Jean Norton Real Estate Investing http://www.jeannorton.com If real estate investing isn't working for you, then you need to change your STRATEGY or change your LOCATION. Mon, 18 Sep 2017 17:43:15 +0000 en-US hourly 1 Why Use Land Trusts for Real Estate Investing? http://www.jeannorton.com/why-use-land-trusts-for-real-estate-investing/ http://www.jeannorton.com/why-use-land-trusts-for-real-estate-investing/#respond Sun, 17 Sep 2017 15:53:59 +0000 http://www.jeannorton.com/?p=3571 I consistently use Land Trusts for my real estate investments and am constantly amazed at the flexibility and the power they provide me.

The post Why Use Land Trusts for Real Estate Investing? appeared first on Jean Norton Real Estate Investing.

]]>

Top 3 Benefits of Using Land Trusts for Investing

I consistently use Land Trusts for my real estate investments and am constantly amazed at the flexibility and the power they provide me. Laura Hope Richards, founder of The Richards Law Firm and Investor Trustee Services, will join me to discuss the top 3 benefits about using Land Trusts for your Real Estate Investing.

1. Anonymity
2. Protection
3. Flexibility

Learn how important it is to setup the Land Trust properly and how easy it is to implement this strategy for your real estate investing.

The post Why Use Land Trusts for Real Estate Investing? appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/why-use-land-trusts-for-real-estate-investing/feed/ 0
Disaster Scams from Irma and Harvey Hurricanes http://www.jeannorton.com/disaster-scams-irma-harvey/ http://www.jeannorton.com/disaster-scams-irma-harvey/#respond Mon, 11 Sep 2017 16:47:54 +0000 http://www.jeannorton.com/?p=3548 Favorite

The post Disaster Scams from Irma and Harvey Hurricanes appeared first on Jean Norton Real Estate Investing.

]]>

Rebuilding from Irma and Harvey Disaster

The outpouring of donations, prayers and human support for those affected by Hurricanes’ Irma and Harvey disasters remind us of the good in humanity.  However, there will always be opportunists and scammers that crawl out of the woodwork with one purpose in mind: to present themselves as helpful businesses when in fact they are con-men motivated by nothing more than to steal your money.

According to a recent Consumer Reports Article, here are some important warning signs that you’re dealing with a scammer:

  1. Unsolicited visits to your property to sell you their services.
  2. Scammers will impersonate as government officials to get your confidential information.
  3. Contractors who’s credentials can’t be verified.
  4. Promises of Heavy Discounts.
  5. High-pressure sales tactics.

For those in Florida:

Always verify their contractors license.  Florida is one of the strictest states that proactively prosecute people performing contracting activities without a license.  You can easily verify their credentials at www.myfloridalicense.com/dbpr.  You can also report unlicensed activity on that link.

For those in Texas:

Unfortunately there are little restrictions for licensed contractors, so you must do some additional checking.  Make sure they have a real address, Google their name and check their references.

But whatever you do, NEVER give them a lot of money up front to start the job.  It’s easy for them to quote a job asking for $10,000 up front to buy materials. Way too often they pocket that money and you will never hear from them again.  It doesn’t hurt to get a picture of their drivers’ license also.

The Payment “Up-Front” Scam:

You can protect yourself from the “Up-front” scam 2 ways after you negotiate a minimal up-front fee:

  1. Buy the materials yourself
  2. Use a credit card

The Hard-Sell contractor will threaten to get other jobs because there is plenty of work for him out there, bullying you into giving cash or initiating a wire transfer.  Understand you have no recourse should they not perform.  I’ve found it’s pretty easy to educate a contractor on how to accept credit card payments.  Square, Stripe and PayPal are just a few of the low-cost options available for contractors.  Even if they don’t like paying the extra charge, it’s worth it to you to pay it for them.  You will be protected should they not perform as stated, even if you have a solid contract.  Your credit card company is your first line of protection.

Buying the materials yourself is easy even if you don’t know what to buy.  I’ve often had cashiers from the big box stores call me as the contractor checks out of the store and I give them my credit card number over the phone.  It’s a slight inconvenience for the contractor, but it assures you that you are in control of the spending.

Please share this information with anyone you know that needs some construction help.  You could save them from a lot of turmoil.

The post Disaster Scams from Irma and Harvey Hurricanes appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/disaster-scams-irma-harvey/feed/ 0
The Real Estate Investing Strategy we Forgot About http://www.jeannorton.com/real-estate-investing-strategy-forgot/ http://www.jeannorton.com/real-estate-investing-strategy-forgot/#respond Mon, 14 Aug 2017 17:25:31 +0000 http://www.jeannorton.com/?p=3404 The real estate investing world has since changed.  Foreclosures have dried up, people think their houses are worth more than they are.  Who can blame them, really?

The post The Real Estate Investing Strategy we Forgot About appeared first on Jean Norton Real Estate Investing.

]]>
It was 2009. The foreclosure crisis was in full swing and I was a sponge, soaking in every real estate strategy people mentioned.  I listened to podcasts, watched webinars, read books, followed anyone that claimed to have the “secret to success”.  If there was a strategy, I wanted to know it.

The real estate investing world has since changed.  Foreclosures have dried up, people think their houses are worth more than they are.  Who can blame them, really?  Qualified buyers are clamoring to buy homes and are even willing to pay over asking price and making up the difference in cash should an appraisal come in low.

How can you get a deal today in this market?

Just like in any industry, you must constantly be aware of your economic surroundings and adapt to changes.  Which is why I will revisit the “5-Day Sale” strategy I learned about in my beginning years.  (This is a book written decades ago about how to sell a house quickly utilizing scarcity and deadlines to emotionally engage urgency in buyers.)

I’m not one to take an idea and buy into it without a lot of research.  I spent many hours researching this strategy to understand the psycho-dynamics of motivating the buyers.  In addition, I seeked those that actually worked this model and found the activities always resulted in a sale, but still at a lower price than desired.  So I let it go.

Recently I met a fellow real estate investor on Facebook, that found a way to improve, systematize and profit by utilizing similar principles I remember from this book I read so long ago.

It made me wonder if the economic conditions had changed enough, combined with the systems this guy put into place that maybe it is worth revisiting.  I must admit I’m intrigued, as he’s leveraged the one aspect I remember from that book, and parleyed it into creating multiple streams of income.

Learn more about what he is doing in my Facebook Group. I think it will make for an interesting discussion.

The post The Real Estate Investing Strategy we Forgot About appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/real-estate-investing-strategy-forgot/feed/ 0
Dissecting this Tampa Bay $458,000 Foreclosure Shock http://www.jeannorton.com/dissecting-tampa-bay-458000-foreclosure-shock/ http://www.jeannorton.com/dissecting-tampa-bay-458000-foreclosure-shock/#respond Tue, 04 Jul 2017 17:37:45 +0000 http://www.jeannorton.com/?p=3344 Condo associations have the right to foreclose based on unpaid dues. Sometimes they go to high bidders, sometimes they revert to the association. This does NOT extinguish any underlying lien. Therefore, the association or the new title holder can enjoy, lease, or otherwise CONTROL the property subject to underlying liens.

The post Dissecting this Tampa Bay $458,000 Foreclosure Shock appeared first on Jean Norton Real Estate Investing.

]]>
On June 8, 2017, an Orlando Couple won the high bid at a “Courthouse Steps” Foreclosure, but faces ending up with nothing, according to this News Report from The Tampa Bay Times. “Florida couple stunned to learn $458,000 paid for gulf-front condo may be for nothing”

The main point of the article is there is an underlying lien holder that will foreclose on them in short order, and a simple title search (or for me, a direct search on the publicly available official records, which is normally free) would show there was at least one underlying superior lien.

However, this article references so many moving parts, I need to lay them out as the story is more complicated than just conveying the message “do your due diligence”.

Event 1: Initial Foreclosure from the Condo Association

Condo associations have the right to foreclose based on unpaid dues.  Sometimes they go to high bidders, sometimes they revert to the association.  This does NOT extinguish any underlying lien.  Therefore, the association or the new title holder can enjoy, lease, or otherwise CONTROL the property subject to underlying liens.

Many condo associations in Florida recouped many of the bad debts this way, enjoying increased income from the rentals while the banks were overloaded trying to exercise their rights to foreclose on the property.  This is what happened when the original owner didn’t pay his $11,000 in dues.  A company called Outbidya Inc. paid $157,800 for the title to the property 2 years ago (according to the article).

The condo association was paid the original judgement, and then “surplus” of the difference is held by the county in Florida.  There is no mention in this article of what happened to that surplus.  However other lien holders, or even the original owner of the property could file for the right to receive that surplus.  What happened to that surplus? Let’s save that question for later.

Event 2: Outbidya Inc. et al Borrowed $160,000 from owner’s other Newly Created company

This is where things get a little cloudy, and maybe a little shady.  According the news article, the original owner of Outbidya, Inc., Roy C. Skelton established a new corporation, “Deutsche Residential Mortgage” only a month after Wells Fargo, the original mortgagor began the foreclosure process.

(Note, I added “et al” since Outbidya granted 50% interest in another company, Parkes Investments Inc., who happen to claim the same address, with a management member named Lou Katz.)

This is when the RED FLAG WARNINGS jumped out at me.

  1. No Lender would originate a second position mortgage on a property where the first lien holder began the foreclosure process.
  2. Skelton had interest in Outbidya, and had interest in the Deutsch Residential Mortgage, using one company to borrow from the other company. (Seems kind of strange to me)

Event 3: Deutsch Foreclosed on Outbidya et al

Seeing a company named “Deutsch Residential Mortgage” as a plaintiff in a foreclosure can give a false level of comfort that this was a first mortgage foreclosing.  It wasn’t.  It was the Second Lien holder that foreclosed.  Remember, Wells Fargo has a first position loan against the property from years before the condo association originally foreclosed 2 years ago.  First positions stay with the property and are not extinguished by a second mortgage foreclosure.

Somehow the judgement from the $160,000 loan came to $377,036 owed to Deutsch as they were able to combine other promissory notes to the original second mortgage to reclaim their debt.

More red flags.

  1. The original $160,000 loan was issued to jointly to Outbidya and Parkes Investments, secured by a mortgage.
  2. More promissory notes showed up as a cross claim by Deutsch, which I don’t quite understand, as it appears they were loans from Skelton to Outbidya, not to Deutsch. An explanation from an attorney or credible source is welcomed here.

Now the foreclosure is finished, the nice Orlando couple can take possession of the Condo of which they paid over $488,000 for the right to do so.  Let’s hope the unit is vacant so they can enjoy it, as they may need to spend more money to evict whoever is there.  In addition, they face paying any arrears in outstanding condo fees which includes penalties and interest if not paid by Outbidya et al.

In addition, if they want to keep that unit, they will have to settle with the first position lender which is most likely in their best interest to protect their investments.

What about those Surpluses?

According to my rather lay person’s attempt to determine what happened to the surpluses, this is what I determined:

  1. The original condo foreclosure resulted in a surplus of over $136,000.  The only person that requested the surplus was the original owner.  It was so granted.  Why didn’t Wells Fargo request that surplus?
  2. The second foreclosure by the company Skelton established company, Deutsch Residential Mortgage, who held the second mortgage and was able to combine other promissory notes from Skelton’s other companies or personal promissory notes where there resulted in a surplus of $78,000 is under consideration by the courts to be refunded to Skelton’s other interest, Outbidya, et al.  If no other claimant, such as the original lien holder comes forward, it will most likely be granted.

I suspect the “innocent couple” may get clear title, as Wells Fargo, the original lender ($167k in 1997) had plenty of opportunity to reclaim those surpluses.  I suspect that would have paid off that original note.  But all I can say is there is some kind of really strange behavior here, and it has more than just an innocent couple getting into trouble.

The post Dissecting this Tampa Bay $458,000 Foreclosure Shock appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/dissecting-tampa-bay-458000-foreclosure-shock/feed/ 0
Gap Funding for Real Estate – 3 Different Views http://www.jeannorton.com/gap-funding-for-real-estate-3-different-views/ http://www.jeannorton.com/gap-funding-for-real-estate-3-different-views/#respond Sun, 16 Apr 2017 18:02:00 +0000 http://www.jeannorton.com/?p=3338 Gap Funding can make all the difference with your successes in real estate.  When people say you can make money in real estate without using any of your own money, it’s almost true.  Yes, I’ve made money in real estate utilizing none of my own money, many times.* There are 3 views to analyze when […]

The post Gap Funding for Real Estate – 3 Different Views appeared first on Jean Norton Real Estate Investing.

]]>
Gap Funding can make all the difference with your successes in real estate.  When people say you can make money in real estate without using any of your own money, it’s almost true.  Yes, I’ve made money in real estate utilizing none of my own money, many times.*

There are 3 views to analyze when considering gap funding: The Rehabber, The Gap Funder, and the Hard Money Lender

Entering into a Gap Funding agreement can be very rewarding for all, and can be devastating to all.  My personal experiences are as a rehabber, yet I’ve seen what happens as from the viewpoint of the gap funder.  I will outline the benefits and the risks from both perspectives.  But first, a quick definition:

The Gap Funder provides funds required for a renovation project that the Hard Money Lender doesn’t cover.  This allows for rehabbers to complete a project without using any of their own funds, yet enjoy profits from the project.  It allows for cash investors to make much higher returns on their funds.

The Rehabber

The concept of gap-funding was introduced to me in my early days as a real estate investor.  The intricacies of financing real estate projects for a profit can be somewhat unclear, especially for a new investor.  The concept “gap funding” is the critical component for the term “other people’s money” – or “OPM”.  This is the vehicle that allows YOU, the real estate investor/rehabber to do your job without making a personal financial sacrifice.  The concept works, with some exceptions.  I’ve done several projects without using any of my own money.  However, you must know this is the most expensive money available (OK, well the extension fees on hard money lender contracts are arguably as expensive, but that’s another story.)

[features_box_blue width=”75%” + border=”2px”]Failure to understand your responsibilities to the Gap Funder is a critical concept that will result in a very short career as a real estate investor.[/features_box_blue]

As a Rehabber I will either use a joint venture partner (where there is an agreed upon profit split) or a Hard Money Lender.  Sometimes I use a gap funder, but I personally try to avoid it at this point in my investing career.  However, with all of my cash currently deployed in other projects, I’m facing using gap funders for my futures deals.

As a rehabber, the person that identifies the opportunity, understand the profit potential, manages the construction project, manages the paperwork and sales effort, I have 2 more responsibilities.  That is to my Hard Money Lender and to my Gap Funder.  Failure to understand this critical concept will result in a very short career as a real estate investor.

Most gap funding contracts include a second lien position on the property.  You, the rehabber have no lien holder rights to the property.  You, or your entity, may be the owner of record, but the liens usually cover any profitable interest.  You are vulnerable and must prove worthy to your cash investors.

Once the project is finished, the Hard Money Lender is paid in full, the Gap Funder is paid back their original investment plus a share of the profits, and you, the rehabber get the other share of the profits.

I have never been in default with a gap funder, but you must be prepared to deal with that situation should it occur.  That means, you will have to pay them back even if it means selling some of your personal assets.

 

 

The Gap Funder

The riskiest investment with the greatest returns can easily get you very excited.  Viewing a pro-forma spreadsheet, trusting in another’s competencies, and the thought of the easy money can lull you into a sense of giddiness that you willingly pull out your checkbook with excitement.  This is when the Gap Funder has lost any level of intelligence that may have previously existed.  Smiles, money, new beginnings over rule common sense.

I hear of more people that have significant losses in the role of a Gap Funder than any other role.  They aren’t thinking when they loan the money.  These are some of the biggest mistakes made by Gap Funders:

  • Fail to secure the loan (second deed of trust or second mortgage)
  • Place too much trust on an inexperienced investor
  • Fail to monitor the project
  • Not seeking help once they realize the deal has problems

Of all of the investment loss stories I hear, it’s the Gap Funders that have lost the most.

 

 

The Hard Money Lender

Most hard money lenders are either people with a lot of cash wanting to act as a hard money lender, or have other peoples funds available to them for hard money loans.

Hard money lenders insist on have the first level of security in the property – a first lien position.  Smart hard money lenders make YOU, the rehabber come to closing with cash. They want YOU to have “skin in the game” as you are more motivated to save your own money than you will to save the Hard Money Lender’s money.

The Hard Money Lender is usually in a good position.  They make sure there is equity in the deal should they have to foreclose.  Most don’t really care if you have a gap funder involved, yet some do.  Since they have the first position any subsequent position is usually extinguished upon foreclosure.  They owe no duty to the gap funder or to the renovator.

Most hard money lenders was their loan to be paid in a timely manner.  It is costly to foreclose on properties, and don’t really want to have to deal with the properties once foreclosed on.  However, I have heard there are many that have intentions of legally stealing properties for their own benefit.  Luckily I have not come across any.

In Summary

Should you want to invest as a gap funder, treat it as a business decision.  This world of real estate investing is based a lot on trust.  Writing checks to rehabbers like me is not the same as showing up at your local Fidelity office and having them invest your funds for you. The risks may be similar, but you must know how to protect yourself more than anything.

On the other side, don’t get bogged down with analysis paralysis.  If there is a good opportunity with a person that has a track record of managing profitable projects, then you must be prepared to take action.  Gap Funders CAN make a lot of money with the right team.  You merely need to understand your role and how to protect yourself.

Please join me in my private real estate community  CLICK HERE to see more.

You are also welcome to come into my Facebook Group.

 

 

*Where you can make money in real estate using all other people’s money, there are times you will need use of your own funds due to timing issues, for example you may have to put up an earnest money deposit while you search for cash investors.

 

The post Gap Funding for Real Estate – 3 Different Views appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/gap-funding-for-real-estate-3-different-views/feed/ 0
An Open Letter to Banking Regulators http://www.jeannorton.com/open-letter-banking-regulators/ http://www.jeannorton.com/open-letter-banking-regulators/#respond Sat, 11 Mar 2017 02:55:48 +0000 http://www.jeannorton.com/?p=3329 THIS IS AN OPEN CALL TO BANKS, MORTGAGE BROKERS, UNDERWRITERS AND REGULATORS TO THE ATROCITIES THAT OCCUR DUE TO LAZY UNDERWRITERS, BAD MANAGEMENT, UNLIMITED PRIVILEGES OF THE BANKS AND NO RECOURSE FOR PROMISES MADE.

The post An Open Letter to Banking Regulators appeared first on Jean Norton Real Estate Investing.

]]>
An Underwriter’s job is safe, no matter how many delays, no matter how many pieces of papers they need to approve a loan no matter how long it takes to understand laws in a state where a property is located.  The Underwriter, and Bank suffers NO REPERCUSSIONS for delays caused by banks when trying to obtain a loan.

They are forgiven, regardless of the cost to the potential borrower.  Let’s examine some of those costs:

  1. Existing Liens and Extension fees, balloon payments and other penalties.
  2. Breaking leases, hotel and other temporary living expenses.
  3. Bank mandated Fees, not paid for by the bank but paid by YOU, the borrower, thus you are stuck with just one bank that you choose, the bank you INVESTED your faith in.

Existing Liens and Extension Fees, Balloon payments and other Penalties.

Where the underwriters can sit on their tushy’s saying they need this, then they need that, our time bomb is clicking.  We either have a balloon payment, a hard money loan with extension fees and continued high interest payments.  In my experience, I submitted a very STRONG application (admitted to by the bank on 12/21/2016) with good credit a valid rental property that everyone knew was supported by a hard money lender with payments at almost 12% interest.  The holidays caused some delays, and on 1/3/2017 I was approved for a loan. 2.5 months later, I still haven’t closed.

I had a hard money loan with extension fees that were to go into affect on 2/28/2017.  The bank said there was plenty of time to close by 2/28.  Of course, here I am, mid March and this bank STILL can’t refinance on a loan that was 40% LTV – an appraisal that took on month to complete because the bank I dealt with didn’t have good contacts with local appraisals (Truth be told, they moved the lending opertation from Florida to Texas because I live in Texas, yet this bank doesn’t have a rolodex of appraisers, NOR understand the law in the location of the property, which was Florida.)

OK, one full month to get an appraisal.  Still not enough.  This bank didn’t understand the survey requirements in Florida.  Given they moved the location from Florida to Texas, these underwriters needed to be proved to them that the laws were different and the Texas rules do not apply to Florida properties.  Another good 2 week delay for them to try to understand the laws.

COST TO ME: 4 MONTHS OF PAYMENTS TO HARD MONEY LENDERS: $1400*4=$5,600
COST TO ME: 1 EXTENSION FEE TO HARD MONEY LENDER $1,250 + Late fee, $400 = $1,650
APPRAISAL FEE: $400 (ORIGINAL FEE PRESENTED TO ME WAS $700)

TOTAL COST TO ME TO DATE: $7,600

And that was because I believed this bank could close in the time frame they promised.

THERE IS NO RECOURSE FOR ME, OR PEOPLE LIKE ME FOR A BANK’S FAILURE TO PERFORM.

Breaking leases, hotel and other temporary living expenses

Let’s forget about me, and other investors.  Let’s look at the poor people trying to buy a home to live it, and possibly raise a family.  Again, they have rental leases, they give notice to their landlords, the landlords find new tenants and the BANK’S UNDERWRITERS need more information that could have been given to them months prior.  They have to move their furniture into storage, they have to stay in a hotel and the costs cause these people not only emotional upset, but extra expenses.  Then the bank pulls their credit one more times, and they see a lot of charges on their credit cards (since the bank didn’t move in a timely manner) and then cancel the loan or question why the additional debt.  SMH (SHAKE MY HEAD).

SHAME ON YOU, LAZY UNDERWRITERS AND INCOMPETENT BANKERS.

Bank mandated Fees

In addition, the banks charge fees that don’t allow normal credit qualified people to create an environment for healthy competition.  They make the buyer pay for an appraisal fee, and the borrower has no control on who the bank chooses.  How many banks can I hire at the same time and how much will it cost me to have a bank actually close in the timeframe they promise?  At anywhere from $400-$700 per appraisal (even if you have an appraisal from the previous month), how many applications can I run concurrent to ensure the bank will close in the timeframe they promised?

Not too many.

And then the Mortgage Brokers

Are about as evil as the banks themselves.  I’ve seen a broker keep delaying a buyer’s closing date while they continue to shop around a mortgage to give the broker the highest payout.  Yes, my buyer got strung along for months, as I had to face hard money extension fees and the poor buyer unable to close on the property.

THIS IS AN OPEN CALL TO BANKS, MORTGAGE BROKERS, UNDERWRITERS AND REGULATORS TO THE ATROCITIES THAT OCCUR DUE TO LAZY UNDERWRITERS, BAD MANAGEMENT, UNLIMITED PRIVILEGES OF THE BANKS AND NO RECOURSE FOR PROMISES MADE.

Please join me on a social media campaign using the hashtag #BANKSABUSE and tell your story.  Thanks.

 

The post An Open Letter to Banking Regulators appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/open-letter-banking-regulators/feed/ 0
12 of the Most Bizarre Pics I’ve Seen While Researching Properties http://www.jeannorton.com/12-bizarre-pics-ive-seen-researching-properties/ http://www.jeannorton.com/12-bizarre-pics-ive-seen-researching-properties/#respond Wed, 08 Mar 2017 01:51:08 +0000 http://www.jeannorton.com/?p=3313 Copyright by Jean Norton and those that took the original pictures.  Please do not distribute without contacting me first. I wish I could find the really bizarre picture I first stumbled across with a property I bought in Highland Park, IL, where there was nothing but a toilet in a closet.  SMH, which means “Shake […]

The post 12 of the Most Bizarre Pics I’ve Seen While Researching Properties appeared first on Jean Norton Real Estate Investing.

]]>
Copyright by Jean Norton and those that took the original pictures.  Please do not distribute without contacting me first.

I wish I could find the really bizarre picture I first stumbled across with a property I bought in Highland Park, IL, where there was nothing but a toilet in a closet.  SMH, which means “Shake my Head”.  I’ve since seen plenty and posted as I discover them in my Facebook Group (HERE).  After accumulating quite a number, I’m sharing with you.

His and Her sinks?  I don’t think so.

 

This was once a Door to Where?

 

Don’t disturb Occupants?

 

An Improvement on Duct Tape…

Maybe a Chiropractic Studio, or Natural Dungeon?

Anyone Ready for a Flood?

 

I Love Blue, But Really…

 

We Don’t Need No Stinkin’ Drywall!

Is this from a Chicago Dungeon?

 

On those Rare Occasions when You just Can’t Hold It

 

Who Wants a Bonfire in the Tub?

 

Yes, Red goes with Anything!

 

OK, WHO LOVES PINK?

 

Are you in my Facebook Group?  If not, CLICK HERE.

The post 12 of the Most Bizarre Pics I’ve Seen While Researching Properties appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/12-bizarre-pics-ive-seen-researching-properties/feed/ 0
Women as Real Estate Investors are a Subset of the most Successful Investors that Exist http://www.jeannorton.com/women-real-estate-investors/ http://www.jeannorton.com/women-real-estate-investors/#comments Sat, 04 Mar 2017 21:34:38 +0000 http://www.jeannorton.com/?p=3307 The words, the body language, the "deer in the headlights" look when they introduce themselves as a new real estate investor. It's obvious and they are scared.

The post Women as Real Estate Investors are a Subset of the most Successful Investors that Exist appeared first on Jean Norton Real Estate Investing.

]]>
Women new to real estate investing will be surprised to learn that we are a subset of the most Successful Investors that Exist.

[content_box_blue width=”75%”]Survey after survey shows that women lack confidence when it comes to investing and retirement planning. Yet if you look at the actual results, women often perform better than men. (CNN Money)[/content_box_blue]

But you wouldn’t know our successes by looking at us.  You wouldn’t know it by listening to us.  Because we stay quiet.  We don’t boast, we don’t brag so therefore go unnoticed while in the world mostly dominated by men.  We question our confidence and show our fear uncontrollably, thus look weak in the eyes of our male counterparts.

I see it every week in my Networking Meetings in Austin.  The words, the body language, the “deer in the headlights” look when they introduce themselves as a new real estate investor.  It’s obvious and they are scared.  The men?  They introduce themselves and it could be months before you realize they were new, and that’s only because they mention they just finished their first flip.

Communicating with so many over the years with social media, networking meetings, emails, general questions, and even requests for phone calls, I see the same patterns that stop so many women from reaching the pinnacle they envision.  I see this with all women regardless of cultural, racial, and social classes.  I know this because the Real Estate Industry is the only industry I’ve found to enable people to make money in ALL of society in the US.

[features_box_blue width=”75%” + border=”2px”]”…companies with a female founder performed 63% better than our investments with all-male founding teams.” (Source: First Round Capital [/features_box_blue]

The data is solid.  The facts speak for themselves. So WHY, do we still discount ourselves, second guess our pro forma, and wonder why we can’t raise the funds we need to be successful in Real Estate? Why to we beat ourselves up for one little mistake? Why do we look to our husbands, our fathers, our uncles for the resources we need to do what we are so totally able to do superbly, year after year after year?

Look for future calls on this issue and a Retreat for Ladies, http://DivasDoRealEstate.Com, coming very soon.  Also please join me in my Facebook Real Estate Group.

 

 

The post Women as Real Estate Investors are a Subset of the most Successful Investors that Exist appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/women-real-estate-investors/feed/ 1
AirBNB vs VRBO Findings http://www.jeannorton.com/airbnb-vs-vrbo-findings/ http://www.jeannorton.com/airbnb-vs-vrbo-findings/#comments Sat, 28 Jan 2017 20:37:11 +0000 http://www.jeannorton.com/?p=3300 This post is about my experience dealing with both AirBNB.com and VRBO.com. Given I have 2 very different kind of rentals, I want to share my experience for your information.

The post AirBNB vs VRBO Findings appeared first on Jean Norton Real Estate Investing.

]]>
This post is about my experience dealing with both AirBNB.com and VRBO.com.  Given I have 2 very different kind of rentals, I want to share my experience for your information.

[SUMMARY]  VRBO exceeds expectations for true vacation rentals in my experience, hands down.  AirBNB exceeds for corporate short term rentals in my experience, period.  Both attract people wanting a lower price that what is posted, and both have varying features you may find important when making your decisions.

Where my limited supply of 2 rentals are not enough for a statistical conclusion, my experience varied widely between my 2 different condos, one in an urban area of Chicago, and one in a peaceful oceanfront community in the Treasure Coast of Florida.  The differences are so vast I thought I would share.

