"What's It Worth To You..?"

Bernard “Barney” Hale Zick (1948 - 2005)

"If you will do for two years what nobody else is willing
to do, you will be able to do for the rest of your life
what nobody else can do."

(Barney Zick - Creative Real Estate Investor / Trainer)

Making Your Own Sub2 Luck...

My partner Jim called me up a day ago and said we need to go 'drive for dollars' tomorrow (or something like that). I said, "Great, let's go!"

So we arranged to meet at our regular car pooling place at the bourgeoisie "Le McDonald's" home of "Le Big Mac de Deliciose". After getting on the road, Jim pulled out his folder packed with prospective deals, and gave me directions on where to head.

We drove by some familiar houses that we'd negotiated on, and a few others that had just become obviously vacant and abandoned.

After driving around the farm writing down new addresses for about two hours or so, we came across a house that once had quite lush landscaping. I pulled in the driveway, got out, and walked up to the garage door and found it unlocked and opened it. Thankfully, someone had already bashed in the entry door from the garage to give us access! Jim and I went in and explored. It was beautiful and well laid out. Later, I discovered that the owner lived around the corner.

As we continued driving, we saw a woman out in her front yard appearing to rake the dirt of her rental house. I got out and jokingly asked if she was preparing the house for rent? She laughed, and said, "No, I live here." I laughed, too, and added for giggles if she was interested in selling. Before she could answer, I said, "Come on! Tell me you want to sell this place." She laughed again at my forwardness (I think), and said, "OK, it's for sale, if you say so."

With the conversation set firmly on friendly ground, I was able to discover that she owned a condo nearby that was in foreclosure, but the bank hadn't filed an NOD yet. She had just stopped making payments when the renter bailed. Her interest payment was very low, but the rent didn't quite cover everything.

My mind whirled. If I sub2'd this condo and resold it on a Land Contract for the loan balance, but at market interest rate, I could not only get a $10,000 down payment; make a couple hundred dollars a month on the payment spread, but save this lady's credit, and become a hero. At this point Jim interrupted me and saved me from offering this woman any money! Just kidding. I didn't offer her a dime.

Bottom line: We're taking title, reselling the condo with $10k down; making $200 a month in cash and giving the seller nothing, but a credit boost. Yay. All that just by asking a "landlord" if she wants to the sell the 'hell hole' that she's raking the dirt on.

Back to the other house. We're talking to the seller, offering them a few hundred bucks for the right to control the property, lease it out, and negotiate a loan modification (if that fails, we've collected rent for about 18 months at $1,300 a month) without paying property taxes, but maintaining the seller's fire insurance.

Both these prospects came just from driving around YESTERDAY! Does this happen every time? No. But it happens often enough to keep us jazzed up about doing small sub2 deals.

BTW, how much money does this mean we made with our two hours of driving around? Well, $1,300 x 18 months is $23,400. Then we've got the condo with $10k up front, and $200 for another 18 months. That's another $13,600. So we will have made $34,000 in 18 months for maybe 2 hours worth of prospecting.

Now you might ask, what's it gonna cost to fix the condo and clean up the house? We'll have $3,500 invested total. So, $30,500 isn't too bad. That's still about $15,000 an hour less prep work. Okay, Jim and I are splitting the profit so it's actually $7,500 an hour. That's better than my surgeon makes an hour.

If you'd like to know exactly how Jim and I put these profitable sub2 deals together click the link below.

You'll have an opportunity to provide your name and email address and then be directed to the Screw The Bank information page via email.

Screw The Bank! Sub2 Profit System

"Screw The Bank!" - The Training Course!

Whew! Finally. You can relax now! Yes, my course is ready and coming in January in FULL FORCE.

The launch is being rolled out first as a professional training program offered to the San Diego Creative Investors Association members and friends.

I have received so much help, encouragement and feedback from them that I thought I would just give that group first crack at what I've got to offer. Plus, this is a hard group to satisfy since they didn't just fall off the turnip truck.

Meanwhile, this course has been a challenge to assemble, but very satisfying at the same time. Now, what I hope happens is that I catch a comet with this program and begin to share it nationwide.

There's a lot of folks who don't know how to start, need a step-by-step program that is easy to following...and makes lots of money for them.
There's lots of stuff to say about this money-maker of mine.

Those interested in knowing more, or are just curious about what I'm offering the SDCIA group, click on the picture of the "SCREW", or click HERE

My First Student! :D

I came across this video from Preston Ely, the probate real estate guru. He posted this on FaceBook and I just laughed my head off.

One reason I post this, is just to prove that ANYONE can do real estate. It just takes passion, persistence, and a program! I give this guy kudos for plugging away.

Note: The guy's wife's fingers pic at his nose --- Hilarious!

Enjoy!


f

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!

"Bigger League Negotiations" Let The Seller Say, "Yes."

Loon wrote [PropBot Forum - 5+ Units - 8/8/09]

"I always start at zero, assumptively[sic], and make the seller explain to me why that won't work. If I pay more than 5% I expect a real bargain price. It all depends on what your competition might be offering, but don't assume there even is any competition until your seller shows their hand."

This short post by "Loon" from PropBot.com demonstrates tremendous sophistication. So many investors are afraid of negotiations. They just are. They're afraid of the Seller and/or his reactions to a profitable offer. Worse, the amateurs fall into a trap of offering their "last best offer" trying to achieve a clean, acceptable deal. That is usually stupid, unless there's lot of competition. If so, then I ask why am I competing with anyone over any property in the first place?

Notwithstanding, doing this undermines the ability for both the buyer and seller to "work" for a closing --- and achieve satisfaction for doing so.

Yes, we all once dreamed of making clean, acceptable, profitable offers --- where all the chips fell into place with just one offer and no "pesky" negotiating. Well, that's reserved for dreamers, not for professionals. The fact is, if there isn't some emotional satisfaction involved by both the Buyer and Seller in reaching a deal, the deal will likely not happen. This is sad.

It's sad because the essence of getting either good terms, or a good price is allowing the seller/buyer to achieve emotional satisfaction from the negotiation effort. And we do that by opening the bid far away from where the seller/buyer wants to "end up,": as it were. Otherwise, what Seller doesn't want to say, "Yeah, I finally ground that guy down until he paid me what I wanted," or a Buyer bragging about how he beat the Seller to a pulp?

I say, ahh the satisfaction of getting exactly what I wanted by "forcing" a Seller to "cave" by making me to pay 50% of retail value!" Get it?

Well, the Seller's achievement may be debatable from an objective point of view. However, the point of this post is about negotiating "assumptively" to coin "Loon's" phrase here. Loon suggested assuming that "zero" percent interest is acceptable for all parties, and unless the Seller can prove this won't work for him, (apart from his greed, and no competition), the Seller has to show his cards and/or cave, all the while put the Seller on the defensive regarding the interest rate. I love it. Why not assume things are in your favor when initiating negotiations? The post goes further...

Someone commented: "Loon, Did I understand you correctly? They [the Seller] gave you free carry back financing?" [talking about one of Loon's four "zero" interest loan deals]

Loon: "Absolutely. You rarely get what you don't ask for. If they insist on interest, well, then let the negotiating begin!"

This is is so important. Let the Seller defend his position. But the Seller won't feel compelled to defend his "greed," if we don't put him in a place where he MUST defend his greed. That means starting low, and working to the satisfactory conclusion. BTW, the satisfactory conclusion has nothing to do with an objectively equitable position.

I've seen Seller's cave to fantastic prices just because other things were more important than price. So, if we don't know what the Seller's motivation is, it's very good that we assume the Seller wants to finance us, and finance us for free --- or.... give the property to us...because.... (he's dying with no heirs; likes us a lot; hates his children and doesn't want to give them a dime; has a lapse in judgment....etc.), or otherwise force them to defend charging us anything.

[As an aside, about 15 years ago a guy in my church made friends with a freight shipping company owner. He asked the owner to literally give him the company in his will. The owner had no wife or children. My friend ended up with the company just by asking. He simply made an offer "assumptively" and gave the owner the opportunity to say, "yes". My friend went from earning $60k a year to making $$760k a year.]

As Loon puts it, "....[we] rarely get what we don't ask for."

The moral is to ask for the moon, and expect to get it. This is precisely what big league negotiators do in the real world. It also provides a way to create satisfaction in the deal for everyone. That's how we get into the big leagues.

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

How To Turn A Lemon Into Lemonade!

I just came away from an appointment that I would not normally have made. The seller showed me all the "wanter-itis" "sores" I could stand to look at.

However, ever a masochist and always curious, I wanted to see the cute 1 acre property anyway, and keep my sub2 pitching arm toned up, so I played the interested "wanter" role anyway and asked to see the property today at 9 a.m.

I brought in my credential book ready to "yellow pad" the crap out of the victims, er the sellers, again just to keep my pitching arm toned up.

First I knew they wanted $25,000 up front. Deal killer. They owed $19,000 more on the property than it was worth. They were asking $100,000 more than what is was worth. Really a deal killer. They told me, point blank, they weren't desperate to sell the house. Really, really, really a deal killer. And finally, if this wasn't the straw that broke the camel's back, they wanted their Realtor buddy to be present at my presentation. OK, no really?

Well, upon arrival I discovered that the agent was one I made a verbal offer through two years ago on a pre-foreclosure. I know he was desperate to sell something, but I wasn't seriously interested in that deal either. I let the agent beat the seller up with my low-ball opinion. I know how the game works. I was helping him get a closing. He sold that house for 80k less partly because I gave him ammunition to discourage the seller with. he he.

Wow so now I've got an ally, I hoped. I introduced myself again and then pitched down the center. I showed everyone the examples of houses we buy and sell, and the referral and reference letters, that we support little league and the better business bureau, and offered the "bad news" RE articles, etc.

This was my second time at the property. I already toured the house the day I called, so that part of the presentation was moot. So, we just analyzed the numbers as if, and I outlined all the costs, carrying costs (based on 23 months of inventory! wow), and finally showed them that they would have to cough up $20,000, if they waited for a retail buyer (as if the price weren't $100,000 over retail as it was). Frankly it would take them 10 years to find a buyer for that extra $100,000k in price. Actually, just one day, if they went with me! Who knew?! Lots of laughs.

I informed the sellers that I was there to qualify them for our system of buying and selling (following the "cash now" script/pitch exactly).

During the scripted presentation, I uncovered all sorts of nook and crannies of need. Problematic for me was the wife was a ditz. She couldn't quite comprehend what "take over payments" meant exactly. Argh!

So it was an uphill battle. I digressed from the script in order to come at something the sellers could understand without having to defer to my now agent-buddy.

After explaining that I could make it possible for them to buy a cheaper house in Arizona (and with the agents help in suggesting they could find a "low-down" lender in Arizona), the entire pace of the negotiations picked up speed.

All of the sudden the need for $25,000 as a down payment disappeared, the fear of having to be responsible for repairs disappeared, and the fact that they could get out of the payments on the house, move to a cheaper home with a cheaper mortgage, could enable them to continue paying on their credit cards, and protecting their credit became a genuine solution to them. Who knew?

So again, I suggested two alternatives to the sellers; 1) a lease option (which I only suggested so that I could knock it down), or 2) take over the payments (which I showed all the more benefits of doing as opposed to "renting" their house for 10 years, etc.). It took me a while to explain how this could work as a long term solution to their $100,000 over-pricing.

Here's where you sharpy's might ask, why didn't the "yellow pad" analysis enable me to knock off $100,000? Well, it did. However, I used the analysis to demonstrate that even their over-retail asking price wasn't going to net them anything. And from talking to them, they would rather have an R E O, than let someone equity-strip their perception of equity.

I could see how $400 or $500 extra a month just waiting for a gestation period would be worth my time anyhow, so I met their price, if they were willing to give me my terms. This was the crux of the negotiations.


Well, the couple can't continue paying on $40,000 of credit card debt, AND make their mortgage very much longer (of $287,000) --- and they really want to move to Arizona a.s.a.p., so the hubby can die near relatives.

Meanwhile, they wanted enough out of the deal immediately to pay off the credit cards originally. I said, in not so many words, the best I can do is take over your first mortgage loan, and promise you the extra $100,000 in 120 months. And at this price, I'm not going to put anything down, or pay interest on the extra $100,000, or make credit card payments. And btw, you'll need to leave everything here when you leave so that I can attract a decent buyer willing to pay $100,000 over retail.

They asked the Realtor buddy to confirm what I've said was true, and he backed me up 100%! Who knew?

Bottom line, they want to make sure that if they sell this way, they won't have to come back and fix anything, regardless if they lease option, or sub2, me. I said fine.

And their other concern is that one of them won't live out the 10 years, and will be stuck with the whole credit card bill and have to wait for the remaining $100,000. I said fine. No, just kidding.

I just said I can only one thing here, and give you a silent, no interest 10-year balloon for the extra $100,000.

So, now they're getting back in touch with the mortgage broker in Arizona to see if they can actually buy a "used house" with very little down, and if they can, they said they want to do the deal. That's a far cry from we want $25k, and "What the f--k does 'take over payments' mean!"

What I should have done is had them sign my preliminary Buy Agreement, and then let them do all their due diligence, and then actually force them to cancel our agreement. But, leaving the "printing out a contract" task until eighty thirty this morning, and discovering that my printer server wouldn't recognize the wireless router (which has never happened), I went without being my usually prepared self.

So, after this couple finds out that they can get into a smaller house, with a lower down in Arizona, and still qualify for a loan since they've barely been able to keep their credit card and house payments current --- I believe I can resell this place for a contract price of $390,000 in 10 years, realize a monthly spread on the payments of about $400 a month, with about $15,000 up front.

Just thought I'd share this scheme with you guys. The things that make this work are that the first mortgage has a low fixed interest rate for $1,700 mo. PI which is very marketable; I'm not paying anything on the perceived equity until 2018, and I'm able to get into the deal without any real cash, just notary and recording fees; I'm only paying $1,400 taxes on a 1988 valuation/purchase; and I've got buyers for this thing in the pipeline.

Who knew any of this would be likely had I not made an appointment and made an off-the-cuff offer presentation, on a house I was only curious to use for comparison --- and was otherwise a "loser deal".

Anyone else have a war story they want to share?

I'll let you know what happens when this couple realizes NOBODY else has what I have to offer them.

Houston. We Have a Problem.

I'm now officially sixty days behind schedule in launching my training course. It's been unbelievably complicated and time consuming. I'm glad I'm not having to hold my breath --- or my bladder!

I've still got writing, editing, and tons of loose ends waiting to be nailed down. Who knew how much brain power was required to put together something like this, I ask.

Meanwhile, I'm motivated by the fact that one of my mentors offered two-day training camps every two months for about ten students at a time for about two thousand dollars each person. If my math is correct that's about ten thousand dollars a month gross before expenses. He probably spent about thirty percent on overhead. He told me that it wore him out and he's no longer offering the training camps. Hmmm. Maybe it was too inexpensive?

My other mentor meanwhile is grossing nearly four hundred thousand a month selling a newsletter! I'm almost tempted to go into the newsletter writing business! :) Nah.

Yesterday I was writing advertising copy. It read well enough that I was halfway tempted to pull out my VISA card and order my own course from myself! Ha! Maybe I should do that anyway just to make sure everything works?

During my research of various account providers I discovered that PayPal has a LOT of restrictions, including holding back money from it's clients for six months in the event they suspect fraud. I also learned that one of the merchant account providers held up several hundred thousand dollars of my mentor's VISA receipts because the credit card processor was surprised by and consequently suspicious of the huge amount of money they were processing. They are still holding back several hundred thousand dollars of his --- after six months! Another vendor is still holding about thirty thousand dollars. Wow. That would be scary and irritating!

I just learned that my credit card company wants to know what my sales estimates are before they "approve" my merchant accounts. With all the 9/11 security checks and money laundering schemes they want to know what to expect. I have zero idea. For safety reasons I'm going to say, "Exactly Six Quadrillion Dollars a month."

That's a start, huh?

Meanwhile, back to the writing, editing and marketing "stone." I'm so anxious and excited about my course launch that I'm giggly on my way to bed every night!

More to come later...

Der Bubble