WIAcademy EducateBlog

The Art of Successful Trading

By Joe Inman

Trading is considered by many to be the most dangerous event short of war, and like the old saying goes “he who is well prepared has won half the battle.” You are going up against the best and brightest Wall Street has to offer and sometimes it feels they all have one goal, which is to take your money. If this is true, what can you do to survive and prosper in such a demanding profession? First, you must commit to yourself that your goal is not merely to trade but to trade successfully. Successful traders are patient and let the market come to them. It is not in their nature to force a trade. They realize it is better to do nothing unless there is something that should be done. All too often, those who are new to trading will commit the costly sin of overtrading. This occurs most often out of the fear that if they miss this trade opportunity, they may not get another one. Experienced traders realize it is better to miss a trade rather than get into one that only has a marginal chance of success.

An important first step is to make certain you are in a proper setting to trade, both mentally and physically. This is your business, and you need to be in a comfortable business setting and in an environment that is conducive to your needs. You must be able to concentrate on your trading, and I suggest that sharing the kitchen table with your son or daughter while they are doing their homework or sharing the table with your wife while she is fixing dinner will lead to a lot of poor trades. Similarly, you have to be prepared mentally to compete. Problems in your personal life can reduce your focus and poor health will lead to a lack of concentration. All of us have days where we are not up to doing our best. We have gone to work when we feel sick and in sports, it is somehow considered heroic to play while you are hurt. Trading, however, is different. If you are not up to playing your best game, then your portfolio will certainly suffer. You will not trade successfully using a laptop while you are lying sick in bed.

Successful traders continuously set higher goals, develop a well-scheduled planned time for studying the markets and analyze every trade. They use every loss to their advantage: to improve their knowledge of market actions. Many successful traders have told me they learn more from their losses than they do from their successful trades. I am amazed at how few beginners take the time to examine a trade and to analyze why it did not work out. Did you go against the trend? Did you see the proper support and resistance points? These are only two of the many important questions you should ask after every unsuccessful trade.

Most of our time as traders is spent on technical preparation, and I have often been asked by my students what I consider to be the most important technical tool. In my opinion, understanding and mastering the concepts of support and resistance are most critical. If you were traveling from New York to Washington, you would certainly want to know what entrance ramp to get onto the interstate, how long you needed to stay on this road, and which exit ramp to take. It is just as true in trading. Before each and every trade you need to know the exact price you want to enter the trade, how long you should stay in the trade, and most importantly, when you must get out of the trade. Support and resistance are the entrance and exit ramps on the road to financial success. If you understand these points you will be well on your way to becoming a successful trader. If you do not understand and employ these in every trade, then it will be impossible for you to achieve the success you desire and, quite frankly, you should not trade.

Another attribute of successful traders is they trade with their brains and not their emotions. Patience, perseverance, determination, and rational action will do much to determine the level of your financial success. Trading with your emotions leads to trading on fear and greed, two emotions that will guarantee trading losses at the end of the day. It is important for you to develop a pre-determined set of rules for your trading and to stick to those rules religiously. Your mentor can help you, but the rules must be unique to you and meet your needs. They should include a set of boundaries, which add focus and will help you limit the emotional reactions to your trades.

Never get into the market because you are anxious or impatient. Enter only those trades that meet the criteria of the rules you have established. In other words, Plan your Trade and Trade your Plan. While this saying may sound trite and simplistic, it is the single most important piece of advice that I can give to you. Remember that the most difficult part of trading is not prediction, but self-control.

Joe Inman is a stock mentor for Wealth Intelligence Academy®.

Posted 01:39 PM | Permalink | Comments (0)

Jim and Darlene B. of Fort Collins, Colorado, began their training with Wealth Intelligence Academy in November, 2005. While completing their training, they purchased 17 properties. Their most profitable deal was a lot they purchased for $86,000 and later sold for $268,000.

Today, Jim and Darlene have a full-time short sale business that produces, on average, about $30,000 per month and the total value of their real estate holdings exceeds $2.4 million. They agree that while their training has helped them to make considerable profits, it has also enabled them to help good people out of bad situations. In August, Jim and Darlene were inducted into the Wealth Intelligence Academy Hall of Fame.

Note: Jim and Darlene B. attended the following advanced training programs: Wholesale Buying, Foreclosure, Lease Option, Short Sales, and Asset Protection.

Disclaimer: Results from programs are based on individual effort and other factors, and are exceptional or atypical and are not to be expected by the average person using these programs or methods. Various advanced trainings are typically needed, each at a cost of approximately $4,990. Discount packages offered for courses purchased as a package.

Posted 01:33 PM | Permalink | Comments (0)

Business Capital:
The Life Blood of Your Real Estate Business

By Matt Fagerness

We’ve all heard about the numerous ways you can successfully do real estate transactions with no money down (or at least with a bare minimum of operating capital) and I am a believer in these techniques myself. After all, I was also a Wealth Intelligence Academy® student before becoming a trainer and a mentor for the Academy. I have done deals with owner financing and I have done my share of wholesale deals too, which goes to show that the no money down concept is alive and well, and that these kinds of deals are also something you can do.

