LESSONS FOR BEGINNING INVESTORS FUTURE HOMEOWNERS...building was a two flat with 5 units and the lot...
Transcript of LESSONS FOR BEGINNING INVESTORS FUTURE HOMEOWNERS...building was a two flat with 5 units and the lot...
LESSONS FOR BEGINNING INVESTORS FUTURE
HOMEOWNERS
By
Ken BIG Blake
Chief Visionary Officer / Blake Investment Group
A realty investment educational consulting firm for buyers & sellers looking to
reach their monetary goals.
Managing Host / Founder: thinkBIGradio.com
An international Realty, Business, Financial & Entertainment radio podcast where
BIGthinkers come to teach and learn.
D.E.A.L.S. IN A.C.T.I.O.N.S
This manual will teach the basics to a novice investor or future
homeowner. It was designed to cover the fields involved leading to your
first investment.
Copyright© 2014 by Kenneth L Blake p.s. Take it…it is free…Im serious…It is yours now……thinkBIG
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All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical,
including photocopy, recording, or any information storage and
retrieval system now known or to be invented, without permission in writing from the publisher, except by a reviewer who wishes to quote brief passages in connection with a
review written for inclusion in a magazine, newspaper, or broadcast.
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This manual was designed to provide competent
and reliable information regarding the subject
matter covered. However, it is sold with the
understanding that the author Kenneth L Blake,
corporation Blake Investment Group and any of
it’s subsidiaries are not engaged in rendering
legal, financial, or other `professional advice.
Laws and practices often vary from state to state
and if legal or other expert assistance is required,
the services of a professional should be sought.
The author and publisher specifically disclaim
any liability that is incurred from the use or
application of the contents of this manual.
TABLE OF CONTENTS
Chapt. 1 What is an investor? PG. 3
Chapt. 2 Finding Properties PG. 14
Chapt. 3 Finding Property Owners PG. 21
Chapt. 4 Contacting The owner PG. 29
Chapt. 5 Finding Financing PG. 34
Chapt. 6 Credit PG.42
Chapt. 7 Writing offers PG. 48
Chapt. 8 What makes sense? PG.51
www.kenBIGblake.com
You will find links throughout this manual that will uncover the
resources you have been searching for. ThinkBIG!!
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CHAPT. 1
What is an investor?
An investor is someone who puts money into
business, stocks, etc… in order to receive a profit. To invest
money. The key words in this definition are to receive
profit. Advantage, gain, the sum remaining after deducting
costs. There are many types of investments as there are
investors. There are investors of stock, real estate, mutual
funds, businesses, loans for startups, insurance to name a
few. These investments are just vehicles to get you from one
place to another. ( www.kenbIGblake.com )
An investor has a plan, which consists of
moving from one level of wealth into another higher one.
The vehicle you choose to move in is your personal choice.
There are good and bad arguments for any that you choose.
This one is better than that one and so on. The only thing
that matters is that you follow your plan and continually
educate yourself in the area you have chosen. The area I
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have chosen or vehicle is called Real Estate. Land including
the buildings or improvements on it. There are five
categories of real estate.
Category 1- Residential: Property used for single family or
multifamily housing whether in urban, suburban or rural
areas.
Category 2- Commercial: Business property, including
office spaces, shopping centers, stores, theaters, hotels and
parking facilities.
Category 3- Industrial: Warehouses, factories, land in
industrial districts and power plants.
Category 4- Agricultural: Farms, timberland, ranches and
orchards.
Category 5- Special Purpose: Churches, Schools,
cemeteries and government held lands.
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As a beginning investor future homeowner it may be
wise for you to start with residential properties. When your
education and experience evolves then you may want to
form a plan to acquire holdings in other areas. Always stick
to your plan and revise it as your education increases.
When is the best time to start?
Yesterday, today, and tomorrow if it is 12-24 hours from
the time you read this. I know that everyone has heard those
stories about buying a property in the seventies, eighties, and
nineties and it’s worth x amount of dollars today. Well guess
what? Why don’t you be on the end of one of those stories
by buying today. There is no better time than the present.
Let’s get started
As a beginning investor future homeowner you must
first set GOALS then develop a PLAN of action. (We
cover this in more detail in our D.E.A.L.S in
A.C.T.I.O.N.S coaching. Visit www.kenBIGblake.com
for more info.)
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Where do you want to be?
How do you get there?
How long will it take?
What are my available resources?
Who do I know?
What can I change about myself to attain the goals I
have set forth in my plan?
Once you have answered these questions then you are going
to need the basic tools of the trade. You can add to this list
as your education increases.
Dictionary of real estate terms.
Monthly interest amortization tables app
Calculator ( Karls Mortgage Calculator App)
Notepad ( evernote)
Business cards
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Contracts
Folders
Camera.
Flashlight
Fax machine or online fax service
Computer or Tablet
The books can be purchased at most bookstores. It is
imperative that you at least purchase an all in one printer.
Electronic stores sale them for under $100.00. A
computer is not necessary as I know several successful
investors without one but it will aid you greatly.
The reason why I stress the fax machine or program
is that it will save you time. In some cases it may benefit
you to have your client fax you their information. A
person can say anything to you over the phone. When
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you reach their home the paperwork states another thing.
(Loss of profit and more important loss of time)
Let me share a story with you. I received a call from
one of my flyers from a person being foreclosed on back
in 1999. They wanted out as soon as possible. The
building was a two flat with 5 units and the lot next door.
Three of the units were 3 bedrooms and two were 2
bedrooms. The mortgage payment was under a $1,000. I
knew the rents in that area would bring in at least $2,200
allowing an apartment for your self. I asked the client to
fax me their paperwork. They didn’t but contacted me 2
days later. I agreed to meet with them.
The numbers I received over the phone had a 15-20
thousand dollar difference than those on the paperwork.
It gets better. After I spent about an hour and a half on
the phone with different lawyers and mortgage companies
I found out the house had been foreclosed on several
months before. They just failed to leave the property.
You will come across time bandits also.
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Before you take a trip get as much documentation that
you can by fax or web so that your decision won’t be
based on solely what is told to you. Many homeowners
are only repeating what they were told. The paperwork
will give you a clearer understanding. In some cases you
have no choice but to visit. Make sure before your arrival
that they have all the documents you will need to review.
Make yourself a checklist that you can read to the
client over the phone. As an investor you must be
determined to look at property in all areas. Most
properties are a goldmine with bad management. If you
don’t find your property earning a profit though all the
numbers are there then you may need a property
management firm to handle it for you. Contact our office
and we will review your situation free of charge.
It will take time to learn the proper execution and to build
your team. However as you will find on the next page….it
is well worth the trouble to increase your
knowledge…hence your income!!!
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I would like to briefly share with you the three types of
people you will come across in your investment career. You
are or may have been one of these people.
Negative faithless one: This type of person has
very little self-esteem and faith in their own works.
They always bring up the “what if” scenarios. They
are not willing to take the steps necessary to free
themselves. They aren’t willing to dream but use
their energy to stop you from dreaming with
thoughts of lack and bad consequences. They are
not happy with their position in life and haven’t the
faith and determination to change it. You will meet
this person in various degrees throughout your day.
If you are this person, please change.
Optimistic fearful one: They believe it will work
and feel they may be able to succeed. They aren’t
negative but are just fearful in taking those first
steps. They feel as though they always need more
information instead of acting on the knowledge
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they have. You really have to push this person and
spend time strengthening their esteem and outlook.
This person can succeed in time if they just take
action. There are more of these people than any of
the other types. If you are this person, please
determine now how much more information you
will need. If you don’t set a deadline to begin, then
you will never start.
Optimistic faith filled one: This person is willing
to learn and follow until they are able to stand on
their own. They have faith in people and more
important faith in themselves. They draw to them
the circumstances that create wealth. They take
their basic knowledge of a system and with time
show what may seem impossible to others. They
don’t let the words of the negative faithless one
persuade their outlook. They are quick to say “ Get
Behind Thee Satan” and focus on the positive
productive things in life.
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They have that childlike quality that we all shared
learning to walk. We never said I might fall down or
walk into traffic. Imagine as kids if we had the choice
of learning to walk. I know a few people who would
be crawling today. It is your choice to become wealthy.
You can believe it or not. As children we learned to
crawl, walk, run, ride, drive and fly. Let’s take our
financial situations through those steps 1 at a time until
we all can fly.
In the next chapter we will discuss the basics of
finding property. The information in this manual is
enough to get you started earning profits on real estate
deals. We offer coaching called D.E.A.L.S. in
A.C.T.I.O.N.S. that covers more than just the basics
outlined in this manual. I strongly suggest that you
attend our workshop for more in depth training. Visit
www.kenBIGblake.com for more info.
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I would like to share with you something I’ve learned. I have
attended many seminars and purchased many courses since the late
eighties. I drowned myself in every bit of knowledge that I could find
dealing with real estate. I may have purchased well over a thousand
dollars in books alone. I don’t want to even think about the
thousands I’ve spent at seminars. I have consulted friends and family
alike in ways to maximize their purchasing power. I have made some
clients more money in deals than I have even made for myself. I’ve
had my realty license, loan officer license, and need only one course
to attain my appraisal license. I had the knowledge but something
was missing. I needed more knowledge. (So I thought) I invited a
fellow investor to a seminar a few years back and he declined the
offer. He said to me that I have the knowledge and that I should start
applying it to more of my own deals. It was then that I realized that
every single course I had taken or book I had read was all I needed to get started.
They all work. What I was missing was A.C.T.I.O.N.
