How Do I Implement The Lease Purchase Plan?
 by: Sue and Chuck DeFiore

Well, as we have discussed in previous newsletters first you have to set up goals for yourself, both long term and short term. Don’t forget these goals define how your business is run. They will determine what you do on a daily, weekly and monthly basis. The best way to do this is to picture yourself a year down the road. Close your eyes and get a mental picture of where you want to be, what you want to have, how you want to look, then open your eyes and write all that down on paper or speak into a voice recorder.

First determine how much time you will have to work on your business. If you are starting part time or spare time and think you might have 5-7 hours per week, in reality you probably will have 2.5 to 3.5 hours per week. Whenever we ask a partnering student how much time they have I always cut the time they give me in half. Why? Well because things come up, such as children, obligations, illnesses, their other job, etc. So rather than kid yourself and set yourself up for failure before you even start, be realistic with the amount of time you will have.

Once you have determined how much time you have, make up a 12 month plan. For example if you only have 3 hours per week to work, that means in a 4 week month you have 12 hours. So realistically, the first month is going to be getting yourself set up. Getting your identity package done, your template letters done, your database set, your telephone script done, your research (networking, FSBO sites). You want to start collecting newspapers (remember 5 weeks and older). Your second month would be going through the newspapers, and going on line to those FSBO sites and collecting numbers. During the end of the second month (6 weeks after you have started) you should be able to start calling on property. Depending on the hours you are doing your calls will determine how many people you get to speak with as opposed to leaving a message for them. Months three and four you will continue your calls, set up a networking schedule and do deals with one particular strategy. After you feel comfortable with that strategy you can move on to the next one during months five and six. Months seven and eight should have you starting the next strategy, and the same goes for the remaining months (nine, ten, eleven and twelve). During months eleven and twelve you should do some evaluating of your goals for the year, and start thinking of where you want to go in year two. Be sure to write articles up for each deal and make note of things you did wrong (yes, you will make mistakes) and how you fixed them for subsequent deals.

Once you have your monthly plan set up, break that down in weekly goals, and then set up your daily goals to meet your weekly goals. If you don’t meet some goals, don’t beat yourself up. Look at the reasons why you didn’t meet your goals for that particular day, week or month. Did other things get in the way (family, work, health issues) or did you just slack off. Sometimes you need to take a breather and come back with some fresh energy. So if you need a break once in a while take one.

However, you need to realize if you want to succeed you need to make a commitment to implementing the plan you set up. If this means missing some television shows, shopping spree, visiting with friends or some sleep; then that is what you have to do.

So start implementing the plan today!

Copyright DeFiore Enterprises 2003

13 Deadly Mistakes
Beginning Real Estate Investors Make

1.    LACK OF ACTION / PROCRASTINATION

        Taking the first step is always the hardest. Many people aren't sure what action to take first because their mind may be blurred with too many ideas at one time. Do your best to keep yourself focused in one or two directions and keep yourself from going in too many directions at one time.

2.   HAVING THE WRONG PARTNERS

        Your partner's attributes should always complement your own. In other words, if you don’t have cash, your partner should. Other attributes may be, knowledge of closings, doing repairs, an understanding of buyer financing, rental procedures, etc.
        However, many beginning investors form partnerships with people who don’t have any better clue what to do and are more broke. The reason is probably so that they have a buddy to work with, that will give them positive support and motivation. This is a disastrous mistake as a beginner trying to learn the ropes and nothing can be worse than splitting a check after you did all the work, that is if there is a check to split.

3.    FEAR OF FAILURE OR MAKING A MISTAKE

        Some people don't take action because they are afraid they are going to make a mistake. Everyone learns from their own mistakes, but it s better when you can learn from somebody who has already made the mistakes and can keep you from making the same mistakes also. Study as many courses about real estate investing as you can. You help avoid costly mistakes, or getting a hands on seminar on how not to do something. You will never learn everything & the real estate field is always changing.

4.   NOT MAKING ENOUGH OFFERS OR
       FEAR OF MAKING OFFERS

        You're never going to buy a house if you do not make an offer. And the more offers you make, the more houses you will buy.
        Don't be afraid to make an offer on the property. If you spent your time pre-qualifying the property and looking at it, then make the offer. Even if the seller is asking thousands more than what you want to pay.
        Don't be afraid of the seller being insulted by the price or terms. Let them know why your offer is what it is. The property needs repairs, etc., bad area, etc.
        Some of the reasons for not making the offers is fear it will not get accepted or a counteroffer. Some people say what if it gets accepted but I m not able to close? The worse thing that can happen is you will lose your deposit. Other people say what if I get a counteroffer? If you get a counteroffer, decide what can be paid for the property. If they are still asking to high of a price for you, counter them again. If you can't get the seller down to your price range, go to the next seller. There are always more deals out there.

5.   ABUSING WEASEL CLAUSES

        Weasel clauses are contingencies put into your sales contract so that you have a way out of buying. Such as "Subject to my partners approval", "Subject to final inspection", or "Subject to buyer herein, finding a new buyer/assignee."
        Simply put, weasel clauses are for weasels. After all, that’s where the term came from. Most banks don't even consider a contract that has a weasel clause and most sales people will discourage the seller from accepting the contract. 
        Don’t make an offer unless you fully intend to follow through and are willing to loose your deposit if you don't. Otherwise, you will quickly get a reputation for being a weasel.

6.    NOT BEING ACCESSIBLE

        When dealing in real estate it is always important that potential sellers and buyers be able to contact you easily. If a potential buyer or seller calls your phone number and they get an answering machine, they may simply hang up and that would cost you a deal that could have made you thousands of dollars. When you do get a call and you re not able to answer it, make sure that you return their call promptly. If you do not already have a cell phone you may want to consider getting one. There are pagers available for as little as just a few dollars a month, and you should at least have a digital pager.

7.    DEALING WITH UNMOTIVATED SELLERS

        Spending too much time going out and looking at deals you could have pre-qualified and found out that were not true deals. Don t spend time analyzing a property s repairs, costs of improvements, closing costs, etc. before you know you can get a good deal on the property. Before you even go look at the property, you should know that this property may be a potential deal after talking to the seller.

8.    WAITING FOR BLOCK HOUSES

        If you want to keep a property as a rental, it’s OK to want it to be block, not that there is anything wrong with good frame rentals. However, some investors wait for block houses to fix and sell retail, passing up very good deals on frame houses. There is absolutely no reason for an investor to pass up a frame house that can be fixed up and sold for a profit. There are many home buyers out there that haven’t even had the word "block" cross their minds.
        Remember, if you see a frame house that has rotten wood... WOOD IS CHEAP! How much does a 2 X 4 or sheet of plywood cost? However, when negotiating with a seller, you always want to act like the rotten wood will cost a fortune to fix.

9.    LACK OF EDUCATION

        Failure due to not understanding how to invest or not having a good enough education in real estate. This is, not to say that you need to know every technique and every thing there is about real estate investing before you can get started and you will never know everything. However, it s important to know one or two investing techniques and master them and not try to be the master of all techniques. Pick out one or two ways, maybe three ways to find or buy, real estate and put them to work. Remember to stay focused on those techniques.

10.    NOT FOCUSING / GETTING DISTRACTED

        Getting distracted by other programs, taking bad advice, and listening to negative thinkers, can kill you chances for success as a real estate investor. The biggest negative thinkers that you re going to run into are most likely your closest friends and relatives. They may say things like "You don t believe that stuff really works, do you?" or "You don t believe you can do that real estate stuff on late night TV?" Set them straight right away, that their negative sarcastic remarks are not welcome. Seek out positive and supportive people. Also, don't let yourself get distracted by other money making projects. There is always some new course on how to get rich quick. Remember that real estate is the number one "MILLIONAIRE" maker in America.
        It is very important that you create a system for staying focused and keeping track of all your leads. Keep yourself organized where you can process vacant houses as you find them and also process your potential tenants and potential buyers as they come to you. Everyone who is going to do this business, needs to have a daily planner. A daily planner helps you to stay organized as to who you need to call, who you need to see, who you need to make offers and more. It is also very important to keep a to-do list in your planner.

11.    NOT PLANNING A DEAL START TO FINISH

        Another reason for people s failure in real estate is the fact that they do not plan their deal from start to finish when they make their offer. Many investors will go out looking for a property that is cheap and put an offer on the property. When the offer is accepted, that investor is not sure what they are going to do with the property.

12.    DOING REPAIR WORK

        Nothing can be worse than trying to do all the repairs yourself. The goal is to be a real estate investor, not a contractor or handyman. Now there s nothing wrong with doing one or two small things yourself. And when I say small, I mean as small as changing a light bulb or changing the door lock on the front door. On a normal rehab, you can hire a contractor or handyman and have them completely redo the house in a matter of a couple of weeks. But if you, yourself try to do it, chances are it s going to take a couple of months. Not only do you have to pay the cost of the mortgage during the time that you re fixing the house up, but you re also spending your time doing repair work instead of finding your next deal. The most labor it should ever take you to rehab a house is lifting a pen to write a check. You'll find this business so much easier when you watch other people do all the dirty work.

13.    OVER DOING OR UNDER DOING REPAIRS

        Another mistake investors make is either under doing repairs or overdoing repairs. If you under do the repairs on the house, the house is not going to look nice and home buyers just are not going to want to buy the house. This is going to increase your difficulties in finding a good buyer and increase the time that it s going to take to eventually sell the house.
        If you overdo the repairs on the house, you re going to spend too much. The goal in real estate investing is to balance the amount of repairs that you do against what the market place is asking for. If you re repairing a house in a neighborhood where the average house sells for $150,000.00, you'll want to put in beautiful light fixtures, polished brass bathroom fixtures, marble sinks and plush carpet.
        However, if you re dealing with a rental property in a lower income area, where the average price of the house is only $50,000.00, you'll want to go in with standard fixtures that are nice and presentable.
        It does not take much to make a house look nice, with a little bit of paint, carpet, and a few door knobs and ceiling fans.

How To Earn Huge Profits Investing In Mobile Homes

by Ernest Tew

           The manufactured housing industry is making it possible for millions of families to buy their own home for less than they would pay in rent.  A few people have become wealthy by showing them how & investing in mobile homes.

          It isn’t necessary to quit your job or profession to start a profitable part-time business.  But, you may soon find you can’t afford to keep your job.

          After convincing my oldest daughter to read Deals On Wheels by Lonnie Scruggs, she finally became motivated and started investing in manufactured homes.  Diane was a full-time nurse with two small children to care for.  She had no experience or training in business.  Yet, she and her husband managed to buy and sell twelve homes within a year after getting started—all at a significant profit.  She soon began earning more income from her part-time business than she earned on her full-time job.

          To minimize the risks and time involved, she started with homes that were already set up in local mobile home parks.  She discovered that the best mobile home buys were those between ten and twenty years old.  They were usually free and clear of debt.  She found that, in most instances, owners needed the money out of their home in order to move.  But, owners soon discovered that, while there were plenty of interested buyers, almost none of them had enough money to pay cash.  Banks were not interested in financing older mobile homes.  And, even if they were, most buyers couldn’t qualify.

          My daughter discovered that a motivated owner would sell at a very low price if paid in cash.  She found it profitable to borrow money from relatives and other private investors in order to pay cash for the homes.

          She was surprised at how quickly she could resell the homes by providing seller financing.  She soon learned that most buyers were more concerned with “how much down and how much per month” than they were about the price and finance charges.

          To show how easy it is to get started in this part-time business, let’s review the very first mobile home transaction completed by Diane and her husband:

SITUATION:

          After being unable to sell his home for $4,500, the owner simply left town and abandoned it.  The finance company became the new owner and was trying to sell it for the $3,300 balance due on the loan.

PROBLEMS:     

1.          The park had several vacancies and the manager feared a buyer would move the home out.

2.          The finance company had not received payments or earned interest on its investment for the past three months.  Moreover, the finance company was now faced with the high cost of moving the home or paying rent on the lot.  They had been unable to sell the home to a qualified buyer because it needed to be repaired and redecorated.  With the home being vacant, there was the possibility of vandalism and having the insurance canceled.

          The employees of the company were busy with more important matters and didn’t want to be bothered with a nine-year-old mobile home.  Besides, it wasn’t their money in the investment.

