Foundation To Success Ebook

Table of Contents
Introduction . ................................................................................................................. P. 3
Step 1: Know the Foundation to Success ..................................................................... P. 6
Step 2: Know Your “Who” and Your “Why”................................................................ P. 8
Step 3: Learn How to Find Incredible Properties ......................................................... P. 10
Step 4: Evaluate the Properties . ................................................................................. P. 19

Step 5: Purchase These Properties Using the Two OPM’s ............................................ P. 24
Step 6: Put the Property Back Up for Sale . ................................................................. P. 27
Step 7: Create and Enhance Equity Through Use/Condition Change .......................... P. 30
Step 8: Sell for a Profit ............................................................................................... P. 32
Step 9: Refinance for an Equity Position ..................................................................... P. 34
Step 10: Prosper and Teach Others this System .......................................................... P. 36
Next Level Training ...................................................................................................... P. 38

Foundation to Success
Introduction
INTR
I Introduction
Congratulations on downloading this experienced-based investing information eBook. My
desire to share this information springs from my past. I have been an investor for 14 years
and a real estate agent for 13 years. I have learned and seen how hard it is to make it big in
this business. There are many obstacles to overcome before you can become successful in
real estate.
I have worked very hard to overcome these obstacles, including other people’s negativity
and my personal limitations, in order to become a very successful investor. I’m providing
this information to share the system I have learned so that perhaps it can help you to also
overcome the obstacles to successful investing in your life.
I have traveled across this country, spoken with thousands of investors and been in countless
markets. The formula for excellence in investing has been the same wherever I go. I have
yet to find a market location where this system does not work on an incredible level. This
includes metropolitan, rural and small cities.
This system also works in any type of market. Whether the market is up, down or flat, these
principles work. In fact, I have often said that the Foundation to Success works great in good
markets and even better in bad markets.
What you are about to learn will change your life if you let it. I have seen it change
innumerable lives already all across this great country.
The system works principally on one concept: investors must learn to see real estate for what
it can be, not for what it is. One must then work tirelessly to profitably change people and
properties into what they can be. Anyone can see things for what they are. Most people do.
Very few people are able to see the vision of what a property can become. This system will
teach you how.
Please read The Foundation to Success eBook with an open mind, as it is probably different
than anything that you have ever seen before. You should be familiar with each its parts, but
the sequence and motives in the actions introduced are truly unique. If you dedicate yourself
to the system, incredible success will result.
- Mike Watson CRS, ABR, GRI, IRR - Investing REALTOR® and Partner of Investing
Agents nationwide
10 Steps Any Investor Can Use to Create Immediate Investing Results

Introduction
A Powerful Example
To illustrate the steps of the Foundation to Success eBook, I will use an example of a recent
personal investment. This deal is a great example of how to maximize the potential of a
property and how to create profits that others simply don’t see!
My team and I found this home in a mid-sized metropolitan area. It was 75 years old and had
been neglected in every way possible. The inside was barely inhabitable. The landscaping was
overgrown and/or dead. I do not know if there was anything about the property that did not
need to be fixed or changed. The seller was trying to get market value for her property. It
was a great price, but the condition of the home made it a very average deal. However, I was
not an average investor. I knew a few more tricks than just the carpet and paint fixer-upper.
Most investors would have bought the property, put carpet and paint in it, cleaned up the
landscaping and tried to sell it for a profit. That may have worked, but I knew the property
could be so much more than an old beat-up house with new carpet and paint.
Before I found this home, I had gone to the city and determined the areas where we could
take properties from one use (such as a home) and convert them into a much higher and
better use (such as a condominium complex). I found one incredible area that was zoned for
25 residential units per acre. I got a city zoning map and outlined the streets and properties
that allowed for this incredible use. I was extremely confident that I could find properties in
that zone which were utilizing less than the 25-units-per-acre allowance.
I then located in that area of the city all of the listed properties for sale, the expired real estate
listings, the for-sale-by-owners, for rents, vacant properties, distressed properties, notices of
default and pre-foreclosures. Next, I asked myself which of these properties was utilizing less
than the already approved 25 units per acre. Of the properties I found, one of them was this
distressed old house on 0.63 acre lot. My research indicated that this home should not be a
carpet and paint rehab; it should be a 15-unit condominium project. (25 units x 0.63 acres =
15.75 units)
I gladly paid full asking price for the distressed home, even though the price was strong for
a carpet and paint job. I could have put $40,000 in remodeling in the home and yard and
maybe sold it for a $15,000–$20,000 profit. However, this wasn’t very appealing to me. I
didn’t want to do all of that work for such a small profit. Besides, I saw the property for what
it could be and closed the deal.
Once we closed, I immediately put the property back up for sale as a 15-unit condominium
project in progress, instead of a carpet and paint rehab. I listed the property for
approximately $90,000 more than I purchased it and announced to the world that they

Introduction
could come in and complete the condominium project for a profit, or I would. The fun part
about our system is that I didn’t really care if the property sold or not. See, in our system,
you make money if your property sells and more money if it doesn’t.
We listed the property on a Friday and had 3 full-priced or greater offers only three days
later. The offer we took was over asking price, had an earnest money of 5% of the asking
price and a quick cash closing. We closed 28 days later and made just over $65,000 in net
profits after commissions, closing costs, city fees and carrying costs on the deal. We did not
do any fix-up work to the home and did very little work at all.
The property sold to a builder who wanted to do a condominium project. He was grateful
to buy our property because he could not find any places to do a project similar to this one.
We sold the property for what it could be (a 15-unit condo project), not for what it was (a
beat-up old home that was in foreclosure). From purchase to sale took less than 70 days.
We made almost $1,000 per day for each day of ownership.
You may have questions of how we completed this process. The following system will
explain the answers to your questions in detail. As we proceed through the Foundation to
Success, I will refer back to this property as the example so that you can better understand
how this system works in its entirety. Please remember this project for that purpose.
Here are the Ten Steps of the Foundation to Success:

