Question:
From Mike Oliver, he asks, “Hi Lou, I picked up my first Subject To Deal and as I was going through the Due-on-Sale checklist in the Trust Course, I got a bit confused. Am I contracting with the seller and assigning it to a trust in which I have a beneficial interest or am I having the seller deed the property into trust in which a friend or an entity is trustee and having the sellers assign their beneficial interest to me at closing? Would you please clarify this for me?
Answer:
Okay let’s start with that one Mike. First of all, we are having the seller place their property into their trust; however, we are having you select the trustee. So it is going be a friend, or it is going to be an entity that you control, that is going to be the trustee of the sellers trust. Now that trust is going to show the seller as the beneficiary of the trust, then we’re going to have the seller assign and quick claim their beneficial interest in the trust, and they’re going to assign and quick claim that, to not you Mike but to another trust. We’re going to have them assign and quick claim to a personal property trust and again that’s going to be a trust that you control. So it’s going to be again your trustee, a different one than we used for the land trust, and we’re going to have you as the beneficiary or an entity that you control as the beneficiary of that trust. Hopefully, that cleared it up for you Mike.
Now the Assignment and Quick Claim of Beneficial Interest is on page 96 of Volume 4. That’s your land trust guidebook, and that gives you all the details on how to do it as you found using the Due-on-Sale checklist, which is also in Volume 4.
Mike I’m going to remind you that our four day trust event is coming up August 23-26 and I highly recommend that you get yourself and your family to that event, because we cover many things there that are not in the guidebooks and are not on the tapes and CDs. So, this is important training for you to get and I strongly encourage you to and everyone on the call to get yourself to the Trust Event August 23-26. You get yourself registered by the way, since you own the whole enchilada junior you do receive a $1000 discount for attending that event. So, we do encourage you to get registered for that in advance. The last two or three times we’ve had the event we’ve ended up with a waiting list. So, we encourage you to get registered early for that to make sure that we have seats and we have materials for you. Call the office at 1-800-578-8580 to reserve your seat now and you can qualify for a payment plan as well. If you get yourself registered now, we can split that up over the next couple of months, till you get to the event.
Question:
The next question is from Lydia Espinosa. She says, “Hi Lou, Here’s my question: My father, who was a carpenter, built several apartment complexes starting in 1973, which were all free and clear and are in the state of Texas. He passed away in 1989, and all the children assigned their rights to any inheritance to our mother. Now my mother is in her late 70s and does not want to mess with managing the apartments.” I don’t blame her Lydia, she’s worked hard all her life and she doesn’t have to continue to work on those apartments, that’s the reason she had all you kids, you know, you’re supposed to take care of that stuff for her. “So she wants to deed each of her kids some of the apartments so they can manage the apartments, so it would be less work for her. We have no idea of the cost when they were first built and would like to know how we can transfer these properties without having any taxes. How do we figure out the value of each apartment so we can distribute them evenly?”
Answer:
Well Lydia that’s a fantastic question, and let me tell you something, it’s very important for many of the people on the call to listen to this one carefully. That’s another reason we do the Trust Event, it’s not only for asset protection, and it’s also for estate planning. What you’ve asked me is very much an estate planning and a tax reduction question.
Now, first of all, I’m going to recommend that you deed each apartment complex to a different trust. So, you’re going to need to create a different name for each trust and hopefully a different trustee for each apartment complex to segregate and separate the assets into separate compartments. So that anybody looking up the ownership of those various properties would find different rabbit trails to go down, and they couldn’t connect the dots to see that indeed your mom and your family are the owners of all those apartments. This helps particularly you know you see these tenants suing landlords on a daily basis all throughout the country. So, this is something to be very, very concerned about and not to maintain these properties in your moms name or in your family’s name but instead in trust names. That’ll be the first step.
Now I’m going to recommend that you have your mom as the primary beneficiary of those trusts. The reason for that is that from a tax standpoint you have an asset that if your mom passes it down to the kids it is possibly subject to gift taxes and those gift taxes can be 50 percent of the value of the property while she is still alive. So, what we want to do is have her as the primary beneficiary but that doesn’t mean that she has to continue to manage those properties. What we’re going to do is have each complex deed to a different trust and then have the kids as the successor beneficiary to your mom. So mom is primary beneficiary using the Declaration of Trust and Land Trust Agreement, which is on page 35 of your Volume 4, you’re going to have mom be the primary beneficiary then as it outlines on that page, you’re going to see that you can have multiple beneficiaries. Now each child can be X percent of the beneficiaries of those trusts. So since you didn’t tell me how many kids there are let’s say that there’s four, will you, then what would happen is each child would be a 25 percent beneficiary. So your mom would be 100 percent primary beneficiary and each child would be 25 percent successor beneficiaries to your mom.
Now what I recommend next is that your mom would hire you or more of you to manage those properties. Use the Management Agreement on page 88 to take over the responsibility for management of those properties and in fact, it would be the trustee of the trust that would hire you and your siblings as the managers of the property. Now that management agreement is going to outline what the manager’s responsibilities going to be. So if one of you elects to be the manager then the trustee of the trust would hire you to do that and that management agreement would outline what you would be paid to do that job and yes you should be paid to do that. I recommend a 10 percent management fee to whomever takes on that role, because they’re going to have a bigger responsibility in the day-to-day operation of the property and keeping it full and keeping it maintained, which is an important part of the overall management of a property. Also many management companies also charge when they acquire a new tenant, they charge anywhere from a half to a full month’s rent, the acquisition of the tenant and whenever those tenants renew they charge usually about a half a month’s rent on the renewal. So, that could be an income stream for one or more of the kids as the properties are being managed on behalf of mom. Also, that can provide an income stream for mom, if she needs it. A percentage of that income or all of it could go to mom while she’s living, if she needs it. It seems like though in your question she’s actually saying I want to give the properties away now and give the income away to the kids. Well that can happen. What could happen indeed is that the management fee would be equivalent to the income from the property, leaving mom with nothing, even though she is the primary beneficiary. So you can siphon off the income while leaving ownership with mom.
Now there’s another way to do this and I want to get deeper into that when you come to the event because we’re going to teach you how to set up a Living Trust as well and the Living Trust can have some extra spinoff benefits that I don’t want to confuse you with right now. I want to go through the process of at least getting these properties in Land Trusts and then we’ll work with the additional benefits later.
Also, as another alternative to mom staying as primary beneficiary is you can have a value of the estate declared now through getting an appraisal. Then that could be charged against moms two million dollar estate, which when I say it’s a two million dollar estate what I mean is that congress has passed estate tax exemptions and if the value of the estate is two million dollars this year, then that two million dollars is exempt from the estate. That means that anything above two million dollars would be taxed and in fact it’s taxed very heavily. So what I would recommend is that you could have the value of the property declared now, charged against her two million dollars, and then if it exceeds that later, then it would be a charge to her. Now these values are going to go up over the next few years, and I believe in 2008 it goes to 3.5 million dollars. Then in 2010, actually the law reads that there is no estate tax, so Lydia what that means is if your mom dies, god forbid she dies in 2010, that would mean that your family has absolutely no estate tax, if her estate exceeds the two million dollar threshold that’s now or the 3.5 million dollars in 2008. So these are some things to consider and Lydia I’m going to tell you that with a complex question like this and with a complex estate such as you have, you cannot afford not to attend the event August 23-26. In fact you can bring your family with you, bring mom, bring the kids, all your siblings, bring everybody with you so that all of you can get trained on exactly what we’re up to here.
Now let me say one final thing about this. You can sign the Land Trust Beneficiaries Agreement, so once you and your siblings are named as the beneficiaries of the trust, then you must have an agreement amongst one another, so essentially what the Land Trust Beneficiaries Agreement is a partnership agreement, and it outlines all the details of that partnership. Now I’ve got a structure of one on page 47 in the Land Trusts Guidebook, which is your Volume 4. So go there to put together a structure for your relationship and who’s going to do what and who’s going to be responsible for what and now is the time to do this Lydia, while mom is living, not when she dies, because that’s when things frankly fall apart in families. Everybody starts getting a little bit different than they were and they start thinking differently. So now while mom has control of all the purse strings is the time to work all these things out.
Hey I wish you the best of luck on that and keep me advised on that. By the way if you’re a member of our higher level coaching Direct Q and A, we’ll even take a look at your documents for you, and make suggestions on what to do and on the one-on-one Q and A you can even ask me questions directly on our monthly call when we work together and work things out. So, I highly recommend that you either increase your coaching level or get yourself to the August 23-26 event. For a complex situation like that you definitely need some help.
Question:
By the way I overlooked one of Mikes questions when, Mike Oliver’s question earlier he also goes on to say, “Also would you suggest I write checks to the seller’s mortgage company? I’ve seen people recommend a certified check from the trustees name as trustee.”
Answer:
Well Mike I don’t want you to worry about that. The lenders receive the checks and they are processed in a great big room by a big machine. They don’t pay any attention to who wrote the check or what name is on the check, all they pay attention to is that loan number, and so don’t you worry about what name is on that check. You just make sure it’s a good check, so it can be applied appropriately, and you’re going to be in fine shape there.
Question:
William asks, “A land trust provides privacy but does it really protect you from lawsuits and judgments? Can a beneficiary be sued?”
Answer:
William that’s a great question let me explain it this way. Those of you who have seen my wealth strategy and my wealth wheel have seen that I say protect assets by avoiding lawsuits and my strategy revolves around not having your name on public record and not being a target. If people can’t see that you own anything, it’s less likely that they’re going to pursue an expensive and time consuming lawsuit against you. So, what I’m actually espousing is not that we’re going to protect ourselves from lawsuits and judgments what we’re going to do is protect ourselves from the lawsuit in the first place. No let’s say that somebody does sue. Can a beneficiary be sued? Absolutely. Let’s look at it this way, if you are in a car accident and you caused the mishap, somebody could sue you, and they would be suing you in your name. One of the things they would be asking is what do you own. Well as a beneficiary of a trust you don’t own anything in your name, you own the avails and proceeds, which may flow from a trust. Now you would have to reveal that but what could happen in fact is those monies never do come down from the trust. They get used up inside the trust, so in fact you would not get the money with which to pay the lawsuit, which would make it very favorable for someone to settle the lawsuit at a greatly reduced price, because they never know when they’re actually going get their money. I would say that a land trust does not protect from lawsuits. What it does is, let me just give you the example this way. Let’s say that you’re passing through an orange grove, and there’s tree after tree after tree full of beautifully ripe oranges. You look up the tree and you see beautifully ripe oranges at the top of the tree, and you see this low hanging fruit, beautifully rip oranges. Now what are you going to do? You’re going to reach out and you’re going to take the low hanging fruit and you’re going to eat that. Now everybody can see the beautiful fruit at the top of the tree, but who wants to climb the tree and get the fruit? That’s exactly what I’m doing with you when I teach you about trusts. I’m literally running you up the tree, where it’s difficult. People can see you and they know they can get you, but do they want to go through the effort to do that or do they just want to pass on to the next tree and get the next low hanging fruit? I can tell you that attorneys like low hanging fruit. They’re looking for the easy kill. They’re looking for the easy fees and if they’re going to have to climb the tree for their client, they’re going to charge them accordingly. They’re going to tell their client in advance how much it’s going to be or at least what the starting cost is going to be. They’re going to tell them they’re going to have to have a significant retainer to start on the case, if there’s going to be, they size up a case, in other words, they determine what the extent of the work is going to be and then they charge accordingly. So that is what our trust strategies is designed to do, it’s not only designed to solve the problems that Lydia and Mike talked about earlier, it’s also designed, William, to solve the problems of not being sued in the first place.
