The Real Deal Real Estate Show with Larry Harbolt

Today I’m talking with my audience about taking full advantage of your real estate investing education. Most beginning real estate investors believe the least expensive option for education is at real estate investor’s meetings; this is completely untrue. Many of these meetings simply peddle a product from a traveling guru.

I learned from the “School of Hard Knocks” and made a LOT of mistakes while learning. You have the luxury that you don’t have to do stumble around in the field; you can find fantastic education from top-notch investors.

You need quality information, from people who teach quality material. You need to decide what your budget is for education; if you don’t have a large budget, then there are resources out there that are incredibly affordable and can get you started right now.

You need to use your education, wherever it comes from, to find deals in the market that has significantly less traffic than other people. You should be talking with sellers and making multiple offers; remember, you’re working towards a deal  that’s good for your family and that is good for theirs.

Also, remember that networking is CRITICAL. You need to be making contacts and talking with other investors. These will be the people you’ll ask for advice, talk to about your market, or work with on deals you don’t want to keep but know they’ll want.

If you want real, affordable education, then take a look at our Cashflow Blueprint course at http://www.LarryHarbolt.com/Blueprint.

Today I’m covering a topic that I hear from everyone all over the country. These are the various roadblocks that stand between people searching for a better way than their 9-5 jobs and the reality of that dream. No one knows this better than me; I’ve experienced every single excuse and reason imaginable:

1. My job takes up all of my time.

I worked seven days a week as a pipe fitter when my kids were young, and after every work day I barely had the energy to come home, eat, and collapse in my bed. My kids also had extracurricular activities and family functions I had to attend and didn’t really want to miss. However, many people who want to become investors use this as an excuse.

1. I’m terrified of talking to sellers.

It’s hard to believe now but when I began, I had no idea what to do or say to every seller I contacted. Every conversation felt like “do or die” for me, with the pressure of supporting my family.

1. I have terrible credit.

Even though I had children and a wife to feed, I was often laid off and between jobs during my first years in real estate investing. I made ends meet with unemployment checks and part-time work until I could find another full-time job. You can image this did not create an outstanding credit score.

1. I don’t have the money for a down payment!

A big hurdle for me when I began was the false mindset that you can’t start investing in real estate if you don’t have any money. It was unbelievable to me that sellers would offer seller financing terms and happily take payments instead of a lump sum of cash.

1. I don’t have any formal training on how to invest.

My first 16 years in the field, I went into each deal with no knowledge under my belt. I call this the “trial and terror” method; it was scary but I kept going. Eventually I got education and learned more than my one way of investing, pushing me to be more than a “one-trick pony”. Getting education is key and will unlock your potential, and now you can get it relatively inexpensively to get you going.

To take advantage of our new Cashflow Blueprint course, visit us at LarryHarbolt.com and click on the course on my front page.

Happy investing!

Larry talks to his audience today about how to determine which exit strategy is the most effective for every deal you come across. When joining a group of his fellow mentor Robyn Thompson’s students on a bus trip to view properties, Larry noticed that instead of taking notes of needed repairs and renovations, most students just sat back and watched the scenery. They weren’t analyzing the properties or figuring how that property fits into their own investor identity.  They weren’t asking any questions, let alone the right ones.

Some of critical questions you need to ask yourself are:

1. Is this a property I want to own?
2. If I am, how do I want to make money from the property?
3. Is this a home I wouldn’t want even if it was free?

These questions are critical to understanding how to make money from almost every deal an investor comes across. An investor needs to understand the desirability of the neighborhood, the age of the property itself, and the condition of the streets and sidewalk in front of the home.

For more information about Robyn Thompson and her real estate rehab course, you can visit her website at http://robynthompson.com.

Today Larry is joined by Cynthia Schmidt, landlord and creator of the “Collect Back Rent” system. This system is a must for anyone who is a landlord or looking to become a landlord by walking them through the eviction and judgment process so even when your tenant doesn’t pay, you still get your money. Currently there is over $19 billion in outstanding judgments, and over 70% of those judgments are easily able to make their way into the landlord’s pockets.

Many landlords forget that their business is a BUSINESS and let their tenants take advantage of them with excuses. Landlords need to be firm with their 3 Day Pay or Quit notices; this protects them from losing their income and from tenants who are only too eager to put off paying their rent for as long as possible.

Landlords are spending their time following the lead of their tenants instead of vice versa. If you allow your tenants to slide constantly, this will only end up hurting you with your lenders, sellers, and financial friends who you’ve promised their return every month.

The “Collect Back Rent” system teaches landlords the proper procedure for their state, including the 3-day notice, how to file evictions, and how to recover your money in the discovery phase in court. The system includes your individual state’s procedures and paperwork.

To find out more about the Collect Back Rent system, visit Cynthia’s website here: http://www.larryharbolt.com/collectnow

Time is not an infinite resource; we only have so many hours, days, months, and years. Today Larry teaches the audience about how to wisely budget your time so you’re more effective in your investing and making the bigger monthly checks. Unlike what the traveling gurus will crow at the top of their lungs, real estate investing is not a part-time, high profit field. It requires long hours and working times outside of the normal 9-5 so you can access the sellers who work those 9-5 jobs.

A large part of using your time wisely is having a thorough understanding of your target market, whether it’s commercial, single family, multi-family, etc. You need to understand what materials are going to be well received by your market or you’ve wasted time AND money.

The key to getting the best bang for both your buck and your time? Understanding your incoming tenants or buyers, and that real estate investing often demands hours outside the norm. But that’s when the greatest rewards are earned.

Time and struggle can be good teachers but they also can be a horrible way to learn. As I look back over the past 38 years I think to myself, that was the life I had chosen, but the way I thought I had to do my chosen business could have been done much faster and easier to get me to my dreams.

Stop struggling no matter where you are in your learning curve and find and work with a successful mentor who can help you get the stress and struggle out of your life quickly. Why not get smart now instead of wasting years and alter lose the precious years simply because you were too independent and wasted good years when you didn't need to. You really need a good mentor to help you get to where you want to go, get one today. 

There is more to cashflowing from a property than just purchasing it outright or even seller financing. Two of the highest investing strategies are the lease-option and master lease techniques, especially when a seller is reluctant to do seller financing terms.

Lease-options and master leasing a property comes with plenty of benefits: you’re not responsible for the many of the expenses that can come out of the rent, leaving you with a bigger monthly cashflow. Another perk of these lesser known strategies is the ability to flow with the market; if the property doesn’t bring in tenants after a certain period of time, you have the ability to just walk away once your lease is up.

Today Larry stresses the importance of treating your business… like a business! Real estate investing is unlike any other career; one person can make a huge impact in their community and in the lives of the families who they work with, and it’s easy to forget that you’re doing this for your own livelihood. Just like with any sound property, a solid foundation of financial self-discipline is going to keep your business afloat for decades to come.

Each property has to pay for itself, and has to be able to sustain its own existence by making enough for the debt service, taxes, and upkeep. He suggests pulling the annual costs, such as clean-up after a tenant moves out or the property taxes, in monthly increments so you’re never accidentally spending what you need to pay the government. By focusing on pulling out your expenses first before you take your cashflow, you’ll save yourself quite a few headaches during your investing career.

When you’re trying to buy a property, it’s critical to create multiple offers. Just throwing cash at the problem will end up costing you quite a bit in the end.

However, if the seller wants to retain control of the property so they know payments will be made, there are still a few options to create cash flow from the property:

1. Buy the property — This should always be the first choice for property acquisition.
2. A lease-option — Also known as a “rent-to-own”, this gives the owner of the option the choice to buy the property down the road at today’s price.
3. A master lease — This will allow you to sublease the property for more than what you’re paying the owner.
4. An option on the property — This is a right to buy the property sometime in the future for today’s price.

Give the seller every opportunity to help you make money.

Holding costs are CRITICAL when calculating the total cost of a potential deal. These numbers have to be considered from the day you acquire the property until the day you sell it.

The traveling gurus and flashy seminars that crow about their students’ big checks in the tens of thousands never tell you about how much of that was actually eaten away by holding costs while they held it. Here are a few of the holding costs you need to consider:

1. The monthly mortgage payment
2. 1/12 of the annual property taxes put away each month
3. 1/12 of the annual property insurance costs put away each month
4. Working utilities — water, electrical, garbage, etc.
5. Lawn and pool care
6. Snow removal
7. Realtor commission if you’re selling with a real estate agent