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Getting Started in Real Estate

As I talk with people every day about Creative Real Estate, I frequently get asked this question: "How did you get started in Creative Real Estate?"

People are curious to know how or why someone like me found themselves buying property creatively. The simple answer is that at the time I bought my first property, I was broke and needed a place to live. Of course, people want the details, so I give them the long explanation.

In July of 1979, 1 took the California Bar Exam. As soon as I had finished the exam, I flew to Hawaii to join my wife who had left earlier. We had decided to live there a while after taking the exam. While we were living there, my wife's uncle made a trip to the mainland. When he returned he came back with many things, one item being a book about creative real estate (No, it was not A Fortune at Your Feet).

This book was pretty basic compared to A Fortune at Your Feet. It did cover such topics as leveraging and how compounding works. I began to realize why my parents had purchased a few rentals over time. You see up until this time my view of rental property was something I had to work on.

In my family I was the eldest son. Whatever help my father needed, I was there to provide. Most of the time I was not enthusiastic about my role as an indentured servant! He had purchased properties with no money out of his pocket. After reading this book, as basic and self-serving as it was, it opened my eyes to the possibilities of owning not only my own home, but a number of properties.

The author kept referring to his use of a "wraparound mortgage" to buy him several properties and how by using this technique he had purchased properties with little or no money out of his pocket.

In December of 1979, we moved back to California. We arrived broke. The costs of airline tickets for ourselves and our household goods tapped our cash and credit resources. I may have been broke, but I had a plan! We moved into my sister-in-law's home. However, before we came back, I asked my sister-in-law to find us a Realtor. As soon as we arrived I met with the Realtor and told her what I wanted. I wanted to buy a house using a wraparound mortgage. Lucky for me she had just gotten her license and was eager to put together a transaction!

There is something to be said for working with a young dynamic person who has a lot of energy and enthusiasm. She didn't know what a wraparound mortgage was and neither did I. You see, the author never gave an explanation of how it worked. Therefore, I could not explain it to my Realtor except to say that you use it to buy real estate without having to go to the bank. While she was looking for a property for me, I was out interviewing for a job.

I realized that if I were to purchase a property for "no money down" I still had to make the monthly payments. Within two weeks we were both successful. She had found us a house and I had found a good job. The home was a four-bedroom in a suburb of Los Angeles. The owner was a contractor who happened to live right across the street from the property. The owner was tired of having renters as his neighbors. He also was tired of maintaining the property.

However, he still wanted the monthly income from this property. After inspecting the property and meeting with the owner to discuss the needs of the owner and explaining the situation, "no money, great prospects", we made an offer. We gave him his asking price because we had reviewed some comps and his price was reasonable. We asked that he carryback the financing using a wraparound mortgage.

Lucky for me he knew what that was and how it worked. He had sold other properties using this technique. I wrote the Realtor an IOU for $500 on the back of an envelope for deposit. The bottom line is that I had to come up with $500 at closing with further principal payments over time.

Part of the offer was that we could live rent free in the house during the escrow period. The owner agreed with one stipulation, that I provide verification of employment. I was able to comply with this one stipulation and moved into the house. So there you have it. How a dummy got
an idea from a book and just did something!

Five Real Estate Success Strategies

Real Estate Success Strategy #1

Get NetworkedJoin an Investment Club When I started out twenty years ago investing in real estate, I was lucky enough to find real estate investment groups in my area. 1 was able to network with others who had the same interests as I did. From my association with these people I received a lot of encouragement, advice and a greater understanding of this business. "Let's get connected!"

I was able to purchase properties creatively from other members. I gained insights, as experts on various aspects of real estate investing would speak at the monthly meetings. Going to these meetings, being around these people fired me up monthly to go out and pursue my real estate investing career. I owe a lot to those club members that helped me succeed.

Real Estate Success Strategy #2

I believe one of the saddest things in life is to see someone who has promised to do something not carry out that promise. How can others trust us and believe in us if we keep breaking promises to them? How can we trust and believe in ourselves if we keep breaking promises to ourselves?

"Honor your selfpromises"

Think about it. You promise yourself and maybe others that you are going to change your life. Maybe you promise to go on a diet and exercise program to improve your health or maybe you're going to buy and "flip" a couple of properties to increase your cash flow but you end up doing nothing. Would you really start believing yourself if you kept breaking promises to yourself?

If you are guilty of doing this, make a strong commitment to change this pattern. Honor your self-promises, start with little promises to yourself like "I promise I will call two people a day about their real estate". Try this and see if this does not create big benefits in your life.

Real Estate Success Strategy #3

Focus On Your Future Vision How often have we heard professional athletes say that they have pictured in their mind shooting the game-winning basket in the fourth quarter with time running out? Just the other night I heard Kobe Bryant of the Los Angeles Lakers make that comment. We can do this also. Prior to falling asleep at night visualize how you want your life to look in five years, ten years.

What kind of car do you want to drive?

What kind of house do you want to own?
Is it paid for?
Where are you going on vacation?
What kind of properties do you own?
What kind of cash flow are you netting every month?

