What Can You Do With A Solo 401k Plan?

Solo 401k is the most innovative qualified plan among others. Solo 401k rules even allow you borrow up to $50,000 for any purpose.

If you are one of those who would like to use your own knowledge and skills to make the most out of your investment opportunities, then perhaps, the Solo 401k plan is the best retirement plan for you. If you think you would do best in real estate investment or a private business, then you could invest your own retirement funds on these sectors. Not only that, you will also get a tax-free and penalty-free access to a loan amounting up to $50,000.

The Solo 401k plan is an Ultimate Qualified Retirement Plan created for self-employed individuals without any full-time employee working for them. Their business could actually be in any capacity and form, whether it is a corporation, a sole proprietorship, an LLC, a partnership, or even if the owner is working as an independent contractor.

Unlike conventional 401k plans, this plan permits small business owners or any self-employed person the capacity to make use of his or her own retirement savings to different investment opportunities. He or she may choose among assets such as real estate, businesses, tax liens and tax deeds, or precious metals without having the need of an approval from their designated custodian. And because it is a qualified plan, you will still enjoy tax-deferred benefits or even tax free gains from investing a Roth sub-account.

The investment choices and tax benefits are the main reasons that make Solo 401k plan so popular among real estate investors. Why invest in stocks and bonds, which you have little experience with, when you can put your rich experience in real estate to work and grow your retirement fund faster and more securely?

High contribution limits enables plan holders to take full advantage of tax deductible contributions which could reach up to $57,500 per year. This makes it possible to invest in real estate, which often requires higher capital upfront.

Among all plans approved by the IRS, this is the most innovative qualified plan that can be tailored to your financial needs. Solo 401k rules will even let you borrow an amount up to $50,000 for any purpose it may serve you, and to broaden the horizons of your retirement funds into include any form of investment, excluding only collectibles.

One Question Too Many Investors Fail To Ask A Coach

The question that I am talking about is simply this: “Have you ever lost money in any of the investments that you have been involved in?”

It’s a question that more investors need to be asking. It is also what I consider “The Question” that when answered will tell you a lot about with respect to who you are thinking of investing your money with, what you are considering investing in and even dealing with a mentor/coach.

When the person you are considering having an investment relationship with whether it be an individual, company, etc. answers this one question it will tell you a lot.

And it’s pretty simple to derive the necessary information you need from their answer as well because if their answer
is:

ANSWER #1 – “NO” – then you need to run away from this investment or the person working on the investment. A NO answer
either tells you one of two things:

1) They are lying – simple as that …..OR….

2) They do not have enough experience.

Anyone that makes investing in investment real estate (stocks, bonds, mutual funds, any other investment for that matter) their primary business HAS had investment losses because not EVERY investment works out.

It is impossible for every investment to work out. Even those investors considered the BEST at what they do and are very well known KNOW this to be the case and they have all lost money on something. Even those “sure things.”

It happens.

A very high percentage of all of the investment real estate properties I have been involved in have worked out very well but I also admit that I have had some stinkers too! Some stinkers that lost money and a few that lost more money than I would care to admit.

But facts are facts and as they say, THOSE ARE THE FACTS.

So, my answer to the question of “Have You Lost Money In Any Of Your Investments” is an absolute – YES I have.

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When you begin relationship with someone, especially an investment relationship everything needs to be transparent or  everyone is wasting their time. If the relationship is nottransparent and all of the facts are not discussed then this spells trouble with a capital “T”.

Things generally work out fine the majority of the time for sure but nothing is guaranteed. We are all smart enough to know this but how many of us really look into this? Ask the question?

You see I am always happy to discuss, PERSONALLY, the investment projects that I mention to you from time to time that I recommend and all of what you can expect but I am also always open to talk about the ones that just did not work out because the best way to have a great (but not perfect) track record is to learn from the bad experiences and lessons so they are not repeated.

Even in this economy!

Darin

Seller Responded – Making Your First Offer Example P3

Let’s recap what we learned in Seller Responded – Making Your First Offer Example P1. A seller responded to my marketing letter which was sent in the mail based on an “educated hunch” that the property was distressed. After speaking with the elderly owner’s daughter for the first time I came to the following conclusions:

• I spotted a property that no one else even knows is for sale.
• I’ve determined that indeed, the property is for sale.
• We also note that the asking price of $80,000 is the retail price for that neighborhood.

I decided now that it’s action time. Reviewing the numbers , if I set my target sale price at $80,000 and we spend $2000 in fix-up costs, we still have to discount the purchase price significantly from there in order to make a reasonable profit. We do not yet know what the minimum price will be so all we can do at this point is evaluate some of our options.

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Making Your First Offer CalculationsSome of the options we can consider when  looking to make an offer to a seller include:

Offer Option#1:
We could offer $60,000 on a cash-out sale. That’s a 25% reduction from the original asking price. After fix-up, our gross profit would be $18,000 if we could resell at $80,000 to the new buyer. We would request a 60-day escrow (independent third-party processor such as an attorney) in order to give ourselves enough time to find the new buyer before the escrow was scheduled to close.

Then, our new buyer would obtain new financing thus cashing out our seller and giving us our $18,000 profit. The escrow costs would be paid by our seller, Ida Mae, and by our buyer so none of the closing costs would come out of our gross profit. Escrow would simply pay us our profit out of the new financing obtained by our new buyer.

Option#2:
We could offer an even higher price; say $70,000, with the proviso that the Ida Mae carries back the financing. Our argument here would be that Ida Mae would then receive higher interest than she could obtain from a bank CD at current interest rates. She would have a monthly cash flow that would undoubtedly last her for the rest of her life. We would find a buyer at the $80,000 figure that would also pay us a larger down payment than we would be paying to Ida Mae.

If we structure this correctly, we not only get our buyer to cover our down payment, our buyer also covers our $2000 in fix-up costs plus perhaps another $1000 or two that we immediately put into our pocket. We can simply transfer the seller-provided financing to our buyer, or we can create a wraparound mortgage in which we earn a slightly higher interest and monthly payment than we will be paying to Ida Mae.

If we can obtain 5% financing, we can charge 6% financing to our buyer. If we can get Ida Mae to agree to a $3500 down payment, we can charge a $6000 down payment from our buyer. Using 5% interest and a 30-year amortization schedule, our monthly payment would be $356.99 on the $66,500 mortgage ($70,000 purchase price minus $3500 down payment). Our buyer would pay us $443.67 per month on a $74,000 mortgage at 6% interest for 30 years. Monthly, we would make $86.68 ($443.67 minus $356.99) in addition to the $2500 lump sum up front ($6000 minus $3500). We recovered our $2000 fix-up cost and have an additional $500 in cash.

Summary of Our Offer to Ida Mae:

$70,000          Purchase Price to be paid to Ida Mae

+  2,000          Fix-up costs out of our pocket

$72,000          Our total cost



$70,000          Purchase Price

-   3,500          Our Down payment to Ida Mae

$66,500          Mortgage owed to Ida Mae at 5% interest, 30 yr amortization

$356.99          Our monthly payment to Ida Mae for Principal + Interest

Summary of Our Buyer’s Payments to Us

$80,000          Purchase Price paid to us by our buyer

-   6,000          Down payment from our buyer

$74,000          Mortgage (wraparound) owed to us by our buyer

$443.67          Monthly payment from our buyer to us (6%, 30 years)

Summary Between What Our Buyer Pays Us vs. What We Pay Ida Mae

$6000             Our buyer’s down payment to us

- 3500             The amount we pay to Ida Mae as our down payment

$2500             Gross Cash to us

- 2000             The amount we paid to fix-up the outside and inside

$  500             Net Cash to us

$443.67          Payment we receive from our buyer, Principal + Interest

- 356.99          Payment we make to Ida Mae, Principal + Interest

$  86.68          Net monthly we make on the difference

Option#3:
We could offer Ida Mae her full price under a lease-option program. Here we would offer to lease the property from her for a year with the right to renew that lease four additional times. Then we would find a tenant/buyer who would lease from us at a higher rent than we are paying Ida Mae. Additionally, our tenant would give us an option payment larger than the payment we would make to Ida Mae. As a result, we profit from the difference in the option payment up front; from the difference in what we pay as rent versus what we collect as rent; and finally from a higher sales price than what we’d agreed to pay Ida Mae.

We might offer Ida Mae $1000 for the option but charge our lease/option buyer $5000 for the option, thus making $4000 up front. We’d handle the lease payment in the same manner as we structured the wraparound mortgage in number 2 above. We’d pay $500 per month in rent but charge $700 in rent to our tenant.

