A New Recession-Proof Income Stream

by Early To Rise (04/5/2008)

Issue #2322

  • WEALTHY: A bank agreement that lets you walk away with a profit (Clyde Goulet)
  • HEALTHY: How to recover after a weekend junk-food binge (Craig Ballantyne)
  • WISE: Akira Mori on real estate

ALSO IN THIS ISSUE:

  • 3 not-so-boring ways to give your customers what they want (Rick Maggio)
  • The most dangerous thing on your computer (Suzanne Richardson)
  • It’s Fun to Know… about books by the foot
  • Add "delectation" to your vocabulary

== Highly Recommended ==

How To Get Your Web Site on Google’s First Page for Higher, Faster Profits

If you’ve got a start-up or even an established business, you don’t have to always wrestle with complicated and time-consuming SEO tactics. Sometimes you can simply buy your way (at ridiculously low costs) into Google’s sweet spot for deep profits. If you know the right secrets, you can do it with AdWords easily and effectively.

Howie Jacobson is THE man other experts turn to when they need advice for quickly growing their - or a client’s - business. Ken McCarthy, Bill Glazer, Perry Marshall, and others vie for his attention and book him to speak at their pricey seminars. While trotting the globe, Howie has also become the best-selling author of AdWords for Dummies.

But Howie’s all yours for a fraction of his usual fee at Early to Rise’s Profits in Paradise conference in Orlando this month. Howie will give you detailed step-by-step plans for wildly profitable online success - even if you are a complete beginner.

And he’s just ONE of the experts you’ll meet this this month. Click here for more details…

"In my experience, in the real-estate business past success stories are generally not applicable to new situations. We must continually reinvent ourselves, responding to changing times with innovative new business models."

Akira Mori 

A New Recession-Proof Income Stream

By Clyde Goulet

Would you like to know how to create equity out of thin air?

Would you like a guaranteed method to "recession proof" your income?

If you are a property owner who’s been hit by the falling real estate market, how’d you like a way to climb back on top?

Out of chaos comes opportunity. If you have been paying attention to the real estate market (and, really, how could you not?), you know that in most parts of the country foreclosures are through the roof. But don’t be scared off by other people’s real estate failures. I have found a way for everyone to win. Even you. And even if you are not currently involved in real estate. Let me explain…

I have been in the real estate business - both residential and commercial - for over 25 years. I am a licensed real estate broker in Florida, just outside of Orlando. And I can tell you from experience that when the market is cranking along and credit is easy to get, you could just about train a chimp to make money with real estate. But when times get tough, you need to try an unconventional approach. The one I recommend is learning how to work "short sales."

The short sale has been around for many years. It’s nothing more than the lender/bank agreeing to take less than what is currently owed on the property. They do it because they are not in the business of owning real estate. They just want to get the property sold and off their books before they have to go through foreclosure.

Here’s how it works: A property owner, real estate agent, or investor informs the lender that they would like to short sale the property they are involved with. After they submit the appropriate paperwork, the lender’s Loss Mitigation Department (a department that can actually help the property owner) will negotiate an acceptable price lower than the current mortgage balance.

Many times, the Loss Mitigation Department will use their own internal formula to determine the discount they will take. But when the market is so slow that most houses are selling below asking price and even below "market" price - like right now - lenders will often agree to take bigger discounts.

The short sale enables property owners to get out from under properties that have either declined in value or were simply overleveraged to begin with. And it enables investors to make below-market deals on properties that they can quickly turn around for a profit. Everybody wins!

As an investor, the lower you can negotiate the debt, the greater your potential profit upon re-sale. And it’s even easier if there are multiple mortgages on the property.

Here’s what I mean…

Let’s say you start doing research, and one fine day you find a soon-to-be foreclosed property with an 80 percent first mortgage held by Acme Primary Bank and a 20 percent second mortgage held by Secondary Lender Corp. You have struck gold!

While Acme Primary Bank may not be interested in discounting the balance of their 80 percent first mortgage a whole lot, you will probably be able to get it down somewhat. Meanwhile, Secondary Lender Corp. will almost certainly be willing to discount their 20 percent second mortgage. You see, when a first mortgage is foreclosed, the second mortgage is usually wiped out along with any other junior liens on the property. So the only way for Secondary Lender Corp. to get anything out of the property is to work the short sale and accept a much smaller amount for their payoff.

When you are dealing with properties in the $500,000 range, a 20 percent second mortgage is $100,000. This is where equity is created out of thin air for the short sale investor.

I keep my eyes peeled for this type of situation. If I know the second mortgage holder will discount their loan to mere pennies on the dollar, then I know I can walk into the property with equity. In most cases, the first mortgage holder will discount their loan to some degree. Combined with a major reduction in the second mortgage… that’s a windfall for the savvy short sale investor.

There are many reasons to invest in short sale properties:

  • There are currently so darn many of them to choose from.
  • You can create equity in properties where none existed before.
  • You can work these deals in the comfort of your home. No office necessary.
  • You don’t need money to profit from short sale deals.
  • If you buy them right, you don’t need credit either.
  • Short sales will be a hot market for at least the next 18-24 months.