SOLUTION:

          Diane made an appointment to meet with the manager of the finance company.  She showed him photographs of the home and pointed out that it needed a lot of work.  She asked what the lot rent was doing to the value of their investment.  She then asked him to give her their lowest cash price.  Anxious to be rid of the older home and avoid more lot payments, the manager said he would accept $2,800.  My daughter told him she though the price was too high, considering the condition of the home, but would “talk to her husband.”  (In negotiations, it’s called using a higher authority.)

            The next day she telephoned the manager and told him she had discussed it with her husband and, “he would not let her pay more than $2,400.”  The offer was accepted.

           After cleaning the home and spending about $500 on repairs, the home was sold for $5,900.  The buyer agreed to pay $500 down and $164.70 per month, including 14.5% interest for 42 months.

 ADVANTAGES:

           The finance company sold the home, received $2,400 in cash, and was relieved of the management responsibilities and monthly lot rent.

           For showing the home, the park manager received $100 for her efforts and avoided the possibility of another vacancy.

             The financial results for Diane were as follows:

           The entire process was completed in less than thirty days—while caring for her children and working as a nurse.  However, we should keep in mind that we earn this kind of return by dealing in mobile homes as a business—not a passive investment.  While almost anyone can find ways to buy and sell mobile homes, it does take a little time and effort.

          With a lot of people, the big problem is indecision, caused by a lack of information.  When you are faced with making important decisions that you are not sure about, why not turn to people who are in a position to help? 

          Opportunities are all around us.  We usually refer to them as problems.  While there may be more social and economic problems than we can handle, we should never forget that the flip side of a problem is an opportunity. 

          Wealth is usually acquired by solving problems for a lot of people.  Once you get involved, you will begin to find solutions.  The more you learn, the more you will be able to solve the problems you encounter.  Not only can you become wealthy, you will derive a great deal of personal satisfaction from the knowledge that you are being well paid for a job well done.

If you had the chance to start over again, knowing what you know now, what would you do differently the second time around? What a great question. It cuts to the core of the essential lessons of a lifetime of real estate investing.

Here is my six-part answer to this question:

Realize it is never about the property

One of the biggest misconceptions about investing in real estate is that the most critical thing is the property itself--its condition and location.

The truth is that both of these considerations are secondary to the motivation of the seller. If the seller is NOT motivated, then no matter what the condition or the location of the property you still are not going to get a great deal.

But if you have a motivated seller, then you have a great chance of turning a handsome profit no matter what the condition or location.

When this really sinks in, it revolutionizes how you prioritize your search for finding great deals. No longer do you waste time on due diligence and inspecting the house UNTIL you have made sure you've found a motivated seller.

Finding this motivated seller becomes the most important activity you can ever engage in. This is what you must focus your time, efforts, and creativity on searching for.

This also means that the highest leverage activity you have as an investor is to be sitting face to face with a motivated seller.

Don't allow non-motivated sellers to waste a minute more of your time listing off all the wonderful features of their homes. You don't care about the house until you've established the seller is motivated.

Understand if you never ask, you'll never get

When I first got started investing in real estate I was scared to death to actually make offers to a sellers. The root cause was my fear of them rejecting me and my offer. In my mind the two were one and the same thing.

Over time I came to realize that this one mistake kept me from making offers that, in retrospect, I feel the sellers would have said yes to. This ended up costing me hundreds of thousands of dollars in lost profits.

Today I see many other investors falling for this same trap. Sometimes it is the disbelief that a sellers would ever accept a nothing down offer. Sometimes it is walking away from sellers with a promise to "get back with them" (rather than making the offer on the spot). The cost is still the same.

The most important lesson I learned from these experiences is that NOT asking is an automatic no, and asking is never so painful as I might have imagined.

Over the years I've asked for and gotten everything from extensions on the term of a seller carry back, to money from the seller for a repair, to free appliances.

Remember, if you don't ask you don't get. A great book on learning how to ask effectively is The Aladdin Factor, by Mark Victor Hanson and Jack Canfield.

Always maintain "walk away" power

The common denominator for all the borderline deals I've bought, flipped, or lease optioned is that at some point in the negotiation, I crossed over to the point where I felt I "had to" do the deal.

