Category Archives: Real Estate

What is a Real Estate Agent and why do you need one?

As many of you know I have been spending the last few weeks becoming a real estate agent.  Real Estate is very complex and takes a long time to understand all of the different wareal estate flow chart from listing to soldys to own it, work on it, finance it and transfer it.  There are also a ton of government rules and regulations regarding real estate, and then there are industry standards that must be followed so that we all can work together and speak the same language.

So really it is a system, with its own jargon, rules, laws, institutions and much more.  It is really a business ecosystem and it works much the same way that computer ecosystems work in.  You simply need to follow the rules and the format, copy and paste the code, and you have a contract.  There are about 70 different contracts and 100’s of forms to amend or support these contracts. You can think of it much like WordPress and how you can snap in a plugin that you need.  Working a real estate deal is much like this.  After going to all of these classes I now see who the whole system works and it is very elegant and complete.  It is mostly the same across the nation but each state has a few minor tweaks.

real estate agentSo I always resented the cost of real estate agents, heck that is one of the main reasons I want to be one, was to reduce them on my actions.  I have always used an agent for things I have done, even though there was a cost. Now that I am an agent I am glad I did, we have heard 100’s of stories of the pitfalls of real estate.  There are so many ways to mess up, and when you mess up it costs people money and if you are at fault they will make you pay.  The system is so complex, and there are so many rules that it is almost impossible to not mess something up if you don’t get expert help, and often even with expert help things go wrong.

On top of taking care of the system, and making it all smooth for you a Real Estate agent has access to the databases of listed houses. Of course they created this gated database just for this reason, that you need to come to them to access it.  Unless you are an expert, in the US today you really need an agent to make your transaction work without a headache.  This is the advantage that some investors have, and why they can consistently make money, there are too many people who still have problems, and there is a lot of opinions of what something is worth, it is not a totally efficient market.  A good agent can help you find the best deals, and stay away from the overpriced inventory.  There are many good deals to be had, and just as many overpriced duds on the market.

So next time you need to buy or sell a house make sure you use an agent.  And if you happen to live in Arizona give me a call, I will either help you myself or refer you to someone who can.

My planned speech on HB2677

On Wednesday the 16th I plan to go to the capital and speak about HB2677, here is what I plan to say.  If you read this and can think of something major to change please leave a comment.   This is my first time trying to change a law.  At the end I suggest a change to the bill that would actually result in the intent being accomplished, with almost no negative side effects and a few positive ones.  Here is what I plan to say.

Hello. I am Jason Dragon, I am an elected PC and State Committeeman in the Republican party. I am here to talk to you today about HB2677.

The intent of this bill is to find a way to tax people who are here illegally and use the money to build the border fence, but it fails miserably in both of these goals. I think that we do need to protect our border, and I am for building a fence but I am against this bill.

The first, and main reason that it fails is that it will tax everyone who sends money using a wire transfer service to any nation for any reason. The bill says that this is refundable, but it is only to the extent of a tax obligation. On top of the sender will need to wait up to a year so that they can file their taxes, and then they will need to keep records of these sends, and if needed will likely be required to provide these to the DOR. The majority of citizens in Arizona do not have an Arizona tax obligation due to many deductions or other credits and not enough income; all of these people will not receive a refund. In addition many other people and businesses may send money from Arizona who do not reside here, and thus will not be able to receive a tax credit.

Illegals don’t use these services. Existing state laws, designed to stop money laundering and criminal activity, already have strict ID requirements to send money using these services. They can not pass these ID requirements if they are here illegally unless they have very professionally forged documents, so the vast majority of illegal immigrants don’t send using the services this bill intends to tax. They often will hand the money a friend who can send.

As someone who has lived overseas, operated a business overseas and sends money overseas often I know that there are much easier and cheaper ways to send money than using wire transfers that this bill simply does not cover. Illegal’s and legal’s often also use these methods to send money. The most common way would be to open a bank account in the US and receive a debit card, or buy a PrePaid credit card and simply mail that card to your receiver in the foreign nation. Once they have it you simply deposit money into that account here in the US and the person in the other nation goes to an ATM and withdraws it. They also could choose to use the card at any major merchant for purchases. Because these are withdraws and not wire transfers they are not taxed. This does not even touch on the ability of people to simply mail a check or cash to a loved one overseas. Before this law even goes into effect I would bet that some smart company located in another state will offer a service where someone can send money to them and they would resend it overseas, and they only need to charge a fee slightly less than the tax charged by Arizona to get a lot of business.

The government is going to severely hamper these money transferring businesses, while other methods will prosper. The government should not be in the business of picking winners and losers.

This bill would also make our state even more business unfriendly. We would pass the burden of collecting and tracking this tax onto local businesses. We also would harm businesses that import, have overseas offices or overseas workers, taxing the money that they pay. I for one have freelance web programmers in a handful of nations in Asia, this would cost me more to pay them. I also send money every month supporting kids in Christian schools in Asia, this would cost me more to do that. I have already been contacted by missionaries who receive support from Arizona who are shocked by this bill and hope that it will not pass. I have figured that this bill would cost me about $800 per year if it passes, and the rate of 5%, as has been published in the media, would be charged.

And that leads me to the next major problem in this bill, the fact that the actual rate of the tax is not set, we should not leave ANY tax rate up to the discretion of some unelected director to decide. Where is the oversight?

Because of the complexity of international money and other existing laws this simply is not a workable bill, and it will never generate the funds needed to build a complete fence.

I don’t like to speak unless I have a solution to the problem. I have an idea of a way to amend this law to make it actually achieve the advertised goal without creating a new tax and by only targeting illegal aliens. Basically you would strike this text and replace it with text that would create a law enforcement activity, stating that during the course of law enforcement activity if someone other than a victim was discovered to be an illegal alien they would have their real and personal property confiscated. This property would then be auctioned off to generate funds to build the fence. Some protection would need to be put in there to make sure that property of a business or citizen is not swept up. You could even expand it to include people who apply for social services but are found to be here illegally. Then once the fence is built and a maintenance fund established, extra funds would go to help pay for education. Such a bill would likely be about as popular as SB1070 was. It would also function as a great deterrent to an illegal committing a crime or asking for social services in Arizona.

Thank you for your time.

The secrets of how to dispute things on your credit report.

The quickest way to improve your credit is to work to remove things on your credit report that are negative.  This is not as hard as people think.  Before going forward, remember that is against the law to lie in any of the forms that you will sending to the credit reporting agencies.  But also remember that the law also says that an item in your report needs to be 100% correct for it to remain in your report; so even one small mistake in data is ground for deletion.  The problem is that the credit reporting industry make more money from someone who has poor credit, because they buy more reports, they try to fix their credit by many very expensive means and they try more often to get credit letting the credit companies to make money when they sell your reports to the companies you apply with.  They have many reasons to try to keep your report as negative as they can.

But the law is on your side.  Now here is the secret that I have seen presented at least twice at really high priced seminars presented by very successful multi-millionaires.  The law states that the info on your credit report MUST be 100% correct.  But there is a conflicting privacy law that forces them to redact most of your account information.  This turns account number 123456789 into xxxxxx789.  Because of the conflict of these two laws it has created a loophole that millionaires walk through.  It allows them to dispute that the information is not 100% correct and MUST be deleted.

They simply send a letter to the credit agency that says something like this.  “Hello my name is John Doe, and I am writing to clarify an item on my credit report.  My SSN is 111-11-1111.  You have listed an account with account number xxxxxx789.  This account number does not match the number that is on my statements from MegaBux Bank.  Because the information about this account is not accurate I ask that you remove it ASAP as the law requires.”    The credit agencies hate it when they receive a letter like this because they know that there is no way they can keep the item on your report.  The MAJOR problem with this tactic is that it totally removes the trade line, and many people have poor credit more because of a lack of trade lines than from negative information.  If you have a 6xx score and you have less than 12 trade lines, it would actually hurt you more to remove an item with a few 30 day late payment than it would to keep it on your report.   But if you are in the 7xx range and have 20 trade lines it will likely be much better to remove the trade line.  (On a side note, the reason most millionaires use this trick is not to remove negative items, they use it to remove mortgages on investment real estate, because many banks have a limit on how many mortgages you can have at one time…doing this makes them not show up on the credit report.  They still must declare them all in the application but for some reason banks look at the credit report more than the loan application and give the credit anyway.)

If you want to keep the trade line you often can change it to make it less negative by disputing minor issues with it.  What follows is a set of instructions on how to dispute your credit the way most people do it.  Start with this first, you may get 50% or more of your negative items changed to positive, which is much better than deleting them.

With this economy you need all the help you can get to fix the last few years, and I truly hope that this blog entry helped someone.  If this helps you please comment below.

Start the dispute process

You have every right to dispute inaccuracies in your credit report under the Fair Credit Reporting Act (FCRA), and the credit bureaus and your creditors are obligated to correct inaccurate information in a timely manner.

How to file a dispute

  1. Contact the creditor with the incorrect information
    • We’ve created a sample letter that you can use to start the process
    • Some creditors will correct minor errors over the phone, so we recommend that you contact the creditor first
    • Your list of creditors can be found in the Creditor Contact section of your credit report
  2. Contact the credit bureaus
    • Disputes may be sent to the credit reporting agencies online or in a letter:
    • Experian – Disputes are not accepted by telephone, but you may file a dispute online(link to Experian online form)
    • Equifax – Disputes are accepted online (link to EFX dispute page), or you use one of our sample letters and mail your dispute
    • Trans Union – Disputes are accepted online (link to TU dispute page), or use one of our sample letters and mail your dispute
    • Once the credit reporting agency receives your request, it has 30 days to investigate and provide a response to you in writing. During its investigation, the credit reporting agency will contact the institution that provided the disputed information to seek verification of its accuracy. If the disputed information cannot be verified, it must be removed from your credit report or updated per your request. Information that is verified as accurate may remain in your credit files for as long as allowed by law.
    • You may file more than one dispute at a time. You may also file disputes with more than one credit reporting agency. Each dispute will be investigated separately, but may be processed simultaneously.
  3. Follow up
    • If you have not received a response to your request after 30 days, write a letter to the credit reporting agency indicating that you have not been notified of the results.
    • We’ve created a sample letter that you can customize as necessary to explain your case. Print, sign and mail the letter to the appropriate credit reporting agency, keeping a copy for your records.
  4. Don’t give up
    • If upon receiving the results of the investigation you are still not satisfied, you may request information regarding the person or institution that supplied the information.
    • We’ve created a sample letter that you can customize to your needs and include any additional information necessary to explain your case. Print, sign and mail the letter to the appropriate address, keeping a copy for your records.
    • You may also wish to add a 100-word consumer statement to your credit file explaining the reason for the disputed information so potential creditors have the total picture.
  5. If you do not recognize information on your credit report and suspect that you may be a victim of identity theft, in addition to filing a dispute, we recommend you file an Identity Theft claim.

It is the cashflow stupid.

My friend Adrian posted a very good blog entry about cash flow.  His blog is one that everyone who is serious about being wealthy should subscribe to.  I made and answer to him that point out how stupid so many investors are.  I wanted to share it with all of my readers also so here it is.

Read his entry HERE.

Here is what I replied with….

I have seem this time and again in commercial real estate.  People are willing to leave a strip mall mostly empty, they are unwilling to do short term leases, or even to discount the leases.  So what happens, there are tons of strip malls, and office buildings here in Arizona that are empty.  They have this mindset that if they get a nice long lease that it will be better than the money now.  This may have been the case in the past but to me it just seems so stupid.

An example is a building I was thinking of renting back in 2002.  It was perfect for a business idea I had, I had the backers and was ready to go, I just wanted 6 months rent free and then to rent it for $12k per month, going up 5% per year.  They would not budge on their price of $18k.  It was too much so I passed.  Well now it is 2009 and it is STILL empty, no one has EVER rented it.

Another example is a strip mall that I know of.  It is very poorly designed but has over 400k square foot in total.  Less than 50k square foot is rented out.  A guy I know rented a 8k square foot space, and put a Filipino restaurant and grocery there.  Soon the space next door was rented by another Filipino to build a karaoke club for Filipinos.  It was all located in a part of the strip mall that was totally empty.  The grocery store invested everything they had, over 300k into building out their store and stocking it.  Then the economy hit them, and they could not pay the rent.  On the 15th day of the month the landlord locked them out, charged a penalty and the guy could not come up with the 20k needed, over 50k in food spoiled and they guy was promptly out of business, and the guy next door also moved out  The place is now empty.  So what did the owner of the property have to loose to give the guy some time to catch up, maybe some discounted rent.  He would surely not be making less than he is making right now, he has over 300,000 sq foot of other places to rent out, most of which are better.  It was dumb and short sighted, but that seems to be the majority of commercial landlords, especially the distant ones who never even see the property.

I think of tenants as clients.  They pay you and you should keep them happy.  You have only limited supply so when you are full you can be more selective and follow the rules to the letter, but when no one is buying your product you need to sell at any price to make money, they still like to keep rent high, and if it not rented then they take the tax break at the higher level.  That is illogical to me, but maybe that is why I am not as wealthy as they are.  Or maybe they are just huge REITs playing the game with other peoples money and they don’t really care that much.

Share this Post