Not as Seen on TV: a Guide to Foreclosure Auctions

Even if you are new to real estate investing, you likely know what a home auction is. You’ve probably even seen one on a TV show where people buy a house, and after thirty minutes of airtime have completely renovated and sold a home. Just as the shows can give an inaccurate representation of the rehab process, they can poorly portray an auction, too.

Foreclosure auctions are a viable way to purchase a hot deal with a healthy profit margin, but let’s clear up some misunderstandings.

If you’ve never been to a home auction, I recommend putting one on your calendar to attend. If you live in or near a city, you won’t have to look hard to find one. They usually take place weekly, if not daily in some areas, and are highly educational.

But, what if you aren’t in a position to buy a home at auction yet? Should you still attend?

Absolutely. And if you can, go with someone who will be purchasing a property to see how they do it. I don’t recommend going in blind, however. Here are 6 things you need to know about real estate foreclosure auctions before you attend.


1. You need cash to bid.

If you attend an auction and plan to buy a property, you need to make sure either you or a partner has the money to place a bid or make a purchase. Very few online and TV advertised auctions have available financing.

If you don’t have cash, should this stop you from attending? No! An auction is an excellent place to network. You see that guy over there that just purchased a house for $80,000? Let’s say you’ve run the numbers on the property and the MOA (maximum allowed offer, or bid in this case) is closer to $100,000 to allow enough profit after repairs. Go over to that guy with a business card and make him an offer!

If you say, “Hi there, I’m a real estate investor, too. You just purchased that property for $80,000. How would you like to sell it to me right now for $85,000?” What do you think he’ll say? With a little paperwork and almost no time invested, he’s just made $5,000 (unless he’s smart enough to counter), and you just got a house that you can finance with private money.

I tell people to do this to me at auctions all the time, and they rarely do. It blows my mind! Take the opportunity.

2. Anyone is allowed to bid at auctions.

Some foreclosure auctions require a bidder’s fee of a minimum amount (i.e. $10,000) to prove you have money. You may have to arrive at an auction with a cashier’s check made out to yourself to prove you have money. If you win the bid, you have to sign over your cashier’s check and the remainder of the amount by the close of the next business day. The deed will come in the mail 2-3 weeks later.

(Check the individual rules for each state and each auction as they vary. This is an example.)

Do your research on what the auction requires and be prepared.

3. Always know what lien you’re bidding on.

A property lien is “a legal claim on a tract of real estate granting the holder a specified amount of money upon the sale of the property. Such liens are often used to ensure the payment of a debt, with the property acting as collateral against the amount owed. A mortgage is the best example of a property lien.” (Definition according to Investopedia.)

Have you ever been to an auction where a “property” goes for as little as a few thousand dollars? There are markets where this happens, but the more likely reason is the bid is actually on a second or third lien against the property.

There’s money to be made in having a second or third lien position, but this can be an incredibly costly mistake if you don’t know what you’re doing. You do not want to inherit all the other liens on top of your bid if you can’t afford to buy them and the numbers don’t make sense for you to finance it.

Let’s say you purchase a 2nd lien and inherit the first lien, which is of a substantial amount. You would need to pay that loan off, too, including any past due interest and foreclosure fees and any past due property taxes. The first lien could still foreclose on the property if the loan is not paid off on time to stop the sale. If the first is foreclosed, then anyone who purchased the 2nd could then be wiped out.

Know what lien you’re bidding on by doing your research first. If you want to attempt bidding on a 2nd lien because the property is oh so tempting, know what you’re doing first. In fact, I recommend having an expert on your side. Let us know if you need help with that! Call us at 800-533-1622.

4. Research the properties.

Before attending an auction, drive by the ones you’re interested in to get a good look at them and their context. Make sure you check the property condition and neighborhood. Check whether the property is vacant or occupied. Is it located on a major street or intersection? Kick the tires here, walk the perimeter, do your due diligence. It’s worth the small investment of time to make sure you’re not bidding on something that could sink you.

Also, find out whatever you can about the property. Knock on a neighbor’s door and ask a few questions. Pull the numbers on the property and the comps in the area. Arm yourself with as much knowledge as possible before you put your money where your mouth is.

5. Pay attention to “Redemption Rights.”

Check the laws in your state. Some states allow a homeowner to buy back the property within a period of time if they’ve lost it to foreclosure. You’ll want to be aware of this before you spend money on a property that isn’t yours yet.

