No matter how long you have been speaking there are still lessons to be learned and I learned a huge one earlier this month in the province of Manitoba. I was booked to do two, one hour presentations to the Eastern Manitoba Dairy Farmers annual conference in the beautiful little town of Steinbach Manitoba.. The flight from Hamilton ON was terrific. There is something awe inspiring about flying at 41,000 feet in the winter moonlight.
The accommodations were clean and comfortable and I certainly was well fed by friendly hospitable farm folk. ?So what's the problem?? you ask. Well it was in the set-up of the hall. The conference took place in a rather large one room community hall just outside of Steinbach. The fact that it was in ONE room was the problem.
The planners had the hall divided into two sections separated by a large blue curtain. On the right side of the curtain was the speaking and eating area. On the left side was the sponsor's display area. The sponsors had their booths set up to attract potential customers and the farmers flocked to their section to chat with friends and representatives from the various sponsoring companies. The laughter and the social interaction was a pleasure to behold. Until it was my time to speak that is.
It was only when I began to speak that I became aware of the competing noise level coming from the other side of the blue curtain. It was totally distracting and there was nothing anyone could do about it. The sponsors had every right to interact with the farmers. They were paying the bills for the conference and I was only an invited guest hired by the planners to present two talks on humor and human relationships.
The only thing that saved my sanity was the magnetic power of humor and laughter. The more the audience laughed the more the people from the other side of the curtain were drawn to see what was so funny. I survived the first day but the second day was no better. The same thing happened, plus a few crying babies.
THE LESSON LEARNED??? Always ask about the set-up of the room or hall. You can bet that from now on I will want to know if the sponsors will be in the same room as the speakers. If they are I will either decline the invitation or increase my fee to include combat pay.
It was a frustrating but fun experience. I got good coverage from the Winnipeg affiliate of CTV and the people really enjoyed my message and my style of delivery. In spite of the distractions I remained calm and focussed. If I had become flustered I think the audience would have reacted negatively towards me. Another lesson learned.
At one time in my life I was buying 7-8 Houses a month, fixing them up and then reselling them. Then I got the bright Idea that if I can buy and sell 7-8 a month, I can buy and sell 80. This was a choice that eventually led me to bankruptcy. This has not been that long ago. Twice in my life I have made a lot of money and then took on a large growth spurt and got a large learning experience in business failure. The last one resulted in bankruptcy.
It is hard when things are going well to not be seduced by more is better. When you have something working for you, it is easy to become overconfident and start to think of multiplying it. As with most things in life, you want to be sure when you take on something, that you complete it. Pumping up the volume puts you at risk of not having the structures and being set up to deliver on what you are committed to. You naturally encounter problems that were not present on a smaller scale. It is hard when things are going well to not be seduced by more is better. I had to learn personally that pride Goethe before the fall. The bottom line is that there are always good deals in Real Estate! I say measure your success one house at a time. Buy investor property, fix it up, resell it, rent, do a lease-option, but do it one house at a time.
Multiple Purchases?
One of the most common mistakes I see in business is where investors come into the business and think they need to do multiple houses at a time. Try this on: Try doubling the cost you think it will take to fix the property, doubling the time you think it will take to rehab the property and figure your holding costs doubled (insurance, mortgage payments, taxes, lights, gas, rehab cost).
Great deals in Real Estate don't come in houses fixed and ready to sell. The great buys come from houses that need work. If you are just getting started, stick to cosmetic rehabs (paint and carpet), Don't take on major rehabs. It will take time to develop rehab crew. The most successful people I see in Real Estate do one house at a time. Failures are great; if you look at them and ask what action was missing that would have made a difference?
Hard moneylenders?
One pitfall is using very expensive money. For years I ran a business financed on money from Real Estate Investors who are called hard moneylenders. They look at collateral and loan money based on receiving interest can be 18% or higher when you figure in the closing costs. When you get multiple properties in this condition, you will have interest payments that are going to be double and triple what conventional financing is in Real Estate.
Now combine this with the common lie we tell ourselves that we can repair the house and put it back on the market for sale or rent in a short time. Your overhead will rise because you will need a staff to manage and rehab everything. Can you see this is a recipe for disaster for everyone? Now if you are doing one house at a time, your overhead will probably stay very low, with very little staff. Therefore you have limited your expenditure of time, money and aggravation.
