Aaron Yates

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3 Articles Written
I am strong willed and motivated. I have been building my personal Real Estate portfolio as well as always looking to learn more. More recently I have been trying to help others with the experie...
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I am strong willed and motivated. I have been building my personal Real Estate portfolio as well as always looking to learn more. More recently I have been trying to help others with the experiences I have acquired in my investing business. Currently building a local investors group to help people learn from each other and create deals. My experience is 2+ years buying, rehabbing and renting out properties. Extensive Property Researching abilities Project Evaluation Rehab cost estimations Project Planning and managing
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Real Estate Marketing

Real Estate Rules… Do You Really Need Them?

70% RULE, 50% RULE, 2% RULE…    FIND THE DEAL THE MONEY WILL COME…. Do you REALLY need to follow these rules and will they WORK?  I wanted to share a little about my opinion and experience with these rules. Let me say this before you continue reading. I do NOT recommend you to follow my strategy. You need to be strong-willed, motivated, and driven to make investing work the way I have. I don’t claim or suggest in any way that my strategy will bring you the same results. Do I follow these rules? No! In fact, I never heard of these rules until I found BiggerPockets in July of 2013 and had already purchased my 4th property in 1 years time and in total my 5th property by June 2013. Have I tried following these rules? Yes, I have tried a few of them since I heard about them and so far they have NOT worked for me and the money has definitely NOT come when I find a good deal even when I am footing the rehab costs myself. So I still currently invest in what I can purchase and rehab myself, which are cheap rental properties. How did I find good deals then since everyone says there are no deals on the MLS? Well, the MLS is NOT dead. I simply look on the MLS, run the numbers and decide if it makes sense and provides enough profit for me to move forward. Did you create an exit strategy? Nope. I’m very aggressive and won’t take failure as an option. I go in with one goal and one goal only when buying a property. Granted I have had one project this year that the strategy did change during the project so I guess you can say I had an exit strategy on that one. Do I follow everyone’s suggestions on BP? No. But I definitely listen to people’s advice and if it doesn’t make sense to me and my market then I do what I feel comfortable with. In fact recently I took someone else’s advice on my last purchase instead of relying on my original plan and it didn’t work out as smooth as it should have. So instead of getting the property occupied in my normal month, it took 3 months. Point being, advice is great, but it may not work in your market if it’s from someone who doesn’t invest in your market. But I have learned a lot about investing from BP members and other’s locally so don’t take this the wrong way. What do you do if your estimates are wrong? You adjust accordingly. Shift your rehab plans and strategy. Do some work yourself instead of contracting it out. Work through it and move forward. Should I quit investing if a project goes over budget? My first response to this, HELL NO!! My second response is “yes” if you can’t handle the stress that comes along with it and it’s taking your living money to move forward. I did not follow this suggestion myself in regards to quitting. But again, I have a different mindset. I’m very aggressive. I make it work one-way or another. How much should I have in the bank before I invest? There is no one answer for this. It depends on your plan and budget. I myself have gone broke on every project I have done in the past year. But I will not go into a project if it instantly breaks the bank just to do it. It usually breaks me by the end of the rehab. Then I bounce back. Moral of the story? You and only you can determine what you are capable of and what will work for YOU. You need to be able to make decisions for yourself if you want to invest in Real Estate. This is in my opinion, the number one important thing in investing if you want to succeed. If you constantly rely on someone else to tell you what to do then maybe you need to look into other things and forget about Real Estate. Take peoples suggestions and experiences, including mine, for knowledge and not as a guaranteed way that will work for you to make money in Real Estate. If following these rules work for you then that’s great. But don’t let the rules dictate your direction in Real Estate!  In fact, if I followed the rental rules, I would be making LESS than what I am from my rentals by following my own rules and strategy. So don’t get stuck in a rut by trying to run numbers solely based on “The Rules”. Use them as a guide and adjust accordingly or ignore them completely like I have. But that’s your own decision and I am not telling you to specifically ignore them. Good luck in your investing endeavors and I will try to help in any way I can. Thank you for reading. Photo Credit: ario_ Free eBook from BiggerPockets! Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks, and techniques delivered straight to your inbox twice weekly! Actionable Advice for Getting Started, Discover the 10 Most Lucrative Real Estate Niches, Learn how to get started with or without money, Explore Real-Life Strategies for Building Wealth, And a LOT more Sign up below to download the eBook for FREE today! Click Here to Download the eBook Now! We hate spam just as much as you

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Mortgages & Creative Financing

The Importance of Doing Your Due Diligence: A True (and Almost Disastrous) Story

Today I had a new experience in my real estate investing… it came down to just hours before closing that I discovered some underlying issues with a property I won at auction 2 weeks ago. Here’s the story… The Setting I attended my first property auction on October 29th, 2013 – I was excited and nervous. The seller auctioning off the properties was a familiar one and I had purchased two properties from them already through the MLS. So I couldn’t wait to see what kind of deal I could get since they had been sitting on around 200 properties for a year without being able to sell them on the MLS. The Deal There were three properties I had interest in. I only won one of them, but it was also the least expensive property. It was advertised as a 2 bed, 1 bath property that had a non-paying tenant/squatter and no lease. I thought no biggie, I’ll offer cash for keys and hopefully get him out without anymore damage to the property. I signed the papers with the understanding I will be receiving a covenant deed and marketable title, taxes, water, and any other outstanding fees paid. The Research I was able to contact the tenant by leaving a card on the door as well as talking to one of the neighbors. I set it up for the city to fix the water meter to get a final read before closing after discovering the meter wasn’t functioning. I set the stage to work out a deal with the tenant/squatter after closing. I verified all the normal things you should when buying a property such as true ownership, property history, taxes, and so forth. The seller was paying the taxes, back water, ordinance tickets/violations and all that other jazz that goes with a normal property purchase. I was also able to walk the property 2 days prior to the scheduled closing since the tenant let me into the property. I took my uncle to help prevent any issues that may arise from being alone. The tenant was nice and talkative and the property was in much better shape than what the pictures showed and what the listing had stated. I started getting excited because this property needed maybe $5000 into it and I was only paying $4400 to purchase it! Not to mention that it was really a 3 bedroom, not a 2 bedroom. Can you say CHA CHING????!!!! The Surprise So during the walk-through, I found out that the tenant DID have a lease and I found out what really happened the past year with the company who owned it. I was willing to overlook this until I received and reviewed my closing package the morning of closing. (ok, I received it 3 days prior but got lazy about reading it) In any case, what I found was three more discrepancies from the original deal. This closing package stated that: I will be responsible for the property maintenance fees to the city, I will only receive a quit claim deed but will be getting title insurance, and that the tenant was a squatter with no lease which was what was portrayed at the auction as well. This was all contradictory to what the original deal was at auction and in regards to the lease at hand which I personally read myself when I met the tenant. Plus, now I was only going to receive a quit claim deed and I was being charged for the weed cutting. To make matters worse, I spoke with the tenant this morning and instead of his initial request to be evicted so he can get state aid, he was now demanding cash. He insisted I need to help him find a new place to live. After I told him I would not pay him his requested $2500, we continued talking about his rights as a tenant. In the end, his final request was $13o0 and move-out on January 1st 2014. This was not acceptable to me, especially after the conversation we just had because I no longer trusted this tenant’s word. Not to mention I had already put into motion for the seller to resolve the issues and one of my stipulations that the auction house recommended was to have the seller forfeit any backrent they were legally allowed to collect. This way the tenant wouldn’t have to worry about a lawsuit. But this didn’t matter to the tenant. He now started rambling on that someone has to help him move financially or he will just take his lease to the court and let them know that he and his kids were being wrongfully evicted. His kids did not live with him full time but I’m thinking he would make it look that way for the court. The Result So now I was starting to see the light! This was a professional renter and he knew how to play the game… a game I wanted nothing to do with. I am too inexperienced in this matter and don’t have the financial means to deal with this kind of thing right now. In the end, I contacted the auction company as well as the title company again. Since the seller’s conveyed incorrect information to the auction company and was documented that way, the owner of the auction company agreed that the seller withheld information not only from me but to them and legally I can withdraw from the contract. So I did just that and they sent me a release form so I can get my EMD back. The Lesson The moral of this story is that no matter how much researching you do (and trust me… I do some seriously extensive research!) there is always something that can rear it’s ugly head when purchasing Real Estate. Always do your due diligence – check, check, and recheck. My gut actually gave me a feeling about a week prior to closing and I started making calls at that point but everything seemed to pan out at that time. So do your due diligence! If you are not capable then hire someone who is. Read the fine print. Learn to tell the difference between your ‘gut feeling’ and just being scared to move forward though or you may never get your first deal if you are new and get that feeling every time you look at a property. Photo Credit: Victor1558 Free eBook from BiggerPockets! Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks, and techniques delivered straight to your inbox twice weekly! Actionable Advice for Getting Started, Discover the 10 Most Lucrative Real Estate Niches, Learn how to get started with or without money, Explore Real-Life Strategies for Building Wealth, And a LOT more Sign up below to download the eBook for FREE today! Click Here to Download the eBook Now! We hate spam just as much as you

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Real Estate Investing Basics