6. Secure the property.

Once you own a property purchased at auction, and you are clear of any “Redemption Rights,” move quickly to secure the property. If the property is occupied, call your real estate attorney to start processing an eviction. Call your general contractor to discuss the work and estimates. Start changing locks, boarding up windows and cleaning up. Do a walk through to assess what needs to be repaired and build a budget. Don’t sit on a property, push forward ASAP. Time is money, especially if you have any amount of financing on the property.

Would you like the chance to attend an action with me? Call 800-533-1622 to learn about attending my Inner Circle where you can even attend an auction with me, and get the inside scoop.


2 Bonus Benefits of Attending Foreclosure Auctions:

1. Networking.

Even if you don’t approach a bid winner and offer to purchase their newly awarded property, you can still visit with a stack of business cards and network with people. This is an excellent way to meet people that you may someday wholesale a home to or purchase a house from one day.

2. Staying aware.

Not only do you keep an eye on other investors in your area (what they’re doing, who they’re working with, who you can work alongside), but you gain a consistent feed of information. You can find out which neighborhoods are consistently repeated at the auction (and are worth driving though) and at what amounts others are purchasing properties for.


Like anything else, you want to prepare yourself before you start spending money. If you aren’t “there” yet, let us help you. Have you attended a Funding Tour to learn the basics and tour houses that need to be rehabbed? Have you worked with a coach to understand what you’re fully capable of and how to take the next steps toward success?

Remember my motto, “We get more of what we want by helping you get more of what you want.”

What do you want and how can we help?

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!

#1 Proof of Funds Mistake

If you’re crunching the numbers, making consistent offers that are at your MAO (maximum allowed offer), and you’re coming up bust, you may be making the #1 mistake with your Proof of Funds Letter.

But before I tell you what the #1 mistake is, let’s talk about rejection. Having your offer rejected is common. In fact, if your offers aren’t getting declined consistently, you aren’t making enough offers! Remember how we talked about making an offer on every single place you look at? (READ MORE HERE!) Even if your offers are strong, you’re still going to have some dismissed.

It’s a numbers game, and it’s all a part of real estate investing.

First, look at how many offers you are making every week. Is it enough to sway the numbers in your favor?

Good. Now, why aren’t you having more of your offers accepted?

You can greatly increase your chances of having your offers accepted or countered with one little thing, and I guarantee you aren’t all doing it.

The #1 mistake people make with a Proof of Funds letter is not using one!

The seller wants to know if you have:
a. Cash
b. Financing

If you don’t have a briefcase full of cash to hand over (okay, that’s not how it works, but it might as well be for the majority who don’t have the funds), then showing that you have financing is your next best level of support to your offer. But you don’t get financing first, you find the deal first. (READ HERE FOR MORE.)

Catch 22?

Nope.

The bridge between having proof of the funds before you have the funds (because you have to find the deal first) is the Proof of Funds letter. It’s an easy solution, and thousands of people use it to support their offers and gain traction in acquiring more houses.

What is it?

Before an agent agrees to work with you, they often require a Proof of Funds letters. And many times, a Proof of Funds letter is required along with a purchase offer contract in real estate transactions.

In short, a Proof of Funds letter gives you, the investor, verification to provide to the seller of a property that you have the funds available and ready to use toward the purchase. You can provide this letter to the necessary parties involved in your real estate transactions, proving that you have access to the funds to buy the property.

Why does it matter?

Some buyers will argue that a Proof of Funds is unnecessary or unimportant. Some (especially those doing well for themselves) may even see it as insulting.

Don’t take it personally. It’s a good business practice. It can set your offer above the others, make it more enticing for the seller, and give you a leg up on the competition.

This letter shows that you are capable of affording a large-scale purchase, such as a house. The document is relevant to the seller and anyone else involved in the deal. It’s easy to obtain and increases your chances of having an offer accepted.

If you have a proof of funds letter, use it. It’s an easy mistake to avoid!

If you don’t, how do you get one?

That’s the best part! Cogo Capital® makes it incredibly easy to generate a Proof of Funds letter to provide to real estate agents or other interested parties.

Visit https://cogocapital.com/lp/home/get-a-proof-of-funds-letter/

Need one that’s greater than the dollar amount available online or have questions about restrictions? Call COGO Capital at 800-747-1104 for more information.

If you’re ready to kick it up a notch, join us for a FUNDING TOUR and we’ll provide you with a $250,000 pre-approval letter to support your next transaction. (A pre-approval letter provides documentation of exactly how much you have been approved to borrow.) For more information on what a FUNDING TOUR is and why I believe so strongly that you should attend that I’ll pay for your $497 seat, visit fundingtour.com or call 800-533-1622.

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.

Finding Owners of Vacant Houses

An investor recently asked me on Twitter, “I see vacant houses down the street. How do I find the owner? #asklee”

Whenever you’re driving or riding in a car, bus, uber, or taxi, you should be looking for vacant, boarded up, distressed properties, FSBO (“for sale by owner”) properties, and houses for rent. When you see these house, especially when you target specific areas to know when people are moving in and out, you can capitalize on the potential purchase of a property, but only if you can find who owns it.

Sometimes, it can take some time and effort to find these owners, but once you do, you have a chance that they will be motivated to sell. And that’s great news for you!

Here are a few ways you can uncover the owner of that vacant, distressed house, ready for the real estate pickin’.

ONLINE

Often, you can find this information directly on the internet.

Go to http://www.netronline.com/ Click on “public records,” then your city and state.

COURTHOUSE

Once you have the address, you can physically go down to the courthouse to find the owner’s name in the public records.

THE NEIGHBORHOOD

Stop by and knock on some doors. Talk to the neighbors on both sides, in front, and behind until you find someone who knew them. If you can get a name, you can look them up in tax rolls, appraisal districts, in the phone book, or online. Sometimes, they may know where the owner moved or have their phone number.

This can be one of your most beneficial resources because a vacant or distressed home can bring down the value of a neighborhood. When you introduce yourself as an investor looking to fix up and resell the property, you’re more likely to garner cooperation.

MAIL

Send out two letters, one to the address of the vacant home with the intention that the post office forwards it to the new address. The other, send to the address with the words “Address Service Requested; Do Not Forward” on the envelope.

UTILITIES

Check with the utility company to see if the owners set up a new account under the same name. They are not required to give you the address, and often won’t, but you might learn whether they are still in the area or not.

REVERSE DIRECTORY

If you have an address but not the name, try using a reverse directory to look up the owner. You can find one quickly online (try reverseaddress.com) or in the reference section at your local library.

FLYERS

Sometimes, the owners or family members of the owner will come back to the property to retrieve something, check on the house, or get the mail they forgot to forward. Leave your information on a flyer, business card, or letter for them to find. If they’re motivated to sell, they’ll reach out.

You see these homes everywhere. Now that you know how to find the owners, there’s no excuse not to reach out. The more you find, the more you contact, the more offers you make, and the closer you are to grabbing that next great deal before someone else does!

I can’t share my best secrets on here, but if you’d like to know more about what to do next, join me for an upcoming FUNDING TOUR or one of our specialty labs. For more, call us at 800-533-1622.

Have a question? Hop over to my Twitter at  @LeeArnoldSystem , follow me, and use the hashtag #asklee, and then check back here often to see if I’ve answered your real estate question.

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!

Don’t Look Without Offering

There are few similarities between purchasing your home (your primary residence) and buying a distressed house with the intent of fixing it and retailing it back into the market.

For instance, when purchasing your own home, you will look at the house before deciding to make an offer. You’re going to make sure it’s a layout you like, and the quality is what you expect.

That isn’t the case when looking at an investment property.

You don’t always get the opportunity to look at a distressed home before buying it. At auction, for example, you may have driven by the property before putting in a bid. But if you find a property on the MLS or made an appointment with the owners, if you have the option to view it, you better be ready to make an offer.

 

WHY LOOK AT IT, THEN?

 

Contrary to popular belief, you don’t get in your car, drive across town to look at a property to determine IF you’re going to buy it or not.

You look at a property to determine the price you’re going to offer! You need to already have numbers on paper of what the property is selling for, what it’s worth after it’s fixed up (the ARV, or After Repair Value), and what the comps in the area are.

“But what if it has mold?” 

Then the price goes down.

“But what if it has fire damage?” 

Then the price goes WAY down.

 

WHY ELSE?

 

Sure, if you’re a newcomer and you see a house that you know is way over your head, I’m not saying that you’re locked in just by looking at it. As long as you have leads flowing and more houses lined up, pursue the next one. But you better have an offer ready, even if it’s a low-ball one.

 

But why?

 

Looking at a house without the intent to make an offer can kill your productivity.

 

  1. It’s a waste of your time. Looking at a property without intended commitment isn’t income producing. I can’t tell you how many people are afraid to make an offer because they think their MAO (maximum allowed offer) is too low and they figure the process will be a waste of time. Then, someone else comes along and gets that property for the same amount or less! It doesn’t happen every time, but you don’t know unless you try, and you’re not trying out of fear.

 

  1. You haven’t given feedback to the owner about what the price should be. If you’re looking at a FSBO (for sale by owner) property and they’re asking too much, your first inclination might be to let someone else burst their bubble. Many homeowners, regardless of whether or not they’re in distress, put an unrealistic price tag on a house from sentimental value alone. If you don’t give them an appropriately priced offer, they may never get any offers, and then they may end up TRULY distressed.

 

  1. It creates a false sense of accomplishment. If you have to make an appointment, get in the car, drive across town, put on your professional slacks and smiles, and take the time to view a property, you’re going to wipe your brow when it’s over and feel accomplished that you took a step.

 

I’m all for taking one step after the other, but the work has barely begun. Don’t pat yourself on the back just yet! Take the next step and write the offer!

At first, it can be tricky knowing what to do and what not to do, what to look for, how to write up an offer, how to communicate with a homeowner, etc. You may feel like you need to ease in, like inching forward in the icy water, acclimating with each step.

 

Jump in!

 

Not only will you acclimate faster, you’ll make all your mistakes right away (because you WILL make mistakes), and then you can move on to success.

If you want to make less of those mistakes, know what to do, what to say, and how to offer, might I suggest some assistance? If you can’t catch one of our upcoming FUNDING TOURS (ask us how you can get your $497 ticket paid for and a $250,000 pre-approval letter just for attending), try jumping in full force by getting a coach. For more information on what will help launch you forward into making offers faster, call us at 800-533-1622, and we’ll help you figure it out.

Don’t view a property just to see it. See it with the intention of making an offer.

Otherwise, spend your time on things that are income producing.

 

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!

Don’t Look Without Offering

There are few similarities between purchasing your home (your primary residence) and buying a distressed house with the intent of fixing it and retailing it back into the market.

For instance, when purchasing your own home, you will look at the house before deciding to make an offer. You’re going to make sure it’s a layout you like, and the quality is what you expect.

That isn’t the case when looking at an investment property.

You don’t always get the opportunity to look at a distressed home before buying it. At auction, for example, you may have driven by the property before putting in a bid. But if you find a property on the MLS or made an appointment with the owners, if you have the option to view it, you better be ready to make an offer.

WHY LOOK AT IT, THEN?

Contrary to popular belief, you don’t get in your car, drive across town to look at a property to determine IF you’re going to buy it or not.

You look at a property to determine the price you’re going to offer! You need to already have numbers on paper of what the property is selling for, what it’s worth after it’s fixed up (the ARV, or After Repair Value), and what the comps in the area are.

 

“But what if it has mold?” 

Then the price goes down.

“But what if it has fire damage?” 

Then the price goes WAY down.

 

WHY ELSE?

Sure, if you’re a newcomer and you see a house that you know is way over your head, I’m not saying that you’re locked in just by looking at it. As long as you have leads flowing and more houses lined up, pursue the next one. But you better have an offer ready, even if it’s a low-ball one.

But why?

Looking at a house without the intent to make an offer can kill your productivity.

 

  1. It’s a waste of your time. Looking at a property without intended commitment isn’t income producing. I can’t tell you how many people are afraid to make an offer because they think their MAO (maximum allowed offer) is too low and they figure the process will be a waste of time. Then, someone else comes along and gets that property for the same amount or less! It doesn’t happen every time, but you don’t know unless you try, and you’re not trying out of fear.

 

  1. You haven’t given feedback to the owner about what the price should be. If you’re looking at a FSBO (for sale by owner) property and they’re asking too much, your first inclination might be to let someone else burst their bubble. Many homeowners, regardless of whether or not they’re in distress, put an unrealistic price tag on a house from sentimental value alone. If you don’t give them an appropriately priced offer, they may never get any offers, and then they may end up TRULY distressed.

 

  1. It creates a false sense of accomplishment. If you have to make an appointment, get in the car, drive across town, put on your professional slacks and smiles, and take the time to view a property, you’re going to wipe your brow when it’s over and feel accomplished that you took a step.

 

I’m all for taking one step after the other, but the work has barely begun. Don’t pat yourself on the back just yet! Take the next step and write the offer!

At first, it can be tricky knowing what to do and what not to do, what to look for, how to write up an offer, how to communicate with a homeowner, etc. You may feel like you need to ease in, like inching forward in the icy water, acclimating with each step.

Jump in!

Not only will you acclimate faster, you’ll make all your mistakes right away (because you WILL make mistakes), and then you can move on to success.

If you want to make less of those mistakes, know what to do, what to say, and how to offer, might I suggest some assistance? If you can’t catch one of our upcoming FUNDING TOURS, try jumping in full force by getting a coach. For more information on what will help launch you forward into making offers faster, call us at 800-533-1622, and we’ll help you figure it out.

 

Don’t view a property just to see it. See it with the intention of making an offer.

Otherwise, spend your time on things that are income producing.

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!

