Obtaining Financial Freedom Through Real Estate

Obtaining Financial Freedom Through Real Estate

RECBL - Real Estate News

Linda McKissack and her husband were $600,000 in debt when they made a real estate decision that turned their lives around. Today, their real estate business sells over $60 million and over 300 properties each year. McKissack says their biggest success is not their property sales; it’s how they learned to generate over $250,000 a year in passive income and achieve financial freedom through real estate.

Linda McKissack is an entrepreneur, REALTOR(R), and the author of "HOLD: How to Find, Buy and Rent Houses for Wealth." She’s also a trainer and speaker whose greatest passion is helping others achieve their maximum potential. She’s created five successful businesses and is an owner/investor in numerous residential and commercial properties.

Her message to agents everywhere: "You don’t have to live paycheck to paycheck. Learn how to obtain financial freedom through real estate."

Using lessons from her book, McKissack explains how to start investing and earning money even when you have no money.

"If you don’t design your life, something or someone else will," McKissack said. "Keep this question in front of you: What would happen if today the financial resources of your business totally disappeared? It happened to us; it happened to people in Houston, in Florida, in Puerto Rico with the hurricanes. What are you going to do when it happens to you?"

Drowning in Debt
"I was 23 years old and I didn’t know what the word economy meant," McKissack said. "In the 80s the economy was built around savings and loans, oil and gas and real estate, and it all crashed."

McKissacks husband shut down his Dallas nightclub, and four years later they were $600,000 in debt. He asked for her help digging out of debt, and said his mentor once told him the way to make a lot of money fast was in real estate.

"Im sure he meant invest in real estate, buy real estate," McKissack said, "not put your wife to work selling real estate, but sell is what I did." McKissack took a job in real estate sales, and Jim went to work in her office. They restructured their debt with a simple goal: getting back into the black.

It was a good decision, but it took time to see the wisdom in it. "I made $3,000 that first year, but it cost me $15,000 to $17,000 to make that first $3,000. Fast forward to today and our team closes over 200 transactions a year and $60 million in volume. Today we run as a standalone business."

McKissacks first real estate investment came in 1991. They had no cash, a lot of debt to pay off and weak credit, and the only real estate they owned was the house they lived in, which had a big mortgage.

"We found a property the seller wanted to sell fast, without listing it. They asked if we knew of an investor who would purchase the home. We knew it was a good deal, even though the house needed repairs. We formed a partnership with our builder who put up money and got a loan. We located the property and put our commission into the deal. He did the repairs. We flipped the property for $15,000 profit and we were off to success."

What investing taught McKissack was how to beat the REALTOR(R) dilemma. "The REALTOR(R) dilemma is, the day you sell your last house is the day you make your last dollar. I used to think if I just sold 50 more houses, those 50 houses would solve all my problems. We keep thinking 50 or 100 or 200 houses are going to solve all our cash problems, but its not. Cash flow is not the answer. If you follow the statistics, if we don’t do anything different; most of us will die broke or dependent on the government, family, or friends."

Not wanting to rely on others for their financial security is what started the couple down the road to financial freedom with HOLD.

Creating Financial Freedom With HOLD
"HOLD is a long-term real estate investment strategy to which every real estate investor should aspire," said McKissack. "Be an investor, not a speculator. We bought our first property while we were still $600,000 in debt. We now own over 100 single family properties. There are a lot of people who have money they want to invest, but they don’t have the expertise to do it."

Going 50/50 is a definite option, especially using the HOLD strategy. The HOLD strategy is simple:

1. Find the right property for the right terms and at the right price.
2. Analyze - Make sure you have an offer in which the numbers and terms make sense. Do your due diligence on market values, rents, home prices and appreciations to limit your risks.
3. Buy an investment property where you make money going in. If your numbers are right, you'll make money on the margin and get a positive cash flow from the start. Don't buy a property hoping it will become a good deal. Buy it because it’s a good deal to begin with.
4. Manage a property until its paid for or you have a large amount of equity to leverage. Learn to run your investment properties like a business.
5. Grow your way to wealth and financial freedom. If one investment can bring you $2,000 a month, imagine the income from 10, 20 or 100 properties.

If you’re actually flipping houses (buy and sell), you’re just creating more cash flow. What you need is an investment. Our HOLD formula for wealth-building:

• Buy property at 10 percent or more below market value.
• Put at least a 20 percent or more down payment on the property.
• Be at a 70 percent loan-to-value ratio or less so you’re not over-leveraged.
• Cash flow should be a minimum of $200 per month after PITI and management on a 15-year amortization.
• Buy a newer home (15 years or newer) if possible.
• Buy a 3-4-bedroom brick or stucco (if possible).
• Buy homes in stable or appreciating neighborhoods.

7 Rules of HOLD Real Estate Investing

• Be an investor, not a speculator.
• Cash flow is king.
• It isn’t personal, and the numbers matter most. Don’t get attached to the house or people.
• Learn the magic of leverage.
• Cultivate relationships with other investors and people involved in real estate investing.
• Keep learning from others.
• Give to others and share your information, wealth, and knowledge.

By purchasing 20 single family rental properties that each generated $1,000 cash flow per month, and completing those purchases in five years, with each property financed on a 15-year note with at least 20 percent down payment, the McKissacks were able to keep investing in additional properties.

The HOLD strategy isn’t a get-rich-quick scheme, but a long, slow process which involves learning how to build and sustain a strong team and how to run your real estate career as a business, not a job. These and more tips and information on building passive income are in a recent webinar featuring McKissack. Learn more about the team-building cycle, including how to hire great people who can take you greater financial and business success, by listening to the entire webinar.

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Make Up Your Mind To Achieve Your Goals

Make up your mind to achieve your goals

Cash Buyers Lists Make Up Your Mind to Achieve Your Goals
#realestate #cashbuyerslists #makeupyourmind #achieve #goals #success #entrepreneur #entrepreneurship #momentrepreneur #motivation#passionate #motivated #successful #focused #ican #iwill #iwillsucceed#plan #planofaction
http://bit.ly/RECBL-March3
Many of us set goals and resolutions at the beginning of the year, only to fall off track a few months in or when faced with a challenge. Brian Buffini of Buffini and Company provides some valuable insight on, "Making up your mind to achieve your goals!"
Read More> http://bit.ly/RECBL-March3


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WOMEN ENTREPRENEURS: HOMEOWNERSHIP AND PROFESSIONAL SUCCESS

Women Entrepreneurs: Homeownership and Professional Success

Cash Buyers Lists News

It's undeniable; women entrepreneurs hold tremendous potential for success and the American economy. Entrepreneurial women are starting over 1,100 businesses a day and women-owned businesses have increased 27.5 percent from just 2007 to 2012, currently numbering at 10 million, according to the Census Bureau.  However, this tremendous growth is eclipsed by the dire conditions with which women-owned businesses are faced. Here are two stark truths: 91 percent of women-owned businesses have no employees other than the owner and 88 percent of women-owned firms do not surpass the $100,000 revenue threshold. 

The majority of women-owned businesses are small businesses, and the U.S. Small Business Administration (SBA) Office of Advocacy reveals that of businesses started in 2014, a mere 9 percent survived until 2015. Compounded by the fact that women receive only 16 percent of conventional small business loans, 4.4 percent of the total dollar value of all small business loans, according to a 2014 Senate Committee report, this makes it extremely difficult for women entrepreneurs to make their businesses successes.

Access to capital is a serious issue for women-owned businesses. The National Women's Business Council (NWBC) reports:

• Women start businesses with half as much capital as men ($75,000 vs. $135,000).
• Women receive 0.1 percent of venture capital financing.
• Only 5.5 percent of women-owned businesses utilize business loans from banks to begin or acquire their business.
• 55.5 percent of women-owned businesses are launched through the use of personal savings.

Pervasive gender imbalances like these severely hinder the capabilities of women entrepreneurs. By raising women's access to capital, women become increasingly equipped to enter the business arena with security and succeed.  Women's progress has extensive effects and its ripples are evident in all generations, from college students to seasoned professionals. Women are advancing in their fields, increasing their wealth and simultaneously raising their capability to become homeowners.

The significance of homeownership cannot be overstated. Owning a home means achieving the American Dream and having a place to call your own; it builds wealth and secures your professional progress. For women, who face an imbalanced professional field and work hard for less money, becoming a homeowner is powerful.  How can we level the playing field for women entrepreneurs?

​Women must be able to utilize personal successes profitably in the business arena. In situations when they are denied loans, women entrepreneurs should be able to leverage achievements, like their status as homeowners and wealth, to obtain much needed business loans.

​It's all a cycle. The professional arena needs to be balanced so women are given equal opportunity to succeed. With success, women will be able to lead better lives through accomplishments such as homeownership, which will in turn beneficially poise women for business success.  But what happens when successful women don't appear to be so on paper?

We have seen how lack of accountability has caused a downturn in the housing market, but little has been said about the effect the recession had on financing for small businesses. With the impact of losing home equity, and, in a high number of cases, the home entirely, small business owners were devastatingly impacted.

Damaged credit has left hopeful homebuyers with bad FICO scores and business owners incapable of obtaining loans. Even though women are able to afford a home or repay a business loan, systematic roadblocks prevent them from being recognized as reliable consumers.  The Federal Deposit Insurance Corporation (FDIC) reports that in 2013, 7.7 percent of American households (17 million adults) were unbanked and 20 percent (51 million adults) were under banked. This amounts to almost 70 million Americans who do not have full access to credit.

"We have millions of potential homebuyers, car buyers, and just plain consumers who do not qualify for financing or even credit cards because they don't fit within traditional credit definitions," states Rick Sharga, executive vice president at Auction.com, about an alternative credit scoring system being developed by FICO.

"Many of these individuals are perfectly good credit risks and have good incomes, but until this point they've been unable to get the benefit of their prompt payments and prudent financial management," Sharga continues. "There's an unfairness to this, which can be reduced with the use of alternative credit scoring, and today's big data solutions make the data needed to create this scoring readily available."  A change needs to be made to inflexible, inaccurate practices used to determine if a person is qualified for a mortgage or loan. The significant limitations to which capable consumers are being subjected are unjust. Homebuyers and professionals should not be held back from experiencing important life transitions simply because an antiquated system determines their credit score is not good enough.

Over the decades there have been many creative financing techniques, especially for residential purchases. Innovation in lending is needed now more than ever. Women must be given an equal chance to succeed, personally and professionally.  Homeownership and professional success go hand in hand; when a score on a sheet of paper prevents women from achieving either, alternative methods should allow them to leverage one in order to achieve the other.

DesirEe Patno is president and CEO of the National Association of Women in Real Estate Businesses (NAWRB).
For more information, please visit www.nawrb.com.

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