Would You Buy This House

Or – The House That Nobody Else Wanted

Here’s the story. I wanted to get into real estate. I had been studying and learning about real estate investing for several years. my wife and I had purchased a triplex in out area – South Florida but had paid way too much for it. Bought it at the top of the market. Now I was looking for another investment that might actually cash flow. I had made a contact with a lady in North Carolina that bought problem properties at rock bottom prices from sellers that could not sell them to anyone else. She had a list of hungry for an actual deal that made sense buyers and I was on her list. I made contact with her when I called about one of her other wholesale deals but that house was already long gone by the time I heard about it. She apologized for that and quizzed me about what I was looking for. I knew that she specialized in finding houses that needed a little or a lot of work but would cash flow when rented out. This was in 2008, when everyone was looking for a “profitable deal” but hardly ever finding one. I was looking for a “just paint and carpet” type deal that would cash flow with conventional financing in place. I know – that seemed like a hard thing to find, but she told me that she finds them fairly regularly.  She took my number and promised to call me when she found another one that did not need too much work. A month  or six weeks later she called and said she had just what I said I was looking for. It was a 2 bedroom 1 bath house for $27,000 and needed about $3,000 to $4,000 of mostly just paint and carpet.  Here’s a picture of the property that i was seeing of what she was offering.

It was bank owned property that had been partly to mostly rehabbed by another investor.   If you want to see what the inside looked like, I have before and after shots in the video, as well as more of the story.. She said she thought this was as close to what I had asked her for. Wow! I thought – now it’s decision time. She wanted to sell for all cash and close quickly. I wanted to buy with conventional financing with as little down as possible. She let me know that the banks would probably not finance until after it had the rehab completed. My win-win suggestion was that she complete the repairs and add the $3,00 to $4,000 to the price. She agreed to do it all if we made it $4,000. That would make the conventional financing work. We had a deal. Mind you, I had never seen this property before we agreed to buy it – just the pictures I show in the video. And I had spoken to this woman before, but never actually met her in person, but when I first talked to her she was working for Larry Goins and was using what she had learned while working for him to find this house when she went on her own. Her long term work for Larry Goins told me I was probably in excellent hands.

This was exactly the type of property Larry’s Filthy Riches program teaches about. A little dirty, needing a little work, but someone could have moved into that property in the condition they offered it.We have owned it as a rental property for six years now. The property paid us back our out of pocket down payment and closing costs completely in 4 and a half years. I have done the “cash on cash” return on out investment and this house has provided us with an average 31 per cent cash on cash return each year. That’s what most people would call a “lucrative” investment. The  property will be completely debt free in 9 more years.

Here’s the video with more of the pictures and the story:

So does Larry’s Filthy Riches program work? I know it does, because we bought one of those houses from someone using his system. And it has done extremely well for us.

Would you like to know the details of how these properties can be found and profitably marketed to individual s as homes or as investments? Larry is doing a webinar to give you  the details of how you can can make it work for you just like it worked for the lady that found it and sold it to us. Here’s the link to register for the webinar: http://www.larrygoins.com/kurt

Join us for the webinar, and if you have a question or comment leave a comment or use the voice mail button to the right.

Can Anything Be Done About Rising Flood Insurance Rates?

Your lender may have required you to purchase flood insurance when you got your last mortgage. But are you actually still requited to have it? Flood insurance can be just a small and minor annual expense or a significant burden on the expense side of your personal or investment property. If the amount you pay is small, you might not worry about it too much. But when it’s thousands of dollars a year, that could make a major impact on your available cash. If you were not required to maintain flood insurance, would you still pay for it year after year? How would you know if you no longer need (as a requirement of your mortgage lender) to maintain that coverage? Think you lender checks for you each year? They don’t. When you are getting a new mortgage, whether it is a new property you are purchasing or a refinance, the closing agent for that loan is required to check to see if you are in a flood zone that requires flood insurance. If so, that coverage must be obtained before the loan is closed. Once in place the lender will require that coverage to be renewed, subject to the remaining loan balance, until the the loan is paid off or refinanced, or until the flood zone changes and flood insurance is no longer required.

Here’s the link to the FEMA Flood Map Center

For your convenience, I shot a short 7 minute video on how to check the flood map for your property:


Why is this so important to understand? Flood insurance rates are sky-rocketing out of control – Why? A new law, called the Biggert-Waters Insurance Reform Act of 2012, went into effect that phases out flood insurance subsidies on hundreds of thousands of older homes. That, combined with the fact that FEMA has also been revising its flood zone maps and reassessing the level of flood risk for various areas. Properties that were in low risk zones are being reclassified as higher risk zones. What is this doing to rates? Policyholders are seeing rates soar. Increases from $1,000 per year to over $8,000 are being reported, and this law has not even been fully implemented.

