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If you've emailed Barney and did not get a response,
he has had three (!) computer crashes recently and,
as you may know, email is not picked up by most
email back up systems. So, please email him again
if you haven’t heard from him and make sure the
subject line is simple and direct like “real estate
investors' web sites” or “gold student with
question,” or “ NL student question.” In this age
of tons of spam, we have someone that deletes
Barney’s junk mail so cute subject lines might end
up in the trash! Barney’s email address is
bernard@zick.com.
Q.
I have three vacant properties and the signs have
not brought me a renter. Ads cost a lot but it
looks like I need to run some. Any suggestions?
A.
You absolutely have to have signs. They will get
you better renters than ads. But you have to have
ads. The decision to run ads and the time spent
getting them up and running should all happen with
the snap of a finger. Don’t you dare take weeks.
If the loan on a house is $150,000 then the
mortgage is 1500 per month which means that it is
costing $50 a day to have the house empty. If you
have five houses, that is $250 a day or $1750 per
week for this list of empty properties. Okay, not
all of yours are that expensive but figure $1000 a
week. Not only do ads cost money but the worst
thing is the money wasted in delays.
Here is what I mean…if we have an ad and run it
three times and rent everything, we spend $3000,
lets say. If we run it the first day, we spend
$3000 and start getting income in. If we wait three
weeks to run the ad it cost us $6000! That is $3000
in ad cost and $3000 in delays. So in the future,
when we see we are going to have a vacant property,
come hell or high water, an ad has to be ready to
run and placed to run a few days BEFORE the place
will be ready.
Example: Tenant is gong to go out on the 31st which
is a Friday. We figure one week to do the clean up.
It will be ready next Friday. The paper is a
weekly and it comes out on Thursday. Get the ad in
so it will be seen the Thursday before the place is
supposed to be ready. Have the ad for all three
days, a big display…in the weekly cheap newspaper.
I only want a very short ad to be drawn up for the
expensive downtown newspaper, for us, the Houston
Chronicle:
“Kingwood, Spring, Conroe homes for rent.
Zick Inv. Properties 281 358-0409.”
Don’t delay, do it today.
And if you study our “Hidden Profits” materials, you
will find that in many cases it is better to sell or
lease option than to just rent.
BZ
Q.
Question: Concerning foreclosures, what would you
say to the following strategy?
If the owner or lender will not work with you, can
you suggest anything else when I am unable to meet
with the owner on a pre-foreclosed property when
they are not home, don't respond to my mailing
campaign, etc.?
Thank you.
Jean
A.
First, be sure that in your state you can
automatically assume the loan if you get the
property through foreclosure. This is true in every
state I have checked but I have not checked every
state.
Then, purchase the second or third for a discounted
trust deed. Bring the payments current. Now start
the foreclosure process and get the property. Yes,
you buy the second and foreclose; you get to take
over the first without ever having to assume it. It
is the law.
Buying the second at a deep discount is always a
good way to get in on a property that is behind in
payments.
When students can not get in touch with the owners,
I always suggest they become a missing person’s
private eye. Talk to neighbors; see if you can find
out where they worked. Go there and ask questions.
Research. And if all else fails and it is a great
deal, you can hire a private eye for not that much
money to do “skip tracing”.
BZ
When is a great loan a bad deal?
Q.
A student recently asked me how to determine if a
potential funding source is legitimate. They had
been offered easy funding on large deals. It seemed
too good to be true. Low interest, no liability,
etc.
A.
When looking over the loan information, be sure to
check if they ask for upfront fees. That is always
a big sign of a crooked deal. Check on their
licenses. Are they licensed as a mortgage broker?
Can they give the names of three large firms they
have funded? Same for banks they work with - local
banks where you can go talk to an officer. You also
need to check them out just so you will not waste a
lot of time applying. If you are of financial
strength and net worth to go for a normal loan, why
not start with your local bank and see what they say
about this other loan source.
He Called Back!!
Q.
Barney, Barney, Barney! Help, Help, Help! Here you
have another two students who have an opportunity in
front of them and haven't had time to fine tune the
techniques. Do you remember during your boot camp
my wife and I attended in LA that I mentioned a
property I was interested in across the street from
my house in Santa Clarita? The tenants, after
telling me they were moving, were not being
cooperative in my efforts to contact the owner.
Well, I had written him a letter and also using 411
connect, I had left a message on his phone in Reno,
Nevada where the property profile had placed him.
When we got home from the boot camp we found a
message from him. In my letter and my phone
messages I had only expressed an interest in renting
or leasing the property ostensibly for my daughter.
His message said he "hadn't really decided if he
was going to sell the house or continue to rent it,
but that he was going to make a decision before the
end of the month." Then he said he would like to
talk and invited me to call again.
We would really appreciate it if you would guide us
in this effort so we don't screw it up. What a
great war-story it will make for both of us if we
succeed!!
Best Regards,
J.A.
A.
All you need to know is in the CDs. But here is a
brief overview…lots of contact is in order. Since
he opened the door, your next call should say, “Hey,
since you mentioned selling the place, I am not
opposed to that idea either. In fact, if we were
going to rent it, I know I would have wanted to buy
it sooner or later. Tell me about your selling the
house.”
The point here is to find out his goal and
objective. What is he trying to do? What does he
hope to get out of selling the house, and I don’t
just mean money. You want him to say, “If I sell
the house then I will be able to…”
After he has talked, introduce the idea that maybe
we could do a little of both. I could rent the
house for awhile, and buy the house later. That way
the house would be an investment for you. You could
write off depreciation, and when you sell, if you
want, you could roll the profits into another deal
without any taxes.
Good luck!
BZ
Q.
Thanks Barney for the prompt reply. We really
appreciate it. I know it is all in the CDs but this
is happening really fast and it sure is nice of you
to get back to us so quickly. I wasn't sure when
you would get back to me so I called him and pretty
much said the same thing. I asked if he were to
rent, how long and how much would he want. He gave
me a rent price and said he had been renting on one
year leases with an option to renew but the renewal
price could vary. His thinking about selling was
that he would sell here and roll the money into
another income property but was put off by the high
prices in Reno and is thinking maybe they might slow
down and/or back off in the future.
When I asked "if you were to sell today how much
would you want?" he had no answer and said he needed
to do some research. I got him talking, found out
we are the same age, our kids graduated from the
same school etc., and further bonding revealed that
he might go for a lease option deal but I didn't
push it. I asked instead to view the property and
he said he wanted to fax me a rental application.
We exchanged email addresses and I was thinking of
pointing him to the LA county assessor’s site where
he can look up his own property and see the recorded
sales for the nearby area. There are several
including my own purchase in last November for
$389K. The other nearby properties have sold
between $375K and $392K according to the assessor,
however I know that if he talks to agents, they will
pump him up to believe he can get $500K. That's
where we are at. I am waiting for the application
and the appointment to see the house. This seems
ripe for a shared appreciation deal. What would you
do next?
Thanks,
J.A.
A.
Email him with how to get the comps and then give
him the comps. If he does not know what the
property is worth he may call a real estate agent
and then you are half out of the way! Instead, give
him the information right away to make a decision so
he does not have to go to the competition to get
answers. Don't suggest shared appreciation until
the last ditch thing, while sitting down to
negotiate, when he needs it as a solution.
Otherwise you most likely will be giving something
away he did not ask for and may not need to do the
deal.
BZ |