JP-Vaughan:

Hello, everyone. Welcome to our chat with Joe Kaiser, real estate investor extraordinaire.

I think we're fortunate tonight to have as our guest a man who is the most innovative real estate investing educator around today. I've known Joe for almost seven years and, as far as I'm concerned, when it comes to the nitty-gritty of what really works and what really doesn't work in real estate, you just can't get any better than Joe Kaiser. This is a man who really, REALLY knows what he's talking about. Thank you very much, Joe, for joining us tonight.

Joe, if I remember correctly, you started investing in real estate in the mid-1980s. Tell us a little bit about your background. How did you get started?

JoeKaiser:

Like just about everyone else, it all started with a seminar. Clair Crooksted came to town, and I had room on my Visa card. 12 cassette tapes later... I had a house.

JP-Vaughan:

What happened next

JoeKaiser:

Unfortunately, 12 cassettes weren't enough. I learned all kinds of things, but they were all "seminar" things, stuff that sounded good on paper, but stuff that didn't actually pan out in the real world. So I went to more and more seminars and bought more and more courses... And tried setting the world on fire.

JP-Vaughan:

Like what?

JoeKaiser:

You name it; I attended it and brought plastic. Mike and Irene, Mark O. Haroldsen, Tony Hoffman... If they came to town you'd find me front and center. Sometimes, I'd even go to the same one, twice in the same day. But there was a problem... It was all smoke and mirror stuff. I'm not saying I didn't get good at it... I did. But it was all the stuff that sells seminars. Not the stuff that makes for a career as an investor. That stuff was all about tricks and gimmicks.

JP-Vaughan:

And you're an "easy" sell, Joe.

JoeKaiser:

No doubt, but remember, I was hungry for anything real estate related.

JP-Vaughan:

How long did it take you to figure out what works?

JoeKaiser:

Well, longer than most. I had this thing going where I needed to do things "on my own." So I didn't really seek out help. I was determined to make it on my own, my way. It turned out to be a poor choice and the wrong attitude. It's a people business... and I wasn't willing to listen to other people who actually could have steered me in the right direction.

JP-Vaughan:

What is the single most important idea real estate investors need to understand to be successful?

JoeKaiser:

Persistence. Nothing will substitute for it.

JP-Vaughan:

Persistence. How true.

JoeKaiser:

I do deals every day where you just have to keep pounding away. Today, for instance, buying a house in Seattle, seller in Texas, and all kinds of things going on, brother in the house, mom evicting. A mess. It took six or eight calls, an addendum over-nighted, renegotiated purchase price, a $5000 advance. All that to keep this deal afloat. Had I blinked, It would have gone away like "poof." Instead, it's just rock-and-roll real estate. It's the nature of the beast sort of thing. I'm not sure people realize all that it takes to make this sort of thing happen.

There's a flip side, by the way, the stuff no one talks about, the "admin" side of the business. You get more than a couple properties under your belt, and there's a paper avalanche you cannot believe. If you're not up to filing and paying bills and organizing, you're dead. No one ever warned me about that.

JP-Vaughan:

Joe, before I open it up to questions, what other ideas would you like to give our visitors?

JoeKaiser:

Well, the good stuff, the freedom of being in business for yourself. You and you alone making it happen, turning bad things into good things and getting paid for doing so. That's as good as it gets. Knowing I can jump into my car and stop in any town USA and make $10k in an afternoon. That's pretty cool stuff.

My cousin wanted to get started a couple months back. We picked up a neat little place in one day, and he's hooked. He's 18 years old, an investor, and a property with equity. Not so bad.

JoeKaiser:

Let's take some questions.

Rwb:

Did Joe work another job while he was attending seminars?

JoeKaiser:

I worked on the Kill Floor at Hygrade meats, pulling tar off of dead hogs for $6.22 an hour.

MichaelF:

Joe, a lot of people come to CRE Online chat thinking they'll be able to quit they're jobs in a month. Have any advice for them?

JoeKaiser:

Don't.

slopoke:

Joe, who do you consider your most important team member?

JoeKaiser:

Family... no question about that.

texas:

How do you stay motivated?

JoeKaiser:

Two kids in college... need I say more?