Question:
Next question is, “There are nondisclosure rules a trustee should follow. If I use a friend or colleague, how will they know about nondisclosure when a tough attorney calls them?”
Answer:
Well William what we’ve done is we’ve designed a system that makes it difficult for the attorneys to call them. Number 1 we use initials rather than full names. So that makes it hard for people to even find your trustee to call, but if they were to call then you should tell your trustee never to answer any question by phone, and that anyone who asks any question regarding the trust must do so in writing. That must be mailed to the trust mailing address. Guess who has control over the trust mailing address? That’s you William you are going to use your mailbox location as the trust address. The trustee of the trust is going to receive all of its mail at your address, and guess what do to the management agreement that you’re going to have with the trustee, you’re going to be given the privilege of opening all mail that comes to that address. So, that should solve the problem for you William, and very, very good question.
Question:
Okay here’s another trust question. Jenny C. from Indianapolis asks, “Can you put property you own in other states in a Florida Land Trust, specifically Indiana?”
Answer:
Well Jenny, my paperwork allows you to determine what state law the trust is going to be adjudicated under. It’s in the, I think paragraph 14 of your Declaration of Trust; it determines exactly what state law your trust is going to be adjudicated under. So if you want to use Florida as the laws or the rules, you want your Indiana trust adjudicated under, and then you would put Florida right in that blank. Now I would recommend that you not do that, because it would actually make it more difficult to for you to use that trust in the state of Indiana. For example, if you ever had to go to court and sue anybody, you meaning the trust ever had to go to court and sue anybody, then you would have to do so under Florida’s laws. So I would recommend that you take your Indiana property, put it into an Indiana land trust and we’re going to state in my land trust paperwork, but just put the word Indiana in there as the laws under which that trust is going to be adjudicated under. That should clear that up for you Jenny.
Question:
Ian Hoag asks, “Citizens Insurance are not insuring my properties in land trusts. Not easy finding alternative insurers.”
Answer:
Well Ian, you’re absolutely right, but in Florida, which I think is where you’re from, because I’m aware that Citizens Insurance operates in Florida. There’s been a lot of loosening up lately on insurance. We do have a lead for you. We use a company that does write insurance in Florida, if you’re interested in more information about that you can call my office at 1-800-578-8580 and we will give you our contact information on that. It’s actually a Nationwide Company that does write insurance in Florida, and I know that to be true because we just got an insurance policy on a deal that we worked with one of my licensees in Florida, and we were able to get insurance through this company. So just give us a call and we’ll be glad to refer you on to that company.
Question:
If you put a property in a trust and tell the tenant you are no longer the owner, and just manage the property, should the tenants have had first choice at buying the property?
Answer:
Absolutely not. Not unless your rental agreement said that they had first right of refusal. Absolutely not. Your tenants don’t get a right of first choice. Now what you can do is this, after having put your property in a trust and you notify the tenant that you no longer own the property. However, you’re going to remain on as the manager for an indefinite period of time, and the new owners want you to go over with them. At that point in time, you can also say to the tenant by the way the new owners are willing to sell you the property, and they will sell it to you based on the amount of down payment you have. If you have enough down payment they’ll actually carry back owner financing right now. If you don’t have enough down payment they will actually do an option for you to buy the property. They’ll give you up to three years to buy and they’ll give you credits towards the purchase of the home while you build up enough down payment to convert to their owner-financing program, or go to the bank and qualify for a loan. That would be a fantastic way to go ahead and deal with that one.
Wow such great questions we’ve had tonight, and a bunch of trust questions. So remember August 23-26, we have the full four-day training on trusts. Now at that training I want you to understand, we’re going to go through soup to nuts, how to do trusts. Well actually, you’re going to bring your own deed to class. We’re going to start with land trusts, we’re going to go through and teach you what the trusts are all about, why they’re there, what the benefits of trusts are, then go into the actual paperwork, how you fill it out, because we’re going to do it right there in class. You’re going to your own guidebook, and you’re going to have your own paperwork right there that you can fill in the blank, and learn exactly how to do it. We’re going to go from land trusts to personal property trusts, you’re going to learn how to put vehicles in trusts, how to open a bank account, the whole nine-yards with personal property trusts, then we’re going to move on to living trusts. We’re going to give you the paperwork right there for a living trust, you’re going to be able to have the living trust as a beneficiary of the land trust and the personal property trust and it’s going to bring forth a lot of other benefits as we talked about with Lydia, just a few minutes ago. So these benefits are very important to you guys and I promise you trusts in the thing and estate planning is the thing that people put off until later. But it’s what they ought to do up front as they’re acquiring the properties, because you can literally do your estate planning as you go if you would go ahead and do it and learn it now. So I’m going to highly recommend that you guys must get to the trust training and get all your details, your “I” dotted, your “T” crossed even if you’ve been using trusts in the past, I promise you there is things you don’t understand about those trusts that you need to understand. You’ve probably have some flawed paperwork and I’m even going to teach you how to clean up those mistakes and clean up the flawed paperwork. You’re going to fill out the land trusting class, personal property trusting class, and the living trusting class. You’re going to walk out with all that stuff done. Now the other bonus that we’re giving you is a special CD. It’s a autofill forms disc, that allows you once you’ve been trained to literally fill out one sheet and it autofills all of your documents so that you will never have to go through the pain and suffering of highlighting and typing in each line in the document. It will literally autofill each line in all the documents using one-click of one button after it’s already filled out.
Thank you Bruce for that marvelous thing and that’s only available to graduates of the Trust Class and the trust training.
Question:
Now I’ve got a few more questions and I think I’ll start with this one on, we’ve got a rental question, “Renter is a family. Renter was on social security. Social security was taken from the tenant. How to handle?”
Answer:
File eviction Maria, unless these people can replace that income, and if that income is solely what was paying the rent, you must immediately, immediately get to resolution with these people. Hopefully, they have family they can move in with. In some cases there are charities, churches and other resources that can step in and help them over the hump, and maybe give them one or two months worth of rent, but they’re probably not going to pay their rent from now on. Section 8 is another way that if the section 8 program or the assisted housing program in your area, if they qualify for that then they could apply for section 8 or assisted housing in your area and have their rent covered by that.
Okay so that’s a great question.
Question:
The next question is, “How can new contracts be used when the tenant is all ready in place?”
Answer:
Well that’s a word we call finesse, and what I recommend you do is merely say to the tenant, “Hey the situation is we no longer own the property, however, I’m going to remain on as the manager for an indefinite period of time. The new owners have some new paperwork they want me to go over with you.” Now if the tenant doesn’t resist then boom you just cancel the old contract automatically by having them sign a new agreement with a new date, and that’s what I’m going to recommend you do. If they resist and say they can’t do that, you can’t do that, they’re absolutely right, and you will have to honor the existing contract until it expires. So all of that is in your training in Volume 8 Property Management. Now I’m going to highly recommend that you get the property management system, if you don’t have it all ready. Because it’s got many, many answers you’ve never even thought of before regarding property management.
Question:
If you buy say 50 houses in a year and hold them whose name is on the mortgages? Well Dominic Bowen and he says, “Great seminar”.
Answer:
Yes sir Dominic well let me recommend this. If you buy 50 houses in a year I’m going to recommend that each and every property be in its own trust. Your name should not be on the deed and if you buy houses the streetsmart way, the way Lou Brown teaches you to do, it’s the seller’s name that is going to be on the mortgage. Because your buy subject to the existing financing on that property, you’re going take over that existing financing and you’re going to continue to work the program, and that will allow you to buy something like 50 houses in a year. Because I’m going to tell you one thing, Dominic, it’s going to be hard to qualify for 50 loans and the mortgage companies do not like people that try to qualify for 50 loans. They think you’re risky and they think that their just not going to give you that loan. So, I’m going to tell you to be very, very careful when you do that.
Question:
Now I think I’m going to just allow Keith to ask me a few questions and we’ve got Keith Mock here and Keith is, like I said, he is one of our platinum level members. He’s been in our program now for 18 months. Keith, why don’t you tell them a little bit about yourself? What have you done in 18 months of being part of the program?
Answer:
Well Lou thank you for having me here tonight and join you on the conference call. In the past 18 months we’ve taken our business from a mom and pop business and turned it into a real live investing business. Currently we have over 40 transactions that we’ve added to our portfolio with over $2 million in equity at this time.
Question:
So $2 million in just 18 months. Now you know when you see people on the late night TV talk shows and you hear people say things like that, it’s just hard for people to believe that you could get that much done in such a short period of time. What would you recommend that people do to be able to do 40 transactions in 18 months and make $2 million?
Answer:
Well the first thing they need to do is get the entire product line that we have in place. That’s what we had to do because if you look at the entire system it involves obviously the buying, selling, all the trust work that goes with it, but also you have courses on renovations, property management side of the business. We have negotiations, we even have auctions that we can deal with, so when you look at the entire product line and what’s available to you, you really need those, and also the other thing that is really most beneficial is having the websites. That’s helped us run our business because it’s not just the public face that we have, where buyers and sellers can get in contact with us, it’s the entire business management backend that’s built into the system. I don’t think we spend enough time talking about that because when you get to the level that we’re at now, with the volume of transactions that we’re doing on a daily basis, if we didn’t have automated system to do that with it would be virtually impossible or otherwise we’d have to have 20 people working for us. There is only five working in our business at this time.
Question:
How about that. So, you went from nobody working in the business till now you’ve got five working in the business and you’ve totally automated your process through using our websites.
Answer:
Exactly.
Question:
That’s amazing. So you’ve got the buying websites and the selling websites and the borrowing websites? Is that right?
Answer:
Yes, the private lending sites. Yes.
Question:
The private lending sites. That’s awesome. So now do you manage your leads on a daily basis on the websites?
Answer:
Most definitely. Every day you have to go in, actually we, our process is for instance for buying houses. A seller actually fills out the questionnaire and the lead comes in, and people are assigned actually take that lead, review it, make a telephone call to the seller, validate the information. Lots of times whenever a seller has given you information, they’ll claim that they’re current in their payments, in reality they’re not, and you have to know that information before you can proceed. Once we validate all the information, then we go through the process of researching the lead and getting the comps done, which we use comp whiz for that and we also research the tax information, our tax rolls in our particular county, so that we can see what the liens are.
Question:
Well let’s back up for just a second. How did the customer get to the website in the first place?
Answer:
Well all of our marketing has the websites on that, everything we send out.
