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Your job as a real estate “rainmaker” is to find the deal and make it happen. Leave the building management and operations to others. The big money is made in the deal and that’s where your time is best spent.

Obviously you want to focus only on stellar deals. Forget the marginal ones. It takes just as much time to work on a deal that brings in peanuts as it does to lock down a deal that makes you wildly rich. There are 6 red flags that tell you quickly if a deal will be a time-waster. If you spot just one of these 6 warning signs, move on to the next potential property.

1. The numbers don’t add up.
The bottom line is you want to make a lot of money. If the numbers don’t add up and the seller won’t drop the price, or you can’t get better terms, move on.

2. Missing numbers.
If the seller can’t provide you with the year-to-date profit and loss statements, plus the actual numbers from the previous two years, move on to another deal.

3. Made-up numbers.
Pro forma numbers are pure guesswork. They may be educated guesswork, but they are still a projection. Lenders won’t give these made-up numbers any weight and neither should you.

4. Troubled property.
A property may look good on paper: The numbers are real and they add up. But a site visit paints a different picture… Major repairs are needed because the seller has been deferring the maintenance hoping to pass the headache on to the buyer. Don’t let it be you.

5. Wrong area.
Don’t spend your money trying to reverse a trend. If the neighborhood is in decline, the property carries that stigma. Tenants will be moving on, and so should you.

6. Months on the market.
Good properties go fast. Bad properties linger in the listings for month after month. With detective work you can figure out why it’s a dud. And that’s a viable learning experience. But your time will be better spent going after good deals.

You create a beautiful garden by getting rid of the weeds. It’s the same with building a real estate portfolio: you must quickly weed out the lousy candidates and focus only on the prime properties.

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No matter what formula you use for analyzing a commercial property and deciding if it makes a solid investment, there is no “E” in the equation. “E” stands for emotion.

When I present my bootcamps on investing in apartment houses, there are always a couple of perplexed investors who come with stories about getting into deals that aren’t working out as they expected. For all practical purposes they’re taking a bath on the property and they want me to tell them how I’d fix it.

I’m glad they came to me for help. But the truth is, I never would have done the deal in the first place.

Yet invariably, they argue their rationale was solid. They remain convinced the square peg will fit into the round hole as long as they keep hammering away at it. What drives this wishful and irrational thinking? Emotion.

So I ask what “attracted” them to the property in the first place and I hear things like it was a trophy property and/or that other investors were also interested in it. Well, there isn’t a mathematical formula for “trophy,” so there’s your first clue that emotion has crept into their rationale. You don’t want a property because other investors want it. You want the property because the numbers work.

When I say this, I may hear that the “pro forma” numbers were solid. I’m quick to point out that pro forma numbers are fictitious. That’s like buying a car and finding out later that the 35 miles-per-gallon quoted by the seller was based on your putting in a different engine once you bought the car.

A deal must be analyzed with actual current numbers only. Never take numbers based on a historically ideal scenario where the property is 100% occupied, as compared to the real 70% occupancy that it actually has today.

If the current numbers don’t indicate a workable deal, guess what that means: They don’t add up. You need to scrap the deal.

Making up for lost time is how you lose money

New investors often feel that they’re behind the eight ball; that they should have invested long ago and need to make up for lost time. They take the plunge now even though the tide has gone out. This is emotion-driven thinking and needs to be kept in check. Wait for the tide to return. Rest assured that real estate is a tremendous wealth-building vehicle and you can build wealth quickly — as long as you go by the real numbers and not your emotions.

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A double-dip is great if you’re talking ice cream. But if the subject is the U.S economy it’s not so good.

Some experts predict the economy is headed for a double-dip… a very rocky road indeed. The culprit is consumer confidence, which is dropping fast: March saw the 10th steepest decline on record. Gloomy consumers purchase less. And since homegrown U.S. consumers account for 70% of our economy, that spells trouble.

Why are U.S. consumers depressed? A possible war with Libya and the meltdown of Japan certainly made for gloomy headlines. But other factors are closer to home and our pocketbooks… Hourly wages continue to fall, which deflates consumer confidence like a pin to a balloon. And home prices continue to decline, which makes people feel poorer as their primary nest egg evaporates. The S&P/Case-Shiller 20-City Home Price Index dropped 3.1% in the year ending this past January, which has some housing industry watchers predicting that the market bottom has not been reached and a double-dip is just around the corner.

