Volume 1 Final.pdf

Real Estate Investing That Works A Proven System

Volume 1 by Mike Gazzola

Real Estate Investing That Works Copyright © 2015 Mike Gazzola Real Estate Investing That Works All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means without written permission from the author. ISBN (978-0-9965299-0-7) Printed in USA

Dedication I dedicate this work to my loving partner and wife Melissa, and my adorable children, Ashton and Kailey. Together they have given me the inspiration and motivation to be a better man and a good provider for my family. They are the reason WHY I am compelled to share my real estate investing system with those who are also on the path to making their dreams become reality.

Acknowledgements I’d like to thank KS Real Properties for their commitment to publish my book – even when it turned out to be two volumes. I am grateful for the support and guidance of Ken Meares, Dr. Sharon McQuillan, and Miles Dupree for recognizing that I have a story to tell that can change the lives of many people seeking financial independence. All of this would not be possible without the tireless effort and assistance of Frank Marchese, Chris Lagowski, Elizabeth Gubala, Brent Kinney, Lizett Acosta, Gabriel Camarda, and Blade Thomas. And finally, I owe a special debt of gratitude to my mom, Sharron Kinney, who never told me it couldn’t be done.

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Volume 1 Table of Contents Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi Chapter 1 Getting Started . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Chapter 2 What Is Your WHY . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Chapter 3 Investing Is Key . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Chapter 4 Starting with Less than $10,000 . . . . . . . . . . . . . . . . 17 Chapter 5 The Current Housing Market . . . . . . . . . . . . . . . . . . 33 Chapter 6 The Biggest Secret: Buy below Market Value . . . . . . 39 Chapter 7 Where to Find Investment Properties . . . . . . . . . . . . 49 Chapter 8 Properties for Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Chapter 9 Running Ads to Purchase Properties . . . . . . . . . . . . 79 Chapter 10 How to Buy and Sell Homes and Land Remotely . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 Chapter 11 How to Maximize the Use of Realtors . . . . . . . . . 119 Chapter 12 How to Open and Fund Your Bidder Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 v

Real Estate Investing That Works­ Chapter 13 What Happens after You Win a Property at Auction? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 Chapter 14 Researching Auction Property From The Foreclosure List . . . . . . . . . . . . . . . . . . . . . . . 159 Chapter 15 Back Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 Chapter 16 Mapping Your Route . . . . . . . . . . . . . . . . . . . . . . . 177 Chapter 17 Exterior Property Inspections . . . . . . . . . . . . . . . . 183 Chapter 18 Interior Property Inspections . . . . . . . . . . . . . . . . 189

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Volume 2 Table of Contents Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii Chapter 19 How to Determine Property Value . . . . . . . . . . . . . . 1 Chapter 20 How Far in Advance Should You Research Properties? . . . . . . . . . . . . . . . . . . . . 19 Chapter 21 Bidding through Proxy . . . . . . . . . . . . . . . . . . . . . . 31 Chapter 22 Live Auction Techniques . . . . . . . . . . . . . . . . . . . . . 43 Chapter 23 How Much Money Should You Keep in Your Bid Account? . . . . . . . . . . . . . . . . . . . . . . . 55 Chapter 24 Turnaround Time after Bidding . . . . . . . . . . . . . . . 59 Chapter 25 Determining the Extent of a Remodel . . . . . . . . . . 65 Chapter 26 Buy and Hold vs. Flip . . . . . . . . . . . . . . . . . . . . . . . 71 Chapter 27 Generating Rental Income . . . . . . . . . . . . . . . . . . . 79 Chapter 28 Who Else Wants to be a Landlord? . . . . . . . . . . . . . 85 Chapter 29 Finding a Local Property Manager . . . . . . . . . . . . 95 Chapter 30 Finding a Contractor . . . . . . . . . . . . . . . . . . . . . . . 105 vii

Chapter 31 Online Selling Strategies . . . . . . . . . . . . . . . . . . . . 115 Chapter 32 Selling Techniques . . . . . . . . . . . . . . . . . . . . . . . . . 131 Chapter 33 H  ow I Started an Online Real Estate Business . . . . . . . . . . . . . . . . . . . . . . . 157 Chapter 34 eBay Strategies for Selling Properties Online . . . . . . . . . . . . . . . . . . . . . . . . . . 167 Chapter 35 Tax Free Real Estate Investing . . . . . . . . . . . . . . . 173 Chapter 36 Health Savings Account (HSA) . . . . . . . . . . . . . . 185 Chapter 37 Jump In! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193

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Foreword “Mike delivers a combination of common sense and technology that empowers you to find out everything you need to know to buy and sell real estate online below market value. This is amazing!” — Kerry Lutz Financial Survival Network As a retired attorney, I first learned about Mike Gazzola while doing research for a worldwide radio podcast about real estate investing. I was so curious about Mike that I did a little research to find out if he really has bought and sold hundreds of properties in the past 12 years. What I discovered was even more shocking. When Mike says “hundreds of properties in the past 12 years,” he’s just talking about the properties he’s purchased and sold on his own. What I also discovered is that he’s probably been involved with hundreds of more property transactions that involve joint ventures and partnerships with his friends, students, and other real estate investors. This young man is clearly on the cutting edge of what I consider to be the future direction of a worldwide real estate investing marketplace explosion. ix

Real Estate Investing That Works­ Mike’s system utilizes the simplest and most advanced Internet technology to actually use your personal computer or smart phone to buy and sell real estate without ever leaving the comfort of your home or office. What I’ve learned from Mike is that this is not only becoming a viable method of property transactions, but it is also an almost foolproof method for finding properties that are not even listed on the Multiple Listing Service. And then he takes it a step further by being able to selectively purchase these properties way below market value. Mike has also demonstrated that it does not take a lot of money to get started in real estate investing. He clearly illustrates how anyone can get started with as little as $10,000. But the reality of that promise is that he has again made an understated claim. That’s because Mike shows you how to get started with as little as $2,000, but he firmly believes you’d be more likely to succeed with a slightly bigger capital investment or start off small and build up your nest egg. In fact, I just purchased my first property using Mike’s system. I bought a condo in West Palm Beach for $52,000 with a market value of approximately $105,000. I need to put about $12,000 into repairs, but this still leaves me with a profit margin of $20,000 to $30,000, and I can still resell it under market value. The fact that you have these materials in your hands right now tells me that you are on the path to creating wealth for yourself and perhaps a legacy of financial security for your future and for generations of your family to come. Phone: 800-999-2274 Kerry Lutz’s Financial Survival Network E-mail: [email protected] x

Preface

The information you are about to read has taken the better part of my adult life to learn, prove, and develop into a viable system that’s easy to follow so you can gain personal wealth through the process of real estate investing. There is no theory or conjecture presented within these pages and on my DVDs. Everything comes from actual hands-on experience. The examples and concepts I present come from working in the trenches of buying and selling hundreds of real properties at live and online real estate auctions. I’ve also worked with realtors and other investors who have unknowingly taught me many of the details you are about to learn. Please be clear, I love realtors and I believe they perform a valuable service when it comes to buying and selling properties. However, I have also discovered that with the Internet and today’s amazing technology, it is now possible for individuals to reach far beyond what the local real estate agent and broker can provide to the active real estate investor. During the past five years, I have been teaching adult students my system, and they have constantly asked me to put it down on xi

Real Estate Investing That Works paper and video so others can learn and do the techniques and strategies that have allowed me to achieve financial independence, not just for me, but also for my family and hopefully for my children’s families in the future. Once a student learns my system, we become peers, and I do my best to constantly keep them abreast of exactly what’s going on in the world of real estate investing. I truly believe in what I do, and I know that my success has come not just from hard work, but also from allowing people to maintain their dignity, always telling the truth, and being honest in all my business associations and transactions. I’ve also been very lucky and truly blessed. Thank you for trusting me enough to spend your time and money learning this valuable system of techniques, strategies, and all the personal insights I’ve learned over the years. It is a true honor to be able to share this amazing information with you. All the best,

Mike Gazzola Real Estate Investor & Mentor

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Introduction What you are about to discover is new and amazing. If you have any interest in how to make money in real estate, you are in the right place. Every so often, someone has a major transformative breakthrough in how the world works. The introduction of the Internet more than 20 years ago has transformed just about every aspect of our lives; from entertainment and travel, to health, nutrition, education, and now, real estate investing. When it comes to buying and selling real estate, the Internet has made it possible for us to research and find everything we need to know to make a good buying decision on single-family homes, multi-family units, and raw land. My name is Mike Gazzola. I am a successful — in the trenches real estate investor — who enjoys teaching the amazing system that has helped me build phenomenal personal wealth. It’s no secret that real estate investing has made more people rich than any other commodity on earth. Some people get wealthy investing in the stock market. Others do it through oil and gas. Some even find their fortunes investing in precious metals, gems, cattle, and grains. Some make it by winning the lottery while others chase after currency fluctuations in the FOREX market. xiii

Real Estate Investing That Works­

The Real Estate Market Is Slowly Coming Back! We are now in the post real estate crash phase and the market is starting to make a strong, slow comeback. This is the ideal time to get into real estate. All the options are open: • You can flip for profit • You can create a steady monthly income My biggest real estate secret is not based on an up economy, a down economy, or a sideways economy. It truly doesn’t matter what our economy is doing. It doesn’t matter what’s going on in the world or what world events are happening. What matters is acquiring the property so far under market value that the chance of losing goes way down and the chance of making money goes way up.

Creating Instant Equity This is the best way to take the risk out of real estate investing because when you buy below market value, you are creating instant equity. This is my biggest secret. This is what I have done over the past decade and this is exactly what my system teaches you to do. You’ll learn, step-by-step how to:

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Introduction • Find the hottest markets. • How to wholesale your properties quickly without remodeling them. • How to generate a monthly continuity income. • How to reduce the amounts paid to 3rd parties on all your Real Estate deals. • How to find the best properties way below market value. • How to fix them up using local contractors if you choose to remodel them. • How to find property managers that won’t rip you off. • How to sell your properties quickly at a nice profit to a worldwide audience of buyers.

It All Happened by Accident Twelve years ago I discovered my future fortunes were in real estate. I am a big New York Giants football fan. While at work I was taking a few minutes of personal time at my computer looking for NY Giants collectibles on eBay. By accident, I searched something New York related and up came a listing for a rented duplex in Buffalo, NY, for just $25,000. This seemed amazing to me.

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Real Estate Investing That Works­ I was living in San Jose, California, and even a simple 2-bedroom, 1-bath condo was selling for almost $300,000. So, I decided to look further. I called the guys selling the property and talked with him for about an hour. He answered all my questions. I could also hear his kids and dog playing in the background. He seemed like a legitimate family man. The part of the deal that immediately closed me was that this duplex was occupied and bringing in $1,100 a month in rent, and I could buy it for only $25,000. I thought, “How can I lose?” In two years I could get all of my investment back and still own the property with a positive cash flow. So I made a decision and took the risk. I bought the property and sent him a wire transfer for $25,000. He sent me the deed to the duplex within a few days. It all seemed great. But I knew I could really get ahead if I resold that property for a nice profit I was living in San Jose? So, I got another idea. I ran a small ad in my local newspaper that said:

Rented Duplex For Sale $50,000 The day the ad ran I got several calls, but there was an older woman wanting to know if I was for real and if the property was really just $50,000 — and if it already had tenants. I faxed her copies of their rent checks and their leases. She was very focused so I said, “If you are sincerely interested, I’ll knock

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Introduction the price down to $45,000, and it’s yours. If not, I’ll continue taking calls from other interested investors.” She said she wanted it and she came to my office in San Jose, CA and bought it right then for $45,000. She brought me a cashier’s check for the full amount. I made $20,000 in a few weeks with a few hours of work and I was shocked! I never made so much money — so fast — in my life! I went back to the guy who sold me the duplex in Buffalo and asked him if he had any more properties for sale. He said he did, so I hopped on a plane and flew to Buffalo to see the properties and meet the man. I then bought and sold three more in in a short amount of time. It was amazing. I was buying and selling properties in Buffalo, NY, and making really nice profits from my office in San Jose. This seemed like an absolute miracle! I asked the man if he had any more properties and he said, “Yes. I have 42 more properties.” Since I was so good at selling the properties, I asked him if he wanted to partner up and work together. He said, “No, not really.” I was persistent and I pointed out to him that I had sold four of his properties very quickly, and I could help him sell the rest of his properties. He finally said, “Yes, under one condition.”

You Have to Move to Buffalo! So I said, “OK, what?” He said, “You have to move to Buffalo.”

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Real Estate Investing That Works­ That was it for me. I discussed it with my future wife and my family — and they all thought I was crazy. I told them I was quitting my job and moving to Buffalo, NY. It took nine months to sell 42 of his homes. During that time he showed me how to find the homes, how to buy them, fix them up, and rent them. It was an invaluable experience that paved the way for me to generate millions of dollars buying and selling investment real estate.

I Found the Sweet Spot! When it comes to real estate investing, I am generally not talking about homes you want to live in. I am focused on homes and land available for as little as $100 and as much as $100,000. I’ve found this price range is the “sweet spot” in today’s marketplace. I’m talking about buying homes with no mortgage, no escrow, no appraisal, and usually even without a realtor.

How Is This Possible? Believe it or not, you can buy parcels of land (residential lots) in neighborhood communities for as little as $100. Of course those deals are unusual, but they do become available quite frequently because there’s no one bidding when they go to auction. The catch is that you must pay cash and you must have the winning bid. You need to be prepared to pay 5–20% at the auction (live or online), and then you must pay the balance due within 24 hours, or up to a month depending on the auction.

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Introduction In fact, just last month I personally bought a residential lot for $100 simply because no one else was bidding. At the end of the bidding, before the property went back to the county, I placed the minimum bid of $100 and won the property. Take for example, a young college graduate by the name of Dave Stall. As a teenager, he used to mow my lawn. Through our friendship, I taught him how to buy property at tax auctions. Dave went with me to a local auction and bought a lot for $500. Later, he sold his lot for $2,000, making a 400% return on his investment. Does this happen all the time? No, but it does happen more times than you would think. Just last week I ran into one of my other students John from Beverly Hills and he told me how he bought 2 lots next door to each other for $500 each and just last week he sold them together for $5,000.

Properties with No Owners When you learn how to use my real estate investing system you will be discovering inside information and techniques about how to find properties owned by the county, state, federal government, or banks that need to be liquidated. These properties are not necessarily distressed, but they are orphaned and prime candidates to be picked up at auctions way below market value.

How to Be a Property Detective! My system teaches you how to be a “Property Detective.” This skill allows you to do quick research and within a matter of

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Real Estate Investing That Works­ minutes you’ll know if the property you’re interested in is a hot deal or something you don’t want to go near. With my system there has never been a single auction property I’ve purchased that I haven’t been able to sell for a profit. Most people don’t know about these properties because you will not find them listed on the Multiple Listing Service which is the traditional inventory source to buy and sell homes and land.

Not a “Get-Rich-Quick” Scheme! This is not a “Get-Rich-Quick” system of real estate investing. It is, however, a carefully thought-out plan that guides you stepby-step on how to find and buy properties so far below market value that you have the moneymaking option to do one of three things: 1. Buy and sell immediately for a profit (quick flip). 2. Remodel and sell for even higher profits. 3. Hold and rent for monthly income.

This is the opportunity you’ve been waiting for, and this is the system to help you gain personal financial freedom! Fasten your seat belt as we embark on an amazing journey that has the power to transform every aspect of your personal, financial, business, and family life. Welcome aboard!

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CHAPTER 1

Getting Started Congratulations! You’ve just begun a very exciting journey that will take you from where you are now and transform you into a successful real estate investor! This is your opportunity to create instant equity when you purchase land, homes, duplexes, triplexes, or 4-plexes. You are about to discover how to buy real estate for pennies on the dollar (far below market value) and how to sell it quickly online to a worldwide market. Used properly, this information is valuable because you’ll not only discover how to make more money, but you will also learn how to be your own boss, and create a better financial future for yourself and your family. These are life-changing results! I promise this book will show you exactly how to do that — and more. How can I be so sure? The reason I can be so sure is that I’ve already done it for myself. Like many of you, I came from a very modest background. But I’ve become a self-taught master in real estate. In fact, I’ve already done hundreds of real estate transactions in the past 12 years.

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Real Estate Investing That Works­ I am proud to say that after 12 years in the business, I have never lost money on any of the hundreds of auction properties I have sold. That’s not to say that I’ve never made any mistakes. I’ve made plenty of mistakes. But I’ve learned from my mistakes, and what you are reading now is a carefully designed system that will show you how to create instant equity in your property purchases and reduce the risk associated with investing in real estate. I know this because I have not only done this for myself, but I have also taught thousands of students just like you to do what I do using my step-by-step system. I’m 100% ready to teach you exactly what you need to know to potentially make great personal income, build your retirement savings tax free, and even set aside money for your children’s college education, tax free or tax deferred. • With the right training, It’s not hard. It’s not complicated. Most important…

Don’t worry if you currently do not Know Anything about Real Estate In fact, because of all the misinformation out there about real estate investing, it’s actually better if you don’t know anything. For example, Ive found “no-money-down” deals are rarely good investments? The main reason is that when buying property for no money down, you usually have to pay up to 30% more. It’s true. It’s easy to acquire property when you are willing to pay 30% above current market value. Whether you know nothing, a little, or a lot about real estate, this book will benefit you tremendously. I have developed a unique system that is virtually guaranteed to work. It’s “goof-proof.” 2

Getting Started I’ll show you how you could make money whether the market is up or down. I’ll show you how to be a step ahead (by creating instant equity) the moment you make a purchase. I’ll show you how to flip fast for big returns, or create monthly cash for life as a landlord. You don’t need to know anything now because I’ll teach you exactly how I do it and you will learn my same techniques, strategies, and inside secrets to investing in real estate.

What Do You Need besides My DVDs and This Book? • Desire. You need a desire to make more money and to live a better life. • Willingness to learn. Successful people approach learning with a totally open mind and genuine curiosity. If you bring desire and are ready to learn, you WILL be successful. I can almost guarantee it.

How Will You Get the Most out of Reading This Book? It starts by creating a powerful relationship with what you’re reading. This isn’t just another book. These aren’t just more words on paper. I’m sharing with you over 12 years and hundreds of transactions worth of secrets and street-smart real estate wisdom. People have paid me well over $15,000 for the information in this book & the DVDs, and I have never had a single student complete my course and ask for a refund. Here is a suggestion. Pretend you wrote me a check for $15,000 and hired me to sit next to you and deliver this information in 3

Real Estate Investing That Works­ person. I guarantee if you did, your eyes and ears would be wide open. You wouldn’t have the TV playing in the background. This wouldn’t be a passing hobby for you. You would be focused and determined to get your money’s worth out of everything I show and teach you. If you spent $15,000 for this information, you would clear your schedule to get everything possible out of what I have to say. My students constantly tell me the information in this book and on my DVDs is easily worth TEN TIMES $15,000. No matter what you paid for it, keep in mind the benefits of what you’re about to learn have been proven to be extremely valuable. This is a proven system.

A few tips on getting started: • Don’t just read. Do what I call focused-reading. Consciously take a moment to clear your head and the distractions around you. Then read. Don’t just skim the pages. Read like your life depends on it. If you want to be extremely wealthy, your financial life depends on how well you learn what I am about to teach you. • Don’t tell anyone about your desire to become wealthy in real estate. Keep it to yourself for a while. There are simply too many naysayers out there. Many times I’ve seen one negative comment kill the desire and inspiration it takes to truly achieve something remarkable. • Get excited about reading this book. Get really excited. Imagine the feeling of making more money in one month than most people make in a year. Imagine having true

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Getting Started financial security and not having to stress over where your next dollar is coming from.

“Nothing great was ever achieved without enthusiasm.” — Ralph Waldo Emerson Get pumped! You’re on your way to learning a specific set of skills that will result in you being able to buy and sell properties on your own, without being a real estate agent or broker. There’s no exam to pass and no license to acquire. Everything you need is right here in this guidebook and the accompanying set of DVDs!

CHAPTER 1 Summary: • You have made a wise decision and you are smart enough to realize this is a great pathway to financial independence and success. • You don’t need to know anything about real estate to be successful. In fact, sometimes it’s better if you don’t. • Pretend I am there with you right now telling you this information — and you paid me $15,000 for it. Don’t just read the words. Focus-read. And don’t just skim — read to really get the information embedded in your brain and you will be rewarded with great information. • Be enthusiastic! Making money investing in real estate is fun and exciting!

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C A S E H I S TO R Y 53 Hawley, Buffalo, NY – Bought for $25,000 – Sold for $45,000 a $20,000 profit without having to put any work into it.

This was the first property I ever purchased. It’s an old red brick home, originally built in 1870, 2,200 sq. ft., 6 bedrooms, 3 bathrooms, and a guest house in the back. It was listed as a duplex with two tenants bringing in $1,100 per month. I bought it for $25,000 cash and resold it for $45,000 cash to a lady in San Jose. I ran a small ad in the local newspaper and got an instant response. What I like about Buffalo is that it is the home of many great Universities. It always has great demand for students & staff rental properties. People in California simply couldn’t imagine getting any type of real estate for $45,000, so you can see why I sold it for such a nice profit. This was the property that started it all for me. It inspired me to buy three more properties and sell them almost immediately nearly doubling my money. The only real work I had to do on this property was find a buyer and using one of my techniques selling it pretty easily. This was the transaction that got me hooked! 6

CHAPTER 2

What Is Your WHY? Before we dig into the details of my system, I want to share a quick secret about personal motivation. I’ve found that in order to be really successful in life, it’s impor­ tant to know your WHY? What I mean is, “Why do you want to be successful investing in real estate?” The quick answer for many people will be to make more money — and that is a good start. Or, perhaps you simply want to work for yourself, make your own hours, or work from home. I’ve found it useful to go deeper and get to the real WHY. For me, it’s my family; my wife and kids. They are my WHY. I want them to have the most amazing life possible and for them to never need to worry about money. The reason I work every day, the reason I am always looking to make a new great real estate deal is for my family. That is incredibly motivating for me because I love them very much. What is your “WHY?” It could also be your family. That is an awesome WHY. Do you have a sick parent? Are you nearing retirement? Do you have kids that are getting ready to go to college? If you don’t have a “WHY,” you’re never going to make this work because we all need that motivation to be our driving force and our reason to never give up. 7

Real Estate Investing That Works­ You need to really sit back and ask yourself, “Why do I want to do this? Why do I need to make a lot of money? What is extra money going to do for me? Why is it absolutely imperative that I succeed?” The answers to these questions will keep you motivated and give you the best reasons you need not to give up when you get tired, bored, or decide to jump to something else. Once you know your WHY, then you can always come back to it. If you get a little down or you’re thinking, “Gosh, I’ve been studying Mike’s system for three weeks, been to a few online auctions, and I just haven’t scored a deal yet.” Take a moment and bring yourself back to your “WHY” and understand that as long as you know what’s driving you, it’s easy to re-focus and get re-inspired and press on towards your goals. Take a moment right now, and write down your WHY. A good place to start is to ask yourself, “What means the most to you in life? Who do you love the most?” Wanting to make more money is good, but WHY? Is it so you can live in a nicer home you are proud of ? Drive a nicer car? Have enough money to retire and live comfortably? Here are a few examples of WHY that may help you discover what your real WHY is for wanting to learn how to make money investing in real estate. • I want to never have to worry about money for myself or my family. • I want the independence, freedom, satisfaction, and fulfillment of being able to earn large sums of money on demand. 8

What Is Your WHY? • I want to do something I can be proud of that provides financial security and stability to live my dreams. • I want the ability to be able to quit my job or reduce my hours so I can spend more time with my family. Now it’s your turn. Grab a piece of paper, or turn on your computer, and open up a Word file and title it: MY WHY. Get detailed. For example, with me, it’s not just about my kids. It’s that I want my children to go to the best colleges in the country. Take the time to look at what you are most passionate about; what you are the most emotional about. Once you have it written down, and it really excites you, you are ready to open the doors to real estate investing success — and you’ll be super motivated because when it comes to making big money in real estate — you’ll now know WHY you are doing it!

CHAPTER 2 Summary: • Know your WHY. Articulate it clearly with passion and emotion. Make sure it excites you and that it is a strong enough reason to keep you committed and focused on learning what I am teaching you, even when you don’t want to. • If you are ever struggling or need more motivation, go back to your WHY! It will keep you going when you get lazy or want to quit and give up.

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STUDENT TESTIMONIAL “I’ve Been a Real Estate Broker for 15 Years & Never Knew This Was Possible!”