Question:
So everything, now what kind of marketing do you do to get all these leads?
Answer:
We do primarily direct mail, but we also have all the standard advertising that everybody else has. We have the newspaper advertising, we have flyers, we have car signs, and we’ve even done door-to-door hangers. We haven’t done the post-it notes yet, because at this point in time our leads; there are so many leads that we don’t need them.
Question:
Exactly, so you’d say to somebody starting out, in fact that’s one of the questions I’ve got tonight, it was a getting started question, from Glen Wagner, and he says, “About how long after going to MJS do you expect a person to make their first deal, assuming that the person is determined?” I thought that was such a great question because I can answer it by saying this, I expect you to make a deal as soon as you walk out of MJS, but what’s missing is “how did you get that lead and what did you do with that lead?” Now what would you recommend that Glen do?
Answer:
Well actually if, the first thing that everybody needs to do is once they fill out their business plan at MJS, is to actually go home, part of that filling that out tells you to plan for what you’re going to do when you get home, starting with Monday and what they need to do is go and exercise that. We did exactly the same thing, when we got home one of the things we picked up on was that we wanted to find out who was in foreclosures. So, we went down to the courthouse, got the person’s name and it turned out to be neighbor down the street. Coupling that with one of the your marketing techniques, I literally just walked down the street, knocked on the door, they wouldn’t actually come to the door, so I stuck a note almost like a post-it note on the door. Told them I was interested in buying their house, and before I got back home, they were all ready calling the house and telling us that they needed to sell their house. I put on there “I’m your neighbor”, so they didn’t feel threatened by that and actually met with them and got the house under contract.
Question:
Beautiful. So that just walking down the street you can literally make a deal, and Glen that’s what I’m going to recommend to you. That hey all you’ve got to do is identify the two neighborhoods, as I taught you at MJS, the two neighborhoods that you want to own properties in, and literally if you have very little budget to work with, you can just start knocking on doors. Another thing you can do if you have little bit more budget to work with is start sending out postcards and letters, and if you have little bit more budget to work with you can start putting advertising, a little bit more budget, and so on and on. I taught you all those things at MJS, the signs, the letters, the postcards. We talked about a marketing plan there. That’s exactly what you need to do Glen; you need to implement your marketing. It’s very critical; the marketing is what generates the leads. Right now Glen you haven’t done a deal. The reason you haven’t done a deal is because you don’t have the lead. If you don’t have the lead you can’t do a deal. You got to have the leads to work the leads to get deal in the first place. I was harkened yesterday, someone came into my office and it’s one of our licensees, he works in the local Atlanta market, and he had two notebooks full of leads and he has yet to do his first deal, and I said, “Ron the thing is what is it that you’re focused on.” Well he showed me a particular deal he was working, it was a short sale, and he had done all the right stuff. He had gotten all the paperwork signed, he had done a beautiful package of implementation on the deal, there was so much detail, it was absolutely beautiful tabbed all ready for anybody to look at, the only problem was it was not the lead he should have been working. Because of having two books full of leads he was actually working the most difficult lead he could possibly work, which ladies and gentlemen that is a short sale. Short sales are very difficult leads to work and they lead to a lot of work. Now in looking through his stacks of leads, I actually found some that had equity, they had low interest rate, they had everything that Lou Brown tells you is an A-quality lead. He had A-quality leads, B-quality leads and C-quality leads, but by not paying attention to what he had he was actually working his C-quality leads instead of his A-quality leads. So that’s exactly what I recommended that he do today, was triage all of his leads into A, B, and C leads. Then he’s coming back in tomorrow and we’re going to work those leads together and we’re actually going to work the A’s first, and when we don’t have any more to work, then we’re going to work the B’s next when we don’t have any more of those to work, then we’re going to work the C’s the hard stuff. So Glen you ought to be making your first deal after going to MJS, if you need a refresher call the office, let’s get you back into the next MJS which is coming up in Philadelphia, Pennsylvania July 21 and 22. So by all means get yourself registered for MJS. Get yourself re-jumpstarted and let’s get you going. Because it is absolutely inexcusable that if you follow that system you don’t have something to work with.
Keith do you have anything to add to that?
Answer:
I think that they just have to realize that once you attend MJS you have to take a hold of it and you have to apply it exactly as you lay it out, and you can’t short step through any of it. You have to lay it out and then do what you say you’re going to do.
Question:
So, they have to be committed to their business, and they have to commit a certain amount of time? Now when you came back from MJS how much time did you commit to the business?
Answer:
Well I had a full time job where I worked about 16-17 hours a day, so I managed to try to squeeze in a minimum of 2 to 3 hours a day and then every Saturday or Sunday I committed to it.
Question:
Wow and your wife did she do that too?
Answer:
Yes she did.
Question:
Wow. So the two of you, when you joined me, both of you had jobs?
Answer:
That is correct.
Question:
And now?
Answer:
We’re both gainfully unemployed.
Question:
Gainfully unemployed. How quickly did Edith get rid of her job?
Answer:
Within a couple of weeks.
Question:
Really.
Answer:
About 3 to 4 weeks we were able. We saw immediately that the volume of what we were doing had changed so dramatically that she had to be out of her job to maintain our business.
Question:
Awesome, so she quit her job and you felt like based on the volume you were receiving, the volume of leads you were receiving, you could replace her income very quickly?
Answer:
We actually replaced her income within about six weeks with one deal.
Question:
Wow, with one deal you raised enough profit off that one deal to pay an entire year salary for her?
Answer:
Exactly.
Question:
Wow and then how did it take for you to get rid of your job?
Answer:
About eight months later.