You’ll always get conflicting predictions on the Web. Take the idea of buying a home right now… One expert will point to the combo of cheap prices and low interest rates and say it is a great time to buy. Another expert will say signals are mixed and you should wait at least until the foreclosure backlog stops depressing prices. Still others say houses don’t beat inflation and you should rent.

So… should you wait until consumer attitudes improve before you invest in commercial real estate? Well, that’s kind of like striking gold but waiting for the price of gold to rise before staking your claim.

Let me explain:

If you do your real estate homework and follow my strategies, you’ll have found and negotiated a stellar real estate deal that gives you positive cash flow, instant equity, and possibly a big check made out to you at closing. Plus, the property will be in an emerging real estate market that has it’s own micro economy acting independently of the national trend. There’s no reason to put on the breaks, no matter what economists, politicians and pundits are predicting on the web.

When you have a great deal, you have a great deal. And that alone is all the reason you need to take action.

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Ask 10 people on the street what “Cash Flow” is and it is likely 10 people won’t have a clue. That’s why none of them are millionaires.

Cash Flow, of course, is the tide of money that flows in and out of your financial life. When you have more money going out the door than coming in, you have the average debt-burdened American.

To be rich you need POSITIVE CASH FLOW, the 3 most powerful words in the English language (or any other language you translate it into.)

“Positive” cash flow means you are just the opposite of the average American: you have more money coming in than going out. Reaching this point was the definitive game changer in my life. You ought to write “Positive Cash Flow” on your bathroom mirror because this is the ultimate prize. It sets you free.

Now if you’re job brings in more money than you need, that’s great. But you’re still WORKING. With real estate, the cash comes in whether you work or not.

Here’s how positive cash flow creates effortless wealth with real estate…

Say a tenant pays $1,100 a month in rent for Unit 101. And this unit’s share of the mortgage and other building expenses is $600 a month. That’s gives you $500 a month in positive cash flow. You’re making $500 while the tenant pays off every penny of your investment.

Multiply $500 by every unit you own… a 3-unit building gives you $1,500 a month is extra cash… a 6-unit gives you $3,000. Life is good.

The money doesn’t end here. Your building is increasing in value. And there are big tax benefits. I hope you’re starting to see why owning an apartment building is better than a goldmine. During the Gold Rush days more than 99.99% of the prospectors went bust. But the entrepreneurs who sold them picks and shovels made millions. They had tapped into the real Mother Load: cash flow.

I want you to be the rich entrepreneur offering a basic service everyone needs: a roof over their heads. It’s a great trade off… you provide people with a place to live… and they provide you with Total Financial Security.

Financial freedom is a great thing. Look at what comes with it…

- No more unpaid bills piling up.
- No more credit card hassles or late payments.
- No more feeling you’re at the mercy of the economy.
- No more bosses or worries about keeping your job.

I could go on, but you get the point. Financial free is liberating and Positive Cash Flow is what makes it possible.

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If you are in the fortunate position of being able to afford to buy a house using only cash, and with no requirement to rely upon the additional support of a commercial lender in order to make up the shortfall of the asking price, then you need to be aware that you will be required to produce some documentation.

The reason for the need for purchasers who conclude a transaction using cash only to produce relevant documentation is to prevent, deter, detect, and catch fraudulent and criminal activity.

Specifically, many criminals seek to launder their ill-gotten profits that they have made through their various criminal enterprises by the purchasing of real estate with cash. By making a large purchase with their dirty money, they then have a plausible and legitimate excuse for having such a significant amount of wealth to their name and so this can further muddy the waters for law enforcement who are trying to competently investigate the conduct of the criminal.

That said, purchasing a home with cash is actually much easier and speedier a transaction than by paying with alternate forms of credit such as with a home equity loan or mortgage, and the level of paperwork involved is fairly minimal. Once you have identified a particular property that you are interested in purchasing, make sure that you do your due diligence, determining the structural condition of the property along with a search of the title deeds of the property.

Should both of these searches (which are entirely voluntary by the way, however, it is strongly recommended in the most emphatic terms possible) turn up no adverse results, you will then need to initiate contact with the seller and provide them with an offer.

