How ATM Machines Work – Operating an ATM Business

Having been in the ATM machine business for nearly two decades I’ve been able to unlock the mystery behind how ATM Machines Work as a Business. There is no magic potion, but there are several pit falls and traps that can be avoided if you work with an experienced ATM company. It’s very similar to a vending business, the main differences are this vending machine dispenses cash and deals with the banking regulations. The only inventory is twenty dollar bills.

The ATM Business is straight forward. Let’s look at all the parts.

  • You have a piece of hardware (The ATM Machine).
  • You need a good location (retail store, parking lot, restaurant, condo complex, office building, hospital, medical building, airport, etc).
  • You need to fill the ATM with Cash (yourself, the location manger or an armored car company).
  • You need a reputable ATM Company (they have contracts with an ATM processor, sponsoring bank, move your money between banks, provide statements and online reporting) They should also provide technical support, but some don’t.
  • You need your own bank account, where funds are deposited if you load cash.
  • The income comes from the surcharge (fee customers pay to use the ATM) a portion of the interchange (the fee banks have to pay the network and processor) and then they deduct some network fees. This works out to a little bit more than the surcharge (we’ll explain later or you can jump to the bottom).

Many ATM companies try to make it seem complicated but if you’ve done it long enough it should be a simplified process. ATM companies that claim to sell you locations, or find you ATM spots and get you to invest in them are most likely scams.

Personally if I found a good location to put an ATM into why would I offer it to someone else if I could put my own ATM in there and make a profit. There are a few reasons, maybe I’m out-of-state and need someone locally, okay, that’s a good reason. But if I’m local to the place I would never get rid of a good spot unless I was exiting the business or selling a route.

Knowing the rules, getting all the facts and crunching all the numbers can ensure that if you invest in ATM that you’ll make a wise investment and good business decision. Like any business you want to know how much you need to invest and what the return is. This is the ROI. How long is it going to take and is the income better than other known instruments. Is the ROI better than keeping the cash in the bank in a regular savings account. Well, these days just about anything pays better than a savings account. Just like real estate, it’s all about location, location, location.

If you select the wrong ATM Company to help you navigate the waters the costs can mount up effecting your ROI.

The ATM Machine. Obviously a key component to your business. Buying the wrong machine, an outdated machine (not in compliance), or not getting a machine from one of the top three manufacturers (Triton, Tranax, Hyosung) can be a nightmare. Free standing, through-the-wall or kiosk, what is the best for your needs?

The Location: Another key component to make sure you’re successful it to verify how many people visit the location you select. Do they accept credit cards? Are they an all cash business? What are the other important questions. An experienced ATM company can help you answer all these questions and more to help you determine if the location could have good potential.

Who loads cash: The ATM owner and the cash loader typically share the lions portion of the ATM revenue. So if you plan to own the ATM and load it yourself, you will obviously keep most of the revenue. Other than the cost of the space (you may rent it, sign a placement agreement for a portion of the income, etc). There are many types of deals you can make. Armored car service is only a viable option if the ATM does really well (over 500 transactions monthly). Armored car service is expensive and typically cost prohibitive for retail ATM machines.

A reputible ATM company will help you with all the above information but more importantly they should help you with the process of ordering your ATM, arranging for delivery, installation, training and programming to ensure the cash transactions are reliable and secure.

A good ATM company should also provide 24/7 toll-free technical support. We see many ATM companies that don’t offer this. However they appear to be a good deal because they offer an unusually high rebate. But what good is a high rebate if your machine has an error code or problem or you have an issue you can’t get resolved because you don’t have anyone to call to help you. Or when you do call, no one ever answers the phone. The extra few pennies you can earn from some of these ATM companies can cost you hundreds of dollars when it comes to needing service. Don’t be penny wise and pound foolish.

How do you make Money with ATM Machines?

Your ATM charges the card holder a fee (referred to as a surcharge or convenience fee) you, the ATM owner, set this fee. Depending on the ATM Company you sign up with you receive most or all of this fee plus a portion of the interchange. Banks pay a small fee to the ATM networks for connecting the cardholder to the bank, this is the interchange.

There are many variations and deals similar to credit card processing. An honest ATM Company should give you 100% of the surcharge and depending on the number of transactions your ATM does or the size of your ATM portfolio (if you have several machines), they will give you up to $0.15 of the interchange.

To manage your ATM’s you should make sure the ATM company offers 365 day toll-free tech support 24/7. They should also provide you monthly statements and access to monitor your ATM machine online at no charge. Other benefits of a reputable ATM company include no monthly minimums, no monthly fees, and no statement fees. Small, inexperienced ATM companies that can’t offer economies of scale may charge for services whereas others do not. Caviate Emptor, let the buyer beware!

Want to know more about the ATM business? Check out the links in the authors resource box below.



Original article by Noah Wieder

How To Get Rid of A Bad Google Review

Almost all business owners understand that providing the very best customer service possible for their customers is essential to running a viable business. However it is almost impossible to run a business without occasionally having a dissatisfied customer. It used to be said that for every dissatisfied customer you had they would tell 15 other people.

Well the rules have changed. The internet now gives a dissatisfied voice a range of thousands with an almost endless time limit to express themselves. All anyone has to do is give a business a bad review on Google Places, or Yelp, or Facebook or one of the hundreds if not thousands of the directory sites, and that one incident can make your business look bad sending customers running from your business.

I recently was working with a client who had exactly this situation. A rare dissatisfied customer had posted a negative review on his Google Places Page. He knew of the situation so he knew it was real and not a competitor’s dirty trick. What most business owners do not realize is that it is virtually impossible to get a review removed unless you can prove to Google that some one else really is playing dirty pool. But this review was real and even though the account of events (as told by the customer) was not exactly in line with what my client told me.