S.W.O.T. Analysis

Last week over on my Lee Arnold Blog, I wrote about 5 of the best qualities of a CEO. Today, I’d like to do a deep dive into what it takes to get you there.

There are so many traits a good CEO must have. But, how can you understand and pile on a bunch of positive attributes if you don’t know where you currently are and how you can improve?

You need to start with the basics; a baseline of self-discovery to build upon or trying to stack traits could feel like throwing wet noodles against the wall. Some might stick, but most will fall behind the stove.

Grab a sheet of paper and set it up like the photo below (or print this PDF here: S.W.O.T)

Print me!

Strengths:

 

First, list all your strengths.

 

– What do you do really well?

– Who do you have on your team?

– What do you offer that is different/better than your competitors?

– What parts of your business are you passionate about?

(Without passion, you won’t make much money, but without money, you’ll lose your passion!)

– What are your business strengths? Are you detail oriented, outgoing, analytical?

– What are the assets you can contribute?

 

Weaknesses:

 

 Next, catalog your weaknesses.

 

– What parts of business are you weak at?

– What are the weaknesses in you that others are likely to see?

– What do you despise doing?

– What can you delegate/avoid?

– What weaknesses can you work to improve or manage around?

– What factors are costing you money and need to be addressed ASAP?

 

Understanding your weaknesses is vital to your success. It shows you where you need to navigate, what you can delegate for the best results, and hints at what you can automate for optimal time management. No two businesses are alike, as everyone has different strengths and weaknesses.

 

Opportunities:

 

It’s important to know what you have going for you. List your opportunities.

 

– What opportunities exist for you? Time, marriage/partnerships, being close to retirement, having money to invest, skills, education?

– Look at the people you can get to know, the events you can attend, the connections you can make.

 

Threats:

 

Don’t be shy. What is threatening your business?

 

– What obstacles are you facing? Cash flow problems? Time constraints?

– What are your competitors doing?

– Is your spouse not on board? (Convincing your spouse may be your biggest sale, but I highly recommend you get on the same page before moving forward.)

 

Like knowing your weaknesses, understanding your threats is essential for the prosperity of your business. Though it isn’t fun to dive into the aspects that are potentially menacing, it’s much more threatening not to.

 

Take the time to analyze yourself and your business, then press forward. Attend conferences, hire out your weaknesses, and focus on building and USING your strengths. Take advantage of your opportunities and decide how to handle your threats. In this, you’ll propel your work forward.

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!

 

Attracting Money

It’s easier than you think, and has very little to do with YOU.

What is the #1 thing you need to be successful in Real Estate?

Desire? Well, you need that, but no. Information? Yes, you’re going to want tons of it, but not quite. Connections? It will help, you’re almost there.

You need a DEAL.

Credit, finances, ability, health–none of these are deal breakers. If you don’t have a deal, you don’t have a business.

So, what keeps people from engaging in finding deals?

Fear? Not knowing where a good deal is? No! Those are common objections, but they aren’t the main doubt.

The number one opposition from people is that they think they don’t have the money. You don’t need the money first (READ MORE HERE). You can build relationships with lenders, but truly, you need a deal first, and the money will follow.

So, how do you “attract” the money you need?

For starters, money is not attracted to you. Money doesn’t like you. Money likes opportunity.

In order to attract money, you need to create opportunity.

Money wants to insert itself into a vehicle where it can grow and get fatter.

You don’t necessarily represent that opportunity as an individual, and so it isn’t attracted to you. You can be education,  highly skilled, have contacts. But at the end of the day, you have to have an opportunity. In real estate, which comes in the form of property; what you purchase the property for, what you make it worth through rehabbing, and what you sell it for.

You make your money when you buy. You realize your investment when you sell.

Repeat after me: “I make money when I buy.”

If you don’t buy right, I don’t care how pretty you make a house; you will lose money. You have to analyze the NUMBERS.

We often think “location, location, location.” But, your success is found in “price, price, price!

To determine how much your maximum offer should be on a property, CLICK HERE to read more.

If you’re new, and you still have fears and objections, finding a good deal will seem more daunting than it actually is. But once you get used to running the numbers and making offers, you’ll see them all over the place. Jump in, and learn to swim as you go.

For more on the steps of finding a good deal, why not join us for an upcoming FUNDING TOUR where we will not only show you the details of a good deal, you’ll receive a $250,000 pre-approval letter just for signing up, you know, just in case your objection is STILL that you don’t have the money to put those good deals together.

For more information on our FUNDING TOURS, CLICK HERE or call 800-533-1622.

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!

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.

Stay tuned, we’ll soon 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