Focuson your future vision even if you're living in a tenement apartment or sleeping an a friend's couch. Napoleon Hill once said, "Whatever a man can conceive in his mind, he can achieve". Those are words to live by. Focus on where you want to be and not where you are. You will get there!

Real Estate Success Strategy #4

Take Action! Of course you won't get there unless you take some action. I can't tell you how many people I've worked with who get hung up on "analysis paralysis". They find a good deal and argue over it with themselves long past the point of reason, and usually long past the point of being able to purchase it, because in the meantime another investor has locked it up.

Nothing is going to change until you take action. If you find a good deal write an offer. You can write in some "weasel clauses" if you're worried something may go wrong. Things just don't happen, you have to make them happen. Go for it!

Real Estate Success Strategy #5

Don't Give Up! I believe the worst thing you can do is give up on yourself, your goals and your dreams. To my way of thinking once you have given up on your goals and dreams you're dead-you just haven't stopped breathing yet. I guess you can always replace your goals and dreams with other goals and dreams. However it has been my experience that this does not happen in most cases. "You can write in some 'weasel clauses'. Don't give up, remember it took Thomas Edison and his staff over one thousand experiments and a year and a half to invent the electric light bulb. Try these real estate success strategies for yourself and see if they don't make a big difference in your life.

Real Estate Mentoring Stories

Frederick Tingley, of Salt Lake City,Utah, is a real estate coach and over the past four years has personally mentored hundreds of individuals in all fifty states. A lawyer, real estate broker and developer, he has developed several tracts of land and has been a general partner and manager in over 25 limited partnerships and LLCs.

Real Estate Mentoring Program

From time to time I like to share with our readers some success stories that our students in the mentoring program are having. The first story is related by Cathy B. in Asheville, N.C. Cathy deals a lot with mobile homes. This is a story of how a finderfunder situation can develop in your investor club. Here is Cathy's story.

Cathy B.'s success with the Real Estate Mentorng Program

"We'd owned a small subdivision for a year and hadn't done a thing with it. I read A.D.'s book and got excited and signed up for the mentoring program. I got more excited as I met with Fred. I knew I had to get committed and do something because I had to talk with him every week.

"I thought I'd been wanting to do something with these lots. Fred mentioned team work. I had worked with Mike at the mobile home dealership and knew he could get the job done. Mike could get mobile homes at 50 cents on the dollar. "Mike gave me a floor plan and spec sheet on a 1296 sq. ft. mobile home that usually sells for $56,000.

Mike would get it for me for $27,000 including delivery, setups, footers, and finished inside and out. "I gave him $500 and had two weeks to come up with the rest. With two days to go, I still didn't have the $27,000. A friend called from our real estate investors association. I told her my problem and she said, 'Cathy, our advanced group is meeting at 11:45 today. Come and somebody will give you the money!'

"I went and met a new investor. His name was David. My friend Judy mentioned why I was there and David said, 'I can get my hands on $27,00O for you.' Another investor offered me a deal too. "I agreed to give David a 1 st mortgage on the home for the money. I agreed to repay him with interest in 45 days. The other investor agreed to be a backup just in case.

"I got my money to buy the mobile home. My mortgage broker got a new loan from a savings bank, which refinanced the subdivision and the home. My payments are $28 less per month than they had been with the original seller of the subdivision and I'm getting a new house out of it!"

As you can see Cathy used her local investment club to find a funder for her deal. A.D. is always saying that if you need a funder for your deal look to your local investment club.

Eric's success with the Real Estate Mentorng Program

Another story comes from Eric in South Florida. Eric just started as an investor. Here is his story. "My name is Eric and I recently moved to South Florida with my beautiful fiancee, Tami. We began our search for investment properties by driving around our area in a ten mile radius. Much to our surprise we located several properties that we were interested in. "In the South Florida market it is difficult to find properties under market value.

In theory, there was only one formula that would work. Buy at full price and then sell as a lease option to buy. "Our first deal was a property in a middle class neighborhood listed for $102,000. We commissioned an experienced Realtor to check the comps in the area and find out what was motivating the seller to sell. "The value of he property was estimated at $107K to $115K.

The seller had an offer in on another property contingent upon the sale of this home. They had reduced the price for a quick sale. We made an offer. "We offered a slightly higher price than they were asking and in return they would pay 3 percentage of the purchase price toward our closing costs. They agreed to our contract!

"We applied for and received 100% financing in Tami's name (she had a better credit score). Upon the signing of the contract and the preliminary approval for financing we ran an ad. "We received more than 30 calls on the ad and began screening the prospects immediately.

"Our closing costs were paid by the sellers. The couple that took the lease option, gave us a $3,000 deposit towards the purchase price. We receive $250 a month over and above our PITI for 24 months and a future profit upon the exercise of the option of $14,000. Not bad for 20 hours of part time work. This has become our cookie cutter formula."

Eric is in the process of closing on two more properties using this same formula.

Cathy and Eric using insights gained from the mentoring program have found great success and have jump started themselves on the road to financial success. If you have a success story please send it to me to show others how ordinary people are finding extraordinary success using creative real estate principals.

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