Master Real Estate Course

Lesson #2 Drive Your Area

Objective:

• Begin the career-long process of becoming THE real estate expert in your specific investment area.

1. Buy six properties. 2. Love your tenants. You buy a property and you pay off the mortgage. Then you enjoy the income. Then your children enjoy the income. Then your grandchildren enjoy the income. Your great-grandchildren will enjoy the income. When does this end? Now, you know why real estate investing is so great because it never ends. In a hundred years, your offspring will be saying, "Thank you great-great-great-great grandpa or grandma!" Start your family dynasty. This is beyond the comprehension of average people. You can do this. You deserve this.

Background:

After you have determined your specific area for investment, the next step is to learn that area. It doesn't matter if you've lived your whole life in the area and consider yourself the ultimate townie insider. Now you're going to view real estate from a different perspective, as an owner. Therefore, don't presume that just because you may have lived in your investment area for years, you can skip this step. You can't.

Average people are looking for ways to avoid work and cut corners. Never forget, you are a Master of Success. You want the work. You want the action. This is the work necessary to become THE expert on values in your small specific investment area. As THE expert, you will find a continual stream of profitable opportunities.

Alert and aware, as a thinking person of action, you will get in your car and drive. You will drive down every street, every avenue, every highway, every byway and alley. Where is the real estate? It is everywhere.

For your drives, you'll want to take along a map, notebook, pencil and a digital camera. Start a scrapbook with your photos and notes. Or, if you're a little more technically sophisticated, you can scan your photos into a research database. Of course, you can substitute a portable computer or PDA for the notebook if you wish.

You get into your car with the pencil, notebook, map and camera and, alone and with the radio off, you start to drive a section of your area. This is not a step to be rushed. Take your time. The more investigating you do the better. The more you'll be learning. At a minimum, you should plan to devote ten or twenty hours to Step #2. You should break this time down into one-hour segments. After each segment, give yourself time to reflect and form opinions.

Google Earth or Microsoft's Virtual Earth will give you a satellite view of your specific investment area and you'll be amazed at the detail. Start moving along that learning curve. Also, combine your satellite views with home valuation information by visiting sites, such as http://www.eppraisal.com.

As you drive, you start to think like a real estate investor. This is your area. Start thinking like a commanding general. You survey the landscape. What do you like about certain properties? What do you dislike? Which properties would you be proud to own? Which would cause you to take immediate remedial action? Visually, what do you like or dislike? Can you identify areas where all the homes are single-family residences? Are other areas reserved for apartments, commercial or industrial properties? What is your opinion of each neighborhood within your area? Use your camera to document your likes and dislikes. If you see house colors that you like, take a picture. If you see landscaping or a fence or a driveway that stands out, take a picture.

Start your own Real Estate Success Scrapbook. This self-created motivational book should stimulate your thinking.

When you find memorable properties, positive or negative, take notes and a picture. Which neighborhoods do you prefer? What streets look bad? What building styles do you like?

Here's some excellent advice from Donald Trump, "To get a building built in New York City requires knowledge of zoning, contractors, architects, air rights, tax laws, unions, and a thousand other things – not least of which are the intended customers. When I started, I would learn something, apply it, and make progress. Believe me; becoming a developer didn't happen overnight."

Mastery Mindset –Keep looking and learning. This research isn't about today or tomorrow. It is forever or, at least, the next twenty years. You will always be investigating and looking for new opportunities. When you are rich and retired, you can kick back.

Does the upkeep of the lawns and yards give you an indication of the type of neighborhood you are in? Does there seem to be a pride in ownership in the area? Are there abandoned cars or beautiful automobiles on the streets? Is the city or town doing its job to keep the area safe and attractive? Are there parks and other recreational amenities in the area? How do they look? What about the appearance of the schools and government buildings and houses of worship? What is your impression of the people in each neighborhood?

Add your commentary to your notebook. What do you want to know about your specific investment area? You want to know everything. Start to learn the street, store and school names. Look for vacant buildings and vacant land. Look at For Rent and For Sale signs. Look for new construction and new developments and people fixing up their own homes.

Average people will take a cursory look. They will ho-hum and sigh and whatever and presume that this driving around is just a waste of time. They are wrong. You want to know everything.

