Tuesday, December 4, 2012

Mega - WOW: JT Foxx's Mega Partnering VI Tops the Charts

I just got back this morning from Los Angeles,  California where I spent invested most of the last week (Wednesday through Monday) getting my head crammed full of the most powerful business building information while rubbing elbows with about 650 of the most successful entrepreneurs in the US and with some of the most amazing celebrities who you never knew were business geniuses (genii) when out of the public eye.

You may recall a tiny little entertainment company named Disney?  Well, we were party to the most amazing conversation with the man who took Disney from $1.3B to $60B (yes, that is Billion, with a "B"), Michael Eisner.
International Entrepreneur JT Foxx, Top One Coaching Chairman Tom Sheppard and Former Disney CEO Michael Eisner on the red carpet and Mega Partnering VI in Los Angeles, December 2012

JT didn't do a "Mickey Mouse Job" in the interview. An experienced and talented talk-radio host, he did a fantastic job of drawing out the usually staid Mr. Eisner into a wonderful and revealing interview about how he achieved such amazing results at Disney, his rock-solid long term marriage, and his personal and working relationship with Apple and Pixar founder, Steve Jobs.

After the speech, Mr, Eisner attended a gala dinner with select attendees from the Mega Partnering event.  One of the ladies at the table with Mr. and Mrs. Eisner told us that Mrs. Eisner said she had NEVER seen her husband so relaxed and having so much fun in an interview. 

Rumor has it that Mr. Eisner has indicated to JT that he would like to attend the next Mega Partnering in June of 2013.  I can't wait!

As if having one of the most successful CEO's in the world come to teach us, JT had to bring one of the most beautiful and successful businesswomen in the world to teach us also.  Former Sports Illustrated Swim Suit Model turned business tycoon Kathy Ireland regaled us with her story and business savvy.

She is both beautiful and charming.  But, don't let the good looks fool you guys!  This woman has a real head for business.  Take a minute to check our her main website http://kathyireland.com/.  After she decided she had enough of striking stunning poses in bikinis in front of the camera, Kathy moved act to the board room where she has been quietly building a business empire that is her real legacy.  

She started her empire by selling socks!  Now, she has lines of apparel, flooring, linens, wedding dresses, jewelry, and the list seems to go on and on and on.

International Entrepreneur JT Foxx, Business Mogul Kathy Ireland, Top One Coaching Chairman Tom Sheppard on the red carpet at Mega Partnering VI in Los Angeles, December 2012
What was this fabulous event with a cornucopia of celebrities, entrepreneurs, millionaires, billionaires, and business moguls?  This was the sixth semi-annual Mega Partnering (www.MegaPartnering.com).

As a veteran attendee of Mega Partnering (I have been at all six events), I knew I was in for a week that would be jammed packed full of powerful insider business information designed to help me move my business forward by leaps and bounds.  And, I knew from experience that JT Foxx (JTFoxx.com) excels at bringing in some of the sharpest business minds in the world today.  But, I was still blown away by this conference.  WOW seems like too small a reaction by orders of magnitude.

Just to give you a glimpse of what we got (I am including links so if you don't know who these folks are, you can go check them out yourself).

Dr. Ivan Misner (http://ivanmisner.com/) taught us about how to unleash the true power of networking (done the right way) to create sustainable business growth based on giving value first and then monetizing our relational capital.  Yes, it sounds kind of mercenary, but it is anything but that.
I was introduced to the conference by "The Voice of Champions" Michael Buffer (http://www.letsrumble.com/main.html).  I was also able to renew my friendship with Michael's younger brother, Bruce Buffer (http://www.youtube.com/watch?v=1IxJxyGXAdo) (http://www.youtube.com/watch?v=V8IrFQ-U8rY).  

Top One Coaching Chairman Tom Sheppard and Eric Trump
Eric Trump, son of the world-famous Donald Trump.
Tom Sheppard, Author of "Fire Yourself: Get the Job You Want" with millionaire businessman and the current President of High Point University, Dr. Nido Qubein

Dr. Nido Qubein, who is on the board of BB&T, Lazy Boy, Dots, and is Chairman and majority owner of Great Harvest Bread Company.

And the marketing genius, Jay Abraham (http://abraham.com/) ...
The Chairman of the Board of Top One Coaching, Tom Sheppard with marketing genius Jay Abraham
Gretchen Rossi from Real Housewives of Orange County, and many others who I will tell you about in the days to come.

Before I close out (or pass out... I came in from Mega Partnering on a red-eye from LA just this morning and I haven't been to bed since 7AM yesterday), I wanted to put a plug in for a friend of mine who spoke at Mega Partnering, Chris Van Cleemput.  I just bought his Kindle book after hearing him speak about this to the crowd and Mega Partnering.  If you have ever been in a relationship where you felt taken-advantage-of, you need to read this and apply it.  When I heard him talk about it, I realized why some of my business relationships have been dysfunctional and what I can do about it.

Tom Sheppard is the author of "Fire Yourself: Get the Job You Want" available from XLibris Press, Amazon.com and Barnes and Noble. Tom has been successfully investing in real estate since 2001 while working part time. In 2008 he left a six-figure job as an enterprise project manager with a major national bank to manage his real estate business full-time. His goal is to help 100,000 people find peace of mind by finding quality, affordable homes. He is currently looking to expand his network of funding partners who are helping him achieve this goal. If you would like to know more about how you can Do Well By Doing Good (TM), go to www.CharlotteWealthPartners.com

In addition to his own businesses  Tom Sheppard is the Chairman of the Board of Directors at Top One Coaching, the company that hosts Mega Partnering.

Mega Partnering is an elite conference of the most successful entrepreneurs in the world.  Since 2012 admission is by invitation only.

Thursday, November 22, 2012

Thanks and Hope

I was reading the editorial page of The Wall Street Journal on Wednesday.  They published a couple of editorials that they have run every year on the day before Thanksgiving since 1961.

The first is from the record of the colony at Plymouth Rock.  Although it made me pause to consider what those pioneers faced back then, and why they had reason for thanks when their first harvest came in. However, it was the second article that caught my attention.

"…we can all remind ourselves that the richness of this country was not born in the resources of the earth, though they be plentiful, but in the men that took its measure."

I confess, I was disappointed in how the election turned out.  Since then, many of those who send me emails and messages have been forecasting doom and gloom.  However, I am not ready to surrender to despair. 

The reason I am not ready to join the doomsayers and forecast the end of America as we know it is because I believe what that editorial author said, the true richness of this country is in the people of this land, rather than its natural resources, regardless of their abundance.

In short, I believe in people.  I believe in the resourcefulness and ingenuity of people.  I also believe that the United States of America provides the best environment for individuals to employ their creative abilities to overcome every obstacle.

This is true both individually and collectively.  In other words, we have the abilities to overcome our personal obstacles as well as those facing our society.  Many times to overcome our personal obstacles we need help from others.  There is nothing wrong with that. In fact, our ability to help each other is one of the things that makes us truly great.

I have been helped many times by others.  I also get a great deal of satisfaction by helping others to succeed at getting and keeping the life they want.  That is why I do what I do.

If you need help to get and keep the life you want, I am here to help.

Tom Sheppard is the author of "Fire Yourself: Get the Job You Want" available from XLibris Press. Tom has been successfully investing in real estate since 2001 while working part time. In 2008 he left a six-figure job as an enterprise project manager with a major national bank to manage his real estate business full-time. His goal is to help 100,000 people find peace of mind by finding quality, affordable homes. He is currently looking to expand his network of funding partners who are helping him achieve this goal. If you would like to know more about how you can Do Well By Doing Good (TM), go to www.CharlotteWealthPartners.com

Goto www.APlusResults.com and use the code "BFD" to get a Black Friday Deal of 25% off your entire  order.

Friday, November 16, 2012

Fiscal Cliff for Short Sales?

Short sales are very popular right now.  In fact, they account for about 1/4th of all home sales occurring right now.  A short sale can be a good way to buy a house at below market prices but it is not for the impatient or faint of heart (www.buybelowmarket.com). In case you aren't sure what a short sale is – it is where the owner of a home sells their home for less than they owe the bank and convinces the bank to accept that payment to release their lien against the house.

The difference between what the seller owes and the amount the bank is paid is called a deficiency.  Traditionally, the bank has a couple of things it can do with that deficiency.

  1. They can go to court and get a deficiency judgment against the seller.  This judgment will allow them to attach to other assets the seller has to try to get their money at a later date.
  2.  They can forgive the deficiency.  When they do this, they issue a 1099 to the home seller. George W. Bush signed legislation which waived the tax implications to home sellers (not investors) who got a 1099 on a short sale.  Before that, the IRS would then come after the home seller for taxes on the amount of the deficiency as though they had received the deficiency in cash.
  3.  They can write it off and eat the loss without issuing a 1099. This doesn’t happen often and may be illegal.
The legislation that George W. Bush signed in 2007 (the Mortgage Debt Relief Act) was extended through 2012.  It is now about to expire and although there is support for extending it, there are no guarantees when common sense meets politics. The law was extended in 2010 but is due to expire at the end of the year unless Congress acts to steer away from the so-called “fiscal cliff.”  Separate bills have been introduced in the House and Senate to extend the mortgage relief tax break for another year. The measure would cost about $1.3 billion in uncollected taxes.

Expiration of the tax treatment would create a major new headache for the one in four homeowners who owe more than their house is worth. Those "underwater" sellers would have to come up with a big check for Uncle Sam to pay the tax on the difference. That “would be a blow to the housing recovery,” said Paul Diggle, a housing economist at Capital Economics. “The increased use of short sales, rather than foreclosures, has become an important support to the recovery.”

Bank of America Wednesday reported that some 62,000 borrowers have completed short sales that saved them $7.4 billion in debt, or an average of about $120,000 each.

The law is credited with helping pull the housing industry out of the worst recession in nearly a century. Though still deeply depressed, sales of both new and existing homes have been steadily rising. Home prices appear to have bottomed out and are rising again in many parts of the country.

Restoring the tax on debt forgiveness could throw cold water on one in four home sales by sticking the seller with a large tax bill. “If (homeowners) decide that a short sale is not the best option, and they just allow (the mortgage) to be foreclosed, that has a more negative impact on the neighborhood and on home values,” said Blomquist. That would be bad news for lenders, too.

The average price of a bank-owned property seized in foreclosure is about $30,000 lower than comparable house transferred in a short sale. Banks also avoid the legal costs of seizing a home and the extended cost of maintaining it. “(A short sale) really does work out to both the borrower’s and lender’s benefit in most cases,” said Michael Fratantoni, a research analyst at the Mortgage Bankers Association.

As an investor, although I recognize the value of short sales, I stay away from them.  As I mentioned, they are not for anyone who needs to buy a house right now and wants to get a bargain.  I have a connection to a service that will handle short sales for me, but short sales take a long time and most end up failing.  All too often the bank forecloses even while the short sale is being negotiated.  In some cases, they have rejected a short sale offer only to foreclose and sell the house for less than the short sale offer.

When working with a potential seller who is underwater on their mortgage, I will always educate them on the short sale option (along with other options), although I seldom offer to buy their house on a short sale.  In most of those cases, I would rather wait until the foreclosure happens and all the junior liens are wiped out and the bank is facing the additional costs of holding the property in the face of a less than favorable market.

If you know anyone who is looking to buy a house at below market prices, encourage them to go to www.BuyBelowMarket.com.  The Gold Seal Homes Group (www.theGoldSealHomesGroup.com) buyers are constantly working the Charlotte market (including Mecklenburg, Cabarrus and Rowan counties) and buying houses at below market prices.  They make sure the houses have clear title and are in good condition and then sell them at a discount to people who want to own their own homes. In some cases, they can even arrange for seller-financing or rent-to-own programs for those who cannot get a bank loan right now.