As a business owner when you get a bad review your initial reaction is to want to set the record straight. But as we talked I was able to explain to my client that there is a better way to handle it. You see Google gives the business owner a rebuttal space right below the review. How you handle that rebuttal can mean the difference between getting more customers and not.

It might mean eating a drumstick of crow, but it is worth it to make sure the bad review does not do the damage the author had in mind.

What we did was to acknowledge that a bad situation did occur. In our case the complaint was about a late delivery. Even though the customer had actually given the wrong address over the phone, we did not say that. What we said was that we strive to make sure we get accurate information, but in this case something had gone wrong. We apologized to the customer for that.

Then we took the key step to correcting this situation. We offered a significant discount to the customer if they would come back in and give us another chance to prove our capabilities.

To my knowledge that customer never took my client up on his offer. But what we accomplished with this type of rebuttal was a chance to tell other potential clients these things about us.

  • We care enough to answer the complaint.
  • We are responsive to our customers.
  • We take responsibility for our actions (even though anyone reading between the lines would recognize the customer had some culpability in the delay).
  • If things go bad we try to make them right.
  • We took the high road in our response.

That is one way to deal with a bad review, but here is another way.

Get your satisfied customers to go in and crowd out the bad review. For Google places just a couple of long winded reviews will push the bad review beneath the fold (off the page).

Finally another way to deal with them is to make it right with the customer. Do whatever it takes to get them to turn that bad review into a good one. But see actually that is the thing. You can’t go in and revise your reviews. Once they are there…they are there. What you can do is to go in and give an updated review. Once you have a satisfied customer that is what you want to ask them to do; to give a revised version of their experience with your company with a new review.

If you are going to be in business these days you really have to keep an eye on your internet reputation. You can’t turn a blind eye, because potential customers are looking for you and finding you. It does not take much to have them move on to your competition. How you deal with bad reviews can be killer important to your bottom line.



Original article by Bob Wadley

The Power of "Non-Lien-Able Debt" to a Real Estate Investor

Isn’t it great that there is so many ways to get funding for Real Estate Investing projects today? That’s important since Sellers kind of want to get paid for their houses when they sell them… Right?? Now, just because there are what seems like an endless number of sources for funds, doesn’t mean those funds are easy to get… or when you can get them… they’re easy to afford. The borrower is required to, in many cases, “Jump through hoops” in order to end up with the funds they need. Credit approval, Appraisals, LTV/ARV… and, even then they usually don’t get it. All they need, is “skin in the game”.

Good debt vs. Bad Debt

Most Real Estate Investors are familiar with the expression “Good debt vs. Bad Debt”. The problem is most don’t fully understand the difference. My daughter knew the difference when she was 8 years old. I remember when we went to lunch and she went from asking me to do “plusses and minuses” to doing story problems. So, in the interest of “training her early in life”, I gave her story problems involving business. She would accidentally learn about everything from expenses, to profits… including the differences between good and bad debt. Her understanding was so thorough she could recite the definition, and more importantly explain it when asked to.

Unfortunately, we are not taught any of this in school today. We are taught how to be spenders/savers instead of how to be investors/entrepreneurs. In other words, we are never taught how “money works”, but we are most certainly taught how to “work for money”. Knowing the difference between Good and Bad debt isn’t brain surgery, but the negative effects of ignorance can be huge. The difference is very simple. Bad Debt costs you money, Good Debt makes you money. Yes, it’s just that simple.

What the Banks Know that We Don’t

The Banks are well aware of the difference. Just look at the difference between what they “pay you” (and I use the word “pay” very loosely) for your deposits, and what they “charge” you when the “sell” you credit. Understand the business of banks are to sell credit. They also know and understand the dictum, “Own nothing, but control everything”. They live by it. What’s fun, is with the use of Non-lien-able debt, the Real Estate Investor can do the same thing. They can almost become their own bank.

Bad Debt costs you money since the net result of it is you end up with less than what you started with. Good debt makes you money since the net result is you end up with more than what you started with. In business, you are comparing Profit vs Expense. In our personal life, we are comparing income to, well “Income substitute’… sometimes referred to as Credit Cards.

The obvious examples of Good Debt would be things like SF rentals, Multi-family rentals, commercial properties, and other appreciable cash flowing assets. Bad debt examples would be the previously mentioned Credit Cards, boats, RV’s, etc… The equity in our own home is not an investment. It makes us no money, it costs us money to build it. Now, if we tap into it in the form of a loan, it becomes debt… what type of debt depends on what it is used for. Note that I’m not saying we should all go out and refinance our homes, cash out the equity, and invest. If you decide to do that, you don’t have my blessing. You are putting your home at risk. Not smart. Particularly since there are so many other safer ways to get funds to invest with.

The Power of Compounding… Duplication on Steroids

Banks understand all of this. They leverage your assets/deposits into credit/debt. That’s, credit from them, and debt to you. They own nothing, and in fact can leverage credit, actually sell “virtual money” to you at many times the “face value” of your asset on deposit with them. That topic is for another time. For this discussion, understand that the bank is exploiting the power of Duplication. Actually, they are taking advantage of what Albert Einstein referred to as the “Greatest Invention of the 20th Century”… compound interest. He went even further to state that those that understood it (banks) live off of those that don’t (the rest of us).

You want a very powerful example? Start with a penny… just 1 cent. Then, for the next 30 days, double it. So, day 1 would be 2 cents, day 3 would be 4 cents, day 4 would be 8 cents, and so on. Do it on paper. It will have a much greater impact on you. What’s the answer? Try it. You’ll be amazed. What you will be watching is an example of compounding at its finest.