If ever you hear yourself saying these words, even if it is merely to yourself, push back you chair, get up from the negotiating table, and walk away.

I'm serious about this. If the deal is that good, a small break while you take a moment by yourself won't stop the deal.

And by taking this time you might just keep your ego and your emotions from pushing you to make a deal that means lots of work and risk for little real profit.

It seems I fell into problems here incrementally. I'd put $3,000 into a house to fix it up and then find it needed a $2,000 repair I didn't know about. So I would spend $2,000 so I wouldn't lose the $3,000, only to find out…

You get the idea here. Beware this slippery slope and know when to cut your losses.

Remember, good deals are like buses--even if you miss one, there will always be another one along before too long.

Beware of the "rehab" trap

Have you ever caught the bug? "Fabulous wealth can be yours if you buy junkers and turn them into palaces."

There are millions to be made in rehab projects, but before you go off and dive into this type of investing, you need to do some serious soul searching. This type of investing isn't right for everyone.

I've discovered that rehabs aren't for me. In my opinion they too often take too much up-front money, too much energy to complete, and too much time to turn them.

The first causes too much risk; the second cuts into your efforts to find more deals; and the third eats into your margins and cash flow and turns you into a motivated seller!

Knowing this, I've come up with rule that I follow: If it needs more than minor cosmetic work, then flip the deal to another party.

I want to make it clear here that this is my personal bias and that many investors love rehabbing properties and are well paid for it. Still, it is just not for me.

If you are going to do rehab projects (and let me make it perfectly clear that you CAN make a TON of money fixing up houses) then make sure you listen to the following rules:

1. BUY RIGHT! Don't overpay for the property. Build a LARGE profit in by buying right.
   
   

2. Make sure you factor in ALL the real costs, not just the financial costs to rehab a property.

This means you must factor in the TIME cost to do or oversee the project. You must factor in the EMOTIONAL cost of having to do the work, having so much of your money on the line, etc. Finally, factor in the OPPORTUNITY cost of having your cash, time, and attention tied up for the duration of the project.

Reprogram your beliefs about self worth and money

Collecting money from a buyer can cause you to confront deeply hidden pitfalls from your past about self-worth and what it means to be wealthy.

This might be hard to accept, but in my opinion, it's one of the biggest road blocks to making a fortune investing in real estate. I've gone through this myself.

When I got started investing I had trouble selling the properties I picked up. On one level or another, I didn't feel good enough about myself to think it was OK for me to be making that much money with so little effort.

My beliefs about money and what it meant to be "rich" made making money a dirty thing for me. On some of the first properties I sold, I was uncomfortable to even collect an application fee from prospective tenant buyers.

It took several years to clear out this garbage and be comfortable with the wealth that flowed into my life. My partner, Peter Conti, was instrumental. He was a great role model for a down-to-earth, ethical millionaire.

Who do you know that can be this kind of positive role model for yourself? Spend as much time with these people as possible.

There is a great book on this subject called Your Money or Your Life, by Joe Domingez. I highly recommend it.

Gather up as many positive references of people using money for good purposes as possible. This will help you reprogram your beliefs about what you can do when you have money.

Read biographies about billionaire philanthropists like George Soros and Ted Turner who have literally given away BILLIONS of dollars to worthy causes. Tithe 10% (or some percentage) of your profits to groups you want to support.

This lesson deserves your attention and honest self-evaluation.

You'll never know it all, but you can learn enough

I was probably just like you when you got started investing in real estate. I kept learning more and more, but never felt like I knew enough. But then one day I realized when a person really knows enough…

1. It's not when you know it all because you'll never it know it all.
   
   

2. It's not when you know all the legal aspects and contract clauses.

You know enough when you step out and take action, acknowledging that you'll never know it all. This leap of faith is the final ingredient of success.

About the author...

David Finkel is an ex-Olympic level athlete turned real estate millionaire and one of the leading investing experts in the nation. He and his partner, Peter Conti, teach people across the country how to create multiple streams of income buying homes in nice areas with nothing down and minimum risk. Over the past decade, his students have bought and sold over $100 million worth of real estate.

David shares his insights, secrets, and money-making systems in his highly informative courses: