Passive Real Estate Investing – About

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Passive Real Estate Investing

Hello, and welcome, everybody, to exciting edition of Passive Real Estate Investing Blog. This is the blog for all of your real estate investing needs, questions, strategies, and techniques.

I’m super excited to be here today. I’ve gotten a ton of great emails throughout the week, asking different questions ranging from what to do on a specific deal that some people are working on to the new investors that are just trying to get into the business now for the very first time.

I want to welcome you to the podcast. Thank you so much for taking the time to listen to me and what I have to say about the world of real estate investing as I know it. I want to make sure that everybody out there has a great and clear understanding about how to invest in real estate, what to look for, how to structure deals, what qualifies as a deal, and what to do with it once you’ve got it.

To give you a snapshot of my history here, I’ve been in real estate for about 13 years now. I started off as a real estate agent, just selling houses for commissions, and have evolved into a full-time real estate investor who now owns a real estate brokerage. I have nearly 40 employees and independent contractors working for me. I’m 36 years old and have done over 700 transactions, totaling over 100 million dollars.

Doing all of this has helped me realize my dream life, my dream lifestyle. I want to help you achieve your dream lifestyle through real estate investing today. With the techniques that I teach you in these free podcasts alone, you can get out there and consistently make anywhere between 5,000 dollars and 15,000 dollars per deal, just by wholesaling properties. The process is so simple that it’s practically a no-brainer once you understand some fundamental basics about real estate wholesaling.

If you wanted to do this business part-time and just make an extra 5,000 dollars a month, I can show you exactly the steps you need to take to achieve a 5,000-dollar-per-month additional income. If you wanted to do this full-time, quit your job, and get into real estate investing full-time, the earning potential is limitless. Currently, I am averaging a very high five-figure and low six-figure monthly income. You heard me right. I said five to six figures consistently on a monthly basis from my real estate investing.

I can honestly say that I am definitely not the sharpest tool in the shed. I never even graduated from high school. I must have had well over 50 jobs from the time I was 16 years old until I started making money in real estate. In fact, my first two and a half years in the real estate business, I was still working another full-time job just to make ends meet. If you’re anything like I was, struggling to pay bills, buy the things you want, take vacations, pay for college for your kids, or anything else that you desire but cannot seem to get a grip on, you’ve come to the right place. I can help anybody who is serious about making money in real estate, just like I’m helping my current coaching clients and investors make money, too.

If you’ve been sitting on the sidelines, wondering what you should do, you’ve come across my podcasts or seen some of my videos on YouTube for a reason. Now’s the time for you to take action and do something. Listen to my podcasts. Go to YouTube and search my name, Michael Kevorkian. That’s Michael, the common spelling, and my last name is spelled K-E, V like Victor, O-R-K-I-A, N like November. Hopefully, you’ll get some motivation to make a change in your life for the better. What I teach in real estate investing is a simple 12-step real estate investing process, which is a simple step-by-step system that walks you through the beginning stages of real estate investing all the way through being a professional real estate investor.

Let’s begin now. I’m going to talk about double closings today. I’ve gotten a few emails from you listeners out there asking about how it works, how to do them, and what the process is. As promised, I’m going to respond to your requests. Today, we’re going to talk about the infamous double closing.

How to do double closings. Before we get into that, we need to define what a double closing is so you have a very clear understanding of the technique. A double closing, or also referred to as a simultaneous closing, as it is sometimes called, is when you, the buyer, actually take title to the property momentarily before you sell it. What this means is that your name or the name of your company will appear on the chain of title, whether you sell the property the same day … which is typical for a double closing … or sometime down the road.

The basic idea behind doing this type of transaction is that you do not need to bring any of your own funds to the closing. That is how things used to be done before the market crashed, and a lot has changed since then. I’ll walk you through the overall process. When I’m done, I’m going to explain how things have changed and what you need to do to get your deals done right and fast in today’s real estate market.

How do double closings work? The first part of the transaction, which is referred to as the A to B transaction, is between you and the seller. The second transaction, where you sell the property to your buyer, is called the B to C transaction. As a wholesaler, you will almost always fund the A to B transaction, your original purchase from the seller, with the funds from the B to C transaction. Simply put, your end buyer is bringing all of the money to the closing for both transactions.