ACTION CHANGES THE IMAGINABLE OPENING NEW
SYSTEMS.
I ask you to decide to make this one work for you. One other thing
I’ve learned, if you don’t believe you can do it, you never will.
Have faith and determination. Think BIG!!!
www.wealthinvolveswork.com
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CHAPT. 2
Finding Property
There are many ways to find property. Word of mouth,
driving, realty agents, the courthouse etc…as a beginning
investor you should focus on discounted property to get the
most for your investment dollar.
What is discounted property?
Discounted property is property that you can purchase
much less than the appraised value. Every investor has there
rule of thumb but I like to consider a property a discount if
it is 60% below the average selling price of like properties in
its area.
Some examples of discounted properties are those
going into foreclosure, tax sales, abandoned, sellers
relocating, divorce, death, auctions, estate sales, etc…All of
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these and more are good discount properties and can benefit
a beginning investor and future homeowner. I will talk about
three forms of discount property. They are foreclosures, Tax
sales, and abandoned property.
What is a foreclosure?
A foreclosure is a property that the lender calls the
loan on because of circumstances that lead the buyers to
come into default. The foreclosure process goes through
several steps ending with the property being sold at an
auction. One of the keys to acquiring a property this way is
to contact the owners before the sale. This will be discussed
later in detail in the following chapter.
Can a foreclosure be stopped? (Answer)
Yes. The buyer of the property can reinstate the loan by
paying all of the back payments, late fees, and any fees
associated with the filing of the lis pendens (legal notice)
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What are the stages of foreclosure?
They are slightly different in each state but follow a pattern
similar to this.
Stage 1 delinquency: Owner fail to make payment
Stage 2 lis pendens: legal notice is sent
Stage 3 complaint: tells why foreclosure is happening
and amounts of judgement
Stage 4 final Judgement: grants the motion to set
sale date
Stage 5 Sale: sale date is given for auction
The first two stages take place in 3-4 months. The third and
fourth stages take place in 6-7 months. The last stage is
normally in the ninth month. (Banks don’t like to foreclose.
They will work with a homeowner and use foreclosure only
as a last resort. Most homeowners only have to explain their
situations and work with the bank.)
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Can a person reclaim their property after it sells?
Some states have a redemption period and you can check
your local real estate attorney for the answers in your area.
As an investor when you work with people who are in
foreclosure you will find that more than half think that their
problem can be solved. In most cases their financial picture
will tell you otherwise. Don’t try to convince them to go
with your plan, just put the numbers in front of them and let
them decide on their own. Use your energy to locate and
obtain that next deal. Good deals are everywhere.
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What is a tax sale? (Tax foreclosure)
A sale of the property after a period of nonpayment of
taxes. The buyer of the property receives a tax deed or
certificate to show ownership from the courts at the auction.
In most cases you will own the property for far less than
imaginable.
Who can attend a tax sale?
Anyone can attend and buy a tax certificate that is not
currently in default on their taxes.
When are they held?
There are two types of tax sales. The annual is held
every year in January or February depending on the state and
the scavenger sale usually is held in the summer every 2
years. Visit the link below for info in your state.
http://www.tax-lien-certificates.com/
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Do I own the property after a successful bid?
No you will have to wait until the redemption period is
over .Every state has different periods and in Illinois it is 2.5
years on residential and 2 years on commercial.
What if they redeem their property?
Then you will have received 1.5% on your money for
every month held. That’s 18% a year compounded.The
number to the tax sale department at the time of this writing
is (312) 603-3175. Here are a list of websites that may be
able to assist you
www.lexisnexis.com
www.taxsale.com
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What is abandoned Property?
Abandoned property is a property that the owners let
deteriorate and is left uninhabited. In some cases these
properties are confiscated by the city.
Why is abandoned property a good deal?
Most of the time a property owner who has abandoned his
property will be willing to sell it for little or nothing.
What if the property has city liens on it?
Find out exactly what kind of liens they are and contact the
appropriate agencies. Let them know your intentions and that
you will be bringing the property up to code. In most cases the
city will work with you to accomplish this.
What if the property is owned by the city?
If the property is owned by the city it may be possible to
purchase it through the *Chicago Abandoned Property Program.
(CAPP) Some of the housing is sold for as much as a dollar. The
dept. of housings number is 1-800-882-0882 or www.nhschicago.org.
For your state visit http://www.unclaimed.org/
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CHAPT. 3
Finding Property Owners
I hope upon your arrival at this chapter that you
have a clear understanding of what a discounted property is.
(A discount property is one that you can buy at least 20%
below the market value) As a beginning investor future
property owner it is very important that you began operating
at a profit. Don’t rely on what may happen in the market.
An investor can see their profit clearly before the purchase
not the resale. Buy smart, buy right, and buy low.
