Yesterday I mention how investors have been pitched and sold on the concept of the “overpriced analysis software that removes creativity” Some of the big name Guru’s have been selling these systems for years. I admit to being one of those who stood in front of crowds and said “this is what you need to take your business to the next level.”

I was wrong.

Those systems have their good points but it’s a system you never own. You pay a hefty upfront fee and a monthly fee and “you own it as long as you pay the monthly fee.”

The days of “pushing a button and getting rich” are over. You’re going to have to look at your deal from a purchase perspective and two or three selling perspectives in order to survive. Calculating the transaction downside went out the window when the market exploded and every Tom, Dick and Harry decided they wanted to be a flipper. Today watching your downside is the most critical piece to your investment survival.

The instrument needed to calculate your downside is a $35.00 calculator. I have used the HP 10B, 10BII, 12C, 17B and the 19B. I prefer the 19B but the investment is north of $150.00.

If you really want to learn how to find the fun in real estate investing and if you want to learn the correlation between real estate and real estate paper; your going to need a calculator to do it. Not some fancy software but a calculator; the HP 10BII works just fine.

Click on the share this link and forward this post to all your twitter followers, Facebook friends, investor list etc.  Then subscribe to my RSS channel.

The summer of 2009 has been the hardest in my business career both inside the real estate world and out.

My real estate business has found some incredible opportunities. I have been able to get some fantastic discounts because of the current economy. My problem is the same problem you and ever other investor are having; finding affordable long-term money. I have been successful in arranging short term financing but making my investors whole and cashing them out with long term financing has been a tremendous challenge.

If I had to describe my emotion they have ranged from pissed off to angry, frustrated to rage. I even said those words I would never say; “my real estate business isn’t fun anymore.”

I sat down about a week ago and decided I would review some of my past deals. I went all the way back to my beginning and started reading my notes on properties I had sold.

Here’s what I found; my deals were easier, they were more fun and most of them never involved a bank. I also saw how I took my short-term investors and made them long term funding sources.  My definition of a long-term funding source is loan lengths of no less than 36 months.

Because long term financing was easy to get and banks had programs that fit my long-term solutions, I failed to remember the one thing that created the core of my business in the beginning and that is this.

“If your in Real Estate your in Real Estate Paper and if your in Real Estate Paper your in Real estate.”

Over the years I have learned how to manipulate the financing in a real estate deal.  This manipulation has produced easier deals, better relationships with my investors, a bigger and broader buyers list and more control.  No more fancy overpriced analysis software that removes creativity

The format of this blog going forward will be about

The Correlation Between Real Estate and Real Estate Paper.

Stay tuned

Click on the share this link and forward this post to all your twitter followers, Facebook friends, investor list etc.  Then subscribe to my RSS channel.

Do you remember the recovery buzz?  Mortgage applications are up, housing sales are up,  building permits are up.  The idiots that report the real estate news have no clue as to the true market conditions.

Remember the shadow inventory?  Don’t forget about the 600,000 homes that are not on the market yet.

Here is some more information for the clueless.

“Foreclosures in April exceeded even March’s blistering pace with a record 342,000 homes receiving notices of default, auction notices or undergoing bank repossessions, according to a regular industry report. One of every 374 U.S. homes received a filing during the month”

Why am I telling you this.  Make sure you watch your pricing formula and you adjust for market declines.  Don’t let you realtors, brokers, or anyone else try and tell you what the market is doing.  If you adjust for the decline you will be the best priced property in the best condition.  I would suggest that you figure out how to hold the property for cash flow.

Retweet This To Your Followers

A few years ago I woke up on a bright sunny Saturday morning and decided to take my gelatinous rear end to McDonalds for a Sausage bagel sandwich.  I was really hungery and decided that I wanted to add some bacon to it as well.  When I made this announcement to the gal behind the counter, she paused, looked puzzled and then said “I don’t have a button for that.”

Yesterday I was talking with the bank trying to get a price and terms approval on a loan modification.  Time is not my ally on this deal because the trustee sale is coming up fast.  My proposal was a little off the wall; it included a reduction in monthly payments and a reduction in the interest rate.

There was a long pause on the other end of the phone.  We can’t do that because I don’t have a program like that.  It reminded me of my McDonalds experience and we wonder why the banks are “Stressed”

If the bank accepts my proposal they will be made whole on 100% of the debt owed by the seller.  If they don’t accept my terms the house will go to Trustees Sale and the bank will lose $200,000 because of the market decline.

Made whole or lose $200,000 what would you do if you were the bank?

Retweet This To Your Followers

Yesterday I got a call from a lovely woman who couldn’t pronounce my last name.  She said she was calling about a house I sold in 2002.  I replied with which one?   She didn’t know the address, she didn’t have a sale date, or the city, the only information she had was that I “sold a home.”

I asked her what this was about and she told me that I sold a home in 2002 and “I know your receiving monthly payments.  I have some investors who want to give you cash for your monthly payments.

I told her to have her investors call me directly and we could talk.  She told me that she was the go between and that her investor wouldn’t talk to me.

I said “ok have a nice day, good luck to you.”  She was a little shocked by the answer and asked my why I was hanging up.  I said that I like to deal with the money people directly and I’m not interested in talking to a go between.  She replied with “your suppose to talk to me that’s how the program works.”  I said, “Is that what Russ Dalbey’s people told you?”  “Yes, how did you know?”

I get calls like this 2 to 5 times a week from eager beaver Dalbey students trying to buy the notes I create when I sell property.  I don’t mind the calls because you never know whom your going to meet on the phone.  The problem with this gal and the 50 or so before her, is how they ask their questions.

There are two lessons from this brief conversation that I want you to learn.

1.    It’s not what you say  - it’s how you say it.
Your phone calls and you face-to-face conversations should always be spoken from the voice of the principle buyer or seller.  Never say your representing someone else; you’ll lose your prospect and some credibility.  This is why I never make a contract contingent on “partner approval.”  Buyers due diligence is about due diligence and marketing, finding money or locating a partner.  Don’t scare your prospect away before you even get a chance to propose your offer.

2.    Who are you getting your information from?
This woman paid for a list of people who are receiving monthly payments for properties they sold.  She didn’t ask how old the list was; who scrubs it, how often is the list scrubbed, etc.  The property that she was calling me about was refinance by the buyer in 2004.  My note has been paid in full for 5 years but someone is still selling her an old list and we all know that’s wasted money.

There is nothing wrong with qualifying your lead source.  If you going to buy notes make sure the information is within 12 months of the sale date.  This what I have used to as my criteria and its worked out pretty well.

If you have a list nightmare leave me a comment and if you don’t tell me what you think below.