their house.

A seller that is not interested in your offer right now, could decide that it is a great offer after time changes his/her mind. Nobody’s life is free of problems. Over time these problems can happen and accumulate and cause their position to change. They no longer have the ability or desire to “hold out” for a better offer.

They now just want that cash and to be done with their house problem!

But, what if they don’t remember who they talked to or did not keep your card or your offer?

This is very common.

There could be 6 months or even a couple years that go by before circumstances create the motivation to trade the house for your cash offer.

At that point, if you haven’t been following up with them, they will likely start their search over again and end up selling to one of your competitors.

We don’t want that.

Why whatever can we do?

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Some investors use spreadsheets to manage their leads. Click here to see one way to do this using spreadsheets that my friend, Shae Bynes, recommended on BiggerPockets.

Other investors spend countless hours trying to configure a CRM system like Zoho that is built to be general enough to allow it to work for every conceivable use…which makes it hard to make work exactly right for your specific needs.

To me, spending my time focusing on the 20% of things that produce 80% of my results (Pareto’s Law) in my real estate investing is the smart thing to do.

I’d rather be spending my time analyzing deals, viewing houses and making offers.

It’s a fact that most of us have trouble getting out of our comfort zone though and so we end up avoiding these massive results producing activities by spending days trying to configure a system we will never use because we aren’t doing the things necessary to generate real estate investor leads in the first place.

We have to break through those limiting issues and focus on taking action.

Without action, you’re just stuck where you’ve always been.

What information should be kept better track of

Regardless of which system you use, spreadsheets, CRM system you configure, writing things on the back of your hand and down your leg, folders or notebooks, there are several things that are very important to keep track of to maximize your chances of getting the deal.

This list is in no way exhaustive, but it will definitely get you on the right track to benefiting more from each lead.

  • Property details – The details of the house: property type, number of bedrooms and baths, one story or two story, garage, basement, heating and cooling, year built, square footage and lot size.
  • Seller contact info – This one is kind of important…you need to be able to get in touch with the seller. Get as much contact information as you can: home phone, cell phone, email, etc.
  • Repairs needed – You’ve got to know the repairs that are necessary to return the house to sellable condition so that you can properly analyze the deal.
  • Reason for selling – After you’ve been in this business a while and you’ve talked with a lot of motivated sellers, you’ll realize that understanding what people really want, is not always just about the amount of money they can get. Keep track of why they want to sell. If you’re not asking this question, smack yourself and then make a note to start asking it. :)
  • Their asking price – Keep track of how much they say they want. This number is almost always much more than they really expect to get.
  • How much they still owe – Not asking how much they owe because you are afraid you are asking for too much info? Get over it and start asking this question so that you don’t waste their time…or yours. If they owe too much for you to be able to buy their house, why are you going to waste their time asking a million more questions and going to see their house? Riddle me that one.
  • How fast they want to close – This is another motivation determining piece of information.
  • Your max allowable offer – After your deal analysis, you want to keep track of the max you can offer for the house.
  • Comparable sales – Keep track of the comps used to determine the after repair value of the house.
  • Offers made – Keep track of the offers you make, the counter offers by the seller, with dates made. This will help you see the big picture of the ongoing negotiation.
  • Notes – Record all of your notes for the lead so that you can catch yourself up on where you last were with the lead. This can be very helpful when a seller calls you years after your initial meeting.
  • Follow up reminders – You should have a reminder message and date to follow up with the seller. This is how you stay in the seller’s mind and become the person they call when time motivates them to sell.

I just bought a house that I had been trying to buy for 8 years

I kid you not. Yes, I finally bought a house I had been trying to buy for nearly a decade.

Years and years ago, I sent the owner of a run-down, large, two-story house in a historic district a letter explaining that I would like to buy it.

The seller explained that he was interested in selling but that his grown kids were against it. I had made an offer and followed up with him religiously every month for about 8 months. Then I waited about a year and contacted him again. Then I contacted him again after another year….

Honestly, I gave up after that.

Then, out of the blue, the seller called me a couple of months ago and said he was ready to sell!

We ended up buying the house for pretty close to our initial offer and were able to wholesale it for a profit of over $30,000!

We were going to fix it up but I just didn’t have the time to take on such a large project that would have likely taken at least 3-4 months (probably closer to 6 months). Wholesaling it made the most sense as our return on investment and return on time invested were astronomical.

Just goes to show you the power of following up with sellers until they either sell the house, or they start talking about a restraining order.

What I did before I flipped hundreds of houses

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Bear with me…and don’t worry, I won’t bust out a slide show.

My full-time job before I became a real estate investor was as a software developer. I really enjoy the challenge of designing and creating software…but didn’t really enjoy doing it for someone else.

I wanted freedom.

I wanted the freedom to be my own boss, vacation when and for as long as I wanted, to control what I did everyday and have control over how much time I was able to spend with my family.

Flipping houses gave me that freedom.

But, I never lost the urge to develop software. Since the beginning I’ve been creating software to help me manage my leads. It’s been through many iterations and was always just built for myself to use.

Then, one day years ago, it dawned on me that maybe other investors would like to have just such a system. There were a couple other systems out there but they were either million-dollar custom systems for large investment companies or systems that were priced way too high for most small investors to justify the cost.

Why not allow them to use the software I’d been creating and improving for years?

I’ll tell you why I didn’t just immediately make it available…

It was HIDEOUS.

Simple as that.

It was only built for me to ever lay eyes on. It had it’s idiosyncrasies as well that I didn’t worry about because I was the only one using it.

I thought it would only take a matter of months to get it ready for others to use…boy was I wrong.

Here we are about 4 years later!

We are on the brink of releasing this software system after all this time. I’m out of my mind excited about finally allowing you to have this system available to use.

I’ve named it REIMobile as it is built to work well on mobile devices so that you can access your information while on the go. How cool is that?

The system is “cloud” based so that when you make changes using one computer and then access the system from a different computer or device, you will have everything synced.

hero-real-estate-investor-software

I’ve set up a quick website to explain more about the system and show some screenshots:

>> Click here to check out the real estate investor software system that I will be releasing soon <<

Be sure to scroll to the bottom of the page on reimobile.com and enter your email address to be notified of any news and information about the release.

Have any ideas? Want something you haven’t found available anywhere else?

http://www.dreamstime.com/stock-photo-any-ideas-inscription-chalk-blackboard-image35268830

I won’t pretend to know everything people would want in such a system.

I’m hoping you’d be willing to share what sorts of things you would love to have in such a system.

What features or functionality do you feel are ‘must-haves’?

What are some things you haven’t seen in other systems or felt were lacking in other systems?

Please share your ideas and thoughts below in the comments.

I’m all ears and very much appreciate any input you would be willing to share.

Thank you.

Danny
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