I would like to briefly share a story with you. One
day I received a call from one of my ads. The owner wanted
to sell her property to me with $6,000.00 down and I would
then take over her mortgage payments. I went to see the
property with one of my business partners and it was a nice
brick bungalow with plenty of space for additions and a 2.5
car garage. I loved the property but more important I
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needed to see the numbers. I found out that she paid the
appraised price and that the homes in that area were selling
far short than her appraisal. She had the house for less than
a month and with section 8 tenants she still would have to
put $2-300 out of her own pocket monthly. She bought the
home from a seasoned investor who made about $40,000.00
on the deal.
I really felt her pain but there was nothing that I could
do to help her. I told her if in her situation how I would
solve it. Most people don’t listen to advice but in her case
she did. Within 1 week she had a contract on the house, paid
the mortgage note and was relieved. Guess what? I met the
investors that put the contract on the property. They were so
anxious to make a deal that they failed to look at the
numbers. Don’t ever guess the numbers, know the
numbers.
Well enough of the stories, let’s get down to the real reason
you are reviewing this information.
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How do I locate an owner of a property?
The neighbors.
There are many ways to locate an owner. I will show you 3
of the most basic.
The first thing to do is ask the neighbors. They can tell
you more about an owner than sometimes you’d care
to know. They may know where the person is or
works. You can also use this opportunity to tell them
you are an investor. Leave a couple of business cards
with them in case they feel uncomfortable giving you
information. They can then pass them on to the
owner. Another thing you may want to do is leave a
flyer on the property in hopes the owner will return to
check up on it. Neighbors also may have knowledge
on sales in the area. (We cover this more in detail in
our Deals in Actions coaching.
www.kenBIGblake.com for more info.)
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Realty agents
The second thing may be to ask a realtor. You can give
them the property address and they can pull up a
detailed report with the tax information and all. In our
D.E.A.L.S. in A.C.T.I.O.N.S coaching we discuss
approaching agents.
Websites
The third thing you may want to try is a website that I
have found helpful in Illinois.
( http://chicagotribune.public-record.com/realestate/.)
When you reach the site go to the real estate section and
click on the transactions link. A section will come up that
allows you to enter an address and zip code. This site has
all the properties that have been sold within the last 7
years. It will tell you how much they paid and the owner’s
name. Check the phone book by name and address to
locate the owner. In some cases a people find search
engine will help locate a number.
www.Zabasearch.com
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County building: http://www.courthousedirect.com
The fourth and most informative is to take a trip to
your county court house. In Chicago this is located at
118 N. Clark street. When you enter go to room 112
* Maria Pappas Cook County Treasurer. There are
several large black books. Find the book with your
address and get the tax I. D. #. This is ten numbers
that describe the property. This number will tell you
where the tax bill is sent and who pays it. The number
to this office is (312) 603-6025. They will also be able
to tell you if the taxes have been paid. Once you have
the tax I.D. number you can go to room 120 *Cook
County Recorder Of deeds. Go to the tract
department located in the basement. Give them the tax
I.D. number and they will give you more information
and a document number. Take this document number
and go down the hall to the microfilm library. Anyone
in this department can help you or you can go to one
of the computers and enter the doc #.This number
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will tell you everything about the properties mortgage
terms, liens, legal description etc… The number there
is (312) 603-5582 at the time of this publication.
When the property in question has taxes owed you
can visit room 434 *Tax Redemption Division. Give
them the tax I.D. number and they can give you a
printout called an Estimate Of Redemption. This
will tell you all the fees associated with the properties
back taxes and the amount to bring it current as of that
day.
Sometimes finding a phone number for a property
owner is the hardest thing to do. With a little patience
you will soon be able to do this in your sleep. The
more you look the more you will uncover and learn. I
would like to share another story with you.
I had a buddy that liked an abandoned building in a
good area. I told him that I would find out the name
of the owner, how much they paid for it, what the
property was worth now and rehabbed. Well I think
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my mouth was speaking before my mind. I would have
been better off telling him how to do it.
I spent about an hour cross-referencing and
searching all of my sources. The property went
through about 4 different owners in a year’s time and
they were all related. (Deductive Reasoning) They also
purchased the lot next door. It turned out that the
owners lived 2 blocks away on the same block in
which my buddy lived. I wish there was a more
surefire method that only took the time it took him to
walk up the street. ( There Is.) In order for you to learn
it will be better for you to go through the process 3-4
times. After you have learned what to look for then
you may want to teach someone your methods. There
are a lot of people willing to learn as you yourself are.
The more time you can free up to find deals the more
successful you will become. Find what you are good at
and devote your time to that.
Every thing you will learn in this manual is very
simple to do. Don’t kid yourself though. It will take
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time to get good at it. There is much involved in
investing for an investor to try and learn everything.
