Monica Main Blog

The Good, Bad, and Ugly of Real Estate Investing

Saturday, December 29 2012

The Good, Bad, and Ugly of Real Estate Investing

A lot has changed in the world of real estate in the past couple of years. Let me give you the good, bad, and ugly of it all as we prepare to enter 2013.

Let's get The Ugly out of the way first:

The Ugly:

Real estate agents and brokers are still losers, even more now than ever because of their lengthy time in starvation mode. It's like letting a caged dog out of a hot box after starving him for a couple of weeks. Not a pretty sight. And yes, he will attack you, probably eating you in the process. And no, none of them got any smarter, more professional, or kinder in the last few years. I have to say that it's probably the meanest and angriest group of "professionals" since the lynch mob in the 1800s.

There are still some very creepy unscrupulous characters out in the world of lending. Although they can't get away with the former lending practices that got us into all that financial trouble a handful of years back because of so many newly implemented federal regulations, they are a little more brazen with their front-end scams such as "money-up-front" loans, ridiculously high loan application fees, equity partnership scams, due diligence legal fee scams, and a wide variety of other illegal behavior that's pretty obvious unless you're emotionally desperate to do your deal, then you may actually fall for the scam at hand. There are still Uncle Guido loan shark types out there with super high loan points and borderline illegal interest rates that make investing in any type of property not only incredibly risky but just plain stupid.

The Bad:

Many sellers still think they are selling at the peak of the market, even after watching their property rot on Loopnet with no activity for years and years. They also think that their property is the hottest thing since the Gold Rush in California and won't budge on their price, probably even thinking their building was built out of 24K gold bricks; this is how deluded many of them still are. Yet on the flip side, because the market heating up so fast in the commercial real estate realm, many of them can actually hang on for a little longer and get what they're asking for. Maybe more.

Competition pretty much took over the commercial real estate investing market virtually overnight, especially with apartment building investing. This happened because everyone realized (at the precise same time) that the market wasn't getting any lower on pricing, interest rates weren't going to get any lower and commercial banks started lending with much less strict mortgage criteria. This "perfect storm" happened over the summer, probably while you were at the beach. Tighter competition means that the days of 100% owner financing are officially over. So is expecting a lot of seller carry.

The Good:

Investors are picking up properties so fast (expecting that they'll start going up soon) that they are limited to choosing stabilized properties in order to manage their cash flows and/or appease their investor partners. Most of them are notin the position to rehab or lease-up an underperforming property. This leaves the REO and underperforming property market pretty much wide open for you.

Investors are leaving smaller properties alone. This includes 4-plexes ("quads"), SFRs (single-family residences), smaller MHP properties (up to 20 pads), and smaller apartment buildings (5 - 16 units). The good news about this is that smaller properties are much cheaper to function. Your operating expenses usually never exceed 35% on these properties and can be as low as 20%. (Bigger properties have operating expenses as much as 65% or higher in some cases!) Having a bunch of smaller properties is the way to go because the cost to operate them is much less, thus putting more cash into your pocket.

Becoming part of an equity partnership deal is super easy now. Every investor and wannabe investor with money wants in on real estate right now. Long gone are the days of twisting an investor's arm to get him or her to invest in a deal or convincing them how awesome apartment building investing is. Their pens are poised to write checks. Now! You just have to find these people through a variety of specific methods that I've taught over the years. (Now is time to use these methods; get my point?)

Commercial mortgages are actually much easier to get than you think. If you have good personal credit, you're in. Even if you have no built business credit yet, you can still buy a building under a newly formed LLC and use yourself as a personal guarantee since all loans under $1,000,000 are recourse loans (requiring a personal guarantee) anyway.

Gaining access to unsecured lines of business credit has never been easier because of a newly implemented government program encouraging commercial banks to lend more money to businesses to get the economy rolling again. Banks get special incentives for lending money to businesses. Of course, this requires that you take some time to build some business credit which takes anywhere from 3 - 6 months. Good business credit can put you in an unsecured line of business credit in the low- to mid-six figures which can, in turn, be used for down payments on properties. Since you're going to be focusing on smaller properties from now on (priced $100,000 to $1,000,000), having unsecured cash will easily give you the 20% required for the down payment on these deals.

