If you're a serious real estate investor, one of the best things you can do is work towards becoming knowledgeable in what we call Real Estate Technician skills. To review, a real estate technician is someone who understands the legal documents and flow of paperwork that accompanies a real estate transfer, or more technically, a conveyance.
There are many types of transfers: Legal title, equitable title, a real estate interest like an option, a leasehold transfer, assignment (transfer) of note or some other contractual interest. A real estate technician also has the knowledge to draft basic real estate documents like deeds, notes, assignments, options, and a host of other documents. The technician will use his own research and the aid of various legal form software to handle his documents, but he always is smart enough to have a knowledgeable lawyers or title company professional to review his work, especially in the early phases of his experience.
The Power of This Skill
You may wonder why learning this stuff matters. Here's why: You are in a much better position to understand distressed real estate opportunities when they appear. You'll be much better at sizing up the deal, like pronto quick. Many distress deals involve time deadlines. I've done deals in as quickly as 2 days. Also, there's a very hidden profit center in the fact that many on the low-end properties you come across have old liens that can be negotiated away or left on the property to see what happens. This game is not for amateurs or the uninitiated. There truly are hidden secrets.
Another skill a technician should be able to employ is title searching. When buying and selling distressed properties, being able to quickly and thoroughly check out a title is critical. If you come upon a fantastic deal, you should have the knowledge and checklist for checking to make sure the title is as the seller has represented it. Of all the different phases of being a technician, this area is the one that probably requires the most knowledge and double-checking. If you misinterpret the title search or just plain miss a lien, it can get ugly. I make it a point to use this on the little junker houses, and not for the big money deals like buying a large piece of ground or apartment complex. In these cases, definitely hire someone who has experience and an insurance policy if they screw the deal up. In any case, if money is involved and your not comfortable with the process, get a pro to research your title and make sure his or her results match yours. I have already done a quick search to make sure the deal really is as the seller said, then I sometimes hire out a second search to confirm my search.
My first tip is to start collecting forms and real estate documents. Set up a small form file in a file drawer. Have one for each of these categories: Deeds, notes, options, leases, assignments, mortgages and trust deeds, and miscellaneous forms. These forms can be filled out or blanks.
Start Asking Questions
Make a list of all the real estate legal type questions you don't understand and start asking more questions at your real estate closings. Ask the title agent or lawyer how such and such works, so that you begin understanding the process. Ask what if questions. Be careful when asking other investors or even governmental employees who don't know what they're talking about. Recently I spoke with one investor who bought a house at a state sheriff sale; one of the deputies gave him wrong information on lien property and it probably is going to cost him about $40,000. Dumb. Don't play in the major leagues if you're still learning the rules of the game. Investors are notorious for not knowing what's going on too! Be doubly careful when one of the old-timers from the investment club or barber shop says it can't be done!
Small Book Collection
Invest a few dollars in the next couple of years buying real estate law books for your state. Also, purchase a Black's Law Dictionary. This is almost a must. The dictionary will help you translate the hidden code in the legal garble. Our book, The Hidden Secrets of a Real Estate Technician is another book you should consider having since it is the only book on the market for real estate investors that explains the conveyancing and legal documents around real estate. This book is truly one of a kind. Very detailed compared to much of the rubbish on the market.
Learn Basic Legal Research
This is an important skill that you can master. I wouldn't ask you to get into reading a lot of court citations, but there are numerous shortcut methods to quickly and easily learn your state's law on a matter. In a very brief nutshell, there are state bar practice manuals that in many cases provide a nice review of the topics in questions. Typically, they have one on judgements and liens that should get you started along with using your Legal Dictionary. Tip: if you're not ready or can't afford to buy a legal dictionary yet, a good quality (large and comprehensive) dictionary will typically provide the legal meaning for a work. Some legal words have a non-legal meaning; therefore, the dictionary will give you both meanings, regular, and legal.
In summary, this isn't an arena for amateurs or simple-minded folk. Get started by getting a small file started. Ask other investors for forms. Attend meeting at investment clubs. Ask lots of questions even if you think there dumb or basic. Invest some money in some books (Avoid the overpriced, rip-off course that costs thousands). Visit the courthouse and ask the clerks to show you the basics of finding who owns a property and check out how much they paid from the deed. Check out a prospective deal you are buying by trying your own search, and then get your title company to research the title again. Compare results. I decided many years ago to learn this information and it's some of the best time and money I spent. I've saved several thousand in document prep fees and when I have used a lawyer I was able to clearly understand him and supervise to boot!