Take what you do know and use that. When you reach
a challenge talk to someone who deals with those types
of challenges. We have a website that you can use to
ask us and other professionals for information. Visit
www.kenBIGblake.com ( Yes… again it is me)
In our workshop we contact owners of property
in a learning environment. You will be able to listen in
on deals and have the chance to also make calls
yourself. You will see firsthand that there are really no
two deals alike and how to ask the right questions to
begin negotiating.
I suggest that you attend our coaching if you
are seriously thinking about investing. The
thinkBIGradio podcast offers discounts on realty
related services and put you on a fast track to your first
investment property. We also offer discounts to clubs,
associations, and groups of 15 or more that attend our
training.
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CHAPT. 4
Contacting The Owner
What do I say?
When you are dealing with the owner of a property it is
very important ( if it is a distressed property or foreclosure)
that you approach the situation as if it were you in there
shoes. Everyone has his or her own method of dealing with
a cold call and with time you will develop what works well
for you. I must stress here more than anything that each deal
has to be a win/win situation. That is the only way to
remain successful in this business.
When you contact an owner the best thing to use is
common sense. Tell them that you are interested in
purchasing their property and if they would consider
meeting you to discuss details. If they are not looking to sell
leave them your name and number and also make a note to
call them back in 3-5 weeks to see if they haven’t changed
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their mind. If they are willing to sell try to find out as much
as you can about the property over the phone. Here are a list
of questions you can ask for either seller or buyer.
Questions for sellers/buyers
How many rooms? (Bedrooms/Baths)
How many baths?
Is the basement finished?
Does it have a garage?
How many cars does it hold?
What type of heating system?
Does it have air conditioning?
Does it have an existing mortgage?
Is the mortgage assumable?
What are you looking for as far as price?
Are there any problems that need fixing?
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How long have you owned it?
Is anyone else on the title?
What are the yearly taxes?
Are they paid?
Do you have a copy of the tax bill?
What is the average monthly gas bill?
Is the neighborhood nice?
Where are the closest schools?
(Grammar/High/Private/ catholic Etc…)
Where is the nearest hospital?
Where is the nearest public transportation?
When can we meet so that I may present a written
offer?
What will you be doing with the money?
How quickly do you want to sell?
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What was the property appraised for?
When was the last appraisal?
Will you owner finance?
What is most important to you in this deal?
Where do you work?
How long have you been there?
How much do you make a month?
What type of property are you looking for?
How much do you have down?
How is your credit?
If the property is not in an area that you are familiar
with the best thing to do is to contact a R.E. agent and
ask for a comparative market analysis. This is as close as
you can come to an appraisal. The realty agent can give
you a list of the like properties in that areas selling price.
This in some cases is more important than an appraisal
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because it tells you what people are willing to pay in that
market. (http://www.trullia.com or www.zillow.com)
When you have determined value and what you are
willing to pay then it is time to write up your offer. I
myself like to present the seller with three different offers
and a brief explanation of each. My first two consist of
some form of owner financing and I point out the
benefits of it and what they would receive in the long run.
I try not to go over 15 years and never use balloon
payments under 7 years. My third offer normally consists
of financing through a bank. (Sometimes you may not be
able to close on a deal.) That is a part of life. However, at
our D.E.A.L.S. in A.C.T.I.O.N.S coaching we can show
you how to still make a couple of thousand dollars on a
deal.
(http://kenbigblake.com/free-gifts/)
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No points
No fees
No yield spread premium
No pre-payment penalty
No balloon payment
No required credit life or other unnecessary and overpriced insurance
Buy down an already below prime market rate to .125% interest rate
No appraisal fee
No mortgage insurance premium
No closing costs
No lawyers Fee
Find out more here!!!!!
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Chapt. 5
Finding Financing
Financing (banks)
Every investor needs this one way or another. There
are hundreds of banks in your city alone, not counting the
ones that are a keypad away. These banks have 2-3 or
more lending programs each. If you have decent credit
great, if your credit is not that good then you can try
those banks that loan on the value of the house. You can
contact the banks directly or save time by contacting a
mortgage broker that has access to a majority of banks
with your specific needs.
As a beginning investor there are certain
documents that you must have available at all times.
These documents make up your loan package. Although
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you may have a bank that you work with continuously
there are still other banks that may have to finance your
project. It is imperative that you update this file monthly.
Sometimes you may need to close on a deal within 10
days. This is not uncommon in the world of an investor.
Once you get the hang of it you may be closing in 2-3
days. I will now list the items that most banks require
from you for financing.
W-2 (2years)
Current months pay stubs, or proof of income
Employment address ( 2 years history)
Last 3 months bank statements ( all accounts)
Apartment lease (if renting)
Open loans-monthly payments etc…
Real estate loan numbers, balances monthly
statements
Social security card and drivers license
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Complete copy of bankruptcy schedule and release
Divorce decree
Va certificate of eligibility and or dd214
Year to date profit and loss statement for self
employed
Income tax returns for the last 2 years
Personal check, money order or cash for credit
report
Retirement fund statements, including 401k IRA’s
etc…
Name address phone number of attorney,
insurance, carrier and real estate agent
Proof of earnest money (copy of cancelled check
front and back)
Most recent statement from accounts to be paid off
if it’s a refinance.