With that said, let me shift gears just a little bit. It is often said that businesses (particularly small ones) usually fail for three common reasons. One is the business owner selects the wrong business to begin with. With real estate being as diverse and commonplace as it is, I am not concerned about this pitfall being in your way. Another reason that businesses may fail is they are poorly managed. Right now, your business is likely so small (personnel-wise) that management is not really a factor. On top of that, remember none of us need to be experts on all facets of the business and what you do not know can and should be delegated to your professional power team.

This brings us to the third and perhaps most common reason why young businesses struggle or even fail. It is because they are undercapitalized. Business capital is absolutely the life blood that drives all kinds of businesses worldwide and real estate investments are no different. Sure, we all have to start somewhere, but think for a minute about a recent real estate investment club meeting you may have attended. Most groups have new investors in attendance and most also have some bigger players. What sets the bigger players apart from those who are newer to the business?

It could be argued that experience or knowledge is what sets apart the new investor from the one who is out there doing more and larger deals. I will not dispute that and I will also add that most every big-time real estate investor I have ever met also had a significant source of business capital with which to operate. Coincidence? I don’t think so.

My point here is not to suggest that you are lacking the tools to be a big-time investor. Quite the contrary. You are in the process of gaining the knowledge and experience to become as successful as you want to be as a real estate investor. Now, it is time to add the final piece of the puzzle: business capital. When you start focusing on raising capital as much as you focus on finding high caliber deals, the potential for your business to grow and grow quickly will go through the roof. It is a model that has worked for countless businesses over the years and it is time for you to start thinking that way also!

What kinds of business capital are there? I can think of several, some of which you may be familiar with, and some of which you may not. Either way, all of these sources of funding can be powerful ways to start capitalizing your business for the future.

1. Available cash— While I do not usually recommend overuse of your own money (the opposite of OPM), this is always something to consider if you have cash available.
2. Unsecured credit lines— these would basically be credit cards and, again, while I do not suggest frivolous use of this source, it can help fuel smaller capital needs.
3. Business or personal loans—basically, I am talking about mortgages here. Whether they are personal loans, business loans, or hard money loans, they all help you get to where you want to go with your investments.
4. Secured credit lines—these would include business lines of credit, home equity lines of credit, and the like. I always recommend caution in using lines of credit and, that said, if the return on the investment exceeds the cost of borrowing the money, it may make sense business-wise.
5. Retirement accounts—this tool has significantly grown in popularity among real estate investors and is headlined by the self-directed IRA. As with any investment tool or capital source, use this type of tool wisely and know that it is available to you.

A sixth, and perhaps the most powerful source of capital, is venture capital. Venture capital is a loan or capital contribution from an outside party that is not a formal lender like a bank. Venture capital has been a powerful business tool for centuries and it also applies to real estate investment. Venture capitalists in real estate are often called private lenders and they can draw from any of the above-listed capital resources that you can! All you need to do is promote what you do and, as needed, show private lenders the many ways that they can help capitalize your business.

Private lenders can be powerful tools in growing and sustaining your business. Remember to be smart about how and when you use it. Laws on how to properly approach private lenders, and also how to set up agreements with them vary from state to state. When you choose to pursue this valuable (and arguably unlimited) capital resource for your own business, be sure to collaborate with your power team attorney to make sure you are following the proper steps and protecting both yourself and the lenders with whom you may be doing business.

As a closing thought, real estate investment has been and will long continue to be a powerful tool for financial growth. As you grow your own business, be thinking like a businessperson in the biggest picture sense possible. Focus on not just finding deals, but also on finding business capital. You will find your business knowledge, negotiating skills, capacity to do deals, and profits will all increase more than you thought was possible!

Matt Fagerness is an instructor of the Real Estate Sales and Negotiation Advanced Training and a real estate mentor for Wealth Intelligence Academy.

Posted 01:20 PM | Permalink | Comments (2)

The Hardship Letter:

Learn More about this Important Piece of the Short Sale Package

By Lauri Waddell

When a short sale is negotiated with the lender, a hardship letter from the homeowner is requested in the short-sale package. There are several purposes for the submission of the hardship letter which we will explore.

The hardship letter is a letter to be written by the homeowner detailing the events that led up to the default and pre-foreclosure of the mortgage. The letter should detail, in chronological order, the events that caused hardship which ultimately led to financial duress and the default of the loan. As investors, we must always keep in mind that “Life happens to good people.” No one intentionally chooses foreclosure. Our job as investors is to assist the homeowner in documenting the events that led to the preforeclosure of their home. We do this with an empathetic and professional approach that gives the homeowner dignity in the process of letting them tell their story.