The Analysis

I advertised both properties on both platforms, with the requisite A/B testing.  I began my testing prior to them either being ready or prior to the “season” in order to prove there was a demand for short term rentals.

Chicago

I received responses early in the spring, especially for medical students on rotation, people coming in for a show at McCormick Place, Graduations, Weddings and the like.  Since VRBO takes such a hefty commission, and encourages you to buy into their subscription service, I signed up temporarily.  For various reasons I chose to cancel that subscription as I felt it was too high compared to the AirBNB commissions.  In addition, AirBNB collected and paid the local taxes for me. That is something I probably would have let fall through the cracks, out of laziness.  So I was thankful AirBNB would keep me honest.

At the same time, others spoke to me of their experiences, saying that AirBNB brought the craigslist mentality – always asking for a better deal.  However, I didn’t find that to be totally true.

Treasure Coast, Florida

The particular HOA for this condo allowed for 2 month rentals, once per year.  If you don’t already know, the HOA laws in Florida tend to favor the Association.  This is important to know in case there is a misunderstanding of your intentions.

I advertised on both platforms, with most of the inquiries coming from VRBO.  Even though I still wasn’t ready to commit to the VRBO subscription, it may have been more beneficial had I subscribed.  I suspect VRBO’s commissions will be higher than had I subscribed with them.

There were many VRBO inquiries that didn’t fit the personality of the complex, or couldn’t commit to the length required, so I had to turn many away.  I ended up getting a rather upsetting message from VRBO that my account was at risk of being closed, mainly because I had to turn so many away.  I’m not fond of “bully marketing”.  However they said I could restore my good standing by, you guessed it, subscribing to their service!

HOWEVER, I was getting ZERO inquiries from AirBNB.  None, zippo, zero.

I played with the settings, looked at my listing from a competitive standpoint, even to the point where I changed the minimum stay as 2 days, knowing the HOA required a 2 month minimum lease, just to solicit some interest and discussion.

Don’t do what I did

I forgot about the AirBNB listing that was left at 2 days minimum stay.  Somehow the HOA found that listing and assumed I was renting it to transients.  Without asking me, which I will never understand, they chose to get their attorney involved with a Cease and Desist letter.  A little overkill I thought, but this is Florida and I’ve heard many stories of abuse of power by HOA boards in Florida.  In fact, it makes me feel even better about the win with the battle I had with my Tax Deed Purchase in Daytona Beach.

Just to follow up on what happened with that purchase, the HOA demanded I pay the previous owners arrears, which had accumulated to over $30k.  Luckily my attorney quashed that issue in pretty short order, the rest of the time was spent bickering over them paying my attorney fees, which they did.  Now that I know more about the entitlement attitude of the HOA Boards I should have celebrated that win more.

Sorry, but I digress.

In Conclusion…

There are a few other issues that make a big difference: AirBNB pays on check-in, VRBO waits a while.  VRBO offers insurance on damages (or will collect a deposit), yet AirBNB offers a host liability insurance.

If I still own the Florida condo next year, I will most likely register for the VRBO subscription service and ignore the AirBNB option.  However, I plan to keep the AirBNB service for the Chicago condo (pictured here) which is currently available on a month to month basis.

Should I get another property with the idea of short term rentals, I will probably perform the same tests.  However, I will be a little wiser if an HOA is involved, especially if in Florida.

 

 

 

The post AirBNB vs VRBO Findings appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/airbnb-vs-vrbo-findings/feed/ 1
About Online Auctions for Real Estate Investing http://www.jeannorton.com/online-auctions/ http://www.jeannorton.com/online-auctions/#respond Wed, 25 Jan 2017 23:01:33 +0000 http://www.jeannorton.com/?p=3290 Online Auctions are my favorite way to obtain Real Estate for my Investing.  I was motivated by a lot of questions I get through social media, including BiggerPockets.com, a great resource especially for new investors, and finally made the conference call I had promised for so long.  I talk about Auction.com mainly, but there are a few […]

The post About Online Auctions for Real Estate Investing appeared first on Jean Norton Real Estate Investing.

]]>
Online Auctions are my favorite way to obtain Real Estate for my Investing.  I was motivated by a lot of questions I get through social media, including BiggerPockets.com, a great resource especially for new investors, and finally made the conference call I had promised for so long.  I talk about Auction.com mainly, but there are a few others I’ve used.

Here are some of the questions I answered on this call:

  • Do I have to pay immediately?
  • What about Title Insurance?
  • Will they accept hard money?
  • How long do I have to close?
  • Can I choose my own closing company?
  • What if I change my mind?
  • Why do I have to put up a deposit?
  • Are the banks bidding on their own properties?
  • Do the Sellers have reserves?
  • What if the seller rejects my high bid?
  • How long to receive my EMD back if they reject my bid?
  • Why would I want to buy properties via Auction.com?

Enjoy the recording!

 

 

 

 

 

CLICK HERE to download and post more questions here.

 

 

The post About Online Auctions for Real Estate Investing appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/online-auctions/feed/ 0
Armando Montelongo RICO Case Filed in Texas, More Plaintiffs http://www.jeannorton.com/armando-montelongo-rico/ http://www.jeannorton.com/armando-montelongo-rico/#comments Wed, 21 Dec 2016 17:00:32 +0000 http://www.jeannorton.com/?p=3285 "Acting through his many corporate shells, Montelongo sells worthless, dangerous, and unlawful advice about real estate investing; takes advantage of the students’ trust to loot their accounts; sells them properties at inflated prices without disclosing his stake in them; encourages them to pursue their real estate investments using his allies, who also victimize the students; and harasses those who dare to speak out against him."

The post Armando Montelongo RICO Case Filed in Texas, More Plaintiffs appeared first on Jean Norton Real Estate Investing.

]]>
The Armando Montelongo RICO case initially filed in California has re-filed in Texas with more plaintiffs, and more gusto.

To view the entire complaint, CLICK HERE.

Excerpts from the RICO Claim

“Acting through his many corporate shells, Montelongo sells worthless, dangerous, and unlawful advice about real estate investing; takes advantage of the students’ trust to loot their accounts; sells them properties at inflated prices without disclosing his stake in them; encourages them to pursue their real estate investments using his allies, who also victimize the students; and harasses those who dare to speak out against him.”

“As another example, Montelongo solicited large amounts of student money for an investment in a marina near Sarasota, Florida called the Olde Fish House Marina. It may have reaped benefits for Montelongo—the AMS website describes it as a “successful casual dining establishment”—but the students who invested with him sustained heavy losses.”

And Kurt Weinrich, (aka Kurt “the shirt” Weinrich)

“Defendants also encourage students to transfer money in their employer- controlled or other secure retirement accounts to self-directed IRAs held by companies allied with Montelongo and the Defendant entities. Until at least mid-2015, Defendants’ chosen company was Preferred Trust Company, LLC (“Preferred Trust”), run by Kurt “the Shirt” Weinrich. After that time, Weinrich continued to be Defendants’ chosen self- directed IRA provider, apparently through a new entity the identity of which Plaintiffs do not yet know.”

Weinrich also permits Montelongo access to confidential information about the students’ finances that Defendants then use to prey upon them. During the asset protection events, Montelongo’s employees ask students to share their financial information (including about their Preferred Trust accounts) in the name of educating the students. The employees then share that information with Montelongo, whose response to a positive account balance is visceral: Multiple former employees report that he shouts angrily, saying, “That’s my money! You’re not doing your job to get that in my pocket!” The employees comply, using their knowledge of the students’ finances to sell them more AMS “education” or encourage them to invest in properties with AMS-allied developers.”

Regarding Alleged Harassment

“To hide their deception, Montelongo and his employees instill fear in the students to discourage them from questioning the AMS system, and attacking or silencing those who attempt to speak out. For example, early on in a group event, when someone asks a question, Montelongo will berate the speaker, deriding him or her for wasting the other students’ time. Cowed, few others will dare to interrupt again. At other points in an event, Montelongo will mention his in-house legal team, and claim that no one could possibly sue him and win. The crux of these remarks is that anyone who would cross Montelongo on a business deal would lose, and that any student who would cross him would lose, too.”

Self-Dealing Transactions

“Defendants also victimize their students by engaging in self-dealing transactions with them, frequently without disclosing their own interests. For example, before a bus tour event, Montelongo will use an affiliate to purchase properties in the area where the event will occur, and then, during the event, sell the properties to students at inflated prices without disclosing that he has an interest in the sales or receives a share of the profits. (One student fortuitously overheard Montelongo discussing this scheme when she dialed in early to a planned group call for AMS students.)”

Register for Jean’s Newsletter (on the top right of this blog) to keep up-to-date on these legal proceedings, and/or join her popular Facebook Real Estate Group: Jean Norton’s RE Connections.

 

The post Armando Montelongo RICO Case Filed in Texas, More Plaintiffs appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/armando-montelongo-rico/feed/ 2
Investing & Strategy for Ladies http://www.jeannorton.com/investing-strategy-ladies/ http://www.jeannorton.com/investing-strategy-ladies/#respond Thu, 01 Dec 2016 22:27:10 +0000 http://www.jeannorton.com/?p=3270 Plus some pampering… Men and women solidify their investing strategies very differently.  Plus spending my entire career life in male dominated industries, I see that Real Estate is no different. I see women in networking meetings, and way too often they have that look like a deer in the headlights.  The uncertainty comes through and affects their […]

The post Investing & Strategy for Ladies appeared first on Jean Norton Real Estate Investing.

]]>

Plus some pampering…

Men and women solidify their investing strategies very differently.  Plus spending my entire career life in male dominated industries, I see that Real Estate is no different.

I see women in networking meetings, and way too often they have that look like a deer in the headlights.  The uncertainty comes through and affects their entire ability to do this business.  It happens with men sometimes too, but men, in general are attracted to the “let’s crush it” attitude.  The motivational videos shown in the seminars are of male athletes pushing themselves harder than ever to success.

Where that education and motivation is fine, there are plenty of women that are convinced that real estate investing is a money making method for building wealth, but just don’t align themselves with the “let’s crush it” mind set, or believing that “it’s simple”.  That’s not how we are wired.

The women I know that have done well in real estate experience their own path to success.  Listening to their stories on how they are able to invest in real estate for so long has some common themes.  Confidence, trying at the risk of failing, independent thinking, making quick decisions, and of course understanding the numbers are just some of those common themes.

This has been on my mind for some time, and I’ve finally created an environment that will improve women’s confidence in real estate investing, create a supportive and nurturing environment for women to learn more about real estate, plus strategize on many issues.  This kind of environment requires, in fact is of utmost importance, to be removed from your home settings.  Therefore, I’ve created a retreat for Lady Real Estate Investors that includes some education and strategizing along with some serious pampering time – plus exploring some of the culinary and cultural delights that Chicago has to offer.

April 3-7, 2017 is set for the Divas Do Real Estate Investing Retreat in Chicago.  CLICK HERE to learn more about it and be sure to share it with your friends!

divasimage

<—CHICAGO in April

The post Investing & Strategy for Ladies appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/investing-strategy-ladies/feed/ 0
How an HOA can Destroy your Property Value Overnight http://www.jeannorton.com/hoa/ http://www.jeannorton.com/hoa/#respond Sun, 20 Nov 2016 17:29:04 +0000 http://www.jeannorton.com/?p=3253 Homeowner’s Associations (HOA’s) are, and have been the cause of much grief for many over the years.  They exist for a communal benefit of a group of property owners.  But who could have guessed that one HOA could stigmatize a property so badly that the retail value would plummet overnight?  The only other issue that could […]

The post How an HOA can Destroy your Property Value Overnight appeared first on Jean Norton Real Estate Investing.

]]>
Homeowner’s Associations (HOA’s) are, and have been the cause of much grief for many over the years.  They exist for a communal benefit of a group of property owners.  But who could have guessed that one HOA could stigmatize a property so badly that the retail value would plummet overnight?  The only other issue that could cause a similar stigma that I could conceive would be a double murder suicide. That could cause a property value to plummet, but to cause an entire complex to be stigmatized?  I’m sure there are others with their stories.

I will speak about my particular experiences, the reasons HOA’s exist and why they are important,  why HOA’s are so hated, and welcome others to comment.

For those that don’t want to read the entire story here it is in a nutshell: the members approved a special assessment to paint the building and do some balcony repair.  My part was $12k.  I immediately put my unit on the market to cover that surprise assessment.  Shortly after the work started the construction crew discovered severe structural issues with the concrete floating balconies.  The estimate came to an additional $31k.  Nobody will buy that condo now.

The members in an outrage, plus a lot of discussions of alternatives discussed such as staggering the timeline, looking into other materials an other solutions, all to be a waste of time an energy as an additional assessment of $31k was levied and approved by the board, without the need for member approvals.

The entire complex devalued overnight.  Nobody will buy into that complex with that stigma and without years of proof that the building is sound.

Background

I’m not afraid to invest in condominiums.  I’ve had some great luck buying, rehabbing and selling condo’s for a profit.  Plus I’ve been very generous to my private cash investors.  I can list a few that were slam dunk, easy peasy and highly profitable deals.  But there is a reason most experts say to avoid condo’s.  This is one of them.

Not wanting to put blame anywhere, I tend to listen to what others want and I watch out for those types of opportunities.  Sometimes I get stuck with the property myself, as they changed their minds, or the numbers weren’t as profitable as we originally thought.  That’s OK with me as I’m the one that saw the opportunity and bid on it.

In the back of my mind, I remember my strongest hard money lender telling me to watch for a condo for him in Florida, as he was based in Michigan and very tired of the cold.  He wanted something rather large, close to the beach, and the view wasn’t as important as the location.  And voila! About a year later one appeared and the profit margins were solid.

I secured the property, and since it was a milder winter than when he first suggested that I look for a property like this, he wasn’t as motivated.  No problem, the spreads were still pretty darned good.  I took it on myself.

The Property

This is a 3 bedroom, 3 bath, 2,167 square foot oceanfront property in a peaceful setting of the Treasure Coast in Florida, surrounded by high dollar high rise condominiums.  The unit I bought was in bad need of cosmetic updating.  Built in 1982, it had all the original kitchens and bathrooms and it was in need of a major overhaul.

A new area for me, I vetted several contractors and agents, all saying that I needed to budget $60k for a rehab.  Sixty thousand dollars for a condo?  A house with a gut rehab in Chicago, maybe, but not a Florida condo.

Off I went to Florida to hire the necessary help to rehab the property to the area’s standards.  I was able to negotiate less than the $60k the locals estimated, but still the salt air destroyed any metal and there were unforeseen costs.

I was so pleased with the support I got from the condo board as I tried to get into the unit and get access to the various tools I needed, such as security codes, garage openers, etc. I was so fortunate to have the best condo association work with me on this property.  I even told them they were the best I ever worked with.  The response? “Well…a new board is coming so I can’t say that will continue…”.  {ENTER JAWS MUSIC HERE}

The Timing

Delighted to finally get the property ready to sell, I ended up with an agent that wasn’t anywhere near the property, knowing nothing about the area and didn’t even respond when the HOA contacted the agent for issues like, the HotWater Heater broke and was flooding the garage.  Dang.  And she was insulted when I didn’t renew the listing agreement.

In that time period, the property right next door sold for well below it was worth, totally ruining my ability to reach the sales price I wanted.  What more can you do but rent it out for a year, which is what I did.

The Assessment

The new board members in charge, they immediately campaigned for an updating and refreshment of the building, often blaming the previous board members for their deferring maintenance and not managing the property correctly.  OK, so I got talked into approving the $12k assessment, yet I made it very clear I would have to sell my unit to pay that fee.  The response was that I just needed to show some effort for paying on that amount due.  Come to find later we both misunderstood each other since now I’ve been told they will impose late fees and interest on the unpaid amount.  SMH.  They can do it.  It’s in the condo docs and the HOA is protected by Florida law.  What isn’t necessary is to deliver that message from a position of power as a looming dictator, as opposed to a fact.  But that’s why we have the word “bully” in the dictionary.

The construction started with the 2 buildings closest to the ocean.  Shortly into the process they discovered some severe issues with the structure of the balconies.  Not only had the concrete deteriorated due to “tile floors” allowing moister to seep into the concrete, therefore rusting the rebar and basically turning the concrete into powder, the post tension cables had gone bad and some even broke.  This is a very serious issue as this kind of environment could cause extreme damage and lives could be harmed.

The construction issue had to be totally reevaluated.  The balconies aren’t safe.

[easymedia-gallery med=”3257″ filter=”1″]

The Conflict

Given I wasn’t liquid enough to pay the initial $12,000, you can imagine my shock that they claim another $31,000 was required and that it was my responsibility to pay for incidental issues involved with the construction, such as removal and replacement of the hurricane shutters, etc.

To be successful as a real estate investor, you must be able to come up with alternatives to complicated issues such as these.  Do we need to replace these floating balconies with the same?  Can we use steel?  Can we prop them up with posts? What about wood balconies?  How can we reduce this amount?  Can it be spread over time?

All of these options were discussed and overruled. At this point the board is in charge and it doesn’t matter what the members propose, and even though we thought we could have a say, we couldn’t.  The board is protected by law and they all unanimously approved that assessment.  That assessment, by the way, had a budget of $40,000 for legal fees as they expect they will have to sue a few people that may withhold payment.  Geez.

Where was that nice board I worked with before?  The one that looked for the win/win to uphold the fabric and enjoyment of the somewhat small community?

Polarization amongst the owners has begun.  Distaste from the current board members to the previous board members obvious, the position of power stance the current board members exercised and promise to uphold a clear statement to the rest of this previously harmonious community.

The HOA Laws in Florida

Believe it or not, my handyman, who was once a president on an HOA board, could explain things to me that helped me understand why HOA boards are often put in such a difficult situation, imposing such unreasonable demands on innocent people like myself trying to make a living.  There is the law, then there are people’s personality embellishing their perceived position of power.

The Florida laws are there to protect the HOA.  The HOA must follow and enforce their own rules, regardless of unforeseen issues, in order to continue to be protected by the law.

One example I saw was an HOA ordered fines for someone installing a door that wasn’t the correct color.  It went to court and the HOA lost because the previous board members allowed others to have different color doors.  Therefore, if the HOA doesn’t enforce their own rules, they aren’t protected by Florida laws.

The Silver Lining

I’m stuck with a property that is stigmatized so badly there is no selling price that is possible.  I don’t have the liquid resources to bring to the table to sell it, as there is so much owed between the mortgage and HOA fees, let along getting any of my investment out of it.  So I decided to furnish the unit and rent it to snowbirds, if possible, as there are strict rental criteria according to the condo docs that can’t be changed even with the level of construction and inability for some to pay.

The silver lining is that it is in a beautiful location, on the beach and big enough for my entire family to visit when we want.  It may be a struggle and the payments to the HOA will always result in a loss for me, and I will suffer a slow bleed for years to come.  Give the beautiful location and close proximity to the beach, I guess I’ll enjoy it to it’s fullest extent.

Are you in my Facebook RE Group? Join in on the discussions.

The post How an HOA can Destroy your Property Value Overnight appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/hoa/feed/ 0
The EASIEST Way to Make Money in Real Estate is…Cash Flow http://www.jeannorton.com/cash-flow/ http://www.jeannorton.com/cash-flow/#respond Sun, 25 Sep 2016 18:54:45 +0000 http://www.jeannorton.com/?p=3219 Making money in real estate can be easy, it can be risky, but nobody will deny that the best way to earn money with your real estate investments is through CASH FLOW. There are 2 types of ways to make money.  One is working for it, the other is NOT working for it.  The EASIEST money you […]

The post The EASIEST Way to Make Money in Real Estate is…Cash Flow appeared first on Jean Norton Real Estate Investing.

]]>
Making money in real estate can be easy, it can be risky, but nobody will deny that the best way to earn money with your real estate investments is through CASH FLOW.

There are 2 types of ways to make money.  One is working for it, the other is NOT working for it.  The EASIEST money you can make is when you don’t have to work for it.

Sounds pretty easy, right? Well…it depends.

How Can I Make Money with Cash Flow if I don’t have any?

This is a great question.  Where it is possible to acquire properties with no money down, it’s almost impossible to do by yourself.  There are ways, depending on your integrity, your credit scores, other people’s trust in you, yes, it is possible to buy cash flowing properties without any of your own money.  However it is so much easier if you have decent credit and some money in the bank, or in your 401k/IRA.  Some people forget they have that IRA money.  If you do, you may want to speak with an expert on how to leverage your IRA funds to get into real estate investing.

What about my IRA?

You may not know it, but if you have some IRA money with your bank or a brokerage like Fidelity, you may want to consider moving your funds to a “self-directed IRA”.  There are several firms that offer self-directed IRA’s, and I even featured one company on one of my calls a few years ago.  You can listen to that call HERE.  But please don’t let that overwhelm you.  The bottom line is you just MAY have money you didn’t know you could use.

 

 

I Found Some Money!  Now What?

Great! Now we get into the nitty gritty and analyze your investing goals.  Are you saving for your kids’ college, your retirement, or do you just want some side money coming in each month?  Once you have your main goal in mind, you want to answer the following questions:

  • Where should I invest?
  • What should I invest in?
  • Where can I get the most cash flow for the least amount of investment?
  • How can I leverage what I have to gain greater returns on my investments?

LOCATION, LOCATION, LOCATION

You’ve heard this before, and it is so true.  You want an investment property that will serve a community that can pay for your property.  That means you don’t buy an abandoned home in the middle of nowhere.  The location should have some amenities or serve a local area that is in some level of demand.  Colleges and large corporate presences are some of what you should look for when determining a location.

Leverage

You don’t need to have all cash to invest in a rental property.  Most banks will loan a certain amount of money at a reasonable interest rate if you also have a job and decent credit.  If you don’t, consider partnering with someone that does, or research some of the hedge funds that create landlord loans.

Are you active with me in my Facebook Group Page?  Join Me while we chat about real estate.

 

 

 

The post The EASIEST Way to Make Money in Real Estate is…Cash Flow appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/cash-flow/feed/ 0
The Power of the Mastermind in Real Estate http://www.jeannorton.com/power-mastermind-real-estate/ http://www.jeannorton.com/power-mastermind-real-estate/#respond Mon, 15 Aug 2016 21:18:02 +0000 http://www.jeannorton.com/?p=3212 About 18 months ago I started an “invite only” small networking group of people local to me that that had the expertise, the experience and desire to propel their real estate business forward.  Facing some growing pains myself, I solicited others to meet weekly and “mastermind” together to talk about what we were doing, how […]

The post The Power of the Mastermind in Real Estate appeared first on Jean Norton Real Estate Investing.

]]>
About 18 months ago I started an “invite only” small networking group of people local to me that that had the expertise, the experience and desire to propel their real estate business forward.  Facing some growing pains myself, I solicited others to meet weekly and “mastermind” together to talk about what we were doing, how we were doing it, how to manage our growth experiences.

Where it was true that I learned a lot from my other weekly real estate networking meetings, the group was getting too large to really answer some critical issues I faced at this mid-point stage in my real estate investing career.

Why a Mastermind?

I’m not talking about networking to get deals, or to promote your business or to make money.  I’m talking about the sharing of our business lives, our paths our traction and our learning experiences.  I’m also talking about holding others accountable in their path.  This close and intimate level of sharing our issues and challenges is risky and scary.  Part of this includes being vulnerable to judgement and criticism if you are in the wrong group.

If you’ve had any entrepreneurial background or business education, you probably know the term “Mastermind” came from Napoleon Hill’s “Think and Grow Rich”, as he reported in his study that masterminding is one of the critical activities the most successful business leaders practice.

How Did it Work Out?

Actually there were 2 masterminds that started about the same time; this one and a female only mastermind that incorporated more of a vibrational, law of attraction kind of approach.  That one didn’t last long, and I think it was because of the various levels of participants.  Two were custom builders, me, and a brand new real estate investor.  I don’t know if it was too “woo-woo” for some, or if the group was just too small, or the varying levels of our experiences weren’t a good fit, but within about 3 visits people stopped coming.

The other one still continues.  We setup some rules about inviting others: the level in their business, the opportunities before them, their level of comfort being transparent about their business, and their level of integrity.  Several names came up and shot down for some of the reasons above.  There were some that were invited, but rarely actually attended.  For whatever reason it wasn’t a good fit for them, so we stopped inviting them.

In the 18 months, here is a sampling of how the participants evolved:

  • A property management company owner stopped jumping on so called “good deals” which were single family properties near Austin, and concentrates 100% of his time acquiring distressed apartment complexes, adding value to those properties with the intention of refinancing and/or selling them at a higher cap rate.  The “bright shiny object” syndrome was getting in his way and distracted him from his real long term goals.
  • A local custom builder happened to have a commercial property close to downtown Austin, and through our masterminding and research she had done for another of our members, stumbled across a repurposing idea for her commercial property that will exponentially explode her cash flow – while providing a highly needed service in that location.
  • For me, they’ve helped me vet my first commercial property I’m acquiring, one that can finally provide me some consistent cash flow PLUS help me evaluate exactly how to optimize the value add options present in the property.
  • For another, one with money and many single family properties in Texas, is almost ready to get out of his comfort zone (having hundreds of single family homes), by considering consolidating into easier to manage projects.

These types of transformations don’t happen with busy networking meetings.  Sure, there could be deals done within those meetings, and yes I’ve found many private investors for my deals in those types of meetings, so I still encourage networking with others as you never know how you can help someone, or they help you.  But to really transform to a higher level in this business you need to bounce off ideas with others that complement you.

 

How Can I Start a Mastermind?

I looked at those around me and wanted to be around people that were doing different things than what I do.  I found one person that was a commercial realtor interested in self storage and happened to want to do the same thing.  From there we started exploring people that we thought would fit in with that group.  We invited:

  • A Custom Builder
  • A Note Broker
  • A Short Term Rental Specialist
  • A wealthy business man (with hundreds of properties) that wanted to learn more about Real Estate and was frustrated that the other networking meeting had grown so large
  • A Property Manager
  • A Highly Successful Fund Manager we wanted for his business acumen
  • And me, online auction VIP,  and Rehabbing Remotely.

So think about those that are around you, that have some expertise or resources you don’t have, knowing they are solid, honest and ethical and start a lunch meeting.  It may work out and it may not.  One thing for sure, it’s been well worth my time.

 

The post The Power of the Mastermind in Real Estate appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/power-mastermind-real-estate/feed/ 0
Should Short-Term Rentals be Part of Your Portfolio? http://www.jeannorton.com/short-term-rentals/ http://www.jeannorton.com/short-term-rentals/#respond Sat, 18 Jun 2016 23:23:05 +0000 http://www.jeannorton.com/?p=3181   I finally jumped on the bandwagon and entered the world of short-term rentals for a recent condo I purchased in Chicago.  The condo was cheap, not really in the greatest of areas, yet still near transportation.  The HOA existed but still recovering from the hard-hit Chicago housing glut that occurred since 2009, but the […]

The post Should Short-Term Rentals be Part of Your Portfolio? appeared first on Jean Norton Real Estate Investing.

]]>
 

I finally jumped on the bandwagon and entered the world of short-term rentals for a recent condo I purchased in Chicago.  The condo was cheap, not really in the greatest of areas, yet still near transportation.  The HOA existed but still recovering from the hard-hit Chicago housing glut that occurred since 2009, but the area in an up-turn as the whole nation recovers from that dreadful financial crises we all experienced.

Why Short-Term Rentals?

The answer was easy.  They make more money!

20160412_161655

Half Bathroom after

Here are some before/after photos:

2016-06-18_1714

Half Bathroom before

 

2016-06-18_1713

Kitchen Before

43rd kitchen2

Kitchen After

 

As usual, the renovation took longer than I would have liked, but once I posted the pictures the reservation requests came in.  The next issue was finding the right price point.  Just like in any industry, you need to be adaptable to the market trends.  The first 2 months were booked solid, so I kept raising the rates, compared the value to the other short term rentals in the area, tweaked the cleaning fee and the extra costs involved with larger crowds and it took a while to balance that out.

Risks

These are the 2 words that scare off most investors: What if?  What if the lawmakers make short term rentals illegal in Chicago?  What if I get bad reviews from the rental?  What if I can’t find a local person to help manage the property with me? What if the neighbors complain? What if I don’t get any rentals?  What if the HOA changes their minds on furnished rentals?

Yes, there are risks which is why it’s so important with ANY real estate strategy you employ, you make sure there is more than one way to make money on the investment.  Sure, it’s possible the laws will change, absolutely the HOA could change their rules.  Maybe there are people moving out of Chicago.