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Most lenders need all or most of the articles that I
have stated. There are also a number of things that you
shouldn’t do while you are waiting for your approval.
They are as follows
Don’t change jobs
Don’t make any late payments
Don’t purchase any high end items
Don’t transfer money from one account to
another
Don’t deposit large sums of money without
notifying your loan officer
Don’t cosign for anything.
Don’t apply for any new credit
There are also credit unions savings and loans
and private investors that will also make loans on
your deals. private investors may have a higher
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interest rate and shorter term but sometimes that
may be all you need to make a quick 10,000.00
Owner financing
One of the best ways to pick up a property is
if the owner finances you. You will need a contract
for sale stating the terms in which you both agree.
Sometimes the owner will finance you their equity
in the property while the bank finances you the
remainder.( You must ask the right questions in
order to find out if it will be advantageous for the
owner to finance the deal. 5 out of 10 times it is.)
When an owner finances the terms aren’t as
stringent as what the banks look for. They can get a
small down payment and like a bank charge you
interest on your loan. (Never pay more than 12%
interest in owner financing.) The benefit an owner
will receive is that they are not taxed on their capital
gain but only on the income they receive monthly.
Also if a buyer keeps the loan for the entire term
the owner will receive almost 2 times the amount
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asked for because of the interest payments. (Most
people refinance within 3 –5 years of owning.)
Lets do some quick math.( my worst
subject) Lets say you are selling your home for
100,000 dollars and you are owner financing it. You
are charging 10% interest with nothing down. You
are selling with the term being 15 years. That’s 160
payments. The monthly payments are 1,074.61 In
three years you will have received 38,685.96 cents.
The amount that would have gone to principal is
$8,685.72. The buyers refinance and they pay you
$91,314.28. The owner has just made an additional
$30,000.24 cents on their property by playing bank.
If the buyer fails to refinance, the owner will have
received $193,428.92 cents for the entire 15 years.
There are many scenarios that can be
made to work if your desire, dream, dedication, and
creativity is there with you. The more education you
receive the more creative you will become.
Financing can be a dream or a nightmare. It is up to
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you to choose what it will be in your eyes.
Sometimes an investor may have to take a little time
to get their financial situation and credit in order.
Don’t let this deter you from finding deals.
What is pre qualified?
Some banks or mortgage brokers do what is
called a pre-qualification. This is when they tell you
based on the amount of money you make minus
the money you owe, how much you are most likely
to be approved for. This can be done over the
phone. It is quite simple to do and is one of the
courses we teach in our D.E.A.L.S in
A.C.T.I.O.N.S. coaching.
What is a pre-approval?
A pre-approval is when you have a banks
approval and you are issued a letter for a certain
amount for a specific time as long as nothing has
changed in your initial paperwork. Owners are
more willing to close faster for a lower amount than
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wait for someone who has to find financing. Never
let an owner know exactly how much you are pre-
approved for.
In some cases if a property needs work the owner
will give you credit towards fixing it. What this
means is that they will lower the purchase price by
the amount that is needed to correct a problem
within the property. When you are buying a
property it is better for you to correct a problem
with the funds credited to you then relying on the
owner to do so. The reason is because you will take
more time to make sure it is done right as opposed
to an owner who just wants to sell.
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Chapt. 6
Credit
Lenders look at many things when making a
credit decision, including income, kind of credit
applying for etc.. A FICO score only evaluates your
credit report at the credit-reporting agency.
What is Credit? (Need Assistance In Increasing Your Score )
In finance, the availability of money, A sum
available to one as in a bank account, trust in ones
ability to meet payments when due?
What is a credit score?
A credit score is a score based on various factors
dealing with the activity on your credit report. This
is known as a FICO score.
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What is a FICO score?
The banks use this to help them access your risk
level when determining whether to issue you a loan.
This is named after Fair Isaac a company that has
software that generates the scores.
How is this score determined?
This score is determined by the compilation of
five factors of information gathered from your
report. They are as follows.
Payment History 35%- Your track record on
the various accounts you have open and
closed.
Amounts owed 30%- Close all unused
accounts and pay off all with balances that are
maxxed
Length of credit history 15%- Age of oldest
and newest accounts, how long accounts have
been open yet unused.
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New Credit 10%- Are you taking on more
debt, opening many new accounts at once?
Are there many inquires on your account
Types of credit 10%- Installment, revolving
retail, finance companies
Each credit bureau has a different score because
Fair Isaac only looks at each individually and not
as a whole.
What is the best way to build my credit?
Start by eliminating everything that causes you
to be overextended. Challenge everything that
appears to be a mistake or shows up more than
once on your report. Close all unused open
accounts. Don’t make any late payments.
Eliminate 1 of your accounts that are of the
same nature. (Sears, Montgomery Ward-
Carson’s, Neiman Marcus-Home depot,
Menards etc…)We offer in depth credit repair in
our advanced workshop. Borrow from a bank
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with a secured loan. Several new good ratings
can override a few older negative ones.
What if my credit report has mistakes in it?
The best ways to fix these mistakes are to
dispute their validity. I have enclosed a copy
dispute letter at the end of this chapter so that
you may have an example to go by. L.O.X.
(letters of explanation) can be used to explain
negative items on your credit report. In our
D.E.A.L.S. in A.C.T.I.O.N.S coaching we
cover credit repair and teach/help you repair it.
Will I still be able to purchase a home with bad credit?
Because of the many different lending programs out there
you can. In most cases it is better to have a place lined up
with enough equity to support the program. In some cases
40% equity. There are many banks that will loan with the
owner financing his equity position as long as the bank has
the first mortgage position.
I already have great credit and want to earn income!
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Credit bureaus
www.equifax.com
800 685-1111
888 532-0179
P.O.box 740241
Atlanta, Ga 30374-0241
www.experian.com
888 397 3742
Experian national consumer assistance center
P.O. box 2104
Allen TX. 75013-2104
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www.transunion.com
800 888 4213
800 916 8800
Transunion LLC
Consumer Disclosure letter
P.O. box 1000
Chester, PA 19022
Here is a list of credit related websites that may help you.
www.creditbase.com
www.truecredit.com
www.fairisaac.com
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Chapt 7
Writing offers
Are you aware that your initial offer does not need to be
on a sales contract? Sometimes when you are out in the field
you may not have access to your tools. In a case like this
who has time to find an office supply store. Whatever is
handy will do just dandy. After you have came to an
agreement then you can meet later with all the details on a
Real Estate Sales Contract.
What does an offer consist of?
An offer consists of giving and taking. Offers
deal with negotiating. You must be prepared by
knowing your numbers and the most that you will
pay for the property in question. You must be
willing to compromise to reach a deal that both of
you will win. You must be then ready to put
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everything down in writing to sign. Once the
contract is signed then it becomes legally binding.
You and the seller or buyer are then bound to the
agreements terms and conditions.
What are the basic things to have in an offer?
A standard offer normally but is not limited to the
following items.
Sellers/buyers name
Street address/legal description
Any items you would like in the deal (car,
refrigerator, patio furniture etc…)
Purchase price
Amount down (if any)
Interest rate
Principal & interest payment
Balance at close
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Years the mortgage will be
Date by which you can secure financing
Closing date
Any addendums
What is an addendum?
An addendum is something added to the
contract. In most cases it is a way out in case
something you find out later affects the deal in a
manner that really cuts into your profits. Most
addendums involve the type of financing you are
looking for and property inspection clauses. We
go more into detail in one of our D.E.A.L.S. in
A.C.T.I.O.N.S coaching on writing offers.
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54
Chapt. 8
What makes sense?
This is the story about two people born on the
same day same year. Both kids were told to do well
in grammar, high school and college. They were
told to apply with a well-known company that was
stable upon their completion of schooling.
However one of the kids decided to also
build a business on the side in her spare time for a
little extra income. (http://kenbigblake.com/earn-while-
learn/) Every month she followed her plan like
clockwork. After a while this income became more
than the income she received at work. This extra
income went toward purchasing multiunit buildings,
which in turn produced more income.. She had to
form a corporation to handle her assets.
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After working for the company for 12
years they had a layoff. The job security that they
both counted on was now gone. What do you think
happened to the person that didn’t try to build a
business on the side? The person that didn’t own a
building that brought on extra income.
Not one of us would like to be in that
person’s shoes but everyday that we are not doing
things to build our own business is a day that we are
closer to becoming a victim of our lack of
economic education. The business owners don’t lay
themselves off.
Property income is passive, which means
whether you work for it or not it will continue to
come in. You only need to maintain it to make sure
it is working well. This is similar to residual income.
Put in a little effort today and get paid tomorrow.
There are many companies out there that have this
type of income in which you own your portion of
the business. That is also something a
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56
beginning/investor future homeowner should look
into. The most important thing you can do is to
continue your education in areas of finance. Believe
me, MONEY MATTERS!!
