Real Estate Gurus to Avoid!

[$Cash$]

Infowell,

An acquaintance of mine who has a very large real estate business was telling me how it works and far as his agents go, only he referred to them as minions.

The more minions you have the more money you make in this business, because I take a cut out of every deal so the more minions the more money I make.  They pay for their desk space, plus various other items that are common place in the real estate agency business, which more than pays my overhead.

Here is how it is done after you pay for the privilege of being a broker’s agent.

You find a house that the seller wants $150K for, so you go under contract and add in your 6% so that when it is sold the buyer will be paying this commission in the purchase price so the seller can claim it on the HUD-1, as yes he does pay it out of the buyers money.

The house is priced at $159K with the commission added.  The property is sold for $159K by an agent from a different company in the majority of cases.  So your office gets $4,500.

The broker gets $1,800 and you the broker’s agent receives $2,700 and since I am not really familiar with the percentages I am told the norm is a 60/40 split. Out of this deal you wound up with $2,700 and I will not deduct the fees you pay to work for the Realtor.

Now let's go on to how a creative investor works, he finds the same house only the seller owes around $135K on the property.   Remember creative investors deal with motivated sellers so the seller needs out and needs out now.  I explain how he would not put any money in his pocket if he listed it because between the realtor and closing costs this would amount to 10%, which would eat up his equity.  

Even if they were to say they are not using a realtor I reply you are whether you want to or not, because most all appraisals have the 6% added. We reach an agreement and I give him U-Haul money of about $1K to get him moved.

I have bought and sold over 500 houses without the use of a realtor so this one would be no different and I purchase using the Subject To method.

I will sell on a 2 year land contract.  My terms are $10K down, the exist mortgage rate is 6% and I make it 8% to give me a monthly passive income for two years of lets say $300 a month.  I also add two years of appreciation and let's say it is 5% a year to the purchase price of the property.

Here are my numbers:

$8K from the down which is less my costs.
$7.2K from the monthly passive income.
$10K two years appreciation when the house is refinanced.
$15K from the equity when I purchased.

The same house you made $2700 on I make $37.2K on, now you understand that you have to sell about 14 houses for every one I do to make the same money.

Get cracking as I have already done two this month with higher numbers.

John $Cash$ Locke

[wallacehobbs]

I

Infowell,

Here are my numbers:

$8K from the down which is less my costs.
$7.2K from the monthly passive income.
$10K two years appreciation when the house is refinanced.
$15K from the equity when I purchased.

The same house you made $2700 on I make $37.2K on, now you understand that you have to sell about 14 houses for every one I do to make the same money.

Get cracking as I have already done two this month with higher numbers.

John $Cash$ Locke

John,

Long time no speak.  Hope you and yours are doing very well.

I liked the way you explained this for us to understand.  "Right on."

Just wanted to take it one more step to break it down a bit more if I may ask ???

John, when you figure in Taxes, and other Fees how much money will you actually earn or Net from the $37.2 K amount?

Also you made no mention  about your repairs or rehab amounts and cost?

I have never bought a older house I did not do "something" to unless I just sold it to another investor? ???

Thanks and have a great weekend!  

[$Cash$]

Wallace,

It has been awhile, however see you are trying to own a property in every state and a very large goal, so good investing.

First of all I do not re-hab any property I purchase, only make sure it is super clean.  I found that my buyers are willing to do any work that is needed themselves.  Since I do not market to pre-foreclosures, only to those folks who need my help before they get in trouble and I know who they are, chances are the property is in good condition.  These houses are not older houses either.

Selling or holding time is no problem as I check the days on market (DOM) and when I see that the normal time it takes realtors to sell a property is let's say 90 days then I know I will sell mine in two weeks.

Taxes and fees vary state by state so this would be tough to estimate, I like to think of it this way, if a creative Subject To investor does four deals a year on an average of $37K gross profit then they are making about $148K a year, so pay the taxes, give Uncle his share and think where else can a person make this without all the stress and hours working for someone else.

There are so many pre conceived ideas about what Subject To investing is all about I can understand your questions.

John $Cash$ Locke

[Infowell]

Infowell,

An acquaintance of mine who has a very large real estate business was telling me how it works and far as his agents go, only he referred to them as minions.

The more minions you have the more money you make in this business, because I take a cut out of every deal so the more minions the more money I make.  They pay for their desk space, plus various other items that are common place in the real estate agency business, which more than pays my overhead.

Here is how it is done after you pay for the privilege of being a broker’s agent.

You find a house that the seller wants $150K for, so you go under contract and add in your 6% so that when it is sold the buyer will be paying this commission in the purchase price so the seller can claim it on the HUD-1, as yes he does pay it out of the buyers money.

The house is priced at $159K with the commission added.  The property is sold for $159K by an agent from a different company in the majority of cases.  So your office gets $4,500.

The broker gets $1,800 and you the broker’s agent receives $2,700 and since I am not really familiar with the percentages I am told the norm is a 60/40 split. Out of this deal you wound up with $2,700 and I will not deduct the fees you pay to work for the Realtor.

Now let's go on to how a creative investor works, he finds the same house only the seller owes around $135K on the property.   Remember creative investors deal with motivated sellers so the seller needs out and needs out now.  I explain how he would not put any money in his pocket if he listed it because between the realtor and closing costs this would amount to 10%, which would eat up his equity.  

Even if they were to say they are not using a realtor I reply you are whether you want to or not, because most all appraisals have the 6% added. We reach an agreement and I give him U-Haul money of about $1K to get him moved.

I have bought and sold over 500 houses without the use of a realtor so this one would be no different and I purchase using the Subject To method.

I will sell on a 2 year land contract.  My terms are $10K down, the exist mortgage rate is 6% and I make it 8% to give me a monthly passive income for two years of lets say $300 a month.  I also add two years of appreciation and let's say it is 5% a year to the purchase price of the property.

Here are my numbers:

$8K from the down which is less my costs.
$7.2K from the monthly passive income.
$10K two years appreciation when the house is refinanced.
$15K from the equity when I purchased.

The same house you made $2700 on I make $37.2K on, now you understand that you have to sell about 14 houses for every one I do to make the same money.

Get cracking as I have already done two this month with higher numbers.

John $Cash$ Locke

How can you taste my cup of tea Quai Chang...when your's is already full?

Your method is not the only way to invest (not by a long shot).

Your path is not the most profitable, or productive way to invest (in my humble opinion).

"Get cracking as I have already done two this month with higher numbers."

You've always jumped to conclusions regarding where I live, how much I make, how I earn a living...

FTR: I've never written a purchase & sale agreement.

My interest is in land, and to a lesser extent...emerging markets (riding the equity elevator).

We do quite well for ourselves & we're satisfied with our income & lifestyle.

"The broker gets $1,800 and you the broker’s agent receives $2,700 and since I am not really familiar with the percentages I am told the norm is a 60/40 split."

How come you're "not really familiar" with the percentages?

Didn't you once write that you were married to a RE Broker?

-Info

[TMCG]

in all honesty, i didn't read much of this thread, but i did read the first posts link -

no matter what anyone puts out there - they're going to be judged by some as being "rip off artists" and the like.

i'm not debating whether any one of them is or isn't, all i'm saying is, i've reviewed the sheets program and though i did not carry through with much of the silliness of the course, i can definetely say that the course is full of USEFUL information that can lead you in a positive direction.  

in my opinion - i do not think any of them should accept ANY REFUND WHATSOEVER.  unless a customer receives something that is faulty, like a CD that doesn't play or a booklet that is damaged, etc - why offer a 9.95 "trial period"...when the person can burn at least parts of the CD's, photocopy all the information and just return it.

dumb.

why offer people the trial period - especially, ifyou're going to give them a hard time for doing so.  

i would just charge X (i.e. 99 bucks) or whatever makes a profit and offer ABSOLUTELY NO STUPID TRIAL PERIODS.

you buy it, you own it - good luck!

success in rei depends on YOU, not the GurU.

[TMCG]

kdhastedt

We deal with this daily on a level that you can't even fathom...we didn't fall off of the turnip truck this morning.  We know where this goes when it's left unattended.  If you don't know what happens, go to the forums at www.landlord.com.  They had to close theirs down because they became a free-for-all foodfight.

so kd, you guys are constantly editing the forums to keep it clean and focused huh?

unreal.  listen, for what it's worth, there's a reason i've posted (what i consider) alot of posts.  i couldn't quite put my finger on it, but when i visited some other forums, many are just....bad.  basically, they s*ck.

now i know why.  this is a great website, good information and you guys do one heck of a job.  as moderators - how does that work anyway?  are you guys compensated...are you all partners?

[kdhastedt]

All of the Moderators on this site are purely volunteers...we do as much as we can as often as we can to keep the "noise floor" to a minimum.  Somedays it is harder/more frustrating than others.  Sometimes you just have to put your foot down, draw the line in the sand, and say "not here"...there are several Members that CONSTANTLY push the envelope...there are others that are blatant and they usually wind up getting "excused"...

We are trying to keep this an enjoyable/educational experience for all.  We get a lot of posters that obviously can't fathom the difference between an informed opinion and an outright commercial...

Keith

[klproperties]

I have gone through Robert Allen and am very pleased in the very short least than 4 months I have gone throught it. I wealth of knowledge and alot of access to mentors, programs and ect. I just need to apply it. With our recent move $$ is tough so we need hard money to cover all to get the ball rolling am going to work on that a bit after the holidays for property in the DFW (texas) and Northern Cali areas.

[Rich_in_CT]

as moderators - how does that work anyway?  are you guys compensated...are you all partners?

I WISH!  Nah, just kidding.  I hang out here a lot and learn a lot so I volunteered to moderate and keep the spam that gets posted here under control.  On average I spend a few hours a day reading (which is definitely helping me) and delete around 15-20+ posts that are advertising viagra, porn, and other junk.  

[kdhastedt]

<<as moderators - how does that work anyway?  are you guys compensated...are you all partners? >>

Only Rich_in_CT gets paid for this...that's why he's "rich"...

...and he doesn't delete the porn, he captures it for later "review"!!!

ROFLMAO!

Keith

[Mr Investor]

Will someone please ban this jerk.

[Mdhaas]

Will someone please ban this jerk.

You know Kdhastedt pretty well, huh?   

[kdhastedt]

Not me...I'm a kitten!

Keith

[moellerryan]

Great post, very informative.  I have taken some weekend bootcamps and seminars.  All of them had good information, some seemed a bit like a dog and pony shows with a parade of other Gurus trying to sell you their bootcamp.  Many gurus are not active investors, they are speakers.  I recommend talking to people who have taken the bootcamp/seminar and also make sure they are true active investors.  They say that less than 4% of seminar attendees actually apply the material afterwords, that means 24 out of 25 people at the seminar pay all that money to understand theory and never make the choice to implement any of their new knowledge.  That surprised me, I guess they expected to be handed money without doing anything.

[christopher w]

Ryan,

You make a very good point. I think that is what happens whenever "the next big thing" comes along. People think they are going to take a seminar and then money just magically starts appearing in their bank accounts. I'm sure you all have noticed the "I make $1283 a day at home working on the internet" ads that that are popping up everywhere now. The "gurus" are not preaching real estate anymore they are now preaching google adwords and how that can make you millions. I took an online course in SEO and adwords just to see if it would help me capture more leads for my mortgage business and I can tell you that it is not easy. It takes a lot of time and effort because it is all about testing the right word combinations as well as investing money in software and then you have to pay google to post your ads where people will actually click on them.

A few years ago during the real estate boom a good friend of mine decided that he was going to be a mortgage broker. So he went and got a job, invested in all of the mortgage gurus material, the scripts, the calculators, the market predictors, went to seminars, etc... and you know what happened?? He quit after 3 months because his phone did not just magically start ringing when he came to work. It never occured to him that he would have to go out and pound the pavement or dial for dollars.