Abandoned Properties - One of the Best-Kept Money-Making Secrets in Real Estate
Issue #2066
- WEALTHY: Is that run-down old house next door hiding piles of cash? (Reggie Brooks)
- HEALTHY: Make money by NOT raising hogs (Jon Herring)
- WISE: Thich Nhat Hanh on possibilities
ALSO IN THIS ISSUE:
- Competition? What competition? (Michael Masterson)
- Watch out - your frequent-flyer miles could be about to vanish (Jennifer Stevens)
- It’s Fun to Know… about your chances of winning big
- Add "flagitious" to your vocabulary
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- Patrick Coffey
"We have more possibilities available in each moment than we realize."
Thich Nhat Hanh
Abandoned Properties - One of the Best-Kept Money-Making Secrets in Real Estate
By Reggie Brooks
When I began my career as a real estate investor in 1985, I stumbled across a tremendous opportunity that most people still don’t know about to this day. Yet it has given my family and me a lifestyle we never dared dream we’d have.
I’m talking about investing in abandoned properties - a highly lucrative, yet little-known, segment of the market.
Abandoned properties are just that - abandoned. No one lives or works there anymore. Weeds may be collecting, taxes may be accruing, and leaks may be spreading. But, in many cases, the owner has already divorced himself emotionally from the property. And that means you could get an excellent under-market deal.
Where do you find these properties? Just look around. You probably pass right by them on a daily basis - and you could be passing up hundreds of thousands of dollars in profits! These properties have been abandoned for any number of reasons. Perhaps because of a divorce, an illness, a death in the family, or a job relocation.
A case in point…
A $58,000 Profit Right Across the Street
I remember a young lady who attended one of my two-day training classes. On the first day of class, we covered many unconventional profit opportunities - including abandoned properties. The next day, she told us that when she got home from class, she put her key in the lock … but instead of going inside, for no apparent reason, she stopped and turned around. Across the street was an abandoned house.
She had seen that house every time she walked out her front door, and had never paid any attention to it. The windows were broken, the grass was high, and the yard was cluttered with trash.
But now, because of what she’d learned in my class, she knew what to do. Over the next three months, she purchased the property, fixed it up, marketed it, and made a profit of $58,000!
Why Abandoned Properties?
When you work with abandoned properties, you can use the best financing in the world - seller financing. There are several reasons why we prefer this to conventional financing.
Rarely will a seller ask to see your credit report. If you have credit problems, it usually will not become an issue. (By the way, the young lady I just told you about had no credit, no money, and no job when she made that first abandoned-property deal.) Many times, the seller will be open to creative strategies that will help him get rid of his problem property. After all, what does he have to lose? The property isn’t generating any rental income. It’s just sitting there costing him money.
The seller probably has a mortgage on the property that he has to pay every month. More than likely, he’d like to rent it out or sell it, but he doesn’t have the time (or maybe the money) to get it in good shape. In the meantime, another month goes by, and he has to make yet another mortgage payment. He also has to keep ponying up money for taxes and insurance. Not only that, but because the property is vacant and subject to vandalism, he has to keep shelling out cash to keep it from completely disintegrating.
Needless to say, since it’s such an eyesore, everyone in the neighborhood has probably been complaining about it. In fact, the Department of Building and Safety might already have gotten involved.
This can all add up to a huge, money-sucking headache for the seller. As you can imagine, he is almost certainly very motivated to get rid of it!
How Do You Find Abandoned Properties?
The more affluent an area is, the fewer abandoned properties you’ll find. But you don’t have to go into the worst parts of town. You can find plenty of abandoned properties in lower-middle class areas, many of them on the upswing.
Keep your eyes open for broken or boarded-up windows… overgrown grass and shrubs… trash, handbills, and newspapers accumulating on the lawn and porch… and other signs that a property may be looking for a new owner: You!
Make sure you have a pen and a pad of paper with you at all times. Take different routes to and from your normal destinations, and write down the addresses of any properties that look promising. You might have to leave home a little earlier in the morning to do this, but it will be worth it if the time you spend brings you just one abandoned property deal every few months.
