This post has been a long time in the making, and is something that I think many people can commiserate about.

Adding People to Your Email Marketing Campaigns is Not Only Annoying, but Can Also be Illegal

There is nothing that makes me want to cooperate with a company or investor more than when they add me to their email SPAM list without my permission . . . smell the sarcasm?

While email marketing in the real estate business can certainly be effective if done correctly (and legally), you’re shooting yourself in the foot by adding people to mailing lists without permission, and you’re also putting yourself at risk. Most people who send Unsolicited Commercial Email in the real estate world, do so in violation of the CAN-SPAM Act, because they are too lazy or stupid to take a minute to find out what the laws are.

I know several people in real estate who have made it their mission to see that folks who engage in violations of CAN-SPAM are fined, because they are just sick of the SPAM and harvested emails. With that said, I’m sure that they are not alone in being tired of the crap in their inboxes, so I’m going to share with you information from the FTC’s website that is important for both consumer and marketer alike.

Marketers - If you violate this law, you’re doing so at your peril.
Consumers - If you get email from anyone who violates this law, contact the FTC OR forward unwanted commercial email to the FTC at spam@uce.gov.

Without further comment or analysis, I present:

The CAN-SPAM Act: Requirements for Commercial Emailers

The CAN-SPAM Act of 2003 (Controlling the Assault of Non-Solicited Pornography and Marketing Act) establishes requirements for those who send commercial email, spells out penalties for spammers and companies whose products are advertised in spam if they violate the law, and gives consumers the right to ask emailers to stop spamming them.

The law, which became effective January 1, 2004, covers email whose primary purpose is advertising or promoting a commercial product or service, including content on a Web site. A “transactional or relationship message” – email that facilitates an agreed-upon transaction or updates a customer in an existing business relationship – may not contain false or misleading routing information, but otherwise is exempt from most provisions of the CAN-SPAM Act.

The Federal Trade Commission (FTC), the nation’s consumer protection agency, is authorized to enforce the CAN-SPAM Act. CAN-SPAM also gives the Department of Justice (DOJ) the authority to enforce its criminal sanctions. Other federal and state agencies can enforce the law against organizations under their jurisdiction, and companies that provide Internet access may sue violators, as well.
What the Law Requires

Here’s a rundown of the law’s main provisions:

• It bans false or misleading header information. Your email’s “From,” “To,” and routing information – including the originating domain name and email address – must be accurate and identify the person who initiated the email.
• It prohibits deceptive subject lines. The subject line cannot mislead the recipient about the contents or subject matter of the message.
• It requires that your email give recipients an opt-out method. You must provide a return email address or another Internet-based response mechanism that allows a recipient to ask you not to send future email messages to that email address, and you must honor the requests. You may create a “menu” of choices to allow a recipient to opt out of certain types of messages, but you must include the option to end any commercial messages from the sender.

  Any opt-out mechanism you offer must be able to process opt-out requests for at least 30 days after you send your commercial email. When you receive an opt-out request, the law gives you 10 business days to stop sending email to the requestor’s email address. You cannot help another entity send email to that address, or have another entity send email on your behalf to that address. Finally, it’s illegal for you to sell or transfer the email addresses of people who choose not to receive your email, even in the form of a mailing list, unless you transfer the addresses so another entity can comply with the law.

• It requires that commercial email be identified as an advertisement and include the sender’s valid physical postal address. Your message must contain clear and conspicuous notice that the message is an advertisement or solicitation and that the recipient can opt out of receiving more commercial email from you. It also must include your valid physical postal address.

Penalties

Each violation of the above provisions is subject to fines of up to $11,000. Deceptive commercial email also is subject to laws banning false or misleading advertising.

Additional fines are provided for commercial emailers who not only violate the rules described above, but also:

• “harvest” email addresses from Web sites or Web services that have published a notice prohibiting the transfer of email addresses for the purpose of sending email
• Generate email addresses using a “dictionary attack” – combining names, letters, or numbers into multiple permutations
• Use scripts or other automated ways to register for multiple email or user accounts to send commercial email
• Relay emails through a computer or network without permission – for example, by taking advantage of open relays or open proxies without authorization.

The law allows the DOJ to seek criminal penalties, including imprisonment, for commercial emailers who do – or conspire to:

Use another computer without authorization and send commercial email from or through it

Use a computer to relay or retransmit multiple commercial email messages to deceive or mislead recipients or an Internet access service about the origin of the message

Falsify header information in multiple email messages and initiate the transmission of such messages

Register for multiple email accounts or domain names using information that falsifies the identity of the actual registrant

Falsely represent themselves as owners of multiple Internet Protocol addresses that are used to send commercial email messages.

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It’s 10am, do you know where your building inspector is? You certainly know where he isn’t, he isn’t approving the most recent work so that you can move on with your project. Your inspection was scheduled for first thing in the morning and the inspector finally shows up near the end of the day.  On the one hand you want to yell, scream and complain, on the other hand you know that you need him to sign off on the work so that you can proceed.  Outwardly you are respectful and cordial, inside you are seething and thinking, “next time I’m doing this without permits!”

Do I Really Need Permits?

It’s very tempting to do renovations without pulling permits.  You can save time, money and a big hassle, but at what cost?  The primary reason that municipalities require permits is so that they can be sure that work is performed to acceptable standards and that it meets all building codes.  The codes are created to set minimum standards for safety and appearance.  These standards give home buyers a reasonable level of assurance that a home is safe for them to live in. 

A lot of cosmetic work can be done without permits.  Installing new carpets, painting and simple changes do not normally require any kind of approval.  Major renovations involving plumbing, electric, foundations, extensions etc. almost always will.  A good starting point is the local building department.  They can give you an idea of what the local requirements are.  When in doubt, give them a call.

We Don’t Need No Stinkin Permits!

When working with contractors you need to be careful.  If they tell you that they don’t need permits to do the project you should check to be sure.  It could be that they are unlicensed or they may be looking to cut corners.  Be especially wary if they say that you can save money by not pulling permits, you may end up paying a lot more in the end.

Big City vs. Small Town

When working with a building department in a large city you a probably dealing with a bureaucracy and may not see the same inspector twice.  In a small town the local inspector may be the entire building department.  You need to adapt to whatever the situation is.  In a large city you want to develop a good reputation so that inspectors know that you are easy to deal with.  In a small town you need to make the inspector your friend.  Making an enemy of a small town inspector can be the kiss of death for your business as can a bad reputation in a big city.

Permits, inspectors and inspections can be a big hassle.  However, they are a part of the business and learning to deal with them can make your life a lot easier.

Tact is the ability to describe others as they see themselves. - Abraham Lincoln

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Alan Greenspan, the controversial former Fed Chairman, in an interview by the Wall Street Journal’s David Wessel gave us a few pearls of wisdom to ponder about the state of the housing market.

He starts out with a prediction calling for a stabilized market by summer of 2009. Greenspan admits depending on the size of the bubble certain location will see continued price declines after his deadline. But for the majority of markets, a never-ending price depreciation will end about a year from now…and I happen to agree with him on this point.

Denver, where I live, was first into the bubble (a smallish bubble at that) and will be the first out. We are already seeing signs of this as the Case-Shiller Index for Denver was up for 2 months in a row in May and June. However, Phoenix, Las Vegas and other markets like them were late to the bubble party and saw bigger price appreciation, so they won’t hit Greenspan’s target but will follow soon after.

Greenspan bases his prediction on supply versus demand statistics as well as rent versus own price corrections. He states it best by saying,

“It’s the imbalance of supply and demand which causes prices to go down, but it is ultimately the valuation of the commodity which tells you where the bottom is.”

He uses the current figure of 800,000 vacant homes and figures it will take a year to liquidate enough of those homes at lower and lower prices, that an equilibrium will be hit when investors feel the desire to hold on to the home rather than sell…put another way, when it costs more to rent than to own.

I like this dual methodology for analyzing the bottom in the housing market. Historically, home owners had to see a benefit from owning versus renting and landlords needed a premium to stay landlords. Greenspan knows a “corrected” market will return us to that state. He also informs us the number of households created in a year in the US today is 800,000…the same number as vacant homes, so the supply/demand component is covered too.

If prices could drop fast enough to make a mortgage payment less than rent for the same house…violia…the bottom is reached.

He warns against too much legislation, tax incentive, or bail out activity which could slow the speed in the drop of housing prices. Subsequently, he voiced he dissent on the GSE bailout by saying,

“They should have wiped out the shareholders, nationalized the institutions with legislation that they are to be reconstituted — with necessary taxpayer support to make them financially viable — as five or 10 individual privately held units,”

Greenspan fears a huge taxpayer bill coming due for Fannie Mae and Freddie Mac thanks to Hank Paulson’s new law…and I share his concern.

Wow…I agree with Alan Greenspan a lot here…I’d better go lay down.

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Last week I said I would present a solution to the foreclosure mess in today’s post. However, I was sidetracked by two pieces I read in a friend’s newsletter. Since they are about the recently passed housing bill, I think they are important. After you read them, you too may decide they are important.

The newsletter is: International Council of Online Professionals and is published by jl scott (sic). She is the Director of i-cop located at http://www.i-cop.org. The pieces were in the August 11, 2008 edition.

She gave me permission to reprint the two items as long as I left them intact with the proper attributions. Please pay attention to the ramifications of this thing called a housing bill.

As you read them you will notice several things, one of which is neither author is actively involved in real estate or real estate matters. These are two citizens who took the time to read the damned bill and discovered business as usual is the name of the game under the guise of helping people who are in a terrible life changing situation.

Housing Bill” Affects E-commerce Merchants
by Tom Mahoney

Last week, President Bush signed the Housing and Economic Recovery Act of 2008 into law. Sure, another law will fix it. Hidden in the 700-page bill are a couple of totally unrelated provisions.
One relates to hurricane recovery and gives tax breaks to a Canadian rail car manufacturer in Alabama. Of course, in true government style, this has nothing to do with housing relief but after all, someone had their hand out and got their hand-out.

There are also some provisions in the bill for home buyer credit; provided that you’re a first-time home buyer between April 8, 2008, and July 1, 2009, and make under $150,000 ($75,000 if you’re single.)
And there’s an additional $1,000 standard deduction against property taxes ($500 if you’re single.)
You wouldn’t think any of this has anything to do with E-commerce merchants that accept credit cards, but you’d be wrong. You’d be wrong because there’s also something in the law for us lucky merchants.
Starting in 2011, banks or other companies that process credit cards must report the amount of the payments a merchant receives on card transactions to the IRS. The law will not apply to merchants doing less than 200 transactions totaling less than $20,000.

We can all thank PayPal (thank you PayPal) that the exemption amount isn’t $600. Yep - they tried to make it $600, a whopping $50 per month, but PayPal successfully lobbied to raise it to the current level.
So, starting in 2011, even some smaller e-Bay sellers will have their income reported to the IRS.
Just thought you should know.
————
Tom Mahoney, Founder and Director of Merchant911.org
http://www.merchant911.org
————

More on the “Housing Bill”
by jl scott

I thought you should know, too. I’ve been watching this for a long time. But, as little as about two months ago, I read that Congress was rejecting it. Wouldn’t you know, they’d slide it through by hiding it in the “Housing Bill!”

And, you should know this will include third party processors such as 2CheckOut and PayPal (who Tom already mentioned).

Some self-righteous people will say, “So, what’s the problem? We all have to pay our taxes, anyway.”

True - But There are SEVERAL Problems …
Not the least of which is that government will now have access to information not just of the sellers but of the BUYERS.

Unless it is stipulated differently - which I would seriously doubt - everything you buy online will now be accessible by the U.S. Government - and it will not matter what country you live in.
It may not be on the original report, but it WILL have to be available to back up the data. And, if it’s available, they’ll take it any time they please.

Talk about lack of privacy!

Second, will be the additional paperwork for your tax preparer - which YOU will pay for. These reports to the IRS will ONLY state how much money you received. It will NOT show refunds or any charge-backs, etc. All that will have to be calculated.

Third - the merchant account companies are sure to increase fees. You can bet THEY aren’t going to pay for the extra help and hours to prepare these reports - YOU will.

Fourth - in the past, if the IRS wanted to get information from banks and merchant accounts, it required going to a judge and getting a subpoena. Now, the IRS can step in and audit at any time - with a little or no notice. (emphasis added by Tom Koziol)

I’ve been told by a CPA, who is also a registered agent for the IRS, this law MAY be repealed. SOMETHING definitely needs to be done about the loss of privacy for buyers. And subjecting innocent customers from around the world to surveillance by the U.S. Government, is truly unacceptable!

Don’t panic - but, don’t ignore this, either. Pay attention to whatever is coming next!

This was a rather long post but I thought if you didn’t know the government has pulled another end around your Constitutionally protected rights, you should. The bastards actually used a scammed up housing bill to put greater monitoring and reporting controls on us.

To anyone who says this isn’t germane, I say you probably don’t buy anything over the web or don’t have a web based – even if part time – business. If you use any of the online based foreclosure sites to locate properties, you could be a subject of this bill. If you use the web to make, or apply for, loans, you could be a subject of this bill.

The list goes on and on but I will stop there. I thank jl scott for having the foresight to print this material even though her site has nothing to do with housing or foreclosures.

As it turns out, my proposed solution will put an end to this kind of preying on the people by the politicians. Maybe the above information appeared at just the right time.

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I’m highly allergic to poison ivy and I get it about once a year. Here is how this yearly occurrence happens:

Every day, I take my lazy dog Toby for a walk in the woods behind my house. Once summer comes around, I take him on a walk wearing shorts and get poison ivy all over my legs. I promise myself that I will not wear shorts again, and for the rest of the summer I wear long pants. Well, another summer rolls around and I haven’t had poison ivy for a year and I tell myself that I won’t get it again. I take Toby for a walk in shorts, get poison ivy on my legs, and I wear long pants for the rest of the summer. This is pretty much my yearly poison ivy occurrence (I never said I was the smartest guy in the world…hey, I went to college for the social life, not to learn how to work for somebody else).

Anyway, I recently got my yearly poison ivy and now my legs are covered in it. I have had it about a week, hoping it would go away, but it hasn’t. So finally I broke down and went to CVS ready to buy anything that would ease the pain. I ended up buying a $20.00 bar of soap that is supposed to be some super-duper soap that has a special chemical which washes the ivy away. Yes…..I spent $20.00 on a bar of soap. Why did I do that? Because I was motivated to ease the pain of my poison ivy. I didn’t care about price, I cared about itch relief (prepare for cool metaphor, simile, analogy….whatever the heck it is).

New investors are always in disbelief that a seller would sell their house for 65 cents on the dollar. Or that a seller would let you take their loan subject-to or do a lease option. They don’t end up doing deals because they have the wrong mindset and think none of the creative stuff works.

So why does a seller sell for 65% or why do they let you take over a loan for no money down? Because they want to get rid of their “poison ivy”. The name of the game is motivated sellers and they will do anything to get rid of their property problems (they just want relief from their pain). This is where new investors make mistakes. If the seller is not motivated, move on. You cannot force someone to be motivated, so don’t waste your time. When you are screening a seller, the first thing you need to determine is motivation, because it is the most important aspect of real estate investing. And don’t forget it!

Alright, last week’s post was on lease options and all of my loyal fans (if I am my only fan, does that still count?) requested more info about how to do this method better and make more dineros. Over the next several weeks I am going to go over the nitty gritty details from A-Z of everything you have ever wanted to know about lease options.

Next week, I will show you the three best marketing methods to find lease option candidates and the crucial paperwork needed between you and the seller. Also, please respond to this post with any other questions you would like me to cover over the next few weeks about lease options (I first started out wholesaling, then became a lease option machine, so the method is near and dear to my heart……….I want to show you how to become a “player” with this method and use none of your own money or credit). So you better send me some good questions! And remember, there are no stupid questions, only stupid people.

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Is there finally some light at the end of the long, long, long, tunnel when it comes to the housing market mess in the U.S.? Well, the answer seems to be a firm—maybe! A small hint of light anyway.

According to a new report, home prices in different parts of the nation might still be falling, but they are falling at a slower rate.

And, says the report in Rueters, in some areas, home prices have even gone up, though not by much.

The best quote of the day belongs to Karl Case, who helped develop a well regarding gauge of the housing industry, the Standard and Poor’s S&P/Case-Shiller Home Price Indices. He told the news agency, “Anybody who tells you they know when the housing market will bottom is delusional, but anybody who denies there are some positives out there that could make the housing market bottom fairly soon is equally delusional.”

Will California Lead The Way?

California, of course, was among the hardest hit–if not THE hardest–housing market in this Depression-like downturn, mainly because the bubble was so large there, just waiting to POP!

And, of course, it is the most populous state in the nation. So, says one banking analyst quoted by Reuters, “The key is to try to get some stability in the price of homes, which appears to be happening in California.”

“California is the linchpin and so if the region flattens, that changes everything,” Karl Case is quoted as saying.

But…
Yes, of course, there is a big but…in fact, lots of big buts…that could quickly reverse the slight apparent progress we are now starting to see in some regions: Even though home prices still are declining for the most part, credit is still harder and harder to come by, even for those lucky enough to have a pretty good credit score. And, the fixed rate mortgage has also continued to climb, making even the biggest of bargins unattractive to many would-be home buyers.

It is also not clear how helpful the emergency housing measure Bush recently signed into law will be? Many experts predict it will not be very helpful because lenders will have to agree to take a bit of a loss by reducing the mortgage while home owners will have to prove they can afford the new, lower payments, which many will not be able to.

So, it is premature to say happy days are here again…but, they may not be as far off as many feared?

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Let’s take a look at some of the actual returns for a small apartment building investment over a period of five years. Whenever you are making projections into the future concerning investment returns it is always necessary to make some assumptions. In this case we will keep our assumptions very conservative and well in line with historical averages.

Also, I will be using as an example an eight unit apartment building with a purchase price of $300,000.00. I want to use a smaller property with smaller numbers because I believe that just about anyone, who properly prepares him or her self with the proper education and preparation beforehand can realistically purchase, manage and profit from an apartment building this size. There are many methods for securing the money for a down payment that I discuss in my course but I don’t have the time right now to list and explain them all.

The purchase price for our eight unit apartment building is $300,000.00. We are using a bank loan for 75% of the purchase price and we are making a down payment in the amount of $75,000.00. The Net Operating Income of the building is $27,750.00. Our annual mortgage payment on the property is $19,952.76 based on our 25 year bank loan with a fixed interest rate of 7.5%. After paying our mortgage payment the building’s cash flow is $7,798.00. This cash flow gives us a cash-on-cash return of 10.4%. (the cash flow of $7,798.00 divided by the down payment of $75,000.00.)

Let’s take a look at what happens to your returns after five years. We will assume that the building’s income has grown by 3% a year. We will also assume that the expenses have increased 3%. The fixed rate mortgage payment remains the same for the life of the loan.

The Net Operating Income has increased from $27,750.00 to $32,169.86.

The new Cash Flow for year five is:

The new Net Operating Income of $32,169.86

-

The mortgage payment of $19,952.76

_______________________________________

= $12.244.00 Cash Flow at Year Five

The cash-on-cash return has increased from 10.4% in the first year to 16.3% in the fifth year.

In the mean time the actual value of the building has increased by 3% each year to $347,782.00. And increase of $47,782.00 after five years

In addition, the mortgage balance has amortized. The principle amount of the 25 year fixed rate loan has decreased by $20,106.76. The remaining loan balance is now $204,893.24.00.

Putting aside the income returns seen from the Cash Flow every month for 60 months and just looking at the appreciation and loan amortization you have a total return of $47,782.00 + $20,106.76 or $67,888.76. That is a whopping 90.5% cash-on-cash return for a period of five years.

These kinds of returns for many investors who are stuck in the stock market might seem too good to be true. But, remember that we only used one real assumption and that was a growth rate of 3% which is well within historical average norms.

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