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I recently hosted an event in New York and a woman signed up for one of my programs. We’ll call her Sally.

About a week after we met, I had a call with her and she said, “I thought it was just wonderful how you did that entire day and you didn’t sell anything.”

I said, “Sally, you’re in my program. You bought something.”

And she said, “Oh, yeah. I didn’t notice.”

So that’s the ultimate goal. You should be so fired up about what you do and you’re just sharing your services and saying, “Listen, you want to play with me? Great! Here’s how you can play with me,” and you move on.

People will actually pay you money and they won’t event notice that you sold them anything.

It’s not about the sale, it’s about the message. The people who are lined up for your message are a natural fit, and it doesn’t even feel like a sale. They understand your message and they are ready to say yes.

The plan is for the government to purchase these securities at low prices and sell them at a later date at higher prices for a profit.  This way the government helps out the financial industry and the economy with an opportunity to make the money back.  The government also has the opportunity to request an ownership stake in the companies that it bails out.

Another key component of the legislation is that it authorizes the Securities and Exchange Commission to suspend a set a rules known as mark to market accounting.  The current rules require banks to take losses on all of the bad mortgages regardless of whether or not they are able to sell them off in the future at a profit.  As a result, it ties up capital because the banks are required to have a certain amount of assets on the books in order to be able to lend out money.

So how does the bailout affect real estate investors?

The major impact on real estate investors is that it serves as a stop gap to ensure that there will be capital available for purchasing investment properties.  One of the biggest fears prior to the bailout being passed was that lending capital was going to dry up.  As a result, if you purchased property with ANY type of lending capital, you were at risk of not being able to get the money that you need to fund deals.

Another component of the bill that can have a major impact on many real estate investors is the legislation involved the AMT known as the Alternative Minimum Tax.  This is a tax that affects anyone that has a gross income of over $75,000.  There are a number of deductions that you get as real estate investors that you don’t get if you fall under the AMT.

What the bailout bill does for this is it inserts a provision that basically ensures that the AMT will not be applied to about 24 million households that normally would fall under this tax.  As a real estate investor, particularly if you are making money in real estate, there is a good chance that you would have falling under that tax code if this provision wasn’t applied to the legislation.

Regardless of whether you are for or against the bailout, the key takeaway is you want to understand how this affects your real estate investing efforts.  This way you will know exactly what modifications you may need to make to your overall investing strategy if any.

A major piece of legislation was recently passed by Congress and signed into law by the President of the United States.  This legislation is referred to as the economic bailout and is one of the most controversial pieces of legislation passed by the United States government in quite a while.

So what is the bailout exactly?  The bailout is a piece of legislation where the meat of the legislation is a proposal to purchase up to 700 billion dollars of mortgage backed securities at risk of being defaulted upon.  The purpose of this plan is to free up capital for banks and other lending institutions so that they can loan out more money to borrowers.

Currently foreclosures are at an all-time high.  Many lending institutions were lax in lending requirements.  The reason why is because the large majority of loan originators sold off their loans as soon as they wrote them.  As a result, if the loan went into foreclosure, they didn’t care because the loan was off its books already.

What was happening prior to the bailout being passed was banks and financial institutions were hesitant to lend to each other.  This was making it extremely difficult for anybody to get a loan.  A lack of credit is extremely damaging to the economy and even more damaging to anybody involved in real estate, an industry that is heavily driven by borrowed capital.

If you encounter a property that has a judgment lien filed against it, your first step should be to find out how much all of the liens of the property amount to.  Then consider the amount you are buying the property for as well as the full market value of the property.  Depending on what the after market value of the property is worth, it still may be worth purchasing the property.

For example, suppose you are looking to purchase a 3 bedroom/2 bathroom home.  The house is in good condition and needs very little repairs.  The owner wants $10,000 to walk away.  The outstanding mortgage is $80,000 and the full market value of the property is $150,000.  However, there is a $30,000 hospital lien against the property.

The owner is very far along in the foreclosure process, so it’s too late to sell the property to a seller on the open market.  He needs an investor who can purchase the property all cash so he can sell the house before the bank forecloses on the property.

If properties like this rent for $1,500 a month, this is a great deal, even with the $30,000 hospital lien.  Suppose you paid off the mortgage, the hospital lien and gave the owner $10,000 to walk away.  It would cost you $120,000 to purchase this property.  Suppose your total monthly expenses was $1,200 a month.  You would have $30,000 equity and $300 a month cash flow from renting this property out.

However, what if the lien is a deal breaker?  Should you walk away from the deal and move on?  Not necessarily.

One option you can take is of course; negotiate with the homeowner to see if he or she would be willing to take less in light of the lien being on the property.  I call this my “Discount Lien Release Technique” and cover this process in detail in my advanced course on Making Big $ with Property You Never Have to Buy.  Some homeowners simply don’t care about the money.  All they want is for the problem to go away and even if they can’t get any money they will still sell the property to you if they know that you can eliminate the problem.

Of course there are going to be some situations where the homeowner is unwilling or unable to take any less.  Should you walk away from the property?  Most investors would.  However, there is potentially a way that you can still make this deal work even if the numbers don’t work.

The first step you need to take is to see if reducing the judgment can make the deal work.  For instance, a $30,000 judgment won’t make the deal work, but if you can cut the judgment down to $15,000 the deal will work for you.  If there is a scenario where reducing the judgment can make the deal work in your favor, you have some

options to make the deal work in your favor.

When a property is in foreclosure, if the bank completes the foreclosure, the foreclosure wipes out ALL liens filed against the property.  The only lien that cannot be wiped out by a foreclosure is a tax lien.  Usually in that case, the bank will just pay off the taxes and take over the property.

Here’s what this means for you as the investor.  If the bank forecloses against the property, the judgment lien gets wiped off the property.  This means that the holder of the judgment lien gets nothing.  Good luck for a company trying to collect a judgment against a person with very little income and no real assets now that their home has been foreclosed on.

Therefore, what you can do to make the deal work is negotiate with whoever is the holder of the judgment lien and see if they would be willing to take less for the lien.  You would be surprised how accommodating a lien holder can be when they realize that the property is in foreclosure and their lien is in danger of getting wiped out.

By negotiating with the lien holder regarding the lien, you may find that you can get the lien amount reduced to an amount that makes the deal worth pursing.  It is not unheard of for lean holders to take 5-10 cents on the dollar for a judgment lien simply because they would rather get something instead of nothing.

So in the case of a $30,000 lien, imagine if you can get the lien holder to take only $3,000 to satisfy the lien?  Do you think saving $27,000 on the lien could make the numbers on the deal work for you?

Obviously the lien holder can refuse to take anything less than the full amount and if that happens, stronger negotiation may be needed.  However, you will never know unless you ask.  Most investors don’t ask and as such most investors lose out.  So next time you see a judgment lien, see if you can make that deal work for you.  You might be amazed at what you can make happen.

One of the main reasons why people can no longer keep their house is due to financial hardship.  As a real estate investor you can help these people start over by purchasing their house and giving them money to start a new life.  However, many real estate investors get afraid when they see judgments against a property.

If you are passing up properties that have judgments against them without doing any research, you may be letting some excellent deals pass your way.  Properties with judgment liens can be some of the most profitable deals you can obtain if you know what you are doing.  By utilizing some simple strategies you can take deals that most investors pass on and turn them into very profitable transactions simply because you have the knowledge that other investors lack.

What is a judgment?

A judgment is a court order levied against someone usually due to either the loss of a lawsuit or non payment of a legally obligated debt.  The judgment gives the creditor the ability to take certain actions against the losing party through several means, such as wage garnishment, seizure of bank accounts and liens against assets.

Once a judgment is filed against a homeowner, the creditor will then use the judgment to file a judgment lien against property owned by the homeowner that lost the judgment.  Once a judgment lien has been filed, the homeowner cannot sell the property without satisfying the terms of the lien.

On the surface, this doesn’t look good for you as the investor.  If the homeowner can’t sell the home, you as the investor have to pay off the lien before purchasing the property.  Depending on the terms of the deal, this may not be feasible.

However, before making a decision to walk away from the deal, there are certain things you need to know about judgment liens that could have a major impact on your decision.