If you are wanting to invest in real estate, please contact me at Charlotte Wealth Partners (Tom@CharlotteWealthPartners.com) and I will help you.  If you don't know what to do, I can guide you.  If you are already familiar with the risks of real estate investing, I can connect you with people who can provide you with a variety of real estate investment opportunities, ranging from totally passive, risk-managed investments, through turn-key rentals and right up to your own fix-and-flip opportunities.

Tom Sheppard is the author of "Fire Yourself: Get the Job You Want" available from XLibris Press. Tom has been successfully investing in real estate since 2001 while working part time. In 2008 he left a six-figure job as an enterprise project manager with a major national bank to manage his real estate business full-time. His goal is to help 100,000 people find peace of mind by finding quality, affordable homes. He is currently looking to expand his network of funding partners who are helping him achieve this goal. If you would like to know more about how you can Do Well By Doing Good (TM), go to www.CharlotteWealthPartners.com

Friday, August 31, 2012

Real Estate Expert Robert Irwin Says "Buy Real Estate NOW!"

My friend, Dan Auito just published what he calls the Real Estate Encyclopedia of 2011.  The actual title of the book is "Be a Real Estate Heavyweight: 95 Experts Show You How".  Amazingly, he published it all as a pdf and has given it away FREE.  Really.  You don't even have to give up your email address to get this from him.

I got it late yesterday.  Dan cautioned me that it is not the kind of book you sit down and read through.  Rather, he told me, it is a reference volume where you look in the the table of contents to find the topic you need to read up on and then you go to that section.

After perusing the table of contents, I came back to the Introduction, written by Robert Irwin.  I have five books written by Robert Irwin about real estate finance on my bookshelf!  The guy is a legend and one of my business heroes.  I have learned more about how to approach creative financing from him than almost all my others sources combined.

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When I read his introduction, I thought that he must have written it for this blog.  He even references lemons.When I read Robert's intro, I thought, this is exactly what I have been telling people for a while now.  Perhaps they will actually listen if they hear it from someone else as well.

So, I have excerpted a portion of the introduction and share it here with you (my emphasis added in places).  So, without further ado, listen to the wisdom of a true real estate heavyweight, Mr. Robert Irwin.

As Dickens wrote, it is also the “best of times,” so, too, are there great opportunities. I’m speaking, of course, of real estate investments. For those with the gumption to make lemonade out of lemons, there’s never been a better time to invest in property.
The U.S. population is growing by about 3 million a year. That’s an enormous rate of increase and all those people need some place to live. That means that hidden beneath the falling prices is a huge pent-up demand just waiting for a stable market to unleash itself.
Further, and something every investor should pay special attention to, is the ratio between housing prices and rental rates. (After all, the lifeblood of real estate investing comes from rental income.) The traditional relationship between rental income and housing prices is about 20 to 1.
During the housing bubble that lasted roughly between 2000 and 2006, that ratio went as high as 33 or 34 to 1. Rentals are once again approaching the “magic”20-to-1 ratio.
Perhaps most important of all, the price of housing has reached its long-term trend line. If you were to chart housing prices from the end of World War II through today you would see a saw-tooth generally upward trend (at about 5 percent a year), then a huge spike up that was the housing bubble, and a dramatic pitch downward, that is today’s slump. But at the end of that slump, you would see the trend line just where it’s supposed to be as if the bubble hadn’t even come along….now, they are roughly where they should be, given 70 years of history.

[educated stock investors call this the “support” line. TS]

For the investor who has the foresight and the gumption to see clearly when others are lost in the fog, this can be the best of times. Once again it’s possible to buy property at a reasonable price. Finally sellers are willing to negotiate reasonable terms. Once more, you can step in and make money—potentially big money—by buying low, holding, and eventually selling high.
I cant tell you when, but I firmly believe that in the future real estate prices will not only return to their former highs, but will exceed them! I believe that those who have the courage and foresight to act when the market is down will reap enormous benefits when it eventually turns up.
Its all well and good to get enthused about making your move into the real estate market when its down. But how do you learn the mechanics of doing it? Where are you going to find out how to get the financing you need, learn to determine true values, uncover the location of suitable properties?
You cant just look at the rules of the past. Time has moved on and the rules have evolved. Whats needed is a strong resource to give you the information you need to make an informed investment. What you need is a guide to todays opportunistic real estate market.
Robert Irwin
So, now you have heard from more than one person. I have been saying for some time that NOW is the time to invest in real estate.  If you wait until the newspapers say it is the right time, ALL the smart money will be moving out of it by then.  NOW, you are hearing it from an expert who has been doing this for most of my adult life.

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I have 5 immediate investment opportunities available here in North Carolina, right now! They are solid investments producing steady cash flow.  If you aren't ready or willing to become a landlord, no problem.  You can make your money work for you as a private lender.  You get a first lien position secured by a deed of trust on the property and you get a steady check each month while someone else deals with the headaches of tenants, toilets and termites.

However, if you are ready to get the greater rewards that come with the greater risks of being a landlord, you can buy any of these 5 properties and, based on current cash flows, anticipate a 10% return on your money right now.  When the market turns up and everyone else thinks it is a great time to buy, you can sell these properties to those wannabe investors and make a very nice profit while they take on the risks of being a landlord.

If it is so great, why would someone sell these units?  The answer is simple, the seller doesn't WANT to sell. He WANTS to hold on to the units and work with a private lender to create a win-win solution.  But, since he has some personal debts that MUST be settled NOW, he is willing to SELL, take on a partner, or guarantee a private loan.

If you would like to know more about these opportunities, contact me directly (Tom@CharlotteWealthPartners.com), but you better do it FAST, because these deals will not be available very long.  The good ones never are.

I have been successfully investing in real estate in the Charlotte area since 2001.  I have weathered this financial chaos because of the common sense rules I use for investing.  If you are looking for a guide to help you take advantage of today's real estate market, look here.  Be warned, my experience and knowledge is not FREE.  I paid dearly for both my knowledge and experience and I cannot afford to give them away to anyone.  Besides, if I gave them to you for FREE, you wouldn't value what you received.

