Wednesday, December 18, 2013

Street Smart Investing

Lou Brown is a 30-year real estate investor who teaches creative financing strategies that make it easier for investors to avoid having to qualify for a loan. His "Street Smart" investing techniques help Buyers follow the path to affordable home ownership, and his student investors are certified as Affordable Housing Providers.

These are my notes from his webinar today:
Mortgage requirements will make it more difficult for buyers to qualify for a mortgage in the future. Dodd Frank Act will make it more difficult for sellers of income property who cannot offer seller financing.

Lou Brown used examples from his students to demonstrate how to generate cash flow from income properties, without having to get a bank loan. He begins by finding the right property and doing a direct mail campaign, either to sellers with lots of equity, or underwater sellers with no equity.

The goal of the investor is to act as the "doctor," to identify the Seller's pain. He uses a Seller questionnaire that is designed to extract information from the seller, e.g. Are you willing to allow us to take over payment until we get your house sold for you? Find out details about existing loans, say it the right way, extract information.

The investor should pull comps and design at least three offers they may be able to make to a seller before they even go meet with the Seller. He shows the "x-ray of the disease" by showing comps and "cost to sell" worksheet to the Seller. All this homework is done before he meets with the Seller.

Make a presentation in person to the Seller that shows who you are, what you do, how successful you have been with other Sellers. Make yourself a field representative rather than the owner of the company, as Sellers will be more likely to share more information to help you sell your deal. Make it clear that you are authorized to make an offer today. Give the Seller the blank Cost to Sell (retail numbers - calculated to carry property for six months) worksheet to have them to calculate the costs for you to help them sell their house.

Your homework includes figuring out the profit you hope to make using a Property Acquisition Worksheet (wholesale numbers). You should already have a buyer lined up, with less than a month in many cases to close on a transaction. This worksheet will also calculate cash-on-cash return for the investor.

Be sure to have some clauses in the contract that protect yourself if you decide the deal is not right for you.

Structure the right "treatment" for the Seller (patient) to be cured of their pain. What are the best offers to make to the Seller? The conversation should be structured around the issues that are causing them pain.

He gave an example of a student investor paying the monthly mortgage payments for the Seller (Seller had quite a bit of equity), with the balance due when he sold the house. The investor avoided the bank, put no money down, got $20,000 from a Rent To Own (RTO) buyer who paid 50% more on the monthly payments, and paid $50,000 more for the house. This is a good example of risk-free investing that solves problems for the Seller and the Buyer, and offers the buyer a pathway to affordable housing.

He gave another example of buying a property "subject to" the existing mortgage, and flipping it to a RTO buyer for more money and cash flow on the monthly payments. The Seller actually paid the investor to take over the mortgage. Paperwork must be done properly to avoid having the loan called due and payable.

Lou Brown is a big fan of making multiple offers, using the Possible Offers to Make System, using over 36 ways to structure multiple offers to purchase a property. Typically this involves no money out of the investor's pocket and without having to qualify for a loan.

Lou Brown's system is based on the right wording, such as "payments of $XXX per month, which includes interest and principal", magic words that allow investor to take over payments at 0% interest. Investors have to look like a pro to the Seller when making a presentation, to compel the Seller. Business cards show that the investor is a "Certified Affordable Housing Provider" and investor shows the Seller his "Path to Home Ownership" program. These are trademarked and copyrighted designations.

The investor has to look like a pro to the Buyers and to Lenders as well. Lou Brown provided a few additional examples and promoted the training available at his Millionaire's Boot Camp.

For more information on creative investment techniques, and a FREE list on ten different ways to purchase property with NO MONEY DOWN, please contact me at or 888-621-4999.

Happy Investing!

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