A Formula for Real Estate Success

Let’s start today’s crash course with a riddle. When does 25 + 25 + 4 + 2 = Success?

If you’ve been around the Lee Arnold System of Real Estate long enough, you’ll know that 56 is the magic number; a rule to live your week by. Here’s a refresher course. This “Rule of 56” breaks down like this:

WHAT

This is a benchmark for you to hit consistently. This helps you keep track of letters being sent, phone calls being made, time being invested into your work. These are called key performance indicators. If you haven’t made an offer in a while, and you’re committed to making 2 per week, then this is an indication that your performance isn’t where you want it and need it to be.

If you don’t have a yard stick by which you measure progress, then how are you going to know how far you’ve come or where to reach for next?

WHY

In my 20+ year career, I have never known a single person who did the rule of 56 for 52 straight weeks who made LESS THAN $100,000 in net profit.

My goal in relaying to you the “Rule of 56” isn’t to keep you busy. My goal is to help you make money! By following this rule, you’re taking the first step toward entering the Circle of Wealth. My goal is to get you to a place where you have $250,000 in the bank—that’s CASH, not equity or profit. This is your seed capital to continue using for acquisitions, short-term loans, down payments when necessary, and the general cost of things. Your profits will continue to grow, and your $250,000 will not diminish.

Then, I’m going to help you make another $250,000 and another until you’ve reached “accredited investor status” and can make passive income on your money by lending it out to others, making higher interest than you would on a multitude of other investments!

HOW

If you aren’t consistently reaching your goal or 25 letters mailed each week, 25 calls made each week, 4 networking events/meetings each month, and 2 offers made each week, then that’s where we need to start.

We can teach you what to say in your letters to yield results.

We can instruct you on what to say on your phone calls.

We can help you find events.

We can show you how to make offers.

Let us help. Call 800-533-1622 to talk to a business developer or attend an upcoming Funding Tour to learn how to solve the riddle of your journey to success.

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Have a deal? Visit us at www.cogocapital.com to fill out your fast and easy quote. Want to learn more about COGO first? CLICK HERE to get to know all the ins and out!

Helping Distressed Homeowners

 

People lose their homes. It’s an awful experience for most, and the situation comes with a myriad of emotions. Although you can help turn the situation into a win-win experience, if you don’t know how to properly tackle the sensitivity of the topic, you aren’t going to help anyone.

I recently walked you through the basics of an Equity Deal (to read and watch, click HERE) and the fundamentals of Short Sales (click HERE). To further your understanding of these processes, you need to understand the etiquette necessary when talking to a homeowner in trouble.

Put yourself in their shoes. Many owners who are on the brink of losing their homes are emotional, desperate, and/or in denial. You must be aware of their position and ready to step forward with confidence.

Tips for Working with Troubled Homeowners:

– First, you HAVE to be respectful. Smile and be courteous. Don’t present yourself as a money-hungry investor unless you want a door shut in your face. You are not doing them a favor, and you don’t have the upper hand. This is a win-win situation. If the owner feels you’re taking advantage of their plight, you won’t build any trust.

– Assure them that you will help if they’ll let you. You need to know what you’re doing (If you don’t, let us help you learn CLICK HERE to learn more about events coming up where you can learn the basics). Appearing as a novice investor will not gain trust. Practice with a friend or spouse if you need to, and deliver your polished pitch with professionalism.

– Explain that foreclosure is inevitable, and if they don’t take action now, they will lose their home at auction. But don’t ever threaten or say anything to purposely upset them.

– If they want to tell you their “sad story,” as many will, listen to them. You will likely learn a great deal about the history of the home and the loans associated.

– Be compassionate, sympathetic, and understanding of their situation. There’s no reason to be rude or disrespectful, ever.

– Don’t force the issue. If they aren’t ready or if you didn’t explain things well, leave and try another time.

– Dress business casual. You want them to feel relaxed around you, but know you are competent.

