Real Estate Investment System

by Charles J. Givens

Summary by Luke Setzer

Note: This list compiles and summarizes the real estate strategies described by Charles J. Givens in his set of books entitled Real Estate Investment System. The complete Real Estate Investment System is sold with accompanying training videos and a host of other benefits by International Administrative Services Financial (IAS Financial), formerly known as The Charles J. Givens Organization. Call them in the United States at 407-786-2120 for information on how to become a member.

This list is posted by me, Luke Setzer, as a courtesy to those who have an interest in personal finance or Charles J. Givens. I have been a satisfied member of his organization for several years. This web page in no way earns me commissions, nor is it a web page "officially posted" by his organization. It is set up as a quick, easy-to-print reference for those who would like to apply his strategies. However, you must read his books and understand the strategies before attempting to apply them.

REAL PROFITS IN REAL ESTATE
1. Use five step method for generating maximum real estate profits
2. Learn the mathematics of real estate profits
3. Increase your real estate profits with the magic of leverage
4. Hold 3 months mtg pmts in cash, credit for each rental property
5. Use no-fee credit card to cover negative cash flow
6. Use an equity partner to cover negative cash flow on rental properties
7. Live free by buying instead of renting
8. Invest in 1-4 family residential properties; avoid land, commercial real estate
9. Choose a 3 or 4 bedroom property
10. Consider propertiess in reasonably good condition, not handy man specials
11. Choose propertiess under 20 years old, unless completely remodeled
12. Match price range of property to intended use
13. Buy properties on paved streets
14. Locate properties in appreciating areas
15. Choose residential properties with 1 to 4 units
16. Look at only the lowest priced properties in a neighborhood
17. Identify ideal properties in investment pockets
18. In expensive metropolitan area, use concentric circle method to find affordable property
19. Find real estate propserties w/ ads, drive-by's, Realtors, foreclosure lists
20. Decide if buying through brokers, directly from sellers is best for you
21. Use Realtor's MLS Book to quickly locate desirable properties
22. Use MLS computer to sort props. by price, terms, number bedrooms, etc.
23. When buying props. through Realtors, use the Buyer's Broker Agreement
24. Buy real estate directly from FSBOs
25. Use FSBO Contact Questionnaire to gather, organize data on potential home purchase
26. Do Market Value Analysis Form to determine actual worth of a property
27. Use Rental Analysis Form to determine the maximum rent you can get
28. Use the 10-10-10 formula to buy a property right
29. Don't confuse listing price for offering or purchase price
30. Write an effective Offer to Purchase
31. In Offer to Purchase ask for more personal property than expect to receive
32. Limit the time for acceptance on your offer to no more than 36 hours
33. Set the closing date as far into the future as possible
34. Under special clauses in purchase agreement, ask for it all, settle for less
35. Always go with your agent or broker when he or she is making the offer
36. Make an offer on every property you inspect
37. Use as little of your own money as possible when buying real estate
38. When buying a property, make your own terms
39. Always negotiate for lower interest rates and payments
40. Use the building block approach to successful real estate financing
41. Avoid looking at properties that require new or assumption of conventional mortgage
42. Use new FHA or VA mortgage to finance your own new or pre-owned home
43. Move into property to satisfy moral, legal requirements of new FHA, VA loan
44. Find properties with existing FHA or VA mortgages
45. Do not assume mortgage if interest rate is too high, balance too low
46. Structure offer with owner first mortgage for seller who needs income
47. If you qualify for a state or county first-time-buyer mortgage, get one
48. When buying a property, check for private mortgage assumability
49. Use a second mortgage to reduce cash down payment required for purchase
50. Make a list of second mortgage companies in your area with loan-to-value (LTV) ratios
51. Use "subject to" clause to circumvent non-assumability of second mortgage
52. If you have poor credit, use owner's equity loan to buy property
53. Be sure equity loan does not contain automatic acceleration clause
54. Use single payment mortgage (SPM) to cut payments 20%
55. Choose mortgage payoff option w/ lowest payments, quickest payoff, easiest
56. When creating single payment mortgage, make mortgage fully assumable, no penalty
57. Make your first SPM offer for seven years at 8% interest
58. Never write an SPM for less than 5 years or more than 10%
59. Use the mortgage payoff options chart as reference guide when making offers
60. Use Triple Punch Stratgey to buy your first home or rental property
61. To lower payments using Triple Punch Strategy, decrease second, increase third
62. Use Triple Puch Strategy w/ 10% cash to reduce number of offers needed
63. Use cash-to-mortgage strategy to buy newer properties w/ little or no appreciation
64. Use the cash to mortgage strategy to buy nearly new properties without credit
65. Use no-mortgage, no-cash strategy, buy properties w/ no mortgage, your own cash, credit
66. Use no-mortgage, no-cash strategy to buy properties w/ no, low, non-assumable mortgages
67. Use demand note strategy to recover cash down payment after closing
68. Learn to identify no qualifying FHA mortgages
69. Use second mortgage company questionnaire to find best rates, terms
70. Use "one to eight" rule to convert points to interest rate % to compare loans
71. Use "selling seller" chart for reasons that convince seller to hold mortgage
72. Use real estate options as no-credit, low-cash method of mass control
73. Add powerful clauses to your option agreement that put you in control
74. Request by contract that seller furnish title insurance to property
75. Record your option contract at the courthouse
76. Have your option contract notarized
77. Refinance to 15 years if interest rate is lower and can keep same payment
78. Use new FNMA rules to save money when refinancing
HASSLE FREE MANAGEMENT
1. Strategies not listed in compact format
CASH FROM BANKS
1. Positioning Your Credit Standing
  1. Review your and spouse's past credit history reports every 6-12 months
  2. Eliminate rejection of purchase contract by avoiding 3 major areas of bank disqualification
  3. Calculate approximate debt-to-income ratio before filling out loan applications
  4. Project your future credit rating by learning which bills to pay first
  5. Remove or explain injurious credit report items
  6. Avoid the so-called "credit repair" scams
  7. If you are disciplined, experienced investor, accumulate $50,000 in credit cards
  8. When you are solicited for a "pre-approved" credit limit, take it
  9. Each year, request a raise in your credit limit
  10. Use high interest, long grace cards for daily use; low interest cards for investing
  11. Don't run after bogus ads offering solutions to credit problems
2. Obtaining Institutional Financing
  1. Ask two key questions before applying for a loan
  2. Use the 3 C's to reduce lender's risk, increase chances to borrow money
  3. Before borrowing or lending money, calculate 2 ratios for repayment, safety
  4. Prepare a net worth and cash flow statement before approaching banker
  5. Create a step-by-step plan for obtaining institutional financing
  6. Calculate maximum loan for which you can qualify using this analysis
  7. Use the bank loan affordability index to maximize your borrowing limits
  8. Use a co-signer; be a co-signer to increase bank's lending limitations
  9. Use blanket mortgages to increase your borrowing power
  10. Structure any blanket loan mortgages to release collateral
3. Finding Bankers with Cash to Lend
  1. Learn to differentiate among types of third party lenders and monies
  2. Approach savings and loans for long-term real estate mortgages
  3. Approach savings banks as you would savings and loans
  4. Obtain business loans and short-term credit from commercial banks
  5. Use mortgage brokers as itermediary between you and lender
  6. Use mortgage bankers to borrow long-term mortgage money
  7. Use your knowledge to know when, whether you should refinance at bank
  8. Develop system for finance using lines of credit, bridges, long-term
  9. Establish a line of credit with a commercial bank first
  10. Establish yourself as a professional investor in banker's eyes
  11. Obtain short-term bridge loan to provide quick funds during wait
  12. Obtain long-term "take-out commitments" from savings and loans
4. The Loan Documentation Process
  1. Establish a strong employment record for the last two years
  2. Always pay rent in a timely manner and without complaining
  3. Gather complete information on real estate for verification
  4. Keep installment loans current and pay on time
  5. Correctly report cash, checking, and savings account information
  6. Gather complete data on property to be purchased or refinanced
  7. Answer truthfully the "big 6" questions on every loan application
  8. Avoid all documentaton requirements, obtain a "no doc" loan using 25-30% down payment
CASH PROFITS IN FORECLOSURES
1. Overview
  1. Focus on forced sales for greatest profit opportunities
  2. Buy now! Real estate will continue to appreciate
  3. See yourself as problem solver, forced sale owner as needing your help
  4. Differentiate between distressed properties and distressed owners
  5. Avoid competition
2. Planning Your Strategy
  1. Focus on your objective
  2. Use one of 12 techniques to profit on every bargain property you find
  3. Zero in on right property using market segmentation, action plan approach
3. Retail "Bargain Purchase" Strategies
  1. Differentiate between retail, wholesale profit opportunities, techniques
  2. Buy bargain properties at deep discounts from motivated sellers
  3. Rate potential homes for purchase and resale value
  4. Make it big on little deals; focus initially on residential rental properties
  5. Avoid commercial real estate when starting out as an active investor
  6. Avoid land when starting out in real estate investing
  7. Use the concentric circles approach to select right-priced properties
  8. Identify investment pockets, buy least expensive house in good neighborhood
  9. Don't confuse purchase price with offering price or fair market value
  10. Locate and negotiate yourself
  11. If you use a Realtor, screen carefully
  12. Beware of self-professed buyer's brokers--most are Realtors only
  13. Negotiate Realtors commissions
  14. Don't become licensed
  15. Locate in your community four or five professional foreclosure specialists
4. Mastering the Ad Approach
  1. Use the secrets of reading classified ads to find the bargains
  2. Study these sample ads to learn how to weed out the bad ones
  3. Search for good deals in classifieds under "capital available", etc.