So, how do we, as Real Estate Investors, do the same thing? Can we do the same thing? The answer to the second question is a resounding yes! The answer to the first question is, you guessed it, with the use of Non-lien-able debt.

The Power of Non-Lien-Able Debt… Compounding on Steroids

How you ask? Simple. First, remember that typical financing used in Real Estate Investing is lien-able debt. There is a lien of some type on the asset… the property we are buying. When we use non-lien-able debt, there is no lien on the property. In fact, there is no tie at all to the property. This is critical. This is what makes this work. This is what makes us our own bank. How?

What’s the first thing that happens at closing, after the mountain of paperwork is signed? The answer is, the original lender of the seller, is paid off. In other words, the lien is paid off. The seller doesn’t even see the money. Wouldn’t you like to at least touch it when selling… even for a minute? How about doing more? How about being able to re-use it, over and over again? Yes you can. That answer was for all those reading this and saying “know you can’t”. Here’s why… and how.

Let’s look at a typical property funding. First, a loan is acquired and we buy and rehab the property. We flip the house, and upon sale we do two things: 1) We pay back the original funding (lien); 2) We make a profit (hopefully). Now, to move forward, we need to get new financing and deal again with the “App triplets”. You know, new Application, Appraisal and Approval. All costly, time consuming and with no guarantees.

Now, if this was a form of Non-lien-able debt, we wouldn’t need to pay back the money we borrowed… at least not right away. This also means, that instead of only walking away only with our profit to use, we walk away with all of the proceeds from the sale. Sell a house for $75,000 with a lien-able debt of $50,000 and we walk away with only $25,000… the profit. Sell that same house with non-lien-able debt, and we walk away with the entire $75,000… minus closing costs. Which would you rather do?

Turning “Bad Debt” into “Good Debt”

OK, before I go further, I need to answer all the readers who are saying “I still have to pay back the debt”. In fact, I have monthly payments coming up that is usually very high due to the nature of the terms on most NLD. So, what I do, is I fund a cash reserve as part of the NLD. The cash reserve is your silent partner whose only role is to make the monthly payments until you can develop your system to become self-sufficient, and self-sustaining. Combine the profits from the first couple of flips and buy/rehab a 2nd “Flip House”, that you will also be re-using those funds over and over again, since there would be no debt at all on that 2nd house… you bought if for all cash. The idea is to NEVER use the principle for anything but the cost of the next Flip House. You are working with two “flip houses” now after that 2nd flip

Flip these two Houses, combine the two profits and buy/rehab a third Flip House. Again, you will be re-using the costs for all three houses to buy/rehab the next 3 Flip Houses in line. You now have three lines of Flip Houses. No matter how many times you try to spend the principle… they keep giving it back to you. Now, this is where the real fun begins.

While you’ve been developing your system, your Cash Reserve is dwindling down to nothing. So, it’s about time you refunded it, don’t you think, and “buy yourself” more time. Keep in mind that these payments you are making from the cash reserve is actually paying off the debt… or it doesn’t work, so when you calculate how much to put into the cash reserve, keep that in mind. Now for the real fun.

Like I said, the cash reserve is “no more”, so refund it… with one of the profits from one of the three flip houses. What do you do with the other two profits? Buy/rehab a “Hold house” for the cash flow… with all cash. Then, just continue to flip the three Flip Houses, over and over again, using the “profits only” to buy more “Cash flow” houses, with all cash, and occasionally refunding the cash reserve until the debt is paid off… and you are completely debt free.

The Tale of the Tape… Einstein was a Pretty Smart Guy

Question #1: How many times did we pay for these funds?

Answer: Once… we just didn’t pay it back all at once, as we would have if it was lien-able debt.

Question #2: How many houses are we able to use these funds for (remember, we are only going to pay for them once)?

Answer: I don’t know. I’ll let you know when I stop re-using them.

We just became our own bank. We are now leveraging our own money to ourselves, at no extra cost. Every time we re-use these funds, at no extra charge, we make the cost of the debt per house go down. This means, we also just made the initial cost of this type of funding insignificant.

Einstein was right. Compounding is a beautiful thing. When combined with Non-lien-able debt, it can be a “gold mine” to Real Estate Investors.



Original article by Joe Villeneuve

Real Estate Investing Basics – Choose Your Neighbor Marketing

A very effective, yet often overlooked method of marketing both your rentals and your houses for sale is door to door flyers in the neighborhood of your property. Residents who live near your property are likely to know someone – a friend, colleague or family member in the market for housing that they can pass your flyer on to. You may also attract the direct attention of a neighbor who is ready to buy or move up/down in their housing.

If you are local and don’t mind running around the neighborhood yourself, this method will only cost you a few hours plus the cost of printing. If you’re not available for the distribution, or just have better things to do, paying someone to distribute flyers is very cheap and incredibly cost effective if it results in a sale or a qualified tenant placement. Just remember to do a quick drive through of the neighborhood to ensure the flyers have been distributed if you’re paying someone to do it.

As for the content of the flyer, it’s worth it to take some quality photographs of the interior and exterior of the home. If your main selling point is the quality of the property, be sure to feature these in full color along with some of the basic specs of the home. If you are advertising a rent to own that’s a really great deal, make sure your analysis of the numbers is prominent and easily understood. Also, be sure to emphasize that this property is in their neighborhood and that this is an opportunity for them to choose their new neighbor. Lastly, don’t forget to include full contact information: your telephone number, fax number, email address and 24 hour recorded information line if you have one.

A more expensive variation of this method is to use direct mail to target your property’s neighborhood. Again, you’ll want to tailor your marketing message to let them know that this is their chance to mold the neighborhood by helping to select the new neighbors. To maximize your exposure, try using both flyer and direct mail distribution methods, timed several weeks apart to make sure that as many neighbors as possible get your message that you have a great property for sale or rent in their neighborhood.