Like I said, I've been warning everyone for a couple of years now that the window of opportunity is closing for getting your foot in the door on apartment building investing with little or no money down, owner financing, and by using creative financing methods.

And I also mentioned that the window of opportunity has just officially closed.

Instead of letting it depress you, instead you need to look at what's left on the table for you to make a killing with.

1) Smaller properties like small apartment buildings, MHP properties, and even SFRs.

2) REO apartment buildings and unstable properties requiring a revamp on management.

But...if you're going to get these properties, you're going to have to put some "skin" in the game. This means putting money down. And you can get this money by changing the face of your personal credit and building business credit.

My students with good credit get anywhere from $300,000 to $500,000 in unsecured lines of business credit.

Students with marginal personal credit but with built business credit get anywhere from $50,000 to $150,000 in unsecured lines of business credit.

Whichever category above you'll end up in by this coming summer will still get you in the investing game because you'll be able to raise the money for your EMDs, due diligence, and down payments to play the investment game.

See you at the top!

Your mentor,

Monica Main

www.MonicaMain.com

Posted by: Monica Main AT 10:31 am | Permalink | Email

A Guy Named Victor in Michigan

Thursday, December 20 2012

A Guy Named Victor in Michigan

Yesterday I met a nice young man by the name of Victor while shopping. Right now I'm in Michigan spending time with my husband's family and looking at property for acquisitions.

And a rare occurrence took place. I was recognized in public.

It happens here and there but not often.

I didn't have the foresight to give Victor my business card and since he says he reads all my emails, I'm going to give Victor a special prize when he calls into my office.

So, Victor, if you're reading this, call my office and ask for Lea. She's in the office from 9am to 5pm PST...that's 3 hours behind you. I already instructed her on what your special prize will be if you can tell her which store we met in and where it's located.

This is what I call synchronicity of the universe.

And it will now be up to Victor on how he chooses to use it.

What's interesting is that Victor said he was just on my website before meeting me. Victor is ready for a change in his life. He happened to bump into me. Think about it: what are the chances? I live in California. I happened to be out shopping in a busy mall in Michigan. (This is something of a pet peeve of mine, shopping in crowded places because my basic motto is "Get it on Amazon.com or Don't Get It at All!")

Since Victor happened to be there at the right time...or maybe it was the other way around...I'm going to give him an opportunity to further the opportunity in his life if he chooses to take it.

This is the universe opening doors for him...because Victor is ready.

Are you ready?

It got me thinking about my students and how many of them have been sitting around thinking about changing certain aspects of their lives, yet they don't for one reason or another. Yet I have a slew of other students who have decided to make the changes and they've become successful as a result of it, mostly by having a Take-No-Prisoners attitude.

This is the point you need to get in order to have the right follow-through.

The start of a New Year is always a good momentum starting point. This is when many of us are gung-ho, clutching to a list of "resolutions" that we swear we'll follow through with this time. Because this year will be different.

This coming year will be different but only if you want it to be.

Unless you believe the end of the world is tomorrow...in which case there won't be a 2013 at all. (Somehow I have a feeling we'll all still be here.)

I've found a single success formula that will always work...but only if you do it.

It's actually compacted into a single word: Action!

Sometimes your plan may be out of whack and that's okay. As long as you're pushing through with some kind of action, sometimes other opportunities or directions are presented to you. Sometimes you alter or tweet the plan and that makes it work. Sometimes you realize the plan isn't what you wanted after all, in which case you devise another plan and go for that instead.

But none of this can occur until you proceed with action in some direction that best matches your desires right now.

Many of my students ask me where to start. Of course, the answer changes every 6 - 12 months depending on what is happening with the real estate market and economy.