1. Know the Foundation to Success
2. Know your “Who” and your “Why”
3. Learn how to find incredible properties
4. Evaluate the properties
5. Purchase these properties using the two OPM’s
6. Put the property back up for sale
7. Create and enhance equity through use/condition change
8. Sell for a profit
9. Refinance for an equity position
10. Prosper and teach others this system

1 - Know the Foundation to Success
STEP
1 Know the Foundation to Success

Amazingly, you do have to know the system to be successful at it. You may have detected
a hint of sarcasm in that last comment. I have traveled all over this country teaching an
incredible two-day seminar on The Foundation to Success. I guarantee that the system
works in any market and with any type of real estate.
I include a lifetime membership in my base camp “Becoming Your Own Best Client” so
people can attend as often as they like for as long as I teach the class. I allow students to
continue to attend so that they can learn every principle of this system on an expert level.
Consequently, I get to see my students over and over again as I travel back and forth to
different cities.
My repeat students usually fit into one of two groups. Group one consists of people who
have dedicated themselves to this system. They have learned, mastered, memorized and
put into practice the principles of the Foundation to Success. Because of their efforts and
commitments to this system, they have realized incredible profits and equity positions in
properties. They can see their path out of the way life used to be. We rejoice together in
the success they have encountered in their lives. These students find themselves forced to
share this great plan with others they come in contact with. They also recruit others into this
system to enable themselves to get more accomplished through leveraging people.
Group two consists of the people who have not learned the system and/or applied it. They
often come up to me and tell me in one way or another that my system doesn’t work. I
always ask them, “Which part of the Foundation to Success is not working for you?” If they
can answer the question, which less than 1% of my students are able to do, I then promise
to help them fix the step that is not working so that they can have and enjoy the success
that my other students are having.
The reason so many are unable to answer my question is because they do not know which
step is not working for them. They have not learned the system! I always fervently tell my
students not to expect a system they do not know to work for them. We must learn it to live
it! If we live it, we will have incredible success with it. The blessings of work and knowledge
are innumerable. Many people truly believe that their lives will be changed by simply reading
a book or attending a seminar. The application of the learning is often the forgotten step on
the way to success. I have very little to do with the success of my students after they leave
the classroom or finish the book.
Some students believe in the Foundation to Success so much that they have a copy of it
hanging in their offices, cars, homes, kitchens, bathrooms and even bedrooms. It serves
as a constant reminder of the way that they want to think and view property. The process
takes hold in their thinking and in the ways they practice their business. They begin to think
differently. When we think differently we are capable of acting differently. When we act
and think differently, we get different results.

1 - Know the Foundation to Success
The joy of this system is that it works and it is very simple. Do not let the simplicity fool you.
You do have to do the steps in sequence and in the way I teach them. The system works if
you work. You must decide to be in Group One or Group Two. This will be determined by
your willingness to embrace the system, think differently and work hard. Let’s get started!
Your destiny awaits you.

2 - Know Your “Who” and Your “Why”
STEP
2 Know Your “Who” and Your “Why”

One of my favorite sayings is, “If you don’t have a powerful reason to be successful, you
won’t be!” I think this statement especially rings true in real estate. Real estate investing is a
very difficult business. There is an incredible amount of competition and no guarantee of any
kind for success.
I remember early in my career the struggles I went through. One of the powerful reasons I
had to be successful was I felt strongly that I had to prove the doubters and negative people
around me wrong. I honestly could not bear the thought of someone believing I could not
make it in the tough business of investing and have them be right!
I decided I would do whatever it took to be successful. I knew I could do it if I made the

decision to. I made the decision and committed to be successful, no matter what it took. I
have always been a believer that I could accomplish anything I put my mind to. Looking back
on those early years, I am glad I had a big reason to be successful because my career was
filled with setbacks and disappointments. However, I took the knocks that life threw at me
and succeeded anyway.
After I had achieved a substantial amount of success in my career, one of my key detractors
told me how proud of me they were and how I had essentially proved them wrong. I was very
touched that this person, who I cared deeply about, realized and acknowledged that I had
become successful. While I was very proud to have proven my point about success, I realized
something I hadn’t anticipated: my motivation to be successful was gone. I no longer had
anything to fight against. I did not have people to prove wrong at that stage in my career. The
amazing thing was that I floundered and sputtered. I was not motivated to fight when things
got tough. I was shocked that things developed that way. After about six weeks without
this motivation, I realized that I had to quickly come up with something to strive for again. I
looked deep inside at the things I wanted to do and be and set new goals.
I soon as I found the right goals that touched me I took off again and went to even higher
levels of success. Since that time I have had to check my motivations a couple of times a year
and ask myself a few key questions.
Let me share them with you.

• Why do you need to be successful?
• Who do you need to serve and help to get there?
• Who can you impact with this life change?
Those three questions have helped me find the two key ingredients to motivating people
to success. The two key ingredients are why do we need to be successful and who are we
going to do it for? Once we start to figure that out, we can begin to form our motivating
statements.

2 - Know Your “Who” and Your “Why”
Steps to take in forming your Who and Why Statements:
1. Ascertain your Why

2. Determine your Who
3. Take the above findings and form your motivating statements.
4. Writing your statement and post it in a conspicuous place as a constant
reminder
5. Start living by the power that it possesses.
6. Review your statement occasionally and make certain that it still is a
motivating and powerful force in your life.
Here are some helpful hints in writing your motivating statements.
The Why Statement
Part 1 – The Why

I will not stop investing until I ____________________ .
My Why Statement goes as follows:
“I will not stop investing until I have shared my vision for investing, my financial and life goals,
my retirement plan and gift to teach and inspire with everyone I come in contact with.”
Part 2 – The Who
I will not stop investing until _____________ lives are impacted and blessed.
My Who Statement goes as follows:
“I will not stop working and investing until my wife lives the life she deserves, my children
have the confidence and tools to fulfill their ambitions and dreams, my extended family and
future generations live in abundance and prosperity, and I touch all of those people that will
hear my message with the gift I’ve been blessed with and the plan that I am implementing”.

3 - Learn How to Find Incredible Properties
STEP
3 Learn How to Find Incredible Properties

I am a proponent of two property-finding techniques. The first I refer to as non-competing
methods. The second are called competing methods.
Non-competing methods by definition are programs and ideas investors use to find incredible
deals that others are not using. I strongly believe that if we want to get different results
than others are getting, we must use different methods. Non-competing methods then are
property-finding techniques that are unique to our business. They put us in a position of no
competition with others.
Non-competing methods are based on two premises. The first is that we look for properties
that are not for sale or on the market. The second is that we think differently when finding
and evaluating properties so that we can have a different outcome after our deal is done.
Some examples of non-competing methods are as follows:
Non-Competing Methods for Property Location

• Door knocking
• Driving around
• Neighborhood dissemination
• Power Team
• Area of Expertise
• Core Clients, Sphere of Influence
• New REALTOR® advertising
The second method for property location is what I refer to as competing methods.
Everywhere I go investors tell me they do not want to do the same activities that other
investors are doing. I tell them that I have incredible success doing what others do when I
perform those same actions with a different thought process.
A competing method by definition is a property procurement technique that others are

using. Therefore, we are in competition with others for the same properties. However, since
we look at the properties differently, we get different results.
Think back to our property example at the beginning of the booklet. Finding that property,
which yielded a big profit in a short time frame, used both competing and non-competing
techniques.
The competing technique was to find properties at the county courthouse and in
newspapers that were in foreclosure or a notice of default status. A notice of default is
filed against a property’s title when the property owner fails to make several payments. The
lender considers the loan to be in default and files a notice as such at the courthouse. The
property owner must then cure the notice by paying the required reinstatement amount or
the property will go into foreclosure.
10 Steps Any Investor Can Use to Create Immediate Investing Results 10

Many investors look for properties that are in a state of financial distress. We often compete
against people that have located a property the very same way, but our bidding techniques
and pricing format are usually very different. This is where the non-competing technique
comes in. Most people would come in and bid the house down from the investor to get as
good a deal as possible. I have always seen that as a poor way of doing business. People
who are in foreclosure and have a notice of default filed should not be taken advantage
of. They should be helped as much as possible so that our dealing with them is a win/win
transaction. Let’s look at how a typical investor would see the possibilities on this deal.
Purchase Price after Negotiation (Asking Price $129,000) $115,000

Cost to fix up $28,000
Holding and end closing costs $12,000
Total costs on home $155,000
Value after work $180,000
Total profit $25,000
Some or even most would not even see this as a deal worth doing. However, as previously
mentioned, we decided to look at the property in a non-competing method. We saw the
property for what it could become, instead of for what it was. Through our non-competing
research we realized the property had a much higher and better use. Therefore, we were
able to pay full asking price for the property. This allowed the seller to capture all of their
remaining equity, leave with some dignity intact and have some money for a fresh start. We
still got the property at a great price and made a huge profit. Let’s look at our numbers.
Purchase Price $129,900

Work on property (platting, site planning, city fees etc.) $4,100
Holding and end closing costs $10,000
Total costs on project $145,000
Offer from subsequent buyer based on Higher and Better Use $210,000
Total profit $65,000
As you can see, since we looked at the property differently, we got different results than
other investors would have. We also helped the seller out on the same transaction.
My need to think differently started very early in my investing career. I realized that chasing
clients and often working for free wasn’t for me. I learned a valuable lesson on finding deals
on my very first short-term transaction.
Early in my career I owned a couple of long-term properties, but I had not yet done anything
in the short term. One day I received a call from a local real estate broker telling me about
a listing he had that had a subdivision potential. He continued to tell me that he had a

property on a corner lot that had a big enough parcel to subdivide off another lot. I could
buy the one property and turn it into two and profit from my activity.
I was a little skeptical at first. I wondered why if he had such a good and profitable deal he
would not do the deal himself. I also wondered why the 50 other agents in his office chose
not do the deal either. I decided to check out the listing anyway and see what I could find
out. I saw the property and noticed that it indeed did have a bigger lot than most.
1)
18,000 Square Foot Lot, 8k min. lot size
9k
I then went to the city planning
1)
and zoning offices and asked the city planner if I could in
fact subdivide the property2) into two lots. He confirmed that it was possible and showed me
the zoning regulations and development standards 9k for
that area. He showed me a use chart delineating all of the uses in that zone that I could
choose from.
Duplex / Twin Homes
1) 9k
8k
2)
3)
10k
9k
Duplex / Twin Homes
9k
8k
2)
For some reason, I asked if3) dividing the lot into two was the property’s highest and best
use. He told me the lot could actually be divided 9k
10k into three lots instead of two if the second
two lots had homes joined together in a zero lot line. I thought it was a great idea and
away I went.
Duplex / Twin Homes
8k
3)
10k

I made a great profit on this deal and knew for sure that I should be doing short-term and
long-term deals at the same time. This would create wealth for me now and wealth for me in
the future.
When I got done with this first deal I was so excited I decided to no longer work with clients.
I would just go out and invest for myself. I would do short-term deals for “now” money and
long-term deals for future wealth. However, one problem came up. I did not have any more
short-term deals to do.
My first thought was to call the agent who told me about this property back and ask him
where the other ones were. I called and he said he didn’t have any more. I told the agent
that he should go find some. We could set up a system. He lists them and gets a listing
commission and I buy them making a buying commission and a big profit. He told me he just
stumbled on to that one and had never listed one like that before. He wished me good luck
and got off the phone.
I was devastated. I wasn’t sure what to do anymore. I started thinking that I got lucky on
this one deal. However, after I calmed down I remembered two things. The first was that the
property was listed on the Multiple Listing Service. I figured that there were probably others
like it on the MLS; I just needed to find a way to determine which ones could be small lot
subdivisions.
The second thing I remembered was that the city planner gave me a list of uses for the zone
the property sat in. I realized that if I found other properties in the same zone that they must
have the same available uses. I excitedly began scouring my MLS based on lot size and zone.
I also began looking for properties that had big enough lots for subdivision in the zone, but
weren’t for sale. I would talk to the owners and see if they were interested in selling their
property.
Using the MLS with searches based on property zone and lot size was a competing method.
Thousands and thousands of people use the MLS and have access to it. I had been on the
MLS as a member and never used it in that manner before. This was a competing technique
(MLS) with a non-competing application (Using zone and lot size to realize higher and better
uses). Once I started thinking differently, my career results changed in massive fashion.
Within a mile’s radius of that property I was able to do over 30 transactions in the next year
or two. I also began to work many other areas.
The following is a list of a few things that we typically use as investors that others compete
with us on. The list is more extensive than this, but this is a good start. Remember, doing the
same things others do is a good idea when we take different steps with a different thought
process in mind. This yields a different result.

Competing Methods for Property Location

• Multiple Listing Services
• Websites (REO)
• Bank properties
One of my first non-competing techniques was to utilize the Multiple Listing Service
differently than I had before. I started using the agent property remarks to search for key
words. Key words to me meant one thing to regular investors and another thing to non-
competing investors.
Let me give you a perfect example. The first remark on the list is “TLC.” Most people think
TLC means tender loving care. This is usually applied to a property that is in bad shape and
needs some fix up or remodeling. If investors look at this property at all, they will try and
find a fixer-upper opportunity for a profit.
I am not opposed to doing fixer-uppers, but there are many more lucrative things to do than
that type of investment, as shown by our original property example. The initials “TLC” to a
non-competing investor mean that we may have a run down property in an undesirable area
of town. Run down properties often yield discounts, but more importantly they are often
located in areas of town where the cities want revitalization done.
When neglected properties group together, cities and counties often offer many incentives
for redevelopment or urban renewal. We will look for these incentives. These incredible
incentives often come in the form of allowed or conditional higher and better uses. These
uses allow us to take what is there and transform it into something much more valuable for
us and the surrounding community.
Powerful MLS and Advertising Search Remarks

• Maps
• Plat or plats
• Bank owned
• As is
• Variance
Another non-competing technique we use is driving around neighborhoods looking for

distressed properties. Again, the regular investor will see a home from the following list of
distressed properties and think that they have found a potential fixer-upper. Driving around
forever hoping to find a distressed property may not appeal to you. It doesn’t appeal to me.
We don’t find these properties aimlessly driving around for less than lucrative fixer uppers.

We first go into the city offices where we wish to work and identify zones and
neighborhoods where higher and better uses, revitalization incentives, renewal proffers,
overlays (areas that have special zoning opportunities) and economic incentives for
development already exist. Then when we find a physically distressed property from the
following list, we don’t have to pay as much for it and the condition of it doesn’t matter
because we are just going to tear it out anyway. Most of my fixer-uppers these days are
done with a track hoe and a bulldozer. This starts the tear-out process preparing the
property for the new higher and better use.
Finding Distressed Properties

• Boarded up homes
• Lights always on or off
• Blinds always open or shut
• FSBO’s
• Out of area phone number
Finding distressed sellers becomes a great non-competing venture also because distressed
sellers often have distressed properties and need to sell. Most people work this group of
potential sellers for the often lucrative discounts that may exist due to the problems in
the seller’s lives. We however try and identify the sellers whose properties exist in places
that allow for higher and better uses. This again allows us to create win/win transactions,
inject new life into neighborhoods and take advantage of city-backed incentives for
redevelopment.
Finding Distressed Sellers

• Job transfers
• Poor property manager
• Notices of Default
Another non-competing idea we have is to undertake a comprehensive study of the city

or county we wish to work in. We will then go to the city planning and zoning offices to
determine which areas offer higher and better uses that are not being utilized. Our property
example at the beginning of the booklet is again a perfect investment opportunity waiting
to happen in communities all across the country. The funny thing about this neighborhood
is that it was full of older homes on smaller lots that all had the same opportunity for use
change and development.
In the absence of our own original ideas, I believe strongly in practicing the Laws of Mimicry.
These laws basically teach us to look at what has been done out in the market and ask
ourselves how we can improve it. I use the following questions to be my guide in these
activities. In fact, I ask myself these questions every time I see a new development of any kind.

Mimicry is another reason that I suggest that you go to all of your city council meetings.
When you are watching the deals be presented and decided on, a great learning process
takes place. I also recommend regular attendance at the Planning Commission meetings.
These meetings are to check the validity of the project against the zoning standards and
intent. These two meetings teach us a lot about the direction the city is going to head.
Ask the Questions of MimicryTM

• Question One – How did others do the things that they did?
• Question Two – Where can I do the same things?
• Question Three – How can I do it better?
The answers to these questions are extremely important. In fact, I was recently in a city
where I was driving down the street and saw a public notice for a variance hearing. A
variance is when the city or county agrees to change the zoning from the underlying zone
to a petitioned zone for one property or project only. This is typically a tall order because if
a city wanted the property to have a different zoning designation, it would usually just zone
the property that way. However, variances are great learning experiences because people
have to have a really solid case to get a municipality to allow zoning changes.
I was going to be at the planning office the next day so I took down the zoning case number
to find out what had happened at the hearing. This was the end of August in 2006. The
date on the variance hearing was from 4 months earlier. I asked a planning official to pull up
the case if the variance request passed.
The woman working behind the counter proclaimed, “Of course it did.” I was very surprised
that she said of course. I replied, “Aren’t variances hard to get?” She said, “Usually, but not
over there.” I then asked, “Over where?” She said again, “Over there.” I then asked, “Do
you have a map of over there?” She said she did and gave me a copy.
I was extremely intrigued at this point. I asked why it was not hard to get a variance “over
there.” The worker explained that the municipality had decided to improve the area by
offering development incentives. The incentive they were offering was a guaranteed zone
change from R-2 (8 development units per acre) to R-3 (18 development units per acre) for
anyone who applied, paid $750 and went to two hearings in 45 days. The kicker was the
fact that they would also approve a site plan for your project in the same time frame.
I was excited and shocked that such a great opportunity existed. I then asked how many
people in that area had used this special incentive. She replied that the project that I had
inquired about was the only one that had been done thus far. I was amazed that such a
great opportunity existed and no one was using it to obtain higher and better uses in zoning.
I asked her why she thought no one else had done anything and she said she felt like it was

due to the fact that the information had not been published yet by the county. She said they
were backlogged and there was no way anyone would know about it unless they had asked
about special incentives or attended a meeting where it was discussed.
I very quickly put six properties under contract in this area and had zone changes and site
plans on all of them. Here is the before and after (following page) concept on the first one
we did.

As you can see, we took a vacant and distressed lot and turned it into something pretty
cool. When completed, we will have a new project with a higher and better use in a
neighborhood that really needs a shot in the arm. Due to the price of the property that
we obtained, builders will be able to provide much-needed entry-level housing for that
neighborhood. Different opportunities exist like this all over the country and they can be
found practicing the Questions of Mimicry and attending the city meetings.
I also recommend regular attendance at the Planning Commission meetings. These meetings
are to check the validity of the project against the zoning standards and intent. These two
meetings teach us a lot about the direction the city is going to head.
THE PROPERTY “BEFORE”
THE PROPERTY “AFTER”

4 - Evaluate the Properties
STEP
4 Evaluate the Properties

One of the first short-term investments I did ended up with a profit of approximately $2,300.
I realized very quickly that I was less than two more mortgage payments away from losing
money on that deal. I also realized that had I missed by even a little more on my expenses I
would have lost money.
I was grateful to have escaped the project with a profit, but was sad I did not make more. I
decided to analyze why I had come so close to financial failure so it would not happen again.
In fact, with each transaction thereafter I took a hard look at the deal to learn where I could
have performed better.
I determined that the two worst things that could happen to me were not being to be able
to sell the property for a profit and being forced to keep a long-term asset that did not have
a positive cash flow. I decided to create a deal evaluation process that not only covered
those two bases for me, but also did much more. Below are the six steps to incredible
deal evaluations! By the way, you can’t be an expert investor if you are not an expert deal
evaluator.
Step 1 - Highest and Best Use (Lesson 4 Video Includes Optional Step 7)
The most important criteria in evaluating a property is determining the Highest and Best
Use. The majority of properties I see in my travels around the country are not used to their
full potential. You may wonder what highest and best use is. I believe a property’s highest
and best use is usually the highest density for the property. If we go back to our example, a
single family home on a 0.63 acre lot is not the highest and best use for this property. A 15-
unit condominium project is.
Some of the questions I ask myself as I drive around are, “Is this property being used for
its highest and best purpose?” and “What other uses are allowed in this zone?” These
questions have taught me to think differently when analyzing property.
The next thing I will try to do in evaluation is to take existing use and compare it to all other
possible uses. I do this by getting a Land Use chart from the city, looking at that particular
zone and comparing the current use to the accepted uses and conditional uses. I try to
determine which of the uses will allow for the larger number of units in my development.
I will also take the current zoning map and compare it to the future zoning map. The future
zoning map is often called the Comprehensive Plan or the Land Use plan. The current zoning
map tells us the zone as it sits now and the Comprehensive Plan tells us where the city
wants the zone to go. Often, the zoning intent for the future is a better application than the
current zone.