Original article by James Orr

Lead Generation Techniques for Real Estate Wholesalers

Many people are overwhelmed when they look into real estate as a possible income stream. Aside from the nervousness hesitation to put out legal contracts constantly, there is an obstacle before they are even able to make an offer on a single property. That obstacle is in the pursuit of actually finding motivated sellers.

Leads are the bread and butter of any successful real estate wholesaler. Without leads, the wannabe investor will spin their wheels. You will find that cash buyers are pretty easy to find when compared to getting motivated sellers to contact you.

Lead generation is your answer. For the next few minutes, you will discover some incredible ways to pull in those motivated seller leads. You will discover the trade secrets of a 20+ year internet marketing veteran that just so happens to be a real estate wholesaler. Let’s get started!

Do you find sellers, or do sellers find you?

There are many methods wholesalers use to reach motivated sellers. Many of them require you to reach out to them. Others will allow them to reach out to you. I am a huge fan of having the motivated seller contact me. Why? Because if they are contacting me, then I know they are more likely to be motivated in the traditional sense. They will be much more open to a discount offer, or even creative financing terms, or subject 2 if there is little to no equity on the property.

While I prefer that the seller contacts me, I am not one to close a door on a gift horse. Every lead is a good lead, and a potential assignment fee. This is why I am going to recommend that you employ as many of these techniques as your time, budget, and determination will allow.

Before you begin, you will want to follow a standard format for your ads. Here is an example…

We Buy Houses

ANY Area, ANY Condition.

Zero Closing Costs, “AS-IS”

Call Now! (555)-555-5555

This will not necessarily be the case for post cards and letters however. You can find that format by searching Google for “yellow letter”.

  • Yellow letters and post cards

The “yellow letter” or post card are excellent sources of done deals. The problem is that a mass mailing can be expensive, even at a single piece cost of $.40 cents per post card. You will need to send between 1,000 and 2,000 to secure a couple of deals. On top of it, the best method is to send it 6 times to the same people before moving on to the next list. That’s about $400 to $800 per mailing times 6. When you are already established in the wholesale game, that cost is easy to absorb thanks to the many assignment fees you’ve collected. When first starting out however, you may not be able to manage that.

The yellow letter is targeted towards a direct mailing list of homeowners with equity and other factors. ListSource is a popular provider of such lists. I have obtained ‘small lists’ of about 180 addresses and names for about $50 or so. You can import the list into a yellow letter or post card mailer service such as BigYellowLetter or any of the various others.

  • Lead websites

As someone who started in the website design and internet marketing business way back in the teenage years, I am always creating websites whenever I get an itch to start a business or collect leads. One of my favorite website backbones is WordPress due to it’s ease of use, ability to optimize for search engines, and the mere fact that I can create multiple variations of lead pages targeting different campaigns.

A wholesaler without a lead website isn’t a wholesaler at all. Not everyone wants to, or has the option to call you. Just providing a phone number on your ad materials isn’t enough. A URL should always be provided as an option, and the visitor should be able to reach you through an intricate contact form that collects information about the house they want to sell you.

When creating your lead site, make sure that you ask all of the appropriate questions so you can analyze the deal ahead of any discussions with the seller. I have an example down below. I like to collect the address, contact info, property type and info, description of needed repairs, etc. I even include an option for them to tell me whether or not they would be willing to hold a note for all, or a portion of their equity. This leaves the option for creative financing in the event that the property is not ideal for a cash offer (low to no equity).

  • Social media

I spend hours every day on Facebook, Twitter, and other social media websites interacting with others, promoting, and just trying to drum up traffic to my website and lead conversions.

Be careful to provide the right ratio of content vs ads however. Over posting ads can be annoying to followers and friends. It would be a good idea to provide fresh articles, resources, ideas, quotes, and other goodies to keep a follower interested long enough to convert them down the road.

  • Newsletter

As an internet marketer, I know the value of building a list. But who is going to want to just hand over their name and email address to a stranger? Someone who is getting something for free of course!

To build a newsletter, you first need to offer something of value for free in exchange for their name and email address. This is often an eBook, or even something smaller such as a 10 page ‘report’. Your report would contain some simple information that teaches them something that they want to know. In order to get access to the report, they must first submit their name and email address. They can then download the report via a confirmation email you send them automatically afterwards. This is email list building 101. Follow this blueprint, and you can have a massive list in 30 days or less.

  • Blogging

Don’t just have a lead site. Blog on it regularly. You can write articles ahead of time, and schedule them to publish week after week. This way, they are getting new content on a regular basis.

In addition to value for your readers, blogs are great for search engine traffic. Content is king. This means that every time you publish a new article, you run the risk of showing up on the first page of Google or another search engine for your target search terms. This will bring in motivated sellers to your lead site (if you convert them), and it can also attract cash buyers if you are targeting them as well.

  • Forums

As before with social media, I have to warn you not to spam forums either. But forums can be excellent sources of leads if you are smart about it and actually contribute. Forums provide a place for you to add your URL and contact information in a signature. This signature would show up whenever you post on the forum, and interested parties can follow you.

I like to join credit repair forums, bankruptcy and back tax forums, and give advice. You can get motivated sellers who are in preforeclosure this way. Just avoid posting urls while giving your advice, as that is considered spammy. Rely wholly on the signature you be your golden goose, and you can’t fail!

You can also join real estate investment forums like EquityPaper or BiggerPockets, and interact with other investors. This can be a chance to co-wholesale deals with other wholesalers who may not have a cash buyer for a certain property. You may be able to help them, and share in the assignment fee.