What can you do? If you have no loan on the property, you are not required to maintain flood insurance. If you do have a loan, your lender may require flood insurance at least to the extent of the existing loan balance, Check the map for your property and see if you are in fact in a flood risk area. If you are, check to see that the risk definitions are correct for your policy so that you are not paying for coverage that is for a higher risk area. Finally, check your mortgage documents to see if you have the option of reducing your coverage as the amount of the loan reduces. Remember, your lender is not going to be checking each year to see I they can save you money. If they check at all, it will be to be certain that flood coverage is in effect. The responsibility to determine if coverage is no longer needed or if it can be obtained for less money is on you. It is your money.

If you could save $5,000 a year because the coverage is not required or could be obtained for less, wouldn’t it make sense to know? A reduction in the expenses of a personal property means more money left in your pocket. But if it an income property, those assets are valued according to their net income. Lower expenses means higher income – a very good thing, but also a more or higher value to the property. It is reasonable to expect that a reduction of expenses of $5,000 could mean an increase in value of ten times that amount or $50,000. That makes checking to see if you can reduce or eliminate some or all of the expense of flood insurance well worth the effort.

How Bill bought 28 Multi-Family units with no cash…

I got a recent e-mail from a friend in the real estate investing business about a guy that was acquiring multifamily units with out using any cash, credit, risk, and not much experience when he first started. There is a link to a video that explains how he did it. Here is what the e-mail said:

“Subject: How Bill bought 28 units with no cash…

A few days ago I told you about the brand new
system my friend Susan is releasing to help you
make some serious cash in the New Year.

It’s called the Master Lease Option Method.

And if you missed it then you missed then you
haven’t met Bill yet.

Bill is one of her clients who 18 months ago came
to her and wanted to break into the commercial
real estate market, but…

He had ZERO cash to buy properties…

He had NEVER done a commercial deal before…

He DID NOT want to use his credit to do deals…

Here is exactly what she told him to do:

>> Click here to see the system she showed Bill! http://bit.ly/WgevPH

Now 18 months later Bill has use that same strategy
to buy of 28 properties and he’s done it all…

In LESS than part-time hours, without using his
own cash or credit and without risking anything

It’s pretty awesome – check out the video and
see for yourself! http://bit.ly/WgevPH

You will find it well worth your time.”

I clicked on the link and watch the video… It was well worth my time. If you are looking to get into commercial real estate investing …WITHOUT cash! …WITHOUT credit! …WITHOUT experience! …WITHOUT risk, this video is worth looking at. Check it out: http://bit.ly/WgevPH


New Resource for Florida Real Estate Market Trends

The Florida Realtors organization has a new tool to keep tabs on housing price trends in the state of Florida. In September 2012 they will release a new home price index that tracks changes in home prices (values) in Florida. This new index differs from other leading indexes in that it is not relying on median prices which can skew the numbers if a large number of high price homes or a large number of low price homes dominate the reporting period. That should make the numbers more accurate. Real estate reporter Kimberly Miller posted an article about this valuable new tool to track the real estate market in Florida.  The three leading market indicator resources for home price value trends are:

S&P/Case-Shiller Home Price Indices

CoreLogic Home Price Index

Federal Housing Finance Agency


Resources to Track Your Real Estate Market’s Change in Value

One of the keys to being known as a go to person in your real estate market is knowing what is happening to the property values at the moment. The way to do this quickly and painlessly is by using a property value index. Housing statistics are sifted, crunched, and compiled into databases that can give you a quick and easy snapshot of the trend of a real estate market. You should be able to know what is happening in the nation as a whole, but more importantly, what is going on where you invest. These market analysis tools allow you to determine where the market is now, which way it is going, and how fast it is headed in that direction.

Here are three index resources to track changes, direction, and speed of market values in any area you are investing in or interested in investing in:

S&P/Case-Shiller Home Price Indices http://www.standardandpoors.com/indices/sp-case-shiller-home-price-indices/en/us/?indexId=spusa-cashpidff–p-us—-

CoreLogic Home Price Index http://www.corelogic.com/about-us/researchtrends/home-price-index.aspx

Federal Housing Finance Agency http://www.fhfa.gov/Default.aspx?Page=87

Which is the best? That is up to you and how you want to analyze your market. Using all three to compare and then draw your own conclusion about what you see in the data will make you a valuable asset to anyone in your investing arena. People can get numbers. What they really want to know is what you think about the numbers. Let them know and they will be more receptive to doing business with you.