by J Wright
What made the zero down and long distance management a reality?
I was always wondering if I could find properties that i could buy with little or nothing down, not locally but nationally. I mean residential income properties like triplexes, fourplexes, and commercial properties such as apartment buildings, office buildings, shopping centers, malls, and businesses. In order to buy these types of properties, I wanted to also manage them long distance from anywhere in all 50 states.
It was an impossible dream at the time but as you will see, the dream became a reality. You are about to explore multiple concepts, unorthodox but legal to expose you to true stories, and concepts that will help you learn the concepts in the upcoming ten chapters.
The whole concept of creating a $5 million or $10 million dollar equity in ten years is realistic and it really depends on you and how serious you are and how much time you will commit to apply the concept to reach your goal that we will cover in time management. It sounds crazy to put in 17.5 hours a week to make $5 million or 35 hours a week to make $10 million, but yet if you examine what you really worth per hour, you will agree to not waste time by using your down times, watching TV at night. All of a sudden you will be convinced that our concept does not sound so crazy anymore.
Being a system engineer and a trained pilot, I wanted to know “what makes the design of the concept, tick?”
Through several experiments and trial and error, it was clear to me that to purchase any property, either personal or real property, I must meet the owner to directly negotiate instead of intermediary with ulterior motives. To buy any property, you need to meet the seller. To sell any property, you must meet the buyer. It is that simple. It is essential to meet the seller too see what they want for his/her equity (cash or monthly income or combination). Convincing the intermediaries to meet the seller or the buyers will also be covered.
You will have the front seat to some of the observations that I have had over the years on multiple national transactions. I developed many concepts by resolving objections and overcame the challenges of my team of 19 brokers and agents that had to go through extensive training in my brokerage firm as well as other types of challenges that investors, syndicators and property managers had to deal with. Those challenges and how to deal with them, will be exposed earlier on so you don’t have to deal with it. Giving up was never an option and creating solutions for those objections will be presented here.
Substantiating the seller’s equity by itself was and still is a challenge, even today. Typically neither the sellers or the real estate brokers, or agents have any experience in determining the real value either using the income, cost or sales approach. In most cases, the broker community for the sake of obtaining the listing, take high priced listings and give in to seller’s unreasonable prices that will end up wasting server months of listing period without any results. We will examine the correct approaches in multiple scenarios for you to use. After all, as a pilot, without a right approach, you will end up in a crash landing.
Negotiating with the sellers from a weak stand point of being just an intermediary, is still an issue today. Sellers always win by wanting a price that truly covers the unrealistic equity that they don’t have, in order to pay for the next trade up property. Listing agents on the other hand are way too protective of their sellers and allowing the sellers and buyers to meet would be against their principal and that itself causes the sale to fall through. We will cover the power of negotiation with you as a broker / principal and that itself causes the sale to fall through. We will cover the power of negotiation with you as a broker / principal versus you just as a broker or agent.
Another typical and common issue related to the listings not selling, aside from not correctly pricing the property has been and still is financing. Listing agents, leaving the seller’s home, happy that, they have a listing and careless if it is overpriced with no financing. At the minimum, requesting and obtaining from the seller a copy of the note on the existing financings and a latest mortgage statement, would simply identify the seller’s equity which even today, seller’s equity is not stated in any of the typical multiple listings.
Why is that important, you ask? It is important for any buyer to assume the seller’s mortgage if it is assumable or can be taken subject to or a wraparound (AITD) as we will cover this. It is important to identify the amount of equity the seller has and asking the seller, how much of that equity is he or she willing to carry? It is one thing for the buyer to buy an overpriced listing, it is another, having the buyer to obtain financing on an overpriced listing, subject to an appraisal or new financing that could possibly kill the deal at the end.
You can get the same training from other national consultants, but what makes our concepts different is that the past proven track records that you need to confirm and verify for yourself, stated in the website.
Over the years, I had to create customized LOI’s, offers, counter offers, inspection and management contracts that would be useful in multiple states. Those forms and contacts are very valuable as they will help you to purchase and manage the properties a lot more efficiently. The material that you are about to read in the books and training sessions will cover a span of thirty five years in combination of flipping, buying and selling off market properties, syndication and remote turnkey long distance management (properties and businesses).
Multiple commercial properties have been purchased and sold and the equity was transferred from the down leg to the up leg through 1031 exchanges. Multiple creative financing will be introduced to you including AITD, loan assumptions, subject to, lease with option to buy and ground lease purchases.