The “Right Way” To Invest In Real Estate Is…

Do you know the one “Right Way” to get started investing in real estate? I gained interest in Real Estate in 2003 – I bought the Carleton Sheets and then after reviewing it I returned it in the 30 day requirement because I was broke and needed my $100 back. No – I didn’t get into Real Estate at that point but that is where it all started. Fast forward to 2008/2009 and my first attempt which I failed miserably at Real Estate. In 2011 I dipped my toes in again with 1 rental property purchased – for cash this time. I even took it one step safer and rented to my mom and uncle for the first year. Finally in 2012, 1 year after my “testing the water” phase, I jumped all-in and went from having only 1 property in June of 2012 to acquiring 4 more cash purchases by June of 2013. I dug in and got my hands dirty as needed. When I need to know something – I become obsessed with it and research until I got the answers. I lost sleep at night thinking about Real Estate, calculating numbers, learning how to find private lenders, how to resolve rehab issues, and so on. I only speak on what I personally have experienced or know is fact. If I get a ‘No’ I move on and figure out how to overcome my obstacle. I’ve learned the hard way and only since July of this year have I been able to network and meet people smarter than me and doing this longer than me because I travel for work a lot. It’s been great and it’s been disappointing at the same time. What is the “Best Way” To Get Started? This leads me to my blog topic today. One thing about learning the hard way is you are forced to learn the ways, how to solve problems, and ultimately what works for you personally as an investor. We all have different life situations. We all have different financial backgrounds. Some of us have friends and family who can help financially and supportively. Some of us do not. Although my wife is very supportive, she was the only one in the beginning who supported me. Now a few family members are not so negative about it – but still have their personal reservations. I also do not and never have had friends or family with money. Can you relate? Since July I have been meeting new people online and offline that are either investing or want to invest. This, now going back to my previous statement, has been great and not so great. You see, with everyones different background also comes different mentalities, ways of thinking, opinions, and more. This is a problem, in my eyes, and I can get offended by some people in certain situations. I just had another experience myself for the maybe 5th time or so in the past 3 months. I had a company come out to give me a quote on my personal residence for repairing my roof. Come to find out – he is an investor as well. So this led to a lengthy conversation which was nice but ended with him offending me. Not only did he offend me by his remarks towards me, but he also insisted that the REIA I attend is not as good as the one he attends (there was more descriptive words that I’m choosing to keep out of this blog). He told me I need to get out of rentals if I want to stay married. I need to network. I need to find lenders. I need to be focused. I don’t know how to research my market… and on and on and on!! So now my curiosity is arise and I will be attending his REIA. Not only because I want to know why he believes this but also because the guy who runs it. I met the investor who runs this group and even hit it off with him. We were working on a deal for him to help me learn to find private investors. We had a plan laid out, a time frame and everything- but then he stopped returning my emails and didn’t answer my calls. (That’s kind of off topic but I wanted to explain why I’m so curious about this REIA now.) Now, if this investor I met last night knew me or what I have already accomplished, he may not have said these things, but solely by appearance and after telling him I have been investing for a couple years, it led into this rant that lasted 30 minutes and I could hardly get a word in edge wise. (Oooh yeah… this guy last night also told me I need to be open minded… HA HA HA… but yet he was the one telling me that rentals are not the way to go!) Truth be-said, at first I thought it was great. I was getting some insight from an experienced investor. But unfortunately that was not the complete case. Although he did give me some good information he also was pre-judging me. Another Know-It-All Let me give you another example (with a better ending.) At dinner the other night, after my REIA meeting, I met a couple people on a more personal level. I had an investor telling me I will never make it if I don’t quit my job and concentrate on real estate full time. He had all the answers. He told me how he was once broke and found his way. This actually hit close to home and it’s how we started talking- but it was the same thing. In the beginning he was telling me what I need to do and telling me I didn’t know anything. By the end of the dinner he had completely changed his mind after finally letting me talk and give him some insight on myself. Here’s the Point Here’s the thing: there are investors who think their way is the RIGHT and ONLY way to invest.  Now I’m all for people having their opinions and beliefs – but my point to this post and to a similar post I put on the BiggerPockets Member Blogs a while back is that there are many, many ways to invest in Real Estate. There are always ways to improve a process or become more efficient. There is no one RIGHT way when we are talking about the different types such as rentals, flips, commercial, wholesaling or whatever your preference may be; however, this seems to keep appearing in front of me from long time investors who want to push THEIR opinion and beliefs onto others as the only way to invest. This clouds peoples minds especially for the newbie investors. I, myself, have even gotten off-track by those shiny ‘new’ techniques for investing; I started listening to these people because I thought I was still too new at investing and thought maybe I wasn’t doing something right. It has become overwhelming and stressful but the more I talk with these people the more I realize how much I have learned and that even I can be helpful to them with experience I have. I also learned that I was more productive with my process and investing before I tried taking on other investors ways. As I mentioned on BP many times- if you are an experienced investor looking to help others, don’t push your ways on them. We all have certain things that work for each of us. I like being a landlord so don’t tell me I can’t make money at it. I want multi-families, apartments, and eventually commercial. But I’m not going to tell someone that my plans and goals should also be their’s. To make a community work and be flourishing, we have to work together, be open minded, listen, and only offer help where we can. Don’t worry about what someone else thinks is the RIGHT way. Do what is right for YOU. Follow your dreams and goals. Take the advice you get and use it as fuel. Use it to help you determine what you really want to do. But don’t let it change your goals or dreams. Lessons to be Learned Here? There is NO RIGHT WAY to invest in regards to what type of investing you want to do. Thank you for reading! Please leave a comment below – and I’m sure I’ll be giving my $.02 in the comments as well! Photo Credit: Gary A K Free eBook from BiggerPockets! Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks, and techniques delivered straight to your inbox twice weekly! Actionable Advice for Getting Started, Discover the 10 Most Lucrative Real Estate Niches, Learn how to get started with or without money, Explore Real-Life Strategies for Building Wealth, And a LOT more Sign up below to download the eBook for FREE today! Click Here to Download the eBook Now! We hate spam just as much as you

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