If you want to be a Master of Success, it isn't what you do one day or one week or even one month. It is what you are prepared to do every day. It is running six or eight miles every day. It is pushing your limits and challenging yourself every day. It is little things done habitually over and over and over again. This is who you are.

If you want to be a multi-millionaire in local real estate, it isn't one day or week or month of looking and study. It is reading and looking and talking and thinking about real estate in your small specific investment area every day. It is little things done habitually over and over and over again. This is who you are.

Do you find any surprises in your area? Are all of the basic commercial services available in your area? Do you have a supermarket, pharmacy, bank, real estate office, insurance office, restaurants, tailor, doctors, lawyers, accountants, and hardware stores? Is there public transportation? Are there major highways? Do most folks seem to work in the community or commute to work outside the area?

To achieve maximum results, champions learn the power of concentration. They can focus. Become a championship level investor. Only venture outside your area of expertise at your own peril. Stick to your small specific investment area. It's what you'll know. It's all you'll need.

Before You Make An Offer:
A Neighborhood Questionnaire

When you purchase a home, you are also buying into a neighborhood and community. So, it is important when contemplating the purchase of a specific home that you also evaluate the neighborhood to ensure that it meets the standards and has the amenities that you expect. Think like your customer, your tenants. Tenants will like to live near transportation, shopping, beaches, parks, schools and day care. Here's a quick questionnaire to aid your thinking:

Overall Appearance. Are the homes attractive and well kept and are the streets clean and well maintained?

Neighboring Homes. Are the neighborhood homes of the same size and in the same price range as the proposed purchase?

Neighbors. Does it appear that the age composition of the neighborhood is what you are looking for; i.e., with or without many school-age children?

Schools. Are schools and playgrounds nearby, or will transportation be necessary? Any institutions of higher education in the area?

Public Transportation. What type of public transportation is available and what distance is the transportation from the home?

Cultural Attractions. Where are the libraries and parks and museums and galleries and theaters?

Shopping. What is your proximity to supermarkets and shopping centers and malls and big box stores?

Public Services. What is the status of police and fire protection? Where is the nearest hydrant? Is trash collection available? When? Is the water supply adequate? Have there been any problems with the local drinking water?

Medical Facilities. How close is the proposed purchase from the hospital, physician and dentist offices, emergency medical services, etc.?

Flooding. Is the area high enough to prevent basement flooding and water backup from the street?

Security. Is the neighborhood adequately lit at night? Is there a police presence? Are people out at night?

Noise. Are there any unusually annoying noise disturbances from factories, airports, highways, etc.?

Odors. Are there any unusually unpleasant odors from factories, sewers, rivers, etc.?

Power Supply. Are there any high-tension power lines in the area or other power supplies, which may interfere with, radio, TVs, etc.?

Telephone. Will you be located in an area where the majority of your calls will be local and not long-distance? How about the quality of cell service?

City Streets. Are the streets owned and maintained by the city?

Broadband. Is high-speed Internet service available in the area? Are there Wif-fi hot spots?

Other Negatives. Are you near a nuclear or toxic waste site? Are the waters polluted? Are you in a brush fire zone? Does an earthquake fault run through your area? Be honest. Why would your potential customers, homeowners and tenants shun your area?

Every piece of real estate in your specific investment area is a possible future investment opportunity. Take an interest in this area. This is the small area that is going to make your BIG investment dreams come true.

When I was teaching real estate investment seminars, I would always be asked, "Aren't you worried that other people are going to take your ideas and take all of the best opportunities away from you?" No. First, most people aren't going to do the research. Second, very few of the people who do the research are going to translate their knowledge into action. Third, it doesn't matter. I wish them luck, because there are too many opportunities and possibilities in any investment area for any individual or even any group of individuals.   Now, when you are doing your twenty minutes of quiet time, think about what you are learning. Start quizzing yourself. Where are the good areas and the bad? What properties do I like and not like? What kind of properties am I going to own? How will I maintain those properties? Think. Take more notes. Refine. Review your notes. Look some more. Who is doing this kind of research? It is a safe bet that no one is. This fact should not stop you, but motivate you.

Does the Area Matter?