Once I have reviewed the potential uses and chosen a higher and better use, I then figure
the acquisition cost of the property, the cost to change it from what it is to what it can
be, the holding costs and the sales costs. This gives me the Total Acquisition Cost (TAC). I
can then compare the TAC to the future improved value to determine my profit or equity
position in the property.
The formula is very simple:

Future Improved Value
- Cost of property
- Cost to build and develop
- Holding costs
- Sales costs
= Profit or equity position for the project
Step 2 - Acquisition Price vs. Market Value (Lesson 4 Video Includes Optional Step 7)
The second step in my evaluation helps me determine if I am purchasing the property for
less than market value. Most investors will tell you that they don’t like to pay full price for a
property. However, if the property has a great undiscovered use, usually our sales price at
acquisition is not as important as the future value of the property. Using our example, I paid
full asking price for the distressed property because I knew how profitable it could be and I
did not want to lose out on the opportunity.
However, we do want to know how far below present value we can purchase a property for.
Any discount we can get at purchase will enhance the profit or equity position at the end the
investment.
We can obtain discounts by finding distressed properties, putting down large earnest money,
assembling cash offers, extending quick closings, purchasing multiple properties in one
transaction and removing all or leaving few purchase contingencies.
Step 3 - Cash Flow (Lesson 4 Video Includes Optional Step 7)
A property’s cash flow is determined by taking the gross operating income (GOI) and
subtracting the operating expenses. This leaves the investor with the net operating income
(NOI). Then subtract the monthly debt service from the NOI. This leaves us with our positive
or negative cash flow.

All great investors try their best to have a positive cash flow. This is crucial to remain liquid
during our property ownership. We should seek to have all of our properties at least pay for
themselves. Any additional monthly residual income is a bonus. Basically, there are two ways
to increase cash flow: increase the income or decrease the expenses. Here is a simple list of
some of the things that we can do to make that happen:
We increase rents by:

• Improved flooring
• Cosmetics
• Appliances
• Parking
• Covered parking
• Storage
• Washer/dryer
• Day care
• Better plans
• Bedroom/bath additions
• Pool
• Better landscaping
• A/C additions
We decrease expenses by:

• Tenant labor/work on the property
• Multiple meters to have tenants pay utilities
• Change our tax evaluations
• Increase efficiency in windows and Insulation
• Decrease our debt service through refinancing
I have seen in my own life that the better I cash flow, the more I want to invest in property.
We need to make sure all of our properties cash flow in case we decide to keep our
investments long term or they don’t sell for some reason. We’ll talk about the short-term/
long-term aspect later on.
Step 4 - Terms (Lesson 4 Video Includes Optional Step 7)
The next step in our deal evaluation process is to determine what terms might be available
on the subject property. I have learned that terms equal value. Some of my favorite terms to
seek from sellers can be seen in the following list:

• Seller financing
• Seller-financed wraps
• Seller finance and mortgage combos
• Extended closings
• Assigns clauses to market the property before closing
• Assumptions in seller financing notes
• Seller partnerships on projects
• Seller investments in projects
• Access to property to perform work before ownership
• Low Interest rates
• Delay in payments
• Discounts in price
• Prepayment bonuses or discounts on balloon deadlines
All of the items on this list can create value in a property in addition to whatever price we
can obtain in the purchase. Great terms make properties easier to buy, more lucrative to
own and far simpler to sell in the future. How good the terms are on a property often are a
deciding factor in purchasing or not.
Step 5 - Determining Future Potential (Lesson 4 Video Includes Optional Step 7)
The next step is to ascertain if the property has a future potential that is better than
the current use. If I can get a property to cash flow and it has a great future plan, I will
certainly purchase the property. I always ask what is/are the city, county, and state’s master
or future plan. This can typically constitute what will happen in that city for the next 5 to
20 year plans?
Other important questions might include:

1. What developments are proposed in the area?
2. What zoning changes are coming?
3. What about annexations may happen to impact my property?
4. What value increasing stores, commercial developments, or residential
developments are coming?
One thing to remember is that future plans are not always guaranteed in the future. They
can and do regularly change. If you are banking on a future change, enact that change as
soon as possible so that you don’t miss out on it!

Step 6 - Comparing Short Term vs. Long Term (Lesson 4 Video Includes Optional Step 7)
One thing I learned about successful investors is they always prepare for the worst-case
scenario. Usually that worst-case scenario is what happens if an investor buys the property,
does a bunch of work to it, spends time and effort on it and then it does not sell. Most
investors only look at a profit in the short term.
They determine that the property can be purchased, fixed up or changed somehow and then
sold for a profit. What if the property doesn’t sell in the shor term for a profit? Being able to
keep the property for a long-term positive cash flow and incredible equity position is at least
as important as being able to sell our property for a profit in the short term.
If the property works in the short term for a profit and the long term for an equity position
and positive cash flow, we can literally become bullet-proof investors. As a new investor, I
strongly suggest you make sure your investments work in the short term AND long term. If
both areas do not work, drill down further and make sure that your short or long-term plan
is literally fail proof. If you are unable to do this, I recommend passing on the deal and not
taking a chance at failure.
Step 7 OPTIONAL - "REALTOR® Application" or also called "Investor Application"or

"Power Team Application."
SEE LESSON 4 VIDEO for MORE INFORMATION on APPLICATIONS - however - this step involves
taking advantage of assigning pieces of your project to your power team members to help
them share in profits from your property deal. "Power Teams" are explained more in detail in
Step 10 Video but are not necessary in accomplishing your first deal or other deals.

5 - Purchase These Properties Using the Two OPM’s
STEP
5 Purchase These Properties Using the

Two OPM’s
OPM typically stands for “Other People’s Money.” This is true for us, but there is another
OPM that we want you to familiarize yourself with, that is “Other People’s Mortgages.” In
layman’s terms
these two things are known as Seller Financing or Raising Private Capital to pay cash for
properties that we purchase.
Other People’s Money or Capital Raising
Most investors do not begin their investing careers with large amounts of cash on hand to
do business with. In light of this problem, other options are sought for success. One of these
options is to raise private capital from others to use in our own deals. Raising capital allows
us to have the money necessary to do things that we wouldn’t normally be able to do on our
own. Cash can allow us:
1. Down payments
2. Cash purchases
3. Earnest money
4. Better ability to qualify for bank mortgages
5. More trust from sellers on seller financing
6. Money to change our properties
7. Money for expenses, taxes, and insurance
8. Referrals to other capital investors
All of these things are crucial in our development as capital raising investors. However, before
we get too far on the subject of money, we must first deal with the most important aspect
of raising capital. Raising capital is a mechanism for creating securities. Many rules and laws
govern working with securities in every state in the USA. Before entering capital-raising
activities make sure to contact your state Securities Exchange Commission to verify the federal
requirements. Capital can be raised legally and illegally. Make sure you do it the correct way if
you are going to do it at all.
Once you set yourself up to legally raise capital, you will find that you may agree with my
belief on raising capital. I believe that money is the easiest part of the transaction and once
you understand the business of investing you will get the capital.
Raising capital is easy because of the limited returns investors get with their other financial
options in investment markets. Returns in the stock markets are extremely risky and not
backed by real estate. Savings accounts have extremely low returns. Bonds, CDs and mutual
funds are usually also poor choices when compared to the real estate market.

The biggest tragedy in capital is the money people have in their homes and properties as
equity. Most people let this money sit in their real estate and get no return. Their properties
may increase in value, but they have no return on their equity. I am a strong proponent of
utilizing equity in properties in income-producing investments. Money can be pulled out of
properties and used to obtain high returns secured by real estate. While there is an interest
expense in pulling equity out, the return on investment makes the interest expense worth it.
Other People’s Mortgages or Seller Financing
Seller financing is the holy grail of real estate. Once you understand how to do transactions
using this powerful tool, you will open up many opportunities that did not exist before. In
fact, most classes I teach on seller financing usually start with a challenge to my students to
present a type of seller’s need that cannot be met compellingly through seller financing.
The premise behind a seller-financed deal is that the seller sells the property to a buyer
and acts in some part as the lender at the same time. The seller usually offers terms, but
negotiations on the part of the buyer are normal. The buyer and seller agree to finance
terms and the seller extends a mortgage to the buyer usually in the form of a Trust Deed
and Note or an All-Inclusive Trust Deed and Note (wrap or blanket mortgage) that is
secured against the property at closing to protect the seller’s interest.
Seller financing is a good option for both the buyer and seller for many reasons. Most
investors do not do a lot of seller financing because they don’t understand it or they don’t
believe it is good for the seller and therefore hard to do. Great investors learn that seller
financing is better for the seller than it is for the buyer. Types of seller financing include the
following options:
Types of Seller Financing

1. Free and clear seller financing: This occurs when the seller owns the property free and
clear and no financing exists against the title of the property. This financing is usually
secured by a Trust Deed and Note.
2. Subject to, wrap, or blanket financing: This financing implies that existing financing
is in place that the buyer will “wrap” and assume without consent from the existing
mortgage. The mechanism usually used to wrap existing financing is called an All-
Inclusive-Trust Deed and Note.
3. Combo seller financing: This is where an underlying mortgage is “wrapped” and some
equity is also financed by the seller. This can be done with an All-Inclusive-Trust Deed
or with an AITD combined with a Trust Deed and Note.
4. Lease option: This is where a seller offers a tenant buyer the ability to rent a property
with an option to purchase it later. Terms are set forth at the beginning of the rental
period and set for a specific time at specific terms.

5. Purchase option: This is a type of seller financing because the seller extends the right
to the buyer to set a price and sometimes terms to hold a property’s value over time.
6. Extended closing: This is seller financing because it allows the buyer to have some
control over a property while terms are fixed.
Reasons why a closing could be extended:

• Financing
• Physical improvements (finished or on paper)
• Buyer seeking financing
• Buyer seeking due diligence on the property and the conditions
7. Seller partnerships: This partnership occurs if the seller stays involved with the deal during
the financing period.
Either he keeps the title during the financing period—thus being a financial partner; or the
title is given to the buyer with no payments or financing terms. The buyer is charged during
the term of the investment. Essentially the seller is bringing or offering the property as their
contribution to the deal.
8. Seller Finance Boomerang: Cash out seller’s equity and have seller financing on the
same transaction. This allows us to get cash at closing to the seller and then reinvest it in
improvements or other property at a high rate of return for the seller
9. Listing agreements: This is a real reach to be used as a type of financing, but again, the
investing agent sees this as an opportunity to have some control and say over a seller’s asset via
a listing agreement. In this agreement, the seller agrees in principal to a sales price and usually
some terms also.
Overcoming Seller Financing Objections

