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Last week we held our largest teleclass in Goal Digger history!  Over 600 additional people tried to get into the call but were shut out because our teleconferencing service was maxed out.  I knew the training class was going to be good, but I could not have imagined the positive response we’ve received since.

Now everyone has the opportunity to listen to the class!

Read carefully, because there are a few things you should know to capitalize on this opportunity:

- The class was 100% training (no sales pitch)
- There is a handout that you must have printed and in hand while you listen
- The handout contains quiz questions that earn you $5.00 each in answer credits, for a total of $140.00 in credits!
- This class teaches a real estate investing strategy that I’m pretty sure you’ve never heard of before
- I called references of people who are using this strategy (one for years, and one for a few weeks) and got the straight scoop on what’s involved, how much time they spend doing it, how much money they’re making, and the pitfalls of the strategy!

You hear the results of my reference calls during the class.

The results of this week’s carnival of real estate have been posted.  Thanks to The Future of Real Estate Marketing for volunteering to host this week.

If you’ve never heard of a “carnival,” you’re not alone.  It’s relatively new to the blogosphere.  There are many carnivals: the carnival of real estate, carnival of pets, carnival of cockroaches - you name it and there may be a carnival representing it.  Each week, bloggers from within the respective topic are invited to submit their best recent blog post.  The host of the carnival for that week reviews all of the submissions and chooses the best 18-20 that they like.  The host posts all of the “best picks” in their own blog that week so everyone has a consolidated place to read them. 

Check it out - you will find several real estate blogs you’ve never seen before!

One of the key reasons some people avoid investing in rental property is fear - fear of the tenant, and more specifically, fear of the eviction.  My friend Rick over at Landlord Shmandlord has been going through the eviction process and is chronicalling it quite nicely. 

Read his last couple of entries to learn about his experiences with it so far.  He’s doing great!

Goal Digger, Inc. is the name of my company, and the umbrella under which The Landlord System resides.  I thought long and hard about my company name and it’s logo, what it represents, and I have a secret confession. 

It is my desire that “goal digger” becomes a household term.  I want to hear this term mentioned in prime time dramas, on CNN, and at happy hour gatherings.  Maybe one day it will become so recognized as to make it into Webster’s dictionary.  With the help of the blogosphere, this is entirely possible!

Let me explain what a goal digger is.

Goal Digger (noun) gōl’ díg’ · er: A person who knows what they want and knows they will get it. 

How do they know they will get it?  The reason they know they will get it is because they know what they want. It’s cyclical logic (see that in the logo?). The hardest part is defining what you want, but once you can clearly do that, making it happen is the easier part. Many of us don’t know what we want and that’s why we go through life not getting.

The concept of being a goal digger applies to all areas of life, but let’s see how it applies to real estate investing, for example. (more…)

There’s something extra powerful about doing a lot of real estate transactions at the same time.  I think you learn a lot more because you’re in the thick of it and you basically have to dedicate your life to it for those several weeks.  You can also compare and contrast how the different transactions are going, and ask questions to one that was learned from another, and then when you get your answer, you can go back to the other with more questions, etc.

I got pretty involved in preconstruction over the last year and had 6 homes built.  Most of them had great builder incentives if you used the builder’s lender, so I’ve been able to/had to work with several different lenders in addition to 3 different mortgage brokers that I tried out on my own.  It’s been great learning tidbits from each one.  It’s also been very interesting to see the diversity in the loan officers’ perspectives, expertise, advice, and style.  (more…)

I’m hosting a teleseminar tomorrow night (July 25) that is going to be really good.  It’s about a different type of real estate investing that I had never heard of before.  It’s not brand new, just new to me.

I spoke with some references at length who shared with me their experiences with the method so far.  One guy has been doing it for years with good success, and the other only started 30 days ago and has 2 deals under his belt so far.  They are investing very little of their own money and also very little time.  The one guy I talked to works up to 92 hours a week at 3 different jobs yet is managing to build up a nice passive income stream on the side.  He gave me details of exactly how much time he invested in each deal, down to the number of minutes spent doing each activity that was required.  He spent between 4 and 20 hours per deal, front to back.