  • Newspapers

I’m sure you have seen a newspaper before. They still exist, and many people read them. In the classifieds section, you will see other ads just like the one I mentioned earlier. Give it a shot, and see how fast you get calls or leads through your website.

Newspapers can be expensive, but there are some smaller ones with more manageable fees.

  • Podcasts

I have gotten quite a few commercials done and played on live and recorded podcasts. They were bought and paid for through Fiverr, and certainly affordable. You can get an ad played for $5, or a little more for larger podcasts. You can get gig extras which also have your ad mentioned on the podcast’s social media accounts, permanent links on their podcast website, and other goodies.

You can also create your own real estate podcast, and gain a bunch of new listeners to promote to here and there.

  • YouTube

YouTube channels have to be one of the greatest methods of generating a following, and converting to leads. You can manage to do a simple 15 minute video every week, and publish it can’t you?

It can take some time to build a following, but soon enough you will see thousands of new followers ready to absorb what you are putting out there. They will share your content and spread the word. Do not fall asleep on YouTube marketing. It truly is a heavy hitter.

Put your creative juices to work, and come up with some excellent lead generating ideas. You may be surprised at what you come up with!



Original article by Brandon Connell

Timeshare Problems and What to Avoid

Ultimately, what you need to avoid is the necessity for a timeshare get out when it is too late. If you have decided that you want to buy a timeshare property and have looked at some timeshare reviews then you will no doubt be approaching the purchase with a cool head. However, the ideal situation for the seller is one where you have had no opportunity for research and that could leave you looking for a timeshare get out later, so take your time.

Many people realize the value of owning a timeshare and being able to get away on vacation on an annual basis without having to worry about paying for it all at once. However, that being accepted, there are numerous, quite different timeshare scams out there in the market place and it is easy to get fooled by one of them. That is why it is important for you to make sure that you are well informed whenever going into a timeshare presentation and that you do so with both eyes wide open.

The first thing to point out, is that just because a timeshare presentation is high pressure it does not necessarily mean that it ranks as one of the timeshare scams that are prevalent. The companies that run the legitimate timeshares spend a lot of time and money learning how to make as many people purchase as possible during these presentations. Essentially, you are being subjected to some well researched psychology. You might call it immoral but it is not illegal. Just be on your guard.

It does not matter what you were told at first; you are going to receive some kind of pressure while you are sitting at the table and you may have to say NO multiple times if you are truly not interested in buying a timeshare property. These are not timeshare scams; they are simply high pressure sales tactics that tend to work well for the sellers.

Of course, one of the most important things for you to keep in mind is the old saying, “if it sounds too good to be true, it probably is too good to be true”. You can expect to be offered some kind of concession in order to sign up for the timeshare and many of these are fairly reasonable. If you are offered something such as a car, or perhaps a very expensive cruise in order to sign on the dotted line, you might be sitting at the table with one of these timeshare scam companies. You might also get caught up in the fine print at one of these negotiations, and more than one buyer has fallen for this.

In order to avoid timeshare scams, you might want to avoid any of the timeshare companies except for one of the well known companies that are available. RCI and Interval International Timeshare are two of these companies that are generally trustworthy. Although they will still fall under the general timeshare banner, with all of its popular misconceptions, as far as their reputation is concerned they are generally to be trusted. There are very few timeshare scams that never occur in these companies but they are both what is known as a true timeshare organization and scams are rare. Any company can have a rogue seller and these two companies are hot on keeping the business clean.

Other obvious timeshare scams would include being sold two timeshares and then being told that you are able to sell one, in effect sticking you with two different sales. You should also avoid any 900 numbers which may offer you one of these timeshares at an amazing price, as it is more than likely a scam. If all else fails, do not overlook the possibility of having somebody, such as a lawyer or a real estate agent look over the fine print of one of these documents before you sign it. The seller will not like it because it delays or even stops the sale but do it anyway. It is better to be safe than sorry, especially whenever you are talking about a large sum of money.



Original article by Jack Murphy

Wade Cook – Feds Finally Nail Financial Guru and His Wife on IRS Tax Evasion Charges – Part 1

It came as absolutely no surprise to me that so-called financial guru Wade Cook and his wife Laura were recently convicted of income tax evasion and sentenced to jail, according to an Associated Press report.

Wade Cook became really annoying some years ago by seeking to peddle his financial advice on his theory and accompanying books, tapes, seminars and associated crap to me and a lot of other unsuspecting potential investors.

Crap is the right choice of word as his financial advice has proven worthless. I never bought his stuff but thousands of other investors did.

Cook was nothing more or less than a cab driver who decided to get rich by preying on people looking for an easy solution to becoming rich.

He wrote three get-rich-quick books on his “meter-drop” theory of investing: Wall Street Money Machine, Wealth 101 and Business by the Bible. Is it not amazing how hucksters always want God to endorse their business, products and shenanigans?

Cook conducted hundreds of seminars in the 1990s on asset protection, stock market investing, real estate acquisition and avoidance of income tax.

He was so good at the avoidance of income tax issue that he will now spend more than 7 years in prison for income tax evasion by defrauding the Internal Revenue Service.

U. S. District Judge Thomas Zilly of the federal court in Seattle ordered Cook to pay $3.75 million in back taxes on roughly $9.5 million of underreported income generated by sales of Cook’s financial advice books, tapes and seminars.

It is one thing to render a financial judgment and another to collect it. It was not reported whether Cook ponied up the $3.75 million.

I do not know if Cook is penniless today, filed for personal bankruptcy, buried what money he had, placed his stash in a Swiss bank account or has millions in a petty cash account to pay his $3.75 million judgment for tax evasion.

I do know that he and his wife are dishonest, not to be trusted, will knowingly lie, cheat and steal to get ahead in this world, and know little about any kind of investing worth talking about. I knew all of that in the early 1990s when they started.

They apparently made millions selling their story to unsuspecting buyers and then not paying taxes on some of their revenue. Some pundits estimated Cook’s net worth at more than $200 million when he was flying high.

He was convicted in February 2007 for tax evasion, filing false returns and obstructing justice. The jury was deadlocked on all counts against his wife Laura who kept his books.

In May 2007 she pleaded guilty to obstruction of justice rather than face a new trial. She was sentenced to 1.5 years in prison. Laura Cook admitted that she created documents to evade taxes on income she and her husband received between 1998 and 2000.

The Associated Press reported that the Cooks said that they had loaned themselves money from a trust that was supposed to become a gift to the Church of Jesus Christ of Latter-day Saints.

Government lawyers said that the couple never intended to repay the money, thus it was taxable income rather than loans.

Cook’s lawyers argued that they were unable to repay the loans mostly because of the stock market collapse in 2001. Cook was apparently such a brilliant financial guru that he lost his fortune in a stock market collapse.

So much for Wade Cook’s theories on investing for profit and becoming rich in the process.

Cook shut down his operations in February 2003, a month after his publicly traded company-Wade Cook Financial Corporation of Tukwila (WA)-sought Chapter 11 bankruptcy protection.

Wade Cook and his wife Laura are only one of hundreds of hucksters who have traveled the country selling their crap (get-rich books, tapes and seminars) to unsuspecting investors.

(Editor’s Note: This is Part 1 of a 2-Part Series.)

Copyright © 2007 Ed Bagley



Original article by Ed Bagley

Starbucks Coffee – What Commercial Real Estate Investors Should Know

Company Summary

Starbucks Coffee, sometimes referred to as Fourbucks Coffee is the largest coffeehouse chain in the world. It opened its first store in 1971 in Seattle’s waterfront Pike Place Market by three partners: Jerry Baldwin, Zev Siegel, and Gordon Bowker to sell high-quality coffee beans and equipment. In 1982, Howard Schultz, the current Chairman and CEO joined the company as the Director of Marketing. He was impressed by the popularity of the espresso bars in Italy after he traveled to Milan in 1983. Back to the US, he convinced the founders of Starbucks to sell both coffee beans and espresso beverages. However, the idea was rejected so he left the company and founded Il Giornale coffee bar chain in 1985. In 1987 Howard Schultz and Il Giornale bought Starbucks with $3.8M and renamed Il Giornale coffee bars to Starbucks and turned it into the Starbucks you know today. The company went public with the symbol SBUX in June 26, 1992 at $17/share with 140 stores. Since then the stock has split 5 times. As of May 2008, SBUX is traded at about $16, down from the high of $39.43 in November 2006.

Starbucks opened the first overseas store in Tokyo, Japan in 1996. The company currently has about 16,000 stores, employs 172,000 partners, AKA employees as of September 2007 in 44 countries. It has annual sales of over $10B with most recent quarterly revenue being $2.526B. About 85% of Starbucks revenue comes from company-operated stores.

Starbucks does not franchise its operations and has no plans to franchises in foreseeable future. In North America, most stores are company-operated. You may see some Starbucks stores inside Target, major supermarkets, University campuses, Hospitals, and Airports. These stores are operated under licensing agreements to provide access to real estate which would otherwise unavailable. Starbucks receives licensee fees and royalties from these licensed locations. At these licensed retail locations, the workers are considered employees of that specific retailer, not Starbucks. As of 2008 it has 7087 company-operated stores and 4081 licensed stores in the US. Internationally it has 1796 company operated stores and 2792 joint-venture or licensed stores in 43 foreign countries. The pace of expansion is slowing down as the company plans to open 1020 US stores in 2008, less than 400 stores in 2009 down from 1800 stores in2007. In addition, it also plans to close 100 stores in 2008.

Risks to Real Estate Investors

Starbucks coffee buildings remain a popular investment for many investors. When you consider investing in a property occupied by Starbucks, you need to understand the following risks of your investment:

  1. Recession-sensitivity: a hungry man can survive with a Big Mac & fries but can live without a four-buck Frappuccino. This means Starbucks is very sensitive to economy downturn as seen in 2007 and 2008 compared to Burger Kings and McDonald’s. This may be the main reason sales at stores in the US open at least a year are expected a mid single-digit percentage decline, the first drop ever. It triggers Howard Schultz to return to the CEO post. The company plans to double its marketing spending to $100M in 2008 to drum up sales. It began an aggressive coupons campaign offering free drinks every Wednesday through May 28, 2008. This may be a sign of desperation. On April 22, 2008 Starbucks cut its outlook for the year citing weak economy.
  2. Calorie & Sugar: Starbucks drinks have more sugar and calorie in which consumers are more and more concerned due to explosion of obesity and diabetes epidemic in the US. For example, its Strawberries & Crème Frappuccino® Blended Crème – whip has 120 grams (over 1/4 lb) of sugar, and 750 calorie on its Venti 24 oz size. If it becomes a trend that consumers decide to cut down on the sugar drinks, or stick to low-carb diets then it will have impact on Starbucks revenue.

  3. Competition: McDonald’s, Wendy’s and Dunkin Donuts now also offer espresso at lower prices to compete with Starbucks. They will capture some revenue from Starbucks, especially from cost-conscious customers. The current Starbucks prices are already pretty high; it’s very hard for Starbucks to increase the prices in the near future without affecting the traffic to its stores.

