"Why Sub2 Investors Give Up..."

The real estate business is always making room for those who are not afraid to work. The fact is the harder one "works" in real estate, the more one learns, the more distinctions one makes, and eventually ...the more money one makes. It's just the law.

Of course, we see the pros make this business look like a walk in the park. And all the gurus tell us that if we just follow their prescription that we'll be just like the big boys in no time.

Well, that's true that gurus do offer meaningful short cuts and systems that help us get traction very fast. However, just because somebody has the gold mine, doesn't mean they're committed to mining it.

I've witnessed students buy my Sub2 course, which is specifically geared to bypass as much wheel-spinning and frustration as possible, and then do practically nothing with it. Here they've got a tool that could help them buy their own dream house, or dream car, and instead they put the tool on the shelf "until they can get around to using it." How long do they want to wait to live prosperously, I ask myself.

Other students, have turned terrible situations around for themselves. They didn't wait around for the stars to line up, to get cracking.

Last month a student contacted me about his investing objectives. He wanted some help getting organized and putting a system together to buy some income property. When I found out what his deadline was, I was practically gulping air, it was so ambitious.

I'm not sure whether it was out of desperation, vision, or what, but his goal was short-fused. It's inspiring an fun to help someone reach an important, if not difficult goal. So, what was the deadline? March 1. So we got cracking! He took the steps necessary to familiarize himself with data sheets, and started making calls on properties. Now he's advertising for sellers and I am excited about helping him reach this goal...

At the same time, this was happening, I had just about had it listening to other newbies complain, "there's no deals," "I can't find anything to buy," "agents are jerks," "sellers want too much," and blahdy blah, and "I want to give up", because they can't find low hanging fruit like the gurus all promised will happen if they fork over $5,000.00 for their boot camp. Of course I don't promise "low hanging fruit," but I do promise the ability to recognize it! There's a difference.

Well, "Reality Knocking! Hello!" It's takes effort to do real estate profitably. That's what my new student is learning, too. I told him that he needed to complete 50 analysis sheets on 50 different properties so that he could learn to instantly recognize a deal. Slowly and painstaking we plowed through a couple income property data sheets so he could get acquainted with the process (and I relearned some important assumptions at the same time). Did you know that sellers will lie about their numbers to gather interest? Anywhoo...

Well, to really drive this point home about the work involved in finding deals, I received a call from a car salesman who wanted to lease purchase a house for himself. I told him that I had nothing in his area, but I would help him find something that he could negotiate on his own (after all he's a professional negotiator). I told him that he would have to put in some hours on the phone, and pointed him to the most likely prospects.

The next day he called me to let me know he found four potential deals ....after about 8 hours of cold calling. After he told me the terms he was throwing out, I could only sit in awe at what the sellers said they were interested in doing with this guy. Of course the next thing out of his mouth was that he wanted to bird dog for me. Of course I said, "nah, I work my own deals, thanks, but no thanks." NOT! Of course, I took him up on his offer as soon as I could get the word "Fantastic!" out of my mouth.

Well, I've got a student digging for income property gems and learning to recognize deals on the spot, and a used car salesman looking in just the right places for deals for himself (and me) and neither of them are complaining about the hard work involved so far.

So, forget about finding the low hanging fruit, and start digging for buried treasure in your own gold mine, and dig out the juicy deals that nobody else knows exists, like my students and bird dogs are willing to do. Then in no time, you'll reach your goals and somebody will assume it's just as easy as the gurus say it is!

"Pimp My Sub2..!"

Only in San Bernardino, CA will you find the "Pimp my Tattoo" mobile tattoo clinic and bus conversion! [well, i guess this bus actually goes 'anywhere']

Yes, friends step aboard and take a trip directly to the psychedelic express to "tat" nirvana! Or not.

I barely got this photo snapped before the bus turned left at the next light. If you notice the graffiti all over the back of the bus in white spray paint. I had to laugh at the graffiti on graffiti situation. I could barely tell which was supposed to be there, and which was not. [It's supposed to be there! Who knew?]

Meanwhile, the bumper read: "pimpmytattoo.com" so I gleefully refer you to them, because I'm so impressed with their marketing gimmick! At their site, you'll see better pictures of the actual bus I saw (being driven in Ohio).

The real reason I post this, is because it draws attention to the cash flow opportunities that exist in these areas. These are management intensive locales, but at the same time opportunities to create an income stream that doesn't require an arm and a leg to get into.

Anytime I hear someone say that there's no opportunities in real estate anymore, I now just direct them to San Bernardino County. Owners change hands often in these places. Often the owners that knew there was cash flow, also didn't know how to manage a business, or how to market correctly. They're the same ones that become, "don't wanters," as Robert Allen describes them; those who want out of their properties. These same owners will accept very creative terms just to save their butts.

I bought an apartment building in an economically depressed area very similar to this. I got in free. All I had to do was apply my professional management skills to turn the place around. It didn't need rehabbing as such. It was just in need of some a consistent, professional, management application to create both cash flow and a substantial amount of equity on paper.

It's simple, but not always easy, however. Tenants that were used to a loosey-goosey management style from the previous owner, which created the mess for the owner in the first place, underwent a severe case of "management overhaul shock" after I pulled in.

Many tenants bailed on the situation, because they had no intention of following any "new" rules, or actually paying their rent on schedule. Did I mention my gigantic late fees?

Anyway, Sub2 financing came in so very handy for this situation, because nobody in their right mind would have tried to get financing on this failed management hell hole, otherwise. The seller knew it. I knew it.

Find a seller with a problem, not a property with a problem, and get rich solving the seller's problem with the property. Yay Sub2!

If you would like to know how I bought that property without new financing click here: "Screw The Bank!"

Rocket Test 1

What a week!

In preparation for my own product launch I've been practicing my marketing skills on a real estate related affiliate course. The course is very good, but the sales page is weak.

My "click rate" is three times better than what I imagined right off the launch pad, but I'm not happy with the zero conversion rate to date [sad face].

I'll be REALLY glad when I get that first conversion! Then I can reverse engineer my approach to see where that one conversion came from, and then focus on doing MUCH more of whatever I was doing! :)

After I get the "conversion" mechanics figured out, and I'm pulling in at least $30 a day, then I'll have to consider the next step.

BTW, what is $30 a day? Is that about $900 a month? Well, that's a new Vette payment.

Whoopee!

If you'd like to see what I'm mercilessly pushing as a test click here:

Click Here!

The "White Pad" Analysis

It pays to know your numbers. I've been plowing through lots of operating data sheets for apartment buildings lately. When I first started looking at them after so many years of not doing that... I was hilariously rusty.

I used to be able to rattle off percentages and do mind calcs like "Rainman." However, for a while, I looked blankly at data sheets trying to remember why agents continue to pawn off "Pro Formas" on me, and never offer the actual operating numbers.

I've had agents tell me that they don't provide the actual operating numbers without a written offer. In other words, the Seller is testing the water, and doesn't want to get organized unless he's got an actual sucker on the line that would actually fall for that approach.

Normally, I would pass on a situation like this, but let me tell you a story about a Seller who had no numbers, did not know his numbers, and as a result gave me several hundred thousand dollars in equity because of his ignorance.

The Seller had just foreclosed on the building that he had previously seller-financed. He didn't have any numbers, except the taxes and insurance invoices. He also didn't have a clear idea of who was in the building, or who was paying rent. He didn't know the market rents or vacancy factor in the area. Otherwise, I had to make my own assumptions of what the potential was. This was my first apartment purchase.

After all was said and done, I bought this property for less than 25% of it's retail value because the Seller himself didn't know his numbers whatsoever. He offered a sale price I felt was too good to be true, and I recognized the sale price as being so grossly under market that I could literally barely hold the pen to write up the agreement. To make matters worse, I didn't have a pre-printed sale agreement with me, so I had to write a "shorthand" contract on a sheet of yellow lined note paper. All I listed was the price, the down, the closing date, the loan balance, and the interest rate. I closed three months later.

Now because I knew my numbers I was able to confidently and quickly, if not not nervously and feverishly act! :D

The Seller, meantime, did not know what he'd done to himself until he went back home and found his answering machine full of inquiries about his building. I would love to have been a fly on the wall and saw his face after listening to 30 messages asking about his apartments! he he he

I did spend 90 days defending my contract after the Seller realized what happened and wanted to back out for obvious reasons. I wouldn't back out, and we finally closed after threatening to tie the property up six ways from Sunday, or until his great grand children were dead, whichever occurred last.

This story would have never happened had I not analyzed over 100 operating data sheets in depth, and performed forecasts and what-ifs on every one of them to see what I could do under various scenarios. I knew my farm, and my numbers.

Since I knew exactly what I could do with 30 newer units in downtown Kansas City, and the Seller did not know, I achieved a 75% discount.

The moral of this story is, know your numbers, be able to make educated guesses, and then seize the opportunities when they present themselves.

Somebody might say, "But Jay, that was a gross steal. How could you not know that, regardless of whether you had analyzed 100 other data sheets, or not?" Well, the analysis gave me confidence to avoid second-guessing myself, and flinching at the last moment. Months before, without having done hardly any analysis, I had come across other "steals," but hadn't really appreciated what I was looking at...or the scarcity of deals like this. As a result, I blinked...and lost deals to investors that did know my farm better than I knew it.

Meanwhile, the fact remains that the Seller did not know I WAS BUYING A STEAL --- from him.

Someone recommended that we, "Know Thy Numbers". I never recommend this to Sellers! :D