All Forum Posts by: Account Closed

What are you offering - how many of those business or commercial properties do you control, is this post more about your fee or putting together a transaction that one can profit from? I buy commercial properties.

Thank you 

Thanks for your comments - anyone - call me - been in this business for over 40 years - love to chat - wishing all good fortune. Find my phone in my profile -

Charles Parrish

Why would you need Hard Money if you are going to flip houses? The most you should spent is $50-$100.00 as contract consideration - remember you are not buying, you are not going to settlement - you are assigning your contract to someone else who has the money! You will need some money (or credit cards for marketing - take that into consideration.) 

• The most important things you need to know is.......
• How to find your deal - power prospecting - distressed properties - ugly houses - sellers with problems - houses with problems.
• Next - how to negotiate - some investors say "If the seller doesn't cry - your offer is too high".
• You also have to be prepared with a well designed contract of sale that gives you -----
• Right of possession - disclosures to assign your contract -
• Full Disclosures - a profit disclosures - assignment disclosure - and a an important clauses to say what happens if you can't find an assignee and you have to walk away without a profit while the seller looks at you very disappointed - make sure you don't embarrass yourself using unproved flip techniques - get it right the first  time, get educated on the right way to do a flip deal. 
• You need TIME - in this business things move quickly - make sure you use banking days - and that you have a built-in extension clause and you have full possession or a right to enter the property to show the it if it is occupied by tenants or the seller.
• Understand the many creative financing methods and how to control  and roll to get to settlement.
• Sellers for the most part are not stupid - they know you are trying to make a profit from their messed up situation - be honest - again----- make full disclosures -- have your title company lined up. Remember the seller is depending on you to solve their problem - they also have rights - a right to sue you for misrepresentation, a right to report you to the state for acting as a real estate agent without a licence - you don't want the real estate commission investigating your activities - 
• Think carefully on how you intend to find an assignee ----
• Will you listed it - put the property on the internet - stick a sign in front of the property - make flyers and distribute them in the neighborhood - have open houses - run ads in the newspaper - go to your buyers list - ?? ARE YOU ACTING AS AN AGENT?
• From the minute you sign an agreement with the seller - your time is running - when your drop dead closing time comes - you have no more time - get on it - find an assignee quickly. If you fail at this step - you fail to earn a profit.
• The highest LEVERAGE in the world is selling something you DON'T OWN! This is what flipping real estate is all about.
• Your ASSIGNEE - Could create more problems - your don't want an assignee that says they need financing - that they want an appraisal - that he wants contingencies -
• You want to assign your contract under the following terms ----
• AS IS - (what you see is what you get ----  if the property has a hole in the roof --- your assignee gets the hole and the roof!). ALL CASH - not contingent on financing - FAST SETTLEMENT - Don't miss this important point - if you do you lose your potential profit.
• Next - GET YOUR ASSIGNMENT FEE UP-FRONT before settlement - if the deal goes south you still made your fee -- MAKE SURE  that your agreement says that the deposit (your assignment fee) is NON-REFUNDABLE!!
• Maybe I am wrong - but in my opinion - flipping real estate has many moving parts - you need to be aware of those parts and act with professionalism - make full disclosures and be honest in everything you do - don't try to get over on people - if you do - it will come back to hurt you sooner or later --- 

My thoughts - I have been doing this crazy flipping business for many years - you need to anticipate problems with sellers - with assigners - with title companies - with seller's and assignee's, lawyers - with state regulators and --- people who are jealous of you making so much money! 

I have done many real estate flips from over $1 MM to as little as $10,000 - I am always aware of the pit falls of doing this - if you don't know what you are doing - if you took a down and dirty motel seminar, if you don't have all the details of a successful flip deal ---- be careful - hang with a mentor who has a successful tract record ----

Flipping isn't as easy as the BIG TALKERS try to convince you - to buy their program - the big dream is possible only with the right tools - deal with successful people who have flipped properties successfully. 

You are welcome - here is a blog I just posted - you may find it interesting ----

HARD MONEY v. CREATIVE FINANCING

Why do you need "hard money"?