Having to guide my real estate brokers and agents, gave me the advantage to fully understand the challenges that exists and sellers objections. Some of those same brokers and agents that applied the concepts made millions and others failed. We cover screening of the buyers, and sellers to make sure that you don’t waste the only commodity that you have “time”. Applying the principal of strictly working with buyers and matching the buyers and sellers, is an art that you must learn, because let’s face it, if you can learn the system of engaging with the buyers and handling them, given deadlines and our forms, you will also make millions.
The reality is that most real estate brokers, and agents, do not know how to handle the buyers due to a simple word, “circumvention” on presenting off market properties. Buyers are not given any deadlines by broker community and hardly any forms are signed. We will coach you through the training, how to handle the buyers and handling them is more rewarding that dealing with the sellers. Without buyers, there are no sellers. Without sellers there are no buyers. However representing buyers is equal to representing cash and money that makes a deal happen.
We cover the fact that any commercial property could be for sale and all you need from the seller is simply a 30 days nonexclusive commitment, not a listing.
The system of long distance management that I have created will allow you to manage from 40,000 square feet (min) to 400,000 square feet (max) of commercial properties. It is a proven system that you will learn for training clients in any state, covering both onsite and offsite management. You will be given every single form that you need to manage your own properties and leasing vacancies and or consult or manage other people’s properties without a license but again legal.
How to apply 100% financing along with modifying the traditional purchase and sale contracts in order to make deals in a much more efficient and creative way;
Financing is the engine in any real estate transaction which is being way overlooked and it paves the way for the buyers to get from point A (opening an escrow) to B (closing the deal). Imagine your car without an engine. How would you drive it? Financing is the engine of any commercial property transaction which will be covered.
It is about time for real estate brokers and agents to negotiate the price with the sellers, substantiate the listing prices, and learn basic financing as we will cover in detail. Why not allow the seller and buyer to meet to make the deal in the conference room instead of being a messenger between the two?
I learned that in a hard way. Percentagewise, I closed twice as many deals by having buyers and sellers meet than having to use fax, email, and text as the only way of communication. We will cover the whole concept from seating arrangements, convincing the intermediaries and of course the buyers and seller, that meeting is essential, even during and after COVID.
As a broker, it is about time that the offer should not go though an email attachment, text, fax, or sending the pigeon to take the offer. We need to get back to basic to meet at personal level and properly present the offer with the buyer as seller’s next successor in a meeting room.
Why any property should be in the market for six (6) months and more? a) Overpriced; b) no proposed financing; c) unknown equity amount of the seller and not knowing if the seller has to carry or cash out and if yes, what percentage; d) no institutional lender’s term sheet?
In reality, the right listing prices of any property within five (5%) of the appraisal price, should sell to one out of ten buyers in thirty days and we will cover how this concept actually works.
Another discussion is the regular listing, net listing and double escrows and flips. Why settle for a sex percent (6%) commission? Who made this golden rule? And how can you break this golden rule?
We will cover the subject of net listing, flipping, and double escrow. Double escrow is a set of real estate transactions involving two contracts of sale for the same property, to two different back to back buyers, at the same or two different prices, arranged to close on the same time. The idea is to purchase a commercial property below the market value and sell it at the market value and the concept needs the cooperation of both two escrows and Title Company which will be discussed in detail. A new listing is where you sign a contract with the seller and selling the property with a much higher commission margin. This method is a lot easier concept so long as you have a cooperative seller, which we will also cover. Not only we will cover this, but you will be given real examples.
The main problem of purchasing residential income properties (duplexes, triplexes, and fourplexes) is not finding the properties but simply learn how the FHA financing work. Once you do, these properties are everywhere to be picked up. “Reverse locating FHA – residential income properties” works the same way as looking for a person using his or her phone number, instead of the other way around. We will cover the FHA limits in all 50 states and also counties in each state and how you can stop renting and purchase them with nothing down, creating an assumable loan that would be easy for your next buyer to assume. You must double check the FHA limits periodically as they do fluctuate.
We will also cover syndicating properties and using accredited investor’s funds through certain Security and Exchange Commission (SEC) rules and regulations with minimum registration requirements. Using other investors or friends and family’s funds to purchase real estate especially advertising for investors must be done in certain ways for t to be considered private offering. You must learn this subject if you will be syndicating as per SEC rules, you are no longer able to receive funds from family or friends to syndicate properties. There is a difference between selling securities and shares of your limited liability company or your corporation. We will cover this subject.
Even after the property is purchased, you have only accomplished 33.33% of the entire cycle. The management of the asset (2nd 33.33%) is the key to take you to the final cycle selling it (final 33.34%).
Let’s discuss what to do after you purchase the property, since anyone can purchase any property, what to do with it is the key. In other words, don’t buy a property unless you can manage it. This brings us to a simple point of “Why buy a property if you can’t manage it”? Why jump in the water if you don’t know how to swim? Why take a flight if you can’t handle high altitudes? Are you buying the property even with zero down, just to wait for the up market? (Like others do). What if the market goes down, what do you do then?
Back in the days, the problem was, even if I found the properties and purchased them, how would i manage them long distance being on the west coast? I looked online to find property management firms nationwide to see if they could take over if I could give them the business, and give them the criteria as to what I wanted after the acquisition. Except a few consulting firms and local management companies that only did regular property management, I could not find any firms that could take the newly purchased property and through “artificial appreciation” (including leasing the vacancies) take it to the next level and sell it. What i was looking for was a company that could explore the hidden potentials of the property and in a short period of time increase the income and lower the expenses and reposition the property in a suppressed timeline and put it back in the market at a higher price.
I received several referrals from management companies from Chicago to Orlando to Dallas and Los Angeles but by looking at their performances, I could not see any one of them fit the criteria’s that I was looking for. Even today, you are not able to find those companies, because they don’t exist and if they do, they can’t perform or apply our concept. Yes, they can collect rents and pay expenses. Yes, they can get leasing brokers to lease vacancies. Yes, they can submit management reports and suggest doing capital improvements. However the idea to buy a commercial property with zero down is to explore the hidden potentials and sell it in a short time, regardless of the up market. Therefore you need to explore what is being offered in management concepts which will be revealed in Long Distance Management.
Having been graduated with degrees in system engineering, mechanical, and aerospace engineering from University of Oklahoma, I knew I had to establish a management system that could do all that. Purchasing or syndicating properties without proper management and repositioning, would be a recipe for disaster. “Long Distance Management” concept was born in 2008 to simply manage, lease, reposition, and dispose of properties in a five year or less time line. That is why for equity buildup of $5 million in 10 years, you will learn to buy at least two properties per year and each transaction must create $250,000 equity on the 6th through 10th year, every year. The system was set up in such a way that running the operation nearly three thousand miles away would be the same as running the operation three miles away. This was not going to be just another management company. The main characteristic of the concept was to take over the property right after acquisition, exploring the potential of the property by repositioning and increasing the income and reducing the expenses per the projections within a business plan. A business plan that you should adapt, way before making an offer to purchase the property. On site management was set up to communicate with off site management (Headquarter – HQ) to manage and lease the vacancies and cater to the tenants at least six days a week. Every onsite property manager would receive an incentive in addition to the salary to lease vacancies aggressively, do collection and passing out tenant invoices and maintenance requests. Daily routine requirements was a part of the management contact (which you will get a copy of).
The ideas was to also “spoil the tenants” to renew their leases, in office buildings by creating conference rooms, break rooms, lounge for unofficial meeting, aa gym and outside gazebo for breaks and lunches. In the shopping centers and malls to have a mall office that would do compatibility analysis to replace businesses that would be bringing more traffic to the property. Some of the ideas are about creation of coupon system, admitting religious entities to increase the traffic on Sundays, soliciting pro education, sports, entertainment, and authentic food restaurants to back fill the vacancies, especially during and after COVID. A mix of local and national tenants with sales reports, marketing program that is next to none covering billboards, social media and multiple signage and bringing the traffic to help the businesses. Adding directional signage always is in addition to pylon signs on major streets.
The concept of purchasing and managing businesses without being on site is another subject that you will be exposed. How to buy businesses with zero down and how to manage and sell them. A “business without a sign is a sign for no business”
Using the methods above in several properties, we have had consistent 98% actual occupancy straight for 5 years in several properties. Why is that important? Let’s take a vacant space that rents for $2,000 a month on a NNN lease and let’s assume the cap rate of the area where your property is, which you have purchased and now selling is 10%. Once that vacancy is leased, you have increased the value of your property by $240,000.00 that is nearly quarter of a million dollars that you gain by just leasing one vacancy. That is stability.
We offer each course for $100 you may also combine the two packages for a total of $150. Applicable discounts are applied if you are a professional licensee or member of arm forces, veterans or government employees. Additional discount is given if you purchase both courses. You will get a hard copy of the book which will be mailed to you in order for you to use and highlight certain areas which we cover in training sessions, and you will get all the forms and contracts. You will also get an e-book, in addition to that you will be given access to the training area that covers all chapters of the book and entire concept of purchasing selected commercial properties with zero down and long distance management. In addition to that you receive six month support comprising of six email a month to ask questions on any deals that you are planning on purchasing or managing in any 50 states. We will guide you through your deals the system of purchasing, managing, and selling properties nationwide has worked for me, and I am sure if you put in your 17.5 hours a week – learn and apply the concept, it will work for you as well. Now that i got your attention, let’s do this.