I'm not a big "motivator" kind of guy. I don't need that stuff. This is my job. I do it better than anyone I know. I'm not bragging. It is what it is, and I prefer it that way. I wouldn't know what else to do. I'm not as crazy as I used to be, and I only hustle now when I need to. But it's what I do, and no amount of motivation will change or add to that.

Keith_TX:

How many houses do you average per year?

JoeKaiser:

Depends. Right now we're not really buying to keep, or buying to fix up (if you see me in a rehab - feel free to shoot me). We're just buying and selling. I haven't looked but I'm guessing we're up to 50 for the year. But it's strictly "cherry picking" right now, no marginal deals.

That Seattle property I talked about earlier, that's expected to be a $60k payday. Those are the deals you can get excited about and really get into. When you have these silly, no equity deals, it's like, who needs that?"

For someone just starting out, say less than a year into it, what's more important to get a handle on first? What makes a deal a deal. I mentioned bird-dogging earlier. You figure out how to do that and you're on to something.

MichaelF:

Right now I'm bird-dogging for an investor, and I stand to make 114k off two deals... and I've learned a lot of what he considers good and bad...

JoeKaiser:

Not so bad. Nice going.

Manage by myself. Not sure if that's a good thing or not. More organization skill than I bring to the table.

Kevin:

Joe when you say bird dog for investors should we ourselves get the property under contract before we show it or just tell them where property is etc.

JoeKaiser:

Man, do we need to talk ;-). Short answer, YES, get it under contract.

gavprop:

Joe, what is your take on the economic outlook for real estate and how will that affect your strategies?

JoeKaiser:

I'm a player. I can play any game that needs to be played and adapt on the fly. "Economic outlook" is totally meaningless to me because I can make it work in any marketplace.

uneedahome@juno.com:

If you live in an over-priced area, where do you buy and what price range?

JoeKaiser:

You buy below market by learning where the distressed sellers are hiding. They are not in your marketplace.

Lin:

You helped your cousin buy a place. Can you walk us through that deal? I'm curious how you started showing a new investor the ropes.

JoeKaiser:

Okay, briefly. I was in the area (eastern Washington) to bid at a tax sale. I had a few days to go make deals ahead of time, and my cousin came along for the ride. We found a "for sale by owner" sign and called from the car.

Sellers were eager and met us at the house that afternoon. I signed them up (I have paperwork on hand all the time). They paid $55k four years ago, CASH, used it as an office for a while, and moved out a few months back. It was a pain for them to even think about, their business is booming, and this is an un-welcomed distraction. I DID NOT MAKE THEM AN OFFER.

I don't believe in offers. Together, me, both sellers, and cousin "talked about it," right there in the yard, for about a half an hour. We hit on all the points that mattered, and in the end, we had a deal. No offer, just an agreement that "worked" for us all: $53k, $2,500 down, 8% owner financing, 30 yr, no balloon, payment is like $350. I'm asking $625 for rent.

Njax:

I don't any credit or money. How do I get started in foreclosure deals?

JoeKaiser:

Easy. Got Brains? I buy foreclosures all the time. You don't need cash or credit. I've got a guy who will buy every fixer I bring to him. He's got cash and credit. And has no problem writing checks. Get a couple of those guys lined up, and your job becomes real clear.

David Anderson:

Joe, I have 40k in cash and want to get into buying real estate. I have not bought any thing in the past. What would you do first?

JoeKaiser:

About that 40k, go put it away. Far away where you won't be tempted. And instead figure out your approach using your brain instead of your billfold. Everything in this business is available to you for the asking, including the money. You just have to know whom to ask.

RJ-MA:

Joe do you think you could have done your cousins deal without the $2500?

JoeKaiser:

First, last, and a deposit gets you pretty close. But let's say I didn't have a penny to my name. I probably would have tried to go a little less down. And maybe be a little more flexible on the price. It's real easy when you're talking to another guy who just wants out.

"Look, the "house is going to need some work... and I'd rather not tie up my fix-up money with a down payment right now. Can I give you the down in six months? I'll get it all fixed-up in the meantime." Or, at closing, it's sometimes fun offer, "Look, my money is a little tight, I'll bump the price from $53k to $58k if you'll let me in with just closing costs down." That's why putting together some cash early on is a good thing, "grease the wheels" money. Stuff you can close with and get right back out with the tenant's money.

Dave (MI):

You recommend $25,000 in reserves before "owning" property. I'm 22 and just completed my first flip. Is continuing to quick flip my best bet to generate cash?

JoeKaiser:

I think so. Your downside is minimal if you're doing the basic due diligence. And you learn what makes a deal work. If you screw up, you've got documents that allow you to gracefully exit the scene. And no one gets harmed in the process. Those are good things and a great place to get your feet wet.

Tim3:

Thanks for being here Joe. What would you say to a person who has taken the courses, but fills up with fear at the mountain of "what ifs"?

JoeKaiser:

Fear. Recognize what fear really is. It's always related to some unknown. It only takes modest success, and you begin to move away from fear toward the things you're really focused on. The key is to take small, manageable steps. It's like you're in a darkened room full of antique furniture, and you're looking for the light switch. One false move and someone's college career goes crashing to the floor. So you move cautiously, slowly, in the best direction you can figure. Knowing that, eventually, you'll get there and get there safely. If that doesn't work, there's always the post office ;-).

Glen:

Does Joe have a favorite niche of real estate investing today? (lease options , flipping, foreclosures, subject to, etc.)

JoeKaiser:

I'm mostly looking to do distressed seller stuff with big equities. Not so much volume right now, just real deals that make good sense.

Lou:

If starting out again, where would you begin? Flips, lease options, pre-foreclosures?

JoeKaiser:

Hmmmm. I'd say none of the above. Newbies need to learn what makes a deal a deal. Just get right down to the raw numbers, no sugar coating, no wishful thinking. You do that by hooking yourself up with a handful of investors and bird-dogging deals for them. You will know in short order how to put a deal together that will make them money.

You'll learn what they don't want, what makes life tough for an investor, and what they would rather avoid. Soon, you'll know exactly the sort of thing that makes a workable deal possible. You'll know what the numbers need to be before you leave the kitchen table. Once you get good at that, then you figure out a way to do it for yourself. But in the meantime you'll have learned to be an investor. With no, "let's create a note we can sell in escrow to fund a no credit buyer" garbage. Just, "here it is, where's my check."

suerte:

Okay, I'll bite. So what makes a deal a deal?

JoeKaiser:

Equity. Buying right is everything if you're working a quick-turn sort of business. You have to be able to buy at rock bottom prices, so that there's room to flip the thing. I signed up a property last month. I paid $350 from a home pro inspection. Told him to "tear it up." And he did. The seller amended the contract by discounting an additional $15k.

He doesn't know it, but we were negotiating. The point of the inspection wasn't so much to let me know what was wrong with the property. Don't get me wrong. I do want to know. The real purpose was to be able to ask for a discount. The seller had advised me that the house needed "cosmetics," and I made my offer based on that. When it was shown that it needed far more than cosmetics, it was only fair to adjust the price.

Kent C:

Is there an average amount of profit you aim for on a deal Joe?

JoeKaiser:

Volume is a lot of work. I'd rather just get better at aiming. Yes, it used to be $10k. Now I'd like to see double that, but preferably somewhere in the $50k range.

Uneedmoney@earthlink.net:

what is the fastest turnaround you have had on a property, and how did you do it?

JoeKaiser:

We sell property the same day we get it. When you have investors waiting for you to call, there's no trick to it.

It's just a phone call, and they understand that if they're not ready to buy, someone else will be. It's not a short list after all these years. Here's how it works. You tie up properties you know investors desire, and you sell them. Early on, I liked to hold open houses for an hour on Saturday, mostly fixer stuff, mostly investors. I'd sell cheap and just make a list of who showed up.

"Hey, you know I get these things all the time, you want me to call when I get another?" They all say "sure," and pretty soon, you got yourself a list. Then it's just a matter of signing up deals and hooking up your investors.

Sharonda:

Why do you dislike rehabs, and why aren't you buying to keep properties?

JoeKaiser:

Rehabs. There are lots of ways to make money in real estate, appraisers, agents, inspectors, etc. People tend to confuse rehabbers with investors--two entirely different things. Investors make money with their brains, not their rehab skills. I'd rather make 10k today with a signature and let the other guy make his $30k six months later. That $30k is money he's earned. And he's more than welcome to it.

Frankly, rehabs take time, money, and lots of organization. Hey, I just ain't up to that sort of gig. I looking to get in and out and keep every tenth one.

tripp:

How do you buy and sell and make profit without rehabbing? I mean, I have gotten to the point where I ONLY look for crappy looking properties.

JoeKaiser:

You need to understand value. Rehabbing adds value, of course. But I'm not interested in working that hard. You know what else works? Negotiating. Given the choice, much, much easier to become a good negotiator than a good rehabber. And I still have all ten fingers.

Calvin:

Joe what winning formula can I use to determine the purchase price that would make it a deal for the investor?

JoeKaiser:

Forget about a formula. You'll know soon enough when you run it by the investors. Once you've done a few, you'll know.

Calvin:

What is the best way to determine price where you profit and the investor profits

JoeKaiser:

Easy. The value of a property is whatever someone will pay for it, period, not a comp, not an appraisal.

It's real easy to set it up so someone can name his price... before you're obligated to purchase the property. You tied it up, run it by your investor buddies, and they will tell you if it's a number that makes sense. And... It will be a number that you can literally take to the bank. Takes all the guesswork out of the equation.

Streetman:

I have the ability to track FSBO's in my area, online. I see every time a seller lowers his price. Some of these have a lot of equity, but the seller is holding out for maximum dollar.

JoeKaiser:

Don't waste your time there unless you can figure out angle. I never could.

Kent C:

Joe, are you tackling ALL price range houses or upper blue collar?

JoeKaiser:

Pretty much.

TheSon:

How do you figure out your maximum purchase price?

JoeKaiser:

Put a deal together that makes sense and has enough room so someone will pay you for it.

Aruna:

what is the best real estate thing to do in a high real estate situation like in New Jersey?

JoeKaiser:

Again, it's not about the house. Your job is to figure out who needs a quick solution to an immediate problem. Those are the people who can sell to you cheaply enough so you can make a profit in any market.

Xxxx:

Hi, Joe, What is your single favorite way to locate and purchase property?

JoeKaiser:

Let me think. I don't really think in terms of "property" or "locating property." To paraphrase Lance Armstrong, it's not about the house. It's about the guy in the house.

I'd rather spend my time tracking down people than tracking down houses. We actually pay someone who does nothing but skip trace. Houses I can find all day long. People in foreclosure who've moved to Chile--that takes talent. Think in terms of distress. Figure out who those people are, and get your name and number in their hands anyway you can. It's not what you say, it's the fact you've said it that matters.

For instance, my county is having a sale soon for delinquent sewer bills. Houses are sold absolute, at auction. If you win that bid, you get a deed for a damn sewer bill! Most everyone drives out and looks at the house. Silly, I drive out and knock on the door. No magic, no tricks, just "what can I do to help you out?" I'll do whatever it takes, provided they can figure out a way I can make a buck or two in the process.

Kim:

What do you gain from knocking on the door? Do you buy before they go to auction?

JoeKaiser:

What do you gain? Everything! If a house makes it all the way to auction, I've screwed up! I can make a deal with the homeowner and have zero competition in the process. It would make no sense to let it go to auction where I'd be no better off than every other bidder down there.

JP-Vaughan:

Joe, how do you find these "zero competition" deals??

JoeKaiser:

Zero competition means I'm the only guy in town that knows there's a deal to be had.

JP-Vaughan:

Yes, and how do you find them?

JoeKaiser:

Sure, once it gets recorded, there will be a zillion other investors sending them letters. But by getting there ahead of the crowd, I'm the first guy they hear from. You want to be first, and more importantly, you want to be last.

JP-Vaughan:

What kinds of clues lead you there?

JoeKaiser:

I've given away most of those techniques in my foreclosure courses (but I keep a few to myself). You just have to know where to look. Once you understand the game, it's simply a matter to going through the motions. Where to look? Public records, mostly. But, I know my share of meter readers. I know my share of process servers. I know my share of mail carriers, and I get calls from title companies, lawyers, brokers, etc. who say, "Can you help this guy out?"

Occasionally, I can. Not so much bird dogs, just eyes and ears. It's a "radar" kind of thing. Once you've got it in place, deals find you.

Tripp:

Joe, I must have seen five houses this week that are obviously distressed, but the tax assessor's records indicate that those houses are still inhabited by the owners. But I'm quite sure they look to be uninhabited. What and where do you recommend I go as far as finding the owners and pitching them an offer??

JoeKaiser:

How would the tax assessor know? First, forget the "pitching" thing. Let Randy Johnson worry about that stuff. You find them, you talk to them, and you help them solve their problems. It's very simple. But it takes lots of work to arrive at that point. Finding them can be hard. Getting their attention can be hard. But in the end, if you're pointed in the right direction, it should be worth you while.

Lou:

what have you found to be the most effective tool in having motivated buyers find you?

JoeKaiser:

I don't permit that to happen. I hunt them down, not the other way around. I can't afford to wait around for them to find me.

Micgo:

I missed out on 20 minutes of this. I am curious, if it hasn't already been said, what is your best advice for finding these distressed people?

JoeKaiser:

Marketing.

Vickie:

Visit about marketing a little bit, Joe?

JoeKaiser:

Marketing. Okay, my take, and I've said it before, It's not what you say, it's that you've said it that matters. Not true in a lot of areas I'm sure. But when you have a blazingly hot prospect, one with a burning need, one who will call the first guy who runs into him, do you really think it matters what my marketing piece says? I doubt it.

There are people who literally will call the first person who gets to them. They want it "handled" now. They don't want to have to tell the story twice. And they'll pay you to make the pain go away. Marketing gets real easy once you've figured out where they're hiding.

Bruce-Florida:

What's the fastest and best way to jump on a deal?

JoeKaiser:

Carry paperwork with you. It's a mistake to look at properties and then go "think about it." Hot-to-go sellers are few and far between, and their motivation changes with the weather. If you're not ready to go at the exact moment they're ready to sign, you may have missed your only opportunity to do the deal.

jpo:

What kind of business cards do you give out to people? I assume you don't give fancy business cards to people in foreclosure. Do you just give them a basic card with your name and number on it?

JoeKaiser:

"Got a real estate problem... I can probably help."

Lou:

I am focusing on pre-foreclosures and quick flips right now, but I haven't had much response from my mailings, one, to be exact. What can I do to get better results?

JoeKaiser:

Avoid the seller's market. Go talk to the people who don't have their houses for sale. They're waiting for someone like you to show up.

Sharonda:

You've said that pre-foreclosures are not beginners. When can someone be sure that she's ready to do pre-foreclosures?

JoeKaiser:

Once you understand both what makes a deal, and more importantly for this arena, what makes people tick, then by all means go for it. But trust me, that's a lot to learn.

Sharonda:

I have your lease options course. I'm wondering how many letters do you recommend sending per month?

JoeKaiser:

Quantity isn't really the issue. You send as many as you can handle, and I suppose, the more the merrier. I have someone who does the eviction thing for me, so not sure of the exact number. It's basically every house that goes through the system.

Sharonda:

Do you have a script for talking to "tired landlords?

JoeKaiser:

No scripts, I'm not that clever. I open my mouth hoping nothing stupid comes out. Works (most of the time).

Duke:

Joe, when you say that an investor needs to operate in the underground to find the high quality deals, what does that mean?

JoeKaiser:

Okay, realize that my market isn't really my market. If you saw my post earlier in the week, you know that I live in the most overpriced town in the US. That sounds like less fun than pulling tar, but none of that stuff matters to me. I don't really invest there. That's for retailers, for the Bobs and Sallys looking for a home. That's for agents to deal with. I buy houses that aren't for sale, from people who refuse to enter that marketplace. They're just looking for someone to make the bad men go away and they don't think "agent" when they're looking for superman. They think: "I got this guy's card. Maybe I should call."

Or they answer the door, and I can make bad men disappear.

Dee-Texas:

Joe, Do you find all of your properties at the courthouse or through county or sheriff sales?

JoeKaiser:

Most of the time, it's some sort of public record. Targeting foreclosures is just one angle. We don't really buy at sheriff's sales; it's a different game here. Sheriff sales have one-year redemptions. So buying there is mostly futile; you get your money back in a year when they redeem, plus 8 percent. Remember this, no matter what sort of foreclosure format or arena, at some point in time, there's a "drop dead" date. That's the time when they lose the house.

With sheriff sales, that's a year AFTER the sale. Same with some tax sales. In Arizona, it's like three years down the road. If you want to invest in Arizona tax sales, you do it three years after the sale when people are actually in danger of losing the house.

streetman:

Ever mess with old listings? FSBO?

JoeKaiser:

Sure, I touch all the bases. But I know that "FSBO" or expired means "Too damn cheap to list or too overpriced to begin with." I'll poke around a bit, but do so knowing the odds are not in my favor. Try to avoid that. Figure out the market beneath the market. Go "subterranean."

mike(ia):

Do you ever deal with REOs?

JoeKaiser:

No.

Glen:

I'd like to hear Joe's opinion on "subject to" since that's getting so much recent attention.

JoeKaiser:

We never called it "subject to." It was always just "taking over payments." It's a good plan most of the time, but I hesitate to do so on zero equity deals. I hate that game plan. To many ways to screw it up, and I've done them all. But if by "subject to" you mean giving them a few bucks and taking over payments, if there's a huge equity left on the table... hey, not so bad.

Natew85:

Dear Mr. Kaiser, I'm 17 and just getting into real estate investing. I read your foreclosure course and am curious: If I talk to someone about their unclaimed funds, how do I get them to assign their old second mortgage over to me without arousing suspicion? I'll have my dad with me to sign the paperwork so it's legal, but it seems most people would be reluctant and won't sign over until they know what's in it for me. This would be in Spokane, so I'm assuming the same laws would apply as in Tacoma.

JoeKaiser:

It's not easy. You have to have a reasonable explanation for what you're offering. However, when you're dealing with business people who've long ago written off the account. It's usually a matter of just telling them what you're doing, without giving away you entire intent.

"I'm working on this foreclosure; you have an old interest. Can I get some help on it." Often, that's all they need to hear or know. Also, you can cut a deal: "I'll track it down, and we'll split whatever I can recover."

natew85:

What do you wear when you conduct business with someone?

JoeKaiser:

Casual, I wear shorts and sandals. I am the easiest person in the world to deal with. I am totally non-threatening. I don't drive a fancy car or wear an expensive suit. I used to, but I like to strip away all the nonessentials and just go make deals happen. I'm not there to impress you or to blow you way. I'm there to solve a problem.

Peter_NC:

Joe, can you give some example of what to say to those facing foreclosures?

JoeKaiser:

At the door I used to be really clever. Clever is hard. Clever is work. It isn't about clever. Today I knock on the door and say: Do you need help getting caught up with the back payments. I don't introduce myself. I don't have a story. They're in foreclosure, who's got time for that?

Sure, the pleasantries come out in time. But I want them to know that I mean business and can get their problems handled, now, today. It's a good test, too, because I don't have time to waste either.

Tim3:

You offer to make up back payments. How often do you actually pay them up?

JoeKaiser:

Always a good idea to pay them if that's what you've agreed to.

uneedahome@juno.com:

What do you tell a homeowner who has no equity, and thinks he should make $7-8K for his equity on a year-old house in a soft market?

JoeKaiser:

We wouldn't be talking in the first place.

MichaelF:

Joe, how do you avoid a seller suing later for being taken advantage of?

JoeKaiser:

Well, that's a problem whenever you're buying a deep discounts. At some point along the line, someone will tap your seller on the shoulder and tell him that he's being ripped off.

Not always, but often enough that you have to take it into account. Yes, we use that seller acknowledgement form on every deal we do. It grows every year, by the way. We recently added, "seller has actually read the agreement." Remember, there is a "honeymoon" period when you and the seller first meet. That's the time to get everything buttoned up. Once the pressure is off and the problem solved, you no longer look like superman.

He lies in bed at night wondering if he was taken advantage of. Sometimes, I have to remind him of our conversations and where he was at way back when. And there are people who just aren't used to paying as agreed. It becomes a habit, and if you're the one who's owed, you can pretty much forget about it.

JP-Vaughan:

The Best Darn Document on the Planet. Read the article, Michael.

Glen:

Joe mentions carry the paperwork... Does he recommend a good source for standard real estate legal contracts and which specific documents does he keep on hand? Thanks.

JoeKaiser:

Well, it's a personal thing. Paperwork gets tweaked for years. At some point, hopefully, you get it close to what you need. But it's a never-ending process. And we're always coming up with something new.

That seller acknowledgment document, just something I made up one evening and kept tweaking for years.

Lou:

I live in a military town (Ft. Campbell, Kentucky) Would your lease option course be a good buy if I applied it to the high turnover rate of the military?

JoeKaiser:

Military town, very cool. You have a built in cash flow generator--transfers. Transfers are a good thing. But it's a tough game until you get it completely sorted out. You're looking in terms of cash flow here with zero equity properties. So you have to be really, really (did I mention "really"?) good to pull it off.

However, with that being said, there are a couple angles with VA loans and owner wraps that you could turn into serious money if you figured out the system. Since the lender can't call a VA loan due on an owner contract sale, you're free to grab up 6 and 7 percent, 30 year financing without cash (They have no equity, remember?) and without credit. (Seller doesn't care more often than not). Hey, where do I sign up?

JoeKaiser:

I'm doing something now a little bit crazy and a little bit off the wall. It's a test. The game plan goes like this.

Sign up a house on a purchase and sale agreement. Make sure your agreement gives you the right to market it during the escrow period and auction that thing off immediately. Here in western Washington, we don't have private auctions, for real estate anyway. There are only a handful of realtors who sell via auction. You need to be licensed.

JP-Vaughan:

I would think you do have a reserve price.

JoeKaiser:

We list the property with the auction agency and sell it during the escrow period.

JP-Vaughan:

How long is your escrow?

JoeKaiser:

Sure, there are a lot of things that go into the equation, and a reserve price is one of them. Escrows are typically 30 to 60 days.

JP-Vaughan:

Do certain agents "specialize" in auctions? How has it worked out so far?

JoeKaiser:

There are only a couple agencies that do the auction thing.

JoeKaiser:

Well, that Seattle house I was telling you about earlier goes up for auction on the 29th of this month. Here's the thing. I'm really good at buying houses, but I'm really bad at getting rid of them. The thrill for me is in the hunt. So if I'm not careful, it's real easy for me to look up and find a dozen new "projects" on my plate

JP-Vaughan:

Why auction instead of a regular listing? Do you expect higher prices?

JoeKaiser:

The auction thing is strictly to dispose of property as quickly as possible.

JP-Vaughan:

So will this be your first one?

JoeKaiser:

No, JP, the price we expect is 85 to 90 percent of "list it and wait." I'm looking for a way to get in and out.

JP-Vaughan:

A fast 85% is better than a slow 100% strategy?

JoeKaiser:

You bet. I don't want to have to close if I can get someone else to at a number that makes sense. And we know that number in about 10 days after I sign it up. I don't need the last dollar.

JP-Vaughan:

That's because you're buying very, very low.

JoeKaiser:

Yes, we have an auction on the 28th, the 29th, and I've committed to doing six or eight to see if it's viable.

JP-Vaughan:

Is your reserve at 85% or lower?

JoeKaiser:

My reserve just needs to cover my purchase price plus costs. We've been paying what amounts to a full commission and expenses. I'll let you know how it goes.

Kevin:

Great to be able to speak to you Joe. In your Hunt for Abandoned Properties course you mentioned you were going to write a course on "quick flips." Was that still in the works or have you decided not to instead?

JoeKaiser:

Writing courses, for the last couple years, has been tough for me. Just so much going on. You can't imagine how much work goes into those things. It would be easy to crank something out, but I'm just not interested. For instance... The Rich Dad "Road to Riches" course came in the mail yesterday (did I mention I buy that stuff? ;-).

Six Steps to becoming a real estate investor. The six steps? Things like "decide to be an investor." I'm sorry, but that stuff just doesn't work for me. I'm guessing it doesn't work for you either. As courses, go, it's fine. It's slick and if you're new, it probably couldn't hurt you.. But, if you're new, it's hard to tell what's "real" and what's just "stuff."

Here's stuff --Page 73: "Upscale homes". 101 ways to massively increase the value of your real estate. It actually says. . . Swear to god... "Install a helipad." Now, I've been doing this a while, like nearly 20 years, and I cannot recall a single tenant with a helicopter. There's not even a spot on my application to list one. My point? When you're new, it's hard to argue with the Rich Dad's of the world. And when you're both new and naive, you think installing helipads is a good idea.

JoeKaiser:

Okay... I'm toast!

About the author...