• Because investors can't get a soft money loan?
• Properties or Investors don't qualify for a normal loan?
• Investors love to share their potential profits with hard money lenders?
• Hard to pay back if the investors miscalculated the time it takes to pay back the loan?
• Investor's heart ache when spouse criticizes them for wanting to be an investor?
• Investors lack of knowledge to make deals and profits without a loan?
• Investors think that the only way they can make profits in real estate is with money or a loan?

Are there alternatives to hard or soft money loans?

• Control property with a delayed settlement with right of possession
• Joint venture with the seller, split the profits
• Find an Angel Lender, offer less than hard money interest with equity kicker upon sale
• Friends or family friendly partnership
• Assign contract before settlement date (use banking days in offer and built in extension)
• Use commercial check protection (give yourself a loan)
• Create a note on other properties and trade for the property subject to sale of note
• Do a Tax deferred exchange
• Sell the property under contract by reserve auction and assignment
• Equity loan on your personal resident or other property owned
• Exchange something you can buy on time in exchange for the property you want
• Propose 120% seller financing, receive 20% cash from seller, split profits
• Short term lease until renovations are completed with option to buy
• Vertical Break Up, offer to buy the building and lease the land it sits on
• Seller Pays Buyer
  That’s right. Sometimes, real estate owners believe that their property is not an asset but a liability. Ask the seller to write you a check to take the property. If their answer is “how much?”, then you might just get a free house – and cash. This technique works more often than you think, especially when the numbers are tight. You never know until you ask.
• Seller Participation You may be able to acquire real estate with your future profits, and no time machine is necessary! As a down payment, give the seller a written pledge to assign all or a percentage of future cash flows for a period of time or a percentage over $X if sold. “As consideration, buyer hereby pledges to pay seller 20% of net income from the Property for the next 3 years.”
• Hybrid Offer
  When your intention is to “Control and Roll” (flip, resell, recast, wholesale, recycle, etc.) and the seller is stuck on a higher price than you are willing to pay, make a hybrid offer. Offer a lower sale price, plus a portion of your profit upon resale within 90 days. You’ll pay to advertise the property, so the seller has nothing to lose. Give the seller a written pledge to pay the portion of your profit, and call it your deposit. Assign your contract before closing.
• Co-Sign for Owner
  When a seller needs money but is credit-challenged, consider co-signing for a loan for him. In exchange, ask the seller to add your name to the deed. Take a buy out option and offer one to the seller. Verify that payments are made by having the seller send you monthly payment receipts. If the seller defaults on the loan, exercise your option and buy him or her out.
• Find a Co-Borrower
  Even credit-poor individuals can secure bank financing by finding a co-borrower with good credit. Deliver a formal investment proposal regarding your real estate opportunity to interested parties. When you find a willing partner, take the opportunity to build your credit by asking them to cosign on your loan. Conduct the transaction, cash out, pay off the debt (and your partner), and enjoy your improved credit rating!
• Pay at Closing
  To create a valid contract without a significant deposit, offer both negotiated funds and check funds. “An initial deposit of $50 in cash will be paid today to Seller. Within 5 business days, Buyer will deliver to the title company a check for $5,000 to be held until Closing and release of contingency. ”The $50 assures a legally binding contract, and the check is to be held (not negotiated) until closing.
• Installment Down Payment
  When funds are tight, control property with a contract of sale and pay the down payment in installments over a period of time. Lease or option the property while making the down payment installments. This arrangement is also known as an interest-free or principal-only mortgage.
• Equity Partnership
  Borrowing money at a set interest rate is cheaper, but when funds are tight a partner can be an alternative to going into debt. Package your real estate opportunity by creating a detailed investment proposal offering a 20, 30, or 40% equity interest in the short-term transaction. You do the legwork. Make sure to negotiate a delayed settlement with the seller so you have time to secure a partner and wholesale the property for a cash profit.
• Over-Finance
  Need cash for repairs? Consider over-financing. If the Seller needs $100,000, write the contract for $125,000 with an addendum requiring the Seller to reimburse $25,000 to you at closing for repairs. It’s borrowed money, but it’s green!
• Broker Leverage
  When purchasing listed real estate, you can save money by buying with a friendly real estate broker. Ask the broker to contribute their commission toward property repairs in exchange for a percentage of your cash flow or equity profit in the short term. Let the broker list it. GIVE TO GET!
• Sell, Then Buy
  Find a cash flow or equity real estate opportunity. Advertise and sell the property contingent upon the ratification of your purchase agreement. Collect a deposit from the buyer, and use those funds as a down payment when you ratify a contract with the seller. Collect your profit at closing.
• “FREEhabbing” for Profit
  If your intention is to complete a rehab, but you lack adequate funds, collaborate with a contractor. Have the contractor perform the repairs to your specifications and within a specific period of time, in exchange for a share of the equity when the property is sold.
• Balloon Note for Consideration