“I specialize in the REO industry selling foreclosures for places like HUD, Freddie Mac, Fannie Mae, all the banks, and GSE, asset management companies. Mike has opened me up to things I never knew existed, and showed me where I can find deals I don’t even have access to. What I learned from Mike is how to purchase properties through tax sale auctions and foreclosure auctions online all across the country — before they go on the market anywhere else! Mike taught me things I’ve never heard before. What’s different from Mike’s program and all the others is that it really works. This is going to help me build generational wealth for my family.” Bill, Real Estate Broker with America’s #1 Top Selling Team

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CHAPTER 3

Investing Is Key Webster’s dictionary defines INVESTING as the act or process of expending resources, especially money, to achieve rewards. Although I am not the CEO of a huge multi-billion dollar international corporation with thousands of employees, I see every dollar I have as a single employee working 24/7 for me. If I want to invest my employees (dollars) in a property, like a duplex, I know that to get that duplex I have to send my employees out to acquire the property. In my first purchase, I sent 25,000 employees (dollars) out to the field, and they came back with a fully rented duplex in Buffalo, New York, generating $1,100 per month in income. Two weeks later I sold that same duplex for $45,000. My 25,000 employees returned as 45,000 employees. I then sent those 45,000 employees out to get three more properties, and they came back a few months later as 115,000 employees. What I discovered about investing was that for me to make more money, I had to send my money out and have it work for me. That’s exactly what I am going to teach you; how to put your money to work so it comes back with a conquest of, you guessed it, more money. I didn’t go out and buy a new car or take an expensive vacation. That’s called spending your money with no possible return of more 11

Real Estate Investing That Works­ employees (dollars). There’s a big difference between spending and investing. Putting your money to work is how you build your bankroll. This is how you can consistently increase your capital by investing. Within a year, I bought and sold over 42 properties with my partners and my $25,000 investment quickly became hundreds of thousands of dollars. It didn’t happen overnight, and it didn’t happen with one single property. A few of the properties had a modest return of a couple of thousand dollars. Others did better bringing back $10,000 to $20,000. The big surprise was that several brought back $30,000 to $40,000.

The Best Way You Can Succeed in Real Estate Investing Is to Have Your Money Working for You. It doesn’t matter if you have a few hundred dollars, a few thousand dollars, or if you have millions of dollars. Develop a mindset that each dollar is your own personal employee. I don’t want my employees just sitting in the break room locked away and doing nothing. No. I want my employees on the move acquiring and bringing back more employees and assets. I want every dollar I can spare bringing back even more dollars. If I just leave my employees in a bank account, savings account, or CD, with today’s minimal interest rates, my employees are stagnant, accomplishing very little. That is like willingly sending all of your employees on vacation. They are out doing nothing productive when they should be totally focused on bringing back more money. 12

Investing Is Key Think of your money as your team of top notch executive employees. It’s not a resource you have to hoard and sit on. It’s not a resource you should be scared to part with. For me, that is the worst financial decision I can make. Wouldn’t you rather unleash those employees and harness the power of those employees to get you more employees so you can build your empire? That’s how you build momentum and become unstoppable. You could, of course, put your employees to work in the stock market. Even if you invest in a big blue-chip stock, it could easily go belly-up. Look at Enron and all the financial stocks that were crushed in 2008. If a stock goes belly-up, all you have left is paper, or at best, a fraction of what you started with. When you buy a stock, you really don’t have any control over what happens to your money. I want to be in control of how my employees are working. I want a certain guarantee they will return successfully with even more employees. That is why real estate makes so much sense. Unlike a stock, no matter what happens, you still own the property. It’s tangible. It’s real — that’s why it’s called Real Estate. Last time I checked, they are not making any more land. More people are being born every year. The number of people looking for a place to live is constantly increasing, but they are not making more land. That is why the value of real estate will almost always go up. As you’ll soon discover with my system, you’ll potentially make money the second you purchase a piece of property whether the market goes up or down. That’s because I show you exactly how to buy properties that aren’t listed in the Multiple Listing Service 13

Real Estate Investing That Works­ for pennies on the dollar. When you make your purchase, you’ll have what I call, “Instant Equity.” The bottom line is: you need to get your money, your employees working for you. There is no better place for those employees to make more money than in real estate. My system is designed to get your personal employees working for you!

It’s All about Your Mindset Some people are satisfied with one deal. They do one good deal and they think they’re set, they met their goal and everything is good. But that’s crazy. Once you make that first fat profit and you just spend it, the next thing you know, all your investment money is gone.

What If You Took Those Funds and Reinvested? What if instead of caving in to instant gratification — “Oh, I made this money, let me go buy a new car,” — you invested it. I suggest that you do it a couple times and then go buy yourself a new car, so you can leave your investment employees in the field working for you to acquire more employees and assets. Never take your small supply of employees and send them to a new car lot and stick them all in a new car. That’s not the right thing to do with those loyal, dedicated 24/7 employees. Put them into a new car, and you’ll have no employees working for you. How are you going to grow your business and build it into an empire with no employees? If you are reading this guidebook to make money, understand you must get your employees tirelessly working for you. 14

Investing Is Key

CHAPTER 3 Summary: • Consider every dollar you have to be a dedicated, loyal employee working for you 24/7. • Leaving your employees sitting around with nothing to do is a total waste! • Real Estate is one of the most proven and profitable places to send your employees to make money for you! • Don’t stop at your first deal. Keep having your employees make more money for you. • Don’t blow your profits on instant gratification until your bankroll is big enough not to be handicapped by unnecessary expenditures that have no potential of bringing back more money.

15

C A S E H I S TO R Y 63 Edison: Bought for $17,000 — Sold 4 months later for $59,000 — Made a $42,000 Gross Profit

This property is a very typical transaction for me. I bought this through a foreclosure and sold it online to an out-of-state investor. Located in a university town, it’s always easy to rent. It’s a duplex built in 1935, two 3-bedroom units with a large garage in the back. The purchase also included the lot next door, making it a really large lot for a city property. It also has an attic and a basement. It was in fairly good shape, only needing minor repairs consisting of paint, flooring, and a few cosmetic upgrades. After purchasing it for $17,000, I put a few thousand dollars into it and sold it 4 months later for $59,000 with a gross profit of $42,000.

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CHAPTER 4

Starting with Less than $10,000 In this chapter I will share how you can get started with under $10,000. I understand that not everyone has $50,000 or $60,000 sitting around to use for investing. We all need to start where we are. I will share how you can start with a lot less and work your way up.

Before you invest a penny, it is very important to get clear on a few things: • What is your WHY? • Why are you doing this? • What is your end game? • Are you looking to generate income? • Are you looking to flip houses quickly? • Do you want continuity income each month? I can’t tell you what your needs are or what your goals are, but I can give you the successful tools I use myself. If you want to start purchasing properties at under $10,000, we can agree that your options will be somewhat limited. But, I’m 17

Real Estate Investing That Works­ here to tell you there are properties out there you can get for under $10,000.

There Are Tons of Them! I’ve bought many and flipped them for as much as $40,000, $50,000, or even $60,000. Let’s get specific because you need to know how to get started with the amount of money you have. It’s great to see a mentor do it, or other people doing it, but the bottom line is you want to do it. That’s what’s important.

How Can You Do It? If you’re starting with $10,000, I wouldn’t recommend tying up all $10,000 at once. You’ll want to tie up only a piece of your bankroll with one property and leave enough to possibly buy another property. If you can do this, I recommend doing it twice. I am going to share what I would do, and you’ll make your own decision based on what I share with you. If I had to start today with $10,000 and everything else disappeared, I personally would jump right into purchasing land. I would get the cheapest pieces of land out there, right now today as I write this book lots sold at auction for under $2,000. I would buy whatever I could find. I would want it to happen fast because I know time is of the essence. I would start by attending a tax deed auction. These happen all across America, some online counties conduct them on Tuesdays. 18

Starting with Less than $10,000 Just because you attend a tax deed auction doesn’t mean you’re going to win one, but you can at least participate and understand this is a numbers game if you trying to find the best deals out there.

Why Consider Investing in Land? Let’s talk about investing in land. If you are just beginning and want to start off small, it’s important to build your limited bankroll incrementally so you can strategically buy even bigger and better properties. You’ll see many deals out there for land available at a fraction of their previous value. Land can be a great opportunity because when construction is not booming — like now — most people are turned off by land. When people are turned off by land the prices go down because there’s much less competition to purchase land. Investing in land could be a great opportunity for you, especially if you have under $10,000 working capital. When people are uninterested in buying land, as odd as it may seem, it’s a good time to buy. Land prices are a fraction of what they were 10 years ago. In fact, many vacant lot prices are now 2–10% of their peak value. To make a nice profit you don’t need prices to go back to 100% of their previous value. You can easily double, triple, or even quadruple your money with small increases of 20–30% of their previous value. That’s the sweet spot to look for when buying land. Properly purchased land right now is a conservative investment. Here’s why:

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Real Estate Investing That Works­ During the real estate boom that ended around ’06–’07, there was incredible speculation. Builders and investors came and bought up all the land and started developing enormous housing communities. Everybody wanted a piece of those areas and then the crash came. This typically happens in an area where you’re going to find great land deals. That’s because the lot prices got so high in value, and people leveraged these properties so much, that ultimately they were foreclosed on. For example, people would borrow $100,000 on a piece of dirt. When the crash came that piece of dirt was then worth $10,000 retail. When that happened, nobody even wanted to buy those lots for $10,000 retail (because everybody was scared). However, the bank was still owed $100,000 on the lot. When the crash first came, we noticed a lot of land freed up right away, because people walk away from land a lot easier than they walk away from houses. Imagine you own a piece of land with an $800 per month mortgage that was purchased based on speculation. Your goal was to build on that land, but now — all of a sudden — there’s a crash. You’re most likely not going to continue to pay that note if you have no plan. Let’s say the property is worth $10,000 retail, but you owe $100,000. People at property auctions aren’t interested in that piece of land because they say, “Oh, I can get a house or a multifamily property for a deal right now.” But understand we all start somewhere; if land has to be your start, imagine buying that same lot with a $10,000 retail value for $4,000-$5,000.

Risk vs. Calculated Risk 20

Starting with Less than $10,000 If you use the excuse, “I only have a couple thousand dollars. There’s no way I can invest in real estate.” Most people would tell you, “Take that tiny amount of money, use that as a down payment, and borrow the rest.” In my opinion, that’s super risky. If you put up a very small down payment — let’s say 10% — and all of a sudden the market goes down, your property is now worth less than you owe. When this happens, most people lose their entire down payment — even if the market only fluctuates by 10%. Borrowing might sound really good on paper until it doesn’t work out for you. That’s what happens when the money you borrowed is more than your property’s current market value. Why do that when you can just start off small? Imagine if you’re able to get a lot for $2,000 that was — at one point — worth over $40,000. I’ve actually done that, and I’ve doubled or tripled my money by quickly reselling the lot. How do I do it? Although at its peak, somebody paid $40,000 for the lot, I’m coming in and paying less than $2,000. Then I take that property and using one of my online selling techniques, put it up for auction to a worldwide audience. Most people around the world can’t believe they can own a vacant lot in America in a residential area for under $10,000 and the profit as a percent of purchase price is very high. Anything in life is possible and everything has a certain risk. What are the chances I’m going to have to sell that lot for less than $2,000 if it once sold for $40,000? I’m not even waiting to get it to go back to $40,000. To me, this is a much more calculated risk than putting your $10,000 down on a $100,000 property. If it’s a great deal and somebody with cash comes in and undercuts you’ll lose that deal. 21

Real Estate Investing That Works­ Many of you have had that experience. You find a great deal on a property, you’re getting your loan approval together, and you’re offering more than the guy who’s paying cash. But for somebody who offers cash, the bank usually has a quick, no questions asked closing making it harder for those who require financing and those looking for financing usually loose the deal.

Using Land Investments to Build Capital If I can get a “free and clear” piece of property without a lien or mortgage, at least I actually own the property. If the economy crumbles or I lose my job and can no longer pay that monthly payment — they’re not going to take the property from me because THERE IS NO MONTHLY PAYMENT AND NO FINANCING INVOLVED! I feel good knowing that I own it free and clear, and for you, that can be your start. I’ve purchased many lots for less than $2,000. Some I’ve resold for only $5,000, but I still more than doubled my money. Nobody can argue with more than doubling your money — even if it’s a small amount — because now you have more money to work with. Then you do it again, and again, and eventually you’ll have even more money to work with to buy single-family homes, duplexes, or multifamily apartments.

This Isn’t a “Get-Rich-Quick” Scheme You’ve probably seen some of the killer deals I’ve done and the amazing profits I’ve made. I’m sure that motivates you, but at the same time you can’t predict the future. All you can do is base everything on today. I can tell you what I do, but ultimately, you have to be comfortable with applying these techniques or you’ll never do it. 22

Starting with Less than $10,000 That’s why my goal is to give you the tools in my arsenal so you can pick and choose what works for you. You don’t have to use all of the tools; in fact, I’ve had people who have paid me $15,000 tell me the entire system was worth it for just one tidbit. They’ve said, “I would have felt like you delivered just based on that one technique, because that will save me money, and I will make a ton of money from that specialized information.” That’s the feedback I get, and it makes me feel good because that’s the whole idea. It doesn’t matter what you pay for a piece of knowledge; if it makes you 10 times the amount you paid, that’s a great deal. I’m not saying that land will make you an insane amount of money. I am saying if you have very little funds to work with, let land be your start because at the very least you can’t lose 100% of your investment capital. If you own an undervalued piece of land and you simply don’t want to sell it for less than $2,000, you lose nothing. You can stick by that price and not sell it until you make money. I’m not saying it’s risk-free, but this is what’s called a calculated risk. You don’t have to sell it for less than what you paid, and the upside has great potential.

Be Prepared for a Great Opportunity Let’s look at a different scenario. Let’s say you didn’t fully understand what you were doing when you bought a piece of land and think you may have slightly overpaid. Knowing somebody paid $50,000 – $60,000 for it, and you still feel like you overpaid at $3,000. If that’s the case, just hang in there. 23

Real Estate Investing That Works­ The economy is just starting to do well again. Don’t sell it for $2,500, thinking that’s all you’ll ever get for it. Here’s a really quick example from personal experience. I was on an auction site not too long ago, and I saw this commercial lot with a huge judgment. It was massive — definitely over $200,000 on a vacant lot — and I thought, “Wow. That’s really expensive.” So, I click on it. Then I discovered it was actually a commercial piece of land, it was almost an acre and a half. Then I realized that there’s a brand new housing tract across the street and that the commercial lot was close to downtown and had huge potential.” So I gave it a second thought once the auction went live I saw that the bidding was at $25,000. Then I clicked on something else, and I see that it’s advertised for over $400,000. Not only is the judgement owed over $200,000, but there was a previous sales listing on the exact same property for over $400,000, and right now, nobody’s bidding on it at $25,000.” Although I originally had no intention of buying that lot, I said, “Oh, what the heck,” and I put in a bid for $25,100, because that was a smoking hot deal for an acre and a half commercial lot on a busy street. I did a quick look-around online, and I saw a $600,000 place next door. Sometimes it can take you an hour to figure out something is an amazing deal or it can literally take you two seconds. Sometimes the evidence is overwhelming that it’s a great deal…and if it’s not, we simply don’t buy. But I saw that $400,000 listing. I saw the judgment was through the roof, and I saw that the previous owner paid over $200,000. To me, that was overwhelming evidence that it was a great deal for 24

Starting with Less than $10,000 $25,000. Because of my own techniques, I was the only bidder. I got it for $25,100. Within a few days I got a cash offer for $80,000, because the person who gave me the offer didn’t even know it was going to auction. You might be thinking, “With such a great deal, why doesn’t someone else buy it?” Well, you are that someone else. I am that someone else. The people who beat me out on a deal are that someone else. There were people who would have bought that lot, but they had no clue it was going to auction. This is specialized information. Somebody gets the property, but only ONE somebody. You can be that somebody. Maybe you were getting bored reading this section because you were never going to consider buying land. I’m glad you’re reading it, because if I opened your eyes to the possibilities — at least now you know that sometimes things do fall in your lap — if you’re prepared to take action. Another great benefit to land is that no repairs are involved. No leaking roofs or remodeling required. If I hadn’t been prepared and didn’t even understand what was happening with that commercial property, I never would have bid on that property. But I was prepared, and without even advertising it for sale, somebody offered to triple my money. Here’s one last thing to consider: There will be more people on this planet, but there will not be more land. If something sold for $60,000 when there were less people on the planet, what about when there are twice as many people on the planet? Couldn’t it sell for $60,000 again? Couldn’t it sell for $80,000 or $90,000? I’m here to open your eyes to these opportunities. So, if you have limited funds, or even if you have a good bankroll, it is important that you always consider buying land. 25

Real Estate Investing That Works­ Investing in land can be a great decision. When other people aren’t interested in investing in land, it can be a great opportunity for you, especially if you want to have the potential to build-up your bankroll to really get started in real estate. This is a good example of how you can go against the grain in this situation and use it to your advantage. Make land investments the right way. If you don’t have a lot of money to start with, low land prices mean you can own a property free and clear, flip it fast, or sit on it, and sell it later. Taking a calculated risk and putting yourself in a position to succeed means you can build more capital to invest in real estate. Use this information and these techniques as you see fit. Only you know what you’re comfortable with, and the more you know, and the more you practice using these techniques, the better you’ll become at making good real estate decisions. Be prepared for a great opportunity. You’ll find that luck seems to come your way when you’re prepared to take advantage of a great opportunity. Real estate is no different. You’re learning how to get the information you need so you can make informed decisions. You’ll find the more informed you are, the more confident you’ll be in your decisions.

What about Starting with Houses? Through tax auctions and foreclosures, I’ve seen houses that sold for: • $3,900 • $5,000 • $3,000 26

Starting with Less than $10,000 • And I even saw one that sold for less than $2,000 There are cheap middle class, blue collar areas all over the country, but you can’t count on something this amazing all the and sometimes it makes sense to pay $10,000+ to get something a little nicer that needs less work.

Be Patient and Diligent and You Will Find Great Deals I would rather get a couple of really cheap homes, and have two deals working for me at one time. I could list one of them on Craigslist. It’s free. Give it a try. Maybe I’d list the other one on eBay. I would not put two on eBay, because I’d just end up competing against myself for the same buyers. My listings would look similar, sound similar, and probably be selling in the same price range. I’d list them on two different sites, and then I’d have two different deals working for me, instead of against me. Does this strategy make sense to you? Let me give you an example: Let’s say you have $10,000, and you’ve only tied up $6,000 of it instead of blowing all $10,000 on one house. Now you won’t feel like: Oh, I have to sell this below what its worth because all your capital is not tied up. Stand your ground. If you are using one of my online auction techniques, you can put reserves; you can put dollar amounts, the lowest dollar amount you’re willing to sell it for and minimize your risk. Don’t get too greedy. Just move forward to the next deal. 27

Real Estate Investing That Works­

Greed Will Hold Up Your Process Let’s say: • Somebody offers you a $2,000 profit on your $6,000 purchase • But you think you “deserve” an $8,000 profit • You could have made $2,000 in a week or 10 days But because of greed, all of a sudden you’re holding out to get so much more, and it takes you several months just to make a little more money.

Those Funds Are Sitting on the Sidelines Your employees are tied up while you are saying to yourself, “I can get a little more!” You may end up getting your higher profit, but you’re waiting several months to do it. It looks great on paper, because you bought it for $6,000 and sold it for $14,000, but remember time is money. But look what you did. You took funds and you left them on the sidelines while you were waiting to get a higher profit instead of just building incrementally. What if: You take a smaller profit right now and reinvest it in another property, so that other property can be working for you? Or, you can have two more properties working for you at the same time instead of just 1. 28

Starting with Less than $10,000

Don’t have the Mentality of Get-Rich-Quick I do not teach “get-rich-quick.” I don’t know how to get rich quick in real estate. What I do know is how to buy below market value and sell quickly for a profit. I also know how to keep the property, rent it out, and generate a very nice monthly income. That’s what I’ve done. I’ve built strategically to what I have today. You hear people claim all the time, “With no money down, you can get rich quickly.” I don’t know how you would get a great deal on a piece of property with zero money when there are people with cash willing to buy that same piece of property.cash willing to buy that same piece of property. You have to wonder, it’s such a great piece of property, why didn’t someone with cash buy it? I know those outdated techniques are still circulating but maybe someone could clearly explain to me how you would do it, because with all the deals I’ve done, I actually don’t know how you could truly get a great deal without using any of your cash or credit.

I know: • How to buy and sell a property • How to start off with little capital but not with none. • How to build investment capital If those are your goals, then, I’m your guy. 29

Real Estate Investing That Works­ If your goal is to just get rich quick, I’m probably not your guy. There are lots of so called gurus that claim they will teach you how to get rick quickly. If that’s your goal, you’d have to talk to them and if it WORKS then please relay that information to me. If you want to start with under $10,000 and work your way up, I’ve laid out a clear plan of how to do it. This chapter could have easily been titled, “Starting with under $5,000.”

If I Had $10,000 Here’s What I’d Do … If I had $10,000, it’s a no-brainer. I’d buy a couple of $2,000 lots in South Florida right now. You can get those every week, anytime. Very little research is required. You get a lot that sold for $50,000 to $60,000. To me, there’s very little thought required to make that kind of investment. You’re quite literally paying 5¢ on the dollar. You might only make $1,500 or $2,000, but you only tied up a small amount of your money. Your security blanket is that previous peak point that the property sold at, or was purchased for. You have that benchmark of it being the highest value that property ever attained. What you know is that it could take 100 years to get back up to that mark. It could also take just five or ten years. You don’t even need it to get all the way there. Just get to 20%, 30%, 40% of whateveryou are willing to sell for, and you’re a massive winner.

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Starting with Less than $10,000

CHAPTER 4 Summary: • Start from where you are, get clear on why you are investing, and work your way up. • If you’re starting with $10,000, don’t tie it up all at once. Get the cheapest pieces of land, as quickly as possible, by attending a tax deed auction. • If you get a couple of cheap houses, list one of them on Craigslist and the other on Ebay or the dozens of auction sites that are out there. That way, you’ll have two different deals working for you, instead of competing against yourself by listing on the same online sales sites. • Don’t get greedy. It will only delay your process.

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STUDENT TESTIMONIAL “Learned How to Find, Fix, and Flip Real Estate for Pennies on the Dollar!”

“Mike shows you what’s working now, not yesterday, not in 1980, not in 1990, not even 2000. His system is so simple that even a child can understand it. I’ve spent tons of money in the past on different real estate courses and even boot camps. None of them can touch this with a ten foot stick. I not only learned how to find, fix, and flip real estate for pennies on the dollar, but I also learned how to use real estate to fund my children’s education tax free!” Chika, One of Mike’s Real Estate Investing Students

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CHAPTER 5

The Current Housing Market I am sure you’ve heard people say this is a depressed market. This is not the time to get into real estate. People have been burned in deals. Watch out. If you listen to the media, you might hear some markets are coming back, but most of the country is still flat. Let me be extremely clear.

This is the best housing market any of us could ever hope for. In my lifetime and in your lifetime, this is actually the best housing market. The conditions are ideal to potentially make an incredible amount of money in real estate. I’ve been doing deals in real estate since 2002. I was here before there was a real estate boom. I was in real estate during the big boom and during the crash. And, I’m still in real estate now as the market is starting to improve. I can tell you, without question, right now is better than any time before, during, or right after the boom. The profits you can make now are far better than the profits I was making before the boom, or even during the boom. 33

Real Estate Investing That Works­ During the boom, it was foolproof, you would just buy the house and simply list it with a realtor, and someone would buy it. That’s because the real estate market was growing at such a rapid rate that you would have had to TRY to fail in real estate. Now we’re in a different situation with far less competition. But that’s ok, because one of the most important secrets I share with you is:

A Proven System That Works in Any Market Condition This is critical because my system shows you how it possible to start making money now, in a year, in 10 years, and 20 years from now. Before the real estate boom, I was investing in blue collar areas. I was looking at cash flow, and I was buying so far under market value that getting rent checks every month was a spectacular bonus. Like many of you, I didn’t have a lot of money to when I first got started started. I was focused on properties under $10,000. When the market was not booming, I was focused on building the number of properties I had and increasing my monthly cash flow from rental income. But at the same time, I was trying to build my capital, so I had to flip some properties too. When we’re in a real estate boom, flipping properties quickly makes a lot of sense because the gains are huge and they happen fast. The key is staying in touch with market conditions. When the bubble starts to burst, you can use my selling techniques and sell your properties quickly. Or, buy them so far under market value, the price fluctuations don’t impact you.

34

The Current Housing Market This is my business. I am always doing detective work and staying abreast of the hottest trends in buying and selling property. That’s what I am presenting to you now. Right after a boom is a very exciting time because everyone is running from deals. That brings us to the next secret.

When Everyone Zigs, You Should Zag The secret most people don’t know is that real estate markets always come back. Always. When the bubble burst, everyone was selling their properties for a fraction of what they were listed for. I was out there buying. People thought I was crazy. They’d say, “Mike, you just bought a property that lost 35% of its value in 6 months.” And I knew that was the perfect time to buy. Should I have bought it earlier when it was at its peak? You can only lose money that way. I acquired substantial wealth buying properties no one else wanted right after the bust. And even today, there are properties available every single day way under market value that nobody wants, or even better, nobody knows about. You can sum it all up with another secret:

It’s Always the Right Time to Get into Real Estate! I’ll also add that any way you get into real estate works, as long as you are NOT borrowing money to do it. For me, it happened almost by accident. I told this story in the introduction, so if you’ve already heard it, be patient and I’ll give the short version. 35

Real Estate Investing That Works­ I was lucky enough to have a great job in my early 20s. I was making a lot of money living in San Jose, California. One day, I was just surfing the web and saw an ad to purchase a duplex in Buffalo, New York, for $25,000 — with monthly rental income of $1,100. My first thought was that this had to be some kind of scam. After just one year, I would be making close to a 40% return on my investment. I called the seller. He thoughtfully answered every question and seemed legitimate. I decided to take the risk and sent him a wire transfer for $25,000, and he sent me the deed. I then ran an ad in the local San Jose newspaper that said:

“Rented Duplex, $50,000” The reason this ad was so successful is that a two bedroom condo in the worst part of San Jose was selling for almost 300k. The idea of buying a duplex with a yard and built in rental income for $50,000 was absurd. Within a day, a woman responded. I showed her pictures of the property and proof of the rental income. Then I gave her a $5,000 discount if she would commit to buying the property that day. the property sold by just running an ad in a booming market and buying the property in a stagnant market. This was a peak experience for me. I was sitting at my desk and I realized that with a few hours of work and a few phone calls, I just made $20,000. That is more than some people make all year, and I made it with about 2–3 hours of work.

