6/3/2020- Building Your Brand as a Real Estate and Note Investor

Back in 2005, I spent some time in the African country of Zambia visiting a family member who was a Peace Corp volunteer.    Zambia is a beautiful place with the variety of animals, warm people, and scenery.   I recall one day being out in the middle of nowhere when we came upon a little store.   Though that area of Zambia did not have electricity or running water, that store had something that I see often when I visit store in my area:   Coke.    Coca Cola has done a great job building its brand to the point that it is recognized in even the most remote parts of this world

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 There are some companies here in the USA that we know well as they have built their brand.  Most of us know that the golden arches are a symbol of McDonalds and that a curved arrow made into a smile is the symbol for Amazon.     Most of us also know that “just do it” is the slogan for Nike.   If you are a real estate and note investor and want to increase your business, it is important that you also build your brand.  There are several things that are important for one to do as you build your brand:

·         People need to feel that you are provide a reliable, trustworthy service or product

·         People need to feel that they know you and trust you

·         Building your brand is something that is done over time.   It has taken decades for McDonalds and Coke to build their brands, and it will take many years for you to do the same.  You build  brand in a myriad of ways such as the following:

·         Interacting with people at real estate meetings, note events, and other gatherings

·         Social media posts, podcasts,  and video

·         Marketing through letters and emails

While perhaps it is unreasonable for a real estate or note investor to aspire to have a brand as well recognized as Amazon and McDonalds, it is not unrealistic for them to do that bit by bit.   What will you do this week, this month, and this year to help build  your brand?    Best wishes in your real estate, note, and wealth building pursuits-  RLW

5/3/2020- A Little P.E.E.P. Talk

I have always loved sports.  I must confess that I am better at watching sports than I am playing them.   One of the things that is common in the sports world is a coach giving their team a pep talk.   The purpose of the pep team is to put a little pep into a team in hopes they will rise to the occasion to win the game.    Today, I want to offer encouragement  to you as real estate and note investors on some things that I think are critical right now as we as a nation and world find ourselves in this pandemic.   I am calling this a P.E.E.P. talk and you will see why in these points below.   Here are my points:  

·         This is a Time to PAUSE-  Pausing is not necessarily a bad thing.  Isn’t that what coaches do when they take a time out.  Pauses can effective in playing music and they also can be effective in negotiating a deal.  I encourage you to take a moment to pause in your real estate and note business. 

·         This is a Tim to EVALUATE-   Here are some important questions right now to ask yourself.  Where am I in my personal finances and business finances?.. Where can I trim expenses and increase income?.. How is my real estate income changed or going to change?....   Who do I need to talk to and communicate with- bankers, tenants, borrowers, etc.?....  Evaluate what cash flow will continue or  what you need to change… Will your lender will take less or whether a tenant will pay less instead of not paying at all?   Evaluation is critical right now in business including the real estate and note business. 

·         This is a Time to EDUCATE- Talk to fellow  investors, mentors, coaches, others… Listen  to podcasts… Attend webinars… Read articles and stay tuned on Linked In,  etc.. Phone  a mentor or someone who might offer counsel… If you think you know it all, you will soon be proven wrong in your arrogance.  Volatility offers Opportunity and education yourself to try to see where opportunity might be in the days ahead. 

·         A Time to PLAN-   If  you fail to plan, then plan to fail.  Perhaps you need to re-invent yourself or your business model in these days.  what can you control and what is out of your control….  Cannot control the wind, but can adjust your sails.  Do I need to seek new sources of capital

Yes, this is a P.E.E.P. talk.   Pause…Evaluate… Educate… Plan.    Best wishes in your real estate pursuits.  -   RLW

4/3/2020- Adjusting Your Sails

Over 10 years ago, my wife and I bought a place in a condo complex on the Intracoastal Waterway of the Carolina Coast.  We were fortunate to buy the property at a bargain price since it was a foreclosure that was a victim of the real estate crash in the 2008-2009 period.  I enjoy the view the property offers us especially the sight of boats heading south in the Fall and Winter and north in the Spring.  Sometimes, we see sail boats heading past our condo and more than once I have day dreamed wondering what place they are heading.  I have never been sailing though I did have two uncles who were proud veterans of  the U.S.  Navy.  