Here’s one example of how I used a short sale to turn a profit…

I found a property with an "asking" price of $105,000. This included the $74,000 first mortgage and a $28,000 second mortgage, plus late fees and costs. The owners could not sell it for that price because of the condition it was in. It needed some rehab work, but they didn’t have the money to do it. Using my short sale techniques, I successfully negotiated a purchase price of under $50,000 and immediately sold it for $78,000. That netted me a profit of over $28,000.

My buyer bought the property from me the same day I bought it. I didn’t bring a dime to the closing table, because the money to fund my agreement with the bank came from my buyer. The deals were closed simultaneously… and here is the result:

In another recent deal, the asking price on the property was the total debt balance plus commission/closing costs of $253,000. In this case, the property had a true market value of just over $212,000. I was able to get the first mortgage balance of $162,000 down to just $145,000. The second mortgage of $74,000 was negotiated down to just $3,000. I ended up buying the property for $148,000 and selling it the same day for $210,000 - making a $62,000 profit on the deal.

Another deal had just one mortgage. The property had a true market value of just over $190,000. But in order for the property owners to pay off their $203,000 mortgage balance, their back payments, and their commissions/closing costs, they had to list it at $234,800. And there was no way they could sell it for that. I negotiated the debt down to under $155,000 and sold the property for about $180,000 - a $25,000 profit.

Even if a property is 100 percent financed, the lender will usually discount the payoff amount to around 82 percent of what’s called the "Broker Price Opinion" (BPO) - an estimated value, determined by a real estate broker or other qualified appraiser - that is frequently below market value. That makes doing everything you can to influence the BPO one of the most critical aspects of successful short sale investing. And when banks/lenders contract with a licensed appraiser to come up with the BPO, you have just one opportunity to do that.

That’s why I always insist on being present during the BPO inspection. I then produce comparables that reinforce and justify my contract price. I "help" the appraiser by handing him information on other properties for sale in the neighborhood. If repairs are needed, I hand him a copy of all the repair estimates. I also research the average number of days properties in that area are on the market, according to the local Multiple Listing Service, and hand that to him.

I do all this for one reason and one reason only: to legally and ethically influence the property’s BPO. This estimate becomes the starting point for negotiations with the bank/lender. So the lower, the better. If the bank/lender knows that the house may need some repairs and has copies of my repair estimates, it will affect their decision. If the bank/lender knows that the days on the market (DOM) for this property is reaching - or exceeding - the average, they know there’s a good chance they will have additional holding costs to pay before they can sell the property. All this information is designed to get the bank/lender to accept my offer and not take the property through the full foreclosure process.

All indications are that we are in for another two years or so of a soft real estate market. Learning about - and knowing how to make money with - short sales will get you through it.

[Ed. Note: Clyde R. Goulet is a real estate broker and author of The Survival Guide to Foreclosure. Clyde, a member of ETR's Internet Money Club, is offering a FREE download of his "Short Sale Manifesto" at www.nobsshortsales.com.]

Click to comment on this article.

== Highly Recommended ==

Imagine if There Were Only 6 Numbers to Choose from When Buying a Lottery Ticket!

Wouldn’t that be great?! Of course, the fewer the choices, the more likely your chance of success, right?

How many choices are there when buying and selling shares? Errmm… a LOT ! Hundreds… One of the reasons I enjoy such consistent success from trading is because I only have 6 options to choose from! Except this is even better in a way, because the lottery is pure luck…

… I only have 6 choices AND have a VERY good idea about which choice to make because of the insider signal. Click here to learn more…

How Boring Search Data Can Bring Life to Your Website

By Rick Maggio

If you’ve got a search box on your website (and you should), you have the opportunity to make your business even stronger than it already is. Granted, the statistics you can pull from your search box aren’t particularly exciting. In fact, in a casual survey of a few of my colleagues, exactly zero found search statistics to be even slightly interesting. But here’s why they, and you, should care: Visitors to your website use your search tool because they cannot otherwise find what they are looking for!

With that in mind, here are three ways you can add value to your website by using the "boring search data" from your site’s internal search box:

1. Perform a search for your most popular search terms and see what, if anything, shows up.

Your website search box may not be as "smart" as you once thought. For instance, let’s say your visitors regularly search for "tax tips." But when you type that into your search box, the results are all about sales tax. This is your chance to make sure the top results give your visitors the information they seek.

2. Add homepage promotions and/or links in your navigation that relate to the top search terms.

Giving users direct access to their searched-for content allows you to point them exactly where they should be to find what they are looking for. For our example, you could include a link on your homepage that says "Tax Tips" and leads to articles and sales letters about getting your taxes in order.

3. Create content and/or promotions around the most-searched topics.

Search data will help you better understand your customers - and may give you ideas for new products and content to offer. Maybe you don’t have any articles about tax tips. If that’s your visitors’ top search term, now’s your chance to create new articles and programs that fill that need.

[Ed. Note: Rick Maggio is ETR's newest Search Engine Marketing Specialist. For step-by-step instructions on starting your own Internet business, get ETR's Magic Button program. Click here to learn more.]