  4. Place your own ad and let people find and come to you
  5. Use the telephone, not your car, to make offers on properties
  6. Use professional house inspector the first time to learn what's involved
5. Forced Sale Property Acquisition Strategies
  1. Buy direct from owner before auction if house has 20+% equity
  2. Buy at auction if debt exceeds 80% of home value
  3. Buy from bank after auction if bid price exceeds 80% of resale value
  4. Maintain an inventory of 25 active cases using various sources
  5. Use our 10-point plan for buying pre-foreclosures
  6. Find property by zeroing in on principal wholesale sources
  7. Differentiate between Mortgage vs. Deed of Trust states
  8. Learn basic foreclosure sequence to anticipate owner's actions and remedies
  9. Understand the priority of loans, liens, and judgments
  10. Identify your county's local foreclosure procedure
  11. Find the owners by letting them find you
  12. Conduct a letter campaign
  13. You must track down all "missing" owners to whom you sent a letter
  14. In high profit potential deals, use professional tracing to locate homeowners
  15. On forced sale situations, do not negotiate over phone
  16. Develop many different "programs" to help distressed owners
6. The Mathematics of Foreclosure
  1. Research public records
  2. Determine the fair market value using a "30-day quick sale" value
  3. Establish your maximum purchase price using mathematics of foreclosure
  4. Beware of due-on-sale clauses
  5. Negotiate with the owner by creating an "offer worksheet"
  6. Brainstorm your purchase alternatives
7. Writing the Contract
  1. Write up the contract; tailor it to fit your needs
  2. Add the words "and/or assigns"
  3. Limit deposits to $10 or use 30/60 day IOUs
  4. Ask all sellers to whom you talk for legal address
  5. Buy equity, not fair market value
  6. Reword the "financing" clauses
  7. Make owner carry back notes fully assumable
  8. Restate your unqualified right to assign contract to another buyer
  9. Avoid payment of loan fees and points
  10. Delay settlement 60-90+ days to permit time for flipping contract
  11. Use an addendum to turn pro-seller contracts into pro-buyer contracts
  12. Use special financing contingency clauses to gain maximum flexibility over eventual property disposition
8. Financing the Deal
  1. Clearly define your profit objectives
  2. Use the 10 key creative financing building blocks
  3. Structure offers of less than $5000 to the seller as all-cash offers
  4. In forced sales, always assume you can assume existing bank financing
  5. Avoid new FHA loan origination procedures
  6. Assume non-qualifying FHA loans originated prior to 1987, VA prior to 1988
  7. Use seller take-backs to finance seller equity
  8. Offer the seller a zero interest loan to lower your purchase price
  9. Lower your payments with a simple interest/reverse amortization mortgage
  10. Use single payment mortgages (balloons) that won't mature for 5-7 years
  11. Obtain 90-95% financing by substituting collateral
  12. Use fully amortizing, non-qualifying seller take-back loans to finance deals
9. Financing the Deal with Options
  1. Use options to minimize your cash outlay
  2. Obtain the effect of an option without an option
  3. Use lease options on properties you intend to hold and manage
  4. Turn tenants into "owners" with options
  5. Sell houses you don't own with sandwich lease options
  6. Buy a house you can't afford with a shared appreciation mortgage (SAM)
  7. Structure the option contract to provide maximum flexibility
10. Flips (Quick Resales) and Partners
  1. Flip contracts for fast cash profits
  2. Nine steps to profiting from flipping your contract
  3. Maximize your cash profits by assigning contracts correctly
  4. Use double closings to avoid disclosure of your profit to the new buyer
  5. Differentiate between different types of buyers of your contracts
  6. Line up buyers, investors, partners through personal contracts and ads
  7. Match properties to buyer's preferences
  8. Get your prospective purchasers preapproved
  9. Determine the cash requirements from your new buyer
  10. Flip multiple properties, create positive cash flow, offset negative cash flow
  11. Use investors, partners, and joint ventures
  12. Solve financial problems with financial partners
  13. Solve time problems with working partners
  14. Joint ventures with a tenant: equity sharing
  15. Structure your agreement using a "contract for deed"
  16. Buy your own home with a joint venture partner
  17. Joint venture with your employees
  18. Joint venture with the seller as your partner
  19. Obtain a specific power of attorney to act on a partner's behalf
  20. Assign your lease option contract for quick cash profits
11. Auctions and REOs Alternative Acquisition Strategies
  1. Attend six auctions before making a bid
  2. Follow 10 steps to buying at auction
  3. Qualify for a lower down payment with private mortgage insurance (PMI)
  4. Don't confuse PMI with mortgage life insurance
  5. Subtract out lender's PMI reimbursement in making your offer for Real Estate Owned (REOs)
  6. Zero in on PMI mortgage loans vs. governmentally insured loans
  7. Help your bank comply with federal regulations; make them a written offer
  8. Locate REOs from auctions
  9. Contact lenders directly to buy REOs before made available to public
  10. Negotiate with lenders and Realtors
  11. Determine the banker's flexibility over the phone
  12. Never let the foreclosure owner stay in the property

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