• Occupancy: The seller will not have to get a new loan for another property until this
one is paid off because they will still live in the seller-financed property.
• Term of call or balloon: Most seller financed properties can easily be sold or refinanced
within 180 days of closing with significant alterations.
• Collateralization of other real property: This gives the seller the collateral or recourse
that can be painful to the buyer.
• Additional cosigners: Adding cosigners makes more people responsible to the seller.
There is implied strength in numbers. Additional co-signers can bring additional
collateral. Added mortgage does not appear on co-signers’ credit reports.

6 - Put the Property Back Up for Sale
STEP
6 Put the Property Back Up for Sale

This may be the simplest step in the entire process. Once the property is purchased and
closed, we immediately put it back up for sale again. Seems easy right? However, the catch
is that we put the property up for sale for what it can and will be, not for what it currently is.
Early in my career I only knew a few investment strategies. The first one was buy a property
and hold it long enough (years and years) for the value to go up and for me to pay off
the mortgage. This was the very slow track to investing success. This will create long-term
wealth, but takes a long time to do it! One of the others was the classic fixer upper. This is
where you buy the old beat up property, put new carpet, paint, and other things in it and
then sell it for a profit.
I always wanted to have my properties sold during the fix up process so that when the work
was done, we could close with the new buyer on the sale. This really helped to cut back on
holding and marketing costs. This also allowed the buyers to have input on changes that
would be made to the property.
I found a little 2 bedroom 1 bath beauty that needed a lot of work. To get a head start on
sales, I put the property back up for sale at a finished fixer-upper price and began the work.
I called the contractors and workers who I did work with. They knew I would be closing
on the property and we planned out the work schedule. As soon as the house closed, my
painter went over to the property to start the paint preparation work. I listed the property
the day before he got there.
His first job was to scrape off the layers and layers of wall paper so that we could get down
to the bare walls. On his first day there, another agent with a client showed up and saw the
work and project at the inception. The agent called me from the house and said they were
very interested in buying the house. They also asked if I would consider selling the house
with none of the work done at a discount so the client, who was a sheet rocker, could do
the work himself. I didn’t really like the idea, but told them to make an offer if they were
interested. I committed to considering it if the offer was good.
I was shocked to find out that the offer on the property was high enough to net me over
half of my fixer-upper profit without having done much work at all.
The painter had about 4 hours on site when the buyer came through. That was it. I learned
very quickly that he was willing to pay more for the property than I was because he didn’t
have to go out and find it like I did and he could do the
majority of the work himself as a professional and make a nice equity position at purchase.
This has turned into a major strategy for me. We will learn more about that later.

As mentioned in our initial property example we didn’t buy that distressed old house on
a 0.63 acre lot and put the property back up for sale as a distressed old house on a large
lot. We listed it as a 15-unit condominium project in progress. In essence, we announced
what the property could be. As you can imagine, a property that is already zoned for 15
condominiums is much more valuable than a distressed home on a decent-sized lot. (Even
if they are the exact same property) In our original example we listed the property for what
it could be and the market chose to see it differently (higher value and as a potential 15-
unit PUD) than the way we found it, even with no physical labor done on the property to
effectuate the condo project.
You will also market to others that they can buy this property now and make a profit doing
the work that you have discovered. If they don’t purchase it, you will gladly do the work on
your own and make all of the profit for yourself. I have learned through years of investing
that properties that have a great opportunity for change are worth more than properties that
don’t. The neat thing about investing in properties is that most properties have the ability to be
changed to something better than the state you find them in. Most people just don’t realize
this amazing fact. We call changing them from one state or use to another a “Use Change.”
Since most people lack the ability to see properties for what they can be instead of what
they are, offering properties with huge potential becomes very lucrative. Essentially, we
can make a lot of money investing in property if we learn what properties can become and
expose that vision to others. Another neat part about this original example was that we did
not even have to get a zone change done.
Let us consider some advertising techniques to make our point here. Using our example
of the distressed house on the 0.63 acres we could market this property in two distinctly
different ways. Traditional investors, sellers and agents would market the home as follows:
Great home with fixer-upper potential. Home needs lots of TLC and has plenty of room to
grow. This home is a blank canvas waiting for an artist. Large detached garage on a big lot.
Close to freeways, shopping and schools.
Don’t miss this one. It will go very fast! Bring your best rehab clients or lose out. Structure
appears to be solid. Square footage an estimate only, buyer to verify all information
This is our average advertisement that would help us get average results. Here is how we
would advertise the property for what it can be, not for what it is:
Attention investors, contractors, subcontractors, do-it-yourselfers and handymen! This is a

15-unit condominium project in process. Buy now and do the work yourself for a profit, or
pay more later when the work is done! The zoning for the project is already in place and

the preliminary site plan for the project is being drawn. Rough site plan has already been
submitted and preliminarily approved by city staff. Once the project is approved and platted,
building permits will be pulled and the sales price will be increased. Call now for preliminary
renderings and city submittals. The sooner you call, the better the price you will get.
As you can see, the two ads will draw considerably different buyers and solicit considerably
different offers. The fun part about the two groups of remarks is that