 

I find myself thinking of sailors and sailboats in these days as the world around me faces a pandemic and challenges I have never seen before.   Specifically, I thinking of a saying that someone familiar with sailing told me years ago and it is this:

You cannot control the wind, but you can adjust your sails

These are days when all of us are adjusting not our sails, but adjusting our lives.  We are learning how to work from home and stay at home… how to cook more at home and eat at a restaurant less…  and how valuable a job that people like  store clerks do with simply seeing that shelves are stocked with toilet paper.  

I encourage you as note investors and real estate investors to pause in these days and consider where you are.    What changes do you need to make in your personal finances and spending?   What changes do you need to make in your business plan either by necessity or because of the opportunity?     In these days when you are spending some time at home and less time out, reflect on your life and business.    Talk to and listen to others. 

Best wishes in your real estate pursuits.  -   RLW

3/3/2020- Sources for Capital to Purchase Notes and Real Estate

In the 1996 movie Jerry Maguire, actor Tom Cruise plays a sports agent.  There is a scene in the movie where actor Cuba Goodling Jr. (playing a star NFL football player)  tells Cruise over and over to “show me the money”.     That is the plea of every real estate investor as they want to be shown the money not just in a deal, but to complete a deal.   Most investors struggle to have the monies to buy a piece of real estate or to buy a real estate note.  This is certainly one of the biggest challenges for many real estate investors.  It has been particularly challenging in these days following the housing crisis that happened a little over a decade ago. 

You will find below 10 possible sources for capital to purchase real estate notes or to purchase real estate.   I have used many of them and had some success with them.  Let me caution you that some might be workable solutions for you or they may not be.  Some of them are short-term solutions to get you in a deal while others might be long term solutions.  Let me also caution that some of them come with some risk as the source of funds (e.g. borrowing from a life insurance policy) is not what the  funds are intended for.  I encourage you to think carefully about using some of these sources and consider the advantages and possible disadvantages they offer.  If you have questions about my use of some of these sources, please be in touch.

Here are 10 sources for capital to purchase a real estate note or to purchase real estate:  

·         Borrowing monies from a retirement/pension account

·         Borrowing monies from a friend or relative

·         Borrowing monies from a life insurance policy

·         Credit  Cards

·         Personal Savings

·         Home equity line of credit or loan  on your personal residence

·         Cash out/ refinancing of a rental property

·         Business line of credit

·         Personal loan

·         Business loan

Best wishes in your real estate pursuits.  -   RLW

2/3/2020- What is the Value of my Real Estate Note?

One of the things that people want to know often is how to determine the value of a real estate note.   A few weeks ago, I got a call from a friend who wanted the same.   I spent several minutes asking him questions about the note, and I suspect he was impatient with all my questions.   Just as it  takes a little investigation to determine the value of a piece of land or a house, so it takes a little investigation to determine what is the value of a home.    Here are some of the things that I will want to know about in trying to determine the value of a real estate note>

THE PROPERTY-  Tell me about the property.  Where is it located?   Is it in a growing, stable, or declining neighborhood?   How many bedrooms and baths does it have?   What is the BPO on the property?

THE BORROWER-  What is the credit score of the borrower?  Do they have a job or source of income?    Do they pay in a timely manner?   Information about the borrower is critical in determining the value of the note.

WHAT IS THE BORROWERS’ SKIN IN THE GAME?-   What size down payment did they make when they bought the property? 

 SEASONING-  How many payments have they made on the note (also referred to as seasoning)?  

 WAS THE BORROWER QUALIFIED FOR THIS NOTE OR LOAN?-     Dodd-Frank federal regulations require that a person buying their primary residence should be qualified by a registered mortgage loan originator.     Did you have the borrower qualified?   That can influence the value of the note?

THE PAPERWORK-  Are the taxes paid up to date?   Is the property insurance current?  Are their liens and judgment on the property?    Do you have the loan serviced by a third party loan servicer?  These can affect the value of a note.

What is the value of a real estate note?   My general answer is that “it depends” on these factors. Best wishes in your real estate pursuits.  May it be a great year.-   RLW

1/3/2020- Looking Back, Looking Ahead

Happy New Year.  Welcome to  a place you have never been before: the  year 2020.  The first month of each year is the month of January.   While most certainly know that, perhaps you do not that the name of the first month of the year comes from the Greek God, Janus.  One of the things that is distinctive about Janus is that he had two faces:  one face looking forward and one face looking backward.

January is that kind of time for many of us including real estate and note investors.  On the one hand, we find ourselves looking back as we gather information for tax returns, complete our profit and loss statements, and the like.  Yet, January is also a time of looking ahead as we set goals, strategies, and the like for the new year. 

In the beginning days of this new year, I encourage you to take some time to look back not just as your finances and records, but at what you did in your investing business last year.  What worked and what did not work?  What should you consider continuing or expanding?   What can you do better in 2020 than in 2019?   At the same time, take time to look ahead.   After giving some thought and evaluation to 2019, begin to prepare goals and strategies for the year 2020.  Write the goals down as that tends to make them more real and concrete.   Set a reminder in your appointment book or device to evaluate the goals on a regular basis.  I try to re-visit my goals on a monthly basis.   Make sure that your goals are specific and ambitious, yet are also reachable.  Spend some time trying to set steps to reach these goals.   As one wise person once said,  “Fail to plan, then plan to fail”.     Goals, steps, and strategies give us a way forward.  

In the midst of looking back and looking ahead, take some time also to evaluate yourself.  What skills do you need to develop or sharpen to be a better real estate and note investor in 2020.  Your business cannot be better if you are not better yourself.   Who or where can you improve and grow?  

   Best wishes in your real estate pursuits as you embark on 2020.  May it be a great year.-   RLW

12/3/2019- Lessons I Have Learned in 45 years of Investing

It is December now.   Thanksgiving is behind us and Christmas and New Years Day is not far away.   This time of year,  I always get a little reflective.   Some of it has to do with the fact that I am a person of faith.   A second reason why I get a little reflective is because we are nearing the ending of one calendar year and getting near the beginning of a new year. 

In a few days, I will be speaking to a real estate investing group in my area.  The topic I have been asked to tackle is :   “Lessons I Have Learned in 45 years of Investing”.   I have seen a lot since I bought my first piece of real estate back in the 1970’s.  I have seen up’s and down’s of real estate, and have seen the same happen in my own real estate and note portfolio.  I have made some mistakes along the way, and there are other times that I have been incredibly blessed.  Here are a few things I have learned in 45 years of investing.  The list is not complete as I prepare to speak to that real estate group.   The lessons  are not listed not in any particular order other than how they come to mind.   They are as follows:

1.       The real estate market is always changing

2.       You need to always invest in yourself, and  keep learning

3.       Be as diligent in choosing who you do business with and partner with as you are in choosing what to buy.

4.       Never be afraid to ask others for help. They may have a better idea.

5.       Principles always before people and money.  You have to sleep at night and look at yourself  in the mirror.

6.      Just because someone says no today does not mean that their no is final.

7.      Deals sometimes  work out if you are patient enough and keep working.

8.      You build your business by building relationships with people.

9.       “This too shall pass”

10.    They are not making any more land.  It is valuable 

   Best wishes in your real estate pursuits as you end this year and prepare for a new year.-   RLW

11/7/2019- Back to Basics

A new college basketball season has kicked off.   I don’t know about you, but I love college basketball and will be spending free time watching games of my favorite teams over the course of the next few months.    One of the legends in college basketball is the late John Wooden.   The story is told that when the season would begin, he would do something that new members of the team found a little odd:  he would spend time teaching players how to correctly put on their socks.  One of the freshman players was puzzled by it   so he said to Coach Wooden,  “Coach, I understand that we need to practice foul shots and defense, but why do we need to spend practice time learning how to put on our socks.   I learned how to do that when I was a little boy.”   Coach Wooden replied,  “Son, you need to know how to correctly put on your socks.   If you don’t, then you would get blisters on your feet.   Blisters and sores on your feet are going to make you unable to play well.    If you don’t play well, that means the whole team does not play well.”

What Coach Wooden was trying to teach the players is that you have got to get the fundamentals down in basketball before you can really be a basketball player and basketball team.   The same is true in real estate and  real estate note  investing.   You have to accomplish the fundamentals.       There are many folks that enjoy the excitement of HGTV and seeing people flip a house or purchase a home on some tropical island in 30 minutes time.   Believe me when I say that reality does not work out that way.    There are days if not months before they accomplish their goals.    The same is true with the real estate business and real estate note business.   There are many steps that must be accomplished before you reach the pinnacle of investing. 

            As we near the end of this year and begin to think about the goals for another year,  I invite you to go back to basics in real estate and note investing.    If you are new to real estate or note investing, you might want to simply go through these basics for the very first time.    Here are a few basics I would invite you to visit again or for the first time:

1.        What is my marketing strategy for properties or notes?

2.         Where do I find the capital to invest?

3.          What criteria do I use to figure out how much to pay for a property or a note?

4.          What good things do I do this year and how can I make the coming year even better?

Take time in these remaining weeks of this year to get back to basics.   You will be glad you did.   You will be a better investor and your business will be better.   Best wishes in your real estate pursuits.-   RLW

10/6/2019- Are You Sharpening the Saw?

There are all kinds of strategies to buy and sell properties or real estate note.   There are some key ways that you can sell properties or buy properties.   One thing that is certain in a real estate and note investing business is this:  IF YOU WANT TO GROW YOUR BUSINESS, YOU NEED TO GROW YOURSELF. 

I had someone call me a couple of weeks ago wanting to know more about my real estate and business knowledge.   They had heard me speak at a real estate gathering in their homeotown.  They asked if I offered classes and if so how much would I charge them to be in my class.  What I told them was that the first place to start was to soak up all you can via internet podcasts… internet articles… and videos and first see if this was something they really wanted to do. 

If you really want your business to be the best that it can be, then you need to be the best of yourself you can be.    It is not enough to invest in real estate properties or real estate notes;  you also need to invest in  yourself.      I remember a quote of Abraham Lincoln  heard several years ago that put it  this way:    “A good woodcutter spends 5 hours sharpening his saw before he spends 2 hours cutting down a tree.”   Are you sharpening your saw?

Here are a few important but simple things that you can do to “sharpen your saw” and grow personally:

1.        Invite a person you admire to be your guest for lunch or breakfast and pick their brain to learn from them.

2.        Attend real estate or note investor meetings regularly.   While it would be preferable to do this in person, you can accomplish this also via phone calls, conference calls, or webinars.  Pay attention to what people say, take notes, and learn.

3.       Find a person that you admire their business model, and offer to work for them for free.  While you will not make money immediately, you will gain a valuable education that will help you make money for years to come.

4.      Join a “mastermind group”  and learn from fellow real estate and note investors.

It is important to be a person who is constantly learning because real estate market conditions are always changing.     Take the time to “sharpen your saw.”   Best wishes in your real estate pursuits.-   RLW

9/21/2019- “Creative Financing Options”

There are all kinds of ways to buy a property.   Though many people buy a property with the financing of the bank, there is a significant number of people that buy real estate with owner financing.     This can be advantageous for the buyer because they have to bring less money to the closing table.  It also can be a good solution to the seller in that they get their money over a period of time without the hassle of tenants, toilets, and the like that come with being a landlord.

As we think of owner financing, I want to share some creative financing options that you might not have been considered.   Most people are quite familiar with the thought of buying a property with zero interest and no money down.   While those can be good, they are not the only creative financing options.    Let me share a few others as follows:

DEFERRING PAYMENTS FOR A TIME-  This can be helpful to purchasers of a property as they prepare it to sell or to rent. 

SUBSTITUTE COLLATERAL FOR A LOAN-  This can be helpful if you are preparing the house to flip, and then you substitute the collateral of another property you buy or already have.

SMALL FIRST LOAN AND A LARGE SECOND MORTGAGE STACKED TOGETHER-  What this means is that the borrower has to pay off the first loan before they begin payments on the second loan.

These are a few creative financing options when you buy or sell a property with owner financing.   While these might not be options at your friendly neighborhood bank, they can be options when the seller is also the bank if all parties agree.    Best wishes in your real estate pursuits.-  RLW

9/18/2019- “Why People Sell a Real Estate Note”

Why do people sell a real estate note?   That is the question put me recently when I spoke to a group of  people at a real estate investment group.    If notes are so great, why would someone want to sell one?   That is a valid question.    The short answer is that the specific reason is as different as the people who sell a note.

Some people sell a note because that is a part of their business model.   I recall a phone conversation some time ago where a person called wanting to sell their real estate note.   They had purchased and rehabbed a house… owner financed the property to an occupant… and now were seeking to sell the real estate note a few weeks later.   I declined their offer  because it did not fit my note buying criteria.   There are some persons and companies who are in the business to buy and sell real estate notes.   That does not mean that the note is good or bad;  it is simply a part of their business model.

There are others (participants small businesses or individuals) who want to sell their real estate note because they want all the money now.   As is depicted in a television commercial about a company that buys annuities and settlements, sometimes people want all their money now.  Sometimes, people want their money now for good things in their life such as buying a second home… taking a dream vacation… or helping their children or grandchildren.   Other times, a person or small business want their money now because of bad things happening in their life:   to pay for health care… a death in their family… or declining health.   One of the things that none of us have is a crystal ball to see into the future.   While we can make plans, none of us make will happen down the road in the next 10 to 30 years (for the term of a note).     

This can present an opportunity for the note-holder to get their money now.   It also can present the opportunity for the note-buyer to possibly get a good performing note at a discount.   Best wishes in your real estate pursuits.- RLW

9/1/2019- “Building a Winning Team”

I believe it was writer John Donne who years ago wrote that “No man is an island”.   That is certainly true in real estate and note investing.  Most of us do not have the time, skills, license, or knowledge to know everything or do everything about real estate and real estate notes.   You cannot do it alone.  You need help and a good team to help you accomplish your business goals.   Years ago, there was a radio show and television show about a western character called “The Lone Ranger”.   While that was his name, he was not alone as even the Lone Ranger has his trusty sidekick, Tonto, to help him.

  

Here are a few persons that you will want to have on your team as a note and real estate investor:

1.       Attorney and/or title company-  There will be legal issues that you will encounter.   In most states I work with, you will need an attorney or title company to close your purchase or sell of real estate.  Find an attorney who understands real estate investing and note investing.

2.      Tax professional-   Whether your tax professional is an accountant or CPA, work with someone who understands not only the tax laws but your specific tax situation.

3.      Mortgage loan originator-  If you are creating real estate notes, you will want to work closely with a registered mortgage loan originator in the state where you are creating a note.   While there are instances where that might not be necessary, they  can help you create a note that is worth more and keep you from being featured on the evening news for doing shady real estate deals. 

4.      Insurance professional-    Whether you are buying a note or buying a home, you want your asset protected in case of fire, theft, hurricaine, or the like.   Make sure you have a good insurance professional on your side.

5.      Servicing agent-  You will want to have your real estate note serviced by a company licensed to do business in the state where the property is located.   This will not only make your note more valuable, but it also will insure that it is being done according to law.  

These are a few parties that you will want on your team.   There will be others depending on your circumstance and what are your goals.   Best wishes in your real estate pursuits.- RLW 

8/26/2019- “Knowing your Why for your Investment”

Whether you invest in long term rentals, rehab homes, buy real estate notes, or use some other strategy, it is important to know why  you do what you do in your real estate business.   Now, I suspect that there are some who wonder why I am writing about this and why they are even reading this   They think that it is  obvious because they see only on the surface of the bills at the end of the month or the  balance in their bank accounts.   When you get right to it , I believe that there is a “why” behind what you do in your real estate investment business.   You do it for more than just to pay the bills or  to see more money grow in your accounts.

Perhaps your “why” is a goal or dream you or your family have.   Perhaps it is the hope to retire by a certain age as you create passive income… to take a dream vacation to a place far away… or to purchase a second home in a beautiful place.   Perhaps your “why” for your real estate business can be captured in a picture of family members-  your children who aspire to go to college… or a family member who you are caring for… or grandkids who you hope to create a legacy.

Remember your “why”.   Let it be your motivation and the cause you work for.   When your business gets difficult or you get weary, find strength in remembering your “why”.    Best wishes in your real estate pursuits.-  RLW

8/25/2019- “Why People Sell a Real Estate Note”

If you are in the market to buy a real estate note,  one thing that I always want to know is the reason why the buyer is selling the note.  This question sometimes will provide some important information to see the motivation of the seller along with information about the real estate note and the borrower.

In my experience as a real estate note buyer and seller, most reasons for selling a note can be summed up in just a few reasons.   First,   people sell a note because that is a part of its business model.   There are some persons and businesses who are in the business of selling notes on a regular basis.   If you are a regular note buyer and seller, you know them.   If you are new to real estate notes, you can find these businesses by a simple internet search.

The second reason why people sell a real estate note is this: they want their money now or need the money now.   Life happens all the time, and sometimes, the circumstances of real estate note holders change.   While having a passive cash flow for 20 years or 30 years from a real estate property they owner financed seemed great a few years ago, things change.   It may be that the note holder wants the money now because of something positive in their life such as they want to go on a trip or they want to buy a new car.   Sometimes, a note holder might want their money now for a real estate note because of something sad or difficult in their life.   For example, perhaps they need to have the money for a medical procedure or to take care of a loved one who needs constant medical care.   I suppose reasons for selling a note can be as varied and different.

It may be that when you buy a real estate note from a note holder you are not only acquiring years of cash flow on a great asset, but that you are also helping the note holder to get their money now to fulfill a dream (such as buying a retirement home) or to meet  a need in their life (such as caring for a loved one).   When that happens, it creates a “win-win” situation.     Best wishes in your real estate and wealth pursuits.-      RLW       

7/30/2019- “Tell Me a Story about your Property”

Most real estate  or real estate note investors focus in their acquisitions on one bottom line:  purchase price.    They want to know “how much” and know details about the property such as neighborhood, condition.   In case of a real estate note, they want to know further details such as payment history and whether there are any liens or judgments on the property.

I suggest a different way to begin instead of with purchase price and that is through getting the note seller or the property owner to “tell you a story”.   As a child, perhaps you enjoyed “bedtime stories” from your parents or hearing stories that your grandparents would tell about the “good old days”.   Begin by getting the seller of the note or the property to do simply this: “Tell me about the property or note”.

While this method might delay getting to the “bottom line”,  it will in the process do several things.   First, this will help build a repoire with the seller.   People are more likely to do business with someone who is personable and they like that someone who simply looks at the numbers.   Secondly, this method will perhaps disclose details about the property or note and about their motivation for selling.   “Their story”  will help you discover ways that might make a deal possible.

While certainly I cannot guarantee this method will guarantee a sale or deal,  I can tell you that a number of people (including myself) have found success with this method.   Best wishes in your real estate and wealth pursuits.-      RLW