At the very least, I have beautiful unit that any renter would want where I could command the upper end of the Section 8 guidelines.  IF market conditions change, I will enjoy a cap-rate higher than in most cities, and until the laws change or something else happens, I’ll be enjoying significant double digit cap rates on my Short Term Rental in Chicago. (CLICK HERE TO VIEW THE CONDO)

The Tools

I used a variety of internet venues, the most successful at this point is AirBNB.  I also listed it on VRBO (Homeaway’s distribution of short term rentals), plus Craigslist.  I didn’t buy the subscription for VRBO so that may be why I didn’t get as much interest with that tool.  I’ve also listed it for corporate month-to-month listings at HomeSuite, and advertised at the local colleges for student rentals.

The hardest issue I’ve had is the ability to synchronize all my calendars.  There are a few tools I have found, but they are pretty buggy at this point.

Next Steps?

If you’re interested in getting involved in this new phenomena of home sharing there are a couple of things you want to make sure about before you make the big investments:

  • Is it someplace that people want to go to?
  • Is there parking and/or suitable transportation for the guests?
  • If there is an HOA or PUD, you need to consult with those rules.  Most won’t allow transient guests.
  • Make sure the neighbors quality of life doesn’t suffer due to your investment.  You don’t want to be reported for any code violations or known for frequent police visits.
  • Always use a tool like AirBNB as they offer you some protection.
  • Make sure you have an alternate strategy due to fluctuating demands.

If you’re not already in my Facebook Real Estate Contacts Group, please CLICK HERE to join.  In addition, I have a new group specifically devoted to the issues around short term rentals.  You can CLICK HERE to join that group.

Any Questions?

The post Should Short-Term Rentals be Part of Your Portfolio? appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/short-term-rentals/feed/ 0
The Plot Thickens for Armando Montelongo’s Civil RICO Suit http://www.jeannorton.com/plot-thickens-armando-montelongo/ http://www.jeannorton.com/plot-thickens-armando-montelongo/#comments Sat, 30 Apr 2016 20:49:24 +0000 http://www.jeannorton.com/?p=3167 For a complete listing of publicly available files, dockets, and other official documents concerning the Armando Montelongo Civil RICO Case, get an account (if you don’t have one) with Pacer.Gov and search the case number in the Northern California US District Courts.  To see this document in a PDF format, CLICK HERE.   UNITED STATES […]

The post The Plot Thickens for Armando Montelongo’s Civil RICO Suit appeared first on Jean Norton Real Estate Investing.

]]>
For a complete listing of publicly available files, dockets, and other official documents concerning the Armando Montelongo Civil RICO Case, get an account (if you don’t have one) with Pacer.Gov and search the case number in the Northern California US District Courts.  To see this document in a PDF format, CLICK HERE.

 

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

MICHELLE SKURKIS, TRINADH BYLIPUDI, et al.,
Plaintiffs,
v.
ARMANDO MONTELONGO, JR.; REAL ESTATE TRAINING INTERNATIONAL, LLC, dba ARMANDO MONTELONGO SEMINARS; PERFORMANCE ADVANTAGE GROUP, INC.; LICENSE BRANDING, LLC; and entities and individuals not yet identified,
Defendants.
Case No. 4:16-cv-00972-YGR
FIRST AMENDED COMPLAINT JURY TRIAL DEMAND

 

INTRODUCTION

1. Armando Montelongo, Jr. (“Montelongo”) has made hundreds of millions of dollars selling real estate education programs to Americans who long for financial security in uncertain times. But although Montelongo styles himself as the “epitome of the American dream,” he is, for his students, a nightmare.

2. Acting through his many corporate shells, Montelongo sells worthless, dangerous, and unlawful advice about real estate investing; takes advantage of the students’ trust to loot their retirement accounts; sells them properties at inflated prices without disclosing his stake in them; encourages them to pursue their real estate investments using his allies, who also victimize the students; and harasses those who dare to speak out against him.

3. By this action, 163 former students now seek to remedy the financial devastation wreaked by Montelongo’s predation.

 

FACTUAL BACKGROUND

A. ARMANDO MONTELONGO AND HIS SEMINARS

4. Montelongo began his career as a real estate investor in Texas in 2001 and began offering real estate investment seminars in 2005. He rose to national prominence between 2006 and 2008 as a star on the A&E reality show “Flip This House,” and when he departed the show used his stardom to expand his seminar offerings nationwide. He now offers his seminars through a web of companies, including defendants Real Estate Training International, LLC dba Armando Montelongo Seminars, Performance Advantage Group, Inc., and License Branding, LLC. Montelongo and these entities (collectively, with Montelongo, the “Defendants”), along with other entities and individuals not yet known to the plaintiffs, operate together an enterprise called here the “Armando Montelongo Seminars,” or “AMS.”

5. What Defendants claim to offer through AMS’s education programs is a “methodical step-by-step system for building wealth in real estate” modeled on Montelongo’s own experiences. One of their websites (armandomontelongo.com) claims: “I was fortunate enough to find millionaire mentors without whom I would have lost a lot of time, money, and hope. They helped me accomplish my goals and reach my dreams. This is why I am happy to share my secrets and help others succeed. Coming from living in my in-law’s garage and $50,000 in debt, I know what it’s like to struggle. I am the epitome of the American dream. I turned my misfortunes into millions, and I can help you do the same.” That same website also claims that the AMS system is bulletproof: “Armando’s step-by-step methodical system works in any financial market, at any given time.”

6. The Defendants offer the AMS system through several education seminars (or “events”). According to their website, they sell the following products:

a. The “preview event,” “taught by Armando’s personal partners, provides an inside look at the house flipping business and teaches you about proven house flipping techniques. Network with successful partners and learn why anytime is the time for real estate. Learn about how to make money by flipping houses, build a retirement income through cash flow properties, and about how to keep your wealth through asset protection. . . . . At the Preview Events, you will: Network with Armando’s hand-picked partners. See the options you can begin in real estate. Learn Armando’s step-by-step system to investing . . . . and so much more!”

b. The “foundation event” (sometimes called the “three-day event”) is “an intensive, information packed workshop that gives you the foundation to build your own house flipping business. Learn all about how to find and fund your deals, how to use the techniques and rules Armando actively uses, and how to overcome common difficulties in real estate. [¶] The three day event covers all important topics for beginning real estate investors. You will learn the ABC’s of real estate investing, such as: After repair value vs. fair market value[;] The 1% Rule versus Mixed Rate[;] Various options for fixing and flipping[.] Upon completion of this in-depth, accelerated seminar, you’ll be equipped all the groundwork necessary for flipping properties.”

c. The “bus tour” is a “three day event filled with Armando’s most successful and exclusive partners and students. At the bus tour, you will learn first-hand about house flipping techniques and easy fixes for profit and personal tips and advice from Armando Montelongo. [¶] This is your opportunity to network with other investors, money lenders, and students from all across the US. Learn how to properly assess properties with Armando and his most successful students as your guide. A one-of-a-kind event taught by Armando himself[;] Get hands-on training from a team of mentors[;] Network with other investors, money lenders, & students[;] Learn how to have a successful business[.] It took Armando a decade to establish his phenomenal house-flipping system. Learn it from the bus tour in just 3 days!”

d. “Continuing education” services, including the “asset protection” program, which Defendants claim teaches “the most essential tools for protecting your finances,” “healthy, strategic, and beneficial business planning,” “[i]nformation on corporate structure and management,” and “the latest information on how to save tax money for your business”; the “market domination” program, which Defendants claim provides “the most efficient ways to flip in any market at this two day event,” “training on how to flip and find deals in the smallest markets,” and “where the top real estate markets in the nation are,” and gives students the chance to “[n]etwork with sellers and investors to get tips from markets nationwide”; the “cash flow” program, which Defendants claim teaches students “to manage rental properties,” “the system for rehabbing different types of rental properties[,]” “how to work with the always changing commercial market[,]” and how to “[a]ccelerate your real estate portfolio with commercial flips”; and the “master mentor” program, which Defendants claim gives students “access to Armando’s real estate hotline for any of your questions,” “personal coaching and training on investment techniques,” and “concepts and techniques created [sic] your personal mentor,” and permits them to “follow up with a mentor to find what works best for your business.”

7.    The AMS enterprise has been hugely successful. In 2011, Inc. 500 listed Montelongo’s group of companies as the 19th fastest growing business in the nation, and in 2013, Montelongo claimed to Forbes magazine that his seminars would bring in $100 million that year alone from 350,000 students attending over 3,500 events.

B. DEFENDANTS’ FRAUDULENT SCHEME

8. Although the ostensible purpose of the AMS programs is to educate students about how to gain economic security and independence by flipping houses, their real aim and result is to enrich Montelongo and his related entities and allies at the students’ expense. The “seminars” or “events” are not genuine educational offerings, but ruses to sell more AMS products, engage in self-dealing transactions with the students whose trust Montelongo cultivates, and expose the students to predation by AMS allies.

i. The Defendants’ Coercive and Deceptive Sales Tactics

9. Defendants market the AMS programs extensively through websites, email campaigns, television, and social media in the hopes of luring students to attend the programs, where they will be deceived into purchasing additional AMS products. These programs include free preview events, foundation courses, and bus tours held throughout the United States, including in the Northern District of California.

10. At the free preview event, the students are sold the approximately $1,500 to $2,700 “foundation” course (as well as a $797 to 997 “tax lien” product); at the foundation course they are sold bus tour packages priced between $18,000 and $54,000, usually held within the new few weeks in the same area; and on the bus tours they are sold additional $5,000 to $27,000 “asset protection,” $25,000 “market domination,” $5,000 “cash flow,” and $25,000 “master mentor” programs.

11. Defendants sell their products using coercion and deception. At the group events, students are crowded together into rooms or buses, where they are pounded with loud music, flashing lights, and chanting; told not to take breaks or leave the room lest they miss a critical piece of information; and deprived of food and sleep by seminars that run until late in the night without cease, and which begin again early the next morning.

12. This atmosphere is built on the model of a cult. Former AMS insiders report that, before he expanded his seminars in 2008, Montelongo studied a film about “mind control cults,” and used it to develop the AMS programs. At the end of the events, when the students are physically and mentally exhausted, they are inveigled by promises that, if they purchase the next AMS product in line that very day, they will finally get the information that will make them successful in real estate investing (i.e., the information they were told they would get in the event they already purchased). Having committed thousands of dollars to the AMS programs, and desperate to recoup their investment, many students comply and purchase more high-priced products.

13. Defendants also engage in outright lies to sell their products, for example, creating fake personal success stories—different employees reuse the same slides of rehabilitated houses, each claiming them as his or her own—and planting employees at events to pose as students who have taken the courses before, and have returned for more “valuable education.”

14. As another example of the Defendants’ sales tactics, they claim to offer students a “Triple Your Money Back Limited Guarantee,” under which the Defendants purportedly promise to refund students’ money if they follow the AMS system and yet do not make three times their purchase price back from real estate investments. This guarantee is persuasive, and a significant factor in convincing many students to purchase AMS programs. This guarantee is, however, a sham. AMS insiders report that the Defendants do not intend to honor these guarantees, and direct their sales agents not to sign the guarantees on behalf of the Defendants in the belief that would render them unenforceable.

15. To further their scheme, the Defendants encourage students to contact their credit card companies and report that they already have the income that they hope to make from flipping houses—hundreds of thousands of dollars that they are not earning, and that Defendants know the students have no realistic chance of earning—in order to raise their credit limits, and purchase more AMS products. Montelongo justifies this practice to his students as incurring “education debt,” which he claims is “good debt.”

16. The Defendants also encourage students to transfer money in their employer- controlled or other secure retirement accounts to self-directed IRAs held by companies allied with Montelongo and the Defendant entities. Until at least mid-2015, the Defendants’ chosen company was Preferred Trust Company, LLC (“Preferred Trust”), run by Kurt “the Shirt” Weinrich. Since that time, Weinrich has continued to be Defendants’ chosen self-directed IRA provider, apparently through a new entity the identity of which the Students do not yet know.

17. Defendants’ alliance with Preferred Trust benefited them, Preferred Trust, and Weinrich at the expense of the students. Preferred Trust charges extremely high fees for its services. As but one example of many, a San Diego resident put $5,000 in a Preferred Trust self- directed IRA and, within three years, was charged $4,200 in fees—even though she had done nothing with her account. Weinrich also permits Montelongo access to confidential information about the students’ finances that Defendants use to prey upon them.

18. During the asset protection events, Defendants ask students to share their financial information (including about their Preferred Trust accounts) in the name of educating the students, and then use that information to learn the balances on those accounts in order to target sales. Montelongo’s response to a positive account balance is visceral and habitual: Multiple former employees report that he shouts angrily, saying, “That’s my money! You’re not doing your job to get that in my pocket!” His employees comply, using their knowledge of the students’ finances to sell them more AMS education or encourage them to invest in properties (frequently with AMS- allied developers).

19. Montelongo and his employees give themselves cover for their deception by instilling fear in the students to discourage them from questioning Montelongo and his system, and attacking or silencing those who attempt to speak out. For example, early on in a group event, when someone asks a question, Montelongo will berate the speaker, deriding him or her for wasting the other students’ time. Cowed, few others will dare to interrupt again. At other points in an event, Montelongo will mention his in-house legal team, and claim that no one could possibly sue him and win. The text of these remarks is that anyone who would cross Montelongo on a business deal would lose; the subtext is that any student who crossed him would, too.

20. As another example, the Defendants carefully monitor their private Facebook groups, immediately deleting anything critical of not only AMS or Montelongo, but also of anyone else who is a member of the group—even if that person has cheated other students of money—and forcing out those who continue to dissent. And in late 2013, when the news show 20/20 taped an interview with a student who complained that she and her husband had been ripped off by the Defendants, Montelongo had her followed by a private investigator (as one of his employees admitted). When Montelongo provided a student who was a “success story” to the news show, that student began recounting the wealth he had earned by following the AMS system, and then broke down and admitted it was a lie. Montelongo harassed this student, too—calling him personally and demanding he sign a declaration affirming that he had been successful.

ii. The Defendants’ Worthless, Dangerous Offerings

21. These high-pressure sales tactics and promises of future fortune do not come with any educational substance. The core of AMS’s “methodical step-by-step system” is so simple it can be taught in a sentence: Take out high-interest debt to purchase dilapidated homes, make cosmetic repairs, and then quickly flip them to the next investor. It is also a recipe for financial disaster, at least since the real estate crash of 2006 to 2012 and at least in some markets, including depressed markets where Defendants sell their products and extoll the merits of home flipping. As just a partial list of the system’s failings:

a. A central tenet of the AMS sales pitch is that students do not need their own money to purchase, rehabilitate, and sell houses, and can instead obtain funding from private and hard money lenders. But these lenders generally require that at least 20% of the project cost be fronted by the borrower.

b. The “65% rule” Montelongo claims provides the ideal price for any property (take 65% of the planned sale price of the property once it has been rehabilitated, and then deduct repairs and holding costs to determine your offer price) does not account for local variations in market conditions, material prices, or labor prices, making it useless (or worse) in many regions of the country, including California and this district.

c. The similarly central “price reduction strategy”—submit an all-cash, no- contingency offer with a very short closing period, and then, once the property is in contract, demand a price reduction based on a new inspection and announce that, instead of cash, the deal will be funded by a hard money lender—has become anathema to realtors, who will often not even submit students’ bids once they realize they are using the AMS system, and cannot be used with all types of properties (e.g., auction sales).

d. Homes cannot be reliably sold in a short window for prices high enough to cover the debt (especially when that debt is financed by high-interest hard money lenders, as the AMS system directs), leaving students with either unsaleable homes that end up in foreclosure or losses on their deals.

e. Federal and state regulations (e.g., a Fannie Mae requirement prohibiting sales of homes to FHA buyers unless the property has been held for 90 days) have altered the legality and profitability of house-flipping, but the system—which has reportedly not been updated in 10 years—does not reflect them.

f. So many investors have entered the rehabilitation market (both the thousands of students AMS churns out annually and well-funded private equity investors) that prices for properties have increased, and margins have decreased. As a result, many students are unable to find suitable investment properties, and are left with debts from the AMS seminars and their retirement withdrawals, and no potential of recouping their losses.

22. Thus, contrary to Defendants’ central claim, the “system” does not “work[] in any financial market, at any given time.” This is not a result of inadvertence. Former employees report that Montelongo teaches them to ensure that students “feel like they have received some content, but do not actually know what to do on Monday.”

iii. Defendants’ Self-Interested Business Dealings with their Students

23. The Defendants also victimize their students by engaging in self-dealing transactions with them, frequently without disclosing their own interests. For example, before a bus tour event, Montelongo will use an affiliate to purchase properties in the area, and then sell them to students at inflated prices (sometimes twice as much as he paid) at tables situated at the back of the venue, without disclosing that he has an interest in the sales or receives a share of the profits. (One student fortuitously overheard Montelongo discussing this scheme when she dialed in early to a planned group call.)

24. As another example, Montelongo solicited large amounts of student money for an investment in a marina near Sarasota, Florida called the Olde Fish House Marina. It may have reaped benefits for Montelongo—the AMS website describes it as a “successful casual dining establishment,” but the students who invested with him sustained heavy losses.
iv. Defendants’ Exposure of Students to Predation by their Allies

25. The Defendants also harm students by encouraging them to work with AMS allies—“mentors” who are paid to provide the students with supposedly in-depth advice on rehabilitating particular types of properties and changing market conditions, but who often lack the experience to provide insight, take advantage of the students’ trust to enrich themselves, or simply fail to respond to student questions; “hard money lenders” or “gap funders” who lend money to the students to purchase their homes at extremely high rates; and “developers” who solicit investments from students to be used in rehabilitation deals.

26. Although the Defendants handpick mentors, lenders, and developers, recommend to students that they work with those particular individuals, and benefit from these recommendations by appearing to offer students a comprehensive, practical program for real estate investing, Defendants refuse to take responsibility when those allies cause students harm—such as when mentors give bad (or no) advice, lenders overcharge, and developers run the students’ projects into the ground or simply abscond with the students’ money. Some of these allies have reportedly come under criminal investigation, including Heidi Linder (a resident of California and this district), […redacted…].

C. THE HARM TO THE STUDENTS

27. The Defendants’ conduct has damaged students in multiple ways.

28. First, the students pay thousands of dollars (and sometimes tens of thousands of dollars) for real estate investment education that, contrary to the Defendants’ promises, does not give them the skills necessary to succeed “in any financial market, at any given time,” but is instead a jumble of empty, contradictory aphorisms and outdated, risky strategies that might have been useful in 2005, when Montelongo launched his seminars, but that have failed to keep up with the changing market and legal landscape; and that ignores critical distinctions between various states’ treatment of mortgages, costs of construction, taxes, and insurance requirements. Sometimes, Defendants even fail to provide the promised services at all, charging students for AMS programs, and then providing neither the purchased services nor refunds.

29. Second, the students incur interest on the credit card debt that Defendants encourage them to incur, and penalties and fees on the self-directed IRAs that Defendants encourage them to use.

30. Third, the Defendants provide dangerous and unlawful tax advice—for example, that the students can reduce their tax burden by naming their infant children and elderly parents as “employees” in order to deduct their “salaries” from their house-flipping revenues, and that the AMS seminars are fully tax deductible.

31. Fourth, the students pay significant travel and meal expenses to attend the AMS seminars (as Defendants would reasonably foresee given the markets they target and the locations of the events).

32. Fifth, the Defendants engage in self-dealing transactions with the students in ways designed to cause the students additional pecuniary harm.

33. Sixth, the Defendants recommend that the students work with particular mentors, contractors, realtors, developers, property managers, and lenders, even when they know or should know that these third parties are likely to cause the students harm through their negligence or intentional wrongdoing.

34. Seventh, the financial devastation wrought by the AMS programs has taken a heavy emotional toll, destroying friendships, wrecking marriages, driving students into clinical depression, and even resulting in suicide.

D. THE STUDENT PLAINTIFFS

35. The 163 student plaintiffs who bring this complaint (“the Students”) are all victims of the Defendants’ fraudulent scheme. Each purchased one or more of the AMS foundation event, bus tour, asset protection, market domination, cash flow, and master mentor products; attended those events and attempted to employ the “advice” they received; and suffered financial injury as a result, including the money they paid directly to the Defendants, the expenses they incurred to attend the events, the investments they lost due to the Defendants’ empty “system,” predation by the Defendants’ allies, penalties from their use of retirement funds, interest on consumer debt used to purchase AMS seminars, damage to their credit rating, bankruptcy, and (in some cases) severe emotional distress. The individual Students and their cities and states of residence are listed in Exhibit A.

E. RICO ALLEGATIONS

36. The persons culpable for the pattern of racketeering activity and conspiracy to commit it are defendants Montelongo; Real Estate Training International, LLC dba Armando Montelongo Seminars; Performance Advantage Group, Inc., and License Branding, LLC, and entities and individuals not yet known to the Students.

37. The enterprise operated by these culpable persons is referred to here as “Armando Montelongo Seminars,” or “AMS,” and is comprised of Montelongo, the defendant companies, and the unknown entities and individuals.

38. The activity of the enterprise and the racketeering acts described here affect interstate commerce, because the AMS enterprise is primarily located in Texas, and yet conducts business and defrauds students throughout the United States.

39. The Defendants have engaged in racketeering activity by violating three predicate statutes.

40. First, in violation of 18 U.S.C. § 1961, the Defendants have committed at least the following instances of wire fraud:

a. On October 18, 2011, Montelongo posted on his Facebook page a link and photos from the “AM Bus Tour September 2011” page.

b. On January 28, 2012, Montelongo posted on his Facebook page photos from a bus tour in Cerritos, California.

c. On March 13, 2012, Montelongo posted on his Facebook page photos from a bus tour in Pomona, California.

d. On July 13, 2012, Montelongo posted on his Facebook page photos from a bus tour.

e. On September 22, 2012, Montelongo sent an email blast titled “Executive Summary – Day 6 of 6 High Level Investment Strategy.”

f. On September 24, 2012, Montelongo sent an email blast titled “Armando Says –‘This Is a First Ever.’”

g. On September 26, 2012, Montelongo sent an email blast titled “Armando’s Double Header Reminder.”

h. On October 2, 2012, Montelongo sent an email blast titled, “Best Opportunity Ever.”

i. On November 3, 2012, Montelongo posted on his Facebook page photos showing “Three full days of Armando teaching his AMazing students how to Dominate their Market.”

j. On March 12, 2013, Montelongo posted on his Facebook page photos from a bus tour captioned “Best Real Estate Seminars in the business.”

k. On June 23, 2013, Montelongo posted on his Facebook page photos showing “Students continu[ing] their education during June’s Cash Flow weekend” program.

l. On August 25, 2013, Montelongo posted on his Facebook page photos of students “learn[ing] real estate from Armando Montelongo and his team” on a bus tour.

m. On October 3, 2013, Montelongo posted on his Facebook page photos from a bus tour in San Antonio, Texas.

n. On November 8, 2013, Montelongo posted on his Facebook page photos from a bus tour in Phoenix, Arizona.

o. On April 27, 2014, Montelongo posted on his Facebook page a video from a bus tour in Miami, Florida.

p. On July 13, 2014, Montelongo posted on his Facebook page a video from a bus tour.

q. On August 24, 2014, Montelongo posted on his Facebook page a video from a bus tour.

r. On February 6, 2015, Montelongo and a number of his companies’ employees appeared on the CBS show “Undercover Boss.”

 s. On July 28, 2015, Montelongo posted on his Facebook page a photo and invitation to the introductory AMS events.

 t. On November 23, 2015, Montelongo posted on his Facebook page photos from an AMS “bootcamp” event in Las Vegas, Nevada.

u. On December 10, 2015, Montelongo posted on his Facebook page a video from a bus tour in Miami, Florida.

v. On January 12, 2016, Montelongo posted a video on YouTube promoting the AMS “asset protection” program.

w. On February 23, 2016, Montelongo posted on his Facebook page a photo from a bus tour.

x. Since about August 2006 and continuously to the present, the Defendants have maintained the website at armandomontelongo.com and promoted the AMS programs there, including events targeting California and this district. Since about April 2007 and continuously to the present, the Defendants have maintained the website at armandolive.com and promoted the AMS programs there, including events targeting California and this district. Defendants conceal the ownership of their websites using a private domain registrar. Jurisdictional discovery would reveal which of Montelongo’s entities is the owner.

41. These acts constitute wire fraud because the Defendants developed a scheme to defraud the Students out of their money by false promises and misrepresentations about their products and about the market for house flipping, and by self-dealing transactions with those Students; the Defendants had the intent to defraud the Students; it was reasonably foreseeable to the Defendants that the wires would be used in that scheme; and the Defendants used the wires to further that scheme by promoting their products.

42. Second, in violation of 18 U.S.C. § 2314, the Defendants have transported in interstate commerce money in excess of $5,000 they knew to have been taken by fraud. They set up events in states across the nation, including California (as described in paragraphs 63 and 64), defrauded students (including the plaintiffs here) of thousands or tens of thousands of dollars each, and then transported those funds across state lines by transmitting them either to their corporate offices or to financial institutions in Texas.

43. Third, also in violation of 18 U.S.C. § 2314, the Defendants devised a scheme to defraud and then induced persons to travel in interstate commerce so that they could defraud those persons of more than $5,000. At live events, over the phone, and online, the Defendants persuaded students (including some of the plaintiffs here) to travel to events in other states, where they were deceived into spending thousands or tens of thousands of dollars on AMS products. These include:

a. In February 2012, students living in Glendora, California were induced to travel to Las Vegas, Nevada for an asset protection event.

b. In April 2012, students living in Glendora, California were induced to travel to Las Vegas, Nevada for a buy and hold event.

c. In May 2013, students living in San Diego, California were induced to travel to San Antonio, Texas for an asset protection event.

d. In August and October 2013, a student living in Norco, California was induced to travel to San Antonio, Texas for asset protection events.

e. In October 2013, a student living in West Hills, California was induced to travel to an asset protection event in San Antonio, Texas.

f. In October 2013, a student living in Eastvale, California was induced to travel to an asset i. protection event in San Antonio, Texas.

g. In November 2013, students living in Bellflower, California were induced to travel to a bus tour event in Mesa, Arizona.

h. In November 2013, a student living in Manhattan Beach, California was induced to travel to a bus tour event in Phoenix, Arizona.

i. In December 2013, a student living in Eastvale, California was induced to travel to a bus tour event in Scottsdale, Arizona.

j. In April 2014, a student living in Manhattan Beach, California was induced to travel to a market domination event in San Antonio, Texas.

k. In October 2015, students living in Orange, California were induced to travel to a bus tour event in Miami, Florida.

l. In November 2015, students living in Orange, California were induced to travel to a master mentor program in San Antonio, Texas.

44. The Defendants have conducted the enterprise through a pattern of racketeering activity that satisfies both the close-ended and open-ended continuity requirements of RICO, because (a) they committed a series of acts of wire fraud, interstate transportation of money obtained by fraud, and inducement of persons to travel across state lines for the purpose of defrauding them within ten years that were related in their purpose, results, participants, victims, and methods of commission; and (b) the Defendants threaten to continue to carry out wire fraud, interstate transportation of money obtained by fraud, and inducement of persons to travel across state lines for the purpose of defrauding them in the same manner and to the same ends now.

45. The Students are persons who have sustained injury to their business or property by reason of the Defendants’ racketeering activity and overt acts committed in furtherance of their conspiracy to operate the enterprise.

46. The Students do not believe their claims are barred by the statute of limitations but, if any Student’s claim would be barred in whole or in part, the Defendants may not rely upon that bar because they fraudulently concealed from the Students that (a) the AMS programs exist only to sell more AMS programs and did not confer the skills promised, and (b) the Defendants were engaging in self-dealing transactions with the Students, giving rise to equitable tolling.

F. PARTIES

47. The Students are residents of cities across the United States, as detailed in Exhibit A. Thirty-five of them reside in California, and four reside in this district. The California residents attended AMS events in this district (as described in paragraph 63) and elsewhere in California (as described in paragraph 64).

48. On information and belief, Armando Montelongo, Jr. is a resident of San Antonio, Texas.

49. On information and belief, Real Estate Training International, LLC dba Armando Montelongo Seminars is a Delaware limited liability company with its principal place of business in San Antonio, Texas.

50. On information and belief, Performance Advantage Group, Inc. is a Nevada corporation with its principal place of business in San Antonio, Texas.

51. On information and belief, License Branding, LLC is a limited liability company with its principal place of business in San Antonio, Texas.