If you would like your own copy of Dan Auito's amazing, FREE encyclopedia for real estate, just follow this link.

Robert Irwin is one of Americas most respected experts in all areas of real estate and the author of more than 60 books in the field. His Tips and Traps series for McGraw-Hill have sold millions of copies. He is a real estate broker, contributing editor to numerous magazines, and reliable leader for investors, home buyers, and sellers.

Tom Sheppard is the author of "Fire Yourself: Get the Job You Want" available from XLibris Press. Tom has been successfully investing in real estate since 2001 while working part time. In 2008 he left a six-figure job as an enterprise project manager with a major national bank to manage his real estate business full-time. His goal is to help 100,000 people find peace of mind by finding quality, affordable homes. He is currently looking to expand his network of funding partners who are helping him achieve this goal. If you would like to know more about how you can Do Well By Doing Good (TM), go to www.CharlotteWealthPartners.com

Thursday, August 23, 2012

Why is Seller Financing NOW Such a Great Deal?

"No brag.  Just fact."

"No brag.  Just fact."  Those are the words Will Sonnett used after telling folks that he was better with a gun than his notorious fast-gun grandson in the old ABC series "The Guns of Will Sonnett."

It is no secret.  My specialty is using seller-financing to buy and sell homes.  I do it better than most people and know more about it than most of the real estate "gurus" (aka notorious fast-guns) who are touring the country today. No brag.  Just fact.  More on that later.

Whether you are buying or selling, using seller financing is probably the best possible way today to buy or sell a home.

Today, we are facing a perfect storm in the housing market - one that makes seller financing ideal.

#1 - There is a lot of inventory.  There are vacant houses in almost every neighborhood in the country.  In addition to the houses that are currently on the market, there are many more where the owners are in default and the banks are holding off on foreclosure because they don't want the houses on their books.  This "shadow inventory" ensures that there will be a steady supply of cheap houses for some time to come.  Because as the current inventory is bought up, then the banks will move forward with their foreclosures against those who have not been paying and who are currently getting a free ride.

#2 - The banks are in financial distress and uncertainty.  They have lots of non-performing loans, foreclosures and REOs (Real Estate Owned by the bank where the foreclosure process has been completed) on their hands. Every one of these non-performing loans (where people aren't paying) and REOs are forcing the bank to maintain much higher reserves than normal.  With the drop in home values, those reserves are often close to 100% of the value of the home.  And the bank cannot use reserves to fund operations, make loans, or even to pay depositors. 

Adding to this financial strain is the uncertainty caused by regulators and changes at Freddie Mac and Fannie Mae.

At any moment, regulators may reinstate "Mark to Market" rules which would have the effect of making nearly any bank today become instantly insolvent.  The result would be bank closure and being taken into receivership by regulators.

Freddie Mac and Fannie Mae, currently in receivership by the government, are being managed out of the housing market by degrees.  They have been forced to raise their standards for loans they will buy from banks and if they buy a loan and it goes bad, they immediately force the bank to buy it back from them at full value.  This means that banks can no longer shift risk to taxpayers via Fannie and Freddie.

#3 - The banks are not lending very much at all.  Oh sure, they advertise that they have low rates and some even advertise programs for people with 650 FICO (credit scores).  But the reality is that they are only making loans either to prime customers (700+ FICO) or to those low income customers who can get a third-party loan guaranty from places like NACA (Neighborhood Assistance Corporation of America www.naca.com), famous for their byline "Sue My Lender."

So, you have lots of houses available, but no money to buy them.  

For the seller that means that there aren't many buyers out there, because most people don't have $10,000 in cash on hand, much less the $60,000 to $200,000 it takes to buy a home without getting a bank loan and there are lots of sellers trying to get the attention of those few buyers.

For the buyer this situation means that although you can see lots of available homes for sale, you cannot buy any of them because the bank won't lend you the money.

Seller Finance is the Solution to this double-bind.

When you sell your home using Seller Finance you are basically relieving the buyer of the need to get a loan from the bank.  You are letting them use your loan and pay you for some of your equity over time.  When all goes well this has three great advantages for you as a seller;
  1. YOU SELL YOUR HOUSE NOW! - The buyer takes over the payments on your current loan so that you don't have to keep making those payments.  That will free up your cash to pay for your new home.  You can now move on with your life instead of living in deadly suspense waiting to either default on your current loan, being unable to move to your new home and job, or leaving behind a vacant house for vandals to destroy.
  2. As the buyer makes the payments on your home loan, they are actually strengthening your credit record.  They loan is still in your name, so every payment they make, your credit rating is being bolstered.
  3. You may be able to collect payments above and beyond your loan payments, recapturing some or all of the equity in your home that you had to give up in the pricing to compete with all the other homes for sale in your area.

When you buy your home using Seller Finance you will probably pay a premium.  The interest rate you pay will likely be significantly higher than the rates the banks advertise for the mortgages they aren't really going to give you.  The contract price for the house will likely be higher than for similar houses in the area.  That is because the prices on the other houses represent what the sellers are hoping to get from an all-cash buyer or what they must have to pay off the loans on their home.  Regardless of the premium and increased price this can be a GREAT deal for the buyer.
  1. YOU GET THE HOME YOU WANT NOW! - Buying your home using seller finance avoids all the expense, hassle and delays that come from the banks' lending and underwriting processes.  You don't have to wait 60 days for someone to appraise the home while a loan officer is looking at your personal financials through a microscope, making you explain every financial transaction for the past six months (or more) while making you hope that your car doesn't need a sudden $300 repair that could make the bank decide to restart their financial due diligence on you.
  2. Buying now gets the lowest price you will see in the foreseeable future. The market price of homes today is the lowest it has been for more than a decade.  Currently, the housing market is bouncing along its bottom.  It will continue to bounce along like this for another couple of years and then values will begin to rise.  In some places they will rise rapidly, in other markets more slowly, but they will rise.  When they do, the value of your home will go up.
  3. Your house payments may go down when you refinance in a few years.  For the sake of argument, let's say that you buy today with seller finance and are paying 10% interest.  When the banks start lending again the rates will they charge will probably be higher than they are right now.  Let's say they go from the 3% range they advertise today to 7% (a 130% increase over today).  Because you already own you home, you will be asking them to refinance.  A refinance loan is less risky and less costly to the bank, so they are more likely to offer one of their best rates and a loan with the lowest administrative costs (origination fees, appraisals, etc.).  And, since you have been paying down the loans on the house, the amount of money you need is less than when you did the seller financed purchase.  This, coupled with the increased value of the home should make your loan even less risky for the bank.   Regardless, when you refinance at 7% you will save $3,000 per year in interest for every $100,000 of home value.  And, if when you bought using seller finance at a payment point you could actually afford, then the new payments will be even easier on your budget and your quality of life will increase a lot simply because of the eased finances.

"No brag.  Just Fact."

I told you near the start of this article that I know more about seller financing than most of the real estate gurus touring the country right now.  Here is why I say that is a fact, not a brag.

Not long ago I spent four days in a seminar with one of these leading gurus as he was teaching "advanced topics" for real estate investors.  I found that it was a good review of what I already knew, but didn't cover some of the emerging issues in seller finance.

Did you know that the government is trying to make it illegal for you to use seller financing to sell your own home?  Under the guise of financial and mortgage reform the so-called SAFE Act and other laws they are trying to regulate this option out of existence.  They tried to make it illegal, but they got too much push-back from too many people like you and me.  So instead, they said you couldn't do more than so many seller-finance deals in one year and you had to comply with their mortgage regulations.

If it is so great, why is the government trying to kill seller financing?

The answer to that question is simple.  Banks don't like seller financing.  They don't get a piece of the action. When you buy or sell a home using seller financing, you are legally robbing the bank and you are not doing anything unethical or immoral.  The bank wants to have a stranglehold on buying and selling homes because home loans are one of their most lucrative products.

When you get a bank loan to buy a home you typically pay thousands more in closing costs than you would with a similar seller-finance deal. In addition to the interest you pay the bank for using their depositors' money (it isn't really the bank's money at all), they layer in all kinds of fees to fatten their bottom line.
  • Origination fees are typically about 1% of the amount being financed.
  • Points used to buy down your interest rate can go as high as 3% of the amount financed.
  • Document preparation fees are "gimmes" the banks use to cover the costs of printing and signing documents (costs that are already being paid for under their ordinary operating expenses)
  • Overnight fees are charges for next-day delivery of documents.  Although they occasionally use an overnight service, often they use their own internal couriers (again already paid for in their ordinary operating expenses) and when they do use an external service the actual cost is usually significantly lower than the "Overnight Fee" you pay them.
  • Appraisal Fees usually have little or no relationship to the actual cost the bank pays for an appraisal.  If they can get by with it, they will have a bank employee do a "drive by" appraisal (sometimes done without ever leaving the office).  If they have to get an outside appraisal, chances are high that they have negotiated a low, volume price from the appraiser or they own the appraisal company.  Either way, the figure you see on the closing documents is usually significantly more than what the bank actually paid.
  • Real estate agent commissions - okay, the bank doesn't get these, the real estate agents do and they usually amount to from 3% to 6% of the purchase price of the home.  With seller-finance deals real estate agents are usually unnecessary.  In fact, at times they are a huge threat to the deal.  The threat can arise because their commission may eat up the down payment a buyer has, or it may be because the agent doesn't like or understand seller-finance because it doesn't fit with the bank-financing model that agents were taught in school.  If you are trying to do a seller-finance deal (buying or selling) and a real estate agent is involved, then don't try to weasel out of the contract - pay them what you owe.  But, if you don't need to get them involved, then don't go using an agent to buy or sell a seller-finance deal. The exception is when you have agents like those I deal with.  They understand seller-finance and know how to facilitate these kind of deals.  But they are exceptional agents.
These fees, taken together can easily amount to nearly 10% of the purchase price of a home.  These fees suck up the money a buyer has for a down payment and take profit out of the seller's pocket.  A seller finance deal, done right, will save both the buyer and the seller a lot of money.

What About Those Regulations You Mentioned?

Banks spend hundreds of millions every year to comply with all the regulations our government imposes on them.  In fact regulations often keep many financial companies from becoming banks, making the costs of doing business too high.  Recently, our regulations have even begun to cause some foreign banks to quit doing business with US banks - they can't afford the costs of showing that they are complying with all our regulations.

The government, in collaboration with banks, has been steadily escalating the regulations on mortgage brokers and seller financing for the past several years.  They have successfully destroyed most mortgage brokers in this country, driving them out of business by the costs of showing their compliance with complex and confusing regulations which change frequently.

Today, most seller finance deals that are done are illegal and if the seller wanted to foreclose on the buyer, they would be unable because their contract would be unenforceable in court.  

Fortunately, my attorney is a very experienced real estate investor.  Because of that, he has a vested interest to stay on top of the seller-finance regulations and the expertise to understand them.  So, he does all my seller-finance contracts and closings for me.  That way, I can be sure to keep inside the law whether I am buying or selling using seller-finance.  In addition, we use a process that has successfully gotten nearly every bank to accept the take-over-payments approach without invoking the "due on sale" clause in the mortgage.

Seller Financing is GREAT and You Need to Know What You Are Doing

If you want to save money buying the home you want with seller financing or sell your home fast using seller financing, it is entirely do-able.  You need an attorney like mine as well as the kind of knowledge that I bring to the table.  You can either do what I did, spend years learning how to do this right and struggling to find an attorney who actually knows real estate law, or you bring your business to me and we will work together to create a win-win solution.  You can reach me at TSheppard@ADBProperties.com. Although my focus is on properties in the Charlotte area of North Carolina, through my network I can help buyers and sellers almost anywhere in the US.