  4. High-expenses business model: while Starbucks profit margin is high as it pays an average $1.42 per pound for the unroasted coffee, its business is very labor intensive just like any other foods businesses. It takes between 10-20 employees to run one store. All eligible part-time and full-time partners in the US and Canada receive benefit package consisting of stock option plan, 401k with company matching, medical, dental & vision coverage. Starbucks is voted as the 7-th best company to work for in the US in 2008 by the Fortune magazine employee’s survey. What is good for employees may not be good for the employers. These benefits are normally only available to key employees or managers in the restaurant industry. Historically, the costs of these health benefits rise faster than the rate of inflation. In the long run, they may have negative impact on Starbucks bottom line. Should Starbucks not perform well, it may be under pressure as a public company to close more stores.

  5. Special-purpose building: Starbucks freestanding building is a special-purpose building designed specifically for Starbucks. Should Starbucks decide not to close or not to renew the lease, it’s hard to re-lease the property. There are few tenants out there willing to pay the high rent like Starbucks. It’s hard to use it as a fast food restaurant due to a relative small square footage. Besides, it does not have a commercial kitchen. Once vacated by Starbucks, the property value will most likely go down.

Starbucks Real Estate Operation

Starbucks divides the US & Canada into 17 real estate territories, each has its own store development office to develop the market in its territory. The developers constructed freestanding buildings about 1800 SF with drive through in a location with high visibility, heavy traffic. Once the location is approved by the territory office, Starbucks typically signs a 10 year NNN lease with 2 five year options in which landlords are responsible for roof and structure. All the leases normally have corporate guarantee which means Starbucks will continue paying rent in the event it has to close the store. The lease often has 10% rent increase every 5 years. The rent is between $1.65/SF in a store in Utah to $5.84/SF in New York. This rent survey is based on the rents at just 30 Starbucks properties, 18 of them are free standing, on the market for sale through out the US as of April 2008.

Starbucks Location with Minimal Store Closure Possibilities

During tough times, e.g. in 2008 when sales are declining Starbucks will attempt to cut costs and close underperforming stores. As a real estate investor considers investing in a Starbucks building, you don’t want to invest in a property that will be closed in the future.

Location—— 1mile——3miles——-AHI/yr—–Size (SF)—-Base rent /yr—Rent/SF/mo –Price—–Cap(%)

Ohio……………296……..2609………$88375….1613………$58,590……….. $3.03……….$868K…….6.75

Florida………..9186……55270……$68595…..1816………$75,000………..$3.44……….$1.2M………6.10

Georgia………5717……57201…..$143936….1750………$74,000………..$3.52……….$1.091……..6.75

Mississippi….188……..4923……..$77372…..1816………$112,184………$5.15……….$1.558M…..7.2

Texas………….5944…..40970…….$75043…..1752………$92,914………..$4.42……….$1,327M….7.00

Table 1: Rent Comparables for Free-standing Starbucks Buildings

Location——SBUX rent/yr—SBUX Size—SBUX rent/SF/mo—Other tenant Size—Rent/SF/mo—Difference

California…….$30096……..1248 SF…..$2.01……………………1245 SF……………..$2.50………….-19%

Kansas……….$43200……..1600 SF….$2.25…………………….1600 SF………………$1.33………….68%

Utah……………$38568……..1950 SF…..$1.65…………………….1200 SF……………..$1.86…………-11%

New Mexico..$92004………2000 SF….$3.83…………………….2500 SF……………..$1.92…………100%

New York…….$125004……1785 SF….$5.84…………………….2819 SF………………$2.75…………112%

Table 2: Rent Difference in Multi-tenant Starbucks Retail Centers

Since Starbucks does not release sales revenue for a particular location, you just need to make an educated guess. Based on annual revenue and numbers of stored operated by Starbucks, the average annual revenue per store is about $1M. In addition, if the annual rent to revenue ratio is less than 10% there is a good chance the location is profitable. For example if the base rent for the Starbucks in Ohio is $58,590 then the annual revenue should be more than $585,590. Besides picking a store at a good location (refer to the article titled “What ‘Location’ Means in Commercial Real Estate” by this author), and the cap rate you should consider the following:

  1. Densely-populated area: more people mean more customers size and thus more revenue. The Starbucks in FL, GA and TX on Table 1 are more promising. Note: the author tries to be sensitive by not disclosing the exact locations.
  2. Low-rent: the Starbucks in MS pays $112,184 for base rent. To be reasonably profitable it needs to have annual revenue of $1.12M. However, since there are only 188 people within 1 mile and 4923 residents within 3 miles radius from the store, it’s less likely the store ever achieves that revenue. Besides Starbucks pays $5.15/SF which is very high compared to just $3.52/SF in a fast growing, high income, densely-populated in GA where there are 57,201 residents within 3 miles radius and Average Household Income (AHI) of over $143K/year. It’s hard to understand how the Starbucks in MS could be an irreplaceable location in an area with just 188 people within 1 mile radius from the property! While offering the highest 7.2% cap, this property appears to be a good investment but it actually has the highest risk of underperforming and could be closed down in the future. Alternatively, Starbucks could attempt to renegotiate the lease with lower rent during tough times. While Starbucks has not asked for rent reductions yet, it is not surprised if Starbucks will do so to improve its bottom line in the future. In either case, the property value will go down.

  3. Rent premium: while most Starbucks properties are freestanding in which it occupies 100%, you may see a Starbucks in a small multi-unit strip center with a few other tenants. It normally occupies the end unit with drive through and thus is expected to pay a premium compared to the adjacent unit. However, most of the time Starbucks pays substantially higher rent. For example, in Table 2 it pays $5.84/SF compared to just $2.75/SF by a tenant in the unit next door in a center in New York or 112% higher. In this strip center should the rent for the unit occupied by Starbucks be reduced (due to closure or lease renegotiation) the value of the center will be reduced substantially. You certainly don’t want to invest in this property.



Original article by David V. Tran

Apartment Building Investing – Find Motivated Sellers

As the creator of the “Buy Your First Apartment Building E-Course” I have many potential students and beginning investors ask me, “How do I find motivated apartment building sellers?”

There are many ways that investors use to find motivated sellers, however, what I see happening many times with beginners is that they start looking for properties to purchase before they thoroughly understand how to identify a truly profitable opportunity. Here are my recommendations for how to begin learning about multifamily investing and then how to find motivated sellers.

Begin by learning what makes mult-family property profitable by taking these steps:

  1. Study and learn about what makes an apartment building profitable.
  2. Read as many books about real estate investment and apartment building investment as possible. It is a lot easier to learn from other people’s mistakes. There is no need to reinvent to the wheel.
  3. Find a reputable real estate investment club in your geographic area and meet with the commercial investor members. These “old hands” are a valuable source of market information.

After the aspiring multi-family property buyer has received a thorough education by reading books, industry magazines and networking with other commercial real estate investors then he or she is ready to begin the process of searching for an actual property to purchase.

Contacting Commercial Realtors

A great reference source for finding well educated commercial real estate agents is the CCIM website. The CCIM is a professional designation that qualifies a commercial real estate professional as capable and knowledgeable in the field. You can also find commercial real estate agents using a simple search on the web.

When searching for a commercial real estate agent take these steps:

  1. Speak to a number of commercial realtors in the area and ask about “pocket listings”. Pockets listings are apartment building owners that the experienced realtor might know who are serious about selling their building but they have not listed the property yet.
  2. Find a commercial realtor who specializes in multi-family investments. A good commercial realtor who specializes in multifamily properties should have a great knowledge of what apartment buildings have sold for recently.

Alternative Strategies for Finding Apartment Building Deals:

  1. Place an ad on Craigslist stating what you are looking for:
  2. “Looking To Sell Your Apartment Building? I am a commercial real estate investor interested in buying multi-family property in Philadelphia between 5 and 100 units. I am looking for owner financing over five years with 5% down or will buy with a 20% down payment and a bank loan.”

    Or, here is an ad that I copied directly from Craigslist this morning:

    I BUY MULTI-FAMILY PROPERTIES W/SELLER FINANCING OR QUICK CASH. Need to sell?
    Moving? tax benefits run out? call me for a offer.

  3. You can also place the same ad in the commercial real estate section of your local newspaper but be prepared to pay a handsome sum for the ad and also be ready for unsolicited calls for real estate agents. Newspaper ads do work but you are better off using free or more direct methods like direct mail.
  4. Another strategy is to contact the owners of commercial real estate directly. This can be done in a number of ways. Multi-family owners can be located by researching the tax records of a metropolitan area. Usually, the owner of record will be listed along with his or her or contact information. The next step is to write a letter that explains who you are and what you are trying to accomplish. The purpose of letter to have many interested apartment building owners contact you. You should leave your phone number, mailing address and email address for sellers to contact you. You should make it very easy for the sellers to get a hold of you. Remember, you will need to look at dozens of deals and sellers before you find the one that fits your investment criteria. You can also contact owners directly by telephone. Keep in mind that multifamily property owners are usually very busy so you might want to write a script or have talking points written down so you are able to get right to the point and get your message across accurately.



Original article by Ted Karsch

How to Develop the Art of Selling Timeshares

Many people buy timeshares as an investment, and so it’s no surprise to see them soon putting the property back on the market. Others use the timeshare for a while and then for some reason, life happens and what was once a great vacation idea no longer fits into lifestyle. Thus, putting the ‘dream timeshare vacation’ back on the market. Still others can no longer afford the taxes or maintenance costs. Whatever your reason, selling timeshares is much easier if you remember some important considerations.

1) First, you should understand that people who make a profit on timeshares are the exception rather than the rule. So you should be forewarned ahead of time that, if a profit is what’s holding up the sale, you might be waiting a while. There are profits to be made, but if this is your intent, you need to be sure that when you’re buying the timeshare, you’re getting a bargain deal. Only true timeshare deals stand a chance of earning you a profit.

2) Don’t kid yourself when it comes to setting a price. If you’re selling timeshares that are studio units, or if it’s an off-season, you’re not going to make as much money. Likewise, you’ll likely get much less if you haven’t kept up with the maintenance responsibilities on the unit. Sadly, even if your unit is in-season, industry insiders warn that they often will only sell for 30 to 50 percent of the price for which you bought it.

3) You’ll get more money if your timeshare is part of a chain of units.

4) All of the above factors lead to this inevitable conclusion: You’ll have to keep the price low, usually much lower than your buying cost, if you want to sell fast. If you want to make a higher amount, and even make a profit, you need to be in it for the long-haul. This could mean keeping the timeshare on the market for many, many months.

5) You’ll increase your odds of selling high if you list the timeshare in a variety of ways. For instance: Obviously, you want to list it with a real estate agency (Be sure the agency belongs to the American Resort Development Association (ARDA), the trade organization that ensures the agency is not out to scam people like you.

Also consider including your timeshare on an auction service. There are numerous auction sites where selling timeshares is allowed, including eBay. And as long as you’re online, you might also try online classifieds such as CraigsList. Timeshare deals are rare there, but almost all real estate gets at least a few responses on the site.

Keep an eye out for developer resale programs. There are often salesmen who work on site who have quick access to buyers that are interested in your particular resort or chain.

And finally, other owners of the same unit might be possible buyers. If they own the unit for a different portion of the year, approach them about extending their ownership months. These suggestions won’t ensure a profit, but they can help with the process of selling timeshares to make sure you don’t lose your shirt in the process.



Original article by Thomas Sondheim