We’d start out at a target sales price of $90,000 at the end of one (1) year to our tenant. If the tenant elected to renew the lease/option for another year, a new option payment and a higher monthly rent and purchase price would be established. If our tenant walked away from the deal at the end of the first year, they would forfeit their option payment and we would simply find another tenant/buyer. Recall that we reserved the right to renew our lease arrangement with Ida Mae for an additional four (4) times after the first 1-year period, so we really have a five (5) year lease/option working for us.

Summary of Lease/Option Program

$90,000          Sale Price to new tenant/buyer

- 80,000          Our Purchase Price from Ida Mae

$10,000          Our Profit on the difference

$5000             The non-refundable Option Payment from our Buyer

- 1000             The non-refundable Option Payment to Ida Mae

$4000             Our Profit on the difference

$700               The rent we charge to our tenant/buyer

- 500               The rent we pay to Ida Mae

$200               Our monthly profit on the difference

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Of course all of this is speculation since we don’t know as yet what our potential seller will agree-to in price and terms. The advantage of pre-determining our options is that we always have a solution to our seller’s problem. Regardless of what Ida Mae tells us she wants, we have a prepared response to solve her requirements and st

20 Mile Marching To Real Estate Success

Every real estate investor should make sure to be an avid reader and they should not simply limit themselves to real estate books. General business books are also extremely important. On that subject, there is no one better than Jim Collins, the author of Good to Great and Built to Last.

Jim Collin’s most recent book is called Great by Choice and it contains an extremely important nugget of wisdom for anyone in business, but especially for any real estate investor. He refers to it as “20 mile marching.”

The phrase is borrowed from the philosophy Joe Brown used when marching to the South Pole. It involves diligent preparation and a consistent and patient approach. Each day, Brown would march 20 miles, no more, no less. He didn’t allow impatience or fear or greed or even boredom to dictate his behavior. Instead he followed a consistent approach that got him and his team to the South Pole and back without losing a single member of his team, a feat many others died while attempting.

Jim Collins relates this to business as follows:

“The 20 Mile March is more than a philosophy. It’s about having concrete, clear, intelligent and rigorously pursued performance mechanisms that keep you on track. The 20 Mile March creates two types of self-imposed discomfort: (1) the discomfort of unwavering commitment to high performance in difficult conditions, and (2) the discomfort of holding back in good conditions. (P. 45)

Contained in this idea is the important albeit simple advice to never give up. Every investor I know lost money on deals and made mistakes. My brother even has a sign in his office with the words “make more mistakes” on it. As Thomas Watson once said, “If you want to be more successful, double your rate of failure.” Even when things gone badly, one must continue to push ahead.

In addition, however, Collins also gives a warning about how to deal with success. In Collin’s book How the Mighty Fall, he discusses another concept called the “undisciplined pursuit for more” which he points to as the primary catalyst for decline. Decline is generally does come from resting on one’s laurels or refusing to change as many would expect.  Instead, it usually comes from an undisciplined gamble brought on my overconfidence. After one has had some success in real estate, the temptation is to go bigger and faster instead of following a diligent, consistent plan. And if you are moving into a new niche, do so carefully. “Fire bullets” instead of “cannonballs” as Jim Collins would say.

Once you start having success in real estate, it is important to stay focused and not get overconfident. It is important to stick to your plan and not get too far ahead of it. Of course that doesn’t mean to turn down a great opportunity that knocks at your door, but it does mean to test your limits carefully.

When we first moved from Oregon to Kansas City, we bought a 29 unit apartment that was in a much worse area than we originally anticipated. We moved too fast and it ended up biting us badly. Once we learned the market, though, we’ve found a consistent formula for success. And we’ve followed it, even when it got kind of boring.

And that is the lesson here. After all, it’s better to be bored and succeed than excited and fail.

Buying Investment Property – Getting Estimates Tips

Let’s say you’ve found the perfect investment property to rehab & flip or to fix-up & rent. You have done aquick estimate of repairs you think need to be done, submitted an offer, it was accepted and you then ordered an inspection. Then what?

Using Inspection Report
Make note of any unexpected problems that were discovered in the course of the inspection. Start working in contractors, and handymen to get estimates to fix, repair or replace items in your potential investment property.