If you would like to know more about Seller Finance, A+ Results has just published "Seller Finance for Sellers: The Ultimate Guide" as a downloadable e-book.  Seller Finance For Sellers Link

Tom Sheppard is the author of "Fire Yourself: Get the Job You Want" available from XLibris Press. Tom has been successfully investing in real estate since 2001 while working part time. In 2008 he left a six-figure job as an enterprise project manager with a major national bank to manage his real estate business full-time. His goal is to help 100,000 people find peace of mind by finding quality, affordable homes.  If you would like to know more about how you can Do Well By Doing Good (TM), go to www.CharlotteWealthPartners.com

Wednesday, August 15, 2012

My Dad Didn't Die and You Benefit

A few weeks ago I got a phone call.  They told me my Dad was dying.

I dropped everything and rushed across the country to see him and be with my family.

The good news is that they were wrong.  Dad didn’t die.  In fact, this Sunday he will celebrate his 87th birthday!

In celebration I have decided to offer everyone I know a gift.  In fact, it is a gift you can re-gift to others and still use it yourself.   All you have to do to get the gift is go to www.APlusResults.com and buy one or more of the ebooks there and enter the coupon code DADS87.  You will then get 30% off your entire order.

Why 30%?  Well, I always thought Dad might live to be 100 and there are 13 years from 87 to 100.  So I thought I couldn’t afford to give and 87% discount so how about 13%? 

I looked at it and said to myself, “Really?!! Who cares about 13%?  Besides, some might think 13 is unlucky.  So, I doubled 13 and got 26%.  I looked at that and said to myself, “Who gives 26% off?  They either give 10%, 20%, 25%, but I didn’t want to round down.  After all, this is celebrating my Dad’s 87th birthday, so I rounded up and came up with 30%.

30% off is a pretty big discount, especially considering that it applies to the entire order, not just one item.  Although I couldn’t add any of the coaching packages, I did add my “Tired Landlord” self study guide to the list.

I hope you’ll take a few minutes out of your day and celebrate my Dad’s birthday with me by going to www.APlusResults.com and checking out the titles I have offered up in this sale.

Birthday’s don’t last forever and neither does this coupon.   It is good for one time, but you can pass this email or the coupon code on to someone else and they can use it one time as well.  And, it expires at the end of this month.  If you try to use it on September 1, it won’t work.

So, go now to www.APlusResults.com and place your order.  We recently enabled the site to accept both PayPal and all major credit cards.  As soon as you pay, you will get an email that will enable you to download your purchase.  If you have any problems with the coupon code or the site, call me (704-699-6080) or send me an email (TSheppard@APlusResults.com).

Celebrate my Dad’s Birthday and take 30% off your order today!  Don't forget to use the code DADS87.

Tom Sheppard is the author of "Fire Yourself: Get the Job You Want" available from XLibris Press. Tom has been successfully investing in real estate since 2001 while working part time. In 2008 he left a six-figure job as an enterprise project manager with a major national bank to manage his real estate business full-time. His goal is to help 100,000 people find peace of mind by finding quality, affordable homes. He is currently looking to expand his network of funding partners who are helping him achieve this goal. If you would like to know more about how you can Do Well By Doing Good (TM), go to www.CharlotteWealthPartners.com

Wednesday, June 27, 2012

Looking for quick tips to help your job search in the internet age... http://ping.fm/LLcx4

Job Searching in the Age of Social Networking

Matt, a friend of mine contacted me a few days ago.  He knows I used to prepare résumés for folks.  He was starting a job search and needed some help. 

Some time ago I pretty much shelved that whole business of preparing individual résumés because I was way too busy doing other things.  But, when I looked at his résumé I realized I could craft him a new one faster than I could tell him how to fix the modest problems his had.

After I did that, I sent it off to him in an email and added some advice.

I thought that others who are looking for a job right now might be able to benefit from what I told Matt, so here it is:

    Make sure you print this resume and the references sheet (when you provide it) on 20 or 24 pound bond paper, preferably light cream colored.  No other color on the page (no flecks, etc.).  Don’t use white, because it will disappear amid other white papers on a desk.

    Always send a hard copy to those who you send an electronic copy and use envelopes that match the resume paper.  Address the envelope neatly in blue ink by hand.  Always send a cover letter with your resume, whether you send it electronically or in hard copy.

    Your cover letter should NOT be hand-written.  It should address the recipient by name and title.  Refer to the job you are applying for and where you found the job lead (or who referred you).  Briefly point out skills you have displayed in your resume that match some of those in the job listing.  Mention any relevant skills or experiences that may not be evident in your resume.  Conclude with a positive statement such as “I look forward to meeting with you in person to discuss my qualifications for this position and how I can add to the reputation for high performance you and your team have earned within our company.  After you finish reviewing my resume, please call me right away at sss-sss-ssss so we can arrange an appointment to meet.”

    Sign the cover letter in blue ink.

    Include a postscript that says:  “PS:  If you would like to read additional information about me please feel free to view my professional profile on LinkedIn.com or you can see my personal side through my Facebook Profile at XXXXXX 

    Trust me on this, they will look whether you invite them or not.  That is why your online presence needs to be managed.  If you have anything embarrassing to you on your FB page, get rid of it NOW! Matt is working in Operations Management and although he is just starting out, he wants to make a career in that field.  Because of that, the next day, I sent him this as a followup…

    I see that you have already created a linkedin profile and started working it.  If you want to build your brand as an Operations Management Expert, I suggest you do a couple of things:
1)      Join some interest groups in linkedin or other places related to this topic as well as subscribing to publications that cater to this profession
2)      Create a blog where you share your insights, learnings and experiences.  As you interact in the special interest groups (see #1 above) you should use your blog link as part of your electronic signature and from time to time suggest that if someone wants to know more about a topic they can read more on your blog.

    The purpose of these two activities is to increase your “googleability” and to link your name with your chosen profession so that it builds your reputation as an expert in your field.  This will increase your prestige and make it easier for you to  command higher pay in your field.  At first, you will be a designated expert.  Over time you will become a true expert and a source of information and learning for others. At some point, you may be able to get paid to teach others what you know about Operations Management.

So, what is YOUR Googleability?  When a prospective employer or client puts your name into Google and searches, do you appear on the first page of their search?  When they do find you, are there embarrassing pictures or messages out there that could damage your credibility?

If you want to learn more about how to avoid these and other pitfalls of job hunting in the age of the internet, I suggest you get a copy of my bookFire Yourself: Get the JobYou Want

Tom Sheppard is the author of "Fire Yourself: Get the Job You Want" available from XLibris Press and on both Amazon.com and barnesandnoble.com. Tom has been successfully investing in real estate since 2001 while working part time. In 2008 he left a six-figure job as an enterprise project manager with a major national bank to manage his real estate business full-time. His goal is to help 100,000 people find peace of mind by finding quality, affordable homes. He is currently looking to expand his network of funding partners who are helping him achieve this goal. If you would like to know more about how you can Do Well By Doing Good (TM), go to www.CharlotteWealthPartners.com

Saturday, June 9, 2012

I Get No Respect

I Get No Respect

When I was born, the doctor said to my father, " I'm sorry, we did everything we could but he still pulled through."  – Rodney Dangerfield

Rodney Dangerfield is famous in the world of comedy for the line “I get no respect.”  Mobiles homes, trailers, are the Rodney Dangerfield of the housing industry. 

The mobile home is truly one of the most brilliant and disrespected ideas in housing and investing in our day.
When Bill Clinton was running for the office of President and women kept coming forward claiming he had sex with them, many of those women were discounted with such terms as “trailer trash” and “what you would expect if you walked through a trailer park with a twenty dollar bill in your teeth.”

Even banks give trailers no respect.  Most banks won’t lend people money to buy a mobile home.  In fact most mobile home buyers can only get their financing from one or two providers.

This scarcity of lenders spells opportunity for investors.

Mobile home buyers are typically people who have little or no money for a down payment and they either can’t afford the high closing costs of traditional home buying, or their credit rating is too low to get approved.  They buy a mobile home because it seems like a fantastic value.

They can buy a three or four bedroom home with 1,600 to 2,400 square feet of living space for a fraction of what it would cost for a stick built home of similar size.  And, mobile home manufacturers will cite a book full of statistics to convince buyers that mobile homes are built to higher quality standards than stick built homes.  Maybe one day, the rest of the world will believe those statistics.  Until then, if the place has steel floor joists, you are going to have a hard time finding financing.

The biggest problem with mobile homes is that they truly depreciate.  When you buy a stick built home for investment, you get to claim depreciation.  Often at the same time you are depreciating the house on your taxes, the market value of the home is appreciating.  For a mobile home, just like for your car, the value of the home does not go up with time, it truly depreciates.

I was recently giving financial counseling to a woman in my church.  She was contemplating buying the mobile home she was currently renting.  I advised her against it on two counts.

1)      Mobile homes go down in value over time. They will fall to a floor value, but they don’t appreciate in value.

2)      The home she was looking at buying was sitting on a rented lot.  When you buy a mobile home on a rented lot, you had better be prepared to move it to a lot that you own.  Otherwise, even when you pay off what you owe on the mobile home, you will have to keep paying a sizable chunk of money each year for lot rent.  And if you don’t pay the lot rent, the park can take ownership of your home with ease.

I told her that mobile homes are not a great investment for a home owner, but they are great investments for investors.

When I see a  mobile home, I see a big ATM.  But, there are right ways and wrong ways to invest in mobile homes.  I have done both.

My biggest  mistake was to buy a cheap mobile home in a mobile home park that I did not own.  The cheap part was a good idea, but having it on top of someone else’s dirt was a really bad idea and it was even worse because it was inside someone else’s mobile home park.

Why was this a mistake?

1)      I had to pay lot rent every month until I got someone else to buy the home.  If I didn’t pay the lot rent, the management could seize my property for the rent owed.

2)      The park management had veto power over any buyer,  unless they were going to move the home out of the park.  Park management always reserves the right to deny people the right to rent a property inside their park and they can deny people who want to move their mobile home into the park.  That means you have to get their approval for any buyer or renter you bring to the table.

3)      The park management had their own homes they were selling which they would show to prospective buyers in direct competition with my offering.  When your mobile home is competing with homes owned by the management company, you are fighting an uphill battle to get your home sold or rented.

I still managed to make money, even on mobiles home in someone else’s park.  But it was a lot harder than it should have been.

Now, I only buy mobile homes that I am going to move onto land I own, or I buy them and the dirt under them.  This makes life much easier and makes the investment more profitable.

The other thing I do when investing in mobile homes, is I try to avoid being a landlord.  Of course I do that on nearly all my investments.

If you are happy being a landlord, then you can ignore these next few points I make.  The problem with being a landlord is that anything that goes wrong with the place, you have to fix it, regardless of whose fault it may be.  This means that your operating expenses (the costs of keeping the property going) are higher than they are for an owner occupant.  If you run your rental investment properly, you will always set aside reserves from the revenues to be used for maintenance, repairs, and vacancies. That way you always have cash on hand to deal with the expenses that must be paid to keep or get a property rented.

I prefer to sell my mobile homes to owner occupants.  In an ideal situation, I sell them the home and rent them the dirt (the lot) beneath it.

Why sell the home and rent the dirt? 

When I sell the home, either outright or using a contract for deed, either way I shift the operating expenses such as taxes, repairs and maintenance on the trailer from me to the owner occupant.  This means I can actually charge less money and make more money.  That sets up a win-win.

I like to rent the dirt for purely selfish reasons.  The average American moves every 3 to 5 years.  This means that your owner occupant is likely going to look to move in just  few years.  If he owns both the trailer and the dirt, he will sell both and move on and your cash flow will likely end, unless you managed to finance the new buyer.  And, you won’t get the down payment, that will go to the seller.

Very few mobile home owners are willing or able to go to the trouble and expense of moving a mobile home.  All-in costs of disconnect, moving and reconnect can run to $5,000 or more.  Most don’t have that much money sitting around to do that.  So, they are looking to get out  and get into a new place for little or no money down.

If they move out and try to sell the trailer, you have put yourself in the position of the mobile home park management.  They cannot let someone else come in and occupy the trailer because the renter or buyer must be approved for the lot rental agreement.

If they move out they are still obligated to pay the lot rent.  If they fail to pay the lot rent, it is a fairly simple court procedure to seize the trailer for unpaid rents and now you own it again.

If you want to be nice, you can offer to forgive them their debt and take title to the trailer in lieu of repossession.  Yes, with a mobile home it is repossession not a foreclosure.  And repossession is a much simpler, faster, and less expensive process than foreclosure.

Either way, when your owner-occupant moves out, chances are very good that you will regain ownership of the home for little or no cost.  Now, you can fix it up and sell it again.  The difference is that the second time around, your cost basis in the investment has been completely or almost completely wiped out by the prior occupant.  That means that nearly every dollar you get from the new buyer is pure profit.
Here is what the numbers can look like:

  • ·       Suppose you buy a mobile home on its own lot for $20,000 and divide the cost evenly between the land and the home.
  • ·       You sell the home (not the lot) to an owner occupant with a sale price of $30,000.  If you get $2,000 down and finance the rest at 11% interest that is a monthly payment of only about $250 for the home.
  • ·       You rent the lot to the buyer for another $250 per month.
  • ·       The only expenses you have are for taxes on the land since the owner occupant is paying for insurance, taxes on the trailer, repairs and maintenance.  If your land taxes are high, you might be paying $1,000 per year for the dirt.
  • ·       $250 + $250 = $500/month x 12 months = $6,000 per year.  Less the taxes you pay on the land ($1,000) = $5,000 plus the down payment ($2,000) you received puts you at $7,000 for year 1.  Now your cost basis has been reduced to $13,000.
  • ·       In year 2 you of this scenario you will clear $5,000 and your cost basis falls to $8,000.
  • ·       In year 3 you add another $5,000 in income and your cost basis drops to just $3,000.
  • ·       This means that by the end of year 4, you have realized a 100% return on your original investment and have earned $2,000 in pure profit, to put you at an ROI of 110% of your original investment.
  • ·       If the owner-occupant decides to move at any point after this, you are well positioned to take over the place for little or no expense and turn around and sell it for $30,000 again.  But this time, your cost basis will effectively be zero so you will be making money from day 1.

And it can be even better than this.

A friend of mine bought a trailer for $3,000 and was able to charge $300 per month in rent.  Do the math!  It means his investment was paid for in just 10 months, less than a year.  Every dollar after that was profit!
The other beautiful thing is that long after the banks and the tax man feel that the value of the home has fallen to zero, you can keep selling or renting this home to people who don’t want to share walls with other tenants in an apartment, but don’t have good enough credit or finances to buy a stick built home.  Many of these mobile homes are still habitable after more than 30 years of continuous occupancy.

Now you may be able to see why when I look at a mobile home, I see an ATM.

Because my company currently owns mobile homes, I see a lot of these for sale every day.  I buy many of them.  Some, I set up as passive investments for those who want the benefits without the hassles.  Others, I sell to other investors.

If you are interested in exploring opportunities to invest in mobile homes, just put your name and email in the form in the box below this article (or use your Facebook account to register).  Over the next month, you will get three free e-books with education about investing in real estate and getting your money to work for you without relying on banks.  After that, if you are still interested, we can talk in detail about what you are looking for and how I can help you get where you want to be.

Why does it take 30 days and 3 e-books before we can get down to brass tacks?

The laws of the United States and the State of North Carolina put limits on who and how I can talk with people about investments.  Any investment in real estate other than for your personal dwelling is considered a security and as such is regulated by the SEC and other governmental entities.   Without becoming a licensed securities broker, and becoming subject to a ton of additional regulations, I am limited by law to  discussing investment opportunities only with friends, family and associates.  And, the lawmakers have determined that if we have had at least 3 communications over a 30-day period without discussing returns or specifics of any actual offer, then you qualify as an associate or friend.  So, between the three e-books and our exchange of emails over the next 30 days, we can clearly show the SEC that we have become friends or associates before we ever talked about any specific investments or rates of return that you might be able to realize from investments with me or any of my companies.

Before I close, I would like to revisit one point from above.  I mentioned that the lack of financial institutions who will lend to buy mobile homes represents an opportunity for investors.  This is a classic example of turning adversity into opportunity.

Many people would look at the lack of lenders and see only the lack and back away.  I see a lack of lenders and a high and increasing demand from buyers for low-cost housing.  This creates an opportunity for investors to use a little cash and put it to work in a way that turns it into a lot of cash.

Under the scenario I described above, if an investor had as little as $60,000 they could buy 3 or more mobile homes and within four years have added 3 more.  That could turn an initial $60,000 investment into a cash flow of $30,000 per year.  If you only have $20,000 in your self-directed IRA or investment portfolio, then start with just one mobile home.  In a few years, you will see that as you plow you money back into your business, it will begin to grow like crazy.

Now that is turning lemons into diamonds.

Tom S.

Tom Sheppard is the author of "Fire Yourself: Get the Job You Want" available from XLibris Press. Tom has been successfully investing in real estate since 2001 while working part time. In 2008 he left a six-figure job as an enterprise project manager with a major national bank to manage his real estate business full-time. His goal is to help 100,000 people find peace of mind by finding quality, affordable homes. He is currently looking to expand his network of funding partners who are helping him achieve this goal. If you would like to know more about how you can Do Well By Doing Good (TM), go to www.CharlotteWealthPartners.com