Click to comment on this article.

5 Easy Ways to Protect Your Credibility

By Suzanne Richardson

"It was 1999," Charlie said. "An executive VP had just started at the 500-person company I was working for. A week later, he announced to the company - via e-mail - his first big initiative. The plan was to eliminate an expensive consulting group and bring the work in-house.

"Only problem? The consulting group had been working for our company so long that they’d been included in the company-wide e-mail directory for convenience. So the e-mail went right to them too. Talk about an embarrassing mess!"

Ever since Charlie told me this story, I haven’t looked at e-mail the same way.

Public embarrassment is a very real potential side effect of the ease and convenience of e-mail. It’s so simple to type out a few words and hit "send." In seconds, you can invite 25 people to a meeting… send your entire office a reminder about the staff party next weekend… or jot off a quick note to a coworker.

But it’s just as easy to send an e-mail to the wrong person. Or for someone to forward your e-mail to someone who wasn’t meant to see it. And bam! Your credibility goes right out the window.

Since I work remotely, e-mail is my primary form of business communication. And I’ve had tons of my e-mails - those meant specifically for one set of eyes - forwarded or copied to others. I have even, on occasion, sent an e-mail to the wrong person. But I’ve developed a couple of rules to help protect me - and my (unintended) recipients.

  1. Don’t fill in the "to" field in your e-mail until AFTER you’ve written and re-read your message.
  2. If an e-mail could have potentially negative consequences - if, for example, you’re critiquing someone else’s work or disagreeing with them - let it rest for a day or two before you send it.
  3. Don’t say anything in an e-mail you wouldn’t want your boss - or mother - to read. That may sound limiting. But somehow it’s those heated "I hate so-and-so" e-mails that tend to wind up in their inbox.
  4. If something is really sensitive, don’t say it in an e-mail. Using the phone and calling a one-on-one meeting are still great ways to communicate.
  5. ALWAYS double-check the "to" field before you hit send.

Keep these rules in mind whenever you write an e-mail. You could save your career.

[Ed. Note: Learn how you can accomplish all your professional - and personal - goals with ETR's Total Success Achievement program. Click here for all the details.]

Click to comment on this article.

Why You Can’t Gain 10 Pounds in a Weekend

By Craig Ballantyne

I always marvel at the reports I get from men and women who claim to have gained 10 pounds over a weekend. In truth, that’s impossible.

Take a look at this study: Researchers from Virginia State University gave men an extra 1,000 calories per day for eight weeks. By the end of the study, the men had gained an extra 11 pounds. That’s 11 pounds after eight weeks of indulging in far too much good food - not after a weekend of visiting the Outback Steakhouse and eating a "Blooming Onion."

After a weekend of "pigging out" on junk food, what most people see is just an increase in fluid retention due to its high-sodium and high-carbohydrate content. There may be some fat. But certainly not 10 pounds of it!

So the next time you get off track with your weekend eating and are shocked to discover that you’ve gained 10 pounds, just take a deep breath and realize that this is not an accurate measurement of the real damage.

Focus on getting back in charge of your nutrition. Stick to whole, natural foods and cut out the high-sodium, high-carbohydrate processed snacks. At the same time, add fruits, vegetables, nuts, and protein to your meals during the week. And add three total-body resistance-training workouts and three interval cardio workouts to help burn fat.

You’ll return to your normal weight in a few days.

[Ed. Note: Fitness expert Craig Ballantyne is the creator of the Turbulence Training for Fat Loss system. For a free online source of information, motivation, and social support to help you improve your health, lose weight, and get fit, sign up for ETR's free natural health e-letter.]

Click to comment on this article.

It’s Fun to Know: Books by the Foot

Eager to have a fully stocked library for your home or office? If you don’t actually plan to read those books and you want full shelves just because it looks good, try the Strand Bookstore’s Books by the Foot service. The New York City-based store will sell you books by the foot in whatever style you desire. Try "Antique Leather" for that vintage look… or "Art Books" if your style is more bohemian. Prices run from $10 to $400 per foot. The best customers are set designers for Hollywood movies and stage productions.

(Source: Consumerist and Strand Bookstore)

== Highly Recommended ==

When the CAR gets stuck in a rut you can call AAA - But who do you call when YOU get in a rut?

Feeling like your life has stalled? Wondering where all the excitement has gone? Don’t worry, you’re not alone. All of us get dragged down in a rut now and then.

But you’ll get back out on the highway of life a LOT faster if you have a friendly “towing service” looking out for you 24×7.

So put on your seat belts, rev up those engines… and let’s get going with our motivational kick-in-the-pants program.

- Charlie Byrne

Word to the Wise: Delectation

"Delectation" (dee-lek-TAY-shun) - from the Latin for "to please" - is great pleasure, delight, or enjoyment.

Example (as used by Colin Tudge in New Statesman): "Animals are not puppets, put on earth for our delectation."

Copyright ETR, LLC, 2008

Similar Articles:

Posted to Daily Issues

Did you especially enjoy this issue of ETR? Why not share it with the world?
with a friend…

Return to the Article Directory

No comments yet… Be the first.

Leave a reply: