Internet Safety Frequently Asked Questions

What Lures People Into an Online Scam

So you want to get rich in Real Estate. You don’t have much money, but you heard all the stories of how people broke the system and made it rich in Real Estate. The Internet is full of Real Estate Scams with one intent…. to quickly part a fool and the little money they have. Not only are these scam artists using the Internet, they have enough guts to hold seminars in major cities to collect more money. I can tell you —- beyond any doubt —- the only thing these people know about Real Estate is their scripted plan to suck money out of victims with high hopes and dreams of making it out of this depressed economy we seem stuck in. Let me show you how it works.

How Online Real Estate Scams Work

Charges begin at the very beginning. After a free introduction online or at a local meeting which consists of NO USEFUL information —- ONLY a load of hype, people fall for these plans like an unsuspecting fish goes for a shinny lure. Things look so good, fees seem like a small investment. Let me tell you what you are investing in. There is a scripted system you are investing in. This scripted system is not designed to make any money for you! It is a system to put money in the pockets of this carefully formed network of thieves. The first charge is a set of lessons, either online or a condensed live seminar. They will tell you about some secret list of foreclosed properties. Here is the hook. They tell you only certain Real Estate Agents get this list! Any suggestion of a separate list is against local MLS rules and agreements all Real Estate Agents share. Every licensed Real Estate Agent must sign an agreement to share all their listings with all other Agents on the local MLS. There is no secret foreclosure list. These people are trying to impress you will false information. Some of them are trying to get you to work with agents they hand pick, but this is very rare. It doesn’t take much effort to gather a list of new, inexperienced agents eager to make their first sale. All these people need to do is check public records to find newly licensed Agents, who may not know what they are falling into.

The next step is to provide you with a pre-approval letter or proof of funds letter. Boy — Do these people look like an answer to prayer. After paying a fee, you get a letter and these people promise to give you money to invest in their system without checking your credit. This is too good to be true! That’s because it is not true! There is a world of difference between a letter and cold hard cash. Of course there is a fee for the letter, and a fee for a credit check, another fee for an appraisal, another fee because they feel like sucking more from you. That’s the system you are buying into. All the money flows one way!

If you happen to have funds, you can elevate to their next level of scams. You get the gold script!!! This is what they will tell you. They will tell you how to bid. Of course you have to get an offer accepted. They will tell you about their plan that never fails —- and it sounds good. But of course will never work in the end. Here is their plan. Over bid on the property. The way they explain it makes sense. After all they are trusting you with their money…. all they are asking for is your trust in return. WHAT A SCAM! You have not seen a dime from them and they are pulling the TRUST ME CARD. By this point you paid them thousands and received nothing but promises. And now you are paying for some of the worst advice I have ever heard. Of course the best properties receive multiple bids and you have to find a way of getting your offer accepted. They tell you once you over bid and get the contact, which they tell you is a legal binding contract…. which is about the only truthful matter they will tell you, the Seller and you are bound by the contract. What they fail to tell you is, asset managers seldom negotiate price after you sign a contract. There is nothing in the contract saying the Seller has to deal on the price. When you fall for this scam, you missed one very important point! The Seller has a group of cash buyers waiting in the wings who can close in a hurry. The Seller can tell you to take a walk. In the mean time, you lost more money on the scam. They tell you they have a network of inspectors to look over the property, give you a report and instruct you on how to use their report to negotiate. Two problems here. Number one, you pay them for the inspection. More money for them. Number 2 – they DO NOT use state licensed inspectors. The contracts I use in Wisconsin states: A State Licensed Inspector must be used. You just wasted your money. Any Listing Agent with a year of experience will take one look at that report and know it is a fake. When I see this, I call the so called inspector and ask for his state license number. Guess, what… the house of cards immediately folds. Next on the scripted plan to part you from your money is the fake contractors. More money out of your pocket, more in theirs. Now here is the real heart break for innocent buyers like yourself. According to the contract you have 10 days or so for an inspection. If you don’t have a good agent, that time disappears. You lost that contingency to back out of the contract and get your earnest money deposit back. The worst part of this scam is the time it takes. Before you know it, time runs out, you fail to close and find yourself in a position to loose your earnest money deposit. Notice how you are the one putting up all the money…. and they are the ones making the money? When time runs out, you are in what is known as breach of contract. You failed to fulfill your part of the agreement. Some Sellers are insisting they keep the earnest money. At this time it appears to be the only way to combat this scam. Most of the time Buyers will get their earnest money returned but when Sellers see this scam, they may not be so lenient. Collecting earnest money is a long process most Sellers will not want to go through, but one Seller instructed me to go through the long drawn out process. In the end the Buyer lost the earnest money. The whole process is nothing but a waste of time for everyone involved and a waste of money for the Buyer.

Beware the Bite

There are other details the scam artists share to appear they are looking out for you. They show you how to alter standard contracts. They want to create the appearance they have your interests at heart, but make no mistake, these scam artists are looking out for themselves. Here is a short list for you to copy and paste. If you ever attend any of these scam artist’s meetings, you can go down this list with a smile on your face and your money in your pocket.

Unexpected Fees

  • They charge fees. Every experienced Real Estate Agent has worked with successful investors and is willing to share information for free.
  • Look out for useless hype.
  • Look out for facts and figures from outside the market area you want to invest in.
  • Look out for a system insisting one size fits all.
  • Look out for secret lists and inside information only a few people have.
  • Look out for networks they may claim to have.
  • If you did pay fees for training…. get out the first time you see a fee they forgot to mention.
  • Shy away from advice on how to alter state approved contracts.
  • Avoid systems which suggest negotiations after signing a legal binding contract.
  • Avoid systems telling you to over bid without providing you with current market conditions.
  • Avoid systems based on national statistics.
  • Avoid systems which teach you how to use an inspection to renegotiate purchase price.
  • Run from all inspectors, contractors, and LENDERS who cannot produce proof of a state license. 

The only system that works involves a few simple steps.

  1. Invest in an area you know and are comfortable with.
  2. Get a list of market reports for the area and know the current trend.
  3. Know market prices for both REO purchases and resale prices for turn key properties.
  4. Work with a reliable, licensed general contractor if you are not capable of doing all the repairs yourself.
  5. Get a little background on local ordinances for vacant properties and building codes
  6. Have your own team in place including a licensed Real Estate Agent, Lender, Inspector, and contractors. Form your organization.
  7. Keep expectations realistic…. the current market will do more to determine your success than any other detail.
Investor Fequently Asked Questions

The Best Financing for Real Estate Investments

I’ve had dozens of people ask me, “what is the best source of funds to begin my Real Estate Investing carrier?” The answer is simple. A home equity loan.

I’d hate to use the old saying, “it takes money to make money.” But it does. It doesn’t matter what source you use for funds. Every legitimate lender will want you to shovel out your own money before they add in their funds. That is common sense. People have to prove they have the ability to make and save money before any lender will trust them. Of course there are online stories and online lenders who claim to know secrets. The only things secret about them is their identity and what they are planning to do with the funds they extract from their victims. Other articles on my website cover aspects about Internet Fraud in Real Estate. This article will cover the best lending advise I have run across.

I’ve seen dozens of people build small empires using nothing more than personal savings and a home equity loan. The home equity loan does one thing. A home equity loan places you the investor in charge.

So you did your homework. You have your business plan in writing. You scoped out an area to invest and waited for that great deal to come along. You view the place. You do a quick spread sheet to estimate remodeling, taxes, and other costs. Including interest payments, insurance, and closing costs. Then you make the move. You write the offer as a CASH offer. In Real Estate cash is king. No doubt about it.

How Do You Get a Home Equity Loan?

Go to your local bank. The bank you are doing business with. Talk to the loan officer. Get the rates and costs. Most costs are very low. Only a fraction of the cost of a regular mortgage. In many cases the bank will loan up to 60% or as high as 80% of the market value on your home. How does that work? Say you own a $200,000 home. Your mortgage is $120,000. That leaves you with $80,000 equity. The bank will only allow 80% of the market value which in this case is $160,000. Subtract your mortgage amount from the $160,000 and you are good for a loan up to $40,000. These of course are rough figures. But they give you an idea of what a bank can do for you and how they calculate a safe loan amount.

The bank may use the tax value on your home. A few banks may have you pay for an appraisal. Talk to your bank to see what their qualifications are.

What Are The Advantages of a Home Equity Loan?

