How I Helped A Widow Start Her Real Estate Investing Business
My Real Estate Investment Week in Eastern Tennessee
I'm a real estate investor working my own business, and a coach for Bob Leonetti and Jayme Kahla through the SMI Funding and the Real Estate Profit Coach. I travel the country helping Bob and Jayme with their educational seminars, and work with our students on-site with their real estate business.
I recently completed a 4 day 1:1 with one of our students, Marylyn Dennis. She's a terrific lady living in a small town in eastern Tennessee and wanted help getting her real estate business off the ground. When meeting with a new student, I want to understand their goals and ascertain their skill level. Marylyn, being recently widowed, wanted to create financial security for herself, and has a strong drive to help people. She is also interested in notes. My challenge in helping Marylyn? There were several.
First, she's previously participated in other real estate training events which lead her to spend money in non-effective areas, and didn't teach her how to connect the dots within her business. She was also talked into creating a Delaware entity in addition to her existing Tennessee entity.
Second, she does not have a functioning computer. How do you conduct your business in these modern times without a computer and internet access? This was going to be an interesting 4 days.
Third, Marylyn wants to help people facing foreclosure. Tennessee has avoided much of the huge foreclosure crisis facing other parts of the country, and is a relatively stable market.
Fourth, Marylyn owns 3 properties free and clear, 2 of which are currently in probate after her husband's death. She is struggling on what to do with the homes.
So what priorities do we set for the 4 days to get Marylyn moving in the right direction? This was definitely not going to be a typical 1:1.
The first nut to tackle was creating a business plan. A proper business plan would give her the foundation for her business, and give her a tool to help her with other business decisions. We spent time refining and committing her goals to paper. We set up a meeting with her CPA and a real estate attorney to review her business plan, and entity structure. They determined the Delaware corporation should be dissolved as quickly as possible. The Tennessee entity more than met her business needs. This was a huge relief for Marylyn, both mentally and financially. The Delaware corporation and maintenance agent were costing her money every month, and she was getting nothing from it.
Now that Marylyn had a business plan, it was time to create her marketing plan. I had Marylyn review Profit Mapping. Bob Leonetti and Jayme Kahla have created a terrific 90 day program to jump start your business, which we used as a guide. I showed her Roland Frasier's 30/30 Matrix that identifies 30 marketing (many free!) strategies over 30 days. As Marylyn is interested in notes, I showed her the "2 Men and a White Board" series on the web site and suggested she make time each day to view one of the 80 videos with one of the top note guru's in the industry teaching you (Bob Leonetti) how to buy notes. Marylyn may have a future need for private money, so I showed her Scott Carson's "Private Money Presentation" on the web site. We ultimately had a plan of action that identified activities on a daily, weekly, monthly basis that Marylyn should focus on to keep her business moving in the right direction.
Part of becoming a successful real estate investor is having confidence in yourself. Marylyn is not accustomed to public speaking, and this could be a hindrance. We attended a local Toastmasters meeting, which I hope Marylyn continues with. If you can get up and discuss real estate with total strangers, talking with homeowners and fellow investors will be easy. We met a local real estate agent at Toastmasters that specializes in auctions. What a great resource! Never underestimate the importance of networking!
The second challenge was the lack of computer and internet access. Marylyn's current laptop has been disabled with a virus. I had her contact some computer repair companies in the area and plan to either repair the computer, or purchase a new one. My friend in Chattanooga has a contact for $125 refurbished laptops that would be an inexpensive way to get Marylyn back into the technology game. Marylyn was impressed with my aircard that allowed me to work virtually anywhere in the world. We contacted her wireless provider, and they have an aircard product and the local store would help her install it. In the meantime, we used my laptop to get us started.
The third challenge is Marylyn's desire to help people facing foreclosure. This is a noble cause and a large part of my own business in the Dallas/Fort Worth metroplex. Due to Tennessee's relatively stable real estate market, coupled with Marylyn's desire for financial security, I suggested a few additional money makers. As luck would have it, during our weekly 1:1 student teleconference fellow San Diego area student, Lane McGhee, received an REO pool in the Memphis area. Lane sent me the pool so Marylyn and I could formulate a plan.
We teleconferenced with Lane to discuss his requirements, and believe we could market the properties at 60% of ARV and still have Marylyn make some money. Wholesaling real estate with an option or assignment of contract would be a great way for Marylyn to earn money without having to own real estate. We quickly posted 9 Craigslist ads in the Memphis area, and began calling real estate agents we knew worked with investors. A great hands-on learning experience for Marylyn!
The fourth challenge was what to do with Marylyn's 3 properties. I walked her through deal structuring and several scenarios for the homes. She could lease them using a property manager and cash flow almost $10,000 per year without the headache of dealing with tenants or toilets.
Another scenario is to sell the homes. We reviewed cashing out with a bank qualified buyer, or selling with owner financing. Owner financing would allow Marylyn to get money when she sells, have monthly residual income, and get cashed out when the new buyer sells. She could use a collection service and not deal directly with the buyer's monthly payments. Marylyn was intrigued with this, and I even gave her solutions regarding her concern about her new buyers not paying and having to foreclose. There are many other options we reviewed regarding owner financing - one of my favorite ways to sell because it's the gift that keeps on giving!
It was definitely a slower paced week than I am used to. I rose to the challenge and created a lot of excitement for and about Marylyn in her community. The most important item she got from our time together is to "Take Action". Good job, Marylyn!
Maryln and Lorena
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