Push In The Clutch...! Or Else.

“Push in the clutch.”

That was my first driving lesson.

I learned more later.

As we all piled back in the car with our milkshakes, hamburgers, Cokes and what not, I was excited to continue to demonstrate my prowess as a newly minted driver.
Seat belt: check. Mirror: check. Adjust steering column height: check. Everything was good.

Ignition key: check. Then I gently, but firmly turned the ignition on. Suddenly like awakening a drunk who didn’t know where he was, and with a spasm and lurching motion, the car heaved forward and immediately died.

Everyone’s food landed on the floor along with milkshakes and pop all over the upholstery, carpeting, and our laps. Whoopsie! I forget to push in the clutch. My bad.

Well then, I tried that twice. Crap, it was like a McDonald’s exploded all over us. Now, nobody was in a mood to ride with me. Never mind I got them to McDonald’s safely and without a hitch. Such short memories!

Well, I see the same misfortune today as newbie real estate investors don’t do first things first. They might know what to do, but they try to take shortcuts, or just forget.

What is this first thing? Treat the business as a business, not a hobby ...or a job.

Doing just that ...first, puts anyone down the road an extra two hundred miles.

Speaking of doing first things first...

Here’s a Christmas Present for You...

“7 Secrets For Success In Business, Plus One”

1. Treat Your Business Like A Business, Not A Job.
2. Keep Good Records.
3. Test And Track Your Marketing.
4. Market.
5. Maintain A Protocol For Moving Prospects Through Your Pipeline.
6. Discipline Your Work Schedule
7. Protect Your Most Precious Commodity (Your Time).
8. Charge What You’re Worth.

Merry Christmas To You

Up A Tree?

It's just a matter of time before the bank says, "Um, your loan is denied."

Gulp. "Wait I've got 20% down, and a 720 credit score!"

"Yeah, sorry 'bout that, but the appraisal came in short... we want 25% down, not 20%... and... besides --- you're ugly!"

This is today's market. And...unless we've got all cash, and are happy doing one deal a year (or less), we've got to have alternatives.

We've got to be able to buy without banks, or cash, or credit, or a job...and by golly we've got to be able to do it over and over again!

[Cue Mighty Mouse theme song] Sub-To to the rescue!

Back in the early '90's we wanted to buy two board and care facilities in Orange and San Diego counties. But, alas, we were equity rich, but cash poor. And without bunches of cash to put down, we were also essentially credit "sunk".

Banks don't lend money to people who need it. And they don't lend money to people who don't fit their mold. Normally, the bank looks to the business operating data and history to "justify the loans", etc. Well, that's the bad part.

Only one of the two operations was actually "operating". The other one was non-operational, but had a huge upside with good management applied. Unfortunately, we didn't have demonstrable experience operating a board and care facility, and so the bank wasn't interested whatsoever in loaning us money at any price (or terms).

What to do? Somebody in our brain tank suggested just going around the bank. What? Yes, it was suggested that we just give the seller what he wants and take the rest. Well, the seller wanted cash, and we couldn't get it without selling things, and this would take forever! Also, we had to be on title to operate the board and care facilities lawfully.

Our brain tank buddies suggested that we trade properties all subject to the underlying loans, including ours...and just take title to the real esate under the care facilities. Brilliant!

What? Yes, we traded a property with enough equity for their two businesses, and we took title subject-to the loans on the board and care real estate, and the seller took our property subject-to, and later refinanced cash out of it. What's more they turned our property trade into yet another board and care facility to sell for profit.

Problem solved!

Well, we got everything running, and successfully operated two care facilities, and essentially used dead equity from our property to buy two businesses without getting new loan, without coughing up any cash, and operated them lawfully with genuine title ownership. Such a deal!

P.S. If we had been smarter and a little less enamored with our management expertise, we could have managed to keep control of our equity rich property and not trade it up front, but simply got the numbers on the board and care facilities looking good, and used the new credit from our business operation to pay off a note to the sellers. This would have been simpler, and more profitable, but alas, we made money anyway.

In my new course, you'll learn how to buy a business without credit, and very little cash, from motivated sellers.

Jay