I don’t want to say too much and steal my guest’s thunder tomorrow night, but I will say that the method provides passive income, a steady cash flow stream that grows annually, and is different than rental properties, lease options, selling notes, or subject-tos.  I will have the inventor of the method himself on the line and he will compare and contrast and explain it fully.  He has even offered to open it up to live Q & A afterwards.

The call is at 6:15 pm Pacific/9:15 pm Eastern, Tuesday July 25.  For the dial-in details and a handout to download, visit this site.

You never know, this could be the real estate investing niche you’ve been looking for!

The results of this week’s Carnival of Real Estate are in!

Thanks to Searchlight Crusade for hosting this week, and for highlighting one of my recent posts, “Tenant, Meet Plunger.”

One of the things I teach my students to do in rentals where roommates live together is to collect the rent in one instrument.  This means all the roommates gather their individual rents together and one designated person writes out one check or gets one money order to send to the landlord.  You don’t have to worry about chasing down late rent x number of times, assessing late fees individually, or tracking security deposits and deductions from them separately.  The jointly and severally liable clause in a lease sort of implies this, if you have one, but it only partially covers this issue and you want to be explicit.  You want to take this clause one step further and treat all roommates as one from a money perspective.

Here’s a good example of when not doing this causes unnecessary hassle.  One of my property managers slipped up and treated roommates individually and is now spending time chasing down a security deposit.  He could have avoided the time and hassle he’s dealing with, which by the way, he doesn’t get paid for since I pay him on rents collected only (not on security deposits collected).

We have 5 roommates living together in a unit.  At the end of the school year, which is also the end of the lease term, a couple roommates left and a couple new ones moved in.  The new ones applied and passed screening so all was good there.  The problem was born when my property manager refunded one-fifth of the security deposit to each of the two departing tenants.  The fact that this happened got lost in the shuffle and now one of the new roommates that moved in never paid his portion of the deposit and is turning out to be difficult about it.  We’re 6 weeks into the lease and we still have a partial deposit in our account - not cool.

What my manager should have done was made a clean break at the end of the lease term, with the “one instrument” clause in mind.  He should have refunded the security deposit in one lump sum to all 5 roommates collectively at the end of their lease.  They can split it up however they decide.  He should have immediately then collected one lump security deposit from the new set of roommates, without regard for who paid what portion of it.  Some of the roommates are sharing bedrooms and some have their own room and I would imagine they agreed to pay different amounts of rent.  I don’t much care because it’s not my business.

This money shuffle at the end of the lease may happen partially on paper, meaning my manager may not literally hand the deposit off, only to collect it back again minutes later.  The majority of the deposit may well stay in our bank account.  The point is you don’t want to get caught up in the details of who is paying what.  One person is designated as the payor (the roommates can decide who this is and write it into the roommate agreement that you have them all sign), and this person is responsible for shuffling money between everyone and handing or mailing the landlord the funds.  Once names of who is paying or not paying come up, you basically need to take a “talk to the hand” stance and not allow the tenants to trouble you with their details.

This is one example of how having policies, and having the forms that allow you to enforce your policies, can prevent and eliminate a time consuming task for you or your manager.

I’m trying to remember the last HUD-1 that I reviewed prior to closing that was 100% correct.  I can’t!  For some of my closings in Arizona the title company doesn’t even have the HUD-1 prepared for you to review ahead of time - at the closing table is the first you see of it.  Well I’ve shown up at many a closing table only to reschedule and walk out without closing.  Sometimes I’ve received the documents a couple hours before or even a day before closing and I’ve caught a few things that needed to be corrected.  With all of the different people involved in a transaction, and with all of those eyes looking at the numbers, I am perplexed by the situation really.  Of course maybe that is precisely why there are so many errors.