The area really doesn't matter. You can make money in prestigious locations or poorer areas. You decide on the trade offs. High prices make it difficult to invest in prestigious real estate. However, it is easy to finance and sell property in a prestigious area.

It is a lot easier to buy property in a poor area and harder to finance and sell there. Yet, you might see a resurgence of interest in an "up and coming" and make tons of money as values rise. You might also feel unsafe visiting your poorly located investments after dark. In Southern California, it might take you ten years to save enough to buy a small bungalow in Beverly Hills while you could immediately buy a brick apartment building in South Central.

Obviously, the best course of action would be a middle ground. You must buy something and get in the game but not if that means being responsible for collecting rent from criminals. You decide on the trade offs.

The worst mistake is to do nothing or to take action based on insufficient information. Research and think. Research and think. Research and think. Act.

Buy a home with your heart and buy real estate investments with your head.

Colonel John Boyd's OODA

Colonel John Boyd was a fighting pilot ace and the author of the OODA school of strategy. He is considered by many to be a tactical genius.

O = Observe

O = Orient

D = Decide

A = Act

Observe what your enemy is doing. Orient yourself to the surroundings. Decide how you will disrupt the enemy's plans. Take decisive action. The colonel taught that whomever could OODA first would be victorious.

Let's apply this strategy to our real estate mission.

O = Observe

As we are conducting our research, we observe the properties and the players. Who owns what? Who is doing what?

O = Orient

We are judging how we fit into the picture in our small specific investment area. We orient ourselves. We see that some properties are owned by corporations. Some are owned by wealthy lawyers. Some are owned by contractors. Some are owned by widows. Some knowledgeable and some seem clueless. Some interested owners and some disinterested. We see how we can and will fit into this mix.

D = Decide

We decide that we are perfectly capable of buying properties within our small specific investment area. We learn what we need to know to make knowledgeable offers.

A = Act

Nothing happens without action. We are Masters of Success. We observe, orient ourselves, decide on a course of action and we act. We make offers. We make lots of offers. We expect most offers to be rejected. We make new offers.

Story:

Philip Owns Lots of Real Estate and Philip Is Miserable

As a young man, starting from scratch, over a period of just a few years, Philip put together a portfolio of a dozen multi-family properties. Back then, Philip was a smart and energetic guy. He isn't any more. Today, Philip is pretty miserable.

Why isn't Philip happy? He is a multi-millionaire. Philip wears old clothes and drives an old truck. Philip's properties are in poor repair. Philip's tenants take advantage of him and Philip resents his tenants. He slogs through his days puttering on non-essential tasks. Every month, Philip seems to scrounge to pay his bills.

Why isn't Philip happy? With common sense, he could fix his properties, upgrade, replace bad tenants and live on easy street.

As you do your research, in every area, you will encounter a few Phil types. These are people who own income property but not really for the income. They really aren't investors. Investing for what? They complicate management into a full-time job. They like to feel superior and have some sense of power over tenants. They can't think of anything to do today except to repeat what they did yesterday. Spending endless hours at their properties gives them an excuse for not being home. It isn't logical. It doesn't make sense. Because there are these hidden ulterior motives, such owners are difficult if not impossible with whom to deal.

Phil is crazy. Don't be crazy. Yes, Philip has made a lot of money but if he continues on his present course, he'll never enjoy it. Some day, some distant relative will get a call from a lawyer to come to Chicago for the reading of Philip's will. The lucky heirs will think, "Wow, honey, your third cousin twice removed was a great guy leaving us his millions." Somebody else will get to spend Philip's money.

When you meet a Philip, don't get annoyed or frustrated. All you can do is to walk around him and continue on to your objective.

Yes, there are a few financially successful investors, but thankfully very few, who are not good examples. They have done what you want to do and you can see their flaws and improve on their examples.

Start with the end in mind. The point of owning property is not to own property. The point is to make millions so that you and your significant other can live a super extraordinary unbelievable life. You are a Master of Success. You deserve this. The objective of investing is to make lots of money to have lots of options. Love many things. Make the money. Spend the money.

If you follow the advice in the Master Success Courses, you will be rich and retire in twenty years or less. You can move on from worrying about making a living. So, move on. Of course, you're a Master of Success so you'll always be working at hunting, fishing, painting, gardening, writing novels, learning to fly an airplane, volunteering in a wildlife sanctuary or whatever else floats your boat and makes you smile.

Is this your end to be happy and smiling and content? This is good. This is why you keep your properties in good repair, love your tenants and succeed.

Think about it, you borrow lots of money and your tenants pay that money back for you. Respect them for what they do for you. It is your tenants who are making you rich.

Dr. Stephen Covey's

Seven Habits of Highly Effective People

1. Be proactive. Take control of your own life.

2. Begin with the end in mind. Have clearly defined goals.

3. Put first things first. Get organized separating the urgent from the important.

4. Think win-win. There is plenty for everybody.

5. Seek first to understand and then to be understood. Listen.

6. Synergize. See the good in others work.

7. Sharpen the saw. Keep learning and growing.

Library

Barron's Real Estate Handbook, James Harris

Real Estate Quick and Easy, Jack Cummings

Maverick Real Estate Investing, Steve Bergsman

Property Management 101

Pay referral fees. You best present tenants are your best source for other best tenants. Rewarding leads with a fifty to two hundred dollar referral fee is usually very cost effective.

Many large area employers, universities and hospitals maintain housing offices. Most cities and towns have housing assistance offices. Make a contact list and, as soon as you receive a vacancy notice, start making your calls.

Providing tenants with self-addressed stamped envelopes is a good no-excuse way to receive your rent on time.

Always make it your general policy to give tenants 24-hour notice before entering their apartments for any reasons.

Operational Limitations:

You are NOT an expert on real estate in your small specific investment area just because you happen to grow up in that area. This cursory knowledge is helpful but it is not enough to make you an expert on property values. Skipping over any of the steps in this course is like trying to sit in a chair with a leg missing, you will fall flat on your butt. Become an expert on your area. Your objective is to become THE expert on real estate in your small specific investment area. Following a short period of research, you will be amazed at how much you know and how much others don't. This difference, this knowledge gap will mean profit to you. Here is the short cut; it is hard work.

At times, even seasoned veteran investors are tempted to stray from the Master Real Estate system and look at properties outside their specific investment area. Please be very careful because you are risking a major portion of your considerable knowledge edge. A Master of Success knows what he knows and, just as important, knows what he doesn't know. Repeat, there are always good deals in your specific investment area if you will devote the time to finding them.

Keep reminding yourself that you are a Master of Success. You are not like other people. You are not average. Average people cling to the status quo which means to do the least possible and avoid challenge. This is not you. However, you will be surrounded by average people who will tell you not to risk. Average people will flood you with excuses. Don't listen.

Be extremely wary when listening to the advice of television real estate gurus selling get-rich-quick advice. They are talking to average people who aren't interested in hearing about delayed gratification or hard work. The newest infomercial twist is encouraging average people to buy property with no money down and to borrow more than the purchase price. This over leveraging is a recipe for disaster which in real estate means foreclosure preceded by bankruptcy. You are not average. You are a Master of Succes. You are committed to research and hard work and patience. Our Master Real Estate Course is a value oriented system based on solid research.

Jargon:

Amortization - The gradual repayment of a mortgage loan by installments.

Big box stores - Large one shop centers such as: Wal-Mart, Costco, Sam's Club, Lowe's, Home Depot, etc.

Certificate of deposit - A document written by a bank or other financial institution that is evidence of a deposit, with the issuer's promise to return the deposit plus earnings at a specified interest rate within a specified time period.

Encroachment - An improvement that intrudes illegally on another's property.

Estate - The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death.

Fair market value - highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.

Finder's fee - A fee or commission paid to a mortgage broker for finding a mortgage loan for a prospective borrower.

Fixed-rate mortgage - A mortgage in which the interest rate does not change during the entire term of the loan.

Home equity line of credit - A mortgage loan, which is usually in a subordinate position, that allows the borrower to obtain multiple advances of the loan proceeds at his or her own discretion, up to an amount that represents a specified percentage of the borrower's equity in a property.

Net worth - The value of all of a person's assets, including cash, minus all liabilities.

Non-recourse loan - The lender can only go after the underlying property to satisfy a debt. The lender can not go after you or your other assets.

Point - A one-time charge by the lender for originating a loan. A point is 1 percent of the amount of the mortgage.

Prime rate - The interest rate that banks charge to their preferred customers. Changes in the prime rate influence changes in other rates, including mortgage interest rates.

Recourse loan - The lender can go after the property and you and your other assets to satisfy a debt.

Secondary mortgage market - The buying and selling of existing mortgages.

V.A. Mortgage - A mortgage that is guaranteed by the Department of Veterans Affairs (VA). Also known as a government mortgage.

Wraparound mortgage - A mortgage that includes the remaining balance on an existing first mortgage plus an additional amount requested by the mortgagor. Full payments on both mortgages are made to the wraparound mortgagee, who then forwards the payments on the first mortgage to the first mortgagee.

Question and Answers

Why are you so down on fixer-upper houses? In my area, there are a lot of ranch houses that you can put a second story on and double the value. Is there anything wrong with that?

Of course not. You have studied your market and found a niche, congratulations. If you have the skills to do the contracting yourself or if you have the temperament to be a construction supervisor, that's a terrific opportunity.

The point is that every property has the potential to make you money if you acquire that property at the right price. It is not the cheap houses, or the expensive houses or the houses in good or poor shape or two-families or split-entries or condos, it is all properties.

Be alert and aware. Yes, find opportunities such as the ranch expansion option you mentioned and make lots of money.

My wife heard you on the radio saying that landlords "Should love their tenants." What do you mean?

My mentor, Don Nardo, taught me that in order to buy property that I would have to borrow hundreds of thousands of dollars. However, he told me not to worry about borrowing money. I didn't need my own money since I would have these wonderful people called tenants who would pay back all the money I had borrowed. I would borrow money and someone else would pay this money back for me. My mentor said, and I never forgot, "Love your tenants."

My brother and I and a friend from work want to pool our money and start investing together. Is this a good way to get started and buy larger properties?

Be careful. Partnership even family partnerships are fraught with peril. There will be conflicting objectives and opinions. Do you want to sell? Do you want to spend for a new roof? Do you want to raise rents? Do you want to refinance? Did you rent to that creep on the second floor? It's your turn to mow the lawn or sweep the hallway or change the light bulbs.

It won't be easy and it won't be pretty. However, if you agree on a short term game plan in advance to rehab, resell and split the profits then maybe, the partnership will work. If your brother and friend put up the money and you get a one third interest for managing the building the maybe, the partnership will work.

Even husbands and wives as business partners with very common objectives find it difficult to manage in peace. My vote would be to do your research and find a smaller property that you can buy individually.

All the really good investment property in my area is gone. The best properties are owned by investors who have owned them for decades, why would they sell to me?

All real estate ownership is constantly passing from old hands to young hands. On the day you die, everything that you own will belong to someone else. Will the heirs have the same enthusiasm for ownership as their benefactors?

Buildings outlive people. As you do your research, you will have properties that will have been bought and sold many times. The average American moves every seven years. There has been, is and always will be a lot of real estate activity. Be patient. Be ready. Your time is coming.

I am not interested in becoming a real estate investor. Really, all I want is a nice house for my wife and me. Do I really have to go through the months of research and the steps that you recommend to get a good deal on one property?

You have to decide what your time is worth. If you researched values and look at property for four hours a week for six months, you would be investing about one hundred hours.

Let's say that the average house in your price range is $200,000 and through your expertise you save 10% that would be $20,000. If you divide that $20,000 by hundred, you earn $200 an hour as your return on time invested.

Now, what if you are looking at $300,000 houses and you save 15%? You can do the math. And, if you can earn this much money with one house why not invest in two or four or six houses? Again, do the math. You know what I think.

You said that you wanted a "nice" house. You can buy a nice house at a good price and then sell that house and buy a nicer house and then sell that nicer house and buy an even nicer house. If you are an expert on values in a small specific investment area, you can buy and sell and buy and sell and make lots of money without tenants. Do your research and nicer and nicer and nicer houses are in your future.

My friend owns a four-family and he has problems with his tenants. Is there a way to avoid tenant problems?