Determine where or not it would be a wise decision to continue to negotiate the purchase price. [Investing Tip - This has worked for me once!]If your are working with a bank, send them a copy of the inspection report and ask that they negotiate further on the price. You never know how motivated the bank is. There is no harm in asking and usually their response to a list of repair is that they will have to lower your lending amount because the value has decreased. If the seller wants the deal to do through they will lower their number most of the time so that the sale with your loan can do through.

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Scheduling Repairs
One your offer has been accepted, schedule the repair men to start work on the investment property  the day AFTER your anticipated closing date. Once you have closed on the loan for your investment property, the interest clock is ticking and your holding costs are rising. Arranging ahead of time for work to begin on the property immediately after closing is crucial.

When getting estimates, try to schedule all of your rehab people to come to the property either at the same time or in 15-min increments. to minimize the number of trips you have to make to the property.

WARNING: Don’t do any work on the property prior becoming it’s owner unless you are 100% positive you will close on the deal. You do not want to spend money on  property that date may prevent you from purchasing.

Remember you can double-schedule your repair guys as long as they won’t be tripping over one another. For example, it is unlikely that scheduling a roofer, plumber and gardener to work at the same time would prevent any problem.

One last tip: Get to know an Investor Friendly Handyman !

Until next time….Camille

Why You Should Consider Real Estate Investment For Your Self Employed 401k?

Self employed 401k, or often called Solo 401k, is designed for self employed individuals and business owners, who usually are drawn to the flexibility and high limits of the plan. One of the perks of having a self employed 401k is that plan holders are able to choose among the widest variety of investment classes, ranging from stocks and bonds to private businesses and real estate. Of course, you can choose to go with your favorite stocks. However, adding real estate to your retirement funds can give you substantial advantages. Let’s take a look at how real estate investments can benefit your retirement fund.

Diversify your portfolio to minimize the riskAs we all know not to put all the eggs in one basket, having all your retirement future rested upon one investment type is not recommended. Especially with the ups and downs of the stock market, we can never tell when the next financial crisis is going to happen. Having part of your funds invested elsewhere will mitigate the risk.

Besides, unlike stock investment, with real estate you are much less likely to lose it all. In the worst scenario, you can always sell or foreclose the property to recover your capital.

Predictable earnings to your self employed 401kWhen security is the top concern, most investors often choose to invest in rental properties, which offer a steady, predictable stream of payments to their retirement account. Another option is investing in notes, where the plan will be paid a fixed interest rate every month, even if the property is not occupied. Due to the secure nature of these investments, most people see them as sources of passive income, where there is little to no effort required to manage the property.

Or gaining large returnsOn the other hands, some investors prefer a bigger return to quickly grow their retirement fund, which can certainly be achieved by investing in real estate. Usually, this group of investors will invest in properties that have potentials for long term appreciation, or engage in flipping houses.

Besides allowing real estate investment, self employed 401k also has many features that make it more feasible to invest in real estate. For example, investing in real estate often requires more capital upfront. Fortunately, the plan allows higher contribution limit than an IRA, which means you can put away more funds in a shorter amount of time to finance real estate purchases. Leveraging your investment is also allowed by non-recourse loans, whereas such transactions with an IRA account will trigger Unrelated Business Income Tax (UBIT). To avoid complication during the loan process, make sure to talk to  your plan provider and work with a specialized non-recourse lender.

7 Facts Investors Should Know About Hard Money

Private lenders have been around for, well, ever: as the saying goes, lending money is the second-oldest profession.  In advanced economies today, private or “hard money” loans are used by real estate investors ranging from professional renovation investors with excellent performance records to desperate last-resort borrowers with terrible credit histories.

While there remain some back-alley loan sharks around doing shady deals with desperate investors who aren’t responsible enough to borrow from anyone else, most hard money lenders are open, ethical businessmen and women with real estate acumen and extra cash to invest.  There are even some formal banking institutions who engage in hard money lending.

Here are some cold, hard facts about the hard money industry to help you determine if  hard money is the right money for you.

Hard Money Lender & Loan FactsFact #1:  Hard money deals are often sought after for their quick turnaround (usually within 7-14 days to process).  Any investor interested in flipping a property knows that time is of the essence and needs to have funding available sooner rather than later.

Fact #2:  One way in which hard money lenders differ from more conventional lenders is in the fact that many hard money lenders tend to be local and more hands on in terms of wanting to view the property before lending money on the deals.   Hard money lenders want to get that up-close-and-personal look and feel for a property before making a decision to lend on a property.

