Real Estate Genius Investment Software Blog

How To Create Massive Passive Income With Out Hassling With A Single Tenant
By Dave Lindahl

The true goal of every investor should be to create as much massive passive income as soon as possible.

Passive income means just that, money that comes into your house month in/ month out without you having to do a thing to get it. How can you accumulate massive passive income quickly?

Well, if you went out and bought a couple dozen single family houses and kept them, you would create a decent income. Good but not great.

Its’ going to take you a little time to find all of these deals and then you would have to manage all of those tenants.

What if you put a couple dozen units in the same property? Then you would only have to find one deal and then a few more to create a great passive income.

I know what you’re thinking. Oh no, not apartments! I don’t want to deal with the tenant hassles! And I agree with you, you shouldn’t be dealing with any tenants, wouldn’t it be better if you could just sit back and collect checks while someone else deals with all of the management headaches?

Those people are called management companies and they make a living shielding investors from the day to day management of their properties so you can go out and continue to do what you do best, find more property and create more cash flow!

But aren’t they expensive? It’s true that management companies are paid a percentage of the gross collected rents, somewhere between 6% and 10%, though if you factor this cost into the deal, as long as the property cash flows with these fees, you’ve got yourself a winner!

Not only have you found a property that will get you one step closer to true freedom, you don’t have to hassle with a single tenant.

But don’t the management companies nickel and dime all of your profits away? While it’s true that there are some bad management companies out there, you can be assured to find a good one if you follow these simple steps.

Go to www.irem.org. That’s the Institute For Real Estate Management, a great resource. When there, go into the search box and search for a Certified Property Manager (CPM).

These are owners and managers who have taken time out of their busy schedule and taken a series of required courses to improve their management knowledge and skills. Upon the completion of these courses, they take a big test and then they are awarded the CPM designation.

These managers are the cream of the crop and these are the ones that you want to have managing your properties. They will send you a summary report each month, telling you how the property is performing and the only thing you have left to do is to go cash you’re checks while you’re out finding more properties for your portfolio!

David Lindahl, also known as the “Apartment King” has been successfully investing in single family homes and apartments for the last eight years. He is the author of many popular, money making home study courses. He can be reached at dave@real-estate-fortune.com and http://www.rementor.com or 781-878-7114

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Real Estate Investing Mistakes To Avoid
By Jeffrey W Anderson

You’ve no doubt seen them or read them. Glossy ads or four-color spreads in magazines and newspapers promising to teach you all the juicy details about successful real estate investing. And all you have to do to learn all these real estate investing secrets is to pay a rather high sum for a one-or two-day seminar.

Often these slick real estate investing seminars claim that you can make smart, profitable real estate investments with absolutely no money down (except, of course, the hefty fee you pay for the seminar). Now, how appealing is that? Make a profit from real estate investments you made with no money. Possible? Not likely.

Successful real estate investment requires cash flow. That’s the nature of any type of business or investment, especially real estate investing. You put your money into something that you hope and plan will make you more money.

Unfortunately too few newbies to the world of real estate investing think that it’s a magical type of business where standard business rules don’t apply. Simply put, if you want to stay in real estate investing for more than, say, a day or two, then you’re going to have to come up with money to use and invest.

While it may be true that buying real estate with no money down is easy, anyone who’s even made a basic real estate investment (like buying their own home) knows there’s much more involved in real estate investing that can cost you money. For example, what about any necessary repairs?

So, the number one rule people new to real estate investing should remember is to have available cash reserves. Before you decide to actually do any real estate investing, save some money. Having a little money in the bank when you start real estate investing can help you make more profitable real estate investments in rental properties, for example.

When real estate investing in rental properties, you’ll want to be able to select only qualified tenants. If you have no cash flow when real estate investing in rental properties, you might be pressured to take in a less qualified tenant because you need somebody to pay you money so that you can take care of repairs or lawyer fees.

For any type of real estate investing, meaning rental properties or properties you buy to resell, having cash reserved can allow you to ask for a higher price. You can ask for a higher price from your real estate investment because you won’t feel financially strapped as you wait for an offer. You won’t be backed into a corner and forced to accept just any offer because you desperately need the money.

Another downfall of many new to real estate investing is, well, greed. Make a profit, yes, but don’t become so greedy that you ask for ridiculous rental or resale rates on any of your real estate investments.

Those new to real estate investing need to see real estate investing as a business, NOT a hobby. Don’t think that real estate investing is going to make you rich overnight. What business does?

It takes about six months to determine if real estate investing in for you. If you’ve decided that, hey I love this, then give yourself a few years to really start making money. It usually takes at least five years to become truly successful in real estate investing.

Persistence is the key to success in real estate investing. If you’ve decided that real estate investing is for you, keep plugging away at it and the rewards will be greater than you imagined.

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The Only Three Reasons To Be In Real Estate
By Dave Lindahl

There are only three reasons to be in Real Estate, if any one tells you any differently then they don’t understand real estate investing.

The three reasons to be in real estate are Cash Now, Cash Monthly and Cash Later. Let’s take a closer look at each one of them.

Cash Now. Let’s face it, we need money to live and pay the bills. With out this cash we would have to go back and work for “the man”. If you’re not a full time investor, this is a reason why a lot of people are afraid to quit their job and work for themselves.

Cash now is the money that you get from “Flipping” properties. Whether it be from Wholesaling, Rehabbing, Subject To, Lease Option or Pre-Foreclosures we need the cash from each of these investing models to put food on our tables and clothes on ours (and our children’s) backs.

Cash Now is good. Having rehabbed over 450 properties in just a seven year period, (I use each of the above methods to acquire my properties) I’m used to those big checks coming in. But then I realized that if I didn’t continue to get Cash Now through flipping properties, then I would not have any cash coming in at all. Which meant I was not as free as I thought I was.

So I changed my strategy. While those big rehab checks were coming in, I put some of money in my account so that I could live, and then I started to put the rest of the money in Apartment Houses.

Owning smaller Apartment Houses is virtually the same as investing in single family houses. If you’re doing your marketing, you run across Apartment Houses all the time. If you are like most investors, you probably just ignore them and continue to search for the next single family deal.

Apartment Houses will give you greater Cash Monthly. In just a short time, you can build yourself a substantial passive monthly income just from your Apartment Houses. That’s how Robert Kyosaki does it in Rich Dad/Poor Dad.

Cash monthly will give you freedom. Freedoms to do what ever you want when you want. I’m not telling you to stop buying and flipping single family houses, that’s Cash Now. I’m saying to get Cash Monthly (Apartment Houses), use some of your Cash Now (single family flips) and buy yourself some freedom!

Pretty soon you will be building an empire. You’ll have enough Cash Monthly to be able to take a month off in the summer or what ever else your freedom desires! If you were only flipping single family houses and you took a month off in the summer, you wouldn’t have any income coming in.
Do you see how Cash Monthly will give you freedom?

You can get some Cash Monthly from owning single family houses long term but not as much and not as fast as owning smaller apartment houses. And it’s a lot riskier to have all of your money in single family houses.

What happens if you lose your tenant in your single family house? You loose all of your income. You’re going to have to dip into your own savings to pay the mortgage until you get a new tenant. That hurts!

If you loose a tenant in a three family house, you’ve only lost one third of your income. The other two floors will cover your mortgage until you get another tenant. That’s just one of many reasons that owning small apartment houses is smarter that owning single family houses, but that’s another article all together.

Now that you have Cash Now and Cash Monthly, Cash Later takes care of itself. It comes when you sell, exchange or refinance those apartment houses somewhere in the future.

You see, with apartment houses you have an appreciating asset. No only is it appreciating every month but your tenants are paying off your mortgage. So between the appreciation and the mortgage pay down, your equity just gets bigger and bigger!

You can sell your property and get a boat load of cash. If it’s creating a lot of Cash Monthly, you may want to keep those checks coming in. If so then you will want refinance to get you cash out.

Not 100% of your cash, which will only get you in trouble. You should take out about 75% of your cash leaving 25% equity in the building, that way if there is a down turn in the market, your protected. Not only that, at 75%, you should still have a decent positive cash flow. Did you know that you do not pay tax on any of the money that you take out during a refinance?

Now take that money and go buy some more apartment houses and get some more Cash Monthly! In doing so, these apartment houses will start appreciating and the tenants will begin to pay down your mortgage for you. You’ve just increased your net worth because you have increasing equity in one or two more buildings instead of the building that you started with.

Can you see how your empire is being created? Can you see how it can be created in a short time? Holding single family houses will make you money. Holding apartment houses will make filthy stinking rich! Which do you prefer?

David Lindahl, also known as the “Apartment King” has been successfully investing in single family homes and apartments for the last eight years. He is the author of many popular, money making home study courses. He can be reached at dave@real-estate-fortune.com and http://www.rementor.com or 781-878-7114.

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Anatomy of a Subject-To Deal
By Jeff Tumbarello

Recently I made contact with a guy who is in the process of going south financially. Nice guy, I think this is a temporary setback for him not armageddon. He owns a four-plex by the Red Socks Stadium. Here’s the skinny on deal. He agreed to deed to a land trust. The Payoff was 134,000.00 plus code enforcement liens. I comped the property at 256,000.00. I had to get expert help involved as realquest gave me comps from 60,000 to 300,000. I thought that in this instance her guess would be better than mine

I did a walk through on property. It needed 20,000 to 30,000.00 worth of rehab. The property was condemned by the city of ft Myers for paint and window glazing. Window glazing seems to be the latest kick by code enforcement if anyone knows why please share this with me.

So here we are

• 256,000 minus the costs of sale( 8 percent, that’s either realtor commission or paying buyers closing costs plus the sellers inherent closing costs)

• 232960 left over after costs of sale; notice I did not use market value.

• 30,000.00 rehab times 1.2 equals 36,000.00 rehab

• 196960 is now left over

• Balance of 134,000.00 (since property is in foreclosure add 5,000 to it as the foreclosing attorney needs a custom set of ping irons for his golf bag) 139,000.00

• 57960 is projected profit minus holding costs and also factor in that at least 1,000.00 will magically disappear at the table, it always does trust me on this

Sounds like a home run Huh?

It was until the title search came back, a recent 400,000.00 dollar lien kills the deal. Now, I was excited but I knew to wait until the title came back clean before I mailed reinstatement to Foreclosing Attorney (who was shopping for his new golf clubs I’m sure). Moral of this story is to have your ducks in a row. Here is what you need to do a subject-to deal.

1. A deal

2. A method to value the property. I use www.realquest.com, club members get a 20 percent discount.

3. Obtain a recent Payoff, every time the Foreclosing attorney or one of his minions picks up the phone, this goes up. Also what is the monthly PITI payment and how much to reinstate the mortgage? Maybe you can hold and cash flow. The above deal would have thrown a 1,000.00 a month (utopia) cash flow.

4. Perform a quality walk thru to determine rehab needs.

5. Order title on the property

6. Pay attention to property taxes are they behind?

7. Last and foremost a trip to county or city to see if there are any open permits or violations.

As Jim Werner puts it ask the little questions like is this house scheduled for Demolition? It’s not a joke that has happened recently.

I am very conservative on my numbers. I learned that through hard lessons (my checkbook).
Good luck and good hunting!

Jeff Tumbarello is a Real Estate Investor, Speaker and Loan Originator with Union Savings Bank. In 2003 Jeff and 3 other SWFL RE Investors Founded the South West Florida Real Estate Investment Assoc. This now has over 400 members. He has materially participated in rental properties, waterfront spec homes and buy & flip transactions. Jeff has originated over 1,000 mortgage loans. Jeff is also veteran of the USMC and served in Dessert Shield and Dessert Storm as an Infantryman with First Battalion Third Marines. Jeff is from Stuart Florida. Jeff is married to Cristina and has 3 children ages 10, 8 and 6. Jeff is currently working with Union Savings Bank and buying cash flow properties in Central Ohio. Jeff is available for speaking engagements about Union Savings Bank Products, Real Estate Investing and Marketing for Real Estate Pro’s and investors
for more info Email jtumbarello@usavingsbank.com

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The Most Profitable Investment In Real Estate
By Dave Lindahl

Having rehabbed over 520 properties and owning over 1100 multi-family units, in my real estate career I have and continue to do it all!

When I first started in the real estate business and got my marketing going, I knew that every potential seller meant a possible $20,000 profit for me. I also quickly realized that there was many different ways to do a deal, and some deals could only be done a certain way.

If I hadn’t learned the technique needed to do a particular deal, then I would wholesale it.

I’ve never liked wholesaling (even when I can make a quick $10,000 – 20,000 doing it!) because I always knew that there was a much bigger payday waiting down the road and I wanted it. Why give up the cow only to go searching for more milk?

So I became a “Transaction Engineer”. I learned how to Rehab, how to do “Subject To”, Lease Option, Short Sales, Pre-Foreclosure, buy, flip and hold Multi-Families, Master Lease Options, Equity Share, Tax Credits… I wanted the big paydays and I was willing to learn what it took to get them.

The more and more deals I did, the more I realized that I was getting much bigger paydays from doing a particular transaction that was far more profitable than anything else I was doing.

All of us want to get wealthy quickly and easily and if it could be done by doing less deals, that’s the way I wanted to do it.

That’s when I came to the realization that there were certain deals that brought me in 10 times the amount of profit as the other deals, even though I was doing the same amount of work and taking the same amount of time.

From the fattening of my bank account I realized that there is one investment that is far more profitable than anything else in Real Estate investing.

The most profitable investment in Real Estate today, is buying, selling and holding Multi-Family properties.

Did you know that you could buy a Multi-Family building using the same no money down techniques that you use buying single family properties. I’ll bet you didn’t know that there were even more creative ways to purchase Multi-Family properties than there are for single families!

Think about it. When you dealing with single family properties, you’re usually dealing with the home owner, someone who is emotionally attached to the property.

When your dealing with a Multi-family property, your usually dealing with an investors. Just like you, investors care about the numbers. Would you now agree that investors are more apt to do creative deals?

Successful people profit from the mistakes of others. I learned that doing a Multi-family deal took just as much effort as doing a single family deal, but there is one big difference…there is an extra “0” at the end of the profit check when I closed the deal!

That means that the single family property that I flipped and made $20,000, with the same amount of effort I was flipping multi-family properties and making $200,000!

As soon as I realized this phenomenon, I focused more of my marketing on multi-family properties!

When you start getting those big paychecks you’ll realize that you don’t have to work so hard, you’ll have more time (a lot more time) to do what you want, where you want, when you want and with who you want!

Most people have a goal of making $1,000,000. If you were flipping single family houses with an average profit of $20,000, you would have to flip 50 houses ($1,000,000/$20,000) to reach your goal. How long do you thing that would take? A year? Two Years? Five years?

If you were flipping multi-family properties, you would need to flip only 5 properties ($1,000,000/$200,000)! How long do you think that would take? Certainly a lot less time!

And remember, it takes just as much work to flip a single family house as it does to flip a multi-family but as you can see by the numbers, it really is going to take you 10x the amount of work and time if you want to earn a million dollars flipping single family houses!

Here’s the another bonus, sometimes when you flip a single family property you hit a home run and make anywhere from $40,000 - $100,000 and more. When you hit a home-run with a Multi-family property your profits are in the $400,000 - $1,000,000 and more range! That’s one deal….same amount of work! How many of those do you have to do before you stop worrying about your retirement?

A student of mine, Rose Morris from Columbus, Ohio is going to profit over $2,000,000 on her first large multi-family deal! One deal.

Justin Anderson from Augusta, Georgia will profit close to $900,000 when the sale is complete on multi-family that he’s flipping!

Does this mean if you’re flipping single family’s that you stop immediately and go after only multi-family properties? Heck no! You can if you want to bu I still flip singles…not as many as in my early years…why do I continue to do it?…because I can!

I’m not one to pass up any good deal and I like getting those small chunks of cash coming in for $20,000 - $30,000 a pop but I focus most of my time on multi-family properties because I learned the more multi-family deals I do, the more and better choices I have as to how I can spend my time!

Head these words, the faster you start flipping Multi-Family properties, the faster you’re going to become wealthy. I will already say “Your Welcome” in advance for those of you who take the advice of someone who has been there and done that!

David Lindahl, also known as the “Apartment King” has been successfully investing in single family homes and apartments for the last eight years. He is the author of many popular, money making home study courses. He can be reached at dave@real-estate-fortune.com and http://www.rementor.com or 781-878-7114.

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