There are many advantages. If you are using the money to purchase an investment property, you can simply write a check. This gives you the advantage of writing a cash offer. You may have to write a check from your home equity loan to deposit money into your checking account and withdraw a certified check to present at closing. Details like that should be discussed with your Real Estate Agent and Title Company.

You only pay interest on the money you draw from your home equity loan. In other words, it is like have a personal account you pay back to yourself. Of course the bank keeps the interest.

You can pay the minimum payment or pay back as much as you wish. If you purchase a property, remodel it, then sell it in 3 months, you can pay off the home equity loan and deposit the profit in your personal or business account.

A home equity loan puts you in charge. Your name is the only name on the deed for your investment property. You spend the money when you need to buy materials, pay contractors, and other costs.

Fees are much lower than other types of loans. The origination fee and annual fees are lower than other types of loans.

Your Business Plan

You have to understand the fact you are using equity from your personal home. Which brings me to the subject of taxes. Check with your account to find out if the interest is deductible. It wouldn’t hurt to have your Real Estate Attorney look at the loan agreement. Since you are placing your home on the line, you better have a written plan. A business plan. You should have a list of contractors, insurance agents, inspectors, and other professionals on hand. You should have an idea of remodeling costs. Or get a quick one day estimate. You have to work with people you know and trust. Time is money. Make sure you have a set schedule. You may have to play general contractor during the project. Make sure you have all the proper permits. And don’t forget lien waivers from all the contractors. A more detailed list can be found on other articles on this site. And we will go over details when we meet and view properties. A Real Estate Agent is more of a partner. Their incomes relies on your success. Return business deserves a reward. You can see my section on Variable Rate Commissions to see my rewards program. Everything works together for success. The first investment property may seem a little shaky. But sit down, review your business plan and schedules. Do a little fine tuning and those little dips will turn into quicker and larger profits in no time. Discuss your business with people you trust and understand your progress and goals. Teamwork is the key.

Investor Fequently Asked Questions

Real Estate Investing with Bank Funds

It may seem like using bank funds is the right choice to begin your investment carrier. You can walk into the bank, talk to people face to face, and do business the old fashion way. But wait. Remember all those old movies when the bank moved in to take over the widow’s property? Does that really happen? It can and it will if you don’t make those payments. Let me ask a question. Do you really understand the terminology in the multi-page agreement? There may be more in those papers than you expected. You may want to have a Real Estate attorney look over those loan papers before you use bank funds to begin your investment carrier.

In many cases bank funds are great for real estate investors. Bank funds have been used for years and have funded some of the largest real estate investments in the world. Which brings up a point. Why is there one standard loan agreement for the little guy, and a host of others for large investor? Of course the large real estate investor will bring in a lawyer. Or a team of lawyers. That is common sense. Then why does the small investor skip that step? How do people skip important steps and expect to make it big in real estate investing?

There may be too many factors in real estate investing with bank funds to cover in one short article on the Internet. But there are a few details to consider before you begin signing contracts and agreements.

You are in the bank. This is your first loan for your first real estate investment. You have one loan and one property. Simple. You remodel the property, resell the property, the loan is paid off, and everyone is happy. But what happens as you grow? Do you get one loan for each property? What happens when your bank offers a blanket loan? That depends on the actual agreement. In exchange for the money, the bank holds the deed to the property as collateral. That makes sense. But what if 2 or more properties are involved? Will the bank release the deed for the one property you want to sell? If that sale will pay off the loan, no problem. If you don’t have enough to payoff the entire loan, you are at the bank’s mercy.

You shouldn’t see that problem if you are buying and selling properties one at a time. Investors more often than not see that scenario when they begin accumulating rental properties. The story usually goes like this.

You decide to buy an investment property. You go to the bank you have been doing business with for years. You sit down, talk to a loan officer, they collect information, and you are qualified for X amount of dollars to buy a duplex. In most cases you will need 20% down. You have to put up some of your own cash. You find a good property. The purchase closes. You get the deed, and the bank is on there because they supplied the money. Business as usual.

You did your homework. Your investment is making money and you are trying your hardest to avoid giving the majority of the profits to the tax man. You set aside a nest egg, and decide to buy another duplex. Over the years you accumulate a few more duplexes. Your system is running smooth. Real Estate prices sky rocket and you figure out you can make more money by selling off one or two of your properties. Your accountant has a great plan that will protect you from paying a ton of taxes. Then you suddenly get a bomb dropped on you.

