One of the things I teach some of my clients who are looking for cash to start a business is to consider the possibility of buying an operating business instead of starting from scratch.
Did you know that you can buy a business using the businesses™ own cash?
Sounds cool, right? Let me give you a few ideas of how you could make this happen. The important thing I want you to get from this guerrilla source of cash is that you can buy the business, even if the seller wants cash, without using any of your own money.
Did you catch that?
I said none of your own cash. You can use the cash that already exists in the business as your down payment. This includes any cash that is already in the businesses bank accounts. You can also use accounts receivable. What I mean by this is that you can borrow against the money that is owed to the business. This technique is called factoring.
It’s important for me to restate that it’s not your money. I’m just describing how you get some of the money. So one of the things that you can do is use assets of the very business that you’re buying to pay for its actual purchase. And, yes, it’s true; you can do that. And get this: yes, you can count on the seller of the business for the money that you need to actually buy a business. This is one of the ways that we can buy a business with its own cash.
I like using OPM or Other People’s Money. In fact, I love using OPM to buy a business. It allows me to leverage the business better. I have none of my cash at risk and I can increase my profit. I always like to have extra cash sitting around. And let’s assume that you’re interested in buying a business and you have no cash; then this would be a perfect option for you.
To prove it to you, let me give you a few examples of people who chose the path of buying a business versus starting from scratch. In fact, I could give you story after story after story, but let me tell you about some companies that you may have heard of. By the time we get to the end of the story, you’ll realize, “Gosh, I know that brand”. And you’ll see that they all started their companies with none of their own cash. They were able to bootstrap it, meaning they were able to do it without financial help from others.
Let me give you the first. This is from a guy named Ray Kroc. Now, Ray Kroc was a 52-year-old milkshake salesman back in 1955 when he convinced brothers Mac and Dick McDonald to sell him a lonely little hamburger stand, which was located near Burbank, California. Now, Kroc didn’t have any money to speak of, so he worked out a really unique and highly leveraged no-cash-down lease arrangement. On its first day in business, Kroc’s cash register rang up $366.12. It rained that day he later explained. The following week, his daily sales doubled. Today, the registers at McDonalds ring up a bit more than that, taking in upwards of $20 billion a year.
McDonalds is both the biggest owner of commercial real estate and the biggest food service corporation in America. And Ray Kroc didn’t have to spend a penny of his own to get started. The fact that McDonalds is one of the largest owners of real estate may come as a surprise to some, but think about it: they own the best locations in every single city. They’re on all the corners because those properties are worth more. McDonalds is about systems and real estate. It’s not about burgers.
Here’s another example about a gentleman named Paul Orfalea. He was known as a C-student, just out of college when he started the now-famous Kinko’s copy stores without a penny of his own money. It began in 1971 when he convinced a commercial bank that there was a demand among college students for a convenient, multi-purpose coffee shop. The bank loaned him $5,000 to take over an 80-square-foot hamburger stand for that purpose. And Orfalea went on to build his tiny operation into a $400 million chain of nearly 800 stores throughout America.
Then there’s the famous confectioner William Wrigley Jr. in 1891, car maker Henry Ford in 1903, Reader’s Digest publishers DeWitt and Lila Wallace in 1922 â€“ all bootstrapped entrepreneurs using other people’s money to lay down a foundation for great business fortunes.
So think about it. These were some people who went out and either started and leveraged a business, got a bank loan, got a lease, were able to use the business assets to fund the business or to get terms with creditors. But they were all able to bootstrap their startup so that it required none of their own cash to get into the business.
Make a donation to charity and the book is yours!
These are some ideas that I talk about in my other book called How To Buy A Business Using Its Own Cash. Would you like a copy? If so just go to our websitehttp://misuniversity.com/bizflip and you can download a copy.
Please comment on this article and tell me what you think
Flip a Business OR Flip a House?
I wanted to share with you a technique that I have rarely shared. I also know that some people who read this will say “Mike, what the heck does this have to do with real estate”? That’s a good question. Over the years I have always looked to diversify my investments. Â I like some in real estate, some in paper, some in stocks and some in businesses. Specifically businesses that throw off hundreds of thousands of dollars a year in profit and can be sold for 7 or even 8 figure paydays.
So bear with me for a minute and let’s see if I can peak your interest.
Have you ever heard of business flipping? It’s where I find a nice business that is doing about $1 million a year in gross revenue. I then buy that business using the businesses own cash. So I literally have no money out of pocket. Once I buy the company I typically triple it’s profits in about 12 months. I then position the company so that I can sell it after 24 months. Right now you may be thinking that it sounds like a lot of work.
Let me let you in on a secret.
I not only buy the company no money down, but I get someone else to run the company and do everything that needs to be done to grow it quickly. Along the way I make a $5,000 -$20,000 a month salary out of the business while we grow it to be sold.
In essence it is just like buying a house and reselling it. You can buy a hose no money down and you can buy a business no money down. You can get rental income from a house and I can get cash flow from the business. You sell the house for a profit down the road and I sell the business down the road (typically 24-36 months). The big difference in the two scenarios is that I make 100x more “rent” and I also make 50-100 times profit when it is sold!
Let’s take a company that has annual revenue of about $1.5mm. It’s earnings are $300,000. I go in and buy the company with none of my own money. In most cases I like to keep the owner in place (you will understand why this makes your life super easy) to run the day-to-day operations as we bring in a new operations person who gets trained by the owner to take over. Then using some proven marketing strategies we grow the company quickly (typically we triple a company’s profit in 8-12 months). So if we triple the company’s profit from $300,000 to $900,000 we can actually sell to a private equity firm for a higher multiple of around 6. In other words we get to sell the company for $4.6 million dollars. If you subtract out the $300,000 we paid we get a net profit of $4.3 million dollars. Plus while we grew the company we were pulling a salary/management fee of around $5,000-$20,000 a month.
Do you like these numbers?
Just keep thinking about the part where you got paid $5,000-$20,000 a month until you sold it and made $4.3 million profit. Can you say cha-ching?
Have I gotten your attention?
Would you like to learn what I do?
Make a donation to charity and the book is yours!
I was thinking of writing more about what I do and how (and yes I am a published author on the topic and my book is called How to Buy A Business Using Its Own Cash. Â You can find it athttp://misuniversity.com/bizflip if you are interested) but I only want to do that if you and others who read this article are interested. Â Just leave me a comment on this article that you would like more information and specifically what questions you have and I will try to answer them.
Virtual Assistants To The Rescue
I am a big fan of letting other people who can do the job better than I can and at a cheaper rate do the things I don’t like to do anyway.
Think of virtual assistants this way. If you don’t have an assistant then you are the assistant.
I have had a lot of people ask me what and how I do it. So, here’s a list of the tools I use in maintaining my relationship with my guys in the Philippines, Ukraine and India. Â I have 21 Virtual Assistants that run all different aspects of my business for as little as $1.50 an hour.
Take a look and let me know what you think:
– Jingproject.com – I use jing every single day, multiple times a day.
– Audacity – audio software
– Google Talk
– Camtasia Studio
Here’s a list of some of the tools I have my guys (VA’s) use:
– jing (of course)
– Google Docs (it’s easier to just share a spreadsheet than to send an excel file back and forth)
– Camtasia Studio
– Google Docs (creata a power point slide and turn it into a video)
– MSN Loophole (the ebook)
– Super (video conversion software)
– Sony Vegas Pro
– Ebay (yes, they manage ebay stuff for me)
– Adwords (yes…)
I also found Skype useful, especially during the interview process. It provides the means to watch the “body language”. Subsequent to the hiring, it has been an invaluable aide to facilitate communications as the VA can also see my expressions. Double endorsement for Camtasia as a teaching tool.
Also, if you want a free audio coaching training call I did on using outsourcing to grow a business please visit http://outsourcingxfactor.com
Leave a comment and tell me what you think. Â Thanks.
How to Buy Judgment Liens for Big Profits
Believe it or not, there are hundreds if not thousands of dollars sitting right in front of you. And what is the worst part you don’t even realize it is there. Well, you may not be the only one. There are a lot of people just like you who are not familiar with buying judgment liens for big profits.
There are many real estate investors who speak at seminars regarding the best ways to make money with real estate, and not too many of them talk about how to get rich buying judgment liens. Well, it isn’t rocket science. You can easily get into the big money by taking advantage of this one hidden or often not used income stream.
There is money for the taking, you just have to know how to go about it. Well the first thing to understand is what a judgment lien is. Once you know that, the rest is a piece of cake. You see a judgment lien can occur in two stages. The first one is where someone decides to hire a contractor to do some work on his house. He makes a contract to do the work, agreeing to pay the contractor so much a month. The homeowner fails to live up to his agreement. The contractor goes to court and gets a judgment against the homeowner.
Despite the judgment, the homeowner is not budging. So the contractor does the next thing and goes to his lawyer to get a lien against the homeowner’s house. Now there is an official judgment lien.
In the above situation, the contractor feels the homeowner is taking too long to pay up. So the contractor agrees to sell the lien to a third-party for pennies on the dollar. He just wants to get some kind of money. In many cases the third-party would be a real estate investor or broker.
Anyway, the contractor has his money. The house goes into foreclosure or is sold or refinanced. The winning bidder/buyer has to come forward and pay the real estate investor since he has the judgment lien. He has debt in the house, and since all debts have to be cleared first, he gets paid the full value of the judgment lien. Now let’s say the full value of the judgment lien is $10,000, and let’s say he only paid the contractor $1000 for it. He just made a handsome profit of $9,000 bucks.
There is a goldmine sitting there ready for you to take it. You just have to understand that it is available. Don’t let this small niche pass you by. Take advantage of it. There are many homes out there that are under foreclosure and that have liens on them. Get your share of the pie as well.
Get your free eCourse on Making money with judgments and liens please visit:Â http://www.misuniversity.com/judgments/content/judgments.html
The Easy Way to Buying Bank Notes
The Easy Way to Buying Bank Notes
As the foreclosure crisis continues, banks and mortgage companies are finding themselves overwhelmed with many sub-performing and non-performing loans. This obviously hurts the lenders, because they have many properties on their books that are not making money for them. In other words, they are not getting paid for the loans they gave out.
Many of the sub-performing loans are considered high maintenance to the lender. They refer to these loans as high maintenance because they have to go through a lot of effort in order to get the borrower to pay the loan amount. Non-performing loans are those that the lender could not collect from. Even with all attempts at collections, they were not able to get one dime from the borrower.
So what happens, both types of loans sit there on the books, with nothing to show for it. When this happens, the lender becomes edgy and wants to unload the properties, so often times they will sell the notes to an investor for 20% – 60% of the original cost of the mortgage and get something out of it. Something is better than nothing.
Here you can step in as an investor and take the property off his hands. What you need to do is verify what the balance is on the loan. Also verify the repayment terms. You must see the actual documents. Don’t go by what the lender says. The next step is to verify with the seller of the note the interest rate and the amount that has accumulated so far. Find out what the next pay date is.
It would be good to ascertain what type of mortgage it is. Take a look at the title insurance policy. This will provide further info on what the mortgage is. Next check to see what the property taxes are and if they are current or not. Also, check to see if there are any impound escrow funds being held, as these will be transferred to you when you purchase the note.
It would be a great idea to have an appraisal done to the property in question to make sure the value has been confirmed. You want the value to be at least for today’s fair market value.
After you have done the appraisal, the next step would be to have the actual mortgage security instrument assigned to you. This will transfer all rights, title, and interest in the instrument to you. Also, have the original promissory note instrument endorsed over to you. Look at the actual mortgage security instrument and the original promissory note instrument and make sure they match.
Don’t forget to have a physical possession of the original promissory note instrument given to you. This is an important document, for it gives you the right to enforce any non-payment of debt to you, should you take over the mortgage and have the owner make monthly payments to you.
Before the deal is done, you may want to get an estoppels affidavit from the Assignor. Once you get this affidavit, you will know from a legal standpoint the actual balance and terms of the note. And finally, notify both the note payor and fire hazard insurance agent, and any other insurance company, under the title, the transfer of ownership of the note.
If you are new to purchasing bank notes, it would be a great idea to consult with your attorney so you know what you are getting into.
Get your free eCourse at http://misuniversity.com/defpaper/content/defaulted-paper.html/
Tags: bank notes, defaulted mortgage, negotiate with banks, note investing, short sale
Tax Liens – What Are they and How Do You Make Money
What is Tax Lien Investing?
As a real estate investor, you are probably looking for ways to create different forms of income streams. You may already be involved in buying and flipping homes. But there is another income stream you can look into. This is tax lien investing. Tax lien investing involves investing but in a different way.
Tax lien investing involves investing in such a way as to see a return on your money, and with very little risk involved. With tax lien investing, if you research well, you can actually come out ahead and have a good income stream to count on for as long as you want it.
Many tax lien investors get into this type of investing and do it successfully. They get a high rate of return on their invested funds. In some cases, they end up owning the property for a big discount. Then they sell the property, while earning a huge profit.
So just what is tax lien investing? First of all, what is a tax lien? A tax lien is defined as a claim that is imposed by a governmental body to liquidate a person’s property until the tax and debt owed is fully paid. In a nutshell, this means that if the homeowner fails to pay his property taxes on time, the local, city, county, or state tax office, has the legal right to put a lien on the property, until such time as the homeowner pays the back taxes owed.
If the homeowner does not comply in a certain time frame, the governmental body has the legal right to hold an auction, which is often referred to as a tax auction, in order to secure the back taxes owed, plus penalties, interest, and late fees. They do this by selling a tax lien certificate to the highest bidder. This certificate certifies that the investor paid the back taxes.
When a real estate investor, or anyone who has the funds to do it, buys those certificates at the auction, that person becomes a tax lien investor. If you are considering being a tax lien investor, you just have to learn what it involves and do a good amount of research. If you do this, you can be successful as a tax lien investor.
For more information please visit us at http://misuniversity.com
Tags: investing in tax liens, tax certificates, tax deeds, tax lien, tax lien investing, tax liens
How To Buy Bank Notes
Buying Bank Notes For Pennies
If you are a real estate investor, you know that any time a loan is taken out, it means something had to be used to secure that debt. In the case of real estate, it would be a debt instrument like bank notes, promissory notes, and so on. Basically, these notes let the lender know he will get paid each month for the cost of the loan as it is broken down over several months.
The unfortunate problem occurs when the borrower fails to make his monthly payments. When this happens, he goes into default. The lender tries to go after the borrower through various collection efforts, only to fail as well. The lender is left with one option at this time. They need to sell the negotiable debt instruments, even at a discounted price, just so he has something to cover the loan, even if it means taking a loss on some of it.
Real estate investors know that buying bank notes can be rewarding if done right. In some cases, buying bank notes can be risky, especially if the investor purchases the notes, but can’t sell them later.
The best way for you to buy a bank note, especially if you are new at it, is to ask that all contracts and documents, which are related to the loan be presented to you. At which time you will review all the documents carefully. The main thing is to look at the outstanding balance of the loan.
While looking over the documents, see if there are any clauses for interest and any other charges. You need to know this ahead of time. If you do see such payments, contact the lender and request verification of the information. You want to make sure all data is accurate.
Check to see if you are the first assignee of the bank note. If you are new to this, it simply means you are the first person to inquire about the bank note from the lender. If you are, you have nothing to worry about. However, if you are not, there may be other obligations you need to be aware of. You may just inherit any earlier assignments that were done prior to your entry into the bank note purchase scheme.
After you have checked over everything and you are assured all is verified and correct, you will want the lender to assign the debt instrument over to you. This transfers all rights and title of the property to you. Make sure the lender endorses the instrument. When the lender endorses the instrument, he is placing his signature on the documents.
Before you leave the bank or mortgage company, make sure you are in physical possession of the bank note. The reason for this is if you sell the property, or the debtor comes forward and pays off the loan, you can surrender the actual bank note. Pay any fees or amounts you and the lender have agreed to and get a receipt.
That’s basically it. If you follow through and do what is outlined in this article, you shouldn’t have any problems purchasing a bank note. If you want some more tips of defaulted paper please visit http://misuniversity.com/defpaper/content/defaulted-paper.html/ for a free eCourse on the subject.
Tags: bank notes, defaulted, negotiate with banks, note investing, reo, short sale
Make Lots of Money Using Local Search Marketing
Local Search – Google Maps – Google Places
When it comes to people who perform a service, they are looking for customers. The business may be a plumber, contractor, electrician, lawyer, or roofer. No matter what the company it is, the one thing is for sure. They are in the business of making money while performing a service.
The only concern these companies have is in finding customers. In local areas this may be easy or it may be hard. If they live in a huge city like Los Angeles, California, people may find it hard to find them unless they have a lot of exposure. Even if the city is smaller like New York, finding a plumber, contractor, electrician, or any other skilled tradesman may be hard to do unless they are widely exposed.
Well, guess what. You can help these companies get the exposure they need. How? One way is by helping people find these companies. You can set up a directory where they enter the zip code, city, or state and find a plumber in their locale they can contact. You can even do one better. Besides offering a directory listing for each major city or zip code, you can also sell advertising space on your main site, or purchase websites that list the plumbers for that local city and place advertising on it. And what is great about it, is you can charge the merchant a fee to have their location listed in your directory. You are not only getting money from the merchant per month, but you can also charge a per month fee for advertising.
For example, letâ€™s say you set up a website for plumbers that are in zip code 10016. You can contact all the major plumbers in that area and strike a deal with them, letting them know that by placing a listing in your directory on your site, they will get a lot of exposure in Google Local Search, and will get a lot of business as well.
Another way this benefits you is that you can sell advertising space on your website. This ad can replace the listing if the merchant rather go that route. Whatever method is used, you still make a lot of money, considering you are dealing with a lot of merchants across the country, not just in one local area.
Plus, think how much you can make from selling ad space as well. You can really make a ton of money doing this. All you need to do is establish a website or two and place listings on them. A company that does this for you and pays you when you find others who want the service is athttp://www.iwantlocalnow.com Happy hunting.
Tags: google maps, google places, local search, marketing, seo
Insider Secrets To Making Money With Judgments
Insider Secrets to Making Money with Judgment Liens
If you are looking for multiple income streams and invest in real estate, you may want to get involved in judgment liens. There is money to be made with it, once you know how it is done. A judgment lien comes in two parts. First there is the judgment, followed by the lien. Once the judgment lien has been put in place, you as a real estate investor can jump right in and get involved.
But did you also know you can purchase judgment liens for pennies on the dollar and make a ton of cash for doing so? Yes, and you can do it with a minimal amount of risk. Buying judgment liens are an excellent way to make a lot of money. The reason is you are actually purchasing them at a fraction of what they are worth.
When you purchase judgment liens you are in fact making a fast profit by buying it very cheaply. You simply cash it in for its full value and the property gets sold at foreclosure auction or when non-foreclosure residential or commercial property is sold. Also, if you purchased a judgment lien, and you are actually bidding on a property at public auction, you can bid higher knowing you have a lien to use as part of the settlement.
Even if you were outbid, you still end up with cash profit because you cash in the lien at full value. How is this possible? Whoever is the successful bidder, that bidder has to pay off all debts against the property first. Since you hold a judgment lien, you own some of the debt to the property. The bidder has to pay you first. So you sell him the lien and you get a nice profit out of it.
What this does for you is that you really didn’t spend the full amount that you bid on the property. You will be getting some of that money back by way of the judgment lien you sold. If you like the idea of making a ton of money and you are a real estate investor, or even someone going into real estate for the first time, you will love the idea of developing multiple streams of income using real estate as the basis for your income.
Don’t overlook judgment liens as they are a good source of great income potential. You just have to know what you are doing and where to look for deals. The rest is rather easy. As someone involved in real estate, it would be to your advantage to seek out judgment liens and it will make you a very rich man/woman in little time.