At one time, my overhead was in excess of $50,000.00 per month. I had to depend on other people to do everything, including checking the work. A hundred percent of the monies I was making went paying down my debts and I kept telling myself I would turn it around tomorrow. I found myself with houses that were not finished and houses being lost in foreclosure and for taxes. That left me a very motivated seller and bankruptcy was looming large. With my overhead still there, I attempted to wholesale deals. I decided I would no longer find, repair and resell homes. Instead I would find great buys and sell them to other investors.
Basically, I started my business over. It takes a great amount of time to cultivate a list of investors interested in buying deals. This business is built on the concept you can borrow you way out of debt, but it just does not work. You have family, friends, and business associates that may get hurt or destroyed. I'm not saying this to tell you a sad story, but rather in the hopes that by sharing it, someone else can avoid the pain of my mistakes. Take from this what you can learn for yourself. I am 53 years old and starting over. I now have the knowledge to build a business with the proper foundation. I teach Real Estate Investing class now that look for pitfalls and what is needed to do a successful deal one at a time.
My advice to you on handling real estate transactions is: Use Title Companies What can happen to you when you fail to get title insurance? We had a participant in one of our seminars, who purchased a house to fix it up. He invested over $40,000 into the home in both repairs and purchase price. When he went to refinance, he found out the person he purchased the house from was not in the chain of title. In other words, he did not have a clear title. Whenever you purchase a home, always close through a title company with title insurance on the property. Title insurance is protection that insures the borrower or lender that they get the property with marketable title. They will only insure the property for the purchase price or for the amount of the mortgage.
Use a reputable lender
Interview lenders. Go to Real Estate Investor Clubs to find out from other investors which companies are doing the best job. Are you at risk when you use a lender that wants to cross collateralize loans or wants personal guarantees? One lender I know will get one-two year mortgages and demand a right to lien all the properties you own to procure the loan you are getting. Just beware, if you are buying the property to fix up and resell, there are things that you don't always plan on like: twice as much rehab cost as you planned for, longer marketing time than you initially thought, resulting in added holding costs, or maybe the market moves the wrong direction and you can't sell the property, so you rent it. Now one of your other properties or even your personal residence needs to be refinanced. You now have a lien showing against the property. Now what do you do? Think before you jump. If you have purchased the property right, you should be able to borrow money based on the equity of that property - not you're home and other properties.
This same lender will ask for a personal guarantee signed by you, your wife and your partner. This personal guarantee allows his mortgage company to lien anything the partner and wife own. Not only that, but this particular lender demands that you use a Title Company he owns. Now when you want to sell another one of your houses and this same cross collateral loan will show up on any property you are selling. Now you are faced with using his title company or he won't release his loan. Beware of putting yourself in a situation where you are using a person who controls the lending, title work, the appraiser and the Real Estate Company.
Do you think, if you had your title work placed with a company the Lender had ownership in, you might run into a problem getting the documents released or have a clean closing at the same title company? Why risk letting human emotions drives a stake into your deals? Keep an arms length distance within your dealings. If you are selling homes or wholesaling property, let the buyer find his own lender and make sure you get an independent title company. Make sure there is not a conflict of interest in the Title Company, Mortgage Company, and real estate company. Keep the integrity in the deal. I am sure there are title companies, real estate companies, and mortgage companies, where there is common ownership that run very good businesses and can separate the conflicts of interests and profit centers. However, to protect yourself, make sure you receive proper disclosure of common ownership. You can always look at the volume of business they are doing in each business and check with the state Licensing Dept. for any complaints against the firm.
Both Mike Moore & Mark Maupin are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Mike Moore has sinced written about articles on various topics from Public Relations, Brand Name and Public Relations. Mike Moore is an international speaker on the role of humor in human relationships.?lessons. Mike Moore's top article generates over 40500 views. to your Favourites.
Mark Maupin has sinced written about articles on various topics from Internet Marketing, Finances and Internet Marketing. Ralph Mark Maupin has has purchased in excess of 3,500 single-family homes and many multi family properties. Mark teachs real estate investing seminars, and has real estate mentoring program.. Mark Maupin's top article generates over 22200 views. to your Favourites.