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The Current Housing Market You can guess what I did next. I called the seller up and asked if he knew of any more properties I could buy. He did, and I quickly sold three more for about the same profit. When I realized there was a great opportunity, I actually moved to Buffalo to fully take advantage of that market. It all goes back to what is your WHY? If you are ready to make a full career of this and maybe even quit your job, you may find yourself making big, bold decisions like this — it certainly paid off for me.

CHAPTER 5 Summary: • The current housing market is ideal for making substantial profits. • Use a proven system that works in any market conditions. • When everyone zigs, you should zag. • It’s always the perfect time to get into real estate.

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C A S E H I S TO R Y *5616/5618 5th Avenue: Bought for $13,600 — Sold less than one month later for $46,500 — I Made a $32,900 Gross Profit

This duplex is located in the city of Ft. Myers, South Florida. I purchased it through a foreclosure auction exactly the way I teach you in this book and on the DVDs. When I showed up at the house, it was already rented. My tenants signed new leases, making it easy and quick to sell as an investment because the tenants were already in place, and I had the documentation to prove it. In fact, I resold this duplex using one of my online techniques in less than a month — making a very nice $32,900 gross profit. I didn’t have to do any work because it was already rented. There was a little bit of cosmetic work that needed to be done on the upstairs unit, but I made a deal with the tenant for him to do the work, and I waived his first month’s rent. This is a good example of how to be a 30-day landlord. 38

CHAPTER 6

The Biggest Secret: Buy below Market Value When people think of traditional real estate investing, they think of: • Buying a house • Waiting for the property to go up in value • And then reselling the house That’s the typical mindset of real estate investors. They think: The market is hot, so I could buy a house, and if it goes up 20%, I just made 20%.

This Type of Thinking Is Super Risky It’s something I would never do. I don’t want to buy property at retail value and hope that it could someday go up in value. My biggest real estate secret is not to buy based on an up economy, a down economy, or a sideways economy. It truly does not matter what our economy is doing. It doesn’t matter what’s going on in the world today or our current political structure. Things like that are irrelevant. What matters is gaining the property so far under market value that the chance of losing goes way down, and the chance of making money goes way up. 39

Real Estate Investing That Works­

My Money Is Made When I Buy When I tell people, “My money is made when I buy,” they look at me a little puzzled. They say, “What do you mean your money is made when you buy?” I say, “Because I made my money when I bought it.”

For example, let’s say today I bought a property worth $100,000. That’s what all the houses in the neighborhood are selling for: • If I buy it for $60,000, I literally just made $40,000 because we already know it’s going to sell for around $100,000. If $100,000 is a fair market value, I’ve made $40,000 by buying it at $60,000. • Now, if I buy it at $100,000 and hope it’s going to go up 20% next year and it does, I look like a genius. But, what if it doesn’t? Look at the risk in this example. What if it doesn’t go up? • What if it goes down two percent or up two percent or goes sideways? Now, your property is worth $102,000 or $98,000 or $100,000. Remember, I paid $100,000 for the house if I pay retail value. To me, that’s not real estate investing, that’s gambling. People ask me all the time, “Isn’t buying real estate risky?” It depends. If I were to pay market value for every house, then yes, that would be extremely risky. Because how do I know that it’s going to go up. There is not a single person who can say they 40

The Biggest Secret: Buy below Market Value know how to time the market perfectly. So always remember your money is made on the “buy.”

My Advice: Buy Properties under Market Value because Your Risk Goes Way Down Here’s an example if you’re buying an investment property: • If you buy a property for $100,000 and you move someone in for $700 a month, that would be $8,400 a year. That would be an 8.4 percent gross return on a $100,000 investment. • Now, imagine you bought that property for $60,000, and you’re getting $8,400 a year on it. Now you have almost doubled your gross return (8.4% goes up to 14%), because you bought it so far under market value. If you’re looking to be a landlord and you buy it at 40% under market value, that’s a 40% higher rate of return you’re going to make.

I’d rather: • Get two houses at $50,000 ... or, one at $60,000 • Take the rest of the money and buy another at $40,000 • Then I have two properties, instead of paying the $100,000 for one property and hoping I will make money based on the current economy.

This strategy is about creating instant equity, when you BUY! This Is My Biggest Secret 41

Real Estate Investing That Works­ Everything I’ll teach you is based on this secret of buying under market value.

In this study guide and on the DVDs, I am teaching you: • How to find homes and land way below market value • How to fix them up and flip them for a quick profit • How to rent them out for a steady monthly income • How to find property managers and contractors that won’t rip you off • How to find good markets • How to invest in your own retirement account tax free. • How to provide for your children’s education account tax free. • How to wholesale properties for profit and quick sales to other investors. • How to use the power of the internet to work from home. You may be thinking: The economy fluctuates a lot. How do I know what the property is really worth? With the power of the internet, you can remove speculation: • You can look at the street the property is on • You can see what houses were sold on that street • You can see what sold previously and at what price • You can find the square footage • You can verify any liens or back taxes. 42

The Biggest Secret: Buy below Market Value

It’s All Public Record Realtor.com will show you current asking prices, and Zillow .com will show you the whole street, what is currently selling on the street, and all previous sales. Zillow.com will give you something called a Zestimate, but don’t pay any attention to their Zestimate, because in my opinion it could be either too high or too low. Use the comparable sales and find similar like homes that have sold in the last 3 months.. The powerful thing Zillow.com does is … it puts up a map where you can see the previous sales around the house you’re considering as well as showing you any previous sales of the property your evaluating as well as age and square footage. This is all extremely good data when your figuring what you should pay for a property.

For example: You would be able to say to yourself: Okay, two blocks over a three-bedroom, two-bathroom house just sold for $400,000. And, three streets over, the same sized house just sold for $405,000. Using this tool, you can start to get a sense of what’s selling in the neighborhood. We call this comparable sales, or comps for short. Comps will show what houses recently sold for. That’s one way to get a sense of the market value. You simply look at houses that are close in age and square footage and see how recently they sold. But now you might be thinking: How do I find out what that house sold for in the past?

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Real Estate Investing That Works­

Zillow will give you numbers on past sales as well: There is a section on the site that says sale history. This section will show you a map with dates of what the sales have been over time. You can also see what is currently being offered for sale currently and the size and age of those properties. It helps you to determine what you should consider paying for an investment property based on how much you are looking to buy under market value. All of this is on Zillow.

Remember to check comparable sales: • Once you’ve entered the address of the home you’re looking at on the main page, you may see on the map a group of properties that have already sold which certainly can give you a comfort level or tell you that what you are considering really is not that great of a deal. • You can then enter the address of the comparable sales and get even more properties around the area and research it. How big is the property, what year was it built, how many bedrooms, how many baths, how is it comparable to the one your looking at? Is it bigger, or is it smaller? • You want to compare the subject property (which is the property you’re thinking of buying) to the properties in the surrounding area. You don’t want to compare a 2007 house with a 1960’s house. You want to compare apples to apples. Remember, you can do all of this at Zillow.com. What do you do if you want to search a little further out? Is there a school right by? Is there a library? 44

The Biggest Secret: Buy below Market Value These are great questions that may be important to your buying decision. You’ll find the answers to these questions with the next tool I’m going to share with you. Perhaps you don’t have the time to fly to a potential property and scan the area. You’d like to see the area, but you quite simply don’t have time. Use a tool called:

Google Earth • With Google Earth you can virtually drive down the street. They have little cameras mounted to the top of cars and they drive all around most neighborhoods in the Country. You can virtually drive down the street and see your subject house, the neighborhood, and the comps as well. All from the comfort of your own home. • This tool allows you to really get a feel for any neighborhood. What if you’re searching and you notice that there is nothing for sale in the neighborhood? What if there are no comps around?

This Is A Good Sign! It means that properties don’t turn over in this neighborhood. It’s probably a more desirable and stable neighborhood. When you go to a less desirable area, there will be tons of houses for sale. More desirable areas will have less. These two tools will help you estimate the property’s current value, which will in turn help you make an educated decision about your possible purchase. And remember, the secret is to buy your property below its current market value. 45

Real Estate Investing That Works­

CHAPTER 6 Summary: • Don’t follow the typical mindset of real estate investors by buying property you think may someday go up in value. It’s too risky. • Remember that it doesn’t matter what the economy is doing. What matters is gaining the property under market value. This decreases your risk. • You can eliminate speculation by using the power of the internet. Use Realtor.com, Zillow.com, and Google Earth to get all the information you need.

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STUDENT TESTIMONIAL “I’ve earned over $60,000 in profit, and I now get $2,300 a month in rent!”

Within several days of training with Mike, I purchased my first property. I spent a few thousand rehabbing the property and fixing it up. I followed Mike’s techniques about renting to tenants and was able to quickly rent that property. I saw gains right off the bat, and then when I sold that property, I actually made a $40,000 profit just on my very first deal. Since then, I’ve purchased six other properties. Four of them I chose to hold and collect the monthly cash flow; two of them have been sold, and it’s absolutely changed my life. My wife and I are now getting set up for our retirement because I put the rental properties into my self-directed IRA, and we’re only in our 30s. Now, every month I am collecting $2,300 in tax free rent checks that go towards our retirement. Shawn, One of Mike’s Real Estate Investing Students

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CHAPTER 7

Where to Find Investment Properties People often ask, “Mike, do you have a strategy for investing in my own backyard, in my own neighborhood?” Realtor.com and Craigslist are fantastic places to find local properties.

Craigslist is like a massive classified section in a newspaper, but it’s online and you can search any market in the entire country: You can pick any small or large city. More importantly, you can look for something close to where you live if that is your comfort level. Put in the name of your city on Craigslist and there’s a special real estate section on the site to help you find local properties to buy. On Craigslist you find a lot of investors or buyers that don’t have the same tools that I’m sharing with you so they are sometimes really motivated to sell which translates in to lower prices often times.

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Real Estate Investing That Works­

Often, investors don’t have these tools, so they’ll just: • Buy a property • Get in over their head • They won’t know what they’re doing • And they will just want out of the property • Craigslist Is a Cheap Way for Anybody to Sell a Property because the Listing Is FREE You’ll find a lot of, FOR SALE BY OWNER properties Its a great way to find deals but its also a good tool to help you sell your property especially if you got a really good deal. Its a good tool for wholesaling. Craigslist is a great way to check things out in your own backyard. You can go on Craigslist right now and you will see properties in your area for sale. Craigslist is constantly updating their site. The newest properties are listed at the top of the list by the date and time entered. If you’re the first one to see it that day and respond quickly, you may beat everyone else to the punch. The further down you go on the list, the more time has passed since the ad was placed and it may be a good opportunity to low ball an offer. Go to Google and type in Craigslist and your state. It will give you a choice to click on a Craigslist in your city. Click the link and it will take you to your local Craigslist site. Once at the site, you’ll see a section called housing. At the bottom of the housing section it will say “real estate for sale.” This is 50

Where to Find Investment Properties where you’ll find the page with properties for sale. The one on the top is the newest entry. There is an advanced search section at the top of the page.

You can search houses for sale by: • Owner • Broker • City • Price • Bedrooms • House type

Since Craigslist is constantly updating, you can look daily for the newest properties: Go in daily and check it out. If you can’t do it every day, spend 15 minutes a night, or every couple of nights while you’re watching TV. Do this research after you put the kids to bed, after dinner, or right before you go to bed. Create a habit around this and you’ll end up finding some really great deals. Timing is everything on Craigslist. Since you’re looking for properties in your own back yard, you’ll probably know the general location of the this is just one tool for buying and selling that many of my students never considered. The old techniques of buying and selling real estate would involve doing this same thing but in the newspaper classified ads. The power of the internet just enables you to do it in any city from

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Real Estate Investing That Works­ a computer. I still prefer the auction as the quickest and easiest source to buy cheap properties online.

You can use all the tools I am teaching in this study guide together: • Maybe you’ll be on realtor.com and see a house you like. • Then you’ll be on Craigslist, and you’ll see one just like it and notice that it’s 10% cheaper on Craigslist than it was on realtor.com. • You may even see the same property on both. Notice if there is a price difference. It may be cheaper on Craigslist because you’re dealing with the owner directly.

I Want to Open Your Eyes to the Different Ways of Searching for Property You may have heard about Craigslist and might have gone on the site looking for: • A car • A garage sale • Or to sell something yourself Most people don’t know that Craigslist is also a phenomenal tool to find houses for sale. We’re not focused on rentals in this chapter, but just so you know, Craigslist is also a great place to rent your properties. Simply list your rental, and it’s a free place to advertise for tenants.

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Where to Find Investment Properties I know we’re not talking about selling in this chapter, but if you wanted to sell a property yourself, Craigslist would be another great option. It’s also a great place to advertise. It doesn’t cost you a dollar and it helps you educate yourself by creating phone calls and emails from other investors. When I first started out I always enjoyed hearing what other investors had to say and their point of view.

The people calling you inquiring about your property will educate you by the questions they ask: • You’re asking questions • Answering questions • Interacting If I want to be an expert on making cereal, I would hang out with people that made cereal as much as I could. That’s exactly how you utilize these tools. Craigslist is simply just another tool to hone your real estate skills.

Third Option: AUCTIONS Now I will introduce to you a third option called the auction. People get a little nervous when they hear the word auction. I get excited because it’s a great way to find properties below market value and I have made millions of dollars buying through public auctions. You may be asking, “What is a public auction, and who puts it on?” Let me start from the beginning. • If you don’t pay the mortgage on your house, the bank is out that money. 53

Real Estate Investing That Works­ • If this happens for too many months, the bank can file to foreclose on your property. • When a property is foreclosed, it goes up for a public auction and is usually sold for a good value to investors looking to flip or rent out those properties. If you see a house with a realtor that says foreclosure, this was a property that nobody bid on (or the bidding didn’t reach the bank’s minimum acceptable offer), and was not sold through the auction. The result was that it was turned over to a realtor. When the bank forecloses on a property, they can’t just turn it over to a realtor to sell. It must be offered for public auction first so it’s a chance to get first crack at a property for a good price. • The bank might have a minimum bid amount that they would accept. • The bank might say to you, “We’re going to sell it at auction and were going to start the bidding at $50,000 and the retail value may be $90,000 but the bank wants a quick sale.” Chances are you will find the very best value when buying at auction but remember most counties require you to pay cash and that eliminates a lot of the competition from the investors that simply don’t have the cash. Also you never know if the bank wants to move it fast or hold onto it for the most money they can get.

When you see a foreclosure sign with the realtor: • You now know that house has already gone through a public auction. 54

Where to Find Investment Properties • You’re getting the second pick; you’re not getting the first pick. • It was first offered for public auction, didn’t sell, and now you’re getting to see it. You may be asking, “How do I find out where the public auctions are in my area and when they are?” It doesn’t matter where you live. Some auctions for properties in your area will be online and others you will need to attend in person but there are definately auctions in every area of the Country.

To find out if your area is online or in person: • You just go to Google • Put in your county • Put in the words County foreclosure and the name of your county. • If you live in a small county you might not find the information, so Google the assessor’s office for the county your interested in and call them and ask how they conduct their foreclosure auctions. If you were searching Monroe County, you’d Google

Monroe County Tax Assessor and get their phone number. Let’s say that it only shows the tax assessors phone number because you live in a smaller county.

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Real Estate Investing That Works­ Call the number and ask them for the phone number for the department that handles the foreclosures. Once you have found the right department you call. And you say, “Hi, I’m in the area and I want to pick up a foreclosure. Do you do live foreclosure auctions, or are they done online?” Sometimes the person on the end of the phone is new, or they are not sure. They may respond with something like, “Oh, can I put you on hold. I don’t know the answer to that.” They’re usually very helpful and strive for good customer service. Be patient and let them find the answer. How often the auctions happen is different in each county. Some counties hold auctions every day, others do not. I’ll give you an example for Lee County, Florida. In Lee County there will be bank foreclosure auctions on: • Monday • Wednesday • Thursday • Friday They may tell you about a tax auction which usually happens a lot less often. At the tax auctions auctions they are selling the homes of people that didn’t pay their taxes. In Lee County Florida as an example, the tax auction happens online on Tuesdays. Other areas of the country will handle them differently just call and ask. 56

Where to Find Investment Properties Some also may only do them once per year. Then what do you do?

If it’s only once a year, you want to be at that auction: • You can go there • Spend a week • Do your inspections and all at once and acquire as many properties as you can at once. It a great use of your time considering its a weeks worth of work for a years work and you can get many great deals at once. • You’ll come home with inventory for the whole year • Or you’ll get that one property you’ve been hoping to buy for less than $10,000 that may be worth $40,000-$50,000 and you made a years worth of income in 1 year. • Make Sure to Get a List of What Is Going to be Auctioned before the Auction begins so you are well prepared and you have done your homework to be well positioned to find a great deal or several of them. For example, in upstate New York, they’ll give you a foreclosure list in advance. You can sort through them and do your research at your leisure. You might be going into a new area you know nothing about. It’s great to have time to do research.

Examples: • “123 Smith Street… What do homes on this street sell for normally?” • Just randomly pick a few subject properties. 57

Real Estate Investing That Works­ • Do some online research and make a few calls to educate yourself about the area. • About a week before the live auction, go to the actual city, personally view and inspect the properties you’re most interested in buying. I can do a quick drive-by and a quick inspection of 40–50 houses in one day at these types of yearly auctions so that I have many choices to really low ball my bids and make sure I get the best deals.

I’ve been doing this for a while, so I can do a quick driveby and make my decision: • If I’m paying less than $10,000 for a house, and I can see it from the car • I see the roof is good, the windows are good, the siding’s good, concrete’s good Chances are the inside is going to be on par with that • If I pull up and see: • Bad windows • A bad porch • Bad roofing Chances are the inside is going to be bad too. It’s not a foolproof system, but generally speaking, if someone takes care of the outside, they take care of the inside. They typically go hand-in-hand.

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Where to Find Investment Properties However, just because it has a good roof doesn’t mean it’s going to be in mint condition inside. These examples are just rules of thumb that have proven to be successful for me. I’m sharing what’s happened based on: • The thousands of properties I’ve inspected • The thousands of auctions I’ve attended • And the hundreds of transactions I’ve personally done That’s what all this is boiled down to. I like to give examples based on what I’ve done.

Okay, let’s say the auction is coming and: • You’ve researched five properties • You’ve looked up the properties on Zillow.com and Realtor.com and they all seem to be good deals • You’ve decided how much you want to pay Now what happens? Let’s go to the auction! When you arrive at a live auction, typically they’ll have you get a paddle with the bidder number on it. They’ll typically start at a random dollar amount. If it’s for taxes, they start at what’s owed on the back taxes. In this case, we’ll say the bids started at only $2,000, $2200, three grand, and all interested parties start bidding $100 dollars at a time typically. As the auctioneer conducts each auction about 30 seconds apart, he keeps going up in increments as long as people are raising their 59

Real Estate Investing That Works­ paddles. Usually, once he gets in bids he will make all bidders typically start to bid in incremints of $1,000 and now interested parties will have to bump up the bidding price by a thousand each time from that point on. Some counties may very slightly but its always the same idea.

So, to break it down simply: • 0 to $5,000 might only be $100 increments • $5,000 to $10,000 might be $500 increments • After $10,000 they might bump up $1,000 at a time Remember that most auctions only last 30 seconds or less so you really need to be paying attention as the properties you want are coming up. A thousand properties have been auctioned in a single day while I was in attendance.

The way to bid is to: • Hold your paddle up and then keep it up until it’s at your number don’t hesitate while the bidding is low or you may end up loosing the deal. • Once they pass the number you are willing to invest, pull it down. • Whoever’s paddle is up when he stops talking is the winner. You may be asking, “If I win the auction, how much am I paying immediately?” It’s completely up to the county. 60

Where to Find Investment Properties What I usually experience is putting 5 – 20% cash upon winning the bid. Be prepared to put 20%, and you’ll be surprised and happy when they only want 5%. There’s going to be a time period when the balance is due. It may be the next day or two months later. Each county will have its own specific process. This is something I like to find out when I’m doing my research, prior to bidding. There’ll be terms and conditions to read through, and it will be crystal clear what their terms and conditions are. It’s always different. You may see the balance of funds are due within 24 hours or 5% due at the time of the auction but the good news is you can always read the terms and conditions before placing any bids. They’ll be extremely clear on it but what I’m seeing is from 5 – 20% required, and sometimes 100% is due at the time of the auction win. I’ve also had to pay the balance due immediately. You may be asking, “Mike, if I find a piece of property and I decide to buy it from the county, how do I know it’s free and clear? Do I need to research back taxes ahead of time?” If you buy a property for taxes and there is a first mortgage on the property, they would have gotten served that a property they have interest in is being foreclosed upon. If they don’t step in and pay the taxes, their mortgage is wiped out. If they do step in and pay the taxes, that property won’t be in foreclosure anymore, remember when you don’t pay taxes on the property the taxes are the senior lien holder meaning the bank will be wiped out if they don’t pay the taxes for the property owner and the property ends of going through tax foreclosure. Remember the banks are notified when someone owes back taxes and if 61

Real Estate Investing That Works­ they elect to not pay the property taxes you will see the property being tax foreclosed. In some areas, water bills follow the house, and possibly trash bills or other government fees. Always check with the county your looking to invest to see what government bills follow the property (Trash, water, sewer ect...) and possibly trash bills or other government fees. Always check with the county your looking to invest to see what government bills follow the property (Trash, water, sewer ect...) and possibly trash bills or other government fees. Always check with the county your looking to invest to see what government bills follow the property (Trash, water, sewer ect...) and possibly trash bills or other government fees. Always check with the county your looking to invest to see what government bills follow the property (Trash, water, sewer ect...) Find out in advance, so there are no surprises as the amount owed may affect your purchasing decision on a $10,000 house. Through a tax deed sale, sometimes part of those proceeds will pay the water bill, trash bill, sewer bill ect... Each city or county will be different. For instance, in upstate New York auctions, the water bill is included as part of the proceeds.

When I bid at an auction in New York, it’s to purchase the property and pay off: • The water bill • The trash bill • And the taxes 62

Where to Find Investment Properties Okay, now you have valuable information about back tax auctions. You may be asking, “What other methods will you use to find a house? We’ve talked about: • The retail approach • The auction approach Just to be clear, in most areas tax foreclosures and bank foreclosures are held separately from each other. It’s not typically in the same auction day. In one of the counties in South Florida: • Tax auctions happen only on Tuesdays. • On Monday, Wednesday, Thursday and Fridays, they conduct the bank foreclosure auctions. You may be asking, “As an investor, what do I need to know about the difference between a tax auction and a foreclosure auction?” The only difference is: • On the tax auctions, it’s strictly people that never paid their taxes. • A foreclosure auction is for lenders who haven’t been paid. Their borrower isn’t paying them, so now they’re foreclosing on the property to get their money back. You may be asking, “If I buy a foreclosure, how do I know what the taxes might be on a property?” 63

Real Estate Investing That Works­ Most counties are online, so if you put in:

Property Taxes, Monroe County, you’ll come up with one of the county sites where you can look up what the property taxes are at any given time. If you’re buying a house at 110 Maple Street, and you see it on the auction list, you can call them up or go online with the county to see if 110 Maple Street has paid its taxes. If you are online, you’ll see the previous year of taxes too. If you’re calling, they may only give you the current amount owed but make sure that the current amount is for all back taxes as well as the current year.

Taking time to do research will keep you from buying a foreclosed property only to find it has back taxes owed which is not a problem as long as you understand there were back taxes and you bid on it accordingly knowing you would have to pay them and you factored it into your bid price. It’s worth the time and money to check it out. I wish there was one set of rules for the entire country, but the truth is if that was the case, it would be harder for us to buy these properties. To me it’s good that we’ve got to dig a little for the information. It weeds out people that shouldn’t be bidding and gives us the information we need to make an educated and smart purchase. That’s why I’m giving you these tools and teaching you how to find this information. This will allow you to make an educated and smart purchase decision. If you give a man a fish he 64

Where to Find Investment Properties will eat for a day, if you teach him to fish he will eat for a lifetime. This is why it is so important that I teach you and go into detail. I want to do my best to protect you from costly mistakes. In upstate New York, it’s once a year for tax auctions, but it could be every day for foreclosures.

Some states will auction off your tax bill to the highest this is known as a tax lien which if not paid will ultimately end up as a tax foreclosure. Some areas do tax liens before foreclosure some just foreclose and never do a tax lien. This is something you would need to check with the county your interested in investing in. Always remember either way that if property tax bills are not paid there will be a foreclosure. People ask me, “Mike, do you like tax lien deals?” I like the path of least resistance. I like to buy the house and sell the houses Im not really interested in lending out money for a set rate of return although some people have found great success with it and you may as well.

Tax deed deals are a niche for some people: • Some people don’t actually want to own real estate. • They just want to buy people’s back taxes, get a rate of return, and if you don’t pay them, they’ll foreclose. This is possible in many areas of the country but what I prefer are tax deeds meaning I am actually buying the property starting at the taxes owed but actually getting a deed to the property. In my opinion it offers the best opportunity to make the most money. 65

Real Estate Investing That Works­ That’s a great specialized niche. Some people don’t want to deal with any of the properties. They are simply looking to get a rate of return through paying peoples back taxes but not really looking to own the properties in many cases. Properties sold for “taxes only” are typically less desirable properties. Not always, but if you were to look at a whole group of bank foreclosures and a whole group of tax foreclosures, the bank ones are going to be a higher caliber in most cases. Remember this stuff is just based on my experience and there are always exceptions. A lot of times I have seen very nice pieces of property sell for just the taxes. If you’re going to let your property go just for the taxes, you would have to imagine that it’s not going to be a phenomenal piece of property. If it was, someone would have stepped in and paid off the taxes which are usually just a fraction of a homes value in most cases. If you have a million dollar house and you owe a few grand in taxes, you’d be begging your uncle, your aunt, everyone you know, every friend, “Come on, bail me out just this one time.” The chances are that a phenomenal property isn’t going to get foreclosed on for taxes. I’m not saying it never happens, because it absolutely does happen. But it’s good to know that the higher quality properties will be on the bank foreclosure auctions for the most part. Remember there’s nothing definitive. These are all just patterns and you’re going to have your own patterns. My job is to make sure you’re able to recognize these patterns. 66

Where to Find Investment Properties

To Recap Places you can find properties: • Retail • Craigslist • Wholesale from people looking to get out of a property for various reasons. ( sometimes sad stories like the 3 D’s death, disease, and divorce) • Foreclosure auctions • Tax deed auctions • Sometimes, on rare occasions, you can get a really great deal with an owner selling the house by himself. Maybe you’re looking to buy in your area and you’re just cruising around and you see a sign that says: FOR SALE BY OWNER Many times these sellers own their homes and they’ve owned them for a long time. If they don’t own them 100%, they owe very little on their property in many cases.

Of course these are just general observations that will help you start your real estate investing career. When you see “FOR SALE BY OWNER,” that could be a chance to see if the owner will carry some paper. What does carry paper mean? It’s a way to say owner financing. 67

Real Estate Investing That Works­ If they wanted a $100,000 for the property, and you said, “I’ll give you $10,000 right now, and you hold $90,000 of paper?” If they like the deal there is a chance they could do it. If you ask them the previous question, it means, “Can you let me pay you in payments on the remaining $90,000.”

That’s a great way to do a deal if you don’t have a lot of cash and it’s much different than borrowing money from the bank: • Maybe the property is worth $120,000 • And you get an agreement at $100,000 • But you only have $10,000 • You give the current owner the $10,000 • You finance the remaining balance of $90,000 with the current owner rather than get a bank loan. This could be beneficial if you have bad credit or you get a really good interest rate from the current owner.

Some people call that a land contract or owner financing: • You make the deal with the previous owner at $100,000 • Now, you work on selling that property • If you sell it for the $120,000, even if it takes you a month or two, you just made $20,000 with only a $10,000 investment. If you’re willing to do a little bit of legwork, that’s not a bad deal at all. 68

Where to Find Investment Properties

Think of this as a general rule: • If you’re really light on cash, you’re going to be doing more legwork. • If you’re heavy on cash, you could do a lot less legwork. • Either way, you’re going to do some leg work. Nothing is free. That’s your sweat equity. If you have a lot of cash and you don’t want to use sweat equity, that’s fine, too. Maybe you want to use the realtor option, or one of the other options I’ve shared with you. What matters is that you get a good deal with a price below market value. Notice that I’m not saying it is okay to over pay. I’m just saying have other people work for you, have other people taking care of your paperwork and phone calls associated with using realtors. If you don’t have the time to use more sweat equity. Chances are the less sweat equity you put into a property the less money you will make. I’m talking about all the little things you would have to do if you have any agent or a broker or someone working on your behalf. Remember they don’t work for free. People will tell you that buying a home through a realtor is free. “Yeah, it’s free.” But it’s not. The money has to come from somewhere. Let’s also include the newspaper, “For Sale By Owner” sales. It’s not just driving around and seeing the “For Sale By Owner” signs. It’s also looking in the basic FOR SALE BY OWNER sections in the newspaper. Those are great if you want to do it in your own backyard. You’ll see many houses “For Sale By Owner.” 69

Real Estate Investing That Works­

You Don’t Have to Use One or Two of These Techniques. You Can Use All of Them! You may be apprehensive, and thinking: Gosh, I don’t know a lot about real estate. I’d like to educate myself. If this is you, start with the basics, start with a realtor. I’ll give you all the tools, and you decide which of them seem like the best fit for you. You’ll gravitate to the ones that serve you best.

CHAPTER 7 Summary: • Craigslist is a great place to find properties in your local area. Timing is everything. Create a habit of checking it daily, and you could find some really great deals. It can also be a great way to educate yourself by placing free ads and paying attention to the questions people ask when they call you. • You can find out about public auctions in your area by doing a Google search on the name of your county and the words “foreclosure processor” or “tax assessor.” Call the number to find out if the auctions are online or in person. If you can get the foreclosure list in advance of the auction, be sure to do your research before you go. This will keep you from buying a foreclosed property, only to find it has a bunch of taxes owed on it. • Tax deed deals are a niche for some people, but typically, when you see properties being sold for taxes only, they are less desirable properties.

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Where to Find Investment Properties • Owner financing can be a great way to do a deal if you don’t have a lot of cash and you’re willing to do some legwork. You can find these in the newspaper or by driving around.

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C A S E H I S TO R Y *1136/1138 Homer Duplex: Bought for $53,600 — Sold 2 months later for $87,000 — Made a Gross Profit of $33,400

I bought this property through foreclosure. It is two separate units, side-by-side in one building. It was a brand new property when I bought it and had never been lived in. I freshened up the outside paint; the inside paint was good. The property was already in great condition so this was abnormally easy for me to buy and then two months later sell using one of my online techniques. Duplexes are very popular in Florida, because many people want to live in one unit and rent out the other unit creating an automatic monthly income. I’ve bought and sold many properties that look almost identical to this one.

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CHAPTER 8

Properties for Taxes I’m sure you’ve heard about getting a property for whatever is owed on the back taxes. If you don’t pay your taxes and the bank doesn’t step in and pay those taxes, that mortgage is wiped out. Let’s say you have a first mortgage for $200,000, and you don’t pay your taxes. The government is going to come after your property. The rule of thumb is: the government always gets its money — especially if property is involved. Banks can get wiped out, but rest assured, the government will go right for property assets to get their tax money. What they’re going to do is sell the property for the back taxes owed to the highest bidder in most cases.

Tax Deeds In this chapter I will educate you about Tax Deeds. There are always going to be people that don’t pay their property taxes. It’s not that they don’t feel like paying them, it’s that they can’t, or believe it or not, the taxes were just overlooked. Maybe the property was inherited and the heirs just didn’t pay attention to the details, and poof, the property is sold for the amount of the taxes owed. If the property taxes remain unpaid, the house will be sold to someone who will pay all the back taxes.

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Look for current examples, from this month, not what happened a long time ago. Real Example #1: I see a property with an assessed value of $230,000, but the opening bid is only $22,000. This usually means the back taxes owed are $22,000. As you can probably imagine, the back taxes were paid at the last moment. That is what is called “REDEEMED,” the property was redeemed from getting sold for the back taxes meaning the taxes were brought current before the property was sold at auction thus the term redeemed. There’s nothing you can do about that, but the good news is, it gets redeemed before the auction starts. It’s not like you’re bidding and you’re so excited because you won the property, and then you find out you’re not getting it. It will most likely be redeemed before the live auction, which is the good news. If a property you’re interested in gets redeemed, you simply move on to the next deal.

Real Example #2: In this example, someone was able to purchase a property in Fort Myers for $3,900 thru a tax deed auction, not years ago, but right this month! This is current at the time of this writing. This is now, and it’s every Tuesday in Lee County, Florida. Somebody got this property for $3,900. That is correct. Someone paid $3,900 for a property located in Fort Myers, Florida using this exact technique. It’s actually a house. At first glance, I assumed it was a lot because it was so cheap. I don’t know a single person that would not 74

Properties for Taxes take a property with a building on it for $3,900. It’s a house that has dirt under it. Do I even care about the condition? You might be saying, “Mike, but what if it’s trash. I mean, trash.” I’ll still take it for $3,900. Why? It’s still a building with dirt underneath it. Somebody will take on that project. There’s somebody that would be more than happy to give you $12,000, $13,000, or $14,000 for a house in South Florida even if it’s a massive fixer upper. This $3,900 example house could be in a horrible neighborhood, but it’s in Fort Myers, Florida. How bad could it be? And remember, most people do not have the ability to purchase these types of homes, because they don’t have the tools or techniques that I am sharing with you. I don’t care how ugly it is. If you paid $3,900 for it, and you told me that you were going to sell it for a loss, I would ask you why you don’t use one of my techniques for selling online. Always remember that most people don’t have the ability to buy a house for under $10,000 because I did not train them.

No matter how many times you do this, you’ll find amazing deals that blow you away! I’m not saying every deal is a home run. What I am saying is there are deals, every single day, if you know where to look. Maybe you’re saying, “Mike, that’s a super extreme example.”

I agree, but you can’t win the game if you don’t play. The examples I am using in this study guide, I saw today… the day I am writing this chapter. I’m not just making these up. I am not going to tell you these deals just fall in your lap. I spend 75

Real Estate Investing That Works­ 30 – 40 minutes per day researching property auctions so I am always prepared. I teach people how to do this systematically. Just so you know — you’re not going to typically find huge, expensive, amazing pieces of property and get them for $10,000. Someone is going to pay off those back taxes (redeem it), if it’s just such a ridiculous deal. But sometimes deals do slip through the cracks. You’ve got to be in the game to win it. One thing I can guarantee… if you say, “I will never get that property. I am not even going to bid.” You will not get that property. That’s a guarantee. It’s all in your mindset. If you’ve done your research, and you believe in that property, why on earth would you not at least just place a bid? It doesn’t cost you a thing to bid on it.

Real Example #3: I’m looking at a property for $20,600. The listing shows it is two acres of land in Fort Myers, Florida. It looks like a pretty sharp piece of land, so I dig deeper. Here’s what I discovered: In 2005, someone paid $240,000 for this parcel of land. I would snatch that right up. If I stepped in right now and paid $20,600, I would feel pretty good about that purchase knowing it sold for $240,000 during the boom. I wouldn’t be saying, “Maybe $20,600 is too much in the current market.” 76

Properties for Taxes At some point, you’ve got to stop second guessing yourself. Maybe you’re thinking: OK, that’s a fluke. But today, while I’m writing this chapter for you, I found two flukes. It’s been a good day. There are auctions every day, and there are 3,000 counties in this country. You never know what you’re going to find out there, and that’s the fun part.

CHAPTER 8 Summary: • If you are looking to steal a property (meaning that you are searching to buy a property for an unbelievably low, low price), tax deed properties are a good place to look. • Tax deed properties are typically not in as good condition as most bank foreclosure properties. The reason for this is people who are willing to let their property go due to back taxes do not see the value in taking good care of their property. While you will notice many of the bank foreclosures look nice because people usually bank foreclose because they simply got in over their head. • You never know what ridiculously priced deals are waiting for someone to scoop them up. It certainly won’t happen all the time, or every day, but it does happen often and those go to the people who are prepared and in the right place at the right time. • Doing your research is how you position yourself to be in the right place at the right time. 77

STUDENT TESTIMONIAL “I’ve been a real estate investor for the past 10 years, and I’ve never seen anything like what Mike is doing!”

I thought I knew how to find properties, but nothing like what Mike does. I’ve purchased property in Michigan, Arizona, Texas, and Canada. The stuff that Mike taught me, the secrets he’s learned over his 12 years of being a real estate investor, literally blew my mind. I had no idea about some of the things he showed me; how to buy, tax and bank foreclosure auctions, and how to submit a bid that is almost guaranteed to win. Mike has inside information that is really not available to the unknowing public. I was able to see how he does it so I can do it myself. I just bought two lots today at an online auction. The two lots sold for $200,000 in 2006, and I just got both of them for under $20,000. That’s 10¢ on the dollar. I couldn’t be happier. Glenn, One of Mike’s Real Estate Investing Students 78

CHAPTER 9

Running Ads to Purchase Properties Besides the techniques I’ve been teaching you, I also want you to know how to run ads that will get your phone ringing with people who want to sell their property to you. You don’t pay anything to select a market and test. The technique I will share with you will get your phone ringing. Let’s go.

Testing the Market Online If you’re thinking that one market might be good and have certain opportunities, but you’re not sure, it’s a good idea to test it and find out. To test it for free, you can go to a site like Craigslist, which allows you to see what’s out there, see how many people are anxious to sell their property, see how many people have inventory that they’re looking to sell. You’ll get: • Investors • Homeowners, and • People that have inherited properties.

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Real Estate Investing That Works­ You’ll hear all the different stories and reasons why they want to sell, and it doesn’t cost you anything. I even put an ad on Craigslist saying: We’re looking to acquire 50 properties in the area. We’re taking applications for the first 200 people looking to sell. Call today 1-800-555-1212. Create urgency. Everyone else out there has ads like, “WE BUY HOUSES.” That’s not engaging. It’s important to create a sense of urgency. Make it ... We’re looking to get 50 homes this weekend by Sunday, or we need to acquire 85 properties. An ad like this will get the phone ringing off the hook. It’s a great way for you test the market. When people are calling you to sell you a property, you’re in the position of power because they’re calling you to sell their property. This technique will help you hone your skills in the area, for free.

When they call you, say: “What’s the best case scenario?” “What are you looking to dump this property for?” Use words with embedded commands such as, dump this property, get rid of this property. Say things like: “If you could get the cash in 24 hours, what would you let it go for right now?”

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Running Ads to Purchase Properties If they respond, “Well, I’m not looking to dump the property,” you respond by saying, “Oh, well if I can cash you out in 24 hours, how much money would it take?” Or, you could say, “I don’t know anything about the area. Wow, that seems kind of high.” When people are calling you, it gives you a great opportunity (advantage) to be in the driver’s seat and say: • “Well, send me some pictures.” • “What kind of property is it?” • “How many bedrooms?” • “How many bathrooms?” This is the online way to test out the market and get people calling you . You can then use the techniques I mentioned earlier to determine market value and make sure your getting a great deal. You can also do the same thing in local newspapers, but you’ll pay a little bit for the ad. I prefer the Internet. I’ve had many ads in local newspapers to buy houses and to sell houses. Rather than put up all these street signs everywhere that annoy people and make them angry that you’re putting them on their fences or on their street poles, you can have a targeted audience by putting it online. That’s your targeted audience, people that are actually looking to sell their house.

Advantages of Selling Online: • Usually selling quicker. Not taking a minimum of 60 days to sell it through a realtor • You save buying and selling comissions, because it’s not going through a realtor 81

Real Estate Investing That Works­ • You’re not taking two months toclose the transaction after getting a contract on the property. • Online really does get a much broader reach and interest in a given property. • selling online can be done from the comfort of your home with a lot less time invested typically.

Testing the Market with Letters Instead of selling online, some people send out letters. It costs you 49 cents in postage per letter, but it works great. Let me give you an example. I located a Medical School in a great area just two streets from a major University. I decided to send out letters to everybody within the radius of these two colleges. It wasn’t going to cost much. It’s only a $200 investment to find if there are any excellent deals and I sent to hundreds of owners around these two colleges.excellent deals and I sent to hundreds of owners around these two colleges.excellent deals and I sent to hundreds of owners around these two colleges.excellent deals and I sent to hundreds of owners around these two colleges.

When somebody responds to my letter and calls me up, I tell them similar things I told you to tell the Craigslist people. Things like: • “You know, I sent out all these letters, and I’m trying to find something nice around the university, but I need the deal to make sense financially.” • “I have cash available, and I’m ready to close.”

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Running Ads to Purchase Properties • “What price is it going to take if I can get you your money quickly?”

They may respond: “Well, gosh, I’ll give you a great price if we can close quickly. Im tired of dealing with this house.”

And I say: “Well I did get a lot of calls from these letters what is the bottom line number that you will take for this property?”

I might just say: “You are being fair and I accept the terms.”

At some point, you’ve got to say: “You know what, you’re being reasonable. You’re not being crazy. I will do that. When can I come and check out the Property. If they give you a high price don’t hesitate to low ball them based on the comps in the area. Condition also has a lot to do with it so be sure to factor that in. Ask for pictures like I mentioned earlier.”

If you’re not in the area, you would say: “You know, I’m out of town right now, or, I live in________ (fill in the blank), but I have a local person right there that will be able to drop by.” Now you’ve got to find a local person that would be able to drop by wherever it is.

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You could just ask the current owner. Say something like: “This would happen a lot faster if you’re able to snap some pictures right now, and e-mail them to me. Just use your cell phone, and snap me a couple of pictures. I don’t care if your house is dirty or clean. I’m not looking at the dirt. I just need to know what we’re talking about. I’ve driven by your house, but I haven’t seen the inside.” Naysayers in the business would say, “Oh my gosh! You’re going to mail out a letter? You’re going to go through that trouble?” It’s just a form letter. It’s just a matter of dropping it off at the post office. Here’s a sample of the letter that I use when implementing this technique:

Sample Form Letter Dear Neighbor, I’m new to the area and I’m interested in buying a home in your neighborhood. If you’re interested in selling your home, please give me a call. I’ve got cash and I am in a position to pay you immediately. Please give me a call and let me know if you, or someone local you know, might be interested in selling their home. I’m not a real estate agent or a broker. If we can come to terms, there will be no escrow waiting period or real estate broker commissions. That way it can be a good deal for both of us. I’m only going to be in town for a few days, so I would appreciate your timely response. You can reach me directly 84

Running Ads to Purchase Properties at 805-555-1212. If I am unavailable, please leave a message and I will return your call promptly. All the best,

Mike Gazzola 805-555-1212 P.S. You can also e-mail me at [email protected]. It would be great if you could take a few pictures with your cell phone, and attach them so we have even more to talk about. This is a variation of running ads. You can run the ad and get them to come to you, or you can target them with a letter. When testing, it’s best for you to place your ad, rather than just looking at ads on Craigslist. It gets your phone ringing and it teaches you to sharpen your skills by taking calls pertaining to real estate. I can’t tell you how many great deals I’ve gotten just by running my own ads and mailing letters. Here’s another quick story. When I first got started in real estate about 12 years ago, I partnered up with an older guy who had 30+ years of real estate buying experience. He was a true master of buying property below market value. He wasn’t good at selling his properties, because when I met him he owned 42 properties. I was only in the business for a month or two, and I was learning how to buy good properties for great prices from him.

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Real Estate Investing That Works­ I was good at selling properties, but I realized the farther below market value I paid for the property, the more money I made when I sold it. I was interested in how he was able to buy property so cheap. He taught me everything he knew about this business, and 12 years later, I’m able to show you an enhanced version of what I learned working side-by-side with him for nine months. Note that I learned an enormous amount of information working with him. I also learned things I didn’t want to do, because it didn’t fit my idea of integrity and treating people the way I like to be treated. This is an example of what I don’t do when buying properties. We ran our ad in the paper. He ran the same ad for many years. He’d get a couple of calls a day, maybe up to five calls a day. One day, he says, “Hey, Mike, I got a call that sounds like a great deal. Let’s go out there and see if we’ve got a hot one.” I said, “Okay. Let’s go.” When we arrive at the house, I’m thinking: Wow, nice woodwork, great detail, and a good size lot. I’m excited. I’m thinking: Wow, if she is only asking for $8,000 or $10,000, like she indicated on the phone, I know I can resell it for $30,000 to $40,000. This is going to be crazy. It will just be a quick flip and we’ll be in and out. The owner of the property is a sweet old lady. She must have owned it a long time, because she said she was moving into a nursing home. She was really nice. My partner tells me, “Mike, watch this. We’re going to get this property.” He says, “Do you know what you’re looking to dump the property for?” 86

Running Ads to Purchase Properties The lady says, “Oh, gosh, you know, if I can get $8,000 that would be great.” That was already the lower end of the range she gave on the phone. I’m thinking: Oh my gosh, $8,000! I’m ready to accept her terms “as is” I believed she was being fair and actually giving us an extremely good deal. I’m ready to run to the bank, get cash, and do the deal. My partner says, “No way. You know, for this piece of junk, I wouldn’t give you more than $2,000.” I’m thinking: What? Are you crazy? She sits there for a moment, and then she says, “Okay.” He gives me a wink when she’s not looking. I’m thinking: What the heck? That’s ridiculous. We’re going to make good money at her asking price by selling the property to a worldwide audience. Although the property was only worth about $10,000 as is once we rented it out and did a bit of cosmetics we would make a good return. You don’t have to squeeze this little old lady that hard. Come on. What she offered us was a great deal for us without needing to negotiate and if she had to hire a realtor and pay the comissions and pay an attorney to close it she would have to wait months and probably only net about 10k after everyone was paid so it was fair for her to get 8k now and move on and more than fair for us. My point is, I’m not going to say, “Oh, your $8,000 is too low, let’s make it $10,000.” But at the same time, I’m not going to make her believe that it’s not even worth the $8,000 she was askig because that’s not my style to lie to people to get a good deal. It’s ok

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Real Estate Investing That Works­ to say the most I’ll pay is X amount of money but in my opinion it’s not ok to lie about the value when you know it’s not true. If people say they want $20,000, and I say I want to pay $12,000, I won’t say it’s not worth $20,000. I’ll tell them, “I just can’t pay more than $12, 000.” I’m not going to lie and say it’s not worth more than that. I just say what I would pay for it. I remember feeling so bad for her. And my partner just winked. I learned a lot from this about how I didn’t want to do business.

Running Ads Is a Tremendous Way to Get Amazing Deals! • You can run ads on the Internet. • You can call ads on the Internet. • You can mail out letters. • You can even put those annoying signs up. I’m sharing my personal point of view. I’m not trying to put signs up all over neighborhoods with my phone number and say “CALL ME.” You’re just going to get angry people calling you, saying things like, “Why is this sign on my fence? Why is your sign on this light pole?” You’ll get city inspectors calling you saying, “You can’t post your signs on telephone poles, fences, or streetlights.” Clearly, running ads to purchase properties is a tremendous technique. People think there’s no way this will work. Isn’t everybody doing that? You just do it a little different. You don’t just throw signs up that say “WE BUY HOUSES” all over the neighborhood and think you’re the first one to do that. Think of 88

Running Ads to Purchase Properties variations, think of ways to get your phone ringing. Do it in such a way that people still want to do business with you. Everyone is used to calling and having someone grind them down. If somebody is being fair, be fair too. I’m not going to buy it if it’s above my price, but fair is fair. Here’s a recent example: The bank had it wrong on a model home I bought, asking only $60,000. I realized the price was too low, because my research showed that its real market value was about $168,000. Most people are going to offer $50,000 just because they’re asking $60,000 and a lot of people think you have to negotiate everything. I offered $68,000, and I have $100,000 of instant equity in that home today. I paid $8,000 over asking price but because the bank had the price so low they got 20 offers the first day but no one but me used the logic to offer almost 15% over asking price but I now have over $100,000 in equity on that property. You may be thinking: In this economy, you’re going to pay over asking price? Absolutely, if it’s just so ridiculously low and it’s way under market value. The big question is, “Why are you worried about the asking price?” You need to look at today’s market value. That’s what’s really important. I’ll just tell the sellers what I can pay and they can take my offer or not. If they don’t take it, I’ve lost nothing except the two minutes I was on the phone. If they take it, I treat them well. Someone might offer them a little bit more, but they would still think: “I already agreed on the price with him, and he didn’t even argue with me. He agreed to pay more than what I asked for. So why not just go with him?” 89

Real Estate Investing That Works­ You can’t trust that everybody will do the right thing. Be prepared for when they don’t. It’s important to understand that there are enough good people in this business that are going to do right by most people, most of the time. Running ads to purchase is one thing. Running ads to sell, that’s a different ball game. In other chapters we’re going to get into specific auction techniques and creating your listing when you sell. Buying and selling are two completely different skills. I make my money when I purchase, because when I buy, I create instant equity with my purchase. That’s why I know I’m going to sell every single house. If it’s a loss, I’m simply not going to sell it.

There’s Never Been a Single Property I Haven’t Been Able to Sell I hope I’ve opened your eyes to something new. These techniques work. Try them and see how well they work for you. They’ve consistently made a bundle of money for me.

CHAPTER 9 Summary: • You can use Craigslist, newspaper ads, or letters to test the market. • Create a sense of urgency in your ads. • When people call you, ask lots of questions, and use embedded commands, like “dump this property” or “get rid of this property.”

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C A S E H I S TO R Y *4887/4889 Jordan Duplex: Bought for $55,000 — Sold 4 months later for $118,000 — $63,000 Gross Profit

This duplex is right across the street from the Westminster Community Golf Course, which is a really nice gated community. I featured the location in the listing, and that’s one reason it sold for more than double what I paid. When I bought it, one side was already rented for $900 per month, and the other side was vacant. I signed a new lease with the current tenant and did a little landscaping. This property was in such good shape, there was almost nothing to do in remodeling and repairs. As you may know, I like newer builds, and this is no exception, as it was built in ’06–’07. It took about 4 months to sell, but I was collecting rent during that whole time.

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CHAPTER 10

How to Buy and Sell Homes and Land Remotely In this chapter I’d like to teach you about buying and selling properties online without ever having personally seen the property to make your buying decision. Most people don’t realize their personal computer is the perfect real estate buying, researching, and purchasing machine the world has ever known. That’s not a false promise or wishful thinking. You can actually never leave your chair and conduct a profitable real estate transaction right in front of your computer using nothing more than your mouse and keyboard. For most people, that sounds impossible. “How could you ever do that? Don’t you have to see the carpet, measure the square footage, inspect the roof, and know exactly what the tax rolls say?” How is it possible for people to buy real estate online and sell it without ever having been there, or touched it, or lived in it? If you’re looking to buy properties online remotely, let me explain how I do it without ever having to physically look at the property. Let’s pretend that I’ve never been to South Florida.

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Real Estate Investing That Works­ In another chapter I taught you how to pull the foreclosure list and how to register for a bidder account. Now let’s talk about what you must do before you make the decision to actually bid on a property. The big question is: How do you know that it’s going to be a good property? How do you know that it’s not completely destroyed? As a general rule, if you’re looking to buy a property remotely, it makes sense to go after newer builds. When I say newer builds, I’m talking about 2001, 2002, and up. Those would be considered newer builds, even though we’re in 2015. Let’s say today is Thursday and tomorrow is Friday. There’s an auction coming up Friday, and I just discovered a property I really like today. I would start with the basics. I’d start with the paint, the roof, and the exterior. With sites like Zillow.com and Realtor.com, you can find pictures of the property itself. It might be a couple of years old, but you can see a general picture of the house. It is also not uncommon to find 10–25 pictures of the property at these web sites. If I looked at it, and the roof had holes in it, all the windows were broken, and the exterior had graffiti all over it; that would be a property I would pass on. Let’s talk about when it looks good in the picture. What I do is immediately go on Craigslist, or I Google to find local contractors in the area of the property who specialize in house painting, roofing, plumbing, electrical, etc. Pick any city in the country and Google house painters right now. You’re going to see a long list of local house painters. You 94

How to Buy and Sell Homes and Land Remotely can Google roofers, then window replacement, etc. Google anything you can conceive of on a house and it’s going to come up with contractor information and their customer performance ratings. The great thing is, when you find a contractor hungry for work and you want them to give you a bid to do the work on the property, you say, “I’ve got this property at 123 Main Street. Can you give me a quote to paint the outside?” You call a general contractor and say, “I want you to let me know what it would cost to replace the windows.” You end up getting detailed quotes back from the contractor quickly. If they’re hungry, you’re going to get the bid the same day. No charge. It’s free.

Your Eyes and Ears Rather than speculate about how much new windows are going to cost, they’ll e-mail you with a quote or a comment like, “All the windows look intact. It doesn’t look like we need to do anything with windows, but it does look like you may need to do some landscaping. The grass is overgrown. The roof looks like it could be bad.” By getting different contractors out to the house, they’re literally your eyes and ears. You can get 20 different professionals to work for you for free. When I say, “work for you,” I mean they have inspected the property and have given you quotes about how much money and time it will cost to do the needed repairs. If we’re talking about Wichita, Kansas, I can get a plumber, a window specialist, or a roofer immediately to the site and give me

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Real Estate Investing That Works­ a bid on what work needs to be done. They’ll even take pictures and e-mail them to me. With cellphones, contractors like to take pictures and send them to you so you can see for yourself what repair work needs to be done. These are going to be current pictures of the property. They’re going to say, “The roof looks like it could be replaced. There might be a couple of years on it, but eventually it will need to be replaced.” You get a couple of roofers — and you take everybody’s information. Not only do you see what’s wrong, but you also get to see what’s right with the property, then you’re able to make a calculated decision based on what their repair cost would be. You take that retail value and back out these costs. You then look at how much profit you want to make and back that out as well. Now you have the maximum amount you are willing to pay for the property. If you are participating in an auction, this dollar amount would be your maximum bid. Remember, I can’t tell you how much profit you want to make. If I had ten students in the room, some would say, “I’d buy that property knowing that I had $15,000 profit.” Another might say, “I wouldn’t buy that property unless I had $30,000 profit.”

Determining Your Bid Price I teach you the tools you need to determine your profit margin: • What is the current retail value of the property? • What work does the property need and how much it will cost? 96

How to Buy and Sell Homes and Land Remotely • Are there back taxes? Now you know the work that needs to be done, how much it will cost, and the amount of any back taxes. Based on this information, you can figure out what you need to purchase that property for you to make an X amount of money. That gives you what your maximum bid price should be. When you hire a property inspector, you pay him a couple hundred bucks, and he’ll tell you everything that’s wrong with the property. Wouldn’t it be much more valuable to not just know what’s wrong with the property, but to know what the cost of fixing each item would be? That’s exactly what I do. When I’m buying a property, I can’t be in ten places at once. If I’m bidding on multiple properties in different areas on a given day, there’s no way I can physically go visit those properties. I get the contractors, not just to tell me what’s wrong, but also what work is needed for a given property and how much it will cost. That enables me to make good decisions when I decide to purchase a property remotely. I already showed you in the previous chapters and you now know how to check for the liens. I already know how to check the property for back taxes. I already know how to check the retail value. The missing factor here is what work needs to be done to the property. Rather than hiring an inspector, it makes more sense to get my contractors out there who don’t charge to submit their bids to do the repair work. Any legitimate contractor is going to give you a free estimate, and if they don’t, you simply don’t use them. I 97

Real Estate Investing That Works­ take those free estimates from a few different sources and calculate what my maximum bid price needs to be to make my desired profit. I even take the pictures they send me and use those in my online advertising to sell the its always nice to show the before after pictures or use the existing pictures they take to wholesale your property.

Know What You’re Bidding On Sometimes just looking in a window or a simple drive-by viewing can tell you everything you need to know about the condition of the property. If the lawn is meticulously maintained and the paint looks great, you usually know that’s going to carry forward to the inside of the house. It’s still wise to have somebody peek through the windows. Strive to have somebody give you a detailed evaluation. This way you know exactly what you’re bidding on.

How do you know how much profit you want to make, and what you’re maximum bid is going to be? Your maximum bid would be different than my maximum bid, because we both have different criteria for how much money we want to make. If you’re working with $50,000, you may say, “If I’m going to tie up $50,000, I need to make $30,000.” If you’re working with half a million dollars, you may say, “I don’t mind investing $50,000 to make $10,000.” I can’t tell you what your profit margin needs to be. I have shown you how to find the retail value and how to determine the cost of the work that needs to be done. You have to 98

How to Buy and Sell Homes and Land Remotely decide the maximum amount you’re willing to bid, because it’s going to vary from person to person. Are you looking to hold the property long-term, rent it out and collect monthly rent checks? If you’re looking to just rent it out — you may end up deciding to pay more for a properties that require little or less work. It’s a sliding scale. The more work a property needs, the more profit margin you want to make. If a property is in verified turnkey, move-in condition, you may be willing to make less profit because the amount of work is going to be less. I’m willing to pay a higher percentage on the dollar for property that requires no work. When I say more, I’m not talking about a dollar amount. When I say pay more or pay less, I’m talking about paying more as a percent of retail value, or pay less as a percent of retail value. If a property’s worth $80,000, I’m not saying, “Oh, you’ve got to offer $50,000, because it needs $30,000 worth of work.” Again, it’s a sliding scale. What’s the retail value? How much profit do you want to make? How much work does it need? Everybody needs to determine their own bid price based on those factors. Remember, the one factor I can’t teach you is how much money you need to make on a property. Now we’ve gone online. We’ve found the auction. We’ve opened up our bidder account. We’ve done everything that allows us to bid on a property. Now we’re actually bidding on a property, and this amazing thing happens — which I really like. It’s the concept of “I won the bid!” Which is a really positive experience.

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Real Estate Investing That Works­ It’s very exciting. You feel like you’re actually a winner. Now that I’ve won the bid, what’s my next step since I don’t have any intention of physically going to Florida because right now were talking about the ability to purchase properties remotely. Now you go from it being a prospective purchase to it’s a done deal. Now it’s time to complete the sale online because the balance of the money is due within 24 hours. We’re talking about the online auction, and we’re using South Florida as an example. You have 24 hours to pay that 95% balance due, because the 5% already came out of your bidder account the moment you won. If you don’t pay within 24 hours, your 5% is taken by the county; a penalty for not keeping your bid. They don’t cancel your bidder account. You’re not restricted from future bidding. Your limit of liability is that 5% of whatever you bid on the property. If you’ve never seen the property, the next 24 hours is your opportunity to sharpen your pencil, and confirm your quotes. The good news is if you back out or you don’t like the deal you have the 24 hours to figure out if the deal works for you and if you walk away you simply loose 5%.

Get Concrete Numbers You may be happy with your winning bid, or you might want to get a couple more quotes on the work that needs to be done. You’ll want to get more people out to the property site to send more pictures and more detail on the cost of the work that needs to be done. The good news is 24 hours is a long time to really sharpen your pencil and make sure your getting a good deal.

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How to Buy and Sell Homes and Land Remotely Don’t hesitate to call as many local contractors, property managers, or realtors to help you out in this step. I like to send someone out to the site to give me a general report on the property. To do this, I look on Craigslist and find somebody that’ll go out and take more pictures of the property. This allows me to further determine what repairs are needed. From there, I like to take it a step further and get a painter, a plumber, and/or an electrician out there to take a look at the property and submit their bids for the necessary repairs. I do all this to make sure I am working with concrete numbers. Now that I’ve won the bid, my liability so far is 5%. Since I’ve never seen the property, I really want to get more information from other professionals. I like to call a few realtors and simply say, “I just bought this property today. Can you send me some neighborhood comps? Can you let me know what you could sell it for?” Even though I sell it online to a worldwide audience, I still like hearing from local experts.

Do you tell the realtor what you paid? No. If they ask, tell them. Typically, they don’t really care because they’re selling the property. They make their money off the maximum sales price. They’re not really too concerned with what you paid for it, but if they ask, I simply tell them.

Be 1000% Confident You can be as cautious as you want. I call it “indisputable evidence.” We all need X amount of indisputable evidence before we can be 1,000% confident. To me, it might take having two different 101

Real Estate Investing That Works­ people out there. If I’m familiar with the area, two different people telling me the same thing makes me feel confident. If you’re a really cautious person and it’s your first deal, you might want to get reports from four or five different contractors. Let’s say you decide you don’t want to fix up the property. Either it’s too much work for you, or it really doesn’t need much work. Both of those things happen. If you really want to quickly flip it; you want to turn around and sell it, and add your profit margin into the price. The price is now whatever you paid for it plus your profit.

How to Sell It Now the big question is: How do you go about selling it? There are a couple of different ways you can sell it. In some areas there’s still very little inventory for realtors to sell. My first step is to go to Realtor.com. I would look at what comparable homes are selling for on the low end and the high end. To do this, simply go to Realtor.com, and enter any city in the entire nation. Then sort the homes by price. I have already gone into great detail on this process in previous chapters.

Low Inventory If I see there’s not a lot of inventory — that prompts me to call up a local realtor (maybe 3–5 of them), and determine which one I want to work with based on: • Who’s the most responsive • Who answers the phone without voice-mail, or 102

How to Buy and Sell Homes and Land Remotely • Who returns my call right away. • More bullet points • Who has a good online presence • Who has other listings in the area, so I know it won’t be out of their way to show my property. I like to find the most aggressive people in any area. If I see there’s not a lot of inventory, and I’ve got one heck of a good deal, I may just turn it over to a realtor, because I like to work several deals at once. If I’m working with one deal at a time, and it’s my very first deal, I want to begin the process of advertising it for sale on Craigslist. My ad is just a couple of lines with my phone number and a couple of pictures that somebody else took for me. Its really a great way of getting a feel for any area. If I’m looking to wholesale a property because it needs a lot of work, I would just advertise it on a basic site. eBay costs a hundred bucks to advertise a property for sale, and you’ll get a couple thousand people looking at your property. If you decide to use Craigslist, you’ll get a few hundred people in the local area looking at your property. That’s a wholesale deal. You’re in and you’re out. You might make 10%. You might make 40% on your money. I’m talking about selling your newly acquired property through online advertising or a local realtor. Some properties sell very quickly online but others with a high demand on the local market may sell quickly and for good money using a local realtor. It is a good idea to do an online advertisement before contracting with a realtor just to see what offers you get. If you’re just in and out, 103

Real Estate Investing That Works­ not doing any work and the property needs work, you’re probably going to have a smaller profit margin. By listing the property online, you’ll sell the property easier and faster, but if you don’t want to do any remodeling the profit margin is typically a bit smaller. I’ve bought properties where I send someone out to inspect the property and report back to me. Sometimes the carpet has been steam cleaned and everything is in great shape. It’s literally a turnkey property. When they say turn-key property, take that with a grain of salt, because every property needs something. When we say turn-key, it usually just means it’s in pretty darn good shape; ready to move in. In reality, you may have a leaky faucet or a ceiling fan that doesn’t work. Until you turn on the gas, the electricity, fire up the heating system, and test every faucet, and every shower — you don’t know about all the minor things that may need to be repaired. If you’re going to retail the property, you’ll have to do all the repair work, but you’re also going to make more profit typically. If I hire a realtor to sell it, I’ve got to factor in the commissions. I’m only going to do that if I have a huge potential for profit margin, and that would be more of a retail deal. You may be wholesaling the property. Wholesaling is when you sell below market value; you’re in — and then you’re out. As soon as I use a realtor, I consider that a retail deal. If I’m selling it wholesale, the price is going to be under market value. That’s because I bought it so far under market value that I can still afford to sell it under market value to my buyer and 104

How to Buy and Sell Homes and Land Remotely although I could do that with a realtor it usually happens quicker selling it online. On my sales end, it’s a winner for whoever buys it from me, and it’s a winner for me. If someone else spends the time and the money to make everything perfect, they’ll ultimately retail it, or live in it, or rent it. That’s how you buy the property, and quickly turn around and sell it. It’s A or B. Am I going to sell it retail, with a realtor, or am I going to throw it up online and cut out the commissions? If you’re unsuccessful in a week or two, you may want to hire a realtor. Take a small profit: 20%, 30%, or even 10%. Get in and get out, and move on to the next deal. If you bought it so far under market value that you can resell it under market value, and you went through a realtor, what you would know is that the realtor rarely gets to sell properties listed under market value. That means your listing is probably going to be something in his inventory that sells right away. I’m telling you the advantages of selling online but also there are advantages of selling with a realtor. You shouldn’t rule out either strategy. My basic rule is the more money I put into the property, the more money I want to make. The more time I spend on the property, the more money I want to make. If I could cut both of those in half, I would make half the money because then I simply move on to the next property. This isn’t scarcity. You can do several deals with quick flips in the same amount of time another person takes months looking 105

Real Estate Investing That Works­ to make a huge return. I’d rather take some money now and keep moving forward to the next deal. That’s how I got the experience and profits of buying and selling hundreds of properties. That’s my particular individual investment strategy. That’s what I like. I give you the tools to find them and sell them, but I can’t tell you what your strategy should be because we all have different requirements. Take one of my students like Dr. Ira. His strategy is completely different. What he wants is a nice property he can put a little money into, get a good tenant, and rent the property knowing every month he’s got passive income from his rental property. That’s his security because he knows, after X number of months, that property is paid for in full. He’s realized 100% return on his investment. Plus he still owns the property, and he’s still getting monthly rent checks. His investment strategy is more along the lines of retirement and legacy. Take a young college graduate, Dave Stall. He’s not in a financial position to be able to do the same thing, because he doesn’t have the bankroll. Dave has to start out small. He buys a lot for $500 and then sells it for $2,000. His next move would be to buy something in South Florida, one of the really cheap lots. If he buys it for under $2,000 and sells it for $5,000, he’s building incrementally. He then takes that $5,000 and buys two more lots in South Florida and sells them for $10,000. Now he takes that $10,000, and brings it back to Buffalo to buy a duplex, or a single-family house and turns that into $25,000–$30,000. 106

How to Buy and Sell Homes and Land Remotely Everyone’s goals are different. You might not want to be a landlord. If you have a property that’s paying you rent, you enjoy that rent, but your ultimate goal is just to resell it; not to get passive income. You have to have your own goals. I never tell someone what they should do with their money. I tell them the way I do it and what I would do if I were just starting out. How is my system different than what everyone else is teaching about real estate investing?

Most Systems Revolve around Borrowing Money Most people aren’t really showing you how to find the deals, and how to buy them for cash. Many real estate systems show how to invest with: • No money down • How to buy on paper • How to leverage your credit • How to put minimal amounts down • How to borrow • How to do hard money loans It all revolves around borrowing money. What makes my system different is I show you how to buy properties for cash no matter what you’re dealing with. Most systems say if you have $10,000 to invest, then that’s a great start as a down payment. I show you how to buy two properties, how to 107

Real Estate Investing That Works­ buy three properties, and grow that $10,000 rather than taking it and using it as a down payment. I don’t know any other system that teaches what I am teaching you right now. For most people, it’s old school. Find a great deal. Borrow. Do a second. Do creative financing. Hire a realtor. Pay all this debt servicing. Pay all these third parties, and maybe there’s a little slice at the end of the rainbow for you assuming the market actually goes up in value. This is the old way of doing things. During a real estate market crash — one little hiccup and your whole down payment is gone. You’re under water. That’s how a lot of people went belly up during the crash. I thrived during the crash because I owned all my properties for cash with no mortgage. I like to buy my properties outright. There was no pressure to sell during the crash pressure to sell during the crash, but if you borrow 90% of your money and the market goes down 10%, what do you have? Nothing! If you bought it for cash and it goes down 10%, you’ve still got 90% of your money, probably even more because I teach you how to buy so far under market value. If the market goes down 10%, you should still have 3–40% instant equity because of your buying techniques and the fact that you’re not borrowing. I don’t know another system that doesn’t teach you to borrow. I’ve never been through another real estate training, but students who I’ve trained have, and they say most real estate courses teach you more about borrowing methods than investing in real estate. There may be another guy out there teaching what I teach, but I’ve never met him or heard of him.

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How to Buy and Sell Homes and Land Remotely This is unique. This is how to potentially make huge profits by investing in real estate without borrowing money and without leveraging your credit. I’ve personally done that, but I’ve never told anybody you should max out your credit cards, and pull all the cash out and buy real estate. I actually saw that strategy online. A popular real estate guru teaches you to sharpen your negotiation skills by calling all your credit card companies and asking to get the biggest cash advance you can, so you could pay him $60,000 for his training. Now, what do you have left? He says, “I’ll teach you how to buy real estate with no money, with no nothing.” Yeah, you just used all your credit to pay him the $60,000 for his training. If somebody was in that position, I would say my training is not for you. If you have zero, and you have to borrow everything you had just to pay me, I’m not the guy for you, because now you’re in the hole so deep that it doesn’t even make sense to be talking about investing in real estate. I don’t care if you have $2,000, $5,000, or $10,000. There’s a property you can buy right now for cash, free and clear. Let that be your start. Don’t try and leverage your $2,000 into a $200,000 house. Your debt servicing, the interest you’re paying, the taxes, the fees, and with all the third parties involved, you’re going to be on such a razor thin profit margin, your chance of success goes way down.

It’s the only system where you can get started with as little as $5,000 or even $2,000. I don’t use the property I bought for $100 a couple of months ago as a typical example, because sometimes luck still comes into 109

Real Estate Investing That Works­ play. I wasn’t looking to buy that lot. I had no intention of buying it, but when you’re there and no one bids, you’re thinking, “Okay. I’ll take it for a hundred bucks.” It was a live auction. Nobody bid, and I just said, “Okay. I think I’ll buy this lot for $100.” Even if I simply auction it off on the retail auctions sits, I’m virtually guaranteed to make a profit. At the next auction three people may want it. It may go for $2,000. You see, some things work when someone’s willing to pay for it. That’s when being in the right place at the right time works to your benefit. This is 99% about doing your homework. When I went to that auction, I had ten properties I was looking to buy. I had the info on them. I was not looking to buy a lot for a hundred bucks. When there are more properties than bidders in a room, these things are going to happen. I remember in October at a live auction, there were 3,500 properties up for auction. Five hundred people were in the room. Every one of us would have to buy seven properties each just to buy them all. That’s why I like live auctions. They take more legwork, but nobody can argue with those numbers: 3,500 homes split between 500 investors. Any time a property came up, we could all be selective. We could all say, “I’m going to wait for the next property.” What if it was reversed? What if there were 500 properties with 3,500 investors? Automatically the prices are going to be higher. Sometimes it’s simple economics. That’s what happens when you resell your properties to a worldwide audience. 110

How to Buy and Sell Homes and Land Remotely Another hot tip I’ve discovered is that if you’ve got 3,500 properties and 500 people in the room, chances are, by the end of the day, half of those people are gone. They already spent their money. Ninety percent of the bidders are gone. Now there’s hardly anybody in the room, and they’re still auctioning off properties. I can’t tell you how many times the last 15 minutes of an auction were the key to my success. You’ve got to know, when the room’s full, many are just there for a specific property. They’re only interested in bidding on the property next door; their mother’s property; their uncle’s property. They’re there for a specific property. A lot of them are newbies. They get nervous. They buy the properties in the beginning and then they go home. What happens in the very beginning if you haven’t yet got the property you’re interested in buying? You’re more apt to enter into a bidding war with a touch of auction fever. The price automatically goes up, but once you get the property you want you’re happy. You spent your money. You go home. Now who’s there to compete against me to drive up the price? No one. They say, “Slow and steady wins the race.” Don’t get anxious. Don’t get too excited. It’s the same for online auctions. If you’re doing an online auction that’s in Florida and you’re in California, you need to be up at 6 in the morning if the auction starts at 9. It could be an hour auction. It could be a 5 hour auction. One day there might be 110 properties; another day there might be five 111

Real Estate Investing That Works­ properties. West Coast bidders participating in a Florida auction like to put their proxy bid in on their properties the night before the auction. They’re not watching the auction. A lot of people have jobs. They’ve got kids to take to school. They don’t have time to watch the auction every day which creates opportunity.

Keep Extra Dollars in Your Bidder Account If you don’t have enough money in your bidder account to meet your proxy bids, then guys like me come in and, BAM! we’ll take it. I might’ve had five competitors, but they don’t have the money in their bidder account, because they already won properties earlier in the day. Their money is exhausted. That’s why it makes sense to keep a few extra bucks in your bidder account, especially if you’re looking to buy multiple properties. Many people ask how these properties get put up for auction. The people responsible for taking care of them are no longer in the picture. Suddenly, they’ve come to the end of the line, and they’re being offered to the general public for whoever will pay the most amount of money. It doesn’t mean it’s a distressed property. It doesn’t mean it’s a piece of junk property. It could be a diamond property that someone bought for $250,000 during the boom, and they put 10% down or 20% and borrowed the other $200,000 or $225,000. When the market crashed, the property was only worth $150,000, so they walked away. It might be a beautiful piece of property, but there’s an old saying that, “You don’t throw good money after bad money.” You’re not going to keep filling that hole; keep paying that mortgage, throwing your good money after bad money. A lot of people walk away, and that’s it. 112

How to Buy and Sell Homes and Land Remotely Now the bank is stuck with the property. They’re on the hook. Their mortgage shows you owe $200,000 on it. It’s now worth $150,000 to them too. Now — even though it’s a beautiful property in perfect condition, it’s become an orphan. The bank is just looking to minimize their loss and get the most money they can, but they’re never going to get what they’re owed. They just want to minimize their loss on the property. The home owner has already abandoned the property. He’s already walked, especially if it’s an investor. A lot of investors during the boom bought multiple properties. As soon as they were underwater, they gave up, since they didn’t live there, and they could care less about it so they let it go into foreclosure. They just simply washed their hands of the whole transaction and went along their merry way, never to think about that house again. It’s the bank’s problem. Now the bank has to do something with it. That’s when they need investors like us, but we’re not looking to pay $250,000 for it. If it’s worth $150,000, we’re looking to pay $100,000 for it, $90,000, or even $80,000 for it. That’s how we make our money because now — to us — that’s a gem!

The Condition Means Nothing What matters is the percent of value that you buy it for. Now I walk in. I paid $90,000 for that property. It’s worth $150,000. The bank was owed $200,000. The buyer bought it for $250,000, so it’s just a chain reaction of loss. People usually say, “Mike, don’t you feel bad? You’re capitalizing on people’s misfortune.” The truth is, if I don’t come in and buy it, someone else is going to. It’s not like the house is just going to magically disappear into dust, and the problem will solve itself. You can’t feel bad about 113

Real Estate Investing That Works­ making money. I have a family, and I can’t feel bad about the bank making a bad decision to lend money on that property. By the time the property’s gotten to that position, the real people who suffered the loss are long gone. They may not have even suffered a loss, because they may have just borrowed the money to buy the house. I see that all the time. Is it hard to feel bad about the big banks that were just bailed out for billions and billions of dollars? Is it hard to feel bad if they lose $100,000 on a property? It’s interesting. You see, the banks got bailed out. The people didn’t get bailed out. I could’ve cried about it, and said, “Oh, that’s so unfair. How do the banks get bailed out? How do they get billions of dollars?” Instead, my brain told me, “Well, I think I can make my money off the banks. Watch them lose money. Watch me buy it. Watch me resell it.”

Banks Are Not Real Estate Investors Most people think banks are sophisticated real estate investors. That’s simply not true. They’re not property investors. They have no idea what they’re doing. Most of the time banks don’t even know the market value of their foreclosed properties. They’re simply putting it up for sale to the highest bidder at a foreclosure auction so a bunch of vultures can pay pennies on the dollar for it. I’m strategically positioned to be the highest bidding vulture, and win the property. Then I simply sell it for what it’s worth and make the money on the fact that the bank didn’t know what the heck they were doing. People ask if I often bid on properties that do not have a hidden bid. 114

How to Buy and Sell Homes and Land Remotely Sure. It doesn’t matter. To me, I don’t care if it’s hidden. I don’t care if it’s revealed. I just care about pennies on the dollar and percent of value. That’s it. I’m focused and dedicated. I don’t deviate. If I say I’m going to pay $42,000 maximum for a house, and it goes for $43,000, have a nice day; I’m no longer interested. It’s dead to me, meaning I never think of it again. It’s like Mr. Wonderful on Shark Tank, as soon as he passes on a deal he says, “You’re dead to me.” He doesn’t even think about it again. That’s how you’ve got to be. I don’t look back and say, “Oh, if I would’ve only paid ...” — No. When does it end, a thousand more, ten thousand more, or twenty? Decide what you’re going to pay based on your concrete numbers calculated from your research. Do not budge. Stick to your guns. That’s why I’m only successful on 10% of the properties I bid on. I’ve gotten into a bidding war when I’m way below my maximum bid. I’m sitting there, and I’m going up at $100 a crack, and I’m battling it back and forth, but only up to my maximum bid. Say we’re $30,000 below my maximum bid. Sure, I’ve been at war for 30 minutes, 45 minutes, going back and forth — and still got the winning bid $15,000 less than my maximum bid. When I say don’t get auction fever, what I’m saying is don’t get caught up and start overpaying for a property.

Know When to Walk Away Auction fever is not if it’s $20,000 under what you’re willing to pay, and you’re battling it out for 20 minutes, that’s no problem. The second it hits your maximum bid, you’ve got to walk away. 115

Real Estate Investing That Works­ That’s what auction fever is. When your ego gets involved, and you say, “I don’t want to lose this property,” and you start making bad decisions and bidding against what your homework tells you to bid on the property. When your maximum bid is below the market price you’re willing to pay, you are virtually guaranteed to make a profit. This is where a lot of people catch auction fever. They say, “I factored in $30,000 profit, so it’s okay if I make $28,000 or $27,000.” It just keeps dropping, to $26,000. They’re justifying it in their head, because now the ego’s involved. “Twenty grand is still better than nothing.” It’s not the higher percentage of auctions you win the better off you are. Absolutely not. I have a 10% success rate. By most standards, that’s an absolute failure to succeed 10% of the time. If I was a baseball player and I got a hit 10% of the time, I’d be kicked off the team. As a property investor, you’re sitting pretty if you can be successful 10% of the time. When I use the term successful what I am saying is that I win approximately 10% of the homes I bid on. as long as you’ve got a big net. Think of villagers when they’re fishing. They don’t fish with a net the size of a hand. They’re not using a goldfish net. They’re throwing out a massive net. They string it out 50 feet, because they’re just looking to grab as many fish as they can but they will never get all the fish in the sea. Some will get through the net. Some won’t. It doesn’t matter, but when they pull that net in, there’s usually something there. If you fish with a little goldfish net, you might be out there all day and get nothing. That’s why 10% success to me is tremendous. I had a guy 116

How to Buy and Sell Homes and Land Remotely tell me, “Mike, I’ve bid on six properties. I haven’t won anything yet.” I said, “Congratulations. I couldn’t be happier for you. That means you’re doing it right! You’ve obviously been trained.” I had another guy bragging that he’d won four properties in a row. He bid on four properties and he won all four. I thought to myself that he likely overpaid on at least a few of those properties unless he got unbelievably lucky.

CHAPTER 10 Summary: • The key to successful remote buying is to do your research. Usethe online tools I taught you to make the best calculated decision you can to get the history and current comps about neighborhood property values. • Use realtors to get up-to-date information about property values and a general sense of the neighborhood you are interested in. • The condition of a property means very little. The most important factor is the percentage of value you are paying. That percentage must be way below market value so you get instant equity when you buy. • Banks are not real estate investors and in most cases, they do not know what they are doing. • Know your maximum bid and never deviate from that number. Know when to walk away.

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STUDENT TESTIMONIAL Thought the Cops Were Going to Arrest Me for Stealing the Property!”

“Before Mike’s system, I was able to do some investing, mostly in the stock market and a little bit of FOREX, but for the effort, it just wasn’t worth it. After Mike’s system, I purchased six properties. They are just lots — vacant lots, in good residential areas, next to great houses. I bought a lot for $1800; I sold it for $2800. I made 40% profit and that was in just a month. I sold another for $2,500 that I got for $1,600. The first time I won an auction, I felt like I should be arrested because I got such a good deal. I thought the cops were going to arrest me for stealing the property! If you want a quick flip, you can almost always sell it for a quick dollar. You may get more if you wait several months but in my position right now, I’m just trying to build up the cash and doing the quick flips is fantastic.” Paul, One of Mike’s Successful Real Estate Investing Students 118

CHAPTER 11

How to Maximize the Use of Realtors We’ve gone through several techniques and overviews about buying and selling real estate. We’ve touched on the auction process. As a beginner, you may not be ready to jump into an auction just yet. This is when you’ll want to have the support of a realtor in a specific area. In this chapter, I show you how to maximize the use of realtors. Most people are used to realtors, but the real question is: How do you get them to work for you, and how do you have multiple realtors working for you that you don’t actually pay? That’s what they say, right? You don’t pay the realtor. It’s important to understand that when you’re buying a house, the proceeds of those funds are paying the realtor. When you’re using a realtor, you’re just submitting low priced offers to buy. That’s called low-balling. Some of your offers will stick, some will not. I’ve made an offer with a realtor for 95% of the value, and it got turned down. A month later, I offered half the value, and it got accepted. Who knows how? Who knows why? The truth is that different people are in different positions at any given time.

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With a realtor: • There could be an asset manager involved. • It could be a homeowner involved. You might scratch your head and think: How did I do that? You could see a hot listing that’s been out for a day or two, and think: Oh, my gosh, the price is great! I’m just going to offer full price, because what they’re asking is reasonable. I might as well just put in a full price offer.

Don’t Hesitate to Make a Full Price Offer Let me give you an example: In Phoenix, Arizona, there is a new community from Heritage Homes. They are big builders in the area, and they deck their houses out nicely with lots of extras. They have beautiful models with tile roofs, all stucco, and granite. They really build beautiful homes. In Phase One, a speculator comes in and buys the property right from the builder. The builder wanted $239,000 as his base. The buyer then put another $60,000 in glass showers and tiles that look like hardwood floors. He pays $299,000 including $60,000 in upgrades. Then he puts it up with the realtor for $350,000. He wants to make a profit. It’s a brand new home, never lived in; he’s a speculator. He didn’t buy it to live in. He lists the property with the realtor for $350,000. Unfortunately, this is 2007. He was a little bit aggressive. Had he gone with a price of $325,000, he may have sold it. But he’s at $350,000 because his house is decked out. Now all 120

How to Maximize the Use of Realtors of a sudden the market value of the property is down to $299,000. He put about half down on the property, so he had a little room in there, but not enough. In this example, he put down $150,000, he financed $150,000. But he’s saying, “Oh, I’m going to get $350,000.” He’s trying to make a profit. All this happens in the midst of the crash. Things are going down, they’re not going up. So that’s why when the housing market is crumbling, you don’t pay way over what other properties are selling for. During a boom you could, but during a decline that’s not a good idea. Had this individual understood the housing market, he wouldn’t be in the position I’m about to share with you. Now he’s asking just $325,000. No response. A couple of months pass, and he’s at $299,000. No response. Now he’s just out what he paid for it. Soon he’s at $250,000, but he’s chasing the market down. Then he’s at $200,000. Now he’s at $175,000, a year later. Once he goes to $150,000 (that’s what he owes the bank), he’s just hoping to break even, but he’s still chasing the market down. This completely decked out home with $60,000 in upgrades is getting no response. At $150,000 he thinks he can break even. Remember he wanted $350,000. This is in Phoenix in a great area with tile roofs and stucco, and he’s never lived in the house. If you’re ever in the area, go by and see Heritage Homes, The Lakes at Rancho El Dorado. There’s a huge lake. It’s a master planned community. The builder really went all out with 121

Real Estate Investing That Works­ beautifully landscaped roads, waterfalls, and trees. They took a piece of desert and turned it into a beautiful oasis with huge palm trees, club houses, and golf courses. Rancho El Dorado has four golf courses and is considered a wonderful master planned community. It’s absolutely beautiful. Now he’s at $150,000, just what he owes. He’s ready to lose his whole down payment just to pay off the bank. He doesn’t get his $150,000. The bank forecloses. I come in and offer $69,000. He initially asked for $350,000. I come in and pay $69,000, which is just $9,000 more than his upgrades. I get the land and I get a beautiful brand new home no one’s ever lived in. It’s a spectacular deal! Fast forward a year later and things are getting better. People are starting to build again. The builder wants $220,000 already for my model. For me, it’s a buy and hold. It’s the house I stay in when I’m in Phoenix. It’s my buy and hold. Why get a hotel? I have a decked-out model home with three bedrooms, two baths, in a phenomenal neighborhood, it’s never been lived in. Every wall is beautiful, and the carpet is brand new. The upgrades are even nicer than my own home.

He Didn’t Understand the Market When He Was Trying to Sell This was not an auction house. It was a realtor house. People put in offers for the property to Bank of America for $120,000, $125,000, and $130,000. Bank of America was just being crazy. They didn’t want to sell it, but they’re chasing the market down during the worst time there is. Now it’s a panic: What did I do? 122

How to Maximize the Use of Realtors Bank of America lowered the price to 60,000… do you think I offered 60,000? Do you understand how ridiculous they are at $60,000? I offered them $68,500. That’s $8,500 over the asking price. I was determined to get that house! I understood what a ridiculous deal it was, so I threw the asking price out the window. Sometimes you’ve got to use common sense. This place was a top of the line build. It had every single upgrade, the glass showers, the carpeting, the padding, the raised ceilings, not nine but 10-foot raised ceilings. Understand that he thought the $60,000 in upgrades was free money, because he borrowed it from the bank. Now I see the builder wants $110,000 for a base model, without $60,000 in upgrades. What was the research involved? I see them building, so I walked in the sales office with the model homes and asked, “How many houses do you have under contract? How many have you sold this month? Maybe eight or nine?” I see the little sold dots on their map that they have in the sales office. They’re trying to show you everything they’ve sold. That master planned community might have 2,000 lots. They built on 500 or 600 of them at the time. It’s not like Florida where you buy a lot, build a house and maybe no one moves in next door for years. What happens in areas like Phoenix or California, as builders come in, they take the entire subdivision. Some of you don’t know this, because where you live they’ll take the entire plot of land and they will actually build a

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Real Estate Investing That Works­ single house on every lot. There will not be vacant lots in these planned communities. When I stepped into an area like Rancho El Dorado with golf courses, beautiful landscaping, and a country club, I’m thinking: Are you kidding me, you’re asking $60,000? I showed up the first day it was listed new, and there were eleven offers that day. There was a stack of business cards on the counter, so you can see that many people have been there. This is one example of me using a realtor to my advantage. I went directly to the realtor that was selling the home. This increased my chances of being the high bidder because he was working as both the buying and selling agent making both sides of the commission.

Let’s say that: • Realtor A is selling a house. • Realtor B makes an offer. • I come to Realtor A directly with an equal offer. • Somehow mine gets accepted.

Maybe: • My offer comes in, and it somehow goes to the bank right away. • The next day, two days after they accept my offer, Realtor B’s offer appears at the always remember timing is extremely important in the real estate business. 124

How to Maximize the Use of Realtors People will do what they need to do to make more money for themselves. It’s human nature. Some realtors may be “out to lunch” when the offers come in. (Would you rather get 6% on a deal or 3% on a deal?) I know this, so I go directly to the listing agent. I saw 11 different realtor cards on that counter, so I know 11 different realtors are most likely submitting offers.

I’ve experienced both sides of this: • I’ve had a realtor submit offers for me, excellent offers, which are above the asking price. • My offer isn’t accepted and I see they sold to someone else for less. How is that? Because having good relationships with realtors and allowing them to make both sides of the deal has proven to be effective.

How to Select a Realtor Let me share something valuable I use all the time. The site I like to use is Realtor.com. The information may be old at times, but it’s certainly going to give you an idea of any city you need to know more about. Let’s use Oklahoma City for this example. You may know absolutely nothing about Oklahoma City. So let’s try an example. Go to Realtor.com and type in “Oklahoma City” to start your search. Do this right now. Follow me on your computer, so you can learn while doing instead of just reading. 125

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Right on top it will give you all of your options: • The location is Oklahoma City • No minimum • No maximum • All bedrooms • All baths • Homes for sale You want to see what the caliber of properties on the low end is like. This will tell you everything you need to know, so choose: sort by low to high. Because this is for research purposes, you’re trying to find out about single family houses. You don’t need to know about mobile homes, farms, land, or multi-families because you’re just trying to learn about the area.

How to Learn about an Area by Viewing Information on Your Computer When you’re searching, you want to see curb appeal. Square footage isn’t necessarily important. Let’s take it one step further, and go to additional features. Maybe there’s a lake or a city view. When you get proficient at this type of research, you can even do it on your smart phone.

You can: • Go to the minimum-maximum appraised property status 126

How to Maximize the Use of Realtors • Look at new home communities • Look at new homes • Look at foreclosures

Find out: • What would $100,000 get me in this city? • Is the curb appeal good?

Let’s say: • You have family in Oklahoma City, and you want to buy there. Or you may simply have found by doing the research I have already provided that you are interested in the city and want to learn more. • You’re looking for something in the $60,000 to $80,000 price range, and you want to know what kind of property that amount will get you. How far will that money stretch? • You’ve just discovered that your money may stretch much further in S. Florida because the low end homes are not nearly as nice as what you can get for the same money in other areas. • It’s not going to touch what you could get in Phoenix or Vegas for the same money. • At this point, you haven’t seen the value of investing in Oklahoma City unless you live there or have other motives. If you looking to invest remotely the bang for 127

Real Estate Investing That Works­ the buck would be in other areas so do another search and see what appeals to you as a percent of value. You can search different areas. Just plug in any city and see how it compares to other cities you’ve researched. You could take 50 cities you have an interest in, and do exactly what you just did.

Sort them by: • Their asking prices, or their age • Square footage • If you’re looking for land only, select land

Everything you need to know is right there: • Type of property • Specific area • Bedrooms and baths • Active listings • Open houses You can search by builder if you really wanted to. You may also want to choose foreclosures only. When you’re analyzing an area, look at retail sales, but also see what’s out there for foreclosure to get the best idea of the area. Sometimes the little snapshot you see when you click any property will tell you everything without digging much deeper. Oklahoma may not meet my criteria, but you may like the demographics. Perhaps you have family there. 128

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Any Market Can Work for the Right Reasons For me, Oklahoma City would be an uphill battle. I’m flexible on square footage. If the house is small, but has good bang for the buck, I’m interested. Larger homes tend to turn me off, because remodeling a larger home is more labor and cost intensive. Smaller, newer homes are going to be a lot less work.

To select a realtor: • Find a house you’re interested in, and you’ll see the realtor’s name right on the listing. • Call the realtor, and ask them what other properties they have in the area. • Pick their brain for free, because they’re the experts in the area. • Ask them, “What’s on the cheap end, or what do you have as a pocket listing?” They love hearing that question. A “Pocket Listing” is a property for sale that is not on the market. It means they have a friend, or a friend of a friend that wants to sell but does not want it listed. That’s their secret house. You would start off by asking, “Do you have any pocket listings in the area? I’m trying to buy something in Oklahoma City.” They may say, “Oh, I’ve got this one.” Then ask them, “What properties are you actually listing right now?” They’ll say, “Oh, I’ve got this, this, and this.” 129

Real Estate Investing That Works­ You reply, “What do you think the best deal would be?”

Don’t be Afraid to Ask What They Think It doesn’t mean you’re going to put any weight in their answer, but it’s great to hear what other people have to say, especially if they’re a realtor or broker in that specific area. There’s no risk.

You can call every one of the realtors and get them to: • Take pictures • Do research • Send you listings • And it will cost you nothing How do you like that? You can get unlimited research on any area paying absolutely nothing, because these are the experts and they want your business. Oklahoma City is not for me. There’s no bang for the buck. But, it’s a great example to see what is available. One time while I was surfing Realtor.com, I discovered a little city called Maricopa, Arizona. You can use that city as your search and compare it to Oklahoma City. Let’s say you’ve done the search and found a house you want to buy in Maricopa, Arizona. What do you do next? Go right to the realtor and start digging in. Start putting in low-ball offers. If I want to test and see how aggressive the realtor is, I’ll put in an offer at a low price or as I like to say “ a low percent of value”. 130

How to Maximize the Use of Realtors You have nothing to lose. Put the offer in and see how they come back. Do it 10 more times, call the realtor directly. You’re paying nothing. It’s a great way to learn the process and solid information about the local market.

Maximize Realtors by Going Direct, because They All Want More Commissions If you want a Realtor to represent your interest in a certain area, here’s how to do it: You can have different realtors working for you. Just have them send you a contract, and sign it. It doesn’t mean you have to buy all the properties you put offers in on, see what comes back as the lowest percent of value now that you have the tools to determine property value. But what if one gets accepted at a great price? It might not have been your first choice, but if it’s an amazing deal, it might become your first choice. The alternative is that if you called an individual realtor and they really stood out above everybody else. You might want that one individual to take care of all of your needs in the area. Have that one realtor you really liked submit the offers for you so you don’t have to go direct. I’ve found that sometimes you’ll get more responsiveness from the realtor by going directly to the listing agent because they’re getting double the commission. They’re the selling agent, and they represent you as the buyer’s agent. In this case, they’re getting both sides of the commission; the buy side and the sell side. This is great motivation for the agent. They’re supposed to treat every offer the same and submit every offer the same, but it is 131

Real Estate Investing That Works­ human nature to try and get double commission instead of half the commission.

There’s a lot of value in Realtors: • Just because you have a realtor doesn’t mean you’re automatically paying retail for a property. • You can still make offers. • You can still low-ball. • You can still apply these techniques to figure out what it’s worth and bid accordingly rather than bid at an auction. • You’re placing your bid on paper and it’s just a longer process. • It’s going to have to go through approvals. • If it’s a short sale it could really be delayed. • If it’s a straight sale it could be a little quicker, but it really all boils down to finding the best deal for you. • You’ve got to deal with title companies. • When dealing with realtors you’re going to have to deal with counting on other people to send various documents, fax that, or the are calling you up, saying, “I need this document, or now I need this from you.” Remember this all takes up your precious time so use realtors in conjunction with the auction process to find the very best deals. Sometimes people get frustrated with realtors because of all the paperwork involved. Once you see that doing it through a 132

How to Maximize the Use of Realtors foreclosure auction is quick and painless, it seems like a no-brainer to just do it yourself. • You don’t have to sign any documents to buy the property. • When you pay for the property, you’re going to have proof of ownership just mailed to you. Realtors are good if you’re just looking to get one or two properties, nice houses in a specific area. If I’m looking at a new area, I may start off with a realtor. But, sometimes I want to test it myself. I just want you to understand all the different ways you can invest in real estate.

When you have an area that goes ridiculously well during the boom: • A lot of speculators come in • They’re throwing up way too many houses at once • They’re flooding the market

When the market goes the other way: • There’s brand new inventory that’s been built • Lots of people can’t make their payments and go into foreclosure • There’s an oversupply of new houses • It’s simple supply and demand. When the market booms there are more homes built, when the market crashes there is more opportunity to get the previously built homes at a steep discount because supply outweighs demand. 133

Real Estate Investing That Works­ After you’ve remodeled over a hundred homes that are 50+ years old, like I have, you start to appreciate newer builds with nice double pane windows, a new roof, new electrical wiring, and new plumbing. Remodel a few houses that are 50 years old and you’ll know exactly what I mean. When people are talking to you about older houses, they will use buzz words like, “This house has a lot of character.” Character’s great if I’m going to live there myself, but I’m more interested in knowing: • If the house is built in the last few years • If the roof is good • If I have to paint and carpet the property • When Buying Any Property, You Have The Ultimate Security If It’s A Newer Home I apply my criteria that way, because I want to get newer homes. I want to find areas that have been over built. Some people say, “Well, what about Las Vegas?” Here’s how I would compare Vegas to Phoenix.

Phoenix has: • A lower unemployment rate • Looking at infrastructure, Phoenix has more corporate headquarters and the prices are pretty close to Vegas on an apples to apples basis. • American Express has 8,000+ employees 134

How to Maximize the Use of Realtors • USAA has a major corporate presence • Walmart has over 30,000 employees These are the type of facts you want to hear about a particular area. You want to hear that there are big companies, and there’s low unemployment. All of this is really irrelevant if you’re still over paying for a house. These are just things that may help you make an informed decision. Let’s say you read an article that says, “The Oklahoma City unemployment rate is down to 2%.” That might prompt you to at least look into it. You’re thinking: What different areas have the best opportunity? Then you look, at a particular area and realize there’s no opportunity. It’s alright, at least you tried. You did your research and looked into it.

Don’t Leave a Market That’s Going Well Until You Can No Longer Meet Your Goals I’m not trying to invest in properties all over the world. I like it to be easier on me. But, I certainly see the value in Realtor.com. Even though I love the auctions, I can also see the value in having other people working for me. They’ll submit offers; they’ll do all the grunt work sending documents back and forth. I can low-ball the offers and they’ll get approved or they won’t get approved. The bottom line is this: Because of this tool I just shared, you can start putting in offers right now. If you feel a little apprehensive that you don’t want to jump right into an auction, use any one of these buying techniques that I’ve been 135

Real Estate Investing That Works­ teaching you. There are many different techniques when it comes to real estate. There are many different ways you can attack this and many different ways you can make massive amounts of profit.

Back to Maricopa, Arizona Now go back to your search in Maricopa. Maybe you are noticing that every place in Maricopa is looking pretty good. When you pulled up Oklahoma City, what were your choices? The places in Maricopa are: • Newer and less expensive. • Showing better curb appeal, tile roofs, and stucco. • Nicer houses all together. Imagine you’re selling online. Californians love tile roofs and stucco. It makes them feel like they’re at home. Arizona homes look as though they could be California homes. It would be just like a smaller neighborhood in California with the tile roofs and all the stucco. A lot of people can relate to this style and design of housing.

If you search the same home in California, good luck finding any one of those deals, as the market in California is going up right now. When I first found Maricopa, Arizona, it was somewhat untapped. I’d never heard anybody mention it. I was actually searching Maricopa County, and I stumbled on Maricopa City. I didn’t know there was a Maricopa City. I’d never been there when I started researching and buying properties. 136

How to Maximize the Use of Realtors You don’t want to spend money traveling to all these places, that’s what computers are for.

Everything You Need to Know Is Online Realtor.com is a phenomenal tool because it doesn’t just recommend realtors; it gives you the research as well. It’s pulling from the Multiple Listing Service, and it gives you a snapshot without paying any subscription fees. If you’re looking to maximize the use of a realtor, my advice is to go direct. Go right to the source. You may want to hire one realtor to talk to another realtor. That’s two people fighting over the same commission. It’s not a problem. If you’re loyal to one realtor and you want him/her to put out 20 offers, you may have some level of success. But if you call the 20 realtors directly, see what your result will be as opposed to having one realtor go to 20 other realtors. Test it yourself.

CHAPTER 11 Summary: • If there are multiple offers on a property, it may benefit you to go directly to the listing agent, rather than through another realtor. • Use Realtor.com to compare the value of investing in different areas. Look for curb appeal, and look at foreclosures as well as retail sales. • When selecting a realtor, ask them about their pocket listings (properties that are not on the market). Don’t be afraid to pick their brains and ask them what they think. 137

C A S E H I S TO R Y 69 Easton: Bought for $18,000 — Sold same day for $69,995

This was a great quick flip. I bought it as a foreclosure through a realtor. The reason I sold it at such a high price was because the previous owner got some kind of settlement and they really went over the top remodeling the inside. It was gorgeous. It was a duplex and the owner converted it to a single family home, so it was HUGE! This home is located in a good, solid middle class neighborhood about 3 miles from the University of Buffalo. I didn’t have to put any money into this property as the previous owner put their money into it and couldn’t keep up with their house payment. Then, for some unknown reason, they went belly up. I came along and bought it for $18,000. The way it was able to sell in 1 day is because I had a 30 day close and I was able to advertise it and have a buyer lined up to close the same day it went into my name. Using my online selling techniques I was able to quickly sell it for $69,995, making a nice profit of almost $52,000. 138

CHAPTER 12

How to Open and Fund Your Bidder Account If you are going to bid at auctions, you’ll need to register by opening a bidder account. It’s quick and easy and I encourage you to do this with me right now even if it’s just for educational purposes. As I walk you through this process, you may think it is very simple, but know that it took years and a lot of diligence to learn these things in order to teach them to you. Let’s use just 1 example to make it simple. I will show you how to open a bidder account in Lee County Florida. First, go to: www.lee.realforeclose.com Next, click where it says: REGISTER You’ll see a page that says: • Welcome to the Registration Wizard! • The next few steps will easily guide you through the registration process. • In order to complete the registration process, you will need the following information: 1. Contact Information 2. Mailing Address 139

Real Estate Investing That Works­ • Click Next to start the wizard

You’ll fill in the basic information: • Company Name • First Name • Last Name • E-mail • Confirm E-mail • Phone • Click: Next

You’ll come to a screen that asks for: • Nickname • Name on Title On This Page People Get A Little Confused Everybody knows how to enter their name and their address. But what you need to know is: The nickname is the name of your bidder account. Not the name that goes on the title. You may call it, IRA bidder account. The nickname is simply what you would call it so that you know which account it is. If you had multiple accounts, you would just want to know at a quick glance: • If you were using a self-directed IRA to purchase these properties, you would want to open a separate bidder 140

How to Open and Fund Your Bidder Account account for your IRA, or a separate account for your kid’s educational account. • If you are doing it in your own name, you might want to make it your own personal bidder account. • If you were doing it for your corporation, you might want to do it as its own bidder account. Enter a Nickname, and click: Enter You could also have one bidder account and simply change the name on the title. So this is one thing that is very important to understand. I’m not just showing you how to open it, but how to be able to actually start bidding.

What happens is: • Whatever name you put on the title can be changed at any time up until the time you bid. • Once you bid, whatever name you had in there at the time you bid will be on the title. • If I wanted to bid on a specific property and I want it to go into my corporation, I would put: XYZ Corporation. • If there is a property on another online page of the auction that I want to bid on, and I want it to be in a different name, I would simply put the other name where it says: Name on Title. Type in the name you want on the Title, and click: Next

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Real Estate Investing That Works­ Now you’ll be on a screen that asks for your: Mailing Address Enter your address, city, state, and zip code, and click: Next

The next screen asks for your: • User Name • User Password • Security Question • Security Answer Find a question on the list that you will remember the answer to easily. Once you’ve done this, click: Next

Now, you’ll arrive on a screen that says: • Thank You for registering with Real4Close. • You will be able to use the same username and password to sign in to any of the Real4Close foreclosure and tax deed auction online sites. • You can modify any of your information by selecting “My Account” from the Left Navigation menu. • For Security reasons please log out when you are not actively using the site. • Thank You. • Click NEXT to be automatically logged into the site. It will bring up a bunch disclosure pages for you to read. 142

How to Open and Fund Your Bidder Account Read the page, and click: Okay Read the next page, and click: Okay Keep going until you’ve read and agreed to all the terms and conditions. Now that you have your bidder account set up, you are ready to get started. Next, go to the Calendar tab on the top left where it says: Bid Menu

When you click on any given day of auction, and you go to place a bid, it will show: • Your nickname • The name of the title (the name that’s on record)

Let me share a little trick with you: • Click on the left hand side where it says: My Account • It has all your information again and almost looks like exactly what you did when you registered.

But now you have two different things you can change at will: 1. Manage E-mail Notifications (Auction Results). This allows you to set up a primary e-mail account as the default and it will automatically receive Auction Result Notifications. If you win an auction and you weren’t available to take action on the bid result (because you were busy or out 143

Real Estate Investing That Works­ of town), it will notify a friend, partner or an assistant to wire the money for you. It will send them an e-mail when you win the auction letting them know to initiate the wire for you. That’s a pretty cool feature.

Something Really Important Is Right under That Feature 2. Manage Aliases (Names on Title). You’ll see the ones you entered when you registered. If you click the blue link that says: Manage Name(s) on Title, it will open up a mini screen. At the top left there is a blue link that says: Add New Item Click that link and it clears the info you entered before and allows you to add a new: • Nickname • Name(s) on Title • Address • City • State • Zip Code Once you’re done filling it in, click: Save This allows you to save multiple accounts or account names so you don’t have to reenter it every time. Fill in all the info and hit: Save

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How to Open and Fund Your Bidder Account If you want to go 50/50 on a property with someone: You would simply add their info into your profile and add them into the deal before you bid. Now if you save it and you bid on a property, your nickname and name on title are saved. You can save multiple names in your account so your not having to constantly re enter this information. The only thing I need to clarify is:

Change the Name Before You Bid You can’t go in after you win the bid and change it. If you want to bid with somebody, or if you want it to be in a different name, be sure to do the name change before you start bidding. If you have another bid right after that, you can do it again in a different name. You can change it for every transaction, and if you have several corporations or different people you want to buy with. Just make sure you change it before you bid.

I just shared: • How you open your bidder account • How you put the names on the title of properties you win at auction • How to have multiple names titled on the deed of any property you win. I want you to know the different options available to you. If you want to have multiple bidder accounts, because your funds are actually separated, meaning you do not want to commingle funds 145

Real Estate Investing That Works­ in a self-directed IRA with your personal funds, or funds in a corporation, this is where it makes absolute sense to have different bidder accounts. I trust you will use this valuable information.

How to Fund Your Bidder Account Now that you have your bidder account set up, the next step is to fund your account with money so you can bid on properties you are interested in buying.

Three Ways to Fund Your Bidder Account There are three ways you can fund your bidder account. Option #1. You can show up in person with green cash. I don’t recommend this funding method. Why would you want to waste your time traveling there to bring green cash? It’s possible. You can do that. Option #2. I also don’t recommend this, but some people prefer cashier’s checks. You can overnight a cashier’s check to the county. Now you’ve got to pay cashier’s check fees, unless you’re a preferred bank client. In order to use this method, you’ve got to physically go to the bank, and get a cashier’s check. You’ve got to take your cashier’s check to an overnight company; something like Fed Ex, UPS, DHL, or even the post office. Then it has to be overnighted. These things take time, but it’s a method. Option #3 is my preferred method and the easiest one. It’s a basic wire transfer. Once you set up your bidder account, they’ll 146

How to Open and Fund Your Bidder Account give you what’s called wiring instructions. If you’re still a little bit old-school, you could bring those wiring instructions in person to your bank. Tell your bank to please wire X amount of money to the county giving them the routing number and account number given to you, click the option to fund your bidder account. This routing number and this account number is how the funds end up in your specific bidder account. Be sure to include your bidder account number which is also given to you at the time you register. This is all very easy. With the power of the Internet, sending wires is very easy. It takes me about ten seconds. I input the routing number and the account number, and then I determine the amount of money I want to wire. One click, and the money is in my bidder account. That’s it. For me, the path of least resistance is to fund my accounts by wire transfer. You can bring green cash, or a cashier’s check, or mail a cashier’s check, but what I prefer is the wire transfer. As mentioned before, most counties (and most live auctions), are going to want 5–20% of the amount you’re going to bid in your account. Let’s use Lee County, Florida as an example again. They require 5%. If you’re looking to buy a property for $50,000 — put $3,000 in your account. Have a little extra for closing costs proper. Money in your bidder account can also be used to pay the balance when you have the winning bid. Or you simply click one little button on the website, and you can get a full refund at any time. Now your funds are on deposit. It means when you log in, you’ll log into your bidder account number and the first thing you see is that your funds are on deposit. It’s just like when you log in to 147

Real Estate Investing That Works­ your online bank account. (If you’re not doing online banking, you need to do it.)

Don’t hesitate to put more money than you need in your bidder account. Here’s why: Now and then you’re going to find a gem of a property that nobody’s bidding on and it’s probably going to be for pennies on the dollar. If your money’s not in the bidder account, you’re going to miss out. If you want a refund, with no fees and no questions asked, you click the refund request button. It asks you how much you want to be refunded. You put in the dollar amount and your money is refunded. After doing your research, you’ve decided on one property you want to buy. You’ve also determined your maximum bid is going to be $50,000. You only have $2,500 in your bidder account. The property you are bidding on might be worth $160,000, but you will not be able to bid anything over $50,000, because you only have $2,500 in your account. You will be limited to 5% of your bid amount, so don’t hesitate to put more into your bidder account.

How Much Money Do I Put In My Account? Lee County, Florida, requires a 5% deposit of what you expect each of your maximum bids to be. If you’re looking to buy a property for $50,000, you’ll need a minimum of $2,500 in your account. It is important to remember that I constantly teach you not to get auction fever. Don’t overbid. If you’re really looking to pay $50,000 for a property, I recommend you put at least $3,000 in your account. This way you’ll have a little room for closing costs. 148

How to Open and Fund Your Bidder Account

CHAPTER 12 Summary: • Using the information I’ve given you, you can quickly and easily open a bidder account. • You can use different Nicknames for different bidder accounts. • Remember, change the Name on the Title before you bid.

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STUDENT TESTIMONIAL This is my first real estate experience and I didn’t have a lot of money to invest. Mike’s system makes that possible!

The reason I was interested in Mike’s course is because this is my first experience in real estate, and I don’t have a large bank roll to invest. That’s what drew me in to buying his after training with Mike, I was able to purchase my first property and make a $15,000 profit. Mike is very honest, very transparent, which I like, because honesty for me is everything. His integrity shines through. One of the things I loved learning is that I am now able to purchase property remotely. This is important for me because I live in the northeast, and being able to purchase property from a remote location is everything to me. You’re going to love this course, because Mike is genuine. He’s heartfelt, he’s authentic, and he gives you 110%, and it’s all done in a friendly atmosphere which is very inviting. Nick, One of Mike’s Real Estate Investing Students 150

CHAPTER 13

What Happens after You Win a Property at Auction? Now, all of a sudden, you’ve won a property at an auction. What happens after you win? What are the precise steps after you’ve won? You’ve gotten THE GREEN SCREEN. If you’re watching my DVDs, you know the GREEN SCREEN means you’re the winner. It’s over. Your bid won. The first thing that happens is 5% of your bid amount immediately comes out of your bidder account. The next thing that happens is within 24 hours from the time you won the property; you must pay the 95% balance due. Again, you can bring green cash. You can overnight a cashier’s check, but now you’ve got a time crunch. You’ve got to hope your overnight delivery company delivers your cashier’s check on time. You just got a smoking hot deal, and now you want to send a cashier’s check? You want to rely on an overnight company showing up on time to fulfill your 24-hour commitment? Not me. I’m going to wire the money. It takes me a maximum of 3–5 minutes online. When I send a wire. The money goes right into the county’s website escrow account, directly into my bidder account. No matter how much money you have in your bidder account, the county will never withdraw that last 95% without your authorization. 151

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What If You Have Buyer’s Remorse? Let’s say that for some reason you have buyer’s remorse. Maybe you changed your mind. Maybe you think you overbid. Whatever your story is, you don’t have to worry about them just arbitrarily taking the money from your bidder account. There’s a secondary step. The 95% is due within 24 hours. Whether you have a dollar or a million dollars in your bidder account, you need to log back in and authorize the transfer of the balance from your bidder account. You simply authorize that transfer. Boom! Ten seconds later it’s out of your bidder account.

11 Days Later, You Get the Deed You’ve now fulfilled your obligation. You know what’s going to happen now? Eleven days later, you get the deed. There’s no signed paperwork. There’s no overnighting back and forth. I don’t know if you’ve ever dealt with a short sale or a traditional sale, but there’s a stack of documents. You need to sign. You need to notarize this, and notarize that. Time is money. If I have to spend ten hours to process a transaction, that’s another three to four thousand dollars I have to make, because I just spent ten hours on it. To me, time is money. That’s why I prefer the wire transfer.

The Key Is to Take Action! Action is your #1 priority. If you want to dilly-dally, or second guess yourself, other people are going to get those deals. You’ve got to understand, there are people out there that are ready to take action. 152

What Happens after You Win a Property at Auction?

The Bid If you’re not ready to take action, it’s going to be hard for you to compete against somebody who is. Now you’ve won the bid and paid your 95% balance due. It took a couple clicks of a mouse. There’s no signed paperwork and no faxing back and forth, no person to talk to. You will have the deed in about 11 days in the mail. You don’t need to show up. You don’t need to call anybody. You don’t need to verify anything.

The Deed Some people ask, “How valuable is the deed?” The deed simply says that you’re the owner. that deed can be accessed online. That same information is public record. I don’t need to call the county. They don’t even need to mail me the deed (even though they will), because the deed is just a microfiche of the fact that the property went into my name. If I can go online and verify that the property is in my name, that’s good enough for me. When the deed does come in the mail, I simply throw it in the file.

What Do You Do When You Sell It? When you sell it, do you have to mail that deed to whoever bought it? One of the things I teach is how to simply recreate the deed when selling your property.

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Real Estate Investing That Works­ When you buy a property at an online auction, the county puts the property in your name within 11 days. The deed you get in the mail is basically a receipt showing the property’s been transferred into your name. You can sell it the same day, the next day, or whenever you decide to sell as long as it’s in your name. Don’t hesitate. You can sell the property immediately or hold it as long as you want. Let’s go through the process of what you need to do when reselling properties. What I do to save time and money is go to websites like documents.com or lawyers.com. For about $10 I get a deed and print it out. You simply fill in the blanks with the seller’s name (your name), and the buyer’s name. Then you have it notarized. The buyer signs nothing. If you give me $100,000 for this property, I simply create a deed. These documents are all online. Lawyers have created them. They’re great. They make it extremely user-friendly. What’s the seller’s name? What’s the buyer’s name? What’s the property address? You can always work with title companies if you prefer but if your selling a piece of land for $5,000 that you bought for $2,000 it may be more cost effective to just create the deed yourself and mail it to the country recorders office for filling. There’s one thing you still need and that is a notary. Every time I sell a property, I still have to get the deed notarized. In New York, you show up at the bank and they have a notary on site. In California, you show up at a UPS store or a notary. UPS stores typically have a notary. Each state handles their notaries slightly differently. Some areas you pay for a notary and some areas its done as a courtesy at your bank.

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What Happens after You Win a Property at Auction? After the deed is notarized, you simply mail it to the county, or if you’re right there, if it’s in your own backyard, bring it to the county. Have them file it for you right then and there. It’s very simple. Or, you can mail it in. I can’t tell you how many times I’ve been in California, sold a property and mailed the deed to to the county recorders office in the area the property is located. You’ve got to mail it to the county, because they have to file it, just like the county did when you won it at auction. When you received that document in the mail, it was a result of them actually filing it. Filing it is the key. Think of the deed you receive as a receipt, because the county records are what’s most important. If you brand new to real estate it will probably make more sense to allow a professional to do this for you. Once your experienced you may find it more attractive to save those fees and do it yourself. If you are experienced and you’re like me and you like to cut out the middleman, then print out the deed, fill it out, notarize it, and mail it to the county with instructions to mail the deed to the address of the new owner. If I were to take the time to try to explain how it works in all 3,000+ counties, this report would look like a phone book. I only use Lee County as an example because I have done this on millions of dollars in transactions. Lee County, Florida, as our example. When I send that deed to Lee County, I instruct them to send the filed deed to my new buyer. That’s it. It comes right from the county, straight to the buyer. I save the 49 cents for mailing it and the couple of days it would take to ricochet from the county, to me, to the buyer. The county sends it right to the buyer. That’s the end of the story. The property is now transferred.

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Are There Enough Foreclosures for Everybody? I am often asked if there are enough foreclosure properties to sustain all the real estate investors looking for good deals. I remember a guy was telling me, “I don’t think there are any more foreclosures out there.” I said, “Well, do you think that suddenly every single person in America is going to pay their mortgage?” He kind of laughed. He said, “No, of course not.” I said, “Well, what happens if you don’t pay your mortgage?” He said, “The bank’s going to foreclose.” I said, “You just answered your own question.”

There Are Always Foreclosures, Even in the Best of Times During the real estate boom there were so many foreclosures, they couldn’t sell properties fast enough. Even in areas where there was very little inventory, there were still foreclosures. It doesn’t matter if the market is going down, going up, or sideways. It’s easy to see the real estate market is improving right now, but understand there are still thousands of foreclosure that are being auctioned off every single day. My job is to show you where to find them. The fact that more and more public records are online around the country (Florida has one of the best open records law in the country), is just making the process easier and easier. That’s one of my specialties. I like to show you how to do this remotely, from your computer, anywhere in the world. Now you

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What Happens after You Win a Property at Auction? can actually purchase properties from the comfort of your own home, doing your research online. The online availability of public records is incredible. More and more counties, and more and more cities are putting these property auctions online, because they’ve realized by putting everything online, they have a broader reach. For people like us looking for these deals, there are more opportunities than I could possibly buy. If I was the richest man in the world, I couldn’t buy all of the available properties. If the ten richest men in the world put all their money together, they could not buy all these foreclosures. There are just too many of them.

CHAPTER 13 Summary: • The precise steps you need to take after you’ve won a property at auction • The importance of notarizing the deed • How to save yourself money by doing the deed transfers yourself. This is only what I do, you may find it easier to just hire a title company to do this for you. Once you understand the process fully, you may want to start to do this yourself. • There are always plenty of foreclosures no matter what the market; boom, bust, or sideways.

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C A S E H I S TO R Y 92 Roosevelt: Bought for $7,000 — Sold less than two Months later for $58,000.

I bought this property for $7,000 through a Buffalo tax sale. It looked a little ugly, so I put a total of about $15,000 in renovations into it — which put my investment at around $22,000, and then I sold it for $58,000, giving me a profit of about $36,000. This old style single-family home was a nice 2-story, 5-bedroom, 2-bath property with a screened-in porch that sold in just two months. It’s a perfect example of how to get a super low price through a tax deed auction, and how to quickly flip it with room to make a handsome profit.

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CHAPTER 14

Researching Auction Property from the Foreclosure List For every auction, an accurate list of the foreclosures is posted approximately six weeks in advance. In this chapter, you’ll learn how to pull the foreclosure list so you can do your research to determine if there are any properties you want to bid on. Believe it or not, people will try to charge you to pull the foreclosure list so you can see what foreclosures are being auctioned. It’s very common. They’ll compile the list and charge you a monthly fee for this service. Most people don’t realize you can pull the foreclosure list yourself for free. Here’s how to pull the foreclosure list, and how to analyze it. In this example we will use the foreclosures in Florida. You would want to go to the website RealForeclose.com. When you browse the site you will see how many counties in Florida are now online. For this example, let’s use Lee County, Florida. Type in Lee.realforeclose.com. Now, you will find yourself on a page specifically about Lee County. You’ll see three different tabs, since I already showed you 159

Real Estate Investing That Works­ how to set up your bidder account, you are now ready to start pulling the list.: • Start Here • Register • Calendar If you click on CALENDAR, you’ll see an actual calendar that shows every auction for the current month. If you change the month, you’ll see all the upcoming auctions for the next month. By clicking on a specific date, the foreclosure list for that day in Lee County, Florida, pops up. Isn’t that great? It gets even better. On the bottom left side of the Lee County page, you’ll see a tab that says, “Jump to.” All the Florida counties are now available and this list is growing at all times. Perhaps you’re interested in Broward, Charlotte, or Duval. All the counties are there. For this example, let’s stay focused on Lee County. If you’re doing what I’m sharing, you’re already there. Now let’s focus on the auction calendar. Spend a few minutes on this page and become familiar with what happens when you click on a specific day. You don’t have to pay for a foreclosure list; you can just pull it up yourself. From one county on the foreclosure site, you can jump to any other county that’s listed on that bottom left corner.

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Auction Property Search Be sure to match up the entire story of your property with public records. You might have to re-read this a couple of times, but it’s very simple, and it’s just a chronological timeline. Let’s look at the official records, and break it down into really simple terms. You want to see that history on each property your interested in.

How to Research Public Records Step-by-Step 1. When looking to purchase a foreclosure through auction you want to search the public records to make sure your making the right decision. I spend a lot of time in my DVD set because this is much simpler to do while I show you on video. It’s important for you to see the entire history of the property you are thinking about buying. To do this, go back in and open up the property appraiser site. A lot of people own several properties, but we’re only concerned with the subject property. 2. If your looking to bid on a bank foreclosure then you want to make sure its a first mortgage that is being foreclosed. This is easy to find online. 3. View the Sales History. It’s always good to know what the sales history is on the property your looking to bid on. It helps you establish the market trends going back many many years. 4. Reviewing the Deed. One of the great things about online public records is that you can not only view the deed online but you are also able to view any back taxes as well as actually pulling the original mortgage on the property. Some counties have really

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Real Estate Investing That Works­ good public records online and some do it the old fashioned way and store them at the county recorders office. 5. Viewing the Images. What’s so great about these public records is you can click on the deed to see it. In fact, you can view the image of anything that is a public record. For example, if I click “View Image” on the deed, I can see the scanned copy of the actual deed that was filed. In many of the counties you can actually see pictures of the property your looking to bid on. 6. Mortgages. Its always important to see that when your bidding on bank foreclosure properties that you are bidding on the 1st mortgage. This is the senior bank lien and you just want to be sure that what your bidding on is not a second mortgage. 7. Understanding the Judgment Amount. What the judgement amount is is the debt on the property that is being foreclosed. If you were to take out a mortgage on a property for $300,000 and didn’t pay that amount then the bank would foreclose. The bank would be awarded interest and fees and the total amount of the judgement would include the amount you owe on that $300,000 mortgage and any additional interest or fees you owe. Don’t confuse the judgement amount with the value of the property. — boosting your own knowledge of the process. Every time you run through these steps, even if it’s a property you don’t win, just doing the research is going to enhance your knowledge that much more.

Understanding First and Second Mortgages The first mortgage supersedes the second mortgage.

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Researching Auction Property from the Foreclosure List If the first mortgage is the one who’s foreclosing on you, any subsequent mortgages are automatically wiped out because the first mortgage is the first mortgage. Just think of that logic. When Bank #1 made the decision to lend money on the property, they were making that decision based on the fact that they’re in the first lien position, and in theory no one else has a claim to the property. A first mortgage is more protected because if you do not pay your first mortgage they can foreclose on you and recover the most amount of money they can without having to worry about paying the second mortgage. What if the property being foreclosed also got a second mortgage five years later from bank #2, but after time neither Bank #1 or Bank #2 was being paid. How is bank number 2 going to supercede the lien that is already in place by bank number 1. The second mortgage knew the first mortgage was in place at the time they decided to allow the second mortgage and made a calculated decision that they were going to lend, even though they knew there was already a first mortgage in place. How could it be fair if you didn’t pay bank #2, and they could wipe out bank #1? How could it be fair to bank #1 who didn’t make the decision to allow more money to be lent on the property? They lent it based on the merits at the time of the initial purchase. It’s common sense. The second mortgage from bank #2 knew the first mortgage from bank #1 was there when they made the decision, but the first mortgage from bank #1 doesn’t know that there’s going to be a second mortgage from bank #2 down the road.

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Understanding Foreclosure Now it’s up to the bank to recoup whatever they can, so it’s going to auction where they’re going to get as close to that judgment as they can. It’s up to the bank to determine what they want to sell it for. Some people might say, “Well, it’s a really nice house. It must be a really high price,” or “It’s a bad house. It must be a low price.” None of that really matters, because we don’t know how much money any bank would be willing to lose on any given property.

If the History on any Property Doesn’t Make Sense to You: Simply DON’T BUY IT If this information isn’t perfectly clear to you, then don’t buy that particular property. Be sure to read this study guide over and over, and apply these steps. It’s a process you need to know and understand. I didn’t just guess at this. In our Lee County example, if you want to research property liens on an auction property through the auction, they actually give you the link. You click that link, and go to the public search. You do the exact steps each time. If you bid on a property through the tax deed, that’s another story. We’re talking about bank foreclosures. You want to make sure it’s a first mortgage. This way you can make sure that if there is a second mortgage that it will be wiped out when the first mortgages auctions the property.