Many students ask in the Short Sale training if they should write the letter for the borrower. This letter should be written by the homeowner, in their words, and in their handwriting. We may be able to assist the borrower in detailing the events that led to the preforeclosure, but ultimately the letter should be written by the homeowner.

The lender requires the hardship letter to validate its decision in negotiating a short sale or reduced pay off. The charter that governs the incorporation of the lender and its lending practices will govern the decisions made on the short sale of the package.

The hardship letter will also assist the lender in determining if the property qualifies for a tax liability (a 1099 form will be filed against the homeowner if it does qualify). This tax liability may be assessed by the lender on properties that are not owner-occupied or the primary residence of the borrower. The lender has the ability to not file a1099 due to the financial hardship and duress of the borrowers.

In reviewing the hardship letter, the lender is able to assess the borrower’s situation and determine if the borrower will be able to reinstate the mortgage payments and/or continue to satisfy the mortgage with regular payments.

The hardship letter should be handwritten or typed by the borrower. If the borrower handwrites the hardship letter, the investor may want to retype the letter and send a typed version along with the handwritten letter. This will ensure the hardship letter is read accurately and easily by the loss-mitigation department. The loss-mitigation department will determine if a short sale is allowed. Making sure the hardship letter is legible and in proper order will facilitate a more timely evaluation and processing of the short sale package.

The hardship letter will be part of the stacking order requested by the lender. All hardships listed in the letter should be fully documented and any verification should be added as an addendum to the package.

For example, if a car accident resulted in injuries that prohibited the borrower from working and ultimately lead to the default, then any documentation related to the car accident and subsequent incapacities should be included in the hardship letter. “See addendum A” in parenthesis is a simple and common method used. Multiple addendums should be added at the back of the package under a tab listed “Addendums.” For example, addendum A might be a copy of the accident report, addendum B may be a copy of the emergency room visit after the accident, addendum C may be a doctor’s report, and addendum D may be a copy of the employer’s notification of laying off the borrower. The hardship should be explained in detail, in chronological order, and with proof of the events added as specific labeled addendums to the Addendum section.

The hardship letter should be factual and accurate without exaggeration or emotional influence. The short sale package should be presented in a professional manner. Accurate and thorough documentation is important to create a professional, first-class hardship letter that stands out among the rest.

The hardship letter is an important piece of the short-sale package. Your job is to assist the homeowner in documenting the hardships in a factual and professional manner. Do not write the letter for the homeowner. Offer your assistance in detailing the chronology of events as well as assisting the homeowner in gathering the documents or items that will verify the hardships. A strong, professionally-documented hardship letter is a key component of the lender’s decision to negotiate a successful short sale.

Lauri Waddell is an instructor of the Wealth Intelligence Academy® Short Sales and Mortgages Advanced Training.

Posted 01:12 PM | Permalink | Comments (0)

While not the primary reason, mortgage fraud has certainly played a role in the current mortgage crisis and has had an impact on real estate markets across the country. It's easy to understand how a naive homebuyer could become a victim of mortgage fraud, but don't think you're too smart to fall for a scam -- even sophisticated investors are at risk. According to the FBI, losses due to mortgage fraud are $4-$6 billion annually.

For tips from the FBI on how to avoid becoming a victim of mortgage fraud, visit http://www.fbi.gov/page2/august08/mortgagefraud_081408.html

Posted 01:21 PM | Permalink | Comments (0)

According to a survey featured in Consumer Reports September 2008 issue, many real estate brokers are willing to negotiate their commission rates with sellers who try to haggle.

The survey found that 46 percent of sellers who responded attempted to negotiate a lower commission rate. Roughly 71 percent succeeded. The survey also found that sellers who paid commission rates of 3 percent or lower were just as satisfied with their brokers’ performance as those who paid 6 percent or more, suggesting that negotiating can’t hurt.

Respondents who paid extra, in fact, were more likely to say they had regrets about the selling process. Nearly one-third said they should have been more assertive in negotiating their agent’s fee.

Paying less won’t hurt the quality of service. While some of the survey respondents who paid lower commissions got fewer services from their agents, the gap wasn’t significant. For example, 81 percent who paid 3 percent or less said the agent provided a competitive market analysis of their home, compared with 87 percent of people who paid 6 percent or more.

Another interesting finding from this survey is: 82 percent of respondents who sold with the help of an agent received $5,000 less, on average, than their original asking price. Almost all of the 17 percent who sold their homes without an agent said they received about what they originally asked.

Posted 04:49 PM | Permalink | Comments (0)

Why do people fail to reach their goals? They usually have a vision and know what they want. They often put together a plan. But then they still don’t get where they want to be. Why?

Most of the time, it’s because they don’t take action. They fail to execute their plan.

Goals are important. A plan is essential. But without action, all the goal-setting and planning is a waste of time.

So think about it. If you haven’t yet reached your goals, could it be because you’re still milling around on the starting line?

Posted 12:00 PM | Permalink | Comments (0)