 

Now that you have some pointers, marry them with this simple process for a winning formula.

1. Contact the homeowner (or respond if they contact you). We’ve talked about how to do this before, but if you still need help getting started, PLUG.

2. Schedule an appointment to discuss in person how you can help, determining their needs and getting the appropriate paperwork signed. If the initial conversation happens on the phone, that’s fine, but express the importance of meeting face-to-face because you need them to sign…

3. Paperwork: You must get a homeowner to sign the proper documentation to begin working with them (each state and lender requires different paperwork, so do your research). Be sure to know what is needed and have it ready to be filled out.

a. Authorization letter: This lender-required document is vital in order to begin working together, stating specifically whom they may release any information to about the loan.

b. Purchase and Sales Agreement: This creates the ability to purchase the property IF the bank accepts the offer, allowing you to be the sole investor with whom the homeowner and bank can do business with. They can be at ease, however, because this document is only valid when the lender agrees to the purchase price or if you offer more than the homeowner owes.

 

Assure the homeowner that they are not signing their life away and should be comfortable with the process! This is simply a step they must take to get the ball rolling, but for you, it is the goal of the meeting.

Next week, we’ll discuss where to meet (and what the pros and cons are of each location) as well as questions to ask them along the way. For now, continue to make contact with homeowners; send out those letters, make those calls, and refresh your ads for maximum exposure!

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

To challenge yourself personally and in your business, CLICK HERE.

Follow me on Twitter: @CogoCapital  and @LeeArnoldSystem 

Loan-to-Value and You

- - Uncategorized

An LTV (or loan-to-value) ratio is an important part of underwriting, and as such, deserves your understanding in order to comprehend the process of your loan.

The loan-to-value, or LTV, on a property is determined by taking the debt owed divided by the fair market value. Let’s say a house is worth $150,000 and the owner’s outstanding debt is $112,500.

$112,500 / $150,000 = 0.75 or 75%

The LTV on this property is 75%

You’ve probably seen this equation structured differently: Fair market value minus the debt owed, which equals EQUITY.

$150,000 – $112,500 = $37,500

The owner has $37,500 in equity in the home.

So why are these numbers important?

LENDERS

First, because it factors into determining the details of your loan, including how much money a lender can offer. All lenders evaluate the LTV to determine their level of exposed risk. This is why the value of a property alone is not enough information needed to process a loan application.

The higher the LTV, the more risk there is to a lender so the interest could be higher. The lower the LTV, the less risk to the lender, equaling a lower interest rate. Essentially, it shows if the value of the mortgage could be recovered from the value of the property. Private money lenders are also concerned with the amount of equity the borrower has invested in the property because it can be used as collateral.

BORROWERS

The LTV is equally important for a borrower. The lower the LTV, the higher the profit margin (depending on how much cash you have to put into it). If the appraised value is higher than the amount you need as a loan to purchase a property, then that’s a better deal. It also can mean lower payments, lower interest, and bigger savings!

When you understand terms like LTV and how if factors into your loan, you can better assess a deal and whether or not it will make you money. Keep crunching those numbers, my friends, and reach out to our loan officers if you have any questions!

Happy to do business with you;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

To read more articles click here.

Follow me on Twitter: @LeeArnoldSystem

Tax Advantages and You

- - Entrepreneurship

You just filed your taxes 2 months ago! Why are we talking about this now? I know, I know. You’d rather be focusing on making the money rather than filling in numbers on a tax document. But, if you start now, I promise you’ll be better equipped for next year. You might even find some nuggets of gold to take advantage of before it’s too late.

There are many tax benefits to investing in real estate, and if you aren’t taking advantage of them, you might be missing out. There are also mistakes that many business owners make that you should avoid.

First, let’s talk advantages:

Tax Deductions

You can write off nearly all your real estate investments and money spent acquiring them. Most importantly, you write off a down payment on a rental property and your mortgage and interest payments.

So let’s say you come to the end of the year and you own Uncle Sam $20,000. Would you like to shell out the dough, never to see it again? Or would you rather spend that $20,000 on a new property that has income potential?

No brainer, right?

In some cases, depending on your market, you can even find an entire property for $20,000. Ask us how at  800-533-1622.

Deducting Personal Expenses

When you own a small business (and to get a loan from COGO, we require you to have at least an LLC), your finances are taxed under the same friendly tax laws as other corporations. You will not pay taxes on the money you re-invest in your business, and that includes legitimate write offs like mileage, cell phone bills, and paper in your printer.

Depreciation Works in Your Favor

For your personal, owner-occupied property, you cannot claim depreciation (or “a reduction in the value of an asset with the passage of time, due in particular to wear and tear”*) on your taxes. You can, however, claim this on investment properties, though my guess is that many of you don’t. This can be a significant deduction, so make sure you have a competent accountant who has your best interest at heart and can make this happen for you.

These deductions may sound simple, but when added up, you can pay less out of pocket to the government and have more for your next project!

 

Unfortunately, there are many mistakes that rookie business owners make. Let’s tackle a few:

 

Shuffling Too Much Around so That You Don’t Owe Anything

Although this is tempting, if you can’t show that your business made any money and is valuable, you will hurt your chances of qualifying for loans in the future. “But I made money,” you say. “I just made it look like I didn’t.” Sorry, you have to show a profit if you want to leverage that value for your business’s benefit.

Not Keeping Good Documentation

Trust me when I say the wrong time to be collecting your documentation is during tax season when it’s due. That’s why I’m harping on you NOW. Collect and file your expenses throughout the year. Not only will you keep better track, but you also won’t forget vital chunks along the way.

Not Understanding Your Deductions

You can run into trouble by calculating deductions without an understanding of your limits. The fix is simple, find out which deductions and work with a professional.

Not Knowing Your Tax Laws

It’s a lot. I get it. And you’d rather be deepening your understanding of the real estate industry (or your chosen field within the industry) than wasting time digging through tax laws. But in addition to State, Federal, and Income taxes, small business can be subject to taxes you’ve never heard of. Don’t overlook these filings; work with a tax professional.

Moving Profits into Salary

After a successful year, you might be tempted to increase your “salary” to take advantage of the deductions for salary payments. However, the government WILL look at the number and compare it to other industry professionals in your field to determine if your compensation is reasonable. If you are too unrealistic, the IRS may disallow a portion of the money as compensation, landing you in hot water.

My recommendation is for you to start now, research often, and stay on top of your tax game. There are real benefits you can use to your advantage, but waiting until April of next year is NOT the time to begin considering them.

If you would like to learn more about investing in your future through real estate, visit the Lee Arnold System of Real Estate for an upcoming Funding Tour in your area, or see if you qualify to attend the Regional Real Estate Clinic in July by calling  800-533-1622.

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

To read more articles click here.

Follow me on Twitter: @LeeArnoldSystem

 

*https://www.merriam-webster.com/

The Long and the Short of Short Sales

- - Borrowing, Wealth

 

This is not a new strategy. It’s been a buzz word since the recession of 2008, but many investors are beginning to shy away it thinking that it’s an outdated strategy. They’re wrong!

If you’ve ever wondered about short sales–what they are and how you can benefit from them–consider this a lesson in Short Sale 101. A short sale is nothing more than a specified bid at a foreclosure auction done months in advance. Let me explain…

There are two types of bids; full debt bids and specified bids:
1- FULL DEBT BID. The opening bid is everything the homeowner owes the bank. It is the full debt bid you pursue in the strategy of “equity deal” we discussed HERE.
           and
2- SPECIFIED BID. The opening bid is lower than what is owed, and though the bank is not guaranteed to get what is owed on the house. They know this but also do not want the house back.

Let’s say $220,000 is owed on a property that went into foreclosure. It’s worth $180,000 in its current condition, but the opening bid is $60,000. There’s a big different between $60,000 and $220,000, and a where the bank loses, the bidder could win. Now, the bank is legitimately willing to let the property go for $60,001 because there’s no guarantee that the bid will go any higher than the opening bid. Unfortunately, the problem with the specified bid is your abundance of competition.

Years ago, I saw the opportunity in this bidding structure but wanted the ability to buy at $60,000 without other bidders driving the price up so much that I made less and less profit. That’s where the short sale came in.

In most markets, a foreclosure process typically takes anywhere from 90 days to 180 days. And in judicial markets, like Florida and Georgia, the process can take 12 to 18 months before the property ever arrives at auction.

If you know a house in going through this process, you can wait until the process matures and jump in at auction time, or you can be proactive and pursue the property before anyone else.

Foreclosures typically begin 90 days before the sale and from the beginning, they have to post some type of notice. “Lis Pendens” or “Lean Pending Filing” (this is the bank suing the homeowner to regain possession of the property) or in a non-judicial market where they begin with a notice of default filing.

Whether it’s a lis pendens filing or a notice of default, this is a notification to you as an investor that this property is in trouble, and unless something changes over the next few months, the homeowner is going to lose the property. A lot of homeowners going through this process have no idea what the process is or how it affects them. This is where you swoop in as the alley to the homeowner and create a win-win situation where you can help the homeowner lose the house to foreclosure, but you can buy that property at the specified price.

Pros:
– You can help a homeowner stay in the home longer than if they home went to foreclosure.
– Often times, you can help the homeowner lower their payments through modification and increase their equity in the home.
– You can inspect the interior where at auction you can’t do that.
– It requires no rehab in the homeowner stays in the property
– You don’t need all cash.
– You don’t have the competition of other bidders.
– We can charge higher than market rent by renting back to the homeowners (not legal in all markets, so check before pursuing this strategy).
– The tenant pays all of your mortgage which = positive monthly cash flow.
– Best of all, you’ll have instant equity in the property and plenty of options if any of the cons below happened…

Cons: (You’ll see these are similar to any property you would buy and rent out)
– There is a possibility that the tenant doesn’t pay you.
– The tenants could trash the place.
– Or the tenants could abandon the property, leaving you without a renter (until you got another one).

Now, as you’ll see, this is a pretty short list compared to the list of pros. And there are other cons that you would need to consider if you pursued a bank loan or conventional financing to purchase a short sale; such as the bank requiring a BPO, or Broker price opinion, or having to wait several months while the banks call the shots on your financing, which can be frustrating! But, you can often get private money for these short sales, seeking out competitive terms and interest.

The bottom line is there are multiple ways to find a good deal. If you think finding a short sale property is right for you, do your research and go for it! We’ll be here to offer a financing option for you when you do.

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

To read more articles click here.

Follow me on Twitter: @LeeArnoldSystem

How Do I Get Approved?

 

I was recently asked, “Lee, how do I know what a good, fundable deal looks like?” While I’ve spend hours reviewing the numbers to my deals and yours during my Scratch Paper Chronicles, at Lee’s Inner Circle, and during courses and specialty labs, the question is valid because every property is different.

Start with the most important question to ask on any deal: Will there be a good outcome for everyone involved?

If the deal isn’t going to make any money for those involved, it’s probably not going to be approved. But, don’t take a denied loan as defeat. Learn from it so you know what to look for next time.

 

Common reasons why deals are denied:

  1. The property value is lower than the sales price (or what the owner thought the value would be)
  2. There isn’t enough cash available to do the deal. (funds for downpayment, closing costs or rehab).
  3. The deal won’t make money. We don’t set our investors up for failure!

This is where information is key. Do your research, know what properties are truly worth, check the documentation, know your own financial situation so you’re ready to answer those questions in the loan process. Learn how to avoid pitfalls when scouting for that good deal and how to avoid deals that won’t work within our lending parameters.

