The Real Deal Real Estate Show with Larry Harbolt

Today we’re going back to the basics: what you need to create your plan and get started in real estate investing. I’m going to walk you through what you need to accomplish in the next 30 days to get you on your way to making money in this business.

More and more people are getting into the market of real estate investing, but as the investing base grows, so does the number of “new” gurus. A lot of these gurus have a few deals under their belt and are pushing their students into getting started as a wholesaler. There’s nothing wrong with being a wholesaler, but the misleading part is the idea that wholesalers will make bank in this area of investing.

A wholesaler is someone who gets a property under contract, then turns around and sells that contract to another investor for a profit. They are being paid for putting the deal together, and once they get their profit, they’re out of the deal entirely. Sometimes a wholesaler will “pre-hab”, such as painting, landscaping, or putting on a new roof, to increase the value for the new investor who will take the contract over. I, personally, do not do “pre-habbing”; if I don’t want a property, I don’t want any more money than necessary tied up in it so I can assign the contract and move on to a deal I DO want.

If you’re buying, selling, and rehabbing a property, that is NOT wholesaling. Wholesaling is meant to be a way to get cash to pay your bills, build capital, or make a profit on a property you don’t want for yourself. There is ALWAYS a cost to using money, no matter how you use it. Guaranteed.

If you need help to get started in real estate, check out my online courses, the Cashflow Blueprint and the Cashflow Foundations. You can find them at my website, LarryHarbolt.com.

Good Luck and Happy Investing.

Today I’d like to talk with you about something I think a lot of people are failing at in their investing business: naming their land trusts. Please note: I am NOT an attorney, but I do present a live event a few times a year where I teach people how to protect their real estate assets by placing them in a land trust.

I believe every investor who plans on keeping a property long-term should learn how to create a land trust. Once you know how, it takes very little time, effort, and money to put one together. The land trust can protect you from bottom-feeders, but it will NOT excuse you from paying your taxes to Uncle Sam.

There are two reasons to have your property in a land trust:

1. Privacy: Anyone can go to the courthouse and look up the owner of a particular property.
2. Estate planning: When you put a property into a land trust, you can pass a property to your contingent beneficiary and continue to protect them from prying eyes.

If you’d like to attend my next Land Trust event, visit LarryHarbolt.com/events/category/bootcamps/ for all of my upcoming bootcamps and live events.

Don’t forget to visit me at LarryHarbolt.com for all your real estate investing education needs.

Today, I want to talk about my fears with investing in real estate, not that I have very many. But recently I was asked what my great fear was about the economy and the real estate market going into a future real estate crash like we experienced in 2008. I don't know if that's going to happen. I think we're seeing places going up continuously just like we did in 2005, 2006 and 2007. Money is available. Most people can get some type of financing. There is a shortage of properties in the MLS. I don't know if it's going to be like we had in 2008 but is there going to be a crash?

In this episode Larry discusses the importance of buy and hold and being a landlord as compared to being a hamster on a wheel working as a “wholesaler”.

With that said; also think of this as planting a garden, your properties are the seeds.

The tenants got to work for you each month in order to bring you money, this should be remembered when making decisions on how they need to be treated.  Larry believes in treating his tenants like “clients”.

Many new investors believe that they themselves need to be able to “afford” the mortgage which is simply not true. Landlord mindset should dictate that the tenants pay your mortgage, not you.

Larry also discusses how the tenants that occupy all of his properties have provided his retirement income while at the same time paying off the loans on these properties which in turn creates equity in them.

Welcome again, real estate friends! Today I’d like to talk with you about the Six Weakest Points of Investing; faux pas made by beginner and experienced investors alike. This is simply because of a lack of understanding of why: why you’re looking at the deal, why you’re interested in buying it, and why it could be profitable.

1. If the house lacks curb appeal, it will be difficult to buy or sell later on. Know what you’re looking at.
2. What are the numbers of the deal? What is the seller asking? What can it be resold or rented out for later? What are the holding costs?
3. Talking with the sellers and negotiating for the property. Build rapport and ask the seller why they need the money.
4. Structure your offers so they make sense for you and for the seller.
5. Consider all your financing options. You don’t need cash if you work with the seller to create desirable terms for them and their goals.
6. The weakest point for most investors: How to maximize the profit. Always think about how to make the deal better, such as offering the seller a higher price in exchange for a lower monthly payment.

Don’t forget to visit me at LarryHarbolt.com for all your real estate investing educational needs.

Good Luck and Happy Investing!

I’ve said it once and I’ll say it again: you have to know your numbers to be successful in this business. Here are the 12 most common mistakes I see investors make when beginning to analyze a deal:

1. Taking too long to get to the deal itself; they’re usually too afraid to “pull the trigger”. Learn how to do the numbers quickly so you don’t lose deals to time.
   
   
2. After talking with the seller, you don’t double-check the numbers they give you for any potential rehab. Most sellers have good intentions, but each part of a deal is subjective to the respecting party. Always check the numbers.
   
   
3. Don’t do the math using a pencil. If you’re working the numbers and think it’s a good idea to fudge the numbers, it’ll be your own money you flush down the drain. You have to be a straight-shooter every time.
   
   
4. Never overestimate a property’s rental potential. There are great websites, including RentoMeter.com, where you can check the local rents. Another great option is to call local property managers and ask them what they would set rent at for that particular size of unit in that area.
   
   
5. Don’t overestimate the “as-is” value of the property. This is the value of the property today in its current condition, and many investors estimate higher than the market actually calls for.
   
   
6. Don’t get “bogged down” in the process. Look at the property and analyze it quickly so you know exactly what path you’re taking with that deal.
   
   
7. Why is the seller selling that property? You need to know what they’re going to use the money for and if they’re truly motivated.
   
   
8. You need to understand what equity is available in the property.
   
   
9. Underestimating the time it takes to purchase, renovate, and either sell or rent out the property.
   
   
10. Don’t skip analyzing the deal just to throw cash at it. What’s the point of throwing cash if you don’t understand the deal as a whole?
    
    
11. Hiding behind the analysis and become afraid of pulling the trigger and taking action.
    
    
12. You don’t know how to negotiate a good deal or how to communicate effectively with the seller.
    
    

Don’t forget to visit us at LarryHarbolt.com for all your real estate investing education needs.

Good Luck and Happy Investing!

One of the KEY tips I can give any real estate investor, new or seasoned, is to LEARN ABOUT YOUR MARKET. It doesn’t matter where you live or where you’re investing, you’re going to adjust and adapt. This is going to help you create your own market and eliminate your competition.

People always focus on “buyer’s markets, seller’s markets,” etc. These aren’t really factors in your investments if you understand your market and take the time to talk with the seller. For example, a flip can be one of the riskiest investments out there if you don’t understand the area. Flipping without all the facts can lead to market speculation, which is DANGEROUS. Stock marketers speculate, but investors shouldn’t; otherwise you’ll lose your shirt.

Make sure to head over to LarryHarbolt.com for all your real estate education needs.

And don’t forget to fill out my quick survey and let me know what you want to learn at LarryHarbolt.com/CheatSheet.

Good Luck and Happy Investing!

We're continuing from our last podcast episode, where we discussed how you can create a marketable promissory note that can then be sold for cash. This is a lifesaver for the investor short on cash, and it's all based on fulfilling your promises as a business person.

In every seller financing transaction you'll ever do in your investing career, you'll need to understand the concept of clauses. There are specific ones we need to include in our Purchase Agreement and in the final note. One of the most important is the "Right to Refusal" clause.

The "Right to Refusal" clause says that if the holder of the note decides to sell that note to someone else for a discount, they would have to contact YOU first. You would then be given the opportunity to purchase the note at the discounted price, or refuse. If you can come up with the money, why not exercise your right?

Another crucial clause is the "Exculpatory Clause". This one isn't as well known and you may not meet too many gurus who even understand what it is. This clause allows you to purchase any property WITHOUT personal liability. The liability is limited to the property itself and will not extend to you. If you don't pay, then they simply take the property and can't come after you.

You also need to understand if you're a "Mortgage State" or a "Deed of Trust State". Depending on where you live, the standard deed will either be a mortgage or a deed of trust. Most investors like deed of trust based on how quickly they can make their money back. However, you can still make money in a mortgage state, but it will take more time.

This is only a few of the clauses you'll need to truly create a market all of your own. For a FREE download of sample documents, visit LarryHarbolt.com/ThinAir.

For all your real estate education needs, visit me at LarryHarbolt.com.

Today’s episode is one of my more exciting ones: making money out of thin air. It’s not a hoax or a scam, but a viable way to create deals without taking money from your own pocket. It’s never really about the numbers or the asset: every deal is built on the foundation of a promise. A buyer creates a formal promise to a seller that they need to fulfill, and that’s where every deal begins.

There are different types of promises that we make to sellers when we create a deal for their property. We use promises such as:

• The Purchase Agreement, which is a mutual promise between the seller and the buyer.
• There is also the Promissory Note, which many college students or anyone who has ever taken out a loan will recognize.
• Next is the Mortgage, which details the repercussions if the promise is not kept (the Mortgage is not paid).
• There is also the Lease Agreement, detailing the stipulations of the lease during its term.
• An Option to Purchase is a promise that the buyer will buy the property down the road at today’s price.
• A Land Contract and a Contract for Deed.

Once you understand that EVERYTHING you do is a promise, then you’ll understand your integrity is on the line. In negotiations, you’re showing the sellers that you’re a person of integrity who can keep your promises. That’s how the best deals are made.

Don’t forget to visit us at LarryHarbolt.com for all your real estate education needs.

If you’d like copies of the forms we mentioned in the episode today, visit LarryHarbolt.com/ThinAir.

Good Luck and Happy Investing!