One time I got the HUD-1 a couple hours before my closing appointment.  On the line for insurance impounds instead of there being a dollar figure there, it said “need information.”  So I call the title company and politely asked what they need, considering I faxed my insurance policy to my mortgage broker weeks ago.  Title didn’t have the annual cost for my insurance. So getting a little less polite I ask how is it possible that it’s 2 hours before close and this is still unresolved.  Instead of putting a note on the HUD-1, did she try calling anyone to ask for the insurance amount?  Of course not.  Did my mortgage broker review the HUD-1 before me or at the same time as me and take care of it?  No.  My realtor?  He was completely out of the picture as I had not spoken to him since the day he told me about the deal.  See realtor mishaps.  I wonder what would have happened if I would not have been by my desk, able to get the HUD-1 by email, if I wouldn’t have had time to review it, or if I would have relied on all the people that were getting paid to handle this transaction for me.  I would’ve gotten to the closing table, only to leave without closing.  Simple changes like this can never be made on the spot.  It takes days.  Watch out if you have a closing deadline and you get charged a late fee per day if you close late.  In this incident, $1,200 in late fees racked up pretty quickly while everyone scrambled to do whatever was necessary to plug in the insurance premium that was clearly stated on my insurance policy.  I later got the late fees removed as I was able to convince the builder that since we were using their preferred title company and since they were paying the realtor, it was someone else’s responsibility to get it right before I only have the final 2 hours before closing to check over everyone’s work.

I have another example from yesterday, this one slightly different. 

(more…)

Here’s something a little amusing about the lending process.  We are in the midst of a couple of re-finances with some of our preconstruction homes in Tucson.  My husband is doing one in his name, and I’m doing one in my name.  We always alternate who gets the loan to cut down on the number of credit inquiries and mortgages that are on each of our credit reports.  Our commercial loans are in the names of LLCs, so they don’t show up on either, but our small-units and homes are split between the two of us.

This one re-fi my husband is doing is a stated income loan.  He’s self employed and in this case he stated his income, he identified himself as being self employed, and he showed proof of assets that were verified through bank statements, etc.  We’re using one of our favorite mortgage brokers to get the loan and today my husband received a phone call from the lender who’s funding the loan.  She was calling for the “VOE” Verification of Employment.

The phone call basically went like this:

Randy: Hello?

Lender: May I speak with Randy please?

Randy: Speaking

Lender: This is ABC Mortgage calling to verify your employment.  What line of work are you in?

Randy: Property management

Lender: Are you an employee or do you own the company?

Randy: I own the company

Lender: How long have you owned this company?

Randy: 4 1/2 years

Lender: Thank you, good bye

One thing I find so amusing about this whole process is that lending is largely about putting checks in boxes.  The woman called, she read her script, she typed in the answers, and she’s done.  She doesn’t ask anything extra, we don’t volunteer anything that is not asked. 

The other amusing thing about lending is that sometimes they can get super nit picky on the details.  I mentioned that we verified assets for this loan, otherwise known as the VOA process (verification of assets).  In this case we sent in all pages of 2 month’s of statements from our brokerage account.  Each month’s statement is 40 pages.  There is a summary page on the front, and then all the detail is double-sided throughout the rest of the statement.  I tried to get away with sending the summary page, which has all of the account numbers and balances on it, but they will not accept it.  It’s a real pain to make copies of double-sided statements, collate it all, and fax it.  So I at least try to get away with less work each time.  Never works.  So we faxed in all the pages as requested.  This time even that wasn’t enough.  They had to call our brokerage house and have them verify the authenticity of the statements.  Our broker had to fill out some forms saying that the statements are correct.  Of course the broker cannot do this until they contact us and have us fill out forms to authorize them to talk to a 3rd party about our account.  And somewhere in the middle of all of this, our broker called me to ask me to call someone at the lender to fax us a form that authorized the lender to request the info from the broker.  And round and round we went.

You would think that the fact that the broker’s logo and special paper is used in the statement would be enough to satisfy the lender that it’s authentic.  Or maybe a verbal confirmation from the broker confirming the information.  Lenders accept much less in other cases - such as a verbal confirmation that you are in fact the owner of your own company that provides you $x in income for example!