Negotiating a Get Rich Slow Scheme


by Dave Miller

The easiest way to get rich quick is to accumulate wealth slowly. Well then, how does one accumulate wealth slowly?

First you need a plan. A solid, well thought-out, practically applicable plan.

This requires a solid plan, to preserve your precious capital, as you do not want to go backward. The retaining of capital is a key element of moving toward your goal. If you lose your initial capital you must not only gain it back but also recoup the lost time.

It must be well thought-out; you do not want to be jumping on some quick get rich band wagon that is ready to go bust.

The plan must be feasible. Over the ages three areas have proven successful; real estate, gold, and businesses. Most wealthy people own one of these three.

Don’t put all your eggs in one basket, just like your Daddy told you. But nevertheless get some baskets and fill them with eggs. Many people use that line to delay saving and investing.

The real estate basket is the topic of discussion today.

Enter John Schaub and his book Building Wealth One House at a Time.

Building Wealth One House at a Time – John Schaub

This book focuses on strategies for creating wealth through real estate by starting small – and making the right moves. Nationally known real estate expert and speaker, John Schaub, learned his craft in the best way possible–on the job, and through every kind of market. He published a great book titled Building your Wealth one House at a Time. In it he shows you how to buy homes with little money down using private or owner financing. By doing this he eliminates the whims of the banking world. The lender he says, is more concerned about getting his money back than earning high interest. In Chapter 6 he tells you to do what it takes to make the lender happy, over secure if you must.

Click this link to read an article I also wrote on keeping the your lender happy.

He recommends only single family dwellings, no fancy shmancy highfalutin projects. Just solid homes the typical family desires and can afford to live in.

The part that hit home for me was that he says buy one home a year. No more. He warns of the dangers of diving headfirst. By waiting a year to purchase your second investment property you will learn innumerable lessons before plunging in.

John uses two people to accumulate wealth; his renters and his lender or investor. His lenders allow him to buy the home and the renters pay for it. In the meantime he is accumulating wealth. Renting to long-term tenants, with financial incentives to pay on time.

By using leverage, i.e. owner financing, investors or the bank, he can purchase a home that otherwise he would have needed to walk away from. This then allows him to have a renter paying down on the mortgage. But remember, leverage is a two-edged sword. It can help you accumulate faster and it can take you down even faster. You must carefully consider the amount of leverage you are comfortable with and what makes sense in your situation.

Building Your Wealth One House at a Time is very concise yet an easy to read book. It lays out a blueprint that is easy to follow using graphs and figures.

Unique is his approach to focusing on buying houses in good-quality neighborhoods while simultaneously creating positive cash flow properties. John uses the Goldilocks theory when choosing a neighborhood: not too expensive and not too cheap. Go with a neighborhood where prices are just right.

Buy his book today. Read it. Implement a plan. Take the first (I know this is the hardest one but do it anyway) step. You will not get rich quickly but you will most definitely be headed in the right direction.

Now for the good news! John Schaub is coming to town. Well, rather to a town in New Jersey. Iselin.

John is presenting a one day class called “negotiating secrets of a Professional Buyer”. Saturday June 23 2012 from 9:00 to 4:00pm. You can register here: http://www.eventbrite.com/event/3199047437 I plan on being there so I hope see a few of you there. If anyone is interested in carpooling from Lancaster County just call me. Cell number 717-656-0749. Currently four of us are heading there. Join us.

A quote from John’s site:

John has survived, prospered, and helped his students to make money in every market since 1975. Come learn how to recognize which opportunities are right for you today and for the next five years at this most interesting time in our history. Get ready for an exciting and profitable future!

You can subscribe to my blog on the right side bar for farther updates. If you do so, you will receive a copy of my blog as soon as I post it thus saving you time by not needing to check back.

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As Barren Ground Gets So Goes Lackadaisical Investing


by Dave Miller

The bare ground of the empty garden was being overrun by weeds in a short few weeks. So I tilled the ground last night and scattered the Jerry oats. With the dirt knocked loose and the weeds stunned the oat seeds I spread can find a hold and quickly overpower the weeds.

  The seed is planted and has a good chance to grow. No weeds to hinder the growth. Fertile ground to root into. At the sight of the greenness we will see the fruits of the labor, our toil combined with productive soil coming to fruition.

Is neutrality possible? The first law of motion says: The velocity of a body remains constant unless the body is acted upon by an external force. So something at rest stays at rest. Unless an outside force affects it. It stays at rest if nothing affects it, but something is always affecting something.

To invest or not to invest. That is the question.

When I say invest I mean good investing, not the I’m-too-uncertain-so-I-will-stick-it-in-bank flavor of investing.

Good Investing; By making good investments of time, money and knowledge you will grow in confidence and intellect. When you see your seeds multiply, your heart will be happy and content. This is not always easy, it’s work, but it’s rewarding.

Bad Investing; When investments go bad they deflate the morale, they squash and humiliate. Your attitude and life will be affected, like it or not, it just will.

Neutrality; By not investing your money, holding it in cash or putting it in a savings account for ½% interest a year, you are not moving. As Isaac Newton said, a body at rest stays at rest unless affected by an external force. The external force is never at rest. If you are not investing wisely you can go backwards, but if you do not invest, you will also go backwards. Neutrality is not an option. The outside force is in motion and if it is going faster than you then you are going backwards.  

Here a few reasons why “neutral” money holding doesn’t exist.

  • If you invest at a ½% in the bank you are (1) not keeping up with inflation (2) your reward sucks so the incentive to save more is squashed.
  • When sitting on cash you (1) are not keeping up with inflation (2) are prone to spend more than needed because it’s visible and accessible. Money in your pocket has a way of disappearing.
  • Did I mention inflation? According to our government inflation has been around 2% to 3% but has jumped to around 3.75% last month. Now we could spend a whole paper on the inaccuracy of these government statistics but we will let it go for now. Nevertheless, they may be inaccurate but the experts agree they are pushed down, meaning in reality they are higher. So if you are not making in excess of 4% to 5% you are floating backwards. Your money will buy less in the future.

The ground does not like to be barren. It will cover itself. Its default is weeds. So if you choose to sit by idly it will cover itself with weeds. Do I want weeds?  No. I will work, till, and plant to create an environment that allows the ground the produce. Today it’s raining steadily. I smile because I planned and prepared.

Related posts:

The Quick and the Deal


by Dave Miller

Ever wholesale a property in three days without leaving the office?

Last week I got a call from my Realtor. “Beaver St is back”, was his message.

Last November I placed an offer on this same property and got a signed agreement. It was a complicated short sale and the seller was not going to be able to give a clear title by the settlement date. I did have a sales agreement signed and could have forced the sale. But that would have been a costly hassle not worth the time and stress. I asked to retract the agreement and he consented.

I did take note, a few months ago, that this property was going to the foreclose auction. I was not able to attend the auction. The bank bought the property back at the auction and put it back on the market.

Monday, 4:08 pm. That’s when I get the call, only a few hours after it hit the MLS. Mmy sharp eyed Realtor spots it and forwards the information. After a brief discussion, I hang up, pull the file (from a year ago), and run the numbers.

A property like this not going to be on the market long, this I know. So I need to move fast. All my paperwork is done and I only have to review it.

When I buy a home to wholesale, I buy it with the intent to own it. If it does not work for me to own it I refuse to buy it. I won’t flip something I wouldn’t work on myself. This makes the selling easy since I can sell it honestly and sincerely, because I believe it will work.

So do not buy a home to wholesale, I buy a home to rehab with the possibility of wholesaling it.

I do not have the money to buy this with cash so I need an alternative. I find it. My self-directed IRA LLC is the solution. My IRA does not have the capital to make a full price offer, so I move fast to avoid a competing offer.

I have the edge because I know the property and already have the work done to estimate the cost of rehabbing it.

Monday, 8:20 pm.  I email the agreement with a copy of the deposit check to the Realtor. He forwards it to the bank’s Realtor. We wait. But not for long.

Tuesday, 11:39 am. “We have a deal” the email reads. I send the deposit check.

Tuesday, 3:32 pm. I send out an email to my network of buyers. In the email is a brief description of the property with two links. Link number one is to my blog with a better description and link number two is to a postlet with additional information and more pictures. I also post an ad on craigslist.

Wednesday. I receive multiple calls and emails expressing interest. We have multiple showings.

 My Realtor offered to show it for me to potential customers so I don’t need to run in each time. He does not charge me for this. I am putting him in contact with prime customers and he may (I have given him the okay) freely solicit other business from them. By doing so I do not need to use my time to show it and he may gain a client. It’s a win-win situation.

Thursday. We come to terms on a verbal agreement with a buyer. He only wants to do another walk through with his wife through and then sign the agreement. This has me a little nervous, women with their emotions can bring a deal down real fast. But I consent. I have no other choice.

Friday 10:30. Sold! It’s a done deal.

Recap of the week:

  • I bought a property.
  • I utilized my network.
  • I marketed a property
  • I sold a property
  • I have more money in my checking account
  • I never left the house

How can you replicate this method of making money?

  • Action! Get off mental duff. Make a cognitive change.
  • Action! Get off your physical duff. Like Wyatt Earp said, “Are you gonna do something, or just stand there and bleed?” Get out there and look at properties. Put offers (low offers) on properties.
  • Build relationships; Bankers, private money investors, buyers, sellers, realtors
  • Start a network; email lists, social networks, investor clubs
  • Buy a buyable home.
  • Hit your network
  • Sell the home to your buyer
  • Cash the check

If that is too many steps, then start with the first two. These are the most crucial.

Quotable Quote: Wherever you see a successful business, someone once made a courageous decision. – Peter Drucker

Get Rich Slow Scheme


by Dave Miller

The easiest way to get rich quick is to accumulate wealth slowly. Well then, how does one accumulate wealth slowly?

First you need a plan. A solid, well thought-out, practically applicable plan.

This plan must be solid, to preserve your precious capital, as you do not want to go backward. The retaining of capital is a key element of moving toward your goal. If you lose your initial capital you must not only gain it back but also recoup the lost time.

It must be well thought-out; you do not want to be jumping on some quick get rich band wagon that is ready to go bust.

The plan must be feasible. Over the ages three areas have proven successful; real estate, gold, and businesses. Most wealthy people own one of these three.

Don’t put all your eggs in one basket, just like your Daddy told you. But nevertheless get some baskets and fill them with eggs. Many people use that line to delay saving and investing. Procrastination kills.

The real estate basket is the topic of discussion today.

Enter John Schaub and his book Building Wealth One House at a Time.

John Schaub

Building Wealth One House at a Time - John Schaub

This book focuses on strategies for creating wealth through real estate by starting small – and making the right moves. Nationally known real estate expert and speaker, John Schaub, learned his craft in the best way possible–on the job, and through every kind of market. He published a great book titled Building your Wealth one House at a Time. In it he shows you how to buy homes with little money down using private or owner financing. By doing this he eliminates the whims of the banking world. The lender he says, is more concerned about getting his money back than earning high interest. In Chapter 6 he tells you to do what it takes to make the lender happy, over secure if you must.

Click this link to read an article I also wrote on keeping the your lender happy.

He recommends only single family dwellings, no fancy shmancy highfalutin projects. Just solid homes the typical family desires and can afford to live in.

The part that hit home for me was that he says buy one home a year. No more. He warns of the dangers of diving headfirst. By waiting a year to purchase your second investment property you will learn innumerable lessons before plunging in.

John uses two people to accumulate wealth; his renters and his lender or investor. His lenders allow him to purchase the home and the renters pay for it. In the meantime he is accumulating wealth. Renting to long-term tenants, with financial incentives to pay on time.

By using leverage, i.e. owner financing, investors or the bank, he can purchase a home that otherwise he would have needed to walk away from. This then allows him to have a renter paying down on the mortgage. But remember, leverage is a two-edged sword. It can help you accumulate faster and it can take you down even faster. You must carefully consider the amount of leverage you are comfortable with and what makes sense in your situation.

Building Your Wealth One House at a Time is very concise yet an easy to read book. It lays out a blueprint that is easy to follow using graphs and figures.

Unique is his approach to focusing on buying houses in good-quality neighborhoods while simultaneously creating positive cash flow properties. John uses the Goldilocks theory when choosing a neighborhood: not too expensive and not too cheap. Go with a neighborhood where prices are just right.

Buy his book today. Read it. Implement a plan. Take the first (I know this is the hardest one but do it anyway) step. You will not get rich quickly but you will most definitely be headed in the right direction.

Quotable Quote: It is hard to fail, but it is worse never to have tried to succeed. – Theodore Roosevelt

Give Him What You’ve Got


By Dave Miller

Your banker holds the keys to many things.  If you are found in his good graces a nod can grant you freedom. But he can wave you off just as easily if you are weighed in the balance and found wanting.

If you are attempting an expansion in your business, you may need a larger line of credit or a term loan. Or maybe you need capital to buy a piece of equipment for that big job you quoted. Maybe your goal is to own your own home or real estate as an investment. Whatever your dream or need is, you probably need capital.

You may have the cash to buy it outright, if so, I commend you. You have done well. 

If you are in need of capital, you are at someone else’s mercy.

The three most popular methods are owner financing, private money or the bank. Of these three the conventional route is to call the bank.

Whoever you rely on, your relationship is crucial. The bank being the most commonly used method of financing; we will focus on this relationship. Nevertheless, these tips can be used for financers other than your banker.

Bankers love paper, or so it seems when I want money. First they ask for a copy of my tax returns for the past couple of years. It is preferred they pick them up with a pickup truck as my return is 83 pages long and my wife’s weighs in at 45 pages. Then they walk in with a towering stack of papers for me to sign. I see visions of dead trees. O Death; once lush vegetation laying down its life for me and my loan.

If it’s paper they want, then paper I give.

When I approach a banker for a loan on an investment property I provide him with a report. Excel is an excellent way to create these reports. I have a template ready and all that’s needed to do is fill in the blanks. This spreadsheet does all my calculating. In five minutes I can have a presentable four page report. This is the same way I evaluate properties before I look at them. Provided in this report are an income statement, cash flow statement, repair costs page and cost analysis. With a few more clicks I can add an amortization schedule.

I have used some version of this report while asking for financing in four deals over the past two years. Each time the banker has made positive remarks about the report. My goal is to keep the banker happy. If it helps to give him a presentable report that takes five minutes to make, then five minutes it is.

An annual ritual I have happens after my taxes are done. Bankers love tax returns. They view them as the Holy Grail. The sooner they have their paws on them the happier they are. I send them my returns even if I’m not asking for money at the time. A local banker, Bill O’Brien, once told a group of businessmen the way to impress a banker is to send him your tax return on April 16th .

I always ask my accountant for a PDF of my returns. I then send them via email to my banker. By having this on file you can have it to someone in two minutes via email. It is a fast and easy, and no tree died in the process.

A list of additional information I send in my packet:

–      Updated Personal Financial Statement

–      Personal Federal Tax Return (previous year)

–      Previous year LLC Federal Tax Return for investment properties

–      Income Statement and Balance Sheet for business

–      Income Statement and Balance Sheet for my investment properties

–       Year to date Income Statement and Balance Sheet for business and investment properties

So the number one way to impress your banker is to make a packet of the above mentioned items and send them his way. Oh, it also helps if the numbers on the paperwork are respectable. Either way, at the least, send your banker your previous year’s tax returns.

Quotable Quote:

A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.  – Mark Twain

Published in: on June 4, 2010 at 8:55 pm  Comments (2)  
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