Question:
Eight months, so after following the system, going to MJS, doing what we told you to do, then suddenly you’re without work?
Answer:
I couldn’t afford to keep the job anymore.
Question:
You couldn’t afford to keep the job. Why not?
Answer:
I was making too much money doing real estate investing to keep my job.
Question:
How about that, now how long did it take you to replace your income?
Answer:
I’d say about after I started actually working we had several deals that came in within two months.
Question:
Oh my goodness, so within two months you replaced, and you were a high level executive, is that right?
Answer:
That is correct.
Question:
So, you made really good money, and that was replaced within a couple of months.
Well Glen I hope that gives you some inspiration and everyone listening to this today, because it’s just so important that you don’t get yourself bogged down with details that stop you. In fact the fellow that I was mentioning earlier that brought in all his leads, and he actually brought me the one deal to work on. It was a short sale that he was working and the reason he had come to me was for funding for that short sale deal, and I misunderstood that he was coming in not to get funding for a short sale he had already gotten accepted. It was a short sale that he had yet to work. So I said the farthest thing for you to worry about today is funding for that deal, it’s to worry about acceptance of the deal in the first place, and then when I found out he had all those leads, I said “wait stop this train, we’re going to refocus your efforts today on something completely different”. So Glen and all of you on the call too, this is what coaching is about. To coach you through that which is stopping you and to coach you through that which you have focused your efforts on, which was not where your mind or your thoughts should have been at all?
Keith how long have you been a member of the Platinum Program?
Answer:
A year.
Question:
A year.
Answer:
A year.
Question:
A year my goodness. So has that benefited you?
Answer:
Yes most definitely. You get to take your business and show the different parts of it to other investors like minor investors that are trying to develop the same level of business that you are and then the synergy of everybody working on your business helps you get new ideas to go home and implement, so that you can grow your business faster.
Question:
Now the platinum members, one of their benefits is to have a highly private Yahoo group, which is only of the other platinum masterminds that are together. Has that benefited you as well?
Answer:
Yes, it allows us to; in between our meetings it allows us to share ideas and concepts. We review a lot of the documents that you produced before the rest of the students get them and we try them out on our business and often helps us accelerate what we’re doing.
Question:
Awesome, awesome, so you would say that that would, what about the one-on-one calls? Has that benefited you?
Answer:
Oh yes, we get to spend time with you, actually answering the question of what we’ve done since the last time we talked to you, which kind of holds our feet to the fire. That’s sometimes you have a tendency to make promises that you’re going to get things done in your business that if you were left to your own devises you wouldn’t get them done, but knowing that we have to face you in a couple of weeks and answer that question really motivates us to get it done.
Question:
That’s a good one. Well I’m glad to hear that and also you take advantage of the Direct Q and A throughout the month too as well.
Answer:
Most definitely.
Question:
Excellent. So that’s what this call is all about too folks. Is that you’re Group Q and A, your Direct Q and A, your one-on-one and your mastermind is all designed as an overall training program to make sure that all the systems that you have, that you own, that you actually understand how to use them and how to work them, because this program works. In fact at our last event we had four different masterminds on the stage and each one of them have been at least $1 million businesses in one year. Now just imagine, I want everybody on this call to just kind of close your eyes and think, unless you’re driving, close your eyes and think about this with me for just a second. What if you could put yourself in a position to totally focus on your business for one year and as a result of that focus and as a result of the support and the details that we give you, that you too could have a $1 million business in one year. I want you to just think for a minute about all your goals, and your visions, and you dreams, and what you want to have happen as a result of being involved in real estate. Then imagine that that can happen in one year. Imagine that you could go to China with Lou and Janice Brown and spend three weeks not worrying about your business because it’s working even when you’re not there. Folks when I was in China, houses were being bought, houses were being sold, houses were being rented, rent-to-own, they were being sold with owner financing, things were happening while we were gone and that’s the way I want you to consider your business. Your business should not revolve around you; you should revolve around your business. Your business should operate at its own volition with its own velocity and you should merely be working on that business not at that business. Now of course in the beginning you’re going to be working at the business, but we want to quickly develop a business where you are working on that business and you have, as Keith was saying, now he has five staff people that work with him and having that business work with velocity without him having to be there.
Keith do you have anything to add to that?
Answer:
I actually it’s not as complicated as a lot of people think it is. You give us the tools and I often refer to the tools as being a recipe, and if you just follow the recipe, it’s all a system, and if you just apply it the way you instruct us to do, it’s actually fairly easy. But you’re exactly right, the nicest thing is we were at an event in Philadelphia this weekend where you did a street smart expo. Those of us in Pennsylvania would like to thank you for coming to that, and I hope a lot of new students are actually dialed in tonight, but even though while we were at that event I actually did two deals while we were there at the event. I also sold a house while we were there and I would have never done that before I met you so thank you.
Question:
Oh you’re welcome. You’re welcome. So you know that’s one of the things that just inspires folks, you know if you could just understand that with my 30 years of experience, it’s easy for me to say but when you can understand that other folks can just step in and they can take a system, follow the system to the letter. Do what the system says to do, and suddenly have success. It makes you wonder, makes you step back and think. I enjoy coaching because I get to see what it is that is stopping people and then I get to attack that piece right there and say, “Look this is exactly what’s stopping you now. Let’s deal with that right now”, and not allow that to continue to stop you along the way. Because you’ve found the right industry, you’ve found the right business, it works every place in this country, because I have licensees in all 50 states and 13 foreign countries. They’re following this system to the letter. They’re using the technology the websites. They’re using the tools all the guidebooks. They’re going to the trainings all the four trainings that take you through all the process of buying, of selling, of managing, holding, protecting your assets with the trust, they’re taking advantage of the coaching, so all those elements is what gets you to where you want to go.
Keith what other questions did you have for me tonight?
Question:
Well Lou this is a question I got at the event quite often this past weekend and was after 30 years of real estate investing and also real estate teaching, what motivates you, what keeps you going and what excites you the most about this business after all these years?
Answer:
Well you know it’s a funny thing. Why would I continue to buy houses when I’ve got plenty of them? That’s one question I get pretty often and the answer is if you were walking down the street and you saw a $5.00 bill on the ground, would you bend down and pick it up?
Yeah baby.
Even if you had plenty of money, would you bend down and pick it up? And the truth of the matter is once you’ve got an operation and you’ve got staff that you want to take care of and you want them to grow and you want them have a future as well, you get motivated by helping others. Frankly that’s the reason that I love to teach, and people say why would share all your secrets, and the reason is because I love to teach and I love to share my secrets and I also love to help people not make the same mistakes that I made getting started. Because let me tell you, I’ve made a lot of mistakes along the way and I love telling people, “Oops, wait a minute, you’re about to step in that pothole and I want to help you not step in that pothole, not make the mistake that I’ve certainly made.”
Question:
How do we help these new students step off the curb and get their first deal done?
Answer:
I think it’s really it begins with confidence. The word confidence, we must instill confidence so that you all that are listening to this have the confidence to move forward. One of the things that instills confidence is you know that you have what it takes, from people that have been there and done that, and are your safety net to make sure that you don’t step off the curb and make a wrong move. I joke about the Monopoly game, and I say you know many people are sitting on Go and they’re parked on Go and they’re afraid to leave Go. But if they leave Go they go to the Chance card and they might turn up the Chance card that says, “Lose everything”, and I think the fear of lose is greater than the fear of success in most people’s cases. So what happens is that that fear of lose literally just stops them cold in their tracks, and they’re just like deer in the headlights, can’t move forward, terrorized by the prospect of having that thing happen to them.
So Keith I would say that all we have to do is instill in them that they have a safety net, and if they can have a safety net and a support team to show them that we have all the answers for them. All they have to do is do what we tell them to do, then I promise them success. You know it’s a funny thing, over the years as I’ve seen people like yourself, that have taken the entire system and you’ve bought into the entire system, you’ve actually been able to put yourself in a position to have that confidence and the support and everything. It’s folks that take pieces and they try to piece it together, that’s when I see failure occur. Because they taking and idea from here, a concept from there, a form from another place and they’re trying to piece that together. Just the fellow that came in here yesterday I saw it; it was all spread across my conference room table. I said, “Okay, what you’ve done is you’ve piecemealed your business, and he said, “You are exactly right.” He said, “I have piecemealed everything.” I said, “We’re going to put all this stuff away, we’re going to pile it up and put it away, and we’re going to follow this right here.” He said, “Thank you so much for saying this is exactly what I need to do and I’m going to stop trying to recreate it, recreate the wheel from all these different sources.”
What other questions do you have for me Keith? It’s okay.
Question:
Well the next question I have was, I often get asked by new investors, where they should look for deals? What should I tell them?
Answer:
Okay where they should look for deals is hey how about the street you live on. That’s a first start, and what I recommend is that they pick out two neighborhoods that they like, that they would like to own property in, and that is a beginning point. As you know we have a number of different ways that we can generate leads, we have identified over 200 ways to generate leads, but what I recommend is that everybody chose just five, just five lead generators.
One of them being perhaps putting out bandit signs in the neighborhoods they want to own properties in. Identifying those neighborhoods and doing a door knocking campaign, where they literally park the car and knock on the doors of the very houses that they someday want to own, and ask the question of the people “Do you know of any houses for sale in this neighborhood?” Opening the possibility that the people might say what about this one and they’re able to buy those properties. Another thing that we recommend is, as you know, we’re very strong on direct mail marketing, and we recommend postcards and letters and newsletters and brochures going to those very neighborhoods again that they want to own properties in. They can also obtain the out-of-state owner list and out-of-town non-owner occupied lists from their tax offices and from sources that we have and they can actually contact those folks by postcard and by letter to offer to buy their properties. That’s another lead source. So as you can hear there’s many different lead sources and we help folks to narrow that down into just five and then they create, as you know, more leads than you can handle.
Right Keith?
Yes, definitely.
That’s another thing, and also just opening up the newspaper and calling the classified ads, the for rent and the for sales ads, as another thing that we recommend and having folks get help to call those ads for them is another thing that we recommend.
Question:
Lou you teach us to smell the money through the phone before we put the key in the ignition to go see a house. Does that mean we shouldn’t do face-to-face negotiations with potential sellers?
Answer:
That’s a great question Keith. I think the real answer to that depends on how many leads are you getting. If you’re getting a plethora of leads you can actually negotiate with people over the phone. If you’ve got plenty of A, B and C leads and somebody is on the phone and you can tell it’s an A-quality lead. Because of the interest rate on the property being let’s say 6 percent and the equity in the property, which if you know that neighborhood, you know that if they’re talking to you about the property being worth $100,000. You know already that properties in that neighborhood are worth $150,000 then you already know that there is a potential $50,000 profit in that, then that’s an A-quality lead. We definitely want to gather as much information as we can over the phone to determine that it’s an A-quality lead. Then it’s time for the key to go in the ignition, because it was that interview over the phone that told us what we needed to know. It’s the mistakes I see people make is when they actually put the key in the ignition, go look at properties when they didn’t even know all the details about that before they went. So, I recommend that you negotiate with people face-to-face but it’s after you’ve gathered the information you needed to determine that it was worth going to meet them face-to-face.
Question:
Lou what is you absolute favorite kind of deal?
Answer:
My favorite kind of deal is a fully financed deal where I don’t have to go to the bank. I don’t have to qualify for a loan. I can take over the existing financing that’s on that property in somebody else’s name, somebody else’s credit report, that somebody else qualified for the loan for and all I have to do is merely step in and take over the payments. I love to use my skills that, and as you are familiar with our exit strategies, of putting a customer in that property that someday wants to own that property. They pay me money to move into that property and then they pay me monthly payments and because of the existing financing I took over, at a great interest rate, I’m able to make a nice cash flow on that property. I’m able to build equity on that property, and I’m able to get a customer in there that loves the property so much and I’ve given them such a good deal, that they take care of the property for me so I don’t have to even fix or work on the property. That’s my favorite kind of deal and we love to do those everyday if we can.
Question:
Lou do the rising mortgage interest rates in the subprime market implosion, when can we expect to see an increase in the tenant pool and a resultant rise in the rental rates?
Answer:
Well that’s a good question. The people that, basically in the last few years, people in the last few years, people if they could fog a mirror they could qualify for a loan. That did make it very difficult to find good quality tenants that wanted properties, but because of our program where we give the people the right to buy the property sometime in the future, either through our lease option or our owner-financing program, we’ve continued to be able to find better quality tenants. Now in today’s market where those loans are no longer available and it is more difficult for people to qualify for loans, that will drive up our tenant pool and we will find more and we’re finding that now. We’re getting more calls from more qualified people right now who have more money to put down, they have good paying jobs, good longevity on those jobs, the very kind of people that we like to work with we’re getting calls from right now. We expect that to continue for the next number of years, because the banks are not going to be quick to increase this subprime lending again, after the mistakes that they’ve made and the mess that they’re going to have to clean up over the next several years, which is another exciting thing about this business. Because right now the industry, the mortgage industry, is stuck with a great number of loans that they should have never made in the first place, and those folks that borrowed that money can’t make those payments. The banks have to do something about that, so we’re going to see over the next number of years, we’re going to see an opportunity like never before. To buy properties, to hold properties, to sell properties, and we’re going to see banks discounting greatly and we’re also going to see banks adjusting, they’re going to take these adjustable rate loans and they’re going to modify them into fixed rate loans, and they’re going to do all kinds of things they’ve never done before. So I think this is one of most exciting times, and in fact the most exciting time I’ve ever been in this industry in the last 30 years. I’m just so happy to share it with you.
Question:
Lou this is my last question, but I often get asked by new investors as they’re trying to get started off, where should they seek funding for their startup costs, such as marketing materials, and advertising?
Answer:
Where should they seek funding? Well first I say start with your own money. If you have money in the bank, if you have money in CDs, if you have money perhaps in the equity in your home, you could get an equity line and you could use that equity line extremely wisely to get the proper education, the proper tools, and the proper marketing program going. Because marketing without the proper education is a mistake. Because you’re not going to know, as the fellow who came in here yesterday, showed me two books of leads but he didn’t even know what to do with them. He didn’t know how to work those leads; he didn’t know how to triage those leads. What was an A, B, or C lead? He didn’t know what to do with the very gold that he had in his hand. It was because he had the wrong kind of education. He didn’t have the right guidance, he didn’t have the right leadership, and he was stuck with those things. So my recommendation is let’s use what we’ve got.
Now the next step is that if you don’t have those things then we can source those from people with IRAs, people with personal funds. We can show them our business plan and then we can show them exactly how we’re going to do it. One of my platinum’s, and you’re going to be pleased with this Keith. One of our platinum’s actually came from the last event, the MPI event. He went right to his bank the next day, on a Monday morning, he went right to them and he says, “Look this is my business plan, this is exactly what my business is all about, and I’d like to have a line of credit.” He was able to obtain a $1 million line of credit using my Street Smart System as his backup plan, showing the bank exactly what his business plan was, I knew you’d get a kick out of that one. A $1 million line of credit, just by showing his business plan and showing them his, as you know each time you graduate one of our events you receive a designation and a certification. Well he showed them his designations and his certifications from graduating the trainings, and he showed them how he was connected with the right support through our coaching program and things like that. They were thrilled. Now what makes that an even better deal no personal recourse. He did not have to pledge any assets, no houses, and no nothing to get that line of credit, because they were so impressed with his business plan. So now he can draw down against that line of credit, as he needs the money. So if he has a deal that’s a short sale and he needs cash for that deal, he can draw down off that line of credit, but of course the way I recommend that we find properties, we take over existing financing. If he has to have two or five thousand dollars he can pull down off that line of credit, and buy that house with little or nothing down and have the cash to be able to rehab the house, and put it out for a new customer. So all those things are kind of built into the system and that’s what it’s all designed to do is not create a patchwork quilt but actually create all the details that you need to be able to go to a bank like that, or any investor even a private investor. But show them exactly how you buy properties and they’re going to be so impressed they’re going to want to give you the money.
Well fantastic, thank you for having me here tonight.
Well thank you Keith. I appreciate your being here and I appreciate your participating on the call and everyone on the call I’ve enjoyed this Group Q and A, another time and I look forward to seeing you in two weeks and also on at the Jump Start in Philadelphia July 21 and 23, and at the Maximum Asset Shield August 23-26. If you have any questions about anything you hear tonight or about our trust system call 1-800-578-8580, that’s 1-800-578-8580, and have a street smart good two weeks.
Take care.