Right now, my recommendations for the upcoming year is the following provided that you're someone who likes to do things yourself (like I am):

1) Get your personal and business credit in functioning order. This will allow you to tap into unsecured lines of credit to purchase apartment buildings, single-family homes, access cash for a business start-up or whatever you want to do. You can't make a living working for someone else unless you're a CEO or other high falutin figure. You have to make money as an investor, business owner, or both.

Fixing/rebuilding your personal credit while getting your business credit up and running will not only help you acquire investments and business cash but it'll allow you to "roll" your money-making leverage up in the fastest possible increments. And you can do this all yourself without sharing any of your investment or business proceeds with an investor partner.

I have a special deal for exactly what I just outlined above athttp://www.monicamain.com/credit_deal which is coming to an end soon.

2) Starting with SFRs. When I first got started in investing eons ago, like many other investors I got started flipping fixer-upper single-family homes. Later on I adopted the methodology of buying SFRs to rent them out. Then, of course, the economy greatly shifted, I moved onto the more lucrative apartment building investing, and I long left SFR acquisitions and flipping in the dust.

Then last year I started flipping SFRs again, only because the economy came around, making flipping an incredibly lucrative enterprise. This generally happens when the economy shifts from a recessive flatline to a slow progressive improvement. Flipping is awesome during these times and...we're now officially in "these times" to make fixer-upper flipping work.

If you're interested in acquiring even more cash for your passive income real estate (i.e. apartment building investing), it's best that you inject your own cash into those types of deals which you can now easily raise through SFR flipping. But this opportunity won't last forever. Just as the window of opportunity has closed for no-cash-no-credit deals with 100% owner financing, you can now get your own cash and credit together to do your own deals and increase your net worth 1,000 fold in the shortest amount of time possible.

At my Detroit event in March 2013, I'll be talking at great length about the SFR flipping opportunity as well as the Total Wealth Building System and you'll even be able to access a million-dollar line of business credit during the event. For more information on this, go tohttp://www.monicamain.com/flipping_frenzy.

This coming year of 2013 can be your year...but not if you plan on sitting on your ass and doing nothing. Every successful person out there -- smart or stupid, with or without resources -- all did one thing and one thing only: they created a simple plan and executed the plan. That's it. Nothing more!

No, you don't have to win the lottery or "get lucky" to make things happen for your life. You just have to have a simple set of instructions and play out the instructions laid out. Just like every other successful person has and does.

And I just laid out the instructions in #1 and #2 above. Now you just need to execute them.

If you have any questions, call my office at (661) 295-5050.

As for Victor in Michigan, Lea is waiting to hear from you after 9am PST.

See you at the top!

Your mentor,

Monica Main

Posted by: Monica Main AT 02:16 pm | Permalink | Email

The Question Everyone Keeps Asking Me!

Saturday, December 08 2012

The Question Everyone Keeps Asking Me

Before I left the office last night, Lea told me that a lot of my students who were calling in about the raising capital website building that we are now doing were wondering about one thing...

Are we going to be doing everything for the website?

Funny that she mentioned this because I was also bombarded by quite a few emails asking me the same thing.

Are we going to be doing everything for the website?

Well, let's define all of the elements that are needed for a super successful raising capital website that will be so awesome, it'll get investor partners writing checks for the down payments on your real estate deals.

1) You'll need a website with multiple pages, including the page in which your hot deal will be located. Yes, we will be doing this for you.

2) You'll need a means of capturing prospective investors' contact information including their email addresses. Yes, we will be setting this up for you including a short "auto drip" campaign and a "bait" report (which you'll also get from us).

3) You'll need fresh copy on your site that will instantly draw in the interest of your prospective investor. Yes, we will be including that on your site.

4) You'll need a hot deal. No, we will not be providing that for you. You will have to get a deal that you want funding for and we can do the rest for you.

One of the other things my students seem to be concerned about is their level of experience and if investor partners will be interested in working with them.

The answer: yes, they want to work with you. If you are presenting an awesome money-making opportunity for them with a basic plan on how you're going to pull it off, they want in. Period!

The basic "rule" though is that the property (or opportunity) will have to be local to some degree. You can't realistically dream of capturing the interest of a prospective investor if you say, "Here's my Loopnet deal, I want 50% of it, and we are going to acquire this as partners yet I'll hire a management company."

No, no, no! This isn't how it works.

Instead, you're essentially saying, "Here's my deal, I want 30% of it for overseeing minor cosmetic rehab and lease-up, we are going to acquire this as partners, and since I'm fairly local to the property, I'll handle every aspect of this deal while you wildly profit!"

The other thing that my students don't seem to understand is that there is this huge wave of interested investor partners coming out of the "mass wealthy" pool. These people are doctors, dentists, lawyers (yuck!), engineers, and other professionals who have lots of liquid assets but no clue on what to do with this money.

Yet they are all in the same boat.

Time is running out for them. It's as simple as that.

These people can only continue working 40 to 70 hours per week for so long before they will realistically drop dead from exhaustion (or blowing their brains out to escape the rat race), they're all getting up there in age, and they are desperate for a real plan on maintaining their lavish lifestyle while cutting back (or eliminating) their work schedule!

And you're their plan.

I've had more "mass wealthy" invest in my deals just in the past 2 years than I've ever had in my investing career.

I had no "mass wealthy" invest with me 10 years ago. I had 1 invest with me about 5 years ago. Now 95% of the investor partners who invest with me on deals are part of this "mass wealthy" pool.

Interesting how quickly things change.

What's awesome about these people is that you don't need to twist their arm on the opportunity. You don't need to convince them of having a high level of experience. Just going through a course on real estate investing makes you much more qualified on the subject than they'll ever be!

This is quite the opposite, by the way, if you're trying to deal with professional investors (which has become very difficult to do these days because they micro-manage everything).

Remember, I've been warning everyone for a couple of years now that the window of opportunity is closing for getting your foot in the door on apartment building investing with little or no money down, owner financing, and by using creative financing methods.

Okay, so you know you have to set up a website to start drawing in these investor partners.

But it takes more than just having a website out there.

A website is like an island. It can be there in the middle of the ocean. Unless people know about it, the island is useless, bare, and lonely.

So, you won't be getting just a website from us. You'll be in full understanding of exactly what you'll need to do to market this website with a cutting-edge, bona-fide step-by-step plan on what to do to drive boatloads of qualified investor partner traffic to your site so that you can get your deal(s) funded virtually instantly!

This is a far cry from what I had to use to get investor partnership money only a handful of years ago.

I had to use investor mailing lists. I had to create a kick-ass mailing piece, talking about specific deals I was working on. I was limited to mailing to Southern California investors and I had to meet with them one-on-one to "sell" them the deal.

This was costly, time-consuming, nerve-wracking, and a miserable process And I hated every minute of it. But I was able to acquire tens of millions of dollars in property from 2003 through 2012 without sinking a penny of my own into a single piece of investment real estate.

I only wish I had access to the type of technology and the online raising capital "system" I know about now back in 2003 because I would be into the hundreds of millions of dollars in property by now.

However, reality is, most people cannot do what I did to raise capital because it takes a certain type of personality and very thick skin.

Now you don't have to anymore.

For a very limited time, I'm offering you an opportunity to have your own Operation Money Magnet website developed and up and running so that you can ring in the New Year with getting your hot new deal funded and launched.

And for a super limited time, you can actually get a sweet deal on getting your site built by us: http://www.monicamain.com/raising_capital_website

I already had quite a few students sign up by the time I left yesterday. I'm putting a limit on this since I don't want to overwhelm myself or Rafael nor do I want any of my students waiting to get a complete website.

You can also use me to write your mini-business plan, PowerPoint, and to do your YouTube online video presentation for your site. All you do is supply the deal.

You decide whether gaining access to hundreds of thousands and even millions of dollars in investor partner down payments for your deals is important...or not.

Go to http://www.monicamain.com/raising_capital_website to get your website going now!

See you at the top!

Your mentor,

Monica Main

www.MonicaMain.com

Posted by: Monica Main AT 04:06 pm | Permalink | Email