G. JUSRIDICTION AND VENUE 

i. Subject Matter Jurisdiction

52. This court has subject matter jurisdiction over this action pursuant to 18 U.S.C.
§ 1964, which gives those injured by RICO violations the right to sue in any United States district court.

ii. Personal Jurisdiction

53. This court has specific personal jurisdiction over the Defendants because (a) they purposefully directed their activities towards California, sold their seminar products to residents of California, and purposefully availed themselves of the privilege of conducting activities in California by hosting their events here; (b) the Students’ claims arise directly out of Defendants’ sale of products and conduct of seminars in California; and (c) the exercise of jurisdiction by this court comports with fair play and substantial justice—i.e., it is reasonable.

54. Each Corporate Defendant is an Alter Ego of Montelongo. Montelongo is the primary operator of the AMS enterprise, and the alter ego behind each Defendant entity. On information and belief, Montelongo owns all or nearly all of the interests in each Defendant entity. All of these entities operate out of the same office space in San Antonio, and the AMS website refers to them as an integrated operation, “the Armando Montelongo Companies,” centered on him.

55. Montelongo is also the de facto owner of yet more entities he places in the names of his family members or other associates for the purpose of concealing his assets from creditors, including claimants like the Students. (This is consistent with his teachings in the asset protection program, where he tells students that all of their assets will be “safe behind the corporate veil,” but ignores the formalities required to preserve that protection.) On information and belief, in addition to the Defendant entities, companies owned by Montelongo that he uses to conduct AMS business or conceal assets include Education Management, LLC; Internet Education, LLC; Armando Montelongo Companies, Inc.; Lead Generation and Marketing, LLC; Real Estate Properties, LLC; EIC VIRE, LLC; Armando Montelongo Holdings, LLC; Alternative Holdings, LLC; RETI Properties, LLC; AMJ Commercial Holdings, LLC; Armando Montelongo Companies Foundation; AMJ Promotions, LLC; AM Productions Holdings, LLC; Montelongo House Buyers, Inc.; Armando Montelongo Management, Inc.; Montelongo Acquisitions, Inc.; AMJL Gp, LLC; Armando Montelongo Jr., Ltd.; The Entity Company, LLC; Great White Ventures, LLC; AMJ Marina, LLC; JRM Marina, LLC; and Montelongo Disaster Management, Inc. As Montelongo’s own accountant, [REDACTED], stated in September 2015 when objecting to a federal subpoena in other litigation involving Montelongo, “there are many ‘affiliates’ owned or controlled or affiliated with Mr. Montelongo.”

56. Montelongo deliberately obscures the various entities’ role in AMS operations, corporate status, ownership, legal relationships, assets, and even names by forming them in states such as Nevada, Delaware, and Utah that have heightened corporate privacy protections. On information and belief, Montelongo also uses other brands to promote his business, including Vanilla Ice Real Estate, Veronica Flips, and Mark and Raoul Real Estate, collecting money from their activities but hiding his involvement.

57. In short, whatever the ostensible corporate forms, the economic reality is that Montelongo controls and acts through each of the Defendant entities and many other affiliates. Jurisdictional discovery would permit the Students to state these relationships with greater specificity.

58. Defendants Purposefully Directed their Activities at California. Defendants directed their activities towards California by purchasing advertising on television and radio stations in the Southern and Northern California markets, often on weekend afternoons and late nights between midnight and five in the morning, beginning no later than 2010 and continuing through the present. For example, between May 4 and May 9, 2016, an AMS infomercial is scheduled to run 23 times in the Los Angeles area.

59. Defendants have also aggressively advertised on Facebook using “interest targeting, aiming the ads at people who liked real estate, investment and entrepreneurship,” as Facebook itself touts in its “Success Story” about Defendants’ advertising on that platform. “The [AMS] ads were active in up to 6 markets at a time and the team used geographic targeting for each segment, adjusting the campaign creative to reflect each region’s housing style.”

60. Defendants also used Facebook’s “conversion tracking pixel,” which Facebook explains consists of “a snippet of code” added “to the HTML on your website” that allows website owners to “measure checkouts, registrations, leads, key web page views, adds to cart and other web conversions” in “reports when people see your ad and take action.” Defendants used the information they gathered from this tool to “make quick decisions about what was and wasn’t working and then change creative elements on the fly. They tweaked the campaign until it got the response they were looking for.” Thus, Defendants actively collected information about the potential students who clicked on their advertisements, and adjusted their marketing to better target those who were likely to make purchases.

61. Jurisdictional discovery would demonstrate the exact geographic regions Defendants have targeted using Facebook’s data-driven advertising tools but, on information and belief based on the California Students’ own experiences, the Defendants have directed substantial resources to online advertising in California and this district, and they have individually targeted students in this district.

62. Defendants’ websites at armandomontelongo.com and armandolive.com are also directed at this district and this state because they advertise and permit students to register for events in (as of the filing of this complaint) Los Angeles, Torrance, Orange County, Riverside,San Bernardino, Folsom, Sacramento, San Diego, Oakland (two on May 5, 2016), Santa Clara (May 6, 2016), and San Francisco (May 7, 2016).

63. Defendants also sold their seminar products in this district during at least the events described below.

a. In January 2011, a free event at a Hilton hotel in Concord;

b. In January 2011, a three-day event at a Sheraton hotel in Concord;

c. In February 2011, a boots on the ground event at a Hilton hotel in Oakland;

d. In February or March 2011, a free event at a Marriott hotel in Walnut Creek;

e. In April 2011, a three-day event at a Hyatt or Hilton hotel in San Jose;

f. In May 2011, a boots on the ground event in San Jose;

g. In August 2012, a free event at a Holiday Inn in Palo Alto;

h. In September 2012, a three-day event at a Hyatt hotel in San Jose; and

i. In January 2013, a free event at a DoubleTree hotel in San Jose.

64. Further, Defendants sold their seminar products in California but outside thisdistrict during at least the events described below.

a. In April 2009, a free event at a Hilton hotel in Sacramento;

b. In May 2009, a three-day event at a Hyatt hotel in Sacramento;

c. In June 2009, a bus tour at a Hilton hotel in Ontario;

d. In the latter half of 2009, a boots on the ground event in Sacramento;

e. In May 2010, a free event in Pasadena;

f. In May 2010, a free event in Torrance;

g. In June 2010, a three-day event in Long Beach

h. In June 2010, a boots on the ground event at a DoubleTree hotel in Commerce;

i. In June 2010, a bus tour at the Ontario Convention Center in Ontario;

j. In August 2010, a master mentor program in Ontario;

k. In August 2010, a master mentor program in Ontario, Fontana, Rialto, Norco, and Riverside;

l. In September 2010, a free event in Selma;

m. In September 2010, a three-day event at the Visalia Convention Center in Visalia;

n. In October 2010, a boots on the ground event in Visalia;

o. In or about October 2010, a free event in Ontario;

p. In November 2010, a three-day event at a hotel in Los Angeles;

q. In December 2010, a bus tour in Ontario;

r. In January 2011, a master mentor program in San Bernardino;

s. In February 2011, a bus tour at the Pomona Fairgrounds in Pomona;

t. In February 2011, a three-day event in Ontario;

u. In March 2011, a boots on the ground event in Burbank;

v. In March 2011, a bus tour at a Sheraton hotel in Pomona;

w. In April 2011, a master mentor program at a Country Inns & Suites hotel in Ontario;

x. In May 2011, a bus tour in Pomona;

y. In May 2011, a master mentor program in the Inland Empire area;

z. In June 2011, a boots on the ground event in Los Angeles;

aa. In September 2011, a free event at a hotel in Los Angeles;

bb. In October 2011, a free event in Anaheim;

cc. In October 2011, a three-day event in Anaheim;

dd. In October 2011, a three-day event at a Marriott hotel in Cerritos; ee. In October 2011, a boots on the ground event in Cerritos;

ff. In November 2011, a bus tour in Diamond Bar;

gg. In November 2011, a boots on the ground event in Santa Ana; hh.

hh. In December 2011, a bus tour in Pasadena;

ii. In December 2011, a bus tour in Pomona;

jj. In February 2012, a master mentor program in Ontario;

kk. In October 2012, a boots on the ground event in Santa Ana;

ll. In October 2012, a bus tour in Riverside;

mm. In November 2012, a free event at a Hilton hotel in San Diego; nn. In December 2012, a three-day event in San Diego;

oo. In January 2013, a bus tour in Riverside;

pp. In January 2013, working with Vanilla Ice Real Estate, a free seminar in SanDiego;

qq. In January 2013, working with Vanilla Ice Real Estate, a three-day seminar inLa Jolla;

rr. In February 2013, a master mentor event in Riverside; ss. In February 2013, a free event in Artesia;

tt. In February or March 2013, a free event in Simi Valley; uu. In April 2013, a three-day event in Simi Valley;

vv. In April 2013, a bus tour in Riverside;

ww. In May 2013, a free event in Woodland Hills;

xx. In May 2013, a three-day event in Woodland Hills;

yy. In June 2013, a free event in Corona;

zz. In June 2013, a three-day event in Ontario;

aaa. In June 2013, a master mentor program in Ontario and Riverside;

bbb. In July 2013, a bus tour in Riverside;

ccc. In July 2013, a master mentor program in Diamond Bar;

ddd. In August 2013, a free event at a hotel in Ontario;

eee. In August 2013, a three-day event at a Sheraton hotel in Los Angeles;

fff. In August 2013, a bus tour in Anaheim;

ggg. In August 2013, a master mentor program in Corona;

hhh. In September 2013, a free event at a Hilton hotel in Irvine;

iii. In September 2013, a free event in Pomona;

jjj. In September 2013, a three-day event in Anaheim;

kkk. In October 2013, a three-day event in Ontario;

lll. In November 2013, a free event at a Hilton hotel in Long Beach; mmm.

mmm. In November 2013, a three-day event in Los Angeles;

nnn. In November 2013, a master mentor program in Diamond Bar; ooo. In July 2015, a free event in or near Newport Beach; and

ppp. In August 2015, a three-day event in Anaheim.

65. The Defendants also had employees or other agents living and working in California as high-level management, speakers, free event staff, three-day event staff, bus tour staff, Facebook moderators, and mentors between about 2011 and the present, including, at least, [REDACTED].

66. The California Students’ Claims Arise from California Activities. The California Students’ claims arise directly out of the Defendants’ promotion, sale, and hosting of events in California. They allege they were lured into the AMS events with misleading advertisements in California, and then scammed out of tens of thousands of dollars each by the Defendants in this state. The 35 Students who are California residents attended AMS events in this district (described in paragraph 63) and elsewhere in California (described in paragraph 64).

67. The Exercise of Jurisdiction is Reasonable. Third, the court’s exercise of jurisdiction over the Defendants is reasonable. It is consistent with fair play to ask individuals and companies that charge California residents tens of thousands of dollars for seminar products at events advertised and hosted in California to appear in this state to defend claims that those products are worthless and those events a scam. It is also consistent with substantial justice: Defendants have retained California counsel to defend them, not Texas counsel appearing pro hac vice. Federal litigation rarely requires parties or senior employees of parties to make personal appearances. The Students’ counsel is willing to travel to Texas to take Defendants’ depositions. Thus, the burden on Defendants of litigating in this court is minimal. And because Defendants claim to have hundreds of millions of dollars in assets, and operate their weekend events all over the nation, it is fair to ask that they incur that modest expense and inconvenience.

iii. Venue

68. This court is the proper venue for these claims under 28 U.S.C. § 1391(b)(2), because a substantial part of the events or omissions giving rise to the Students’ claims occurred in this district. Montelongo and his Defendant entities targeted their advertising here (as described in paragraphs 58 to 62); conducted events here (identified in paragraph 63); and sold products to four Student plaintiffs residing here, along with thousands of other students resident within this district but not parties to this lawsuit.

CAUSES OF ACTION
FIRST CAUSE OF ACTION
RICO § 1962(c)
(Conducting a RICO Enterprise by a Pattern of Racketeering Activity)

69. The Students incorporate by reference paragraphs 1 through 68 above.

70. AMS is an enterprise engaged in and whose activities affect interstate commerce. The Defendants are employed by or associated with the enterprise.

71. The Defendants agreed to and did conduct and participate in the conduct of the enterprise’s affairs through a pattern of racketeering activity and for the unlawful purpose of intentionally defrauding the Students.

72. Pursuant to and in furtherance of their fraudulent scheme, Defendants committed multiple related acts of wire fraud, interstate transportation of money obtained by fraud, and inducement of persons to travel across state lines for the purpose of defrauding them, including those acts described in paragraphs 39 to 43.

73. The acts set forth above constitute a pattern of racketeering activity pursuant to 18 U.S.C. § 1961(5).

74. The Defendants have directly and indirectly conducted and participated in the conduct of the enterprise’s affairs through the pattern of racketeering activity described above, in violation of 18 U.S.C. § 1962(c).

75. As a direct and proximate result of the Defendants’ racketeering activities and violations of 18 U.S.C. § 1962(c), the Students have been injured in their business and property.

SECOND CAUSE OF ACTION
RICO § 1962(d)
(Conspiring to Conduct a RICO Enterprise by a Pattern of Racketeering Activity)

76. The Students incorporate by reference paragraphs 1 through 75 above.

77. As set forth above, the Defendants agreed and conspired to violate 18 U.S.C.

§ 1962(a). Specifically, they agreed to market and conduct the AMS programs through a pattern of deceptive behavior, wire fraud, interstate transportation of money obtained by fraud, and inducement of persons to travel across state lines for the purpose of defrauding them, and use the proceeds from their misconduct to market and sell still further AMS programs.

78. The Defendants have intentionally conspired and agreed to conduct and participate in the conduct of the affairs of the enterprise through a pattern of racketeering activity. The Defendants knew that their predicate acts were part of a pattern of racketeering activity and agreed to the commission of those acts to further the schemes described above. That conduct constitutes a conspiracy to violate 18 U.S.C. § 1962(a) in violation of 18 U.S.C. § 1962(d).

79. As direct and proximate result of the Defendants’ conspiracy, the overt acts taken in furtherance of that conspiracy, and violations of 18 U.S.C. § 1962(d), the Students have been injured in their business and property.

PRAYER FOR RELIEF

WHEREFORE, the Students pray for:

A. Treble their actual damages in an amount to be determined at trial, but estimated to be in excess of $12 million;
B. Their reasonable attorneys’ fees and costs of suit;
C. Pre- and post-judgment interest; and
D. Such other relief as this court deems just and proper.

Dated: April 29, 2016

Respectfully submitted,

EMERGENT

By: Christopher Wimmer
Attorneys for Plaintiffs

The post The Plot Thickens for Armando Montelongo’s Civil RICO Suit appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/plot-thickens-armando-montelongo/feed/ 5
What is Your “Sweet-Spot” for Real Estate Investing? Have you found it yet? http://www.jeannorton.com/investing-sweet-spot-yet/ http://www.jeannorton.com/investing-sweet-spot-yet/#respond Mon, 25 Apr 2016 23:37:14 +0000 http://www.jeannorton.com/?p=3164 It took me years to find my "Sweet Spot" in real estate. When a fellow investor said, "The money is at the kitchen table", I knew I was his polar opposite.

The post What is Your “Sweet-Spot” for Real Estate Investing? Have you found it yet? appeared first on Jean Norton Real Estate Investing.

]]>
It took me years to find my “Sweet Spot” for investing in real estate.  I bought this program and that program, I argued with the guru’s/mentors/trainers, and regardless of what anyone tells you, you adapt your own style, talents and capabilities to your business, no matter if you bought someone else’s “blueprint to success” or not.  Here’s an incident that happened last week that made me very aware of differences in investing style and why:

At a closing just last week I was wholesaling a property to another  During the signing of documents, the buyer/investor taking over my property proclaimed that he authorized $2,000/month to a marketing company so he could get leads for real estate deals.

His comment, “The money is at the kitchen table”

Todd Whittingslow and I couldn’t have been more polar opposites at that moment.  His investing style and mine are totally different.  He has adopted a system for real estate investing that works for him, and I’ve developed a real estate investing system that works for me.  Both styles are very different, and yet we both have the same goals; for everyone to win in a real estate transaction AND make money.  Which is exactly what we did last Friday at a closing.

The last thing I personally want to do is sit with distressed sellers at their kitchen table, listening to their problems, lies, stories and dealing with issues that are inherently human.  It took me years to figure that out, along with some expensive marketing campaigns and doing what everyone says is necessary to be successful: getting out of my comfort zone.

I’ve since learned where my calling lies with real estate investing, and it’s not at the kitchen table.  For me, it’s a business to business model, for so many others, it’s a consumer to consumer model.  Luckily our styles met in the middle as I had a deal under contract that we both liked, and I chose to sell him that contract for a fee that and he felt was fair and would still be a money maker for him.  Again, the win/win scenario that is so important if you are in real estate regardless of your niche, especially if you want to be in real estate investing for the long term.

Our Differences

So why are some successful with Todd’s model, and some with my model?  The answer is so simple, so obvious, I’m embarrassed to say it took me so long to figure it out. It has to do with style, talents, experiences, risk tolerance, agility, and creative thinking.

Let’s do a quick comparison between Todd and me:

Todd: Extravert
Jean: Introvert

Todd: Sales Experience
Jean: Computer Consultant (nerd)

Todd: Risk Taker
Jean: Risk Taker

Todd: Creative
Jean: Creative

Todd: Team Builder
Jean: Lone Wolf

Todd: Loves Dogs
Jean: Loves only Golden Retrievers, otherwise love cats

Todd: Drives an old pick-up
Jean: Drives an old tin-can

Todd: Bends the rules here and there
Jean: Finds the loopholes

I can keep going, but you get the idea here.  Todd doesn’t mind walking up to strangers and starting a conversation and I would rather pull out a toenail than be forced to speak with a stranger.  Although people in my REI meet-up group wouldn’t know it, but I am an introvert and I love being behind the scenes, doing research, finding deals and making low-ball offers to banks and hedge funds.  For me, nobody’s feelings are hurt, and when they make a decision to enter in a transaction with me, it’s a business decision.  Not a personal decision.

There are times, though, when there are people I personally know that are in a stressful life situation and I’m the first one to see if I can help them.  But dealing with strangers is not my thing.  Todd and so many others are just fine dealing with strangers.

What about you?

Where do you see yourself in this business?  What kind of investor are you, or what do you want to be?

The post What is Your “Sweet-Spot” for Real Estate Investing? Have you found it yet? appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/investing-sweet-spot-yet/feed/ 0
This is the Scariest Scam in Real Estate Yet http://www.jeannorton.com/scariest-scam-yet/ http://www.jeannorton.com/scariest-scam-yet/#comments Wed, 23 Mar 2016 19:23:00 +0000 http://www.jeannorton.com/?p=3161 If you are in a real estate transaction and you've been asked to wire funds via an email request, you must be aware of this scam.

The post This is the Scariest Scam in Real Estate Yet appeared first on Jean Norton Real Estate Investing.

]]>
I say this scam is scary because it’s a lot closer to home for me.  I’m sure there are worse scams out there, but since I trade in multiple properties with so much of my communication via emails, I can see how anyone of us could have our real estate businesses DESTROYED if we fall victim to this incredibly scary scam.

Thank goodness both the Federal Trade Commission and the National Association of Realtors are aware of these hackers and have issued warnings to the general public, but we really need to be prepared as real estate investors, to watch and warn within out communities.

This is How the Scam Works

Hackers penetrate your email account in some way and take control over your email.  Just as you are about to close on a property, the hacker sends updated wiring instructions to the escrow company at the last minute.  Those instructions swiftly carry the funds that you were either supposed to send, or receive to some bank that belongs to the hackers.

I know from personal experience that my bank won’t allow ME access to my freshly wired funds until 24 hours after it hits my account.  I don’t know if this is a legal requirement or a voluntary procedure for this bank, but if you are expecting funds and don’t receive them on the day you expect to receive them, SCREAM!  If the financial institutions can catch it within 24 hours, then you are probably in good shape.  This isn’t the case for some, unfortunately.

It’s not unusual for me to deal with several wire transfers a week, and that is a good thing for my business, as timing is critical when it comes to Real Estate transactions.  Overnighting certified checks is another option, but very time consuming.

What Should You Do?

If you are in a real estate transaction and you’ve been asked to wire funds, make sure the wiring instructions match the name of the company and the bank account.  Also, if you get a “last minute” change to the wiring instructions, verify this with a follow-up phone call, as that is a big red flag that the hacker’s got into that person’s email account.

You can read the announcement from the FTC HERE.

The post This is the Scariest Scam in Real Estate Yet appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/scariest-scam-yet/feed/ 1
Profiting from Notes in the Most Unusual Way http://www.jeannorton.com/understanding-notes-brings-profits/ http://www.jeannorton.com/understanding-notes-brings-profits/#respond Fri, 18 Mar 2016 17:20:59 +0000 http://www.jeannorton.com/?p=3156 Knowing what goes on "behind the scenes" in the Note Business gives me the knowledge I need when negotiating payoffs of lien holders, thus maximizing my profits.

The post Profiting from Notes in the Most Unusual Way appeared first on Jean Norton Real Estate Investing.

]]>
When I heard about the Note Business, I was convinced this was my next step in Real Estate Investing strategies.  I attended seminars, classes, networked with a local Note Broker and took that deep dive into exploring how the Note business worked and how I could fit in.

You may remember some of my older posts regarding Notes:

The bottom line is that it wasn’t really something I wanted to do.  It didn’t feel right to me to be a “bill collector”, the “being the bank” isn’t really an admirable status while trying to get legal support and, well, I didn’t really feel right about the whole thing and I can’t really put my finger on it.  So I continue with my buying houses, rehabbing and selling or renting.

Understand the Note Business to Make Better Offers

Little did I know that my exercise in learning about the Note business allowed me to negotiate better offers with sellers!

Knowing what goes on “behind the scenes” in the Note Business gives me the knowledge I need when negotiating payoffs of lien holders, thus maximizing MY PROFITS.  For example, let’s say a second position non-performing loan has a face value of $50,000.  Legally that is what is owed on the note..BUT, that is most likely NOT what the lien holder paid for the note, especially if it’s in a Non-performing status.

Note transactions are recorded in the official public County records as an “Assignment”.  What this means is somebody SOLD that note to another and it’s expected that note sold at a hefty discount.  Given the date of that sale, you can have a “gut feel” of what someone paid for the note.  I asked in one of my online groups, “What would a 2nd non-performing note have been sold for in 2009?”  The experts told me 10% of the value.  Wow.  So another company bought that note for 10% of the face value, or in our example $5,000.

OK, Now I’m Getting Excited!

Without understanding the note business, I NEVER would have thought to determine how to position myself with negotiating with a lien holder.  Knowing someone probably paid $5,000 for that note, I’m in a good negotiating position when trying to remove that lien.  Sure, they will insist on the $50,000 face value, but I know better (wink, wink).  If I paid $10,000 to get that note (or get the lien removed), they would double their profits and we can both win.  Without understanding the note business, I would have thought I got a good deal if I negotiated at $40,000.  Right?

So Where can YOU Learn More About the Note Business?

I was fortunate enough to have a Note Broker in my weekly networking meeting (Robert Young, The Texas Note Co), so I got a little bit of perspective on Performing Notes, and how he made a living brokering performing notes.  Getting that little bit of insight was very helpful, talking about discounts, effective interest rates, etc.  Even then, I would discuss the possibility of obtaining a non-performing note at a heave discount, getting the borrower to sell their home via short-sale (because as the note-holder I can approve the short-sale), and make a profit, all the while saving the homeowner from foreclosure.

My next involvement was with The Paper Source and Bill Mencarow – they hold seminars twice a year and the information was incredible!  The networking incredible! And the cost was reasonable – both the seminar and the hotel.  In fact, he just shared a discount code with me “jeannorton” if you decide to go to the upcoming seminar in April 28-30, 2016 – he will give you a $50 discount.  I held a call with him some time ago and the recording is still online at RehabbingRemotely.com – but remember this call was from a few years ago, but still well worth a listen.

I left there with an incredible amount of knowledge, but still something was stopping me from going forward.  That’s when I heard of Scott Carson, of We Close Notes and luckily he was holding an event in Austin and he invited me to come.  He gave me a lot of tips and tricks for getting into the note business.  and some insight on how the internal departments work inside a bank.  I walked away with some little known strategies for negotiating short sales and added that to my bag of tricks.

I even looked at some notes for sale from hedge funds, but I STILL didn’t move forward in the Note Business.  I would say partly because I was doing OK with what I was already doing, and nothing really motivated me to make such a strategic change in my at that time.

I may never buy notes, but I’ve NEVER regretted my exercise in learning that side of the business.  I highly encourage anyone wanting to learn more to consider going to Bill Mencarow’s Paper Source Note Seminar this April in Las Vegas – and don’t forget to use the discount code “jeannorton” to save $50 off the entrance.

The last time I went to his seminar, I positioned myself as a rehabber that will buy note-holders foreclosures after they foreclose.  I mean, they don’t want to start Rehabbing Remotely®, so I was there to solve their problems – a new lead source for me :).

Tips, explanations, encouragement and advanced strategies are often discussed in the Rehabbing Remotely Club.  CLICK HERE to learn more.

The post Profiting from Notes in the Most Unusual Way appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/understanding-notes-brings-profits/feed/ 0
What are CWCOT REO’s Anyway? http://www.jeannorton.com/cwcot-reos-anyway/ http://www.jeannorton.com/cwcot-reos-anyway/#comments Fri, 11 Mar 2016 16:06:19 +0000 http://www.jeannorton.com/?p=3149 A little known term in the REO field, CWCOT, is a class of foreclosed inventory that is currently hitting the market. This is what you need to know about them.

The post What are CWCOT REO’s Anyway? appeared first on Jean Norton Real Estate Investing.

]]>
Banks have figured out a way to shorten the amount of time REO’s (foreclosures) are on their books via what’s called CWCOT.  This is an interesting concept, as they look better to the Feds for the amount of inventory they carry, and savvy real estate investors have the first chance at getting newly foreclosed properties.

What is CWCOT?

“Claims Without Conveyance of Title”.  What this really means is the Banks can start marketing the property immediately after the foreclosure sale at the courthouse steps.  They don’t have evidence of title, they haven’t taken possession of the property, but they are allowed to start marketing while clearing title for their inventory.  If they happen to sell one of these, the bank will happily supply you with a quitclaim deed, or you have the option of purchasing title insurance.

How is this good for me?

Actually, it’s not really good for a typical investor.  There is no listing agent, you don’t really know if the property is occupied, you legally can’t disturb the occupant, you can’t get inside the property to see what work is needed, and it’s almost impossible to find a hard money lender that will lend on it – because they need an appraisal, and they need to get INSIDE to get the appraisal.

So what’s left?  Oh, the price.

Most of these properties are recently foreclosed.  NOBODY knows the kind of shape that it’s in, what the value is, or what kind of work is required, so naturally the banks are willing to give a significant discount on these properties that you won’t see from regular bank-owned homes.

How is this good for the bank?

First, the bank keeps its foreclosed inventory low.  I’m not an expert at securities and banking regulations, but I do remember that they are only allowed to have so much toxic debt on their books before the Feds shut them down.  The lower amount of toxic debt (either through inventory or non-performing notes) the bank carries, the better interest rates they can get from the Treasury, etc.

Marketing the CWCOT during that initial closing period gives the banks a speedy resolution to the amount of time that inventory is held in their books.

What does the purchase transaction look like?

You can purchase these properties almost immediately via quitclaim deed, which I never recommend.  Most of the outlets that sell these properties allow you the option of purchasing title insurance which I highly recommend, since you have no idea of what kind of liens are on the property.

Why Title Insurance?

I had one property under contract in Florida at a price of $28,000.  Of course I requested Title Insurance and the title search showed a lien that was just over one MILLION Dollars.  Needless to say I backed out of that deal.  Can you imagine if I purchased that property via quitclaim deed and had to carry that lien?

As it turned out it was some kind of lien that incurred daily fines.  Given Florida has a fairly slow foreclosure process those fees can add up pretty fast.

Other issues and complications?

Since most of my properties are not local to where I live, I rely heavily on my local agent to help me a long on my transactions.  There are no listing agents assigned to these properties and they do NOT offer a broker’s fee for the buyers agent.  There is little incentive for my listing agent to help me along on that property at all, especially if I want to fix it up and rent it out.

Hard Money Lenders, for the most part, insist on getting a full appraisal on the property.  While yes, most hard money lenders are asset based, they have their rules and aren’t as willing to lend on the property without a full appraisal.  Remember, you can’t get a full appraisal because they can’t get inside the property.  The best alternative I have found is a reduction in the amount they will put towards the purchase of the property.  The day after closing, you can get in and get a full appraisal and try to negotiate a new loan with the hard money lender, but all in all, it’s a pain in the you know what.

Oh, and you want to wholesale it or assign the contract to another?  Good luck with that one.  Nobody wants to buy a property from a wholesaler without the ability to go inside the property.  So there’s another issue from a wholesaler’s perspective.

In conclusion, more and more of these types of properties are becoming available in alternative markets.  The first nationwide Hard Money Lender that can get to some level of comfort to offer standard structures to advanced real estate investors, is the one I will recommend!

 

Any Questions?

 

 

The post What are CWCOT REO’s Anyway? appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/cwcot-reos-anyway/feed/ 1
Armando Montelongo Facing Civil RICO Law Suit http://www.jeannorton.com/3137-2/ http://www.jeannorton.com/3137-2/#comments Tue, 01 Mar 2016 00:07:04 +0000 http://www.jeannorton.com/?p=3137 In what appears to be the first major lawsuit brought against Armando Montelongo over their seminars, the students seek over $12 million in trebled RICO damages

The post Armando Montelongo Facing Civil RICO Law Suit appeared first on Jean Norton Real Estate Investing.

]]>
Armando Montelongo Now Faces a Civil RICO Lawsuit Backed by 164 Former Students

Many that have followed me over the years know that my first exposure to Real Estate education was through one of Armando Montelongo’s very first bus tours.  I was told I would be rich, that being in his inner circle was all I needed to find deals, lenders, agents, contractors and all that is needed to achieve wealth – at least that is what I remember of the promises.

Naturally when I got home I realized after attending some REI meetings that I didn’t know enough about real estate in my local market. I bought more programs, listened to as many podcasts as I could, and watched as many webinars as I could as I found the path of investing that worked for me.  I’m still here, investing in real estate, and no, I’m not rich yet.

Here is an excerpt from the press release:

Emergent has filed suit under the federal Racketeering Influenced and Corrupt Organizations Act (“RICO”) on behalf of 164 former students of “Flip This House” star Armando Montelongo and his companies, alleging that the real estate mogul’s educational offerings — which cost up to tens of thousands of dollars, and which are attended by thousands of students every year — do not live up to the central claim that the Montelongo “system works in any financial market, at any given time,” and are instead the heart of a fraudulent scheme to sell students worthless “education.”  In what appears to be the first major lawsuit brought against the defendants over their seminars, the students seek over $12 million in trebled RICO damages.

A copy of the complaint is here.  If you’d like to know more about this lawsuit or our other group action work, contact us.

You can read more about Emergent Law on their web-site.

What is RICO?

RICO stands for Racketeer Influenced and Corrupt Organizations.  This is not the same claim that Presidential candidate, Donald Trump is accused of with his “Trump University” Real Estate education program.  That is merely a class action suit that he’s been fighting for almost 6 years now.  (See http://www.courthousenews.com/2010/05/04/TrumpU.pdf.)

Where I’ve seen similarities in the seminar business (see The Seminar Business and the Hard-Sell Up-Sell) from many educators, I’ve never known any to receive such a strong law suit filed against them.

You can read the claim here.

 

The post Armando Montelongo Facing Civil RICO Law Suit appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/3137-2/feed/ 7
You don’t need an MBA to Invest in Real Estate…but it helps… http://www.jeannorton.com/how-my-masters-degree-in-technology-commercialization-plays-out-in-real-estate-investing/ http://www.jeannorton.com/how-my-masters-degree-in-technology-commercialization-plays-out-in-real-estate-investing/#respond Sat, 23 Jan 2016 21:59:37 +0000 http://www.jeannorton.com/?p=3117 Nobody needs to be educated to make money in Real Estate. I've never seen an industry with such diversity where so many people can make money. It doesn't matter about your race, religion, level of education, speaking skills, presentation or even how smart you are. This, with the onset of of Social Media, I'm doing business with anyone and everyone. I'm talking real estate strategies with anyone and everyone. We all have the same goal; making money. The one and only golden rule in this business is "Everyone has to win". You don't have to know rocket science to understand that one.

The post You don’t need an MBA to Invest in Real Estate…but it helps… appeared first on Jean Norton Real Estate Investing.

]]>
When I received my M.S. degree in Technology Commercialization (MSTC), the last thing I thought about was going into real estate investing.  I went from that degree to working for 3 different technology companies; one got bought, one wasn’t a good fit, and one failed.  When the economy tanked in 2009, nobody was hiring so I ventured to find something else, and that’s where I discovered the ability to make money buying foreclosed homes, improving them and selling them. Given my background as a serial entrepreneur, especially with technology focuses, I’m often asked the question: why real estate?

The Real Estate Industry

Nobody needs to be educated to make money in Real Estate.  I’ve never seen an industry with such diversity where so many people can make money.  It doesn’t matter about your race, religion, level of education, speaking skills, presentation or even how smart you are.  This, with the onset of of Social Media, I’m doing business with anyone and everyone.  I’m talking real estate strategies with anyone and everyone.  We all have the same goal; making money.  The one and only golden rule in this business is “Everyone has to win”.  You don’t have to know rocket science to understand that one.

I’m going to point out a few people that I know doing quite well in real estate, and are as different from me as anyone could imagine.

First: Juztin William – 20-something tattoo artist that went from being in significant debt to now managing hundreds of rental properties, rehabbing and flipping houses, and managed to crawl out of that whole without any handouts, without any “student loans”, and still living with the same problems 20-something kids have to deal with.  He and I would private message for hours on our real estate businesses, and I was honored when he approached me on a deal he didn’t feel qualified to take down.  That deal never worked for unrelated reasons, but having that relationship between us, we knew how to take down that deal and where it would be profitable.  And yes, we would do that deal together, and yes, everyone of us would win.

Next: Nasar Elarbi – another 20-something, or maybe 30-something guy that tore himself out of da ‘hood and discovered real estate investing as a way to go.  He calls himself a graduate school dropout – his mother was a teacher so he understood the value of education, but much like me, found himself to be “unemployable”.  He is as black as they come, admits to having problems using correct grammar in his writings, yet is able to pay for and take his father to a super-bowl game from the money he makes as a real estate investor.  He volunteers his time going to schools and inspires hope for so many. I’ve known him for years and I tell him to keep doing what he’s doing (In fact I told him to accept his grammar, that is a part of WHO HE IS, and people are attracted to him because of who he is).  He is an inspiration for so many and yet criticizes himself for his spelling or grammar.  I just want to shake my head.  He is such a success, helps so many others and is a perfect example of how by “being himself”, he has mastered real estate investing.  He has since gone on to help others get into real estate investing.  You can read more about him at http://realestateduru.com.

And More: Stacee Nelson – probably closer to me in demographics in that she is a white female, and so am I, with only a few decades in age to separate us and our differences in hair colors (she’s liking pink hair these days).  She is educated with an MBA in international business and quit her cushy corporate job in mergers and acquisitions to go into real estate full time.  She knew that is where she meant to be.  She is a mover and shaker and won’t take no for an answer.  Her learning about real estate was insatiable. She started with flipping houses, then got into some commercial deals, examined note investing and finally found her sweet spot in buying properties in bulk.  Now flipping some 30 houses a quarter, she has leveraged her education in finance and international business to deal with some of the largest bulk buying groups in the country.  She has surpassed me in bringing her expertise in new industries and still has the passion for real estate.  (If I didn’t know her personally, I may be a little intimidated by her.) And she a girl that likes to have fun!

All I can say is KUDOS to those that have entered into this industry where education, race, color, and gender doesn’t matter.  These examples are just some of the incredible people I have met on my real estate journey.  I have never known an industry that enjoys such diversity and the potential to make money is there for everyone.

Mapping a Technology Commercialization Degree to Real Estate

Raising Funds

The year long Master’s program focuses on finding a technology and developing a business plan around the technology.  Many know that a few technology companies are bought for many times their annual revenues, yet most technology companies fail.  The failures have to do with a multitude of issues, all studied in the program so we all know what to expect, how to avoid getting caught in those positions and therefore have in the business plan contingencies on how to handle these unsuspecting surprises.  But the main focus is to end the year with a venture presentation competition viewed by Investors in order to raise money for the technology venture.

Raising money in Real Estate is no different.  And yes, I use other people’s money in Real Estate.  I use the tools and the strategies to make a compelling presentations, outlining the problem in the markets, the opportunity it presents and the expected return and the timeline.  I share my stories, right here in this blog, to authenticity speak to the reality of this business and prove to potential investors that I am a credible source to handle their funds.

Is commercializing a technology risky?  YOU BET! Is real estate investing risky? ABSOLUTELY!  Do I know how to protect potential investors rather it being in real estate or starting a new technology platform?  YES.

Communicating So They “Get-it”

Being a former geek, computer programmer, etc., I had little patience for those that “sucked up” in the corporate community.  My work was solid and I didn’t have to play any games or do any manipulating to get the job done.  Therefore I didn’t communicate much.  Being opened to this new world of identifying pain points in the market, viewing those as business opportunities and teaching me to learn how to develop a business based on solving that pain point was a real eye opener.

Part of marketing is more than understanding the “pain point” in the market, but being able to communicate that pain point to others that aren’t aware it exists.  I always remember the marketing professor with her comment, and it’s ingrained in me today: If the person you’re speaking to doesn’t understand the message, there is something wrong with they way YOU say it.

As a geek, I remember thinking that if they didn’t understand what I said, there was something wrong with them not to understand.  The reality is I always have to make my message very clear, so the recipient always understands the opportunity.  If they don’t “get-it”, then it’s because of the way I said it.  I continue to work on my messaging every single day.

Being Held Hostage

The Strategy class was probably my favorite.  There are a ton of different ways you can be “held hostage” in business.  This means pretty much running out of resources so you can make the right decision for your business, but are forced to make a decision that could cost your entire business, or lead you down a less desirable path you never expected.  Many that start in the science industries are probably most at risk since their future depends on major government authorities approval of your product.  Sometimes companies find themselves “held hostage” because one supplier is out of a part and they must turn to other suppliers that provide less quality and/or higher priced materials.  They must make the decision to operate with a lower quality product that has a higher price, or eliminating product sales until the problem is solved – thus reeking havoc amongst employees expecting a paycheck, etc.

I’ve seen this in real estate too.  Not so much about the lender that drags their feet on approving your new buyer, thus costing you more money, but with investors not understanding a delicate situation and refusing to fund what is needed to get a project profitable.  Yes it happens, and I’ve had to make it very clear that I was being “held hostage” and forced to make decisions for the best purpose of the project.  It was costly, but we got through it and there was damage to the relationship with that investor. It happens.

Risk Analysis

What a fascinating class.  It was filled with super analysis tools that allowed us to analyze the “what-if” scenarios on very complicated decisions and how it impacts a company with multiple moving parts.  I wish I had more access to those types of tools to help in my presentations to investors, as I have a lot of great ideas for leveraging opportunities I see in real estate.  I don’t have the tools, and haven’t really explored the opportunities mainly because it was lower on my priority list, but when the hedge funds inundated the tax lien market, I knew EXACTLY what they were doing and how they knew they could take the risks of purchasing tax lien certificates even if the property was a dud.

Here’s a little background. I had great luck purchasing tax lien certificates in Florida earning 17.5%-18% interest and I didn’t lose any money.  I blogged about that time HERE, and even was mentioned on a CNN Money article HERE when the tax lien certificate opportunities were taken over by the hedge funds.

Someone was able to use a complicated risk management analysis tool to penetrate the Florida Tax Lien system and they knew how they could do it with a profit.  Where individual investors like you and I would analyze each property we bid on to make sure we didn’t suffer a loss, the hedge fund gathered the statistics necessary where they knew where to bid and that by bidding a mere half a percent on each property, their chances of being profitable were greater than not.

Here’s how they knew this business model would work:  Florida has a minimum 5% penalty to tax payers who don’t pay their taxes on time.  The hedge funds win the certificate because they claim they will accept the lowest possible bid at the open auction.  They win the certificate and they also know what percentage of the certificates are redeemed within the first month or 2 of the certificate being issued.  I don’t know what that percentage is, but in my experience, most of the certificates were paid within the first few months.  So IF a certificate earns a 5% penalty and the certificate is redeemed in the first month after the certificate sale, the yield rates a, impressive 60% annualized.  Sure, they get 5% of their investment back within a month, which is not too bad these days, but to do it over and over can be very lucrative.

So if these hedge funds could earn a pro-forma annualized yield of 60%, what about the properties they bid on that have outrageous liens or for whatever reason can’t be redeemed?  That would be a total loss of their investment.  Someone was able to statistically prove that bidding low on as many tax certificates as possible would prove more profitable and the risk less because they would merely abandon the certificates that never paid.  There is no responsibility in buying a tax lien.  True, if the lien is never paid, they may end up with the property, but they don’t want it and will let it get absorbed by the County.

This is a complicated investing strategy.  But I totally understand their process in determining that it would be profitable, and it has proven to be profitable because they have been doing this every year since.  Yep, risk analysis.

Validation

If there is one thing that came out of the MSTC degree was the need to validate…EVERYTHING.  From the education perspective, just because YOU may think you have a good idea for a business, or your investor friend created some wonderful invention he calls his “baby” doesn’t mean it will sell in the marketplace.  Besides all the issues that can come up, such as copy-cats, ease of exiting the market, ensuring the market is ready for that “baby”, we don’t really know that something is valid until we test the market.  And in real estate I validate constantly.

So many new real estate investors come to me with statements like:

  • My agent told me I couldn’t do that – it was illegal
  • The Wholesaler said the property was worth a MILLION DOLLARS!
  • Asbestos Siding?  OMG – I’m going to run away!
  • Nobody would lend on my project

My agent knows her current market.  She knows what sells and she knows what doesn’t sell.  After years of working with her I know to believe her.  But in the beginning I validated everything she said, and most of the time she was right.

I’ve had agents tell me lies about the way the transaction process works in real estate to put pressure on me to close a sale, and I know they are lies because I validated it.  All of it.  Contractors will tell me what I need to do to be code compliant (and have it cost me more money), but if it’s a really surprise, I’ll read the code myself.  This mindset of validation has saved me a lot of money.  Never let one person stop you from moving forward in your business because they said “you can’t do that”.

Understanding motivators will also give you enough knowledge to know how deeply you want to validate an issue.  For example, contractors don’t care how long the project takes, they are getting paid and that’s all that matters to them.  Agents don’t get paid until the property is sold, and even if it  has to sell for less so they can get paid sooner, that’s what they will do.  Their motivation is to get paid quickly, not necessarily maximizing their check.  I have found that by understanding their motivations you can learn if in fact you need to validate what they say.  I wrote a little ebook “The 5 Styles of Contractors and How to Manage Them” some time ago when I realized the motivations behind the different contractors.  Understanding who you are dealing with in business, what motivates them gives you the information you need to make smart decisions.

Multiple Exit Strategies

Much like technology companies hoping to be bought by some bigger company for multiple times earning potential, you always want to remain open to alternative strategies for your exit.  Of course the worst exit strategy is business failure, which happens all too often, both in real estate and in technology.  But if you are stuck on only one exit strategy you may find yourself in a losing situation.

For example, let’s say you start a company with the intent to sell it to a big company at some later date.  Everything you do is to groom and build your company to be best aligned with that company.  You introduce the product, you market it, you start getting sales, you get the attention of the press, but then the big company you had hoped would buy your company creates their own competing product.  You had your heart set on this strategy and now it’s not there for you.  How do you handle that?  What if you had to sell your company to a company that was going to shut down your business, only to keep the employees they like and spit out the rest?

The same is true with investing in Real Estate.  I really feel sorry now for the people that ran to west Texas to build these “man-camps” in the middle of nowhere so they could house the people working in the oil industry.  Sure the oil companies were paying a lot of money for their “per-diems” – living expenses while they were in the oil field. The profit projections were incredible.  But suddenly the price of oil went down and the oil companies stopped producing oil.  Those properties are worthless right now.  Well, not worthless, but certainly not worth holding onto, making mortgage payments and paying taxes on something that doesn’t provide an income.  Sure, it may come back some day, but these people are caught with no other exit strategy.  None.

So too in real estate, if you buy a property to fix it up to sell, and then you can’t sell it, you are stuck.  Being open to other strategies is critical to your success.  Learning about the other strategies are critical.  Thats where we came up with “owner finance”, “lease options”, refinance and rent, or if all else fails, lower the price to bargain basement or do what some have done: hide their head in the sand.

Financial Analysis

When I started in the real estate business I started with a spreadsheet outlining the goals for my purchases, putting timelines on those goals, identifying when they would sell and leveraging profits to reinvest to grow the business.  While impressive to some of the other students – that I could map out such a plan – the message I got from that exercise about real estate vs technology commercialization is: The value of a real estate business is 1 times it’s current value.  All the time.  No exceptions.  Where as technology companies are often sold for multiple times of their current values.

Final Analysis

Many of those real estate “guru’s” claim you don’t need a formal education.  And that is true, you don’t need an education to make money in real estate as many of my diverse real estate friends prove.  The common threads I’ve found are with those successful:

  • knowing the game
  • persistence
  • alternative thinking
  • understanding risks
  • understanding market demands
  • knowing when the market changes and being adaptable to that change
  • building relationships
  • leveraging funds
  • being flexible when dealing with unexpected events and most of all:
  • the ability to look at your mistakes as learning experiences.

 

Watch for Jean’s new course: Business 101 for Real Estate Investors
To learn more about the Masters of Science in Technology Commercialization at the University of Texas at Austin, CLICK HERE

The post You don’t need an MBA to Invest in Real Estate…but it helps… appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/how-my-masters-degree-in-technology-commercialization-plays-out-in-real-estate-investing/feed/ 0
Blueprint for Success? Or a Setup for Disaster? http://www.jeannorton.com/blueprint-for-success-or-a-setup-for-disaster/ http://www.jeannorton.com/blueprint-for-success-or-a-setup-for-disaster/#comments Sun, 27 Dec 2015 23:11:21 +0000 http://www.jeannorton.com/?p=3108 Real Estate Investing offers the most expansive level of creative thinking than any other industry I've experienced. Here's why the "system" or "blueprint" the guru sold you isn't working.

The post Blueprint for Success? Or a Setup for Disaster? appeared first on Jean Norton Real Estate Investing.

]]>
Real Estate Investing offers the most expansive level of creative thinking than any other industry I’ve experienced.  I’m often reminded of a quote from Bruce Norris, The Norris Group, “Real Estate Investors by nature are curious“.

If you’re NOT curious by nature, and you’re new to real estate, please stop reading and find another business/job.

If you are curious by nature, and want to know more, please continue.
When I started real estate investing my learning was at an insatiable level.  I went to a seminar in California and was sold on the idea that real estate would bring wealth.  I bought it, hook, line and sinker.  I’m still determined that it can bring me wealth, but not in the way I was taught in June 2009.  Within months of my training I knew there were a lot more “investing strategies” that worked for others, because what I learned in California wasn’t working for me in Austin, Texas.

I came back home and searched for that “perfect path” for me.  I turned to the internet for answers, and OH BOY!  Are there ever a lot of “systems” for sale that will make you millions.

I bought a few other “systems” and learned about more “strategies”.  I read, listened to podcasts, networked with others, and even joined yet another coaching program.  Even the coach said to me, “Jean, you’re doing OK.  Why are you here?“.

My answer? “I want to hear all the horror stories with real estate investing“.

Why the “Blueprint for Success” doesn’t Work

I have a simple answer: Because we are human, we have free will, we have our own personalities, we have our own talents and tolerances, and we make innocent decisions that aren’t taught in the blueprint.

One of the horror stories that coach mentioned was a person put a property under contract under her personal name.  That in itself is not a big problem, and innocent enough to go into contractual relations with someone as their first real estate investment.  What she didn’t know was that her bankruptcy from the previous year would rear its ugly head and screw up the whole transaction, even with the possibility of losing her earnest money deposit.  (That story was one that motivated me to write the blog post: Do you Need Asset Protection if you Don’t have Assets?)

This is only one of the things that can happen with real estate transactions.  As so many investors say, every deal is different.  No two deals are the same.

Once you realize there is no blueprint for success, then next step is to understand where the minefields are.  Because “Real Estate Investors by nature are curious”.  Curious people like me will take the first step and learn as I go.  But it would be nice to know as I define my own path, capture my calling, find the “system” that works for me, that I don’t walk into the danger zones.

It took me a few years before I realized there is no “blueprint for success”, especially in the Real Estate Industry.  There are so many other issues that arise that will BITE YOU IN THE BUTT no matter how much planning, how much learning or how famous the guru is.

I wanted to hear about other people’s mistakes.  I wanted to know what led up to a difficult situation so I knew to avoid it.  I couldn’t get ALL the mistakes, all the unforeseen issues that arise, but I got a few, and boy did I learn first hand about the others.  Some I’ve written about in this BLOG.

My question to you is: Are you curious enough to discover your own path? Or are you still hoping that “blueprint” works out for you?

The post Blueprint for Success? Or a Setup for Disaster? appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/blueprint-for-success-or-a-setup-for-disaster/feed/ 1
Why are Land Trusts so Powerful? http://www.jeannorton.com/5-creative-ways-to-use-land-trusts/ http://www.jeannorton.com/5-creative-ways-to-use-land-trusts/#respond Sun, 20 Dec 2015 22:34:12 +0000 http://www.jeannorton.com/?p=3101 Most of those that know me, know that I use Land Trusts in my real estate investments. The more I learn about Land Trust, the more I understand the vast power and flexibility they bring to my business.

The post Why are Land Trusts so Powerful? appeared first on Jean Norton Real Estate Investing.

]]>
Most of those that know me, know that I use Land Trusts in my real estate investments.  The more I learn about Land Trust, the more I understand the vast powerful nature and flexibility they bring to my business.

I am honored to introduce guest blogger, Clint Coons from Anderson Advisors, as he goes into great depth in this article about Land Trusts and the enormous flexibility they offer for our real estate investing.

The main reason I started with Land Trusts have to do with the ease of Wholesaling (#4) – as not to trigger deed restrictions by having a different party close on the transaction I started.  All the other reasons will surprise you.

Please post any clarification questions at the bottom, or contact Anderson Advisors directly for a free consultation.

5 Creative Ways to use Land Trusts

There are many websites devoted to the topic of land trusts.  Some of these sites provide solid information while others make blatant misrepresentations.  Unfortunately for the investor, separating fact from fiction is difficult.  However, keep in mind that a land trust is a simple tool that has been around since King Henry VIII ruled England.  Its purpose then, to hide ownership of land is the same today and a major part of this tools allure for real estate investors.

In addition to the privacy of ownership and “due on sale” clause avoidance, when coupling encumbered real estate with a land trust and LLC, the tool has several other uses not typically recognized by the average investor.  The following is five not so common uses of land trusts that should not be missed.

1. Avoid Churning of Title

When a property is transferred several times between multiple parties in a relatively short period, lenders may be reluctant to lend against the property.   From the lender’s perspective, it might appear as if the subsequent transfers were made to inflate the true value of the property.  In these situations, a cautious lender can require the property be seasoned for six months to a year before it will loan against the property thus, preventing a buyer from purchasing the property.

This problem can be faced by flippers who buy at auction with no intent to rehab the property.  The auction buyer is just looking to pick up a great deal then flip the property to a rehabber for a tidy profit.  Consider the following scenario.  Alan Auction purchases a property at auction for $80,000.  One week later he flips the property to Robby Rehabber for $100,000.  Robby spends one month and $20,000 making the property marketable and finding Ben and Betty Buyer, who are excited to purchase the house for a $160,000.  Unfortunately, Ben and Betty’s lender refuses to loan against the property out of a perceived concern the property is being churned having doubled in value within two months

A land trust can minimize this problem.  Alan should have taken title in the name of a land trust.  When he met Freddy a sale of the trust as opposed to the property would not appear in the county record.  From the general public’s perspective, the trust is the owner of the property.  Know one knows who owns the trust because this information is not recorded.   When Freddy meets with Ben and Betty, he will offer to sell them the property held by the trust.  Ben and Betty’s lender will only see Alan’s original auction purchase and not the intervening transfer to Freddy thus, reduce the title churning concern.

2. Protection from Judgments

Most people are not aware personal judgments can attach to their real estate and possibly force its sale.  A creditor with a judgment has two options, apply for a Writ of Execution to force a sale of the debtor’s real property, or record the judgment in the county where the real property is located.  The first option leads to an obvious conclusion the second less so.  If a creditor merely records the judgment, it will be paid whenever the property owner refinances or sells the property.  The judgment is like a lien against all property title in the individual name of the debtor.

An easy way to avoid personal attachments is to keep title out of your personal name.  The land trust is the ideal tool for holding title to real estate.   When property is transferred into a land trust, it is taken out of the property owner’s individual name and held in the name of a trust in the care of a trustee.  Recorded judgments against the property owner will not attach to trust property.  This method only works if the property is transferred into the trust prior to a judgment being recorded.  Transfers after a recorded judgment carry the judgment into the trust

Thus, real property held in a land trust can be refinanced or conveyed free and clear of personal judgments provided the transactions take place in the trust name.  Note: an aggressive creditor can enforce a Writ of Execution against your beneficial interest in the land trust therefore for full protection consider using an LLC to hold the interest.

3. Facilitation of Property Transfers

Many investors will group several properties within one LLC when their overall equity exposure is minimal.  However, their risk exposure will grow in proportion to the increase in the value of the real property and its debt reduction.  There will come a point when the grouping of several properties in one LLC is unwise and additional LLCs are warranted to reduce overall exposure.

Consider Ian Investor, who owns four rentals in LLC #1.  If Ian wanted to move two of his rentals to a new LLC, e.g., LLC #2, it would require the recording of two deeds for each property.  One deed from LLC #1 to Ian and a second from Ian to LLC#2.  Such a transaction results in multiple recording fees, possible loss of title insurance, loss of casualty and liability insurance coverage, and potential transfer taxes.

The land trust solution avoids the problems mentioned above.  If Ian owned each property in a separate land trust, he need only assign the land trust from LLC #1 to himself and subsequently assign his interest to LLC #2.  Additionally, this approach offers a veil of privacy because the assignments are not recorded thus, no one knows who owns the trust.

4. Wholesales Made Easy

Wholesale transaction can be tricky when dealing with bank or HUD owned properties.  In the typical wholesale transaction, an investor will tie up a property under a purchase and sale agreement without the intent to purchase the property.  The investor, in turn, looks for an investor to whom he can sell the purchase and sale agreement.  The acquiring investor acquires the right to close on the property.  This transfer of rights is often referred to as an “and or assigns” clause.

Banks and HUD are not comfortable with these types of transactions and require the original party to the contract close on the property and will not accept an assignee.  As a result, the wholesale investor is forced into a double close scenario with all of the added costs incurred therein.

Some commentators recommend the use of an LLC to enter into the purchase and sale agreement.  The LLC can then be assigned to another investor without alerting the seller because the purchase and sale agreement is with the LLC and not the investor.  The LLC scenario is a viable, yet complicated and expensive strategy.  A less costly and simpler alternative is the use of a Wholesale Land Trust agreement that offers the same benefits as the LLC scenario but without state filing fees, EIN numbers, change of tax status, and restated operation agreements.

5. Protection from Restrictive Home Owner Associations

Some HOA’s restrict who may be owner typically limiting ownership to individuals or trusts.  For the real estate investor who owns a property in such location asset protection for the investment may appear elusive.  Any attempt to use a business entity to hold title to real estate will result in fines and liens against the property.

A work around exists by using a land trust to hold title to the property.  The trust is exempt for HOA restrictions and, therefore, does not trigger the HOA’s ire.  After the property is deeded into the land trust, the investors beneficial interest is quietly assigned to an LLC for asset protection.

The uses of land trusts cannot be overstated as they are considered an important tool in the investor’s arsenal.  If wielded properly, the trust can minimize title issues, limit liability exposure, facilitate future transfers, and shield ownership.  The key is in understanding its benefits and limits.

What is your favorite reason to use a Land Trust?

 

The post Why are Land Trusts so Powerful? appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/5-creative-ways-to-use-land-trusts/feed/ 0
Scammers… http://www.jeannorton.com/scammers/ http://www.jeannorton.com/scammers/#respond Sun, 13 Dec 2015 00:31:09 +0000 http://www.jeannorton.com/?p=3090 How to Spot the Scammer? Ultimately the scammer will ask you for a fee to get you somehow connected to you getting the loan. They may refer to it as any one of these terms:

The post Scammers… appeared first on Jean Norton Real Estate Investing.

]]>
I remember being a new real estate investor searching for the resources that could help me find money for my real estate deals.  I answered a post on Linked In and had a nice conversation with a real broker.  I will start out saying that I wasn’t scammed, but it lead to my name being used to scam two elderly gentlemen out of $60,000 – It was one of my original posts: CLICK FOR THAT POST.

Not only was I shocked, but I could have been scammed myself, but I think the lender had no idea of what that woman was doing.  Had he been a scammer, he wouldn’t have taken me out to lunch and he would have asked for a fee of some kind to connect me with the actual lender.  Instead he was an honest broker ready to charge me 10 points and 18% interest to borrow money.  Naturally I turned down those rates.  Now I always get the rates up front – learning lesson there for me.

Now that I’m more seasoned, more jaded, and more skeptical, I can spot the potential scammers from a mile away.

How to Spot the Scammer

Ultimately the scammer will ask you for a fee to get you somehow connected to you getting the loan.  They may refer to it as any one of these terms:

  • Loan Insurance
  • Security Deposit
  • Application Fee
  • Registration Fee
  • Non Collateral Document Fee
  • Processing Fee
  • Insurance Money
  • Brokering Fee
  • and more…

Where those fees may be legally acceptable, most often you will pay the person and NEVER SEE YOUR MONEY AGAIN.  The difference between a professional lender and a scammer is they will take their fee once the deal is closed and they will be paid from the Escrow Company.

I spend a lot of time on Facebook (and if you’re not in my Facebook Real Estate Group, you are welcome to join), and there is a lot of great learning information in that group.  At this point though, I can spot a scammer a mile away.

Let’s look at some of the examples:

FACEBOOK POTENTIAL SCAMMER

2015-12-12_1616

  1. GMAIL Account.  Most legitimate lenders can afford to have their own domain name and direct their professional/business email inquiries to that specified email address – NOT a general gmail, yahoo, outlook, otherwise catch-
    all email account.
  2. Low Interest Rate – The reality is in today’s market, nobody is lending at 5% for private unsecured loans, and no sophisticated investors will accept anything lower without collateral.
  3. Area Code/Location specific issues: In this example, the area code is for San Antonio Texas location, yet he claims to be posting from Oklahoma City, Oklahoma.  That alone isn’t enough to cause concern, but combined with the other information, I’m leery.
  4. Misuse of the English Language: “Lending is maximize up to ….”.  That could be merely a typo, but even if it is a typo the property way to express that there is a maximum limit is not “lending is maximized…”, but more “… lend up to …”, or state a minimum and maximum.
  5. Bank Transfer???: This is a soft setup for you to expect to give them sensitive account information.  In addition, we in the industry call it a wire transfer, not a bank transfer.

So you can see that this post is LOADED with red flags that a scam is most likely behind this post.

Let’s look at another:

2015-12-12_1710

  1. Over Excited:  He’s so excited about his loan offer, it’s obvious that he’s trying to reach the desperate.  People that are in business don’t get that excited.  Real lenders are looking for real savvy investors.
  2. Guaranteed Approval: Really?  Are you kidding me?  I saw another post where they said you didn’t even have to provide your social security number or get a credit check.  Really?   Oh, and 100% Loan to Value?  Let’s think about this – Someone is going to loan you 100% of the value of the property, GUARANTEED, (yes, I see the asterisks which may mean a disclaimer, but I didn’t see any disclaimer), and they don’t care if you pay your rent or if they will get their money back or what your credit is or if you can properly handle the asset.
  3. GMAIL – again, most true business professionals use their own domain name, not some tool that can easily be a fly-by-night method for communication.
  4. Misuse of English: “should please contact on.”  The correct term is “…please contact at:”  The reason you want to be very sensitive to these kinds of mistakes are because there are a lot of countries that do not have extradition agreements with the United States, Nigeria being one of them.  They can steal from us all day long and there is no way to make them accountable for their criminal actions.

The bottom line is: The best way to stay safe is to never pay an up front fee to be connected to a lender.

(Just an FYI, I’m associated with the Private Lenders Blacklist Group on Facebook too.  Way too many people have been scammed and discuss it in that group.  It’s also a great way to vet a situation that may seem strange to you.)

 

The post Scammers… appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/scammers/feed/ 0
Yes, I made $100,000 Profit on one deal….but… http://www.jeannorton.com/yes-i-made-100000-profit-on-one-deal-but/ http://www.jeannorton.com/yes-i-made-100000-profit-on-one-deal-but/#respond Mon, 02 Nov 2015 23:27:49 +0000 http://www.jeannorton.com/?p=2933 Trust me, when people see 6 figures on the "Cash to Seller" line of the HUD, the creepy crawly's come out of the woodwork to see how much of that they can grab...

The post Yes, I made $100,000 Profit on one deal….but… appeared first on Jean Norton Real Estate Investing.

]]>

Trust me, when people see 6 figures on the “Cash to Seller” line of the HUD, the creepy crawly’s come out of the woodwork to see how much of that they can grab…

The Project

Scaling your real estate business can be hard, especially if you’re like me and don’t have a staff to help administer the business.  Sure, I have a CPA, but as far as managing projects on a daily basis, especially remotely, there can be some challenges.

I considered a 6 figure profit to be one of my goals, an internal milestone – a marker for for a personal accomplishment that was supposed to mean something to me.  Of course I’m delighted with accomplishing that goal, finally!  I don’t know if my year end will show a 6 figure profit since I’ve had a few other painful issues with projects taking too long, dealing with slow-selling properties, and outrageous extension fees from hard money lenders (of course that was never in my pro-forma at the beginning of the year, but that’s another long and painful story).

Let’s get back on track to what it’s like to make $100,000 on one project, and what backfired on my way to that goal…

I remember the excitement when I got the deal.  I knew it was a great money maker and I even told my agent (who likes to spend more of my money than I like to spend) that I had 6 figures as a profit goal for that project.  I made it very clear that I was watching the budget very closely and I was to achieve my goal.  It would happen!  And as it turned out, it did happen.

How did I get the deal?

Every now and then you stumble across a sweet deal that scares everyone else but YOU.  This particular deal was a foreclosure in Chicago that suffered from a broken water pipe due to improper winterizing.  Mold in basements in Chicago are not that big a deal, but this one was from a broken pipe between the first and second floor.  So the amount of mold was throughout the house and the bank didn’t want to do any of the mold remediation.  In fact, I made a pretty low offer to begin with, but they came back to me and mentioned there was mold inside the unit.  I responded to lower my offer about $12k with that news.  They accepted my offer!

Mold is one of those issues that can be easily cleaned up or a growing glob of danger.  This was a growing glob of danger.  This is the reason the banks don’t want to mess with mold.  It’s a lot of work and they aren’t in the rehab business.  You have to remember that there are people at these banks that make the decisions…people have their own perceptions, and mold, especially growing globs of danger will scare the heck out of a lot of people.  I only back off if there are mushrooms growing on the walls.  You may have heard the term “mold is gold”?  Yes, this mold was gold.

We totally removed all the drywall and hired a mold remediation company to clean it up – a company that had a transferrable guarantee.  We replaced flooring, kitchens, bathrooms, doors, hot water heaters, all the usual that comes with a rehab project and YES, I went over budget.  Not only that, delays came into play due to weather and other stupid issues (all learning experiences).  Yes, the appliances got stolen in this unit too so I installed a security system.  Each day I was concerned about not reaching that goal. But I digress from the real point of the story.

The Biggest Surprise I Never Expected

The place looked beautiful!  We listed it and had multiple offers and within 24 hours accepted an offer above asking price!  That was great news!  I was really looking forward to the closing on this property – my bellwether accomplishment!  The one thing I didn’t expect was what happens when OTHER PEOPLE COUNT YOUR MONEY.

First, the Hard Money Lender

It’s common amongst hard money lenders to waive an extension fee if the property is under contract and there’s a high level of confidence it will close in a timely manner.  It’s also very common for most lenders charge a per diem for daily interest.  Even though we had the property under contract with a solid buyer prior to the end of the 6 month loan, this hard money lender refused to waive the extension fee (because the buyer’s lender was taking forever), and not only that, he had in the fine print that the monthly interest payments are monthly, not daily.

I mean, you can’t argue with the hard money lender on what you signed in a document.  And it’s hard to convince them to waive the extension fee as a common practice when they can see on the HUD how much cash you are to receive at closing.  They stood their ground and were paid the extension fee and a full 2 months extra interest payments.  🙁

I don’t mean to complain, because without their help I wouldn’t have gotten the deal.  But clearly they saw what I was making and made sure they got their fair share.

The Contractor…

Towards the closing the contractor and the buyer were going through the unit, making sure all the little punch list items were being taken care of.  However, I get word back about all these other things the buyer wanted done and the contractor agreed to it.  HOLD ON!  Wait a minute here.  The contractor has no authority to add extra work at the buyer’s request.  Yet my attorney told me that my contractor is considered to be an agent of ME.  Towards the end, the buyer wanted to withhold an outrageous amount of money at closing to ensure the contractor did all the items promised.

You don’t want that to happen.  Often times money’s put on hold are never seen again.  I agreed to give them a few extra hundred dollars for credits just to get the property closed and move forward.

The Title Company…

This was the biggest surprise of all.  When someone sees 6 figures in the “cash to seller” column all the players want to see what they can get out of that deal.  The biggest surprise of all was the Title Company decided to withhold $30,000 to make sure we give them all the receipts from the rehab.  WHAT?!?  Not only did this NEVER happen to me before, even the title company found a reason to get their grubby little hands on my money.  I am sure had the “cash to seller” been $20k-$30k they never would have given it a second thought.

Needless to say, I went ballistic.  (If you’re like me, you would have already had plans for those funds, and this disrupted my plans significantly.)

The Lawyer…

The lawyer was probably the nicest and most supportive of this issue.  His charge was $600.

Illinois performs their closings through attorneys as opposed to title companies.  I never really paid much attention to all the line items on the HUD, because for me, it’s all about the bottom line. All those other line items are trumped up charges and taxes and stupid wire fees, and document fees, etc.  However, this time I happened to see a hefty commission go to MY ATTORNEY for the title policy.  A title policy from a company that kept $30,000 of MY MONEY.

I had complained to him that all the vultures came out of the woodwork when they saw that “cash to seller” line item.  He claimed that he wasn’t one of those vultures…Um…Ah…”Don’t think I didn’t notice that hefty commission on the title policy made out to you.”  – “Hey, I worked 6 hours on that closing Jean” – “OK, $100/hour plus that commission?  I hope you’re buying dinner the next time I come to Chicago!”

I happened to send him my accountant’s report which was all he needed to get me my refund!  I’ll keep him.

The Moral of the Story

Hide your money.  Even if you have a goal of a 6 figure profit, instruct the closing company to pay off your credit cards, to pay a consulting fee to yourself, whatever you can do so that the “cash to seller” is a low amount.

Before you think I got to keep all that money…

I’m delighted to have reached that level in my business.  It was a result of pushing myself outside of my comfort zone, allowing myself to take on more projects than I had ever done before, that I was able to enjoy this project.

Know This…Real Estate Investors Lie…

Just in case you think I’m wildly rich and successful (I may be successful, but I’m NOT wildly rich), I know from experience that it’s easy for us to speak about the 6 figure profit on that one deal, or the $30,000 assignment fee from that other deal, we as business people never talk about the losses.  So know that I made $100k on one deal, and I’m not going to tell you about the other 11 properties I rehabbed, not this year anyway.

The post Yes, I made $100,000 Profit on one deal….but… appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/yes-i-made-100000-profit-on-one-deal-but/feed/ 0
Finally, a “GURU CHALLENGE” http://www.jeannorton.com/finally-a-guru-challenge/ http://www.jeannorton.com/finally-a-guru-challenge/#comments Wed, 15 Jul 2015 16:22:12 +0000 http://www.jeannorton.com/?p=2892 With all the bluster, lies, showmanship, and exaggerations amongst the totally unreliable, deceitful and so called real estate experts out there, finally someone decided to host a "guru challenge" to separate the talkers from the true action takers. And I'm so excited to be a part of it.

The post Finally, a “GURU CHALLENGE” appeared first on Jean Norton Real Estate Investing.

]]>
With all the bluster, lies, showmanship, and exaggerations amongst the totally unreliable, deceitful and so called real estate experts out there, finally someone decided to host a “guru challenge” to separate the talkers from the true action takers.  And I’m so excited to be a part of it.

This challenge is for the wholesalers that tout their incredible skills and flipping hundreds of homes a year.  In the Real Estate Education world, there are many that claim you can make money (and even get rich) with no money out of your pocket (or little) and make money connecting motivated sellers with the other real estate investors and rehabbers, landlords and even end buyers, somehow working around the “brokering” laws.

Tom Tarrant, a long term real estate investor, rehabber and general contractor based in San Diego is passionate about real estate investing.  After seeing a show totally unrelated to real estate investing – a challenge where at the end the winner gets bragging rights – he decided to post it for wholesalers and it was well received in the guru and new real estate student community.

The official challenge is held in a public Facebook Group: Guru Challenge .  He is currently recruiting guru’s that are ready to take on the challenge.  Five have signed up already, and they include:

  1. Tracy Caywood of Property M.O.B
  2. Osvaldo Guglielmo of The Real Estate Wolf
  3. Todd Toback from the No Limits Investing Podcast
  4. Joe McCall of Wholesaling Lease Options
  5. Tom Krol of Wholesaling, Inc.

The challenge starts on September 1st, 2015.  Here is a sampling of the rules:

Tom and I will pick 3-6 cities in various parts of the country where the guru’s can choose to market.  They can’t market in their own city or in any city where they have lived.  The cities will be of the similar size and have a similar amount of pre-foreclosure and landlord rentals, which historically are the demographics that bring the highest level of motivated sellers.  The guru’s are free to use whatever target marketing they like, for example if they choose to look for probate leads, recent divorces even though the choices are based on the fastest converting leads.  They must be direct to the motivated seller, and direct to the end buyer (no daisy chains, that is).  The first one to complete and close a real estate deal gets bragging rights for a year that they won the Real Estate “Guru Challenge”.

Are you a wholesaling expert and want to get in on the Guru Challenge?  Click the link, jointhe group and make your request.  Or just reach out to Tom Tarrant, or me on Facebook and we will get you on the list.  Hurry though, the deadline for being part of the competition is August 15, 2015.

Any Questions?

 

 

 

The post Finally, a “GURU CHALLENGE” appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/finally-a-guru-challenge/feed/ 1
Finding Comps without a Realtor-Updated http://www.jeannorton.com/finding-comps-on-ziprealty-updated/ http://www.jeannorton.com/finding-comps-on-ziprealty-updated/#respond Sun, 28 Jun 2015 17:59:12 +0000 http://www.jeannorton.com/?p=2881 Don't burnout your real estate agent by constantly asking for comps. Get your own comps by using ZipRealty.

The post Finding Comps without a Realtor-Updated appeared first on Jean Norton Real Estate Investing.

]]>
Here is an updated demonstration on how to find your own comps using ZipRealty.  As investors, the more independent we are the more our real estate agents can appreciate us.  We demand a lot of information about a property in order to make an informed decision on how much to offer for a property.  Zip Realty is one of the few sites that does a pretty good job of managing and viewing the sold comps in a certain area, both by list and by map.

[high_impact_btn_get_access_now link=”http://www.anrdoezrs.net/click-5749584-10534635-1422472420000″ target=”_blank”] [/high_impact_btn_get_access_now]

Click the link above to get FREE ACCESS to ZipRealty.

 

 

The post Finding Comps without a Realtor-Updated appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/finding-comps-on-ziprealty-updated/feed/ 0
Is Your Real Estate Investing a Business or a Hobby? http://www.jeannorton.com/is-your-real-estate-investing-a-business-or-a-hobby/ http://www.jeannorton.com/is-your-real-estate-investing-a-business-or-a-hobby/#comments Sun, 14 Jun 2015 17:30:05 +0000 http://www.jeannorton.com/?p=2863 One of the biggest mistakes real estate investors make is not treating their investing as a business. We often hear people say, "Finding money for my deals is my biggest challenge", or "How can I get a business line of credit?".

The post Is Your Real Estate Investing a Business or a Hobby? appeared first on Jean Norton Real Estate Investing.

]]>
One of the biggest mistakes real estate investors make is not treating their investing as a business.  We often hear people say, “Finding money for my deals is my biggest challenge”, or “How can I get a business line of credit?”.

Leo Clark, accomplished real estate investor out of San Diego, and I discuss this issue at length on this conference call recorded June 13, 2015.  If you missed the call, please feel free to listen below.  If you want to be on future calls, simply register at http://jeannorton.com/jeanscalls.

Leo reveals a very simple way to present yourself in everything you do, every where you go.  Here’s a challenge for you – once you hear Leo’s POWERFUL message, comment below on if and/or how that will change your business.

If you prefer to download, right click and download HERE

(Links mentioned in the call: http://jeannorton.com/bigprofits)

The post Is Your Real Estate Investing a Business or a Hobby? appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/is-your-real-estate-investing-a-business-or-a-hobby/feed/ 1
Bad Energy in your Real Estate Investment – aka (Bad Juju) http://www.jeannorton.com/bad-energy-in-your-real-estate-investment-aka-bad-juju/ http://www.jeannorton.com/bad-energy-in-your-real-estate-investment-aka-bad-juju/#respond Sun, 31 May 2015 00:28:41 +0000 http://www.jeannorton.com/?p=2835 After going into hundreds of houses, both for my own acquisitions AND through all the Field Trips I've held in the past*, I know that each property has it's own energy. If you haven't felt it, you haven't been in enough houses.

The post Bad Energy in your Real Estate Investment – aka (Bad Juju) appeared first on Jean Norton Real Estate Investing.

]]>
I’m going out on a limb here, I know, but bear with me.

After going into hundreds of houses, both for my own acquisitions AND through all the Field Trips I’ve held in the past*, I know that each property has it’s own energy.  If you haven’t felt it, you haven’t been in enough houses.

When I first shopped foreclosures in California, I felt sorry for the families that made their house a real home.  Poems and prayers about love and family painted on the walls in a child’s room, the marks as on the walls as the children grew, and the amateur decoration attempted by the DIY (do-it-yourself) homemaker were throughout many houses I viewed.  It was heartbreaking for me knowing these people’s lives were upset, and possibly ruined.  True, I was looking for a real estate deal, but I never forgot the families that were up-rooted from their homes.  We lived in very hard times when I first started my investing.

But there was nothing worse than some of the properties I viewed in Chicago.  I would walk into some of the houses in the South side of Chicago and there was an immediate “icky” feeling.  Sometimes it was so bad I wouldn’t event attempt to venture into the basements.  Some houses were worse than others and you couldn’t define it.  It was an “icky” feeling, and often times I couldn’t wait to get out of that house.

When you think about what happened in these houses, you know there was pain, heartache, possibly families separated with irreparable outcomes.  But think about some of these houses in the Midwest.  These are brick homes built over a century ago, often times passed down from generation to generation, and then suffered foreclosure.

This is not just about the Midwest, as I’ve felt these same issues in Florida, Texas, Georgia, as well as Illinois and California.  You know how it is; you walk in and it feels “icky”.  I don’t have a better explanation.   Some may brush it off as stale air or un-clean.  But you and I know it’s more than that.

When buyers shop for their home of their dreams, the first thing they feel is the energy inside the property.  They walk in and it “feels good”.  You KNOW what I’m talking about here.  A buyer will not buy a home that doesn’t “feel good” when they step in.  Sure the guru’s talk about kitchens and bathrooms, but if the atmosphere of the property isn’t positive, nobody will buy the house to live in it.

After 6 years of investing in real estate to rehab and resell, I finally hired an energy clearer to help dispel the bad energy in the properties I owned.  Was it a success?  I’m not sure, but she could tell me some things about the history, who my target buyer was and what I needed to do to attract that target buyer.

Did it work?  I’ll never really know.  However I went from NONE of my rehabs selling to 3 currently under contract.  Coincidence?  Maybe.  Who knows?  I do know that it’s not a magic answer.  If you’re trying to sell a house that’s overpriced, or if your agent isn’t really positive about the potential sale, or some other hard concern, then all the energy clearing in the world won’t help sell the house.  But if it’s priced right, looks good from the street and inside, and it’s still not selling?  It’s time to think outside of the box.

OK, so am I crazy or what?

The post Bad Energy in your Real Estate Investment – aka (Bad Juju) appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/bad-energy-in-your-real-estate-investment-aka-bad-juju/feed/ 0
Why Gurus Recommend Avoiding Condominium Investing Part 2 http://www.jeannorton.com/why-gurus-recommend-avoiding-condominium-investing-part-2/ http://www.jeannorton.com/why-gurus-recommend-avoiding-condominium-investing-part-2/#respond Thu, 30 Apr 2015 22:16:43 +0000 http://www.jeannorton.com/why-gurus-recommend-avoiding-condominium-investing-part-2/ Many real estate GURU's recommend against investing in condominiums and they have good reasons, but how important is it for the association to be FHA approved?

The post Why Gurus Recommend Avoiding Condominium Investing Part 2 appeared first on Jean Norton Real Estate Investing.

]]>
One of the first directives I learned through Phill Grove’s REvolution online learning product was to avoid condominiums at all cost.  This was followed by so many others warning people away from condominiums as a buy-rehab-sell business.  Being someone that likes to find out for myself, I took their comments under advice and did my own research.  This is what I’ve found…

Condominiums CAN be Profitable

Yes they can.  I remember stumbling across my first foreclosed condo in Bakersfield.  I happily purchased that property for $45,000, put in about $10,000 in upgrades and then sold it for $95,000.  Not a bad little profit there for me, and I was thankful that I wasn’t plagued with investor competition, since so many investors don’t like condos.

Just like I have said in my field trips – if you can get a stable property for 40% of After Repair Costs (ARV), you can pretty much handle surprises that come up.  And YES…there ARE surprises.

And the Risks?

There are PLENTY of risks.  So many people just say “avoid condos” and don’t really say why.  However, as a savvy real estate investor and business person, you learn how to assess risks in business and know when the risks are insurmountable and when they are minor, and how the profit potential compares with the risk.

  1. One thing you have NO control over is the Condominium Association.
  2. FHA has very strict rules on loaning to Condominiums based on their financial criteria
  3. Special Assessments can arise any time (SURPRISE!)
  4. Current litigation with the Association COULD be a deal killer when you resell.
  5. Oh, and they have to like you.  (Often there is an approval process.)
  6. Each state has their own laws about collecting previous owner’s past due assessments.  YES, you could be responsible for the arrears.  Another surprise.
  7. And there are even more risks that I’m still not aware of – so don’t take this as a learning lesson in Condo investing, take it as I usually present myself, I share as I learn.

#2. The FHA has Very Strict Rules on Loaning to Condominiums based on their Financial Health

It’s been some time since my first blog post about condominiums and this whole thread may take some time as I am still learning, and still adding to the list.

When I bought my first condo (not the one I bought on a tax deed in Florida, but one in Bakersfield, CA), I was scared to death of the financial viability of the association.  There were 2 things that really scared me, first the fact that it was a 55+ community.  It’s really amazing how little fear one has investing in those if you’re over 55 yourself.  I mean, there are a lot of people that are over 55 and are ready to downsize and not have to deal with kids leaving their skateboards on your driveway.  But the BIG concern I had was that the condo association was approved for FHA lending.  Of course my first purchase was a few years ago and FHA was about the only one approving mortgages, so maybe I should have been concerned – however I ended up selling the condominium unit to a cash buyer.  All that worry for nothing.

I’ve never really worried about the FHA approved status since then because I realized I could invest in properties that cost me the same, involved less rehab expenses, and provided a higher standard of living compared to the working class neighborhoods I had invested in.  So what does that mean?  It means that the people that are buying these condos are not of the working class variety.  They are educated professionals, for the most part, and at the same price point.  So what?  It means they have their credit and/or down payment requirements in order and can easily follow through with a conventional loan.

I have since bought and sold several condo units, and NOT ONE was an FHA buyer.  Not one.

Note that each area and each price points are different.  If you think you want to buy a condo for the purpose of selling it retail to an FHA buyer, you can check the FHA approval status HERE.

 

This is the second part of a series of blog posts on Condominium Investments.  I appreciate any comments or experiences you’ve had.  Please comment below.

 

 

The post Why Gurus Recommend Avoiding Condominium Investing Part 2 appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/why-gurus-recommend-avoiding-condominium-investing-part-2/feed/ 0
The Absolutely Cheapest Way to do a Background Check on Someone http://www.jeannorton.com/the-absolutely-cheapest-way-to-do-a-background-check-on-someone/ http://www.jeannorton.com/the-absolutely-cheapest-way-to-do-a-background-check-on-someone/#comments Sun, 22 Feb 2015 00:08:17 +0000 http://www.jeannorton.com/?p=2793 One of the biggest problems in this real estate business is knowing other people's level of integrity. Knowing how to do a simple background search on someone can save you a bunch of time, money, and aggravation.

The post The Absolutely Cheapest Way to do a Background Check on Someone appeared first on Jean Norton Real Estate Investing.

]]>
One of the biggest problems in this real estate business is knowing other people’s level of integrity.  I don’t mean whether you can trust them or not, because you can’t.  I mean, what is their basic character?  What are their priorities in life? What motivates them?  A smile and a handshake isn’t enough these days to feel confident you have a mutually beneficial relationship with this person.

Here are some of the mistakes we all make:

  1. We all assume that everyone else thinks like we think.
  2. We think we are protected in the corporate environment, but we aren’t, we are in a litigious environment.
  3. We assume everyone tells the truth.
  4. We want to like people, and we want to be liked in return.

When you do a simple, low-cost or free back ground check, this is what you need to keep in the forefront of your thoughts:

How someone does ONE thing is how they do EVERYTHING

What does that really mean?  Let’s take for example that you are about to do a real estate deal with someone that, after checking, you see they are involved in a lot of law suits.  This was one of my big mistakes, taking their history as an enjoyable level of story telling.  What I totally missed was this person was no stranger to law-suits, and yes, I was sued by this person.

Let’s say you are about to go into business on a real estate deal with someone that has been divorced 3 times.  Should that bother you?  Are you concerned?  Were all the divorces amicable?  These are the thoughts you need to have in your head when you are about to put your most prized possession (your hard earned money) in the hands and subject to the direction of someone that knows how to separate from the most intimate of relationships and either bounce back, or surge ahead.

Does that mean you need to do a background check on everyone?

YES.

And it’s really pretty simple.

STEP 1. Simple Searching

The first thing to do is a simple search of the person’s name on the internet.  You may have to drill down and add a location, but that information is easy to find.  You’ll be amazed when you come up with.  One time I found a mug-shot of someone, a newspaper story of a domestic incident at the home, etc.  I’m not saying whether this is good or bad, but it’s better to know than not to know.

Remember, this is only the first step.

STEP 2. Targeted Searching

There is some information you need to know when you start to drill down to finding the real subject.  If you’re searching for “James Smith”, that will be a challenge to make sure you have the right Jimmy.  Here are some simple criteria to ensure the information you get are really related to the actual person you are trying to know more about.

  • Birthday – don’t worry about the year, the year will help, but most people will share their birthday on social media sites so they get a lot of birthday wishes.
  • Location – where do they live?  Where are they from?  Where did they go to college?  The more information you can get, the better.
  • Physical Description – search in the social media sites too – google plus, Facebook, etc.  Often times people have their picture and you can easily determine if you have the right person or not by their picture.
  • Remember, as you search you will gather more information that can lead you to the information you want.

STEP 3. The Search

After exhausting all the free searches on the internet, and avoiding the high paying web-sites that are happy to tell you where your buddy is, you can actually get a pretty good result from a service I use at about $30/year, PublicData.com.  It’s not the most complete service, but for that price it will consolidate most of the free county sites and give you the information you need in order to start your research.  What you DON’T get is information from the governmental sites that charge a fee to get to the information.  So know the information from this site isn’t complete.

Another resource for the public (fee based, but still cheap) is Pacer.Gov.  This is a web-site that catalogues all federal courts, criminal, civil and bankruptcy, and a search in this can uncover a great deal of information about legal issues.  Remember, this is Federal only, so it won’t bring up county or city level offenses.

STEP 4. Dig Deeper

There are a couple of top notch search sites like Been Verified and more that charge a hefty monthly fee.  The good news is some of them offer free 7 day trials.  You may get more information on these sites, but I use these as a last resort.  If you really want a thorough background check, you’ll have to hire a private investigator.

Do you have someone you want me to search for you?  I go through these same steps – so the only information I can gather is the information freely available on public records.  But it’s amazing that sometimes that is all you need.

Be sure to add the name, some history, why this is important to you, location, age, birthday, etc.


  $120.00

The post The Absolutely Cheapest Way to do a Background Check on Someone appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/the-absolutely-cheapest-way-to-do-a-background-check-on-someone/feed/ 1
SEC Violators on Facebook? http://www.jeannorton.com/sec-violators-facebook/ http://www.jeannorton.com/sec-violators-facebook/#respond Sun, 25 Jan 2015 20:53:16 +0000 http://www.jeannorton.com/?p=2789 So many real estate investors, wholesalers and dealmakers unknowingly violate various SEC and other Federally mandated rules. I see these on Facebook quite often. For my real estate friends, be smart.

The post SEC Violators on Facebook? appeared first on Jean Norton Real Estate Investing.

]]>
A very interesting conversation came up in my Facebook Group about the issue regarding SEC (Security and Exchange Commission) violations and what a lot of people do on Facebook for getting their real estate deals funded, or even to promote real estate opportunities.  It was so full of great information, I thought I would share it here.

I may do more of this in the future because there are so many interesting discussions in this group: https://www.facebook.com/groups/JeanNortonREContacts/

Copied from Facebook Group:

SEC experts, if someone announces an interest or profit sharing deal in this group, is it considered an SEC violation? The reason I asked is Carlene Saelg mentioned she thought that since this was a closed group that it was OK. I know Mark Pantak had some recent training on this. I see people post deals all through Facebook. Does anyone actually get into trouble, or is it like driving at 5 miles over the speed limit? How serious is this and can anyone show examples of prosecuted SEC violators regarding communications on Facebook?

Like · 
  • Mark Pantak It is very easy to violate SEC rules and not even know it. And yes, people do violate the rules on FB and other places all of the time, (and it is not a problem for them until they get caught) I know of two people who are being grilled by the State level of the SEC, and are now on their radar, even if they just get a slap on the hand, and a small fine of $5,000 to $10,000. (can be much, much more) ANY public solicitation for money “could be” a violation, AND any time you pool money you have created a security, (no matter how much you try to rationalize it) Either do it with people you know, below the radar, one person per one deal, or get an SEC attorney and DO IT RIGHT! There! you have my 2 cents! or buck and a quarter!
    23 hrs · Edited · Like · 6
  • Lamar Cannon I am not a lawyer but do have training on this. In my opinion: we are building our own crowdfunding portal and have crowdfunded 1 property with a few more in the pipeline. We’ve been working on this for past couple years. In doing this we’ve seen that SEC laws are fierce. The only time SEC laws really matter are when things go wrong. Once that happens and an investor complains to SEC m, they will then see what exemption you used for your raise (hopefully one was used) and then begin to analyze every relationship with investors who invested and the communication used to bring those investors in. There a certain words that can never be used (guarantee, promise, low risk, safe, etc) and also certain types of communication that can not be used. The only current exemption that allows “general solicitation” is 506(c). This allows you to post on fb, do email blasts, TV commercials and billboards etc. this type of marketing brings in investors that the promoter may not have a preexisting relationship with. If 506(c) is used it is ok. If not, deal goes south and and investor files a complaint SEC will analyze the communication and see if there were any violations. It will be hard to prove that a substantial relationship existed developed if Facebook group is the only why the promoter and investor “know” each other. They are plenty of other rules to consider but this is my opinion on soliciting money on fb groups. Do what you want but if an investor complains to SEC about your deal hopefully you followed the rules. You never know what and investor will complain about, maybe you return 19% and they thought it would be 20% or maybe you didn’t answer on of their calls. Once complaint is filed, whatever the reason, SEC will be breathing down your neck. It’s better to just develop the right habits from the start. The penalties are very serious and this is not something where you want to take shortcuts. And as an investor do you want to invest with someone who is not following SEC rules?
    23 hrs · Unlike · 9
  • Lamar Cannon Mark Pantak right on point!
    23 hrs · Like · 3
  • Jean Norton Well, this is a closed group. Is it considered a public platform?
    23 hrs · Like · 3
  • Lamar Cannon The question is more of: if you post a deal in this group, do you know everyone well enough that if anyone invests in your deal you can prove to SEC that you had a preexisting relationship with that person? The answer is different for each member of the group. If the answer is no (maybe’s count as no’s), then is the deal you are posing about a 506(c) raise (this exemption allows general solicitation)?
    23 hrs · Like · 3
  • Robyn Roberts This is a great post!
    23 hrs · Unlike · 3
  • Mark Pantak Lamar Cannon is right on point!
    23 hrs · Like · 1
  • Jean Norton So the issue is, if you pool money with investors, post deals to raise money, you have to be sure they get their money back and more or they will report you to the SEC?
    23 hrs · Like · 3
  • Matt Reed Word of the day….all is fine until a problem comes up……..disclose disclose disclose whether you’re dealing with investors tenants or sellers
    23 hrs · Like · 5
  • Lamar Cannon The issue is that people can file a complaint for any reason. If you followed the rules and SEC investigates, you will be in the clear, if you didn’t, fines and possible jail time will follow. Not following the rules is betting more money than any of us have and possible jail time that no one will complain to SEC. Personally, I decided that for me it will be easier to learn the rules and follow them. Just like Mark said, most people break the rules unknowingly. Knowing what you can and can’t do along with a having a good securities attorney are highly recommended.
    22 hrs · Edited · Like · 5
  • Sam Ally Advertising rate of return puts you on their radar. Bottom line here is no matter how “bullet proof” or compliant you believe your offering to be, PPM or other syndication formats..if you lose money a good attorney will blow holes in your documentation & you now have the SEC possibly on your backside or aware of you & your reputation has been tarnished …a whiff of any trouble affects your future negatively. You can mention deals all day it is when you are soliciting that issues arise.
  • Sam Ally P.S. when we speak to following the “rules” honestly not even sure the SEC reps are aware of all of them. Similar to the Tax code ya know…
  • Sam Ally Here ya go: there are an abundance of mistakes made here is one of the biggest…  
    If you are contemplating investing in Real Estate thru a syndication or private placement be aware of the many issues that could jeopardize your investment. Specifically this killer that occurs in over 80% of all syndication deals especially with new syndicators;
    Some promoters make preferred payments as soon as they can. But understand that a preferred payment is a distribution of profit from the deal, paid first to the investors. If they don’t have enough profit, then the preferred payment they are making is probably a “Return OF Capital” and not a “Return ON Capital”. Calling a return of capital a form of profit is a form of a Ponzi Scheme which of course is a big no-no. Though it falls into the category of an Inadvertent Ponzi Scheme, it could be the beginning of trouble. Regulators and plaintiff attorneys look for these situations to make their case.
    The right way to determine a preferred return is to subtract all expenses from revenue. The amount left over, the net profit is available for distribution. If they pass out more, trouble could be on their doorstep.
    21 hrs · Like · 2
  • Linda Pasaak Grilho VanOrsdol Good content, thanks to every one for sharing your knowledge.
    21 hrs · Like · 2
  • Robyn Roberts Really good content! Jean Norton you should pin this post somewhere.
    20 hrs · Unlike · 1
  • Jean Norton But I like my currently pinned post ‘cuz it says something nice about me 
    20 hrs · Like · 3
  • Terry Royce Is sending mail to existing private lenders that are recorded in land records a violation?
  • Robyn Roberts Jean Norton is awesome! There, this one says something nice too.
    20 hrs · Unlike · 1
  • Jean Norton What if I copy really interesting stuff like this on my blog?
    19 hrs · Like · 2
  • Matt Reed I’ve been told by counsel….no problem with education and general info
    19 hrs · Unlike · 1
  • Jillian Ivey Sidoti There is a lot of misinformation on this thread. Let me clear some things up: general solicitation is generally prohibited. It does not matter if “things go wrong” – if the SEC or state just plain doesn’t like something they see or hear, they can subpoena, fine and send you a “cease and desist.” I have had clients who merely mentioned they might consider investors on their website, not have one single investor, and have a full blown investigation opened up on them. It’s no joke. DO NOT BE POSTING YOUR INVESTMENT OPPORTUNITIES ON HERE UNLESS YOU HAVE A REGISTERED SECURITY. Also, crowdfunding, in its purest sense, is not legal yet. In the next comment, I will post an article on crowdfunding explaining how some portals are operating legally, while others are disregarding that the rulemaking is not completed yet and will not be until later this year.
    17 hrs · Like · 3
  • Jillian Ivey Sidoti http://www.syndicationlawyers.com/crowdfunding-part-1/

    Question: Will “Crowdfunding” become a viable method…
    SYNDICATIONLAWYERS.COM
    17 hrs · Like · 1 · Remove Preview
  • 17 hrs · Like · 1 · Remove Preview
  • Jennifer Cohen Topscher Consult with an SEC lawyer about what you want to do. If they say it’s fine, then go for it. More than likely you will need to follow specific rules in order to keep it from violating or you may have to register with the SEC. It is well worth the money to know that you have done everything legally and that nothing will come back to bite you.
    5 hrs · Like

The post SEC Violators on Facebook? appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/sec-violators-facebook/feed/ 0
2014 Year in Review, 2015 Goals http://www.jeannorton.com/2014-year-review-2015-goals/ http://www.jeannorton.com/2014-year-review-2015-goals/#respond Tue, 30 Dec 2014 00:43:36 +0000 http://www.jeannorton.com/?p=2770 It's taken me over 5 years, but I can now officially say I am a successful real estate investor! I've learned very valuable lessons, I've faced evil schemers, cried for those that lost to them, and learned about my strong points and am still painfully aware of my weak points.

The post 2014 Year in Review, 2015 Goals appeared first on Jean Norton Real Estate Investing.

]]>
It’s taken me over 5 years, but I can now officially say I am a successful real estate investor!  I’ve learned very valuable lessons, I’ve faced evil schemers, cried for those that lost to them, and learned about my strong points and am still painfully aware of my weak points.

The first year, I got my first deal and made money.  The second year I couldn’t get a deal no matter how hard I tried. The third year I started “thinking outside the box” and looked for alternative methods to get properties.  The fourth year I discovered my niche, my system.  It was the 5th year, the beginning of 2014 where I really challenged myself and it’s because of this challenge that I realized this old statement is true, “People overestimate what they can do in one year and underestimate what they can do in 10 years”.  Facing the mid-point of that decade, I see how it’s possible.  I see the turn in my real estate career to maximize my bank account, and This turned out to be a critical year for my business.  What’s the secret?

FIND YOUR NICHE AND GO AFTER IT WITH A MASSIVE VENGEANCE.

I still wasn’t rich, but I was getting deals.  Even though every-time I got a deal, the money would show up.  But I found myself holding back…sort of waiting until I had a source identified before really going after a property.  I even wrote the ebook “How to be a Cash Magnet for your Real Estate Deals“, because I figured out how to position myself in a way that cash would come to me.

I asked myself “Why do I still hold back?”  So I made the challenge at the beginning of this year to find as many good deals as I could until the cash stopped coming.  Fifteen projects later, I’m finally breaking a 6 figure profit in my business and now I’m ready to quadruple that.  How?

The lessons I’ve learned, especially from 2014 is that even though the funds arrive for my deals, it’s pretty expensive money.  When I finally had to put all my projects into a spreadsheet, it became painfully obvious to me how much of my business expenses are going to lenders and private investors.  I’m doing all this work, I’m making this happen, they just keep getting more money.  So the goal for 2015?

FIND CHEAPER MONEY

This is finally possible for 2 reasons.  First, my track record gives a certain amount of comfort with those considering lending to me.  And second, FINALLY, the credit markets are loosening up a little bit to allow me to leverage funds at more reasonable rates to possibly even buy, rehab and rent!  This is important since the real pathway to wealth is through real estate ownership.

My goals for 2015 then are to continue to do what I’ve been doing, get my cash position up, purchase some longer term financial vehicles (could be notes, could be properties) and re-evaluate my situation next year.

What’s your plan for 2015?

The post 2014 Year in Review, 2015 Goals appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/2014-year-review-2015-goals/feed/ 0
How Investing in Non-Performing Notes is Like Playing Craps http://www.jeannorton.com/investing-non-performing-notes-like-playing-craps/ http://www.jeannorton.com/investing-non-performing-notes-like-playing-craps/#comments Sun, 23 Nov 2014 20:51:24 +0000 http://www.jeannorton.com/?p=2757 If you're a craps player, you will totally understand the analogy. If you're not a craps player, or are too risk averse then you may not want to enter into non-performing notes as an investment strategy.

The post How Investing in Non-Performing Notes is Like Playing Craps appeared first on Jean Norton Real Estate Investing.

]]>
If you’re a craps player, you will totally understand the analogy.  If you’re not a craps player, or are too risk averse then you may not want to enter into non-performing notes as an investment strategy.

You Won’t Win on Every Deal

Just like in craps, don’t approach the table thinking you will win on the first roll.  Don’t buy one note and give up because you didn’t make money.  They recommend you buy a pool of notes, definitely more than 6, or more like 10 in order to assess the investment as a package.

I know when I play craps, I may win some and I may lose some.  The total results are how I ended the day.  With notes, the total results are on the pool you bought.  You win some, you lose some.  You have to be OK with that.  If you’re not, consider paying the higher price for performing notes, or go to your local bank and put your money in CD’s (aka Certificates of Destruction).

You CAN Win BIG in Non-Performing Notes

I heard several stories on some of the big wins.  Just like in Craps, you can roll the dice and triple your money in a heartbeat.

One story I heard was from someone bought a non-performing note, and in the file was a “deed in lieu of foreclosure” already signed by the borrower.  Somehow in the paperwork mess at the bank, they sold the note without even realizing this document was include in the property.  So this person bought this heavily discounted mortgage note and all he had to do was file the paperwork and the property was his.  That’s a big win.

The financial crisis of the last few years caused the government to come in and help homeowners modify their first mortgage that is underwater.  Government assistance intervened and helped the homeowners stay in their home and now pay a much more reasonable first mortgage at a lower rate and lower payments.  For some reason that escapes me is the 2nd mortgage is still in arrears and people don’t pay it.  Sometimes it takes a little communication with the borrower to identify that since they modified their first loan, the second mortgage will be much easier for them to resume the payments.  This is also another opportunity to modify that mortgage and to get the note re-performing thus creating a reasonable cash flow both for the investor and at a rate the borrower can afford.

You Can Get into BIG Trouble if you DON’T Follow the Rules

Don’t even try to cheat at Craps.  Casinos don’t find any amusement in you not following the rules and neither does the Federal Government when it comes to trying to communicating with the borrower.  Just like the craps table, there is no tolerance for inappropriate behavior.

There are very strict rules for communicating with the borrower – for example, NEVER communicate with the borrower until after you’ve purchased the Note.  Then there are certain rules and procedures you have to go through to notify the borrower that the mortgage note has changed hands.  FDCPA, RESPA, TILA are all laws that outline the correct procedure for communicating with the borrower.  Thank goodness there are servicing companies that will ensure you are protected during this critical period of turning a non-performing note into a performing note.

You Can’t “UNROLL” a Dice

Yes, there are some non-performing notes that are just not collectable.  One story I heard was a man just purchased a 2nd position non-performing note based on a property in Texas (Texas has one of the fastest foreclosure timelines in the country).  He went on vacation and when he returned, the first mortgage lender had foreclosed on the property, which totally wiped out any claim this man had to collecting on the note.  This was a total loss to him.

In Conclusion

I’ve attended Scott Carson‘s 3 day seminar, Bill Mencarow’s Paper Source Non-Performing Note Seminar (twice now) and I can say I feel empowered to move forward in trying my hand at some non-performing note purchases.  I’ve also had the good fortune to learn about performing notes with my local associate, note-broker Robert Young from the Texas Note Company and been honored to have Dawn Rickenbaugh, the Note Queen, as a guest on one of my featured podcasts.  I feel comfortable now moving forward.

Some will question if I need a mentor?  At this point, I won’t pay for one.  I know that the best experience is to learn by doing.  Just like my foray into rehabbing a property after my initial training with Armando Montelongo, I had no mentor (he fired my named mentor and the replacement he chose was ineffective, based on my experience), I aligned myself with others that were more advanced or had more experience in the industry, I listened to podcasts on the subject, read books and networked with others both virtually and locally.  But that’s just me.  I’m a little stubborn and hard headed, but it’s true that the best way to move forward is to learn as much as you can, and when you’re ready to pull the trigger, just do it.

The post How Investing in Non-Performing Notes is Like Playing Craps appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/investing-non-performing-notes-like-playing-craps/feed/ 4
Why Gurus Recommend Avoiding Condominium Investing Part 1 http://www.jeannorton.com/gurus-recommend-avoiding-condominium-investing/ http://www.jeannorton.com/gurus-recommend-avoiding-condominium-investing/#comments Mon, 06 Oct 2014 20:11:55 +0000 http://www.jeannorton.com/?p=2736 I really don't mind Gurus telling people to avoid condominiums. Less competition for me! But they have good reason to steer you in the other direction. If you are aware of the risks, and know the profit potentials, it could be a reasonable opportunity to make some good money.

The post Why Gurus Recommend Avoiding Condominium Investing Part 1 appeared first on Jean Norton Real Estate Investing.

]]>
One of the first directives I learned through Phill Grove’s REvolution online learning product was to avoid condominiums at all cost.  This was followed by so many others warning people away from condominiums as a buy-rehab-sell business.  Being someone that likes to find out for myself, I took their comments under advice and did my own research.  This is what I’ve found…

Condominiums CAN be Profitable

Yes they can.  I remember stumbling across my first foreclosed condo in Bakersfield.  I happily purchased that property for $45,000, put in about $10,000 in upgrades and then sold it for $95,000.  Not a bad little profit there for me, and I was thankful that I wasn’t plagued with investor competition, since so many investors don’t like condos.

Just like I have said in my field trips – if you can get a stable property for 40% of After Repair Costs (ARV), you can pretty much handle surprises that come up.  And YES…there ARE surprises.

And the Risks?

There are PLENTY of risks.  So many people just say “avoid condos” and don’t really say why.  However, as a savvy real estate investor and business person, you learn how to assess risks in business and know when the risks are insurmountable and when they are minor, and how the profit potential compares with the risk.

  1. One thing you have NO control over is the Condominium Association.
  2. FHA has very strict rules on loaning to Condominiums based on their financial criteria
  3. Special Assessments can arise any time (SURPRISE!)
  4. Current litigation with the Association COULD be a deal killer when you resell.
  5. Oh, and they have to like you.  (Often there is an approval process.)
  6. Each state has their own laws about collecting previous owner’s past due assessments.  YES, you could be responsible for the arrears.  Another surprise.
  7. And there are even more risks that I’m still not aware of – so don’t take this as a learning lesson in Condo investing, take it as I usually present myself, I share as I learn.

#1. You have NO control over the Condominium Association

You can view condominium associations as the evil bureaucratic group that interferes with your ability to get things done.  The reality, as a rehabbing investor, is the association is an incredible wealth of knowledge and can be your best ally.

Some of the associations require you be approved as a buyer.  This can be good and can be bad.  First, the good. Many require a personal either face to face or telephone interview with you.  Most of the time it’s to make sure you understand the rules of the association.  What is most important is their “WHY” they require this.  When you learn their “WHY”, you can easily deflect their fears and make sure they are comfortable knowing that you respect them and the community.  I love this part because in my experience I’ve developed a helpful friendship, found great local resources.  I want the association to LOVE me.  I want them to know what I do and I am there to increase the value of one of their units, and I’m happy to get any insider information on deals coming in the future.

For the condominiums I’ve purchased, most love me because I respect their organization, will not cause trouble, can communicate effectively with them and they have a level of confidence that I would fit in nicely in their community.  In fact, one association tried really hard to solicit me making a move out there.  It was tempting, but no…I like living here in Austin

Now for the bad news.  They will run a background check on you, and often check your credit score.  Even if you have  good credit score, each inquiry lowers your score a few points.  It’s one of those things you have to know going into this.  Do you have enough room in your credit score to get a few dings?  Is it worth the profits?  For me, the answer is yes.  At least so far.  Usually explaining what you are doing to a lender or future associations wanting to approve you will solve the issue.  However, if you absolutely have to keep your credit score at a certain level, avoid condos.

This is the first part of a series of blog posts on Condominium Investments.  I appreciate any comments or experiences you’ve had.  Please comment below.

 

 

The post Why Gurus Recommend Avoiding Condominium Investing Part 1 appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/gurus-recommend-avoiding-condominium-investing/feed/ 1
Contractors SUCK. Rehabbers are STUPID. http://www.jeannorton.com/contractors-suck-rehabbers-stupid/ http://www.jeannorton.com/contractors-suck-rehabbers-stupid/#comments Mon, 18 Aug 2014 20:10:30 +0000 http://www.jeannorton.com/?p=2726 A painful and eye-opening revelation on how we, as rehabbers, set ourselves up for this terrible moment...that moment when you realize the contractor has most of your money and hasn't delivered the products or services.

The post Contractors SUCK. Rehabbers are STUPID. appeared first on Jean Norton Real Estate Investing.

]]>
An associate of mine claimed this title during a private message conversation between some of us that have gotten caught in that impossible place where there is no place left to go with the contracting arrangement except to fire the contractor and start with another – an awkward time that always proves very expensive, upsets the budget, hit’s deep into your projected profits, and sometimes even means a loss on your project. It was a painful and eye-opening revelation on how we, as rehabbers, set ourselves up for this terrible moment…that moment when you realize the contractor has most of your money and hasn’t delivered the products or services.

Yes, we set ourselves up for that.

“But wait, how is it MY fault?”

In this case, the rehabber/developer bought a property that had a slim margin.  He dictated what the rehab bid had to be, so the contractor matched that bid so he could get the job.

You see what’s happened, right?  WE dictated the budget.  WE didn’t give the contractor a choice.

We need to be aware that contractors submit proposals so they can get work.  They skim where they can and hope to get the job.  But guess what, shit happens.  The pricing of supplies is a little off here, and a subcontractor decided to raise his rates, his normally dependable worker got sick and he had to hire someone else, and darn it, there’s that overdue bill from the last job that never got paid.

“But HE LIED to ME!”

Did he really lie?  Is it every contractors intention to underbid, under deliver and steal your money?  I don’t think so.  I think most contractors want to do a good job and want to have repeat business.  Just like most entrepreneurs, we get paid when we deliver a product or service, and often times we don’t always know where our next paycheck comes from.  Can you really blame him for wanting the work?

“OK, I take responsibility for my decisions.  What is my recourse?”

According to my contractor/rehabber expert, there is a bond associated with a contractor’s license.  I still don’t know all the aspects of this issue, but I do know a lot of people that have been taken by their contractor.  The associate that was helping us is starting a consulting firm to help guide people into making sure the agreement between you and your contractor is realistic, and will help find your recourse if things go south.

Given my unfortunate experience with contractors in the past, I can say this is a good service to have in your court. I have again found myself with a contractor I absolutely LOVE and I have faith in his ability to get the job done quickly, plus he came with references and we all talk about how much we love this contractor.  I’m so excited because it’s been years that I could say I have a great contractor.

So my associate says, “Jean, do you have a scope of work, an agreement in place, his contractor number, his insurance information?”

“Uh, No.  He said he was going to email that to me.”

This particular contractor has a “get it done” attitude.  He knows what he’s doing and don’t stop him from doing his job.  He gutted the property in a day, got the tile guy lined up, delivered the cabinets and is ready to roll this out FAST.  He totally understands that time is money for us.

So I started to have that conversation with this bulldozer contractor, that was ready to roll.  “Um, how do you spell your last name again?”, I asked.  “And what is that contracting company I wrote that check to?”.

My position clearly not in a position of control, in fact, the subservient position women often find themselves in.

“I told you Jean you will get an email with all the information you need.  Now the guys are coming to blah blah blah…”  Yes, that shut me up. I think you can imagine the dynamics  here.

“Your Hired!  I’ll be your first customer!”

I know what you’re thinking – “who is this guy?”  Who can provide this type of service that can vet the contractor, review the contract, understand the bids, draw schedule, and even promise some kind of recourse if things go bad? What will it cost?  Can I afford it in my budget?  Can I afford NOT to have it in my budget is more the question.

I’m still waiting for that next phone call with the contractor, the one where I will insist on getting all of this necessary information and do my best NOT to be intimidated by him.  I mean, he’s working out really well as it is, right?  I’ll pay my associate for his services, even though I’m confident my “handshake deal” with my contractor is hopefully the first of many successful projects.

I’ll pay my associate because I can still be myself, the easy going touchy feely sensitive business woman that I am, but now I have my bad-guy in tow.  I’m ready to say, “My associate is a real stickler for getting all of this information in order before we proceed with the project.  He insists and I have to follow his advice.” I have to admit there is some level of relief knowing I can safely upset the dynamics of the relationship with this contractor, merely by having someone else to blame.

Often times hard money lenders can take the blame – “Oh, I can’t pay you until you sign this lien waiver, it’s my hard money lenders rule”.  But some lenders are more trusting than others.  In fact, I can see where hard money lenders may insist rehabbers have this as a service for their borrowers.  Still, we are all entrepreneurs and the contractor is supposed to have a professional license.  We shouldn’t need that extra service, and I agree, but I’m going to pay for the extra service anyway.

So now I can have my very own bad guy in my back pocket.  What do you think that is worth?

The post Contractors SUCK. Rehabbers are STUPID. appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/contractors-suck-rehabbers-stupid/feed/ 1
The ONE Top SECRET to Keeping Your Rehab Costs Down http://www.jeannorton.com/one-top-secret-keeping-rehab-costs/ http://www.jeannorton.com/one-top-secret-keeping-rehab-costs/#respond Wed, 16 Jul 2014 19:22:08 +0000 http://www.jeannorton.com/?p=2718 Even though you have a team that strives for mutual success, you have to remember each party is out for their own individual benefit, not yours.

The post The ONE Top SECRET to Keeping Your Rehab Costs Down appeared first on Jean Norton Real Estate Investing.

]]>
I’ve rehabbed a bunch of houses in various areas of the country and I can tell you there is one constant that I haven’t revealed that will guarantee to sabotage your rehab budget, and it happens EVERY TIME!

I’m going to give you a hint: it has to do with your power team.  Yep, the team that is the key to your success, believe it or not.

You may be aware of my report, “The 5 Styles of Contractors and How to Manage Them” which is a report I wrote after going through several contractors and losing money because of the contractor (well, OK, I have to take some of the blame myself – I took on too big a project without having enough experience).  I since had a contractor that was a real dream – in and out in 10 days and THEN sent me the bill.  For some reason my agent didn’t really like him and tried to get me with another contractor.  This guy was so obviously a salesman, that I was able to finally put them into the 5 categories so I know what I’m dealing with and how to deal with them.

Here’s the secret, and unfortunately you often can’t avoid it.

[sociallocker]

NEVER allow your listing agent and your CONTRACTOR in the same room together – EVER, especially when the contractor is trying to put together a quote for your project!

When you are Rehabbing Remotely®, you can’t often avoid this from happening, so the next step is damage control.  I can’t say I’ve been real successful with the damage control yet, but it is a necessary part of the real estate investors process. But first, let me explain with some examples:

The first time it happened…

My dream contractor, the one that was in and out in 10 days and THEN sent me the bill, the one that knew absolutely what he was doing and had control of his job, inside and out actually got flustered.  I had already done several projects with him.  He always came back with an estimate and always was on target with his estimate and completion date.  There was this one time, however, when the potential listing agent was with him when he scoped the house to give me a rehab cost.  I never saw him in this state.  This guy was an investor himself, knew what needed to be done, but he came back to me a person filled with self-doubt on that bid.  The reason?  The listing agent was there in the room with him, pointing out every little mismatched door handles and hinges, other upgrades the contractor would never consider, and he left sort of shaken, unsure of himself, and not exactly sure how to give me a quote on that house.