Once you and the seller have finally reached a consensus as to the purchase price, the next step will involve the purchase and sales agreements being verified and signed by a qualified property attorney. The attorney will probably require that you provide a bank statement, proof that you have the necessary amount of funds, along with photographic identification such as passport, drivers license etc. This both confirms that you do indeed have the requisite amount of funds and that you are actually legally competent and entitled to conclude the transaction in question.

In the interests of both safety and convenience, you may want to convert either all or part of the funds required for the final settlement of the transaction into cashier checks. The benefit of cashier checks is that unlike money, they can only ever be used by the recipient and so this means that if they are stolen, they can be easily traced and the thief apprehended.
Once the settlement has been duly concluded to the satisfaction of both parties to the transaction, the deeds will be transferred as appropriate. Your real estate attorney will be better able to explain the precise mechanics involved in this specific part of the process.

And there you have it! The property is now legally yours, for you to use as you see fit.

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As Benjamin Franklin once very aptly noted:
“There is nothing certain in this life, save for death and taxes.”

Given the significant downturn that the US economy has taken in recent times as a result of the global recession and credit crunch, this has meant that unemployment levels have shot up, and more and more people are either bankrupt, facing bankruptcy or are out of work. In addition, the average credit rating has diminished which means that people find it harder than ever before to secure financial support from commercial lenders.

Because of their lack of money, both in terms of personal savings alongside their eligibility for loans, this means that the number of people who are able and willing to purchase property is at an all-time low. Indeed, many people are now having to cannibalize their pensions and saving accounts in an attempt to stem the ever increasing tide of debt that looms over them menacingly and threatens to engulf them entirely.

In these financial turbulent times, it is every man for himself and so the average purchaser is not going to lose much sleep over the idea that they let down a seller who they were going to purchase a home from.

Therefore, it is imperative that if you are selling your property that you keep your options open and are prepared to relist your property in the event that the transaction should fall through. Gazumping, as unpleasant and frustrating an act as it is, can never be truly contained or controlled, and when the economy is in distress, the temptation to perform gazumping rises in turn.

However, so far we have considered the worst case scenario for a seller, i.e. where they have a property for sale but they are unable to conclude and finalize the deal because the purchaser withdraws from the transaction due to financial constraints. The seller may actually receive an offer from a more qualified buyer, i.e. someone who is able to meet the full balance of the asking price in cash and immediately as opposed to an undecided purchaser who is trying to secure a loan from a bank.

By leaving the property listed on the open market, the seller will not only protect themselves from disappointment (not to mention loss) in the event that the current purchaser should withdraw, they can also potentially make more money. For example, a seller may have a property that is in a prime location with plenty of access to educational facilities which renders the property especially desirable to a couple who either have children or who are trying to conceive. Such a purchaser maybe more willing to pay above market value of the property in order to secure the property of their dreams, and this in turn means greater security, more money, not to mention peace of mind for the seller.

Never take anything for granted, especially when it comes to something as potentially lucrative as real estate.

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When you are talking to a seller of a property, trying to get the best deal from them, you should inevitable gear up for a lot of questions. You are, after all, the buyer of property. As such, it is good if you get to know as much about the property as possible. This is where you can use the Safe Island Technique, which was popularized by an internationally famous speaker named Floyd Wickman.  So, what is this Safe Island Technique all about and how does it help you in your selling process?

The Safe Island Technique is a way of getting to know everything in advance. This is wonderfully put into use by doctors. When they are performing any procedure on a patient, they continuously keep telling the patient what’s happening and what’s going to happen next. This removes the suspense from the daunting scary procedure and makes it not-so scary anymore.

This is what the Safe Island Technique is all about. When applied to the real estate selling process, it employs asking a lot of questions to the seller so that you know what is going to happen next.

Why does this become a good technique for handling real estate property investigations? The main factor here is that it removes the stress out. When you know what’s coming next, what part of the procedure is the next in line, then you aren’t unduly worried about what you will have to do next. It also helps put the sellers themselves at ease.

When you are going to see a property, you can make things easier on them by using this technique. For instance, you can tell them that you would like to ask some general questions about the property first. Then you would like them to show you the property. You would like them to tell you what you need to know. Like, tell you about the number of rooms in the house, the amenities and features available, the windows that open to the east, any potential problems and so on. This helps you make a proper judgment about what you would like to ask more about the property.