Turning a Home Run Into a Grand Slam
Some years ago, I was taking my aunt to a doctor’s appointment when I came upon a property that showed all the classic signs of abandonment. I wrote down the address, and called my title company as soon as I got a chance. I gave them the address, and they gave me the name of the owner and his mailing address. I made him an offer… and bought the property for $82,000. Then, to minimize my out-of-pocket cash outlay and maximize my profits, I fixed up the property by taking advantage of something few people know about: the government’s Rental Rehab Program.
This program provides loans at interest rates far below the prevailing rate. It also allows qualifying tenants to significantly reduce the amount of rent they have to pay by going on the Section 8 Government Subsidy Program as soon as the rehab is complete. The average wait for the Section 8 Program at the time was six to eight years - making this a win-win deal for everyone involved.
I kept the property for several years, putting positive cash flow in my pocket every month. I eventually sold it… and made nearly a six-figure profit.
The Best Financing in the World
Because that property needed so much work, it would have been almost impossible for me to get a conventional bank loan to finance it, and I wasn’t in a position to pay all cash. So, what was the solution? The seller of the property financed the entire deal.
Here’s the point: Abandoned properties are one of the best-kept money-making secrets in our industry. They are good candidates for many government loans and grants that can supercharge your profits. Plus, their owners are usually very motivated to sell - meaning you can often get them significantly under market value, and even arrange for seller financing.
Learn how to master this very lucrative real estate niche, and, eventually… you may want to abandon your job!
[Ed. Note: Reggie Brooks is a former telecommunications employee who made more money on his first abandoned-property deal than he made in a full year at his job. Soon thereafter, he "abandoned" his job, and for the last 20 years has been investing in real estate full-time. To learn more about his techniques for profiting in this lucrative area, listen to Reggie live TONIGHT on a teleseminar with Justin Ford. Spaces are limited. Click here to reserve your space today at no cost.]
Couple makes over $77,000 profit on their first deal.
My husband and I went to Reggie Brooks’s seminar and got started with his Abandoned Property System. I had just retired from my job of 28 years and needed a new career. I was so excited to learn all that I could about finding abandoned properties. We found one, made an offer on the property and got the offer accepted. After we fixed it up, we sold it and made a profit of over $77,000! THANK YOU REGGIE!!! I never would have taken the first step without your program. I am truly excited with the knowledge that you have given us, and the push into this new and fun career.
- Cathe & Vinny V. - Clermont, Florida
A Word About Persistence…
By Michael Masterson
Of all the qualities that contribute to an accomplished life, none is more important than persistence. Intelligence, knowledge, connections, luck - they are all important ingredients in the stew of success, but persistence is the stock.
Here’s a little story about persistence - or the lack thereof: A few years ago, I attended a conference where about 200 would-be copywriters had assembled to learn more about the direct-mail business and make contacts. JT, the publisher of a large direct-mail company, invited the crowd to contact her if they wanted to try out for freelance positions.
Shockingly, only eight of the 200 came up to her after her speech and signed up for the opportunity. Imagine that - 192 out of 200 were too busy, scared, lazy, or whatever to take advantage of the kind of career opportunity that comes only once or twice in a lifetime. The eight who did respond were asked to send JT writing samples. Only one person did!
Keep this story in mind the next time you feel you are competing against too many people.
[Ed. Note: This article was adapted from Michael Masterson's book, Automatic Wealth for Grads… and Anyone Else Just Starting Out, one of Amazon's Top 10 Finance and Investing Books of 2006.]
How to Get Rich With Farm Subsidies
By Jon Herring
For years, a fake letter to the U.S. Secretary of Agriculture has been circulating online. It’s not only good for a laugh, it underscores the insane reality of U.S. farm subsidies. Here’s one version of the letter:
Dear Sir:
My friend, Wayne Peterson, over at Wichita Falls, received a check the other day for $1,000 from the government for not raising hogs. So, I want to go into the "not raising hogs" business myself next year.
I want to be sure that I approach this endeavor in keeping with all government policies. What I want to know is, what is the best type of farm not to raise hogs on, and what is the best breed of hogs not to raise?
My friend Wayne is very excited about the future of his business. He had been raising hogs for 20 years and the most he ever made was $420 in 1978, until this year, when he got your check for $1,000 for not raising hogs.