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Researching Auction Property from the Foreclosure List

Where Do These Auction Properties Come From? Many people want to know — when the county has an auction and they have all these properties they’re selling — who were the original owners of those properties? I’ll give you a real life example. This is how I’ve been successful so many times. There was an auction in upstate New York just a couple of months ago that I attended. There were 3,000 properties being auctioned by the city. There could be an auction for people who didn’t pay their bank mortgage. There could be an auction where people didn’t pay their taxes. There are different ways you get foreclosed on. There could be an auction because you didn’t pay your Homeowners Association dues on your condo. There are different ways properties end up being auctioned. Those 3,000 properties were people that didn’t pay their property taxes. There might have been 1,000 people in the room. Do the math. What kind of competition do you have? Imagine 1,000 people looking at 3,000 properties? Many of them don’t even sell, which means nobody bids. That’s how small the competition is. When you buy at auction, you’re taking that one property and you’re advertising it to thousands of people. It’s still the basic principle of supply and demand. The county wants to be made whole on the back taxes due. The new property owner pays the back taxes thru their bid amount and now the county likely has a new owner that will continue to pay when the property taxes become due for the next year. 165

Real Estate Investing That Works­ Now that it’s back on the tax rolls, the chance of the new owner defaulting on the taxes is very slim, because they just paid cash to cover all the back taxes. It’s a great revenue source for local government, because now they’re getting all their taxes paid. Plus they’ve got a property owner that is going to pay in the future. That’s a win-win. Everybody wins, except the person who didn’t pay their taxes. In many cases, you end up renting to the previous owners. Some people can’t budget a couple of thousand dollars a year to go towards a property tax. Some people just can’t save their money. They just can’t pay a yearly tax bill. It’s just a different mentality. Some people can pay that $500, $600, or $700 a month in rent because that’s their housing expense. They can take their pay check, pay their rent with it, and live off the rest of the money. We call it paycheck-to-paycheck. People that live paycheck-to-paycheck usually have a very difficult time paying property taxes because there might be three workweeks worth of pay to cover their property taxes and they just say, “We don’t have it.” To you and me, and to a lot of people reading this, that might seem ludicrous. You’ve got to know there’s a whole wide array of people on this planet. Some are very responsible. Some are completely irresponsible. Some can save money. Some cannot save money. People that can’t save money, even if they’ve owned homes, ultimately end up being renters because they can handle paycheck-to-paycheck, and they have no other choice. If they get 166

Researching Auction Property from the Foreclosure List paid once a week — a lot of people get paid every Friday — by Wednesday, they’re broke. The last two days before they get their paycheck, they’re struggling to eat lunch. I see that all the time. I see people that have a nest egg. They have a 401k. They seem to save. Others making the exact same money are broke the day before they get paid again. They have zero savings, zero net worth, but they make the same money as the next guy who is a good saver and is frugal with his money. There are all different kinds of people. If that wasn’t the case, real estate investors would not be successful. If every single person paid their bills, if every single person owned a home, it would be very difficult to be a successful real estate investor.

CHAPTER 14 Summary: • Do your research. All the information is public record and easily accessible. Go down the chronological list and make sure everything matches up and makes sense. • If anything doesn’t make perfect sense to you, and you don’t feel confident about the deal, or you don’t understand the history, DO NOT BUY. It takes a couple of times to get proficient at this type of research. As you go through the process, you’ll become more knowledgeable. • Understand the difference between transferring a mortgage — where one bank simply transfers the mortgage to another bank — and having a first and second mortgage. Go back and read this section again if it’s still not clear. 167

STUDENT TESTIMONIAL “Mike Holds You by the Hand and Shows You Everything!”

“As a young doctor, I’ve been looking for ways to invest starting with very little money. In this course, Mike actually holds you by the hand and shows you how to do everything from A to Z without any guesswork. My first home that I bought was built in 2003, and my second purchase was a home built in 2006. After training with Mike, I was able to get 2 great properties for a fraction of their previous value. When I sell them, I expect to get a minimum of $25,000 to $30,000 per property in profit because these are practically new homes. If you are on the fence about doing this, just do it. It’s a lot of fun, and you get to see exactly how Mike does it and how you can do it too. I’ve always wanted to invest in real estate but didn’t think I had enough money. Mike gave me the strategy I needed and showed me how to do it with hardly any money.” Dr. Karl, One of Mike’s Real Estate Investing Students 168

CHAPTER 15

Back Taxes How do you know when you buy a property that there are no back taxes? I’m going to show you right now. It’s important to realize when you buy a property through a foreclosure: • If it’s a bank foreclosure, you will still have to pay the back taxes. • If it’s a tax foreclosure, the taxes are paid through the foreclosure. No matter what, the government is going to get paid. For people who own property that do not pay their taxes, the government will place a lien on the property and sell it at a tax auction for the amount of the taxes owed. That’s why:

You Need to Know if a Property Has Back Taxes I’m not saying you don’t want to buy the property because it has back taxes. You just want to understand how much those back taxes are so you can bid accordingly. The worst thing that could happen is that you use all your funds by bidding your absolute maximum bid, and then you find out there’s a couple of thousand dollars due in back taxes. It doesn’t mean that’s a deal breaker, just know the tax situation before bidding. 169

Real Estate Investing That Works­ People say, “Oh. It’s just a couple of thousand dollars.” If you know what you are doing, it’s not necessary for you to lose that money. In some cases, a few thousand dollars could be the difference between buying a property or not. We determine what we want to bid based on how much money we want to make. If you say, “I don’t mind tying up X amount of dollars to make $10,000,” and you find out after the fact there are $3,500 in back taxes, it means that you’re only making $6,500. That’s 35% less than your initial calculation. It’s important to know how much is owed on the property.

There’s Always Something You Didn’t Think about or Know about Maybe you didn’t think you had to paint the inside, and you find out it needs painting. You always want to have a little cushion built in. If you’re saying, “I’ve got to make $10,000 on this deal,” make sure you factor in a couple extra thousand dollars. Don’t kid yourself and say, “Everything is going to go perfectly.”

Checking Back Taxes Every county in the entire country will have its own way for you to determine the back taxes. It’s very simple to determine the back taxes on an auction property. It’s simple if you let it be simple.

Let’s Stay Consistent and USE Lee County Florida as Our Example For Finding Back Taxes on an Auction Property. 1. Go to the Auction Calendar Page. 2. Click on the date you wish to search for foreclosures. 170

Back Taxes 3. Click to choose a property. (Any property.) 4. Click the property appraiser link. The property appraiser site tells you the bedrooms, the bathrooms, the square footage, and what it sold for. By the time we’re done, we’re going to know as much about the property as possible. It’s important to learn this so you can take these tools and investigate any property. 5. It will display a picture as well as the basic property information 6. Click the tax bills tab. Perhaps it says all the taxes show as paid. You want to see the details. How much are the taxes? You want to know everything about the property. 7. Go to the most current year. If the owner didn’t pay this year, look at the last year. He couldn’t have paid this year without paying the prior years. As long as the most current year is paid, there are no back taxes. Let’s say that it says, “Outstanding balance $2,134.” You need to know that to bid properly. Look at all the details. Know what the taxes are. If you are going to buy the property, those taxes are going to be your taxes year-to-year. This helps you determine your expenses and overhead on the property. 8. Scroll down to see the exact tax based on the assessment. If you had a homeowner’s exemption in Florida, they would take that off the assessment, and your assessment would be that much lower. Most people pay too much for their investment properties because they don’t have the tools. 171

Real Estate Investing That Works­ As you can see, this part of the site breaks things down in specific terms. Everything is there, including the sewer, trash bills, etc. In some areas, you’ll pay a separate sewer bill and a separate water bill. This is great information, because a house that sold for over $250,000 and is still kind of new, has a total tax rate with sewer and trash much lower than many parts of the country when you deal with Florida.

Florida Discount One way to decrease your tax bill in Lee County is to pay your property taxes early. The taxes are due in March but you get a 1% discount for each month you pay early ( up to 4 months max) meaning you can save up to 4% per year on your property taxes. Not many areas in the country are this tax friendly. Florida is a great place to invest because they are so tax friendly. Every state has different criteria. If you’re in a state with insane property tax levels, investing there is obviously going to be less friendly than investing in an area that has much lower property taxes. Some people love doing research, including me. When I’m learning a new process, I love doing research. You can do as much or as little research as you want. The key is to get enough information so you can make profitable buying decisions. For taxes, I only need to know what the taxes are and if they’ve been paid. It’s not really that important to know what the taxes were in ’07, ’06, or ’05, but it gives me a feel for what I can expect to pay in the future. Don’t go overboard. I’ve met people that spent 10 hours on a single deal researching, and then they 172

Back Taxes got information overload and ended up not being able to make a decision.

Staying in the positive The best advice I can give you is to look for ways to do a deal, rather than not to do a deal.

Every single deal I’ve done, I could have found a reason not to buy. “Oh. It has ugly paint. The landscape is ugly.” “Oh gosh, I don’t like the house next door.” In the end, if I were to fast forward and show you my profits, it would eliminate every single one of your objections.

Find Ways to Do Something, Rather Than Ways to Do Nothing Open your eyes to the possibilities. Learn techniques from somebody who’s actually had success with what they’re teaching you. No theories. No guess work. These are things I actually do. I do it all the time, hundreds of times, to the tune of millions of dollars.

CHAPTER 15 Summary: • Make sure you know if a property has back taxes, so you can bid accordingly. • Every state and county is different, and Florida is a great 173

Real Estate Investing That Works­ place to invest, because they are very tax friendly. • Do as much or as little research as you want, but be careful not to spend too much time and research your way out of a deal that might have been good for you. If you stay positive, you can always find a way to find a good deal, and make it work to your benefit.

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C A S E H I S TO R Y 718 Roma: Bought for $29,000 — Sold 7 weeks later for $80,000.

This is a single-family basic stucco Florida home, with 3 bedrooms and 2 full baths built in 2005. I purchased this as a foreclosure for just $29,000, and it was in really good shape. The technique I used to get this property so cheap was that I put out a bunch of low-ball offers, and this was the one that was accepted. This property is a great example of what you can get by submitting multiple low-ball offers. Several of the realtors I submitted my offers through laughed, because they were so low. But this one did not laugh. Instead, my offer was accepted, and I became the owner of this highly profitable property. Just 7 weeks later it sold for $80,000, and I made a quick $51,000 profit!

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CHAPTER 16

Mapping Your Route If you’re looking to buy land, it doesn’t really matter what it looks like. You’ll see some amazing deals, and you’ll see deals that are not so amazing. With the power of the internet you can learn just about everything you need to know when determining if a particular piece of vacant land will work for you; do your best and make a way below market value bid. You’ll be pleasantly surprised when you win a nice piece of land for an unbelievably low price. When you’re bidding on houses, it’s a much different story. Before you buy a house at auction (live or online), you might want to physically visit the area and check out the information online to help you in your decision making. If it’s not possible for you to travel to an area, the good news is you can have other help you like I have shown you throughout this book. You’ve got to feel good about what you’re doing. You can have others do the inspection for you, but if… You have the ability, are interested in finding a new area, and realize you would love to take these tools and do this in another area — you’re going to want to be able to go there and do the inspections yourself.

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Real Estate Investing That Works­ A lot of people say: “Mike, how are you able to look at 20 properties in a given day?” “How exactly do you determine what route to take to see so many properties?” “How are you maximizing the best use of your time?” As you know, for me, time is money, and if you’re going to inspect the properties yourself, you should know how to map out the most beneficial route so you can look at the maximum amount of properties in any given day.

To Map Out a Great Route, Go through the Auction Listings First In order to have all my options available, I want to know precisely what’s going to be auctioned over the next three weeks. Then I can fly in, look at the next three weeks’ worth of properties, shoot video of them, and go back to the comfort of my own home and bid online.

To map your route: • Copy the address of your first property • Go to Yahoo Maps. (I love Yahoo Maps. They get my endorsement because they’re awesome.) • Click “Directions” in the upper left corner of the map • Paste in the property address • Copy and paste the address of your next property 178

Mapping Your Route • Click “Add Location” • Copy and paste the address of your next property • Keep adding locations You could do this with 40 properties, or even 50 or 60. Put in as many as possible, because you don’t need to do them all in one day. Section it off, and think about visiting about 20 properties in one area on one day and another 20 properties in another area the next day. You want to take your time with this to make the best informed decision. Example: If you’re starting from Fort Myers, and you also have properties to see in Cape Coral, what would make the most sense? Looking at the map you’ve created, it will be pretty obvious. What you don’t want to do is to just take one auction day and say to yourself: I’m going to look at everything for that auction day. That’s because you’ll be jumping around all over the place. Instead, take 10 auction days. Separate them out, and note what day is for what property. This way you’ll be able to look at the most number of properties. Instead of driving all over the town to 10 different auction days’ properties, you’re able to do 10 days in two days because of the way you’ve mapped out your route. Now, you might be thinking: That’s very simple.

I Just Saved You Several Hours of Legwork! You might have used a Thomas Guide or something like that before, trying to figure out where a property is. Or you’d think: Oh, I’ve got a navigation system. Let me just start plugging in addresses. 179

Real Estate Investing That Works­ You could end up driving 45 minutes between two properties. The idea is to make your route so tight that you drive two to three minutes between properties. You’re in the car, out of the car, in the car, out of the car, making your notes and videoing the properties. Remember, I show you how to do this remotely too, but you may want to do this in your backyard. You might want to try this technique where you live. You might want to explore a different area. You might want to have somebody else doing the inspections for you. It’s all about planning your route.

CHAPTER 16 Summary: • If bidding on houses, whenever possible, go check out the area and properties yourself. • Use Yahoo Maps to map-out your route. Map-out your route ahead of time. • When possible, make your route so tight that you drive two to three minutes between properties.

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STUDENT TESTIMONIAL Husband and Wife Team Start Small and now have bought 18 properties since training with Mike!

“In real life, we are plumbers. We work hard for our money, and Mike’s system has shown us how to have our money work hard for us. Now we make a lot more money and work a lot less at being plumbers! We bought our first house in Florida — purchased it from a computer in my office in Los Angeles, California. I got up in the morning. I looked at all the properties that were available. I put in my bid, and I won it. I funded the bid. They sent me the deed, and I started rehabbing the house right away. We bought it for $33,000, and I sold it for $83,000. We made $50,000 gross profit — more than we usually make in a year — on just one We also bought 2 lots right next door to each other for $500 each. We sold them together for $5,000. Mike’s system is amazing and it truly does work. My wife has always been skeptical about this. Now, after receiving that huge $50,000 profit on our first deal, I can’t stop her. She wants to go look at properties. She wants to fix the properties up and sell them, and I do too!” Johnny & Denise, Two of Mike’s Real Estate Investing Students 181

CHAPTER 17

Exterior Property Inspections EXTERIOR In this section on exterior property inspections, I will use an example of a property I purchased using one of my auction techniques. This property was purchased for $37,000 and it is less than 10 years old. On each auction day you’re going to have different properties and different prices. The idea is to do this systematically. Do your research because you will not get these kinds of deals if you’re not knowledgeable about the details. I’m not saying these deals come up every single day, but I would never have got this deal had I not been bidding at the auction. Let’s talk about exterior property inspections. I’ll share precisely what I look for when I’m inspecting exteriors. In this example, the exterior of the property is all stucco and concrete block construction. It’s got really nice trim around the outside and has great curb appeal. It’s got great details; nice trim around the pillars, nice gutters, and an architectural shingled roof. The roof looks kind of 3-D. It has great shingles that are much better shingles than the usual basic 20-year-old singles that just lay flat. The older, flat shingles wear out much faster. 183

Real Estate Investing That Works­ To review, you notice the architectural shingles, the perfect gutters, the trim around the garage, the windows, and the concrete block construction. But that’s all curb appeal. Let’s get into some of the meat and potatoes. Check out the AC and the water equipment … looks good. If you’re going to invest in Florida, the AC unit can make or break a deal. Look to see if it’s a newer machine. In this example they have a Goodman air conditioning unit. You can tell it’s a newer looking machine. It’s not a top of the line air conditioner, but Goodman’s are durable and last a long time. It’s a good sign. Looking around, you notice that the exterior is in good condition, but when the sprinklers hit the side of the house, it leaves a little mildew. That’s okay, because this is concrete block construction. You look around the neighborhood and you notice on almost every single house, the water hits at the same level. It’s not permeating the block, so it’s not a big deal. Maybe every couple of years you put a coat of paint on it. Next, check the pressure tank. Pressure tanks are unique to Florida. What happens is the water comes from a well that comes out of the ground and into the pressure tank. There’s a well pump that actually pumps the water up through a pipe and brings it into a machine that removes the sulfur. In the pressure tank, there is a place for salt. This unit is actually a water softener. This system takes the well water and cleans it, so there are no water bills. Some people say, “I don’t want to mess with well equipment.” But remember, this well equipment means you don’t have to worry about paying a water bill each month. You can water the grass as much as you like and not worry about getting an outrageous water bill. 184

Exterior Property Inspections By the way, economists predict that water is going to become increasingly more expensive. That means free well water will be a great asset for your property and the water is so abundant in Florida that I have never worried about a shortage of water because it all comes from the same water table underground.

If Water Is Free, Why Not Have the Greenest Grass? As we continue around the house, we notice that there’s an automatic sprinkler box which is unplugged right now, because this is the rainy season so we have all the green grass we need. When it gets dryer and the sprinklers start spraying against the house, that’s where you’ll see more mildew. It’s not a big deal. It could easily be repainted. One thing you’ll notice about Florida properties are the screened-in patios. These are nice because the patios end up being in really good shape instead of weather worn. In this example, I paid just $37,000 for this property. There were great details on the exterior, and everything worked. The backyard backed right into open space, with no houses behind for at least 5,600 feet. This is the type of house you’re looking for. In conclusion, when I’m inspecting the exterior of a property, I want to walk around and know what I’m getting into. How does it look? Is it concrete block? How’s the AC? How’s that water equipment? What’s the curb appeal … because curb appeal sells. In general, my experience is that the newer builds need the least amount of work. That’s why I prefer to buy newer homes. If the roof and windows look good, and there is no concrete damage, it’s a good sign that this property is not only good on the outside,

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Real Estate Investing That Works­ but chances are high that it is probably pretty nice on the inside too.

CHAPTER 17 Summary: • You can tell a lot about the value and interior of a home by the exterior. • Look at the architectural shingles, the gutters, the trim around the garage, the windows, and the concrete block construction. • Check the windows. Do they need to be replaced? If so, get a couple of estimates so you know how much you’ll have to spend to prepare it for sale or rental. • Check out the AC and make sure it works and that the unit is in good shape. • Walk around the house, and look at everything. Do the best you can at inspecting the exterior, and know what you’re getting into before you leap in.

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C A S E H I S TO R Y 3221 Willin Street: Bought for $24,800 — Sold 9 months later for $55,000.

This is an interesting story. It’s a 3-bedroom, 2-full baths, approximately 1,115 square feet, single-family home built in 2004. After buying this home through a foreclosure auction, I went to the property and knocked on the door. The previous owner was still living in the home, and I asked her if she wanted to stay. She said yes and signed a one year lease, agreeing to a monthly rent of $700. Since she was still living there, I didn’t have to do any repairs or remodeling. That’s why I sold it so cheaply and still more than doubled my money. Plus, I collected rent for 9 months before the sale.

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CHAPTER 18

Interior Property Inspections INTERIOR This chapter is about inspecting the interior of auction homes. Some homes will be a little nicer; some will be in a little bit worse condition. Typically, you’re going to want to paint the inside of the house. You’ll find that most of the time there will be a few holes that will have to be patched here and there. I would certainly count on painting all the walls inside. Let’s say that your kitchen is very basic, and it has no appliances. It’s up to you. You can either buy brand new appliances, or you can get used appliances. If I’m quickly flipping the home, I might not worry about the appliances and let the new buyer take care of installing them. If the property is in pretty good shape, and I still want to quickly flip, I may get used appliances to make it look like less work for the new buyer. On the other hand, if I am planning on holding onto the property and carrying it as a rental for the monthly income, I will probably spring for new commercial grade appliances. The reason I say commercial grade is that if the property is one I want to keep and rent out for several years, I want good, dependable appliances that 189

Real Estate Investing That Works­ can easily handle constant daily use. I also want new appliances that come with warranties to protect me against having to fork out more money for any necessary repairs. Something you always want to look for is to make sure there is always an AC unit and a heater. Is the heating coil there, or is it missing? A lot of people might inspect a property and not even notice that the coil is gone. They would say, “Oh look, the heater is there.” You’ve got to open it up and make sure all the parts are there. If it has electricity, turn them on to make sure they work. Pay attention to the details. When you’re buying a property, check everything out: Is the hot water tank good? Are the walls good? Is the heating unit good? A heating unit that someone has taken the coil out could cost you up to $1,000 to repair. Is the flooring good? When you see tile floors, you know it’s just a matter of cleaning up the tile. When you see this, be happy, because the flooring alone is going to save you a fortune. Although the repairs may not cost you a lot, you need to know what you’re getting into, because you don’t want to just buy properties blind and then suddenly have to fork out thousands of dollars to get the property in good enough shape to rent or in good enough shape to flip, and make the profit you want. It is certainly good to buy fixer uppers as well because the percent of profit you make is usually higher. You just want to know what repairs will be required so you can bid that much lower on the property factoring in your time and money. 190

Interior Property Inspections Sometimes you’ll buy properties, and they’ll still have trash and furniture rubble from the previous residents in them. When you come in and see lots of junk still inside, you know this is a CLEAN-UP. You also know that you are going to need to paint every room and every wall most likely, because people that leave junk in their homes typically have dirt on their walls as well. If you look at the details of the house, and determine it was built in the last decade. You will likely know your windows and roof are going to be good. The basics of the house are going to be good. When you’re talking about a newer home, you’re talking about cosmetic repairs that are not very expensive: paint, carpet, sometimes kitchen flooring. When you’re bidding on a property, it’s important to understand that it’s easy to get people online who will go out to the property and do a quick inspection for you. Ask them to take pictures and/or video and e-mail them to you. They’ll even give you the quotes on how much and how long it will take to do the needed repairs. You’ll find out exactly what a property needs, and it saves you a trip to the house. Let’s say the house you’re looking at has bathrooms that are standard cookie-cutter bathrooms. You notice they have basic vanities, basic sinks, and basic toilets. In an investment property your only concern is not how nice the stuff is, just that it’s there and in good working condition. If your goal is a rental property, even though this might not be the cabinet base you would put in your own house, the question is if it’s a good cabinet base. If this is going to be a rental property, you’re not trying to make this place the Taj Mahal. You’re trying to make

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Real Estate Investing That Works­ it so you can get a good tenant. This is the single best rule when remodeling rental property:

Remodel to the Level That Will Get You a Good Tenant Your goal is to make this place as nice and reasonable for the tenants as possible. You look at the bathroom; it’s just very basic. It has a toilet, a sink, and a shower that’s got very basic tile. Sometimes just the small details will convince good tenants to rent your property. That’s it. As long as the components are there, that’s the key. If they’re not there, this means you have to factor in replacing them. Check each room, because you never know what you’re going to find. If you have to spend a little money on dressing the other things up, you just back-out all of those costs from what you would bid on the property. When you bid on the property, be sure to factor in the money you would be putting into the property. If you’re unable to do inspections live, send somebody else out there and have them report back to you … with pictures if possible. Use the tools that I’m teaching you to send people out for free. You can get contractors and different tradesmen to go out to your properties and tell you what they need. If you find one of your properties needs fixing, hire them to fix it. That’s the trade off, and how you educate yourself is by professionals telling you what a particular property needs.

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Interior Property Inspections When I started in this business, I had zero construction experience. I had never done any sort of construction. But nowadays, I’m able to look at a property and analyze it based on what I’ve learned from professionals that have told me what they would charge to paint the inside and/or outside, to put in new flooring, a new heating coil, and what I can expect to pay for new appliances. It’s not costing you anything to send professionals out, because you have to remodel the property anyway. Why not get multiple quotes? Why not send multiple people out there for you? That’s the best way for you to learn this business.

CHAPTER 18 Summary • When buying a property, check out everything and make sure it works. Not discovering something as simple as a missing heating system coil could cost you $1,000 to repair. • When you’re bidding on a property, it’s important to understand that there are people who will go out and inspect the property for you. • In this volume 1 of Real Estate Investing That Works, I walk you through the strategies and techniques that have been successful for me. I spent the last 12 years and hundreds of successful real estate transactions to compile the information in this book. I care about my students success and look forward to hearing about your success. The next volume will have even more information to bring you my vast amount of real estate knowledge. My 193

Real Estate Investing That Works­ passion is real estate and I hope you feel inspired to take action. Always remember that taking action and knowing your WHY will help you to be successful.

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STUDENT TESTIMONIAL “Got My 1st Property for under $25,000!”

“I acquired my first home here in the United States, free and clear, for under $25,000. That’s amazing and unheard of where I come from in Egypt. From Mike’s system, I can look at a house in 2–3 minutes; I can assess its value or potential problems and the positive and negative aspects of the property. I can analyze it quickly in my head and know if it’s a good deal or not. The other thing I like about Mike is his ability to teach. You have two types of teachers; those who know how to teach, but have never done what they’re teaching and those who are not good teachers, but personally know how to do what they’re trying to teach. Mike is the best of both worlds. Mike has done what he’s teaching, and he knows how to teach so you clearly understand and can do what he’s taught you. He can talk the talk, and he can walk the walk.” Amir, One of Mike’s Real Estate Investing Students 195

CHAPTER 19 Continued In

Real Estate Investing That Works A Proven System

Volume 2 by Mike Gazzola

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