That doesn’t mean that there’s twice as much money that your buyer has to come in with. There are two settlement statements created for the closing. One settlement statement, or also know as a HUD-1, is between you and the seller, which reflects the amount that you paid for the property. The second settlement statement is the transaction between you and your end buyer, and that reflects the amount you sold the property for.
Another common question is, “What if I’m not working with a cash buyer?” This whole process probably may seem strange to someone that is unfamiliar with double closings. However, I can tell you that they are somewhat common. The process works because, the majority of the time, you’re going to be selling your properties to other investors that are cash buyers.

On the occasions that you’re not working with a cash buyer, if it is still an investor you’re dealing with, then they’re going to typically bring some kind of, let’s call it, non-conventional financing such as either hard money, a private lender, obviously their own cash, or an investor-friendly bank. If your buyer is a rehabber, then it is common to get a construction loan from one of the local banks that they work with, which will cover not only the purchase price of the property, but also most, if not all, of the rehab costs, as well.

In most cases, the lender is familiar with simultaneous closings. You will find that they don’t have a problem doing them, as long as they’re not a typical bank finance deal. What I mean to say is that if someone is using hard money, private money, or a home equity line … home equity line is money they have access to from a property they already own … then the lender will typically not really care all that much that you are not bringing any money to the table. This is not so true in my experience with more traditional types of mortgages, like FHA, VA, or other purchase-money mortgages, where the buyer is working with a traditional lender and buying retail.

Another point to consider is that you have to find a title company who’s willing to do these types of transactions. You see, there are going to be two obstacles that you have to overcome when trying to do double closings. One is your end buyer’s lender, so the B to C transaction lender. The other is the title company. A lot of the title companies out there today are afraid of doing double closings when you are not funding the A to B transaction with your own funds. After all of the mess with the real estate market and the pressure the title companies and mortgage companies alike have been under, there are a lot less people willing to do creative deals.
Please pay close attention to what I just said. I said there are less title companies willing to do double closings where you are not funding the A to B transaction, not that there are no title companies willing to do them. All you need to do is pick up the phone, get on Google, search title companies in whatever city you’re in or whatever state you are in, and get a list together. Once you get a list, you start calling and ask to speak to a closer, or the owner or the manager of the title company, if it’s a smaller title company.

Ask them specifically if they will do the types of transactions you’re trying to do. Explain to them that you’re a wholesaler, you will be bringing in buyers who will most likely be buying properties from you in cash, and want to know if they will help facilitate a double closing with you. Explain that you intend to use your buyer’s money to buy the property from the seller. This is a key point, so please make this clear to the person you’re talking to at the title company. In other words, you will be using C’s money to fund the purchase between A and B. Then you, B in the transaction, will then sell it to C and keep the difference.

What are the negative drawbacks of a double closing? In my opinion, there really aren’t any. We use title companies for most of our closings. There is the rare occasion that we use a closing attorney, but you will see that is not going to be the normal procedure, in my part of the country, anyway, for most of my deals. Closings typically cost about one percent to one and a half percent of the sale price of the property. That’s an all-inclusive figure that I use to overestimate my costs, so I don’t end up short when I leave the closing table.
If I’m doing a deal, a double closing, with one of my title companies, then what I typically do is negotiate with them to charge me less than two full closing costs. My arrangement with one of the title companies I work with is I pay for the more expensive closing in full, and they charge me half of what they would normally charge for the lower-priced closing.

Let me give you an example of what I mean. Let’s say I’m buying a property for 200,000 dollars and wholesaling it to my buyer for 300,000. If the closing costs are, say, 3,000 dollars for the B to C transaction … that’s me to my end buyer … then the title company will charge me that in full. If the normal fee for the A to B transaction … that’s where I’m buying from A, the seller … and those costs were 2,000 dollars, then I would only be charged half of that, which would be 1,000. My total closing costs across two transactions on the same property in this example would be 4,000 dollars instead of 5,000 dollars, which is what it would normally cost me.

You follow me? You picking up what I’m putting down here? I negotiated with the title company to give me a discount, since I’m bringing in more business for them. I would never expect them to do anything for free or to do two for the price of one. This isn’t Payless Shoes, okay? No buy-one-get-one-free here. They have to make money, just like you and I expect to, and your buyer expects to, as well. You shouldn’t try to cut them off at the knees, but you definitely want to make a point to negotiate a fair deal for yourself in these transactions. Get it all lined up before you have a deal, so you’re not running around at the last minute, trying to figure out how to keep your deal together. It’s very important that you do this ahead of time and with plenty of time to make all the necessary preparations.

A common trap with a traditional lender you’re going to see is, if you’re wholesaling a property and your buyer plans on using a traditional bank, you’ll most likely run into title seasoning issues. Title seasoning is a term to describe how long a person or entity has owned the property. The majority of banks won’t fund a deal unless the title has been held by the same person or entity for at least 90 days. Please keep this in mind. Some banks require that the person or entity owns the property for even longer than that.

The lenders claim that these rules were put in effect to really protect homebuyers from that small percentage of opportunistic investors who are out there to take advantage of people. In my opinion, the reality is that it’s a measure that the banks utilize to ensure that even the law-abiding, legitimate investors weren’t making too much money, according to what the big banks feel is fair or not. The game has changed, my friends, but it is not over. All you need to do is learn the rules and play by them. It’s simple, and anyone can do it if you take the time to learn and apply these techniques.

Let me give you a quick example here of a deal I recently closed and made a 75,000-dollar profit on. I mentioned this property in one of my previous podcasts. It’s a property I purchased for 170,000 dollars from a seller who had no financial distress whatsoever. What she was was a motivated seller. Anyway, I closed, I fully funded the deal myself for 170,000 dollars, and I immediately put it back on the market for 259,900 dollars. I put it back on for 259-9.

In the first couple of days on the market, I got an offer for 245, 245,000 dollars. Guess what? I accepted it. We closed on time according to the contract, and the buyer was getting a traditional loan from a bank. They did not buy using FHA or VA funding, which I know would have definitely caused a problem here, so we avoided that monkey wrench in the wheel this time around. They were putting 20 percent down and getting a conventional loan. The bank didn’t care what I paid for it, and everybody walked away happy from that one.

As you can see in this example, no two deals are alike. I was able to avoid the title seasoning on this one but couldn’t on another deal that recently came up. The other deal was one where I purchased a property dirt-cheap, way under market, rehabbed the hell out of it … and I mean I spent more on rehab than I did for the house … and it sold at a great price. The downside is the buyer’s getting an FHA loan, so they wanted to know how I was able to increase the value of the property so much in such a short amount of time.

It’s really pretty simple. First of all, I’m great at finding great deals. Secondly, I spent some money rehabbing it. I had to provide the receipts, contractor payments, scope of work, permits, and a whole lot more. I even had to pay for the buyer’s second appraisal, because FHA required that I get a second appraisal to justify value. They really put me through the machine on this, which, by the way, the second appraisal came in at the same price as the first one did.

Of course, that helped satisfy the dictator of real estate prices and title seasoning, Fidel Hugo Adolf. My bad, I’m sorry, not that FHA. I mean the Federal Housing Administration. I always get those two confused. I don’t know why, but it happens. Anyway, even though they’re doing their best to control pricing and keep honest, hard-working people like us from making a living, we’re still able to work happily together and see eye-to-eye after they put on their rubber glove and tell me to grab my ankles. If you’ve been in this business for any length of time, you know exactly what I’m talking about here.

Another common question that I’ve seen in my emails recently was, “Can’t I just assign the contract?” Yeah, you can, but here’s my advice. I’ve gone over this in the past in another podcast of mine in the past. How you close your deal is really up to you. I advise only doing assignments when the assignment fee is under 10,000 dollars and if this is your first deal with that particular investor. Once you’ve done some business with a particular buyer, then it shouldn’t be a problem for you to go ahead and just do an assignment with them regardless of what your purchase price is.

Now, I’m saying that loosely. Think about this from your buyer’s perspective. If you were them and you had to bring cash to the table, would you knowingly pay 30,000, 50,000, or even more dollars to a wholesaler, without a question? Probably not, because you might feel like you’re not getting a great deal, even if you truly are. I recently wholesaled a property to an investor who was making about 60,000 dollars on the deal. I made 40,000 wholesaling it to him. When he found out how much I was making on the deal, I have to tell you, he wasn’t too happy.

The God’s-honest truth is that he shouldn’t be counting my money. What I made on it doesn’t matter, as long as he hits his numbers. Guess what? After a few long talks, he came to agree on the concept that the only thing that really matters is what he makes. As long as we meet or exceed that number that he has in his mind, then he should be happy.

Does that mean when I bring him a deal, and I make 50,000 as a wholesale fee and he makes 40,000 on it after rehab, that he’s automatically going to be okay with it? Of course not. That is exactly why I’m giving you this example and telling you to use your discretion when assigning or wholesaling your deals, if you’re going to assign it or do a double closing. My general rule to assign is under 10,000 dollars and double close on everything over 10,000 dollars in profit to me. Typically, the higher the assignment fee, the higher the probability the deal will blow up because your end buyer is not going to be okay with the amount of money you’re making on the deal.
At the end of the day, the whole point with all of this is that you want to make sure that you accomplish a few things here. One, you want to set up your title company, and find a couple of title companies that you can work with that’ll do double closings where you are not having to fund any of the purchase money from A to B … that’s the seller selling the property to you … out of your own pocket. You’ll be able to do that out of the B to C closing funds, where you are selling to your end buyer. That is number one. You got to be able to establish that kind of a rapport and relationship with the right title company and the right closer, to make sure that that all happens very smoothly.

Next thing you want to do is always keep in mind, when you’re dealing with your buyer, you’re going to want to make sure that you’re dealing with them the right way. Again, keep in mind that anything on assignment fee, that you’re going to sell wholesale on assignment, should be a 10,000-dollar assignment fee or less. Again, anything over 10,000 dollars … and that’s 10,000 net to you. If you’re going to be making 12,000, you got to figure you’re going to have a couple thousand, maybe 1,500 to 3,000, in closing costs doing a double closing. You’re going to want to make sure that it makes sense for you to do that, and close at a title company that’ll do a double closing, on anything that you make a profit of over 10 grand on.

Those are the things you need to do. How do you do it? Again, get on Google, get a list of title companies in your area, pick up the phone. Don’t be afraid, start calling. It’s important that you get used to being on the phone, asking the right questions. Simple process. If the closer or the manager or the owner of the title company says, “No, we don’t do that. It’s wrong. It’s illegal. It’s unethical,” whatever they say, don’t listen. Just keep calling. You’ll find somebody.

I’m not giving you legal advice here. By no means am I telling you if someone tells you it’s illegal, not to listen to them. What I am saying is that a lot of times, people think that because something is a bit unorthodox, there’s got to be something wrong with it. Therefore, it makes it wrong. If it’s wrong, therefore it makes it illegal. That is not the case.

Please understand that it is a matter of business practice whether these people do it or not. Typically, a lot of the bigger title companies may shy away from it now in today’s day and age. It is something that was very common practice not too long ago. There are still a ton of companies out there doing it today, because they know there is no law, that I’m aware of, that prohibits double closings. There might be some lender guidelines that say they don’t want to see that happen. There may be some title company guidelines that say they don’t want to see that happen. To the best of my knowledge, there is no law.

Again, I am not an attorney. I’m not giving you legal advice. I have to give you this caveat. Go ahead and talk to an attorney in your area, and see what their thoughts are. Talk to a real estate attorney, talk to somebody who understands real estate closings and transactions, and they’ll be able to guide you a little bit better and answer that question, “Is a double closing a crime? Is it illegal? Are there any laws? If there are, can you please reference the law so that I can go take a look at it and make sure that I’m not breaking the law?” If they say, “Well, it’s illegal, but I can’t reference a law, because I don’t know what it is,” then how can they say that it’s illegal? Use common sense.

Again, you’re not twisting anybody’s arm. If the title company’s willing to do it, then they’re the ones that make that decision. I couldn’t imagine that they would willingly put their business and their license on the line. Do your due diligence. You’re going to want to start with reaching out to title companies, call them, ask them that question, “Do you do double closings? This is how they’ll be set up.”

Make it very clear that you are not funding the A to B purchase with your own funds. It’s a big difference, because if we were to do that and have a double closing where I’m actually funding from my own pocket the A to B, then they don’t care. Every title company out there is going to be willing to do that. You have to be very specific here. “I’m funding this purchase with my buyer’s money. Will you allow me to do that?”
That’s it. Get out there. Start doing your research. Call 10, 20, 50, 100 title companies. I don’t care how many it is. Those of you that have kids out there, I’m going to tell you, very simple question you got to ask. You got to ask this of yourself in your exploring into this real estate business here.

Ask this question of yourself, if you have kids: if my son or daughter tries to walk and falls down, how many times are you going to help them until they learn to walk? What’s the number? When you do give up? Never, right? Never. You’d never give up. You’d want your kid to walk no matter what. If it took you a month, if it took you six months, if it takes you six years, you are going to help your child get up on his or her feet and walk, and teach them how to walk, regardless of how many attempts, how much effort, how much time you have to put into it.
Got to look at your business exactly the same way. You get one no, you get 10 no’s, you get 100 no’s, it doesn’t matter. That goes across the board. That’s if you’re working, trying to find a realtor associate, if you don’t take my advice and get a real estate license, which I do advise you to do. Go get a real estate license. If you say, “Hey, Mike, I don’t want to do that. That’s not for me,” that’s fine. You talk to a real estate agent, they say, “No, I’m not interested in working with you, pal. Thanks anyway,” you just going to quit? Is that it, back to the pizza place? No. You’re going to get out there and you’re going to do the best you can. You’re going to keep asking.

Same thing with a seller. Talk to two, three, four motivated sellers, they all say no. Is that it? Folding up base camp, you leaving, tail tucked between your legs? Come on, man. Get up. Pay attention to what’s going on here. You got to get out there and make this happen. Every no brings you one step closer to the inevitable yes, as long as you don’t ever give up on yourself or in this business.

Same holds true for title companies. You call until you find somebody. I went through the same process, and believe me, I’ve been in real estate a long time and met a lot of people in the business. I went to everybody I knew first. Out of all of them, I only had one. I’m talking probably three dozen, if not more, so 36 to 40 title companies that I’ve done business with in the past throughout my career, and I had one person say, “Yes, we can do this. Yes, we’re willing to do this. Here’s the terms.” I negotiated on that a little bit, and we were able to put the deal together. I have a couple other title companies I work with now, obviously, that do this as well. It took some effort, but that effort pays huge dividends.

You’ve got to be able to understand that. You want to make big money? I tell this to everybody in my office, and all my investors that come with me, all my coaching students. You want to make 100,000 dollars a year? You got to do 100,000 dollars’ worth of work. It doesn’t work any other way. Don’t think that you’re going to just get into my coaching program, and it’s all going to be all flowers, and roses, and rainbows.

It’s not like that. That’s why I have an application process. I don’t take anybody who’s willing to pay me the money. I want to make sure we’re a good fit. You have no idea how many people send the application. I’ll review the information, respond to them, and reach out saying, “Hey, okay, let’s set up a phone interview to talk a little bit further.” Let me make sure that they’re a good fit for the program. They don’t even respond. Why would you fill out the application if you’re really not even that serious, serious enough to have a phone call with somebody, a free phone call, to see if this is something that I even want to spend my valuable time working with you on?

Think about it, please. This is serious business. You want to make serious money? Get serious. Get off your rear end and do something about it. Like I said, you don’t want to get into coaching, you want to go buy a 47-dollar course or hire a 47-dollar-an-hour real estate mentor? Hey, more power to you. I can tell you, I don’t think you’re going to get very good results. I work hand-in-hand with my students. They learn all of my techniques. I have yet to have anybody not do very well and put deals together on a very regular basis.

As I said, I always do a 30-day money-back guarantee for my coaching. Why? Because I know my system works. Quite frankly, I don’t need the money. I do it because if you don’t pay, you don’t pay attention. I charge a very nominal fee for my coaching, but my coaching gets results. Try somebody. Work with somebody. If you’re listening to this podcast, it’s here for a reason. It’s here to teach you and share some stories and information with you.
If you’re really serious about getting out there and you want to do well in this business, find a coach. Find a mentor. Do what you have to do to get your business off the ground. It’s that simple. You can’t open a restaurant without a kitchen, just because you have the idea, “Oh, well, I got a great concept for the front of the house. Beautiful, and pin lights, a white tablecloth, and colored glasses, and a full bar,” and everything else, but you got nothing to bring to the table. What is that? That’s the heart and soul of the restaurant, the food. That’s what you’ve got to be able to produce and produce it consistently, just like I help my students produce consistent results in real estate.

Pay attention. Get out there. Find somebody to work with. Take the first step. I really don’t think you should do this on your own. That’s the very reason that as a real estate agent, when you go to get your license, you got to hang it with a broker. Why? And, you got to pay that broker a percentage of your commission, too. Why do you have to do that? Why is this process lined up like this in almost every aspect of life? Simple. You need some guidance. You need a mentor. You need a coach. You need somebody to walk you through the process that has more experience than you do.

That’s why this business exists. That’s why there’s so much money to be made in here. Why? Because I’m competing with people who don’t have a clue. My competition is a joke. I don’t have competition, because I know what I’m doing, and I do it so well. I want to share that with you, but a select handful. I’m really not looking to do this on a grand scale. You have to understand, I only have so much time in a day. I’m not willing to dedicate more than two to three hours of my day, five days a week, to coaching. I make way too much money doing real estate investing.

I want to take a handful of people that are actually going to bring me more money by generating more leads, more deals, and things that we can partner on and go 50-50 on until you’re ready, until you’re on your feet. Hey, when you’re good to go, shake hands, either literally or virtually, and send each other on our own merry way. Keep that all in mind. Think about what I said. This is a rather short podcast this time around, and I want you to maybe listen to it a couple times and let it all sink in. It’s very important.

Anyway, I’m going to wrap up now. I want to hear about your success and do a phone interview podcast with you. I’ve got an exciting interview coming up with one of my coaching students that I think is going to blow your mind. We’re getting ready in about two weeks from now. Today is Sunday, February 17th, 2013. In about two weeks, we’re going to do our podcast together. You’re going to hear some numbers that are going to blow you away.
This is one of my coaching students, been with me for a little while now. He’s going to share all of his ups and downs and ins and outs in the business, and what his honest opinion is of my coaching and my process. We’re not even going to be sitting in the same room, so he can be very free to say whatever he wants to. I encourage him to do that. I’m not looking for a free commercial. I want somebody who’s going to give the good, the bad, and the ugly.

You can do this, believe me when I tell you. It’s not hard or complicated when you have the right tools, systems, and support in place. I want you to be successful, make more money, help people, and change a lot of lives for the better in the process. I can’t explain what real estate investing has done for me. It has totally changed my life for the better. There really isn’t a thing on this earth I would rather be doing than real estate investing, and helping other people realize their dreams by teaching you what I know and what I’ve learned along the way.
Here’s a small favor I want to ask of you. Go ahead and go to iTunes, and download my podcasts. Leave me some feedback. I always appreciate the five-star reviews. I’d be happy to announce your name and reviews on my next recording of the Real Estate Investors Podcast.

As I said, I definitely want to share your success stories with the rest of the listeners out there. Take a little time and go to iTunes, leave a review. I hope you found this podcast informative, inspirational, and it motivates you to get out there and make a difference in your life and the lives of other people by helping them get rid of properties that they no longer want or need. If you have any questions, again, you can email me directly at info@keystosuccessclub.com. That’s info@keystosuccessclub.com. Or, just go to the keystosuccessclub.com website and contact me through the site. While you’re there, you can download my e-book, “16 Ways You Can Turn Unleveraged Assets Into Income,” absolutely free.

I’m super excited to announce the website is officially up and running. We’ve got a ton of great information, podcasts, videos, and a whole lot more to share as time goes on. Please check back regularly. I think you’re going to really enjoy all the information that we’re giving you out there. I also want you to go ahead and send me an email or contact me through the website at keystosuccessclub.com if you have any subject matter you specifically want me to cover in the next episode. I’d be happy to help and do everything that I can to help you in your real estate business.

Thanks for listening, again. I really appreciate you letting me talk for so long and investing so much of your valuable time with me today in this podcast. I’ve had a lot of fun and hope you learned a thing or two. Remember to always pay it forward. Until next time, happy investing, and remember to go big or go home.