If I can get $1,000 for not raising 50 hogs, will I get $2,000 for not raising 100 hogs? I plan to operate on a small scale at first, holding myself down to not raising about 4,000 hogs, which will give me $80,000 income the first year.
Now, another thing: These hogs I will not raise will not eat 100,000 bushels of corn. I understand that you also pay farmers for not raising corn and wheat. Will I qualify for payments for not raising wheat and corn not to feed the 4,000 hogs I am not going to raise?
I want to get started not feeding as soon as possible, as this seems to be a good time of the year to not raise hogs and grain and I don’t want to miss the best of the season. I am also considering the "not milking cows" business, so please send me any information on that too.
In view of these circumstances, I understand that the government will consider me totally unemployed, so I plan to file for unemployment and food stamps as well.
Be assured that you will have my vote in the coming elections.
Patriotically yours,
Otis Deal
As absurd as this letter is, what is more absurd is that the U.S. Department of Agriculture has actually followed a policy of paying farmers "not" to farm. They have also used federal funds - taxpayer money - to subsidize crops that benefit food manufacturers but make the population fat and sick. Tomorrow, I’ll show you what has happened, and the effect it has had on our health.
Frequent-Flyer Miles: These Days, It’s Use Them or Lose Them
By Jennifer Stevens
No use sitting on your frequent-flyer miles any longer. Do so, and you’re likely to lose them.
Airlines have been quietly - one after another - changing their frequent-flyer policies, shortening the length of time you can keep your accumulated miles.
It used to be that you could horde them for years with no penalty. But nowadays, many airlines demand you show "activity" of some sort (either by redeeming miles or accumulating more) within a certain number of months, usually 18. If you don’t… they’ll zero out your account.
This recently happened to me when I lost 150,000 US Airways miles I’d more-or-less forgotten about. It was a loss I could have easily avoided - and I needn’t have taken a US Airways flight to do it.
I could have kept my account active, for instance, by using a small number of those miles to purchase a magazine subscription or some Starbucks coffee. I’d have been down a few miles, sure, but I’d have retained the majority. Or I might have kept my account active by accumulating a few additional miles shopping online at a US Airways partner store - like Target, Gap, or Staples. I’d have simply needed to make my purchase through the US Airways site.
Take 10 minutes this week to assess the status of your own frequent-flyer miles. In all likelihood, you’re at risk of losing them if you don’t take some action soon. United Airlines announced their "stay active" policy this past January, and American Airlines followed suit just last week.
To cash in your miles for products instead of flights, visit: www.points.com. It’s free to register, and you’ll be presented with all sorts of places where your miles are as good as greenbacks.
To earn miles when you make purchases from a wide range of retailers, visit each airline’s frequent-flyer website and find the link for their partner offers.
[Ed. Note: Jennifer Stevens, author of AWAI's Ultimate Travel Writer's Program, gets paid to travel. If you've ever dreamed of a "job" that would pay you to shop in a market in France ... or dive on the Great Barrier Reef ... or sample the best restaurants in Prague ... you don't want to miss Jen's "Get Paid to Travel" teleconference - TONIGHT. You'll learn dozens of strategies you can use to access this lifestyle in no time - for less than $20. Sign up now.]
It’s Fun to Know: Your Chances of Winning Big
Georgia truck driver Ed Nabors is taking home about $80 million after winning the Mega Millions lottery this past March. That could be you, right? Maybe. But your chance of winning the next big Mega Millions jackpot is about one in 175,711,536.
(Source: The New York Times)
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Word to the Wise: Flagitious
"Flagitious" (fluh-JISH-us) - from the Latin for "a shameful or disgraceful act" - means grossly wicked, scandalous, or corrupt.
Example (as used by Robin Greer in a review of Jim Carrey’s performance in How the Grinch Stole Christmas): "The Grinch, a nefarious, flagitious, sly, nasty, troublesome, bad-tempered, intolerant, and foul-smelling character who, for reasons never fully explained, lives in a cave above the town."
[Ed. Note: Become a more persuasive writer and speaker ... build your self-confidence and intellect ... increase your attractiveness to others ... just by spending 10 VERY enjoyable minutes a day with ETR's new Words to the Wise CD Library.]
Michael Masterson
Copyright ETR, LLC, 2007