You can specialize in commercial or industrial real estate or buying various kinds of land. You can own parking lots. You can buy properties at good prices and immediately resell them. You can buy apartment buildings for conversion to condominiums. You may own a business and can buy the real estate associated with that business. Or, you can buy property and hire a management company to handle day-to-day tenant relations for you.

If you "love" your tenants, which means treating them with the utmost respect, your problems should be minimal.

Don't waste time, your energy or your breathe negotiating with bad tenants. You can not change other people. If you have an uncooperative tenant, get rid of him. Take him to court. Bribe him to leave. Whatever, however, get rid of him.

Since I can do most of my research online and I can find almost all of the MLS listings myself, I don't feel that I need to pigeon hole myself by dealing with only one agent. I know that this isn't your philosophy but I can't seem to find the harm in doing things my way. OK, argue with me.

The overall objective of all material in all the Master Success Courses is for you to stop, think and reach you own informed conclusions, to form your own investment philosophy. You have done that.

If your philosophy is working for you, then your philosophy is working for you and everyone is happy.

Your approach is not directly opposed to the philosophy in the Master Real Estate Course. Eventually, most serious real estate investors do become licensed themselves and represent themselves.

If you are an active investor in a small specific investment area, you will be known. Be known as a person of action who is ready, willing and able to put deals together. When a hot property is listed, you want the listing agent to think of you first. You want to be on the speed dial of anyone with property to sell.

How can I decide if the house I'm looking at is a good house for me?

The Department of Housing and Urban Development (HUD) suggests you consider the following factors in making your housing decision:

Is there enough room for both the present and the future?

Are there enough bedrooms and bathrooms?

Is the house structurally sound?

Do the mechanical systems and appliances work?

Is the yard big enough?

Do you like the floor plan?

Will your furniture fit in the space?

Is there enough storage space?

Does anything need to be repaired or replaced?

Will the seller participate in any repairs?

Consider the house on a year-round basis. Will you be happy?

I would also add that you should consider the location. Will your commute to work be reasonable? Are you near shopping, sports and entertainment centers? Are you near good schools and your place of worship? Is broadband high speed Internet available in your community? Is the town government highly rated? Is the tax base and tax rate stable?

I hired a home inspector to evaluate a house that I was considering buying and I was very disappointed when he would not tell me if the house was a good deal or not. My deal fell through partly because I couldn't get any good advice. What was I paying this inspector for?

You are confusing a home inspector and an appraiser.

The job of a home inspector is to evaluate the physical structure and physical components of a house: foundation, siding, roof, electrical and plumbing systems, etc. The inspector will judge condition and usually make recommendations for repairs and replacement. The role of the inspector is not to give an opinion of value.

The job of an appraiser is to determine the market value of a property given comparable sales and construction costs. For example, when you apply for a mortgage, the lender will hire an appraiser at your expense and as part of your closing costs to ensure that the house is valued fairly and therefore the loan secured.

I have seen properties that can be bought for no-money down but generally these properties are in crappy neighborhoods and are in dire need of serious repairs. Is this typical?

You can buy a beautiful million-dollar mansion in a great neighborhood and if you pay a million for the mansion, you've made nothing.

You can buy a falling down shack for twenty thousand but if you can resell that shack for forty thousand, you've made twenty thousand.

The money is in the deal. You will make good deals only after you have become an expert on values in your small specific investment area.

If you wish, within a few months, even weeks, you can turn almost any deal into no money down deal. You buy a property and finance with one lender. You cosmetically upgrade, have the property reappraised and refinance with a second lender.

My credit history hasn't been too good but a friend of mine just became a mortgage broker and he told me that he could take care of the paperwork to make sure that I got approved. I'd really like to buy a condo but I'm a little nervous. Do you think that my friend's optimism may be overstated?

I hope you are nervous for the right reasons. Your honor and your liberty are worth far more than a house. If you lie on a mortgage application, you are committing loan fraud. This is a serious criminal charge. Carefully check the information that your friend submits on your loan application before you sign it.

You must not lie about your income or job history. You must honestly list your assets and liabilities. Do not tamper with your tax returns or with any financial documents that you submit to the lender. Do not prepare and submit any false supporting documents. Do not present any fake co-borrowers.

You get the idea. Honesty is the best and only policy for a follower of the Action Principles^®. Even if your credit history is less than stellar, there are still mortgage loan programs for which you may qualify. The cost of these loans may be a little higher but the peace of mind and your personal integrity are worth any price.

Do not lie. Do not cut corners. You are a Master of Success. You are a person of honor. If your credit score is bad, you will work to repair your credit.

What's the difference between a real estate broker and a real estate agent?

Real estate agents work for real estate brokers. In many states, an agent must serve an apprentice period working for a broker before taking the broker's exam and opening up his or her own office. Generally, brokers can draft and execute legal contracts such as Purchase and Sale Agreements while agents cannot.

Your Super Agent may be an agent or a broker.

Can I make an offer on a new house?

Everything in real estate is negotiable. Like any other businessperson, a builder needs to sell his product to pay his debts, salaries and to acquire new inventory for sale.

You might look for a new home that has been sitting on the market for ninety days or longer and make an offer. You can make an offer at any time and offers cost nothing. Perhaps the builder will not budge on price but may be willing to add thousands in additional amenities. Again, it costs nothing to ask that a basement be finished or deck enclosed or landscaping upgraded. Be creative. Be bold.

If you can deal with the builder directly, saving the agent's commission should work in your favor. If you like a particular builder, you may be able to negotiate a deal for a house that only exists on paper and have that house custom built. The builder has a customer before construction begins and you get a favorable price or extra goodies. Always make the offer.

Is a no-points loan the best way to go? After all, why should I pay thousands in closing costs if I don't have to?

But you do have to. There are many lender expenses for loan origination; appraisals, legal work, etc. You can either pay these fees upfront as points or you can pay them over time over the course of the loan in the form of a higher interest rate. There is no free lunch.

For each deal, you may compare and contrast your financing options based on your investment objective. Is this a property, which you are buying to flip or will this property be one of your permanent six?

I am really psyched to begin my real estate investing career. I am going to get my six properties. I know that to build investment capital that I will need to buy and sell houses. I know you've said a lot about it but what really makes a house saleable? I want to be able to flip properties quickly.

To have a good property to sell, buy a good property. Don't gamble on anything fancy or unusual. Buy the styles of houses that are most popular in your market area. If the typical house is a three bedroom with a bath and a half and a two-car garage on a quarter acre lot, then you buy these houses because you want a large pool of potential buyers.

Buying the right property at a favorable price begins with your research. Your acquisition price must be conducive both to covering your expenses and making a profit. If you overpay, it is going to be difficult or impossible to then resell the property at market value.

Other factors that will affect the speed of the resale are location, condition, the terms of the sale and the marketing plan.

I am 32 years old and following your program, I already own four properties and will have my six properties within a year. I am too young to quit investing. I want to keep going. What is the downside to owning a lot of real estate?

Only the commitment of your time and energies, as your inventory of properties increases. The challenge then becomes to hire a professional support staff to manage and maintain your properties to a high level.

As a follower of the Military Action Principle™, you will find that as you acquire more that you will actually need less. You will have created a wonderful opportunity to be charitable and help others. Congratulations on your current and continuing success.

This may sound weird but what happens if I find a deal that is too good. I recently approached the owner of a three family house about selling. The owner is in her eighties. She told me that her husband had bought the house for fourteen thousand dollars and if she sold to me that she'd want $150,000 for the property. She also asked that all of her current tenants be given one-year leases at their present rents. Well, from my research, the property is worth almost three hundred thousand dollars. I told her that I definitely wanted to buy the property but that she should consult her lawyer. The lawyer was almost as generous. He said that the property was worth two hundred thousand. I bought the property for two hundred thousand. Was this ethical?

You did act ethically and you were blessed with a great deal. You did the right thing in advising the seller to seek appropriate counsel. You worked with her advisor, to structure a deal which met her needs. Yes, some sellers need a hassle free transaction. You provided that. This seller wanted to work with a buyer who would protect her tenants during the first year of new ownership. You provided that. This was a win/win situation for you and for a woman who lived by our credo to "love your tenants."

My uncle wants to sell his gas station and the real estate agent told me that he'd charge a ten percent commission. Is this legal? I thought the real estate commission is five percent. To make a long story short, my uncle found an agent willing to work for four percent but the property hasn't sold in over a year. How can I best advise my uncle?

There is no set commission rate. The commission is set between the agreements of the parties. In some instances, especially with commercial property, the commission rate may be higher than the usual residential rate of 5-6%.

The reason is that the marketing expenses of the commercial agent may be much higher. Lots of people want to buy houses. Not as many people want to buy gas stations. The commercial agent has to find the people who do want to buy and this may involve advertising in trade publications, buying direct mail lists, contacting relevant business associations, etc. The agent assumes all the marketing expenses. If he or she doesn't sell the property, they are still out the marketing monies.

Your uncle should be focused on his net objective. How much does he want to net from the sale? He wants to get the job done. If the agent who gets the job done makes six or eight or ten or even twelve percent, why should your uncle care? He gets what he wants and the rest is a cost of doing business.

Obviously, your uncle has hired an agent who is not getting the job done and he needs to deal with someone else.

Action Plan:

Start your Real Estate Success Scrapbook. What do you like? What don't you like? Clip real estate related articles from the local newspaper. All education is ultimately self-education, so force yourself to think.

Look at newspapers from five and ten years ago. Look at the real estate prices. Even at the listed prices, doesn't every deal look like a good deal today?

As you drive your area, look for anomalies; really nice properties in lesser locations and lesser properties in nicer locations.

Support:

• From Commercial Investment Real Estate: www.ccim.com
• From International Association of Shopping Centers: www.icsc.org
• For Real Estate Link Exchange: www.realestatelinkexchange.com

Inspirational Insights:

Every defeat, every heartbreak, every loss, contains its own seed, its own lesson on how to improve your performance the next time.

Og Mandino, b. 1923, self-help author

The most terrifying thing is to accept oneself completely.

Carl Jung, b. 1875, Swiss psychiatrist

What comes out of you when you are squeezed is what is inside you.

Wayne Dyer, b. 1940, Self-help author

Do the first sensible deal that comes along.

Joseph Thanhauser, Chairman, Byrnam Wood, LLC

Business opportunities are like buses, there's always another one coming.

Richard Branson, b. 1950, founder of Virgin

After the game, the king and the pawn go into the same box.

Italian Proverb

Sometimes people carry to such perfection the mask they have assumed that in due course they actually become the person they seem.

W. Somerset Maugham, b. 1874, English playwright

Victory is sweetest when you've known defeat.

Malcolm Forbes, b. 1919, founder of Forbes Magazine

Persistence is to the character of man as carbon is to steel.

Napoleon Hill, b. 1883, self-help author

The art of being wise knows what to overlook.

William James, b. 1842, American psychologist

We all have big changes in our lives that are more or less a second chance.

Harrison Ford, b. 1942, actor

We had the same doomsday people when we were building the MGM Grand, same people, same doomsday. You have to ask a lot of questions and listen to people, but eventually, you have to go by your own instincts.

Kirk Kerkorian, b. 1917, billionaire investor

Nobody can give you wiser advice than yourself.

Cicero, b. 106 B.C., Roman orator

A leader is one who knows the way, goes the way, and shows the way.

John C. Maxwell, b. 1947, Christian leadership expert

You can tell the character of every man when you see how he receives praise.

Seneca, b. 5 B.C. Roman philosopher

I have a problem with too much money. I can't reinvest it fast enough, and because I reinvest it, more money comes in. Yes, the rich do get richer.

Robert Kiyosaki, b. 1947, business writer

A strong brand gives customers confidence and leads to higher prices and higher demand.

Donald J. Trump, b. 1946, billionaire developer

One sees great things from the valley, only small things from the peak.

G. K. Chesterton, b. 1874, English writer

It is time for us to stand and cheer for the doer, the achiever, the one who recognizes the challenge and does something about it.

Vince Lombardi, b. 1913, NFL coach

Say what you mean and mean what you say.

General George Patton, b. 1885, WWII military leader

Most of us serve our ideals by fits and starts. The person who makes a success of living is one who sees his goal steadily and aims for it unswervingly. That's dedication.

Cecil B. DeMille, b. 1881, filmmaker