Before You Start…

While holding monthly meetings and giving presentations to the attending audience, one of the more common questions we receive is: “How do I start?”

That is a great question!

When we started, we jumped right in. We purchased 15 distressed condominiums, each 2 bedroom/1 bath, in Miami, Florida. The units were controlled by a private investor who held the note on the individual units. Every unit stopped paying their mortgage and was living rent free. The existing owner was burned out and wanted to quit being a landlord. He asked for $30K for the note. We bought the note at a substantial discount and closed the deal.

That was the easy part!

Talk about being over our heads. We had no idea how to proceed. Suddenly, we had to learn the following:

Landlording	Real Estate Financing
Rehabbing	Foreclosure Law
Evictions	Termites
Liens and Violations	Water Liens
Sales and Marketing	On and On and On…

We had nothing in place to proceed. We had to learn the hard way. It took time and time is the enemy to investors. The longer it takes the more money you are losing in the real estate investment business.

So before you get your feet wet with your first deal, make sure you have the following items setup and running.

Starting Your Investment Strategy

Before you Start Looking for Deals:
- Make sure EVERYTHING IS IN WRITING. Need I say more? This is the beginning of your business plan that can be show to investors, bankers, partners, private money lenders, etc.
- Go to a Real Estate Investor Associations, REIA meetings to Network:
  - Our REIA Club: Miami Real Estate Investor Association MREIA
  - Additional Florida Clubs - Don’t just to one meeting a month. Go three times a week to different clubs and venues. Tonight we are going to a Google Developer’s meeting.
    - http://www.creonline.com/fl.html - This is a link that lists all the real estate investment clubs in the United States.
- Open a Florida Corporation
  - For Florida go to http://www.sunbiz.org to open your own corporation.
  - Create Articles of Incorporation:
    - Identify corporate Officers: President, Treasurer, Secretary, etc.
    - Need to declare number of outstanding shares and price per share.
- Buy/Sell Agreement or Share Ownership Agreement.
  - Want the ability to move shares when boards of directors change.
  - Make sure you have a Shotgun Clause or clause in agreement.
    - Dictates that if you are in a partnership and the partners want to get rid of you, you have to be bought out.
- Company Seal – This is old school but some attorneys still use them.
- Meeting Book – Corporate meeting notebook.
- TAX ID # or EIN # - Uncle Sam wants their share.
- Print up Your Business Cards – Got to let everyone know what you are all about.
- Business Bank Account
  - Documents Needed to Open an Account
    - Drivers License with Photo
    - Articles of Incorporation
    - Certificate of Status
    - EIN #
    - Signatures of Corporate Officers
    - Order Checks
    - Order Credit and Debit Cards
  - Make sure all the documents you order have the proper information. No delays due to typing mistakes.
  - Bank Stamp for Deposits - Cashing one of our $40K checks was delayed due to an improper bank stamp. We didn’t have one!
- Build Your Team
  - Real Estate Accountant – Someone who understands real estate investing.
  - Real Estate Attorney
    - Paul B. Woods – Florida Land Trusts
    - Bruce Jacobs - Attorney at Law
  - Business Plan – You wouldn’t go into the woods without a map or a GPS. Your business plan is your map or GPS.
    - Eduardo Paz – Straglobus, Inc.
- Attend Conventions – Network big time and get ideas.
- Develop A System – Streamline your processes, save time, make money.
  - Outsource your weaknesses and work on your strengths.
    - I hate paper work and accounting. I get someone else to do these processes for me.

Like building a house or anything else you must lay the proper foundation to support what you are trying to build. We give a copy of this outline to all of our mentoring students who are just starting real estate investing.

Next Step - Finding the Deal

Related Links, Blog Postings, Presentations or Articles:

Written by +Bob Burns.

####

Building Our Foundation.

+Real Estate Investor
about.me/RobertKBurns
Telephone #: 305-586-5280
email: sec8@planocho.com

Friday, November 11, 2011

Ten Reasons Why Your Real Estate Deal Fails at the Closing Table!

Having bought and sold many properties I can tell you that deals can blow up right at the closing table.

When I decided to buy my first home in Miami, Florida due to my wife's pregnancy the deal blew up in less than 45 minutes into the closing. I was going to sell my 1 bedroom condo on Brickell Avenue and purchase a 3/2 home in Coconut Grove on the same day! What could go wrong?

Mistake!

The Buyer of my apartment came to the closing but could not close the deal due to late arrival of the bank funds. The Tile Company refused to close that afternoon and wanted to do it the next morning.

Well needless to say, I was MAD!

I was going to use the excess monies from that Brickell Avenue deal as a down payment on the Coconut Grove purchase.

The current owner of the Grove House threatened to take my $12K deposit since we couldn’t close on the contracted date.

Thank God I had an attorney draw up the contract. There was a "subject to funding" clause in the contract

Note: Always have a Real Estate Attorney review your contract template. Check our Service Providers List for our preferred real estate attorney in South Florida.

The next day we closed but I couldn't sleep that night.

Soooooo….just because you have a contract doesn't mean you're going to close!

Below is a list I put together with help from Joseph F. Suarez that provides Ten Reasons Why Your Deal Fails at the Closing Table! (Sellers Beware):

You Contract is not Correct – Too many mistakes can occur right here like wrong Platt numbers, improper property description, wrong dates, etc.
No Financial Commitment By the Buyer
1. No Money in Escrow
Title Problems
1. More/Different Sellers on Title
2. Seller Not on Title
3. Illegal Title Transfer
Buyer has Collections & Judgments
1. Check out the Buyer
Deteriorating Market – Current Real Estate Market
1. Deteriorating Market Value
2. Deteriorating LTV Ratio .
3. Deteriorating Interest Rates
Open Permits and Liens – Hurricane Andrew caused a lot of problems with Open permits in Southern Dade County. I can’t tell you how many times I have been nailed on this item!
Fraud/Foreclosure/Google – Again, Buyer Beware!
Water & Waste Lien – This problem appears a lot with commercial properties that only have one water meter.
Property Doesn't Qualify for Financing – Tax rolls list it as a 2/1 one but you think you are buying a 3/2 Uh?!
Uninsurable Property – Property in a Flood zone, property not up to current code, etc.