That’s about the time most investors find out the bank talked you into a blanket loan. All your properties are under one loan. That is when you find out if your bank is as friendly as you thought they were. The bank has to release the lien on the deed so you can sell a property. You don’t just owe the original purchase price on the property you want to sell, you owe all the purchase prices for all your properties. Either the bank will release the lien on a single property for one large payment, or you are stuck with those properties until you come up with enough money to pay off the entire loan.

The bank makes money from interest. Which is part of your monthly payment. That’s what the bank is in business for. It is like you are paying rent on the money you borrowed. You make all of your payments on time and the bank looks at you as one of their best tenants. You are stuck.

Now you know why it is a good idea to talk to an attorney before signing the papers. There are good bank loans, and loans that can place you between a rock and a hard spot. A wise real estate investor will find ways of staying in control. Every bit of control you give to someone else can come back to bite you someday.

If you think you are working with a great Real Estate Agent helping you build your business, they better be having discussions with you during every showing. They should be asking you questions and helping you put your business plan together. Also sending you information on the local market. And every good Real Estate Agent knows the best Real Estate Attorneys. Consultation with a Real Estate Attorney is one of the most important steps you don’t want to skip.

It may seem like using bank funds is the right choice to begin your investment carrier. You can walk into the bank, talk to people face to face, and do business the old fashion way. But wait. Remember all those old movies when the bank moved in to take over the widow’s property? Does that really happen? It can and it will if you don’t make those payments. Let me ask a question. Do you really understand the terminology in the multi-page agreement? There may be more in those papers than you expected. You may want to have a Real Estate attorney look over those loan papers before you use bank funds to begin your investment carrier.

In many cases bank funds are great for real estate investors. Bank funds have been used for years and have funded some of the largest real estate investments in the world. Which brings up a point. Why is there one standard loan agreement for the little guy, and a host of others for large investor? Of course the large real estate investor will bring in a lawyer. Or a team of lawyers. That is common sense. Then why does the small investor skip that step? How do people skip important steps and expect to make it big in real estate investing?

There may be too many factors in real estate investing with bank funds to cover in one short article on the Internet. But there are a few details to consider before you begin signing contracts and agreements.

You are in the bank. This is your first loan for your first real estate investment. You have one loan and one property. Simple. You remodel the property, resell the property, the loan is paid off, and everyone is happy. But what happens as you grow? Do you get one loan for each property? What happens when your bank offers a blanket loan? That depends on the actual agreement. In exchange for the money, the bank holds the deed to the property as collateral. That makes sense. But what if 2 or more properties are involved? Will the bank release the deed for the one property you want to sell? If that sale will pay off the loan, no problem. If you don’t have enough to payoff the entire loan, you are at the bank’s mercy.

You shouldn’t see that problem if you are buying and selling properties one at a time. Investors more often than not see that scenario when they begin accumulating rental properties. The story usually goes like this.

You decide to buy an investment property. You go to the bank you have been doing business with for years. You sit down, talk to a loan officer, they collect information, and you are qualified for X amount of dollars to buy a duplex. In most cases you will need 20% down. You have to put up some of your own cash. You find a good property. The purchase closes. You get the deed, and the bank is on there because they supplied the money. Business as usual.

You did your homework. Your investment is making money and you are trying your hardest to avoid giving the majority of the profits to the tax man. You set aside a nest egg, and decide to buy another duplex. Over the years you accumulate a few more duplexes. Your system is running smooth. Real Estate prices sky rocket and you figure out you can make more money by selling off one or two of your properties. Your accountant has a great plan that will protect you from paying a ton of taxes. Then you suddenly get a bomb dropped on you.

That’s about the time most investors find out the bank talked you into a blanket loan. All your properties are under one loan. That is when you find out if your bank is as friendly as you thought they were. The bank has to release the lien on the deed so you can sell a property. You don’t just owe the original purchase price on the property you want to sell, you owe all the purchase prices for all your properties. Either the bank will release the lien on a single property for one large payment, or you are stuck with those properties until you come up with enough money to pay off the entire loan.