 

Find out the following:

  1. Is the seller motivated?
  2. Does the seller have any equity in the property? If they don’t have any equity, we can’t structure creative financing solutions. It is important to check the title
  3. Is it an unlisted property? Your odds of getting private money funding grow when you find a property that isn’t listed with an agent (and your odds of getting it at a better price are greater because agent-listed properties appear everywhere on the internet! To read more, CLICK HERE).
  4. Is it in an established neighborhood? We are not the company looking to set the standard and create comps in unestablished marketplaces. We need established, area
  5. Is the house the ugliest house on the prettiest street.

 

If you can answer yes to these questions, get it under contract, and bring it to us to fund. To receive a rate quote by email, visit us at cogocapital.com. Or, immediately receive a $250,000 pre-approval letter for buying real estate investments by attending one of our Funding Tours.

If you’re ready to learn how to get these leads, how to convert them into opportunities, how to follow up, make offers, and get funded, join us for a Funding Tour or call  800-533-1622 to speak to someone who can help steer you toward the education you need.

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

To read more articles click here.

Are You Reaching People?

In this digital age, it can be tempting to forgo any physical outreach in favor of simple, copied-and-pasted ads online. Whether you’re trying to purchase a neglected property direct from the owner, are trying to communicate with wholesalers, or want to set up connections to broker private money, you have to reach out to get and communicate with leads.

Craigslist is great, so is email. Phone numbers are fantastic, too.

But Craigslist can be over-saturated, email can go to spam, and more phone numbers than ever are on Do Not Call registries. The truth is this; it’s easy to go online, so everyone does it! That doesn’t mean it doesn’t work, but you run the risk of getting lost in they masses.

There’s another way to reach people that might feel antiquated but is quite the contrary. Snail mail.

 

According to a USPS Study…

98% of consumers bring in their mail on the day it was delivered.

77% sort through their mail immediately.

Recipients spend, on average, 30 minutes reading their mail on any occasion.

67% feel that mail is more personal than the internet.

64% order from mail received within the last month.

48% read mail to relax, 42% look at mail for financial savings, and 38% use mail to stay informed.

Online shoppers who interact with brands using multiple media spend 30% more than those using a single medium.

 

If you’re reaching out to homeowners and potential clients, invest in a packet of stamps, print up your material, and get to lickin’ those envelopes!

And if you need assistance with materials to send, we have a great tool for that. The Lee Arnold System membership site contains a plethora of back office printables that were expertly designed for making a unique impression. You can customize and save time. To learn more about becoming a member and unlocking these great tools (and more!) call us at 800-533-1622.

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

To read more articles click here.

To learn how to make a unique impression in person in only 8 seconds, CLICK HERE!

What If I Don’t Have Cash for a Home Auction?

Today, I have a committed group of folks out here in Coeur d’Alene/Spokane attending my Lee’s Inner Circle intensive training. I can’t even begin to review everything they’re learning, but I can tell you that today, I am taking them to an auction. It’s a fantastic opportunity for these success-hungry individuals to get on-site training, learn the details of structuring MAO (maximum allowed offers, or in this case, my maximum bid), and I bet a few will acquire properties with me.

Not all of them have cash to buy houses at an auction like I do. Most people think you need to or you’re out of luck.

But what if you don’t have the cash? Can you still participate in purchasing these properties?

Yes! It’s called an equity deal.

What’s an equity deal?

Equity Deals: you’re still dealing with properties that are going to a foreclosure auction (that you could buy at the auction if you had cash) but instead, you do what most won’t; go knock on the door!

Here’s how… (grab a pen and paper and take notes!)

Recap quiz…

Question:
– Should you start driving all over tarnation knocking on doors?
Answer:
– No, first find out if the homeowner has equity in the deal.

 

Question:
– What are the two questions you should ask for any deal?
Answer:
1- What is the property worth?
2- What can I get it for? (And is there a large enough marginal spread for you to make money?)