Fact #3:  Hard money loans are generally much more expensive overall than conventional loans for both the interest required on them as well as points the buyer is expected to pay on them.  Generally speaking, investors seeking hard money can expect to pay anywhere from 10 to 20 percent interest and get hit with as much as eight points with some lenders in some states.

Fact #4:  Hard money loans are most often sought by investors doing short term deals rather longer term deals.  Most hard money lenders will lend from periods of six months up to a few years.

Fact #5: While the red tape is certainly less and the turnaround time is much faster, more hard money lenders are taking a closer look at borrowers’ experience and credit history.  After the real estate crash of the late ’00s, many lenders were triply burned, as borrowers defaulted, but foreclosures were slowed to a crawl for political reasons, and values had crashed.  So while ten years ago lenders were more open to lending money as long as there was sufficient equity, today they tend to be more conservative and screen out rotten-apple borrowers more thoroughly.

Fact #6:  Most private lenders require borrowers to use a specific appraiser who the lender knows and trusts, who will not be swayed by the investor’s pleas for padding the value.

Fact #7:  Most hard money loans are structured very similarly to balloon payments with due dates usually spread over no more than one to two years after the loan is issued.

Real Estate Investors there are many other means to getting your deals financed or purchases other.  What are some other unconventional ways have you used to finance your deals?

How Non-Banks Are Replacing Big Banks

Since the official start of the ongoing “Credit Crisis” back in the Summer of 2007, Private Money loans (debt, equity, and / or mezzanine) and Institutional Funds (i.e., Hedge Funds and Private Equity Firms) have provided more readily available access to funds for residential and commercial real estate investments than many of the largest U.S. banks. Non-traditional funding options have included individual investors (“Silent Partners” or Equity Investors), Crowdfunding, and Private Money or Hard Money Lenders. With Private Money, the collateral for the loan is seen, many times, as at least equally as important as the borrower’s qualifications, which provides more flexible underwriting guidelines as compared with Bank loans.


Many Debt and Equity Investors or Lenders pool millions or billions of dollars of funds from investors, and then provide them as equity money or loan options such as “Asset Based Loans” in which they are funded based upon the potential ARV (After Repair Value) or Future Value of a distressed or non-distressed property. The loans are made based upon current or future “LTVs” (Loan to Value) or “LTCs” (Loan to Cost) for a potential cosmetic “Fixer Upper”, or a deal which requires major renovation or construction repairs. In many cases, an investor doesn’t need to provide “Full Doc” underwriting items such as past tax returns or other detailed income or asset requirements.

For “Fix and Flip” or “Fix and Hold” residential deals, the Private Money options can be a much better option for investors since they can fund their loans much faster than government backed or insured financial institutions (“Time is money”). The difference in average funding time periods from start to finish can vary between a week or two for private money sources to well over a few months for government-backed financial entities.

In some cases, private loans may fund in a few days from start to finish with the bulk of the work completed online (i.e., title, escrow, loan, real estate contracts, third party reports, etc.), amazingly. Due to the large number of all cash buyers for properties in recent years, sellers don’t typically want to wait a few months to sell their home and close escrow. The faster an investor can gain access to funds, get formally qualified, and close escrow on a potential deal, then the more likely they will get their purchase offers accepted at the lowest offer prices possible.

Private Money Solutions vs. Big Banks’ Derivatives

One of the newer private money funding options in recent years is something known as “Crowdfunding” in which an investor solicits contributions from either a small or large number of people, which usually originates from the online community. Crowdfunding has been used in the past from many start-up businesses seeking cash to fund their business ideas partly since business loans from their local bank branches were quite challenging to qualify for in recent years. Crowdfunding has also been used by many Charities to either raise awareness for more individuals or groups of people, or to help pay the Health Care costs for friends and family members in need. Crowdsourcing, in turn, has been used by computer designers to share free software code, or other ideas which benefits all parties.

Even though some financial analysts and Economists have said that the implosion of the “Sub-Prime Mortgage Loan Bubble” was one of the main catalysts for the financial meltdown, the “Credit Crisis” is truly directly related to the near popping of “The Derivatives Market Bubble.” It has been suggested by a fair number of people in the financial industry that the size of the “Derivatives Bubble” (i.e., Credit Default Swaps, etc.) worldwide is somewhere within the 1,000 to 2,000 + Trillion Dollar range. As a comparison, the size of the outstanding U.S. Student Loan Debt just recently surpassed $1 Trillion, and the size of the U.S. Budget Deficit is alleged to be approximately $17 Trillion Dollars.

It has been reported numerous times that many of the Big Banks here in the USA have Derivatives obligations which far surpass the market value of their entire parent companies by a very high number. It has also been reported that 2014’s Derivatives investment dollar amounts for many of these same Big Banks are now at least 20% higher than back in 2008. If true, then aren’t the Big Banks now potentially financially weaker today than back near the start of “The Credit Crisis”?

Crowdfunding has evolved in recent years to become one of the best options for people to invest in Real Estate, either directly or indirectly, after the financial markets effectively “froze” once the “Derivatives Bubble” almost completely popped back in 2008. In effect, Crowdfunding has eliminated the “Middleman”, or the Banks, and allowed individual investors to invest in discounted Real Estate assets for potentially a fraction of the current or future market values. One of the best solutions for Real Estate Funds as it pertains to the “popping” and “frozen” financial markets has been to work with individual investors directly and much more efficiently. This helps all parties focus on the best ways to generate profits with a true “Win/Win” mentality.

Who Reaps The Profits: Banks or Investors?

Instead of the Big Banks reaping all of the financial rewards related to their own Real Estate investments while still providing their bank customers interest rate returns of between just a measly 0% to 1% interest, Crowdfunding, and other private equity or debt options, allows the investors to share in the profits too. Crowdfunding typically offers Debt or Equity investors a variety of investment options and financial solutions with seemingly fewer risks and much higher returns than with investing their funds with their local bank branches, ironically.

In parallel with quicker lending or investment options, more buyers and sellers are matching up online through the internet, Social Media, real estate networking and investing groups, and with better access to real-time Big Data, and then are flipping and closing their home sales in a matter of a few days as opposed to a few months. These quick online home flips are somewhat akin to “Day Trading” stocks. Without the more efficient access to private capital and online real estate information, then the quickest “Fix and Flip” deals may not be as possible today.

In today’s ongoing “Credit Crisis World”, it may be more likely that an individual neighbor, a group of neighbors or townspeople, a Crowdfunding group, or a private funding company may help fund a person’s business idea, charity, dreams, or real estate investment options rather than their local bank. In any “Boom or Bust” Housing Cycle, it is truly the access to capital which typically drives the directions of the housing markets either up or down.

Hopefully, more U.S. Banks try to later follow more logical, efficient, and rational underwriting methods used by Private Money lenders or investors so that access to money becomes easier for more Americans.

4 Keys To Success With Vacation Rentals. Part 2

We had a two-unit upper/lower unit in Hamtramck that always rented to polish folks in the neighborhood. For as long as I can remember Hamtramck was primarily a polish immigrant community. My tenants could not speak English, and even though I am Polish, I can not speak Polish, which made our monthly collections interesting. The tenants always demanded that I pick up the rent from them in person. While picking up the rent they insisted that I sit and have a few drinks with them. They did not use the phone or the mail. Everything was going great until the neighborhood started to change… and my tenants moved out to the suburbs. The neighborhood changed dramatically and now our new tenants were not too keen on paying us on time… ever. As the house sat vacant between tenants we were greeted with a handful of squatters. To say it nicely, it all went to hell in a hand basket.



Even if you think you have a good thing going, sooner or later your “great” tenants move on with their life and you are left renting to the leftovers… bring on the headaches!

Just one of many reasons I got out of the traditional single-family rental business.Go vacation rentals!  In this Blog I will introduce you to the 2nd of the 4 keys to success with vacation rentals Part 1


Key #2: Repeat Renters.
I am a member of an online vacation rental owner message board. It floors me what a lot of the people post and talk about…

•  What is the most secure lockbox?
• Should I use BIN (Buy It Now button) on the advertising websites?
• How should I deal with dirty tenants?
• At what level of damage do I hold back security deposit?
• What to do with unruly renters?
• My renter is complaining about everything! What should I do?
• I’ll do what ever the renter wants – I don’t want to make my renter mad, they might give me a bad review.

the list goes on and on…

All of these folks are dealing with the symptoms of the true problem – a problem which they initially have created for themselves… They treat their vacation rental as a hotel.

Loose, Loose. Treating your vacation home as a hotel, always looking for someone new to rent it, will only cause you problems and headaches. Not to mention the yearly costs to advertise your vacation rental to attract new renters.

Recall my story of my Hamtramck tenants? Once you find a great tenant you NEVER want them to leave! Why in the world would you want to continuously put yourself in the position of rolling the dice on new renters year after year? It makes no sense to me.

Recall that at one of my vacation homes we have never advertised on the big advertising sites. In addition, we have never had any property reviews from our renters. And we like it that way. Now, every advertising website out there will tell you differently, they will say reviews matter. I say hogwash. We’ve never had them and never will.

What do we have?

We have a core group of renters that have rented from us for the past 12 years! They love us – renting a place where they know what to expect year after year. We love them – we know they take care of our vacation home, they pay on time, and they truly appreciate our property.

Win. Win. Repeat renters…

• take great care of the property – as it was theirs
• have a clear history with you paying on time
• refer their friends and family to you
• love going to the same place year after year – no surprises, they know what to expect

Over the years you get to know your renters on a personal level. You become friends.

Yes, initially when you buy a property you have to advertise in some fashion to get new renters. However, once you find good renters, you MUST market to them throughout the year and get them to rent from you over and over again. After a few years go by you will have created a core group of awesome renters that respect you and respect your property.

If you want to treat your vacation rental as a hotel, well then good luck to you… you probably won’t last long in this business.

Next up I will discuss Key #3 to investing success with vacation rentals.

Trevor

Fears And Pressures While Moible Home Investing At A Young Age

Welcome back, As I make my way farther and farther into my thirties I see more and more younger faces coming into the understanding and business of investing in real estate for profit. Gone are the days of me being the youngest investor in my Real Estate Investor’s Club, local seminars, or other real estate related groups.



Bitter Sweet

While aging is bitter as I am starting to show more and more grey hairs, it is sweet that I have been able to sustain a very profitable and helpful career as a mobile home investor. The story below concerning my first deal inside a mobile home park is aimed for anyone who has the overwhelming concern that they are too young to be taken seriously or too young to hold value to help others.

Let’s be honest, if you look fifteen when you show up to a seller’s door people will hold preconceived notions about your experience, your desires, your knowledge, and they may often times not reflect accurately on you as a person. This post is created to acknowledge that your age has little to do with your effectiveness as an investor. If you are determined, motivated, honest, and have a desire to help sellers than you have a better shot than most to make it far in a career with real estate investments.

A First Appointment

On my way to my first seller appointment I was almost to the subject property to meet with a middle aged female seller. After a brief phone conversation I took down the seller’s asking price of $8,000 and the address. At the time I was so new I did not even think to ask if this was a mobile home; I was too excited about the price to think of such questions.

Until this point I had only practiced conversations in front of a mirror and read a handful of courses on the subject of real estate investing. To say I was nervous was a understatement. Not only was I unsure about what I was doing I also looked inexperienced, doe-eyed, pimple-faced, high-pitch voiced, and was driving a junk car. Negative thoughts whirled around my head so loud and fast it was hard to focus on steering my car straight down the street. The positive affirmations and motivational music I had blasting in my car was no help either. Sixty seconds before I was to arrive at the subject property the stress overcame me and I quickly pulled over to the side of the road to get sick from nerves.

A Fork in the Road

Once I was done purging I had a decision to make.

Quit now and run home with my tail between my legs or keep my appointment with this seller who needs help. Minutes later after cleaning myself off I arrived at the property to find a friendly seller eager to fill me in on all the details of the home and her situation. I purchased the property for $3,000, payable as $300 for 10 months. This property alone was to create over $40,000 in net profit over the next 11 years.

With the confidence of this one deal closed I went on to secure over 10 mobile home deals in the next 12 months, some homes in parks and others attached to private land.

Conclusion

In conclusion… age and experience are not the same thing. Use your ambition and drive to push yourself daily to continually be making purchase offers that help sellers sell their unwanted homes. Over the years I have utilized mentors and coaches that have lead me around costly mistakes, other mistakes I have made on my own and have licked my wounds and kept investing.

If you are younger or inexperienced remember that every seasoned investor started with no knowledge of this business and has made a lifestyle through forging their own path through some treacherous real estate terrain.

“Sellers do not care what you know when they know how much you care.”

Love what you do daily,
John Fedro