Then you tell them that you would like to sit down and discuss more about the property. This would be a talk about the price, and negotiations about the property could come in. you can tell them that you would like to bring in an assessor or inspector to professionally look over the property and give his or her opinion about it.

So, in short, the Safe Island Technique is a way of “guiding” the seller through the entire process. They are relaxed about what they are doing, because you have laid out to them what exactly they are supposed to do. There are no surprises waiting to be sprung, either on them or on you, and that makes the whole process become quite a streamlined process for both parties involved in the real estate selling process.

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The secret to making money in real estate is to find a way to get your property to make money for you. That’s right you want your property to do all of the work for you and then turn its earnings over regularly. How is this possible? Well, obviously a building cannot go out and plow a field or fix a road. It can, however, provide a home to an indefinite number of individuals, and it is this ability that will allow it to turn into a positive income generator for you.

The trick to getting your property to generate a maximum amount of income for you is to purchase a multi-family home. What is a multi-family home? A single family home is one that will hold only one family comfortably, generally only three to five individuals, and generates only one rent. With that explanation, you should be able to figure out a multi-family property is one that will house multiple families and generate multiple rents, allowing you to enjoy a bigger income.

When evaluating a multi-family property it is important that you take the time to figure out its capitalization rate, or the ratio between the capital that will need to be expended to purchase the property and the income it generates yearly. This will give you some idea of how quickly the property will pay for itself, thereby allowing you to begin to pocket the proceeds; after all, unlike when a single family is sold and the income it brings in comes in one lump sum a multi-family home is not going to stop generating income after it is paid for.

Figuring (and understand) the capital rate can be difficult, so I have developed what I call my times ten valuation calculation to assist fledgling investors to determine the return they can expect to get on their investment. First, take the yearly income of your property and subtract the yearly expenses; this is going to give you your NOI, or net operating income. Yearly expenses should include such things as repair estimates, land rentals, etc.

These expenses should not include your mortgage payment. Remember this, it is a very important part of this process.

1st equation: Income-Expenses=Net Operating Income.

Take the net operating income and multiply it by ten, giving you the approximate value of the property and allowing you to decide whether or not it is a worthwhile investment.

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Your leasing agent is usually the first person a potential resident deals with at your property. If your leasing agent stands out from the rest, the customer is likely to remember your property as well. Do what you can to facilitate this.

Leasing agents will always give out cards to customers. That is standard procedure in most cases. What if your leasing agents could make their business cards special? One way to do that is to customize the backs of the cards.

There are little postage stamp sized pictures that you can have made and put on the backs of the cards. These will impress the customer in such a way that they will want to keep them. They are more than just a name and contact information on a card. This is something personal.

Another idea for your agent is to put their own mission statement on the card as well. Then, when the customer leaves, the leasing agent can take the time to personalize a floor plan drawing by writing them a heartfelt note. They may go away feeling that you have singled them out for special attention.

It is important that customers have a feeling of personally knowing the leasing agent. One way to do this is to use a section of your webpage. You can put an audio section on it where the customer can hear the voices of the staff inviting them to the property. Putting a voice with a face fosters trust.

You can personalize the apartment or condo with monogrammed linens. You can also get things like coffee mugs with your name on them. Anything that will produce a memory point with the customer is beneficial.

The leasing agents can be remembered by the clothing they wear. Every time they see a person wearing a certain type or color of clothing, they are working as a leasing agent for your property. That sparks recognition.

The customer will definitely remember their leasing agent if a strange package arrives at the door from them. It might be anything that you can use to drive home your message. For example, you could send a valentine heart with the message, “We heartily invite you to come back and rent with us.”

The agent can distinguish him-/herself by using the telephone. People like to receive friendly calls. It might just be a call saying that the leasing agent invites them to come to your property before they go to any others.

If this sticks in their minds, it can have an enormous effect on the number of people who will rent. By seeing your place first, they judge every other place by yours. This gives you a definite advantage.

The leasing agent can put in an effort to make a good and lasting impression. When customers have a warm feeling towards the leasing agent, they will feel more comfortable about visiting your property. They will also feel a sense of trust in that agent when leasing that condo or apartment. It really makes a huge difference.

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