And more recently…

I got this really sweet, unbelievable 3 bedroom 3 bath condo ON THE BEACH in Hutchinson Island, near Fort Pierce, FL.  Remember at this point I had been doing gut rehabs in Chicago where the rehab costs are closer to 6 figures than I ever want to see.  The thought of simple condo rehabs – cosmetics only – is refreshingly appealing.  I had sent a contractor out to the property and asked for a “gut feel” quote – I almost fell out of my chair when he responded $50,000.  My thoughts were that this is not a contractor used to dealing with investors and I would keep shopping for contractors.  Once the property closed, I was ready to get the key.  Come to find out that contractor had the key.  I already had a listing agent lined up and arranged for them to meet at the property so he could give her the key.  BIG MISTAKE.  Next thing I know the listing agent writes to me agreeing that $50k-$60k was on target for the rehab cost for that condo.  Are you kidding me?  It’s a condo!  I have $25k in that budget.  Kitchens and bathrooms, maybe flooring.  Geez.  Diamond stud the mirrors?  Complete home automation package?  I don’t think so.

Then there’s the old “oil and water don’t mix” issue…

I have another house where I got the listing agent involved later in the process.  The contractor had almost finished the project and was following up on some outstanding items found in the inspection report.  We found a buyer for the house and the buyer loved it.  But when the listing agent went out there at the same time that the contractor was out there, an altercation occurred to a level that made the contractor say that all familiar statement, “That’s it, I quit!”

There is ONE exception…

I have one listing agent that also went through the same training process I went through, and has rehabbed her own properties.  I can tell you it’s a DELIGHT when she understands her market so well from an investors perspective, not because she works with investors but because she is an investor herself and knows the “bang for the buck”.  I love it when she tells me I don’t need to update the bathrooms, that it won’t change the selling price of the house.  There aren’t enough agents out there like this one!

[/sociallocker]

The bottom line…

Even though you have a team that strives for mutual success, you have to remember each party is out for their own individual benefit, not yours.

The post The ONE Top SECRET to Keeping Your Rehab Costs Down appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/one-top-secret-keeping-rehab-costs/feed/ 0
ABC 20/20 Keepin’ it Real Estate Does it Again… http://www.jeannorton.com/abc-2020-keepin-real-estate/ http://www.jeannorton.com/abc-2020-keepin-real-estate/#respond Tue, 15 Jul 2014 16:35:56 +0000 http://www.jeannorton.com/?p=2714 ABC does it again bringing the most unusual stories about real estate, and I LOVE IT! Needless to say, anyone that has invested in real estate knows that no 2 deals are alike, and there are surprises you could ever imagine.  These guys seem to find the most interesting, the most unusual, and the most […]

The post ABC 20/20 Keepin’ it Real Estate Does it Again… appeared first on Jean Norton Real Estate Investing.

]]>
ABC does it again bringing the most unusual stories about real estate, and I LOVE IT! Needless to say, anyone that has invested in real estate knows that no 2 deals are alike, and there are surprises you could ever imagine.  These guys seem to find the most interesting, the most unusual, and the most bizarre stories.  I though I heard them all, but none like these stories. This is my second review of what ABC has to say – READ THE FIRST ONE HERE.

The Nanny that Wouldn’t Leave

Holy Moly – can you imagine opening your house to a homeless person, only to find out that the laws apply to protect her as a “tenant”? This is a story worth watching.  Clearly there is a dispute, and there are 2 sides to every story, but thanks to California’s overly “tenant protective” laws, these homeowners can’t get rid of this disabled elderly lady and are clearly frustrated.  The lady says “she feels taken advantage of”.  I have no idea how or if this can be resolved as the homeowners tend to invite media for any potential dramatic encounter with the elderly lady, yet the elderly lady has a rich history of involving the California courts to the point of being on their “California Vexatious Litigant List”. This is what happens when 2 dramatic forces (drama queens) collide.

How Animals Affect House Values

How would you like to live with Tigers in your neighbors backyard?  Think you could sell your house easily to a nice young family with toddlers?  For those like me that don’t live in California, you think either it’s full of people or full of farms – little in between.  But there are some areas where there is a lot of acreage and opportunities to house exotic animals.  I, myself, love those big cats, but I can see why some may fear for their lives – and for the values of their house.  Maybe they should protest with the county tax office on how the taxation value of their house is diminished due to the neighbor with the 67 cats or 2 Big Cats.  That may get the attention of the zoning authorities!

Haunted Houses – For Sale

Yet again another California focused story about the real estate rebound (or boom) of so called “Haunted Houses”.  Once considered a stigma to avoid, is now a novelty that people seek with abandon.  My husband refurbished a 19th century greek revival in a small town called Calvert, TX, that was once a jail.  There was a time I tried to promote it with social media, and sure enough, the intrigue of the potential hauntings got a lot more interest from the general pubic than just an opportunity to sleep in a B&B.  To this day my husband refuses to admit it’s haunted, but I’ve witnessed 2 occasions of cups left on the bathroom sink were knocked over and broken the next morning. Add that to your marketing package if you’re selling an older victorian home – it will get a lot of attention.  Worthy of watching that segment on ABC’s 20/20  CLICK HERE to view.

The post ABC 20/20 Keepin’ it Real Estate Does it Again… appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/abc-2020-keepin-real-estate/feed/ 0
Do You Get Tired of Real Estate Investing and Rehabbing? http://www.jeannorton.com/get-tired-real-estate-investing-rehabbing/ http://www.jeannorton.com/get-tired-real-estate-investing-rehabbing/#respond Mon, 23 Jun 2014 16:44:33 +0000 http://www.jeannorton.com/?p=2706 After 5 years of creatively finding real estate deals, renovating the properties and selling them, sometimes I get tired of the same ol’ thing.  The same ol’ balancing act where I’m not in control of so many moving parts.  The same ol’ sets of problems; the conflicts with the contractor, abiding by hard money lender […]

The post Do You Get Tired of Real Estate Investing and Rehabbing? appeared first on Jean Norton Real Estate Investing.

]]>
After 5 years of creatively finding real estate deals, renovating the properties and selling them, sometimes I get tired of the same ol’ thing.  The same ol’ balancing act where I’m not in control of so many moving parts.  The same ol’ sets of problems; the conflicts with the contractor, abiding by hard money lender rules, arguments with listing agents, balancing a “highest and best” bid with a good profit potential, walking on the tightrope, and waiting, sometimes for months, for that profit to hit the bank account.

I wonder, does this mean I’ve hit a milestone?  Some sign a transition is coming? I can’t help but feel a struggle within, something that needs to change, something inside I haven’t identified yet.

So many people want to be in my position right now.  I have private investors approaching me regularly wanting to invest in my projects (see the ebook, “How to be a Cash Magnet for Your Real Estate Deals“).  I have more people with funds than I have projects.  I know when I get a property under contract, I can pick and choose who, and or if, I want to share the profits with an investor, or a hard money lender.  Wasn’t there a time I salivated at the thought of being in this position?  Didn’t my business partner at the time and I drain ALL of our personal funds to do our first deal in order to prove ourselves as worthy?  The sacrifices, the learning experiences, the growth I’ve achieved is tremendous.  Why then, do I have this internal struggle?

I may feel totally different tomorrow, as my mood tends to change by the hour in this business.  Whatever I’m going through, once I identify it, I will share it with you.

 

The post Do You Get Tired of Real Estate Investing and Rehabbing? appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/get-tired-real-estate-investing-rehabbing/feed/ 0
Have you Hit a Brick Wall with Your Real Estate Investing? http://www.jeannorton.com/hit-brick-wall-real-estate-investing/ http://www.jeannorton.com/hit-brick-wall-real-estate-investing/#respond Tue, 03 Jun 2014 21:02:16 +0000 http://www.jeannorton.com/?p=2692 You aren't alone. I've talked to hundreds of people that just couldn't make it work; either what you were taught didn't work for you, you felt you were left to fend for yourself, you talk to people that tell you "it doesn't work that way", and all you can do is keep writing those monthly checks to pay off that dang credit card.

The post Have you Hit a Brick Wall with Your Real Estate Investing? appeared first on Jean Norton Real Estate Investing.

]]>
If you’re like me, you went to some rah-rah real estate seminar and left all pumped up to be a real estate investor and NOTHING could stop you.  It didn’t matter how much money you spent because it was going to be a drop in the bucket because you were going to be RICH!

Then you got home and hit one obstacle after another.  Each time you hit a brick wall you became even more discouraged.  You started to rethink this whole “real estate thing”.  Then you looked at what you paid and felt miserable.  Like a complete fool.  Too embarrassed to even admit what you spent.

You aren’t alone.  I’ve talked to hundreds of people that just couldn’t make it work; either what you were taught didn’t work for you, you felt you were left to fend for yourself, you talk to people that tell you “it doesn’t work that way”, and all you can do is keep writing those monthly checks to pay off that dang credit card.

Somehow I managed to push through those obstacles.  I stepped back and said to myself “What could I do different that gets the same results?  Where can I go that offers the same price spreads? What other strategy can I implement to make this work?” And off I went.  I started getting deals.  I started making money. And I kept hearing people say “I can’t get a deal”.  That’s when I started the Rehabbing Remotely® Field Trips.

First was Bakersfield, then Atlanta, Tampa, Chicago, Miami and 3 years later, I’m still finding success by Rehabbing Remotely®!

It is amazing to watch people’s minds open up after attending a field trip – the mysteries solved and people getting deals for the first time.  But I still heard these reasons why I couldn’t help so many:

  1. Can’t travel
  2. Ran out of money with other education
  3. Scheduling conflict
  4. Too far away
  5. No time

If you resonate with this, then you are in for a very special treat.

Announcing the Rehabbing Remotely(r) Field Trip available on Video.

And here’s even better news: This video series as now available at an incredibly low price – a mere fraction of what it would cost you to travel to a location, let alone the standard fee of $2,000.

You will get what you need that is stopping you from moving forward in real estate.  How do I know?  Because not only do you get to meet all of the incredible sources I have at all the field trips, you will get a one-on-one phone call with me where we discuss your expectations, your plans, your personality and strategically map out a plan of action for your real estate investing.

This will retail for $997, but for the next week it’s available to you for an incredible $197 and that includes the strategy session with me, a Facebook support group and even more bonuses too numerous to mention.

CLICK HERE to learn more on how you can finally get out of being “stuck” and make your real estate career a success!

The post Have you Hit a Brick Wall with Your Real Estate Investing? appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/hit-brick-wall-real-estate-investing/feed/ 0
Let’s Talk Asset Protection http://www.jeannorton.com/lets-talk-asset-protection/ http://www.jeannorton.com/lets-talk-asset-protection/#respond Sat, 24 May 2014 17:28:05 +0000 http://www.jeannorton.com/?p=2680 Do I Need Asset Protection if I Don't Have Assets?

Yes, I got all caught up in the hype at the free sales event. I was going to invest in real estate, I was going to be rich, and I would need asset protection and it had to be "just right", not just any old template based entity. Some $10,000 later I found myself with trusts I didn't need, entities I didn't use, in States I didn't live in, and an education on how to transfer all this wealth I was to accumulate.

The post Let’s Talk Asset Protection appeared first on Jean Norton Real Estate Investing.

]]>
Yes, I got all caught up in the hype at the free sales event.  I was going to invest in real estate, I was going to be rich, and I would need asset protection and it had to be “just right”, not just any old template based entity.  Some $10,000 later I found myself with trusts I didn’t need, entities I didn’t use, in States I didn’t live in, and an education on how to transfer all this wealth I was to accumulate.

So the Question is: Do I Need Asset Protection if I Don’t Have Assets?

The answer to me is obvious now, some 5 years later in real estate.  I’ve made money, I’ve lost money and I can’t say I’m rich yet like I was setup to believe.  Jaded?  A little.  I could have used that money for real estate investing!

Just like anything new in your life, you need to determine if this is something you are going to do for the long term.  If you’re new to real estate investing and don’t have any real assets, do you need protection?  As usual, the answer is “it depends”.

Here’s an Example where an Entity is Advised Even with No Assets

I have 2 stories where it is critical to purchase real estate in an entity.  First, this one lady I know made an offer on a property she intended to wholesale to another person.  She made the offer in her personal name.  This isn’t normally a problem as she didn’t have any assets, but she WAS in the middle of a bankruptcy and it caught the attention of the bankruptcy court.  Their question: “how can an individual buy property when they are bankrupt?”  This caused reopening of her bankruptcy procedures and a lot of maneuvering on her very savvy real estate agent to get the property to the end investor.

The second story is similar, where a man I know made offers on a property in his own name with the intention of rehabbing and reselling by joint venturing with a money partner.  The money partner funded the transaction and then found out this man owed a LOT of money to the IRS.  His name was on the deed as an asset, and it was her money that funded the transaction.  Even a Deed of Trust can’t protect you from the IRS if you funded the project. Can you imagine losing all of the money you invested in a deal only to find that the IRS will take it all?

Luckily both of these issues were resolved, and it took a lot of work to protect everyone.

Do You NEED Asset Protection?

If you have a squeaky clean background, decent credit, pay your bills, no history of deceit, paid all your child support, never convicted of a crime, nor have any outstanding judgments, you probably are OK for your first deal to be in your own name and not worry too much about protecting your assets.  Get insurance and make sure you are protected from any issue related to your first deal.

If you decide you like real estate investing and really want to make it a business, then go ahead and talk to your CPA or attorney on how to best protect your assets.  This advice is the same whether you sell apples on the street corner, open a retail store or online store, broker financial transactions, create inventions or any other adventure that you could make a business out of.  Try it out first and see if it’s right for you.  If it is, then setup your business correctly.

If you have some skeletons in your closet, then you may want to setup an entity to so you don’t attract unwanted attention.

An Example of Excellent Asset Protection in Action

Robert Kiyoski, famous for his book “Rich Dad Poor Dad” has several different business that he runs through several different entities.  Mr. Kiyoski, from what I can tell lives a very wealthy lifestyle.  But when a law suit resulted in a judgement that was beyond what one of his companies could honor, that entity, and only that entity filed for bankruptcy (http://abcnews.go.com/Business/rich-dad-poor-dad-author-files-bankruptcy/story?id=17463158).  I don’t know any of the particulars, but this is an example of excellent asset protection, where the acts of one company didn’t affect his other companies.

How has Asset Protection helped you?

The post Let’s Talk Asset Protection appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/lets-talk-asset-protection/feed/ 0
When the Real Estate Deal Goes Bad…with Jinean Florom and Sue Vesel http://www.jeannorton.com/jineanandsue/ http://www.jeannorton.com/jineanandsue/#respond Sun, 18 May 2014 02:18:14 +0000 http://www.jeannorton.com/jineanandsue/ When the Real Estate Deal Goes Bad...

Special guests, Jinean Florom and Sue Vesel joined me to discuss options on how to handle disputes within real estate parties, especially when the project is certain to experience significant losses. Jinean is an experienced negotiator in these situations, and where not everybody walks away happy, they at least don't walk away threatening lengthy law suits.

The post When the Real Estate Deal Goes Bad…with Jinean Florom and Sue Vesel appeared first on Jean Norton Real Estate Investing.

]]>
When the Real Estate Deal Goes Bad…

Special guests, Jinean Florom and Sue Vesel joined me to discuss options on how to handle disputes within real estate parties, especially when the project is certain to experience significant losses. Jinean is an experienced negotiator in these situations, and where not everybody walks away happy, they at least don’t walk away threatening lengthy law suits.

We got one case study that proved successful and one opportunity that fits right into a situation where mitigating losses works wonderfully!

[emember_protected for=3 custom_msg=”This recording is reserved for members or is available for purchase below”]

Hi [wp_eMember_first_name] – CLICK HERE to listen. [/emember_protected]

[emember_protected scope=not_logged_in_users_only]

 Already a member?

Login on the right

Get this recording

[wp_eStore_buy_now_fancy id=24]

OR Join the Club!

[wp_eStore_subscribe_fancy id=21] [/emember_protected]

The post When the Real Estate Deal Goes Bad…with Jinean Florom and Sue Vesel appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/jineanandsue/feed/ 0
Florida Tax Lien Sale http://www.jeannorton.com/florida-tax-lien-sale/ http://www.jeannorton.com/florida-tax-lien-sale/#respond Mon, 05 May 2014 21:36:32 +0000 http://www.jeannorton.com/?p=2636 Yes, it is true that I earned 17% and 18% interest on Tax Certificates I bought from various Florida Counties during their Tax Lien Sale one year.  All certificates were redeemed and I was paid in full, plus interest. In fact, my successes were mentioned by CNN Money in an article that spoke about the […]

The post Florida Tax Lien Sale appeared first on Jean Norton Real Estate Investing.

]]>
Yes, it is true that I earned 17% and 18% interest on Tax Certificates I bought from various Florida Counties during their Tax Lien Sale one year.  All certificates were redeemed and I was paid in full, plus interest.

In fact, my successes were mentioned by CNN Money in an article that spoke about the hyperactivity of hedge funds coming in with new strategies that beat out the “mom-and-pop” investors.  You can read about that HERE.

Are you interested in knowing more about how YOU can earn up to 18% interest on these Florida Tax Liens?  Listen to the recorded call below or go directly HERE to learn more.

CLICK HERE to listen to the recent call on the issues to be concerned about if you do move forward with this investment strategy, or go directly to the information page.

The post Florida Tax Lien Sale appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/florida-tax-lien-sale/feed/ 0
Blog Transfer Nightmare http://www.jeannorton.com/blog-transfer-nightmare/ http://www.jeannorton.com/blog-transfer-nightmare/#respond Fri, 02 May 2014 00:07:41 +0000 http://www.jeannorton.com/?p=2623 It isn’t often I write about something that isn’t real estate related, but since I recommend to people in my eBook “How to be a Cash Magnet for Your Real Estate Deals” that you should be blogging your experiences to position yourself as an expert, I will tell you my saga of converting from a […]

The post Blog Transfer Nightmare appeared first on Jean Norton Real Estate Investing.

]]>
It isn’t often I write about something that isn’t real estate related, but since I recommend to people in my eBook “How to be a Cash Magnet for Your Real Estate Deals” that you should be blogging your experiences to position yourself as an expert, I will tell you my saga of converting from a Blogger site to a WordPress site, and what the hiccup was that delayed the complete transition.

Why Convert from Blogger to WordPress?

I stayed on the Blogger platform for YEARS.  It provided me a easy way to blog, allowed me to put up ads that were relevant to my blog posts (and make a few extra dollars per month).  Everyone kept telling me how easy WordPress was, and it wasn’t until I joined my own mentoring group with Ali Brown’s Elevate Program that I realized I needed a more robust system to accomplish everything I wanted.  No more pushing back the decision.  It was time to face learning a new technical platform, and transition what I had without losing the incredible traction I had gotten with the existing blogger platform.

But what about those YEARS of blog posts on my real estate experiences?  Would I risk losing the search engine links?  Would my business be disrupted?  Well, the answer is, and was, YES.

WordPress has it’s own world of plug-in’s that solve every problem imaginable.  I’ve now got my own store, an easy to develop sales page, a membership site (soon), plus I can still blog and enjoy the many features of cross-promoting and leveraging the attention I strive for this site.

I tried several plug-ins and found one that allowed me to limp along.  I mean, I was able to have the old posts redirect to my new post, but no matter what I did, I couldn’t get all of my posts showing as if I had a full WordPress site.

If you normally like reading about real estate, you most likely won’t enjoy the rest of the post because it gets a little nerdy.

[sociallocker]

First I tackled the problem of the authorship issue – that’s setting everything up correctly so my picture will appear by a blog post that correlates with someone’s search terms on Google.  Much frustration and waiting and voila – it finally started working.

Then there was that nagging little problem with those darn 5 years of blog posts not showing up on my blog page.  I researched the issues through all the technical sites, even discovered I had been a target to some injected PHP code that I had to clear out.  I was ready to start modifying the code itself, based on different recommendations from different expert sites, and then I finally noticed something: The imported posts from Blogger didn’t come through as ME being the author.  So sure enough, I made that minor change and the posts started showing up on the blog page.

[/sociallocker]

So that may have been more information than you wanted to know about my “behind the scenes” work that I do when I’m not investing in real estate.  I promise the next blog post WILL directly be related to real estate investing.

 

The post Blog Transfer Nightmare appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/blog-transfer-nightmare/feed/ 0
It’s Hard Money or Conventional Financing-How Can We Meet in the Middle? http://www.jeannorton.com/hard-money-conventional-financing-can-meet-middle/ http://www.jeannorton.com/hard-money-conventional-financing-can-meet-middle/#comments Fri, 18 Apr 2014 16:34:20 +0000 http://www.jeannorton.com/?p=2334 Where is the Medium Money?

The post It’s Hard Money or Conventional Financing-How Can We Meet in the Middle? appeared first on Jean Norton Real Estate Investing.

]]>
It’s been years since the credit markets crashed so hard that honest working self-employed people can’t get the financing they need to leverage their business successes.  Many have gone out of business, others find private investors and pay a higher price for their money, and many are scammed out of the few dollars they have left in order to reach some secret “money source” that really doesn’t exist.

As a business person, I’m frustrated I can’t access funds to run my business.  Of course I do have the credit card with a $40,000 limit, but they charge 29.99% annually (yes I missed a payment by a day and that higher rate kicked in).  That rate is actually pretty cheap compared to the Hard Money Lenders I know.  I’ve seen rates as high as 10 points and 18% annually.  Then there are the private investors that want 20% return in 6 months.  Am I complaining?  Well, a little bit.  The reality is that I can still make money even using their high rates.  I’ve developed relationships where I can have access to money any time I need it with a few phone calls.  So given this credit crunch, I’m one of the more fortunate in this business.

Where is the Medium Money Lender?

I’ve had so many opportunities to hold on to real estate by turning my rehab into rental property AND cash flow at better than the 1 percent rule*, but the money wasn’t there.  Hard Money Lenders want to get in and out of a deal quickly so they aren’t vulnerable to another market crash.  Conventional financing isn’t an option for me and many others.  None of the underwriters will get fired by saying “no” to a loan application. So I had to sell these properties at a lower market price and move on to the next one.  In hind sight, had I been able to cash flow, I would have enjoyed the benefit of cash flow AND appreciation as many markets have rebounded quite nicely.

CrowdFunding

Many real estate investors were excited to see the legal passing of crowd-funding for real estate.  (See previous blog post on crowd-funding HERE.)  The big takeaway from my interview with a crowd funding CEO was that it would be the same as hard money for me, the lone real estate investor.  The points are the same and the interest rates are the same as hard money. *sigh*.  However it is attractive to the smaller accredited investor where they can invest a small amount of funds and reap the higher level interest rates enjoyed by Hard Money Lenders.

Now the world knows that the small investor can earn high interest rates, and they want nothing less.

Click one of the options below to continue reading this article:

[sociallocker]

My weekly networking meeting in Austin continues to grow.  This last meeting there were no less than 4 Hard Money Lenders ready to lend on deals.  Their hands in their pockets ready to pull out the cash.  One would think, according to the model of supply and demand, that the significant supply of money in the room would create a competitive environment that would bring the interest rates down so that at least SOME of their funds would be put to work.

Some of the more innovative Hard Money Lenders, starting with The Norris Group in California, and now Streamline Funding in Texas, have created a hybrid model that starts with a standard hard money loan for a distressed property, then converts to a lower interest loan once the property is renovated, so the developer can add a tenant and cash flow for a longer term.  If you’re a Hard Money Lender and have too much money earning 0% interest, I encourage you to look into implementing similar financing models.

[/sociallocker]

Some day, those with too much cash will figure out it’s better to earn 6%-8% on their money than 0%.  For those ready to make that adjustment to their business model, feel free to reach out to me.

 

The post It’s Hard Money or Conventional Financing-How Can We Meet in the Middle? appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/hard-money-conventional-financing-can-meet-middle/feed/ 3
The NOTE Business is EXPLODING – an Interview with Note Broker Robert Young http://www.jeannorton.com/note-business-exploding-interview-note-broker-robert-young/ http://www.jeannorton.com/note-business-exploding-interview-note-broker-robert-young/#respond Wed, 16 Apr 2014 22:16:05 +0000 http://www.jeannorton.com/?p=2315 Great discussion on today's credit markets and how that is propelling Robert Young's business as a Note Broker. Learn how he started in this business and how you can capitalize on this niche.

The post The NOTE Business is EXPLODING – an Interview with Note Broker Robert Young appeared first on Jean Norton Real Estate Investing.

]]>
Great discussion on today’s credit markets and how that is propelling Robert Young’s business as a Note Broker.  Learn how he started in this business and how you can capitalize on this niche.

[emember_protected for=3 custom_msg=”This recording is reserved for members or is available for purchase below”]

Hi [wp_eMember_first_name] – CLICK HERE to listen. [/emember_protected] [emember_protected scope=not_logged_in_users_only]

 Already a member?

Login on the right

Get this recording

[wp_eStore_buy_now_fancy id=19]

OR Join the Club!

[wp_eStore_subscribe_fancy id=21] [/emember_protected] Links mentioned in the call – http://texasnoteco.com

The post The NOTE Business is EXPLODING – an Interview with Note Broker Robert Young appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/note-business-exploding-interview-note-broker-robert-young/feed/ 0
Live from Atlanta – Coast 2 Coast Radio Show! http://www.jeannorton.com/live-atlanta-coast-2-coast-radio-show/ http://www.jeannorton.com/live-atlanta-coast-2-coast-radio-show/#respond Wed, 16 Apr 2014 00:51:25 +0000 http://www.jeannorton.com/?p=2322 This was such an awesome radio show because it was LIVE from the Atlanta Field Trip.  The guests got to ask questions to the guys and they got GREAT ANSWERS from the guys…and me. You will NEVER guess what they asked.     Favorite

The post Live from Atlanta – Coast 2 Coast Radio Show! appeared first on Jean Norton Real Estate Investing.

]]>
This was such an awesome radio show because it was LIVE from the Atlanta Field Trip.  The guests got to ask questions to the guys and they got GREAT ANSWERS from the guys…and me.

You will NEVER guess what they asked.

Fun time live on the radio  

 

The post Live from Atlanta – Coast 2 Coast Radio Show! appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/live-atlanta-coast-2-coast-radio-show/feed/ 0
Real Estate Groups Worth Your Time and Energy http://www.jeannorton.com/real-estate-groups-worth-time-energy/ http://www.jeannorton.com/real-estate-groups-worth-time-energy/#respond Fri, 28 Mar 2014 20:20:09 +0000 http://www.jeannorton.com/?p=2287 My real estate networking world ranges from local meetings to national communications thanks to this blog, emails, Facebook, Google Plus, Skype, Meetup and more.  Even though it’s been 5 years since I started investing in real estate, it’s obvious to me there is always more to learn.  Between the governmental restrictions, unpredictable market changes, shady […]

The post Real Estate Groups Worth Your Time and Energy appeared first on Jean Norton Real Estate Investing.

]]>
My real estate networking world ranges from local meetings to national communications thanks to this blog, emails, Facebook, Google Plus, Skype, Meetup and more.  Even though it’s been 5 years since I started investing in real estate, it’s obvious to me there is always more to learn.  Between the governmental restrictions, unpredictable market changes, shady characters trying to sell you the next big investing strategy, and the even shadier ones that come up with schemes to extract money from your bank account, I feel like I’m jumping around in a mine-field, hopping from spot to spot all while hoping to make a little money in this business.

There are a few resources and educators I believe are worth investigating:

[sociallocker]

Facebook: Wholesaling Houses Full Time (Closed Group)

There’s an incredible amount of positive energy in this group, from newbie questions, to deal making from investors to advice from investors all over the country (and beyond).  Whenever a newbie approaches me, I send them to two places, this is one of them.

BiggerPockets.com

This site has been around for a long time and has years worth of questions and answers in all areas of real estate investing.

PropertyMob.com

Tracy Caywood is a wholesaler that has put her business on steroids.  She’s blogged for years, just like me, and has some wonderful stories that are educational and entertaining.  I especially love her “Angry Sellers” recordings.

Virtual Real Estate Investor Association

I really like these guys if you’re interested in doing rent-to-own or buying properties “subject-to” the existing mortgage.  They’ve implemented a system complete with training, contracts, and are building a nationwide community of investors to share deals throughout the country.  They provide good support and a very interactive Facebook Group.  Check them out.

REI Rockstars

Dani-Lynn Robison, her husband Flip and attorney Mark Torok have mastered maneuvering around the “due on sale” clause when it comes to “subject-to” investing.  They are worth checking in with if you are looking in to this investment strategy.  Check them out.

[/sociallocker]

And of course, I’m still holding weekly Saturday support calls almost every Saturday at 4pm Central time.  If you’ve never registered, do so HERE to get the conferencing information and reminders.

The post Real Estate Groups Worth Your Time and Energy appeared first on Jean Norton Real Estate Investing.

]]>
http://www.jeannorton.com/real-estate-groups-worth-time-energy/feed/ 0