The 50/50 Deal with Mr. Real Estate

I even get requests to do a 50/50 deal from people who have not purchased any of my materials and don't know the basics of real estate and creative financing. To those people I have to say, "Sorry, I cannot do it." The reason is that real estate requires knowledge. If someone is not interested in educating themselves then I cannot participate in the deal.

Again, real estate requires that you be knowledgeable in order to keep you out of trouble. There are several things you MUST know:

• You must know what is real estate and what isn't. Some people think a mobile home is real estate. Sometimes it is, and sometimes it isn't ..... but you have to know the difference! You also have to know how a mobile home that is NOT real estate today, can be turned into real estate tomorrow.
• You must know everything - from A to Z - about a Contract of Sale, Contract for Deed, Land Contract, or Installment Sale - whatever terminology is used in your part of the country. You must know what contract to use and when. If you studied my book, "Creative Financing," you would know there are two contracts: one to use when you buy the house, and one to use when you sell the house. You have to understand both contracts and how to use them.
• You must understand the deal itself. It is NOT a matter of just finding a house and buying it ..... The numbers MUST work! Here are some things that WON'T work:
  1. Too high interest rate on the underlying loan.
  2. State loans that prohibit the owner from even renting the property.
  3. 15-year loans on the underlying loan makes the payment too high.
  4. Properties with balloons, regardless of the length of time for refinancing.
  5. Properties with loan balances higher than the value of the property.
  
  In the last 10 years, many people were able to get 125% financing on a house. Obviously, they are 25% "upside down" in the mortgage.
  6. Homes that are in foreclosure, bankruptcy, or probate.

What I am offering you is a serious business. Even if you buy ALL my materials, it is peanuts in comparison to the money you can make following this program. If you really apply yourself and work at it, you could be a Millionaire in just one year! I don't know about you, but that excites ME!

I always try to be as educated as possible in any job or career I ever had. When my wife, Arlene and I became active in real estate, we took a course in real estate appraising and became Certified Real Estate Appraisers. Neither one of us ever thought for one second that we would do appraising to make a living. We wanted to get the maximum knowledge of how appraisals are done, how the appraiser thinks, and how to do the appraisal. Many times, we would actually do the forms for the appraiser and guess what! The appraiser used our numbers and the appraisal came in as we planned.

I have attended many courses to enhance my knowledge, whether about real estate, sales, or just some personal motivation. You have to invest in yourself when you are in a serious, money making business.

Just keep in mind that no matter how much knowledge you have, you'll still make mistakes. We all do. The important thing is that we LEARN from them.

If you have read this far, I am assuming that you have a deep desire to improve your financial condition. According to statistics,

• 90% of the people who say they want to improve their finances are dreamers and will do nothing.
• 8% will try a little harder and will give it some effort.
• 2% will put forth 110% of their efforts and will succeed.
  That's why 2% of the people own 98% of the assets in America! If you apply yourself, you can be part of this 2% regardless of your education, age, nationality, or background.

I want to tell you up front that this program is NOT a gimmick! But neither will I risk my name and reputation on something that cannot work. Since you are where the property is, it is your responsibility to provide me with the most complete and correct information you can about the property. Otherwise, we will both waste time and accomplish nothing.

MORE COMPONENTS FOR THE 50/50 DEAL

1. PREFERRED HOUSES.
   
   • Very nice home with a minimum of 3 bedrooms, 2 baths, 2 car garage in a superior neighborhood.
   • Seller willing to sell 20% below what the house would appraise for.
   • Seller willing to wait for you to find a buyer and will be happy with a few thousand dollars in his pocket.

2. ACCEPTABLE HOUSES.
   
   • Maybe a little lesser home, still having 3 bedrooms, 2 baths, 2 car garage in an average, but nice neighborhood.
   • Seller would settle for 10% less than what the house would appraise for if he can move in 30 days and will be happy with a minimal amount of money in his pocket.
   This is not an "ideal" deal, but ideal deals are very rare. The more houses you buy, the more ideal deals you will get. Simple as that. You have to develop an "eye" for real estate. Remember, buying the house is only the first step. You have to SELL it to make money!

   Here comes the most important point: If you bought it right - using what I recommended above, selling the house will not be that difficult!

3. ABSOLUTELY "NO GO" HOUSES.
   
   • Properties in high crime or run down areas.
     After you have been buying and selling homes for a few years, I will teach you how and when to buy in these neighborhoods and how to make a fortune on the properties. But NOT now! You should only get involved in nice homes, with nice landscaping, clean, no repairs required. Houses should have at least 3 bedrooms, 2 baths, 2 car garage because this is what the buyers are looking for!
   • One bathroom is an absolute NO-GO. It is obsolete.
   • No garage is a NO-GO.
   • Small square footage - 1,000 sq.ft. or less - is a NO-GO.
   • There are lots of people, even those with kids, who don't want to live across the street from a school or have their backyard back up to a school yard.
   • A house by a railroad track with a freight train going by every 15 minutes is a NO-GO.
   • Other problem houses are those that are located on a busy street, near the airport, or next to commercial properties like shopping centers. Anything out of the ordinary can be a problem to resell the house.
   Here is a picture of a true "NO-GO" property:

   

   Even though they say "there's a sucker born every minute," stay away from these properties until you have some experience under your belt. Always keep in mind that you have to sell the property in order to make money, so buy something someone else would want to buy.

4. For every property I call on, I fill out a Property Information Profile sheet. To print it out, click on the following link: Property Information Profile and use this on each and every property. This form is more detailed that the one included in the "Insider Secrets" and the "How to Sell a Home" book. It asks for more financial and seller motivation information rather than actual property information. It will keep you focused so you don't forget to ask important questions.

   All the information on this sheet is very important. If you don't know the balance on the underlying loan, the payment, and the interest rate, I cannot talk to you about the property. I must see comps from a Realtor, Title company, or a recent appraisal ... if the property is over-priced, I'm not interested.

   Depending on the information your county tax assessor puts on the Internet, you may be able to get comps that way. You'll have to go to their website - if they have one - and search around.

   Please understand, I DON'T want to discourage you. But if you are planning to buy houses with me - buy them on your own - you have to know everything I know ... or even more.

LEARN THE WORD "NEXT."

1. If the seller doesn't like your offer, say "NEXT."
2. If you see a house and you don't like it, say "NEXT."
3. If a buyer calls about the house you are selling and you don't like the buyer, or you are uncomfortable with his ability to make the payments, say "NEXT."
4. If you are unsure about anything regarding the deal, say "NEXT."

There are thousands of houses, thousands of sellers, and thousands of buyers. It is no big deal to say "NEXT." Whenever you are in doubt, say "NEXT." You have to exercise the intuition you were born with -- your sixth sense -- to keep you out of trouble.

You make your biggest profit when you BUY the property. If you buy it wrong, you cannot make a huge profit.

THE NUMBERS MUST WORK:
If the numbers don't work, we'll both lose money. You can stretch them, tweak them, close one eye on them, you can overlook a little. But in general, the numbers must rhyme. Everything I discussed above must rhyme in addition to the numbers or we'll both go broke on a 50/50 deal. Here's an example below: