Archive for March, 2016

Your Power Team Represents You

As professionals we’ve heard it said that it is absolutely imperative that you have a really solid Power Team.  A Power Team is composed of several individuals.  Some of the most common in Real Estate are closing attorneys, loan officers, contractors, insurance agents and appraisers.  These are all key people to any given transaction and any one of them can make or break a deal so it’s important to have ones that understand what you are doing, are on your side and have lots of quality experience.

We have had the privilege of working with many people along the way with varying levels of success.  Some of these people have been nothing short of outstanding. On the flip side, let’s be honest, some are a bit of a nightmare to work with. As a result, we have learned to never underestimate what they can mean for your business.  Let’s take attorneys for example.

A solid closing attorney is a critical part of your Power Team. We have literally had Sellers that were ‘on the edge’ about whether they should work with one of these ‘We Buy Houses’ people but were given an extra dose of comfort by our attorney. On the flip side, we thought we had an attorney that was on our side once literally talk down to a Seller. Sadly, it killed the deal. That particular deal was a renovation that was good for at least 50k…down the drain. Talk about a hard lesson in choosing your Power Team!

At that point, it became beyond crystal clear to me that whoever I work with really is an extension of me. Taking the time to build these relationships is imperative because of the mutual growth that can be obtained by yourself and the other party.  Steady growth is powerful when you build these relationships! You want to be able to trust them to handle anything they can help with and they want to trust you so invest in the right people.

When you are new to the business you may ask yourself ‘how will I know if this particular person is solid?’ You’ll want to ask them questions about what their experience is as is referenced in many training materials. However the biggest thing you can do is consider ‘How’ you ask them. The confidence you portray in that conversation will matter much more than the substance, especially early on. When you speak with other professionals, keep in mind they are likely talking to new people relatively regularly. They can sense when someone is confident or nervous. This has much more weight than if you are new or not. If they sense confidence in you, they oftentimes will help you if they know you are new. We all instinctively are attracted to people of confidence!

Lastly, pay them! Pay them fairly. You will be amazed at how far this gets you. While you don’t want to be ripped off, don’t expect them to work for free. The best people are the best for a reason so be prepared to pay them accordingly. Strong Power Team members do not like to be nickel and dimed.

In conclusion, there are no guarantees with your Power Team as life does change. The perfect person today may not be tomorrow. However, by picking solid people along your journey for your Power Team, you will save a lot of time down the road. Always keep your power team on their toes and they will likely serve you well. Reward them accordingly and much success to your journey!

Frank IglesiasFrank Iglesias is an active wholesaler, rehabber and landlord in the Atlanta metro area who enjoys creating win-win real estate transactions. Leveraging a mostly virtual staff, Frank has taken working with virtual assistants (VAs) to a high level where they do the majority of the work necessary to run his real estate investing business. As a result, Frank is able to do less while accomplishing more so he has the freedom to spend more time with friends and family and teach others to do the same. Frank is also the leader of the Atlanta Wholesalers Group.

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Don’t Be in a Panic Regardless of What the Experts Say!

Recently I read an article written by Michael Snyder, a graduate of the University of Florida law school. I found it very interesting. This article was titled “Sell Everything!

His headline read, “Royal Bank of Scotland Tells Investors to Fear 2016 Financial Cataclysm.” The 20th largest bank in the world is predicting that 2016 will be a cataclysmic year and Investors should be afraid. This prediction of course is aimed at the stock market, but there is a connection between stocks and real estate many real estate investors aren’t thinking about.

As the stock market is currently going into a Bear Market and people fear losing all of the value in the stocks they own, many will panic and start to sell thinking they must get out NOW if they want to keep as much of their equity as possible. It is also important to realize that when the market goes down, the companies who issued the stock, many times must also lay off workers to stay profitable. This is the bad part that few real estate investors think about. Why is this important? It’s important because when this happens, many people won’t be able to pay their mortgage payments and slowly those people will start going into foreclosure and eventually lose their homes. For a period of time renting may be their only option. I believe owning rental property is a smart move for those who start buying income properties today.

So, What is to Happen to Those Who Lose Their Homes to Foreclosure? Do They Disappear Into the Abyss or Will They Somehow Find Another Place to Live? It’s Time to Position Ourselves for Great Opportunity!

This is where we as real estate investors, can have the upper hand and help these people get back on their feet, or at least help them survive through this crisis. If real estate investors buy houses at the inflated prices I am seeing today because of low inventory on the Multiple Listing Service, it only stands to reason that the payments these investors will be forced to pay will be much higher than if they were able to negotiate a lower price and therefore a lower monthly payment. By negotiating a much lower monthly payment on the houses we buy, that will allow us to pass on a much lower rent to the people who may have lost a good paying job and are now working for much less than they were before the financial crisis. If we are able to negotiate a lower monthly payment when we buy a property, in the event of a financial melt-down we will be able to pass along lower rents to the people hit the hardest financially. And we will still be able to continue paying for the properties we buy, and have the rent cover the monthly payment and all of the expenses connected with those properties.

We could lower our rents to where we make very little or no monthly cash flow if necessary, but is that a bad thing? We investors may still be able to get a small cash flow and as long as we continue to make the mortgage payments on the properties we own, we are still getting loan pay down every month, depreciation and appreciation. We will also still be building equity instead of losing our properties to foreclosure. This is because if we have much higher payments, we may not be able to keep them rented at a rent high enough to make the high mortgage payments. I think it is important to always be conscious of the fact that the economy at this point in time, can turn on a dime and everything we have worked so hard to acquire could be at risk.

I believe every investor should always negotiate their deals with the sellers that will allow them to get terms in order to pass along lower rents to their future tenants if necessary. It is also important to be able to do this without losing all of their properties and continuing to survive through another financial crisis.

Think about what I just mentioned and keep it in your mind when buying any income property. You must think about it if you are going to keep any property long term. The price you pay for any property is somewhat less important if you can get terms that will allow you to easily make the monthly mortgage payment every month, regardless of the economy and the financial markets. I believe there are plenty of opportunities for all of us if we pay attention to the market.

Until Next Month, Good Luck and Happy Investing!

Larry

Larry HarboltLarry Harbolt is the nation’s leading creative Seller Financing expert as well as a popular national real estate speaker and teacher whose time-tested strategies and nuts and bolts teaching style has helped thousands of aspiring real estate entrepreneurs realize their financial dreams with little or no money and without the need for credit. Larry has been successful creatively buying and selling real estate for over 30 years and has written numerous popular articles and real estate courses.

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