The bank makes money from interest. Which is part of your monthly payment. That’s what the bank is in business for. It is like you are paying rent on the money you borrowed. You make all of your payments on time and the bank looks at you as one of their best tenants. You are stuck.

Now you know why it is a good idea to talk to an attorney before signing the papers. There are good bank loans, and loans that can place you between a rock and a hard spot. A wise real estate investor will find ways of staying in control. Every bit of control you give to someone else can come back to bite you someday.

If you think you are working with a great Real Estate Agent helping you build your business, they better be having discussions with you during every showing. They should be asking you questions and helping you put your business plan together. Also sending you information on the local market. And every good Real Estate Agent knows the best Real Estate Attorneys. Consultation with a Real Estate Attorney is one of the most important steps you don’t want to skip.

Investor Fequently Asked Questions

Investing with Hard Money

If you are interested in investing in Real Estate, do you have the funds available to begin and finish the project? There is the old saying, “a fool and their money are soon parted.” Over my 15 years of Real Estate experience I’ve seen too many people with big dreams and small bank accounts. Some people watch 10 minutes of a half hour home improvement video and think they are qualified to handle any home remodeling job. I have news for you. The property will cost money. Tools and material cost money. And of course you have to pay those property taxes. I will cover facts about choosing the right property for investment in other articles. This article will deal with Investing with Hard Money.

Hard money lenders are a catch word in the Real Estate market for investors that loan money to people who buy, remodel, and sell homes. They are commonly known as flippers. Is hard money lending a good idea? It may and may not be. You have to know who you are dealing with. I would personally avoid any overseas lending companies you find on the Internet. They may or may not actually exist. If you don’t have a substantial amount of funds for a down payment and unexpected issues, you may want to stay out of Real Estate investing. Like everything else, it takes money to make money in Real Estate.

Look for local hard money lenders. Someone who you can meet face to face. They do exist. Have your attorney look over the paperwork and agreement. A consultation with an attorney could wind up saving you thousands down the road.

Hard money loans are generally for properties that will be purchased and quickly sold. Normally within 6 months. Interest and up front costs do vary. You will be paying a much higher rate than normal banks will charge. Check with local lenders to see what loan packages they may offer. A home equity loan may be a good source of funds.

I’ve seen investors try to use hard money loans to build an empire of rental properties. The problem is, hard money loans charge high interest rates, may be short term, and require high renewal fees. All of that cuts into your profit.

Image result for building house of cards wikiI’ve seen investors whose kingdom is a house of cards. Borrowing from one source to pay off one loan, then another, and another. Applying for charge cards, borrowing on those until they reach the limit, then searching for other sources. This is usually in the rental sector. You would expect to have tenants pay their rent on time. But that is not always the case. I’ve heard it before. All of a sudden a rash of tenants comes up short. Short enough that payments are not made and the foreclosure bandwagon moves in to pay their tune. You don’t want that to happen to you. Local banks have investment packages. But you have to watch out for certain conditions on those loans. I will cover those details in another article.

Hard money loans normally carry from 10-18 percent interest. Do the math. Gather all the figures and see what the sale price could bring. Then look at your profit. Is it worth all that time and work? Everyone wants a piece of your pie from the lender to the tax man and the insurance agency. Plan accordingly.

Crossroads Real Estate Marketing

Crossroads Real Estate Marketing

Crossroads Real Estate has taken Real Estate marketing to a whole new level. Forget the one size fits all marketing strategy. That one size fits all theology may sell houses, but at what price? And who pays that price? Crossroads Real Estate does not apply the one commission fits all sizes concept to any seller or listing. Each property, Buyer, Seller, Client, and Customer are unique. Each requires a different approach and technique to assure success on both sides of every transaction.

Crossroads Real Estate Marketing is based on a long list of proprietary information. Few if any other Brokers in the nation use marketing techniques honed by years of experience, the local market, changing market conditions, economic conditions, and forecasts.

Crossroads Real Estate Marketing utilizes a high degree of research focused on understanding the local market. In turn that research reveals a number of Buyer interests. Buyers do have different interests in the same property. There can be anywhere from 3 to 6 major interests in any property. Each interest requires a different marketing approach to draw the greatest number of qualified Buyers to a property.

In many cases Crossroads Real Estate marketing results in multiple offers for the Seller to review. That is the goal. On the Broker side, multiple offers require more time, work, and effort. For the Seller, multiple offers places the Seller in the drivers seat and in most cases, places the Seller in a more relaxed stage throughout the sale process.

What does Crossroads Real Estate Marketing consist of? The actual process is proprietary information. Some of the general steps consist of gathering local market data. Automated systems are installed and refined to suit specific needs. Working with a Linux based system is one of the most important keys. Linux based systems are more secure. Which not only protects client information, but protects the actual process used by Crossroads Real Estate from prying eyes on the Internet. Internet security is a major concern for Crossroads Real Estate.

As you all know, Linux systems require a certain degree of programming knowledge and skill. Simple computer applications can track and report on local market conditions and changes that can effect the entire marking concept. A few properly timed changes to the marketing concept on a property can make all the difference.

Rest assured, Crossroads Real Estate does not rely on any third party involved with Internet information gathering, which most often relies on spyware, and selling information. All of the information used by Crossroads Real Estate is actually public information offered by the most reliable sources in the nation. The best news is, this information is free. Which allows Crossroads Real Estate to offer its clients the best commission rates in the area, along with services that go way beyond the cutting edge of the Real Estate Industry in general. This information and its sources is shared with Buyers and clients to help equip themselves with the information they need to make the right choice when it comes to making the decision on the next property they will purchase. Information is power.

Computers are a tool. The information is out there and available. All it takes is a little imagination and a few computer skills to put the best package together, and offer services the competition has never dreamed about. Crossroads Real Estate marketing brings that concept to reality. And with that concept and technology comes the innovative marketing techniques that Buyers and Sellers need to stand above the crowd.

Investor Fequently Asked Questions

Highest and Best Offer

In today’s Real Estate market we are seeing a lot of properties with multiple offers. This is true especially with foreclosed properties. The best properties are receiving a dozen of more offers in the first 3 or 4 days of listing, or offering a new price drop. Many of them are receiving bids over list price.

Its nothing new to deal with a highest and best offer situation. It should be expected when dealing with foreclosed properties. If you deal with foreclosures, you are going to experience the highest and best bid scenario. But in some cases the communication from the listing broker is lax to say the least. Often times Real Estate Agents receive an email asking for highest and best offers. Homepath, one of the most popular websites Real Estate Agents deal with on foreclosed properties relies solely on emails. No phone follow up, and no formal requests for highest and best bids.

To deal with the highest and best offer requires a constant monitoring of email accounts. Most often we are given about 24 hours to reply. It also requires a great deal of organization to have the information to fill in the counter offer, get it signed and submitted on time. Today’s technology allows us to do things quicker, but only if you have the information and programs available.

One of the features used by Real Estate Agents is E-sign. A counter offer can be quickly generated and e-mailed to a client for review and signature. Once it is returned, submitted to the Listing Agent, or uploaded to sites such as Homepath, the process continues and the Buyer is still in the running. The other alternative is to have a blank form available and meet personally with the Buyer for their review and signature. The key is to get the job done right and within the short time frame created by the Seller.

This exemplifies the need to have all the details in place before bidding. One of the biggest obstacles we face in Real Estate is Buyers dragging their feet, taking their time providing proof of funds, or a pre-approval letter from a licensed lender. Most Sellers, or asset managers will not consider an offer if it is not accompanied with proof of funds or a pre-approval letter. Once we enter the counter offer stage requiring a highest and best bid, it leaves little time to tie up loose ends.

The number of people calling me, thinking they know what it takes to buy foreclosed properties surprises me. Many of them watch online videos produced by companies which may, or may not exist, often paying fees to receive online advice. It seems online video viewers are the majority of unprepared buyers. They take advice from someone on an online video about Real Estate who may or may not have purchased foreclosed properties. They seem to know little or nothing about the actual process which causes the majority of delays. The very first step is getting the funding inline. Do you cash your check and put money in your wallet before or after you go to the store? How do you shop? Do you run around looking for the best bargains? Do you wait to find the bargain of your dreams then decide to make a payment on your charge card, wait for the funds to clear, then run back to the store to see if the item is still available? This seems to be the way some people like to shop for houses. By the time they take care of funding, the house is gone.

Straying from the tried and true process most often results in wasted time and energy.