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

Off Topic, but...It's OK.

Kick Mutt!

There are five elements in good advertising that I want to discuss here. I'm talking mainly about direct mail pieces, and I'm offering a video clip for discussion. Meantime, many businesses fall prey to making up in design, what they lack in ad copy. That is to say that amateurs make the mistake of thinking "pretty" mail pieces produce higher conversions than ugly ones.

It's been proven time and after time that {controlled for ad copy alone}, ugly pieces are read 2 to 1 over pretty pieces. Hmmm. Regardless of the "look", here are five elements to include in good advertising copy:

1. Clear.
2. Forceful.
   
3. Memorable.
   
4. Easy to understand.
5. Call to action.

Play the video below see how this advertiser included all five elements in the video. I'll say that this add is a bit cloying, but they sure get their point across.

Consider how you might improve your own advertising. This has been very helpful to me.

The Right Tool...

Of course this post will make any guy cringe. However, the point of this post is to illustrate how important it is to use the right tool for the right job (or...really not try the job at all!).

In fear of devolving this post into a vulgar double entendre, the real story of using the "wrong tool" in question was used by a young man to perform what would expectantly result in an unsuccessful effort to give his "own tool" a circumcision.

Ouch!!! No really!

After the aborted surgery, the young man was rushed to a hospital at Stevenage, Hertfordshire (England). The wound was disinfected and cleansed before he was given a bed in an observation ward.

"This is something we would advise men never to attempt," a medic said, "The results can be quite horrific and long-lasting and have quite an affect on a man's sexual performance."

Oh, really...? "advise never to attempt!" Such words of wisdom.

So, how does this apply to real estate investing? Well, for one, I've seen enough newbie investors try to create/use "one-size-fits-all" negotiations and presentations that sent them out the door in a bloody mess of rejected offers.

That's why having/using the right tools to qualify/disqualify prospects as soon as possible in order to produce successful outcomes is vital. Otherwise, we get promises of the moon by passive-aggressive, codependent sellers that want to please us more than they want to sell, or.... we get a punch in the nose. Whichever, we lose the deal.

Meanwhile, we can burn out real fast knocking our heads against unmotivated seller's skulls! So why pitch those who don't initiate a sign of motivation in the first place?

The answer is we don't want to. However, in order to avoid this we need to use another "special" tool. This is a tool that eliminates most of the Sellers that ask retail prices, have options, can afford real estate agents, are maintaining their homes, and then look forward to rejecting our profitable offers (otherwise known as "low-ball" offers).

BTW, unmotivated Sellers just LOVE to turn down our profitable offers. These are a DIFFERENT species of sellers.

So what is this "special" tool? The tool is the thing that not only helps us uncover the motivated sellers, but gets them to call us first, before they think to call anybody else.

Okay the tool is...(drum roll, please)

The U.S. Postal Service!

Yes, using the mail system to market ourselves to the most likely prospects is the BEST tool we have available. It's private, confidential and "below the radar" of nearly all of our competitors. Mailing to the most likely prospects is likely to keep us from getting bloody noses, and/or empty promises.

The challenge then is creating the best mailing list. Not just a mailing list, but the BEST one. One that has the most likely prospects. Ones that don't need extra "warming up". One's that just need to believe that we're not showing up to scalp them. Remember we can sheer and sheer, but only skin...once. So, we only do a nice, comfortable, enjoyable, satisfying coat sheering. This way the sheered will recommend us to others.

The next question revolves around the definitions of what the most likely prospect are that we put on the mailing list. That is the subject of a chapter in my new investing course coming out soon.

Jay

Thomas Paine Has It Right!