(www.thinkBIGradioGUEST.com )
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57
For more information on our services and educational workshops
you can contact us at
www.kenBIGblake.com
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58
Thank You for allowing me to help educate you in Realty related matters. I am but one person in a group of individuals from all areas of business willing to share ideas and help you reach your goals. (www.welivelifeBIG.com ) I have included this updated bonus section from questions asked and to help enlighten various aspects of the purchasing process. Please share this manual with family and friends. Thanks Ken BIG Blake www.kenBIGblake.com
Your Goals Are Our Goals &
Your Success Makes Us Successful
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59
This Bonus Section will briefly cover 4 Topics
1. Foreclosure Buying
2. Hud Homes
3. BIG News 4. D.E.A.L.S. IN A.C.T.I.O.N.S Coaching
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60
1. Foreclosure Buying: First things first, the leading cause of foreclosures is owners not able to make their payments because of living paycheck to paycheck and predatory lending projects. Many websites are set up that cater to individuals looking to cash in on this market. Many of these sites confuse the novice investor because the prices they have posted are prices to bring the mortgage current. These prices don’t include eviction, fix up, or total amount owed. Although it may be a foreclosure it still needs to be financed. (Unless you have the cash to buy it outright) The best time to pick up a foreclosure is before the banks own it. The bank works with realtors who try to sell it at current market value. There are many facets involved in true foreclosure buying. Visit my website www.kenBIGblake.com for more info
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2. Hud Homes: A hud home is similar to a foreclosed home. It actually is a home the bank owns that had a Fha insured mortgage. A Good 80% of foreclosed homes need work rather it be hud, va, or conventional. There are many programs available to purchase and fix up these homes. With the right financing your hud home can receive a complete makeover with no out of pocket costs. Visit www.kenBIGblake.com. for more info. Ex. You are qualified for $150,000.00 loan. Hud home in your area listed at $100,000.00 Home needs $50,000.00 in work Homes in area appraise at $175,000.00 With 203k ,203b or various other programs you will receive the purchase funds and funds to fix the property up. The funds will fall within your budget and within 30-60 days your new completely rehabbed home is ready for move in. Your first mortgage payment wont be due until after everything is completed. Your $150,000.00 pre-qual just moved you into a home with $25,000.00 in equity. Most people don’t realize that these homes are a good bargain and that there are loan programs available to assist them in these purchases.
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3. BIG News ( www.kenBIGblake.com )
December 26th through December 29th 2014 we will choose 100 people to work with for an entire year.
We will help you increase your income by $50,000.00 or
more in 2015.
We will be offering a double your money back guarantee if you are unable to increase your income by $50,000.00.
You must commit to following our program and doing
a video testimonial upon reaching $50,000.00
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4. D.E.A.L.S. IN A.C.T.I.O.N.S
W.H.Y. should I attend?
Simple…….because
We Help You….
D.E.A.L.S in A.C.T.I.O.N.S Can teach a
B.R.O.K.E. S.L.A.V.E With
G.O.A.L.S Over
T.I.M.E to
P.L.A.N.T. S.E.E.D.S from
I.D.E.A.S & D.R.E.A.M.S with the right T.O.O.L.S
too F.R.E.E
Themselves using T.E.A.M. S.Y.S.T.E.M.S L.A.W.S & R.U.L.E.S.
to create
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64
S.U.C.C.E.S.S. through
S.U.P.P.O.R.T To
G.A.I.N. P.O.W.E.R.
D.E.A.L.S. IN A.C.T.I.O.N.S
Do Everything And Learn Something Action Changes The Imaginable Opening New Systems
B.R.O.K.E Build Regardless Of Known Environment
S.L.A.V.E Someone’s Labor Achieves Vagrant Existence
G.O.A.L.S Go Out And Learn Something
T.I.M.E To Impede My Enemy
P.L.A.N.T. S.E.E.D.S Plan Learn Assimilate Nurture Trust
Seeing Every Endeavor Develop Success
I.D.E.A.S Idle Dreams Eating Away Senselessly
D.R.E.A.M.S Do Right Enjoy And Manifest Success
T.O.O.L.S Timing 0pportunity Open-Mind Liquidity System
F.R.E.E. Financially Ready Enjoying Everyday
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T.E.A.M. S.Y.S.T.E.M.S Training Energies Aiding Momentum
Seeing Your Strongest Talents Earning More Simultaneously
L.A.W.S. & R.U.L.E.S Leadership Achieves Winning Solutions
Leaders Attain Wealth Systematically Retain Unity Loyalty Empowering Success
S.U.C.C.E.S.S S.U.P.P.O.R.T Seeing Unity Change Circumstances Enabling Someone’s Success
Simple Unified Problem Prevention Organized Reliable Teamwork
G.A.I.N. P.O.W.E.R Growth Achievement Independence Noble (Nobility)
Person Of Wealth Exercising Righteousness
thinkBIG!!!
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66
There are many who say and do
nothing, as opposed to
those who do and say nothing!
Ken BIG Blake www.kenBIGblake.com
Thanks & remember to thinkBIG for all of your
R.E.A.L.T.Y. Financial & Business GOALS…
Your Goals Are Our Goals &
Your Success Makes Us Successful