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You may wonder why learning this stuff matters. Here's why: You are in a much
better position to understand distressed real estate opportunities when they
appear. You'll be much better at sizing up the deal, like pronto quick. Many
distress deals involve time deadlines. I've done deals in as quickly as 2 days.
Also, there's a very hidden profit center in the fact that many on the low-end
properties you come across have old liens that can be negotiated away or left on
the property to see what happens. This game is not for amateurs or the
uninitiated. There truly are hidden secrets.
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Title searching
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Another skill a technician should be able to employ is title searching. When
buying and selling distressed properties, being able to quickly and thoroughly
check out a title is critical. If you come upon a fantastic deal, you should
have the knowledge and checklist for checking to make sure the title is as the
seller has represented it. Of all the different phases of being a technician,
this area is the one that probably requires the most knowledge and
double-checking. If you misinterpret the title search or just plain miss a
lien, it can get ugly. I make it a point to use this on the little junker
houses, and not for the big money deals like buying a large piece of ground or
apartment complex. In these cases, definitely hire someone who has experience
and an insurance policy if they screw the deal up. In any case, if money is
involved and your not comfortable with the process, get a pro to research your
title and make sure his or her results match yours. I have already done a
quick search to make sure the deal really is as the seller said, then I
sometimes hire out a second search to confirm my search. |
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Form file
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My first tip is to start collecting forms and real estate documents. Set up a
small form file in a file drawer. Have one for each of these categories:
Deeds, notes, options, leases, assignments, mortgages and trust deeds, and
miscellaneous forms. These forms can be filled out or blanks. |
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Start asking questions
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Make a list of all the real estate legal type questions you don't understand
and start asking more questions at your real estate closings. Ask the title
agent or lawyer how such and such works, so that you begin understanding the
process. Ask what if questions. Be careful when asking other investors or even
governmental employees who don't know what they're talking about. Recently I
spoke with one investor who bought a house at a state sheriff sale; one of the
deputies gave him wrong information on lien property and it probably is going
to cost him about $40,000. Dumb. Don't play in the major leagues if you're
still learning the rules of the game. Investors are notorious for not knowing
what's going on too! Be doubly careful when one of the old-timers from the
investment club or barber shop says it can't be done! |
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Small book collection
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Invest a few dollars in the next couple of years buying real estate law books
for your state. Also, purchase a Black's Law Dictionary. This is almost a
must. The dictionary will help you translate the hidden code in the legal
garble. Our book,
The
Hidden Secrets of a Real Estate Technician is another book you should
consider having since it is the only book on the market for real estate
investors that explains the conveyancing and legal documents around real
estate. This book is truly one of a kind. Very detailed compared to much of
the rubbish on the market. |
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Learn basic legal research
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This is an important skill that you can master. I wouldn't ask you to get into
reading a lot of court citations, but there are numerous shortcut methods to
quickly and easily learn your state's law on a matter. In a very brief
nutshell, there are state bar practice manuals that in many cases provide a
nice review of the topics in questions. Typically, they have one on judgements
and liens that should get you started along with using your Legal Dictionary.
Tip: if you're not ready or can't afford to buy a legal dictionary yet, a good
quality (large and comprehensive) dictionary will typically provide the legal
meaning for a work. Some legal words have a non-legal meaning; therefore, the
dictionary will give you both meanings, regular, and legal.
In summary, this isn't an arena for amateurs or simple-minded folk. Get
started by getting a small file started. Ask other investors for forms. Attend
meeting at investment clubs. Ask lots of questions even if you think there
dumb or basic. Invest some money in some books (Avoid the overpriced, rip-off
course that costs thousands). Visit the courthouse and ask the clerks to show
you the basics of finding who owns a property and check out how much they paid
from the deed. Check out a prospective deal you are buying by trying your own
search, and then get your title company to research the title again. Compare
results. I decided many years ago to learn this information and it's some of
the best time and money I spent. I've saved several thousand in document prep
fees and when I have used a lawyer I was able to clearly understand him and
supervise to boot! |
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