 

Question:
– Is putting together an equity deal better or worse for the homeowner than letting the home go to foreclosure?
Answer:
– It’s better! If structured right, the homeowner can make a profit that they wouldn’t make if they lost the home to foreclosure auction, you get the property at a good price, and to top it off, you acquired the property before anyone else had a chance to bid you up on it. Win win win.

 

Question:
– Does a private money lender care more about you and your financial situation or the property?
Answer:
– The property! If your deal is attractive, you aren’t going to have a problem coming up with the capital necessary to close.

 

Question:
– If you think you have a great deal but you don’t know how to write an offer, are you out of luck?
Answer:
– No! I’m not saying I’m going to write the offer for you, but I will offer assistance so we can see this deal through to fruition. If you’ve run the numbers as best as you can, call us at 800-341-9918 to talk to a funding specialist. Tell them the terms of the deal, how you structured it, and we’ll help you out.

We’re here to support you in any way we can, we just ask that you make the initial ground work and some due diligence.

And, remember, all real estate cares about is whether or not you have a good deal! If you have a great deal under contract and are looking for a private money lender, check out COGO Capital for your loan. Call us at 800-341-9918 to talk to a funding specialist or go directly to cogocapital.com for a rate quote.

What’s stopping you now? What can we help with?

Follow me on Twitter @LeeArnoldSystem and use the hashtag #AskLee, and I might address your question on here next week.

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

 

To learn more about attending Lee’s Inner Circle, contact one of our team members at  800-533-1622.

Out to dinner at Anthony’s in Spokane with the Lee’s Inner Circle team. What a great group of people!

What’s Your Vision?

Do you have a vision statement?

Do you even know what a vision statement is?

No doubt, when you were in your adolescence, someone asked you what you wanted to be when you grew up, and you could answer that within a sentence.

“A doctor.” “An engineer.” “A full-time parent.” Or even, “I want to be rich!”

The reality that spurred from the years between your adolescence and now probably changed your outcome. But that was basically your vision statement at the time.

You need a grown-up vision statement; one you can follow.

I want you to write one out.

Now.

Go ahead.

Need some help? Try answering these questions: What do you want to be doing for the next 5 years? What do you want to achieve in your career and personal life? How much money do you want to make? What do you want to do with your money and time?

Great! Now, how are you going to get there?

The education system does not prepare anyone for self-employment and entrepreneurship. It would’ve been nice if my high school had given me a platform on which my entrepreneurial mindset would’ve been applauded and encouraged, but it didn’t, and yours probably didn’t either.

I see this massive, gaping disconnect between people who want to work for themselves and those who have the skills to do so. If you are a sole entrepreneur, you are in marketing, accounting, fulfillment, customer service, tax filing, everything. Maybe you learned how to balance a spreadsheet in a college accounting class or community workshop. Maybe you learned the basics of online coding (if you’re among our younger generation of entrepreneurs) or, if you’re like me, learned how to type with more than one finger in typing class, so an email doesn’t take 45 minutes.

But did you really learn the skills you needed to go from vision statement to success? Can you say with all honesty that you can tackle every area of your business, or is the unknown holding you back?

Well, I’m passionate about fixing that.

Here’s is a tool to help get you started.

There is so much more to it than I could cover in one post, and that’s why we work hard to get you the information you need.

But what else can you do now? Well, as you are learning how to fulfill the needs of your business, you may have children or grandchildren who are going to one of those schools that don’t nurture the self-employed, entrepreneurial mindset.

So, not only can you get an education in real estate investing with the Lee Arnold System, but I encourage you to bring along the young entrepreneur in your life. If you value your advanced education and want to spend 3 days with my team and me at the next FUNDING TOUR near you, you can bring a guest between the ages of 12-21 and I will pay for their ticket. That’s how much I believe in educating the next generation of entrepreneurs.

And though you’ll always find tools on here and on the Lee Arnold System blog, if you’re interested in learning more about the entrepreneurial education you can receive with the Lee Arnold System of Real Estate, call us at 800-533-1622. We’ll figure out if you need to attend a workshop, a specialty lab, or if you need to see a coach. We will design your education based on your needs.

Because I want to help you fulfill that vision statement!

To Your Success,

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

 

As always, if you have a real estate deal and would like to get a quote from a private money, visit cogocapital.com

FOLLOW ME ON TWITTER: @LeeArnoldSystem and @CogoCapital

Contractors: to lead or not to lead?

- - Fixing, Flipping

There is no question.

If you aren’t leading your contractors, they are going to “lead” you. The #1 snag investors experience with house flipping has to do with contractors in one way or another. And though I’ve discussed it at length on the Lee Arnold System Blog, it’s worth another lesson.

If you invest in a property that needs work, you are likely going to be involved with a contractor in one or more of the following areas:

The relationships between investor and contractor is vital to the success of any project, but can become trying when any of the following problems creep in:

  • Lack of communication
  • Poor communication
  • No communication
  • Misunderstood communication
  • Conveniently “forgotten” communication.

(Notice a trend?)

You must to be in continual and efficient communication with your contractors. No news is bad news.

Key #1 – Communicate with Your Contractor.

You need to know what is happening, when it’s happening, what the costs and projections are, what the deadlines are, how closely the schedule is being adhered to, etc. If you don’t know, they don’t know, so start the conversation.

Key #2 – Be Seen by Your Contractor.

Be a constant face on the job site. Show the contractor that you are hands on, that you will be there when you say you will and pop in unannounced to keep them on the job.

Key #3 – Don’t Bulldoze.

If you don’t want to get bulldozed by a contractor, return the favor and maintain a professional relationship. You can assert your stance as a professional AND be flexible to their advice regarding the project. That doesn’t mean you take every suggestion they make, but you should’ve accounted for appropriate changes in the budget and schedule when applicable.

Key #4 – Be Honest.

This is especially necessary to set up at the beginning! For instance, if you’re going to use a draw schedule, make sure your contractor understands up front how it’s going to work, when they will receive draws, how much, and what you are expecting. Then, don’t deviate from your word once the work begins. Don’t promise to give more than you can, and don’t give less unjustifiably. Remember, this relationship goes both ways.

Key #5 – Make Sure They Complete the Job!

There is little you can do to persuade a crooked contractor to finish a job—and you probably don’t want them to! If you’ve had a contractor abandon a job, your best move is to hire someone reliable to finish the job.

But, that’s not what I’m talking about. I’ve seen people make the mistake of paying the contractors when they’re “done” without doing a final punch list.

This is your job.

Do a final walkthrough with a roll of blue tape and a notepad. Mark up things like chipped paint, unhung towel bars, poorly done calking, or missing trim. Even the best contractors miss things, so get in there, create a punch list, and get the items knocked out as quickly as possible. Don’t pay the contractor’s final payment until this is all done!

Key #6 – Incentivize.

Time is money. You know this. I know this. Contractors know this. If you want a job done on or ahead of schedule, offer them an incentive.

It is possible to build lasting, cooperative, mutually beneficial relationships with contractors that last for the duration of your investing career. Don’t get discouraged if you find a dud. Network with other investors and with multiple contractors. Connect with a mentor or coach when things get sticky. And, most importantly, keep going!

To Your Success;

Lee A. Arnold

CEO

The Lee Arnold System of Real Estate Investing

 

If you want to learn more about working with contractors, finding the right deal, writing offers, and so much more, join me for a FUNDING TOUR. Not only are these 3 day events chock full of user-ready information, but if you book now, your $497 ticket will be paid for by one of the hedge funds I manage.

If you’re interested in learning more about the education you can receive with the Lee Arnold System of Real Estate, call us at 800-533-1622. If you have a deal and would like to get a quote from a private money, visit cogocapital.com

FOLLOW ME ON TWITTER: @LeeArnoldSystem and @CogoCapital