Why make payments on owner financing when you can negotiate a balloon note? As a down payment, ask the seller to take back a note with no payments for 3-12 months. Sell the property or refinance before the note is due. Or, build in an option to purchase the note at a discount. Sell the note for more and take the cash, or pre-pay the note and enjoy the discount.

• Ask the seller to refinance the property with a one time assumption agreement with the lender - assume the loan - seller gets his cash and you get a nothing down deal.

Hard money is OK (but dangerous and expensive) and so is creative financing - you'll know what is best, every deal is different - now go play the real estate game and have fund while learning and profiting - always make full disclosures and don't be greedy ---!

Good Luck --------------Charles Parrish

Here are some ideas on Creative Financing and Hard Money - this is a blog I just posted - 

HARD MONEY v. CREATIVE FINANCING

Why do you need "hard money"?

• Because investors can't get a soft money loan?
• Properties or Investors don't qualify for a normal loan?
• Investors love to share their potential profits with hard money lenders?
• Hard to pay back if the investors miscalculated the time it takes to pay back the loan?
• Investor's heart ache when spouse criticizes them for wanting to be an investor?
• Investors lack of knowledge to make deals and profits without a loan?
• Investors think that the only way they can make profits in real estate is with money or a loan?

Are there alternatives to hard or soft money loans?

• Control property with a delayed settlement with right of possession
• Joint venture with the seller, split the profits
• Find an Angel Lender, offer less than hard money interest with equity kicker upon sale
• Friends or family friendly partnership
• Assign contract before settlement date (use banking days in offer and built in extension)
• Use commercial check protection (give yourself a loan)
• Create a note on other properties and trade for the property subject to sale of note
• Do a Tax deferred exchange
• Sell the property under contract by reserve auction and assignment
• Equity loan on your personal resident or other property owned
• Exchange something you can buy on time in exchange for the property you want
• Propose 120% seller financing, receive 20% cash from seller, split profits
• Short term lease until renovations are completed with option to buy
• Vertical Break Up, offer to buy the building and lease the land it sits on
• Seller Pays Buyer
  That’s right. Sometimes, real estate owners believe that their property is not an asset but a liability. Ask the seller to write you a check to take the property. If their answer is “how much?”, then you might just get a free house – and cash. This technique works more often than you think, especially when the numbers are tight. You never know until you ask.
• Seller Participation You may be able to acquire real estate with your future profits, and no time machine is necessary! As a down payment, give the seller a written pledge to assign all or a percentage of future cash flows for a period of time or a percentage over $X if sold. “As consideration, buyer hereby pledges to pay seller 20% of net income from the Property for the next 3 years.”
• Hybrid Offer
  When your intention is to “Control and Roll” (flip, resell, recast, wholesale, recycle, etc.) and the seller is stuck on a higher price than you are willing to pay, make a hybrid offer. Offer a lower sale price, plus a portion of your profit upon resale within 90 days. You’ll pay to advertise the property, so the seller has nothing to lose. Give the seller a written pledge to pay the portion of your profit, and call it your deposit. Assign your contract before closing.
• Co-Sign for Owner
  When a seller needs money but is credit-challenged, consider co-signing for a loan for him. In exchange, ask the seller to add your name to the deed. Take a buy out option and offer one to the seller. Verify that payments are made by having the seller send you monthly payment receipts. If the seller defaults on the loan, exercise your option and buy him or her out.
• Find a Co-Borrower
  Even credit-poor individuals can secure bank financing by finding a co-borrower with good credit. Deliver a formal investment proposal regarding your real estate opportunity to interested parties. When you find a willing partner, take the opportunity to build your credit by asking them to cosign on your loan. Conduct the transaction, cash out, pay off the debt (and your partner), and enjoy your improved credit rating!
• Pay at Closing
  To create a valid contract without a significant deposit, offer both negotiated funds and check funds. “An initial deposit of $50 in cash will be paid today to Seller. Within 5 business days, Buyer will deliver to the title company a check for $5,000 to be held until Closing and release of contingency. ”The $50 assures a legally binding contract, and the check is to be held (not negotiated) until closing.
• Installment Down Payment
  When funds are tight, control property with a contract of sale and pay the down payment in installments over a period of time. Lease or option the property while making the down payment installments. This arrangement is also known as an interest-free or principal-only mortgage.
• Equity Partnership
  Borrowing money at a set interest rate is cheaper, but when funds are tight a partner can be an alternative to going into debt. Package your real estate opportunity by creating a detailed investment proposal offering a 20, 30, or 40% equity interest in the short-term transaction. You do the legwork. Make sure to negotiate a delayed settlement with the seller so you have time to secure a partner and wholesale the property for a cash profit.
• Over-Finance
  Need cash for repairs? Consider over-financing. If the Seller needs $100,000, write the contract for $125,000 with an addendum requiring the Seller to reimburse $25,000 to you at closing for repairs. It’s borrowed money, but it’s green!
• Broker Leverage
  When purchasing listed real estate, you can save money by buying with a friendly real estate broker. Ask the broker to contribute their commission toward property repairs in exchange for a percentage of your cash flow or equity profit in the short term. Let the broker list it. GIVE TO GET!
• Sell, Then Buy
  Find a cash flow or equity real estate opportunity. Advertise and sell the property contingent upon the ratification of your purchase agreement. Collect a deposit from the buyer, and use those funds as a down payment when you ratify a contract with the seller. Collect your profit at closing.
• “FREEhabbing” for Profit
  If your intention is to complete a rehab, but you lack adequate funds, collaborate with a contractor. Have the contractor perform the repairs to your specifications and within a specific period of time, in exchange for a share of the equity when the property is sold.
• Balloon Note for Consideration

Why make payments on owner financing when you can negotiate a balloon note? As a down payment, ask the seller to take back a note with no payments for 3-12 months. Sell the property or refinance before the note is due. Or, build in an option to purchase the note at a discount. Sell the note for more and take the cash, or pre-pay the note and enjoy the discount.

• Ask the seller to refinance the property with a one time assumption agreement with the lender - assume the loan - seller gets his cash and you get a nothing down deal.

Hard money is OK (but dangerous and expensive) and so is creative financing - you'll know what is best, every deal is different - now go play the real estate game and have fund while learning and profiting - always make full disclosures and don't be greedy ---!

Good Luck --------------Charles Parrish

Well Hello Dolly - (Dolly Caswell) You don't need to know everything about real estate to start making money - focus on just a few things to start --

• One way to motivate a person (Mentor) to work with you is to share the profits - the Mentor can see you as an extension of themselves, their down line or an opportunity to clone them-self. 
• Your Mentor (he or she may not see them-self as a Mentor - but a teacher, a partner - an opportunity to make more deals - a way to multiply their income).
• Become a Locator (also known as a Bird Dog), get into the market, go to auctions, talk to title company associates - agents and hard money lenders.
• What you want to know is who is THE MAN! Who is closing deals in the area - who is most actively flipping real estate - doing renovations - what is the name that keeps popping up. Look for ads - We buy real estate......  whom do you see more often at a auctions - talk to real estate agents who deal with investors - who is their best client -
• You are looking for THE MAN - the person who is making things happen - this is the person you want to connect with.
• Don't over-look active investors on Bigger Pockets - it is OK to have a long distant Mentor.
• When you find THE MAN - the person who is making deals - bringing in $20,000 or much more a month - this is the person you want to FOLLOW ---
• So - how do you you worm yourself into his center of influence? 
• Approach THE MAN in the field (at auctions), ask for an introduction from title companies or agents - send a text, a letter or email. Expose yourself in every-way you can  (well not every way) to this knowledgeable person.
• I always like the approach of GIVING TO GET - offer something of value - something to make your potential Mentor sit up and think about you.
• What would that be? As they said in the move SHOW ME THE MONEY!
• Let him know that you are always looking for (Locating real estate) good real estate deals, that you'd be willing to be a locator for him or partner up on a great equity based property - would he be interested in working with you, giving you a referral fee.
• Let him know that you have some skills in pounding the payment, that you are always talking to motivated sellers --
• Ask him what kind of deals he likes - meet him -- have lunch -- ask lots of questions --
• Call him every opportunity you can - tell him about a FSBO you just discovered, a tax sale motivated sellers, a seller on Craig's List, a motivated expired listing. 
• Remember you got to GIVE to GET!
• Create an Input Sheet of questions to ask sellers - work from this when making calls -
• There three (3) important things you need to learn from the sellers --
• About the existing FINANCING - how many loans - the amount of liens if any - the terms (balloon payments, interest rate and status and balances (current - payments due - foreclosures or tax sale pending)
• Next about the SELLER - why selling - where moving to - how fast do you want to settle - what are they going to do with all that cash - GET PERSONAL talk about yourself a little, but get them to talk about their job - their hobby - their work
• Next the PROPERTY - does it need any work, are there any violations - what are properties selling for in the area - how much would it take to fix or renovate the property - is it vacant?
• You shouldn't be on the phone no more than 10 minutes gathering this important information
• You need to know the potential EQUITY - how much do they owe - what's the potential value - subtract one from the other and you get EQUITY!
• Equity is the key to your success - 
• EQUITY is what you need to know - Equity is what you will be negotiating for - if there is $50,000 equity - the questions is how good are you in negotiating some of that equity for you or part for your MENTOR!

Charles Parrish

Tre,

I am about to post the following blog - it is sort of long, but it may help to answer your questions.

 Real Estate Wealth – The Easy Way – Hard Way – Impossible Way

The Easy Way –

• Inherit money or real estate
• Hit the Lottery
• Get a loan from Dad like The Donald did

The truth is – There aren’t any easy ways to accomplish wealth in real estate – even if you fall into one of the above categories, you still could fail financial and with money much faster. It takes more than money to be a continued financial success in the real estate business.

The Hard Way –

• Start from the bottom and learn the business – study neighborhoods – attend auctions (don’t bid, just observe.
• Take courses – but be very selected – don’t over pay – don’t chase the Get Rich Fast programs from Fast Talking Know Nothing Promoters – most of them are trash
• Get in the field – drive around – farm – talk to neighbors – get listings – call FSBO's, have agents keep you informed of trends and off market properties – train a real estate buyer's agent
• Learn to make offers – but first you need to know what to make offers on, you must understand clauses and contracts – you need to know and understand every word and what that word will do for you or how it can hurt you – my clients are trained to use a contract form we call a Skinny Contract – it is a one page document – it has the address – the offer – and clauses that allow you to sandwich yourself in for an assignment fee and most importantly – full disclosures and what happens if you cannot settle –
• Set goals ----yep – sound silly, but it works – set a goal to look at 50 properties – My clients call this the 50 house rule – select an area – make appointments with FSBO's and agents – keep a journal, write down everything about the property especially the cost per square foot, financials, the owner and the building – look at 50 properties – but don't make offers – just look and study the market – A doctor will studies for years, watches others doctors slice open patients and after many years he has a chance to be a real doctor who has learned to heal people – study your potential profession and work as hard as a doctor would – expose yourself to experience – your job is to know your market better than anyone – it takes a medical student many years to reach their potential – you can earn as you learn without spending years in the process.
• Working the 50 house rule – don’t make offers on any of them – just keep looking.
• The purpose of the 50 house Rule is to know every detail about properties on the market, the expired listing market, the tax sale market, the HUD market as well as the market at the court house steps. You can become the master of your market if you work at it all the time.
• Write down everything about the house the seller and the existing financing – you can always come back weeks or months later when you are more informed and make an offer that can be a short term fast equity profit or assignment fee.
• When this is done you will be knowledgeable of that market and when you are ready to make an offer you’ll know you will be getting a bargain.
• Find and work with a Mentor – not just anyone who calls themselves a “mentor”, a real down to earth financially successful person who can prove his or her net worth, show you their portfolio and can teach creative financing, no down money deals, delayed settlement, joint ventures, tax sales, negotiations, assignment and will refer you to the professionals who can represent you and close transactions. You want to make sure that your Mentor has the tools that will accelerate your income from the start.
• Your Mentor won’t be cheap – but that is relative – since what is learned can produce cash flow in a short period of time.
• At 74 years old – I am still learning – taking on clients and writing offers weekly – it is important to stay tuned to the market because it is always changing.
• Your Mentor will hold your hand, analyze deals, help with financing referrals and tell you who the bad guys are – yep in every market there are those slick investors, title companies, hard money lenders and others that your Mentor will keep you away from and tell you their stories. Our clients have access to a “black list” of people whom we know have taken advantage of others in the market.
• Working with a Mentor will expose you to people you want to be like – the right kind of people who have done and achieve what you want to do and achieve.

The Impossible way –

• Do nothing – wait to retire to start something
• Take the wrong real estate training – pay too much
• Listen to Know-It All Want to Be Rich Poor People at REIAs
• Don’t set goals – goal setting is a method that your conscious mind programs your subconscious mind – that programing (goal setting) will direct you to fulfill your commands
• Don’t make offers – quit early – watch TV – sleep late -
• Listening to the negative comments from others who say “You cannot do it, you don’t have the skills or knowledge, you failed at all those MLM programs – stick to the job you hate!”
• Become brain washed at real estate meetings – jump from one system/course to another – Tax Sales – Subject to Existing Mortgages, buying notes, wholesaling, mortgage lending and un-creative financing.

Summary: The real estate business in the greatest business in the world – no over-head – no need for an office – no employees – no need to buy inventory to resell and the income potential in fabulous.

Rich people constantly learn and grow. Poor people think that they already know. Every master was once a disaster.....you can learn to be great at anything. The moderator of it.

Charles Parrish

Wanted - Real Estate - residential - commercial - land and non-conforming properties. Family business - licensed - bonded and insured - references - All cash as is no settlement costs -  or commission - call for an offer.

Charles Parrish

We do them all the time - that is "flip" paper - I never really called it that - use paper to write an offer, paper to assign my contract.

They may mean mortgage notes - you control a note for one price and flip the paper (note) for a higher price.

• I have been working with people just starting all the time - for about 36 years
• It is sad to hear some of their stories, horror stories of how much money they spend with a so called mentor.
• Mattie came to me after dropping $30,000 to a fly by night mentor (they are still around today - if I said their name - you'd know who they are) and get rich program
• We were able to get her $22,000 of that back
• We had her call her phone mentor to ask question - he was on the phone goggling for the answers
• We helped her write a letter that would have exposed them as frauds - to report them to every AG in the US, radio stations where they advertise, BBB and every real estate site on the internet.
• They could not answer basic real estate questions
• What's a hybrid offer - how do I write one 
• Should I use banking days or calendar days
• Can I build in to my offer an automatic extension - what would the clause say
• Why would I use a "delayed settlement date"
• How do I get right of possession - how is the clause worded
• What are "check funds" (one of the most important thing to know when getting started)
• How do I make the shift from "I want to buy your house" to NO I want to flip it, wholesale it or recycle it for a profit
• When buying, should I keep it in or take this clause out "Time is of the essence"
• What is the proper assignment language to use in my offer
• What is a "second stage negotiation"
• How do I make a "Trial Offer" on the phone and why
• What should I do if the sellers says, "Make me an offer"
• I have no credit or money, how do I answer when the seller wants to know if I am pre-qualified for a loan
• What is the benefit of a "skinny contract" offer
• What is the only out clause I need to put in my offer

So many ambitious and good people have been taken advantage of daily by these traveling Con-men.

• Before you buy another course - ask - 
• How many properties do you own - where
• Are you licensed, bonded, insured
• Get references of past men-tees - don't believe their Power Point
• Look at their financial statement - search their name on the internet
• Do lots of research before you spent 

The good ones are too expensive, the low bidder will up-sell you with change orders.

• I would not recommend my contract to you or anyone else--- because he may do good by me, but not you.
• Referral are good, but you need to do your own homework on contractors.
• We just spent $1 MM on a commercial building - the contractor started out OK, but started to hit us with change orders, and other charges.
• Only pay upon completion of phases
• Never give them money up front - only upon completion of work
• You need to stay ahead of them.
• 1/3 -1/3 and 1/3 is what they like - forget about it - it is your money - protect it.
• Always check their last few jobs, talk to the owners, see how they were treated - make sure you get the dates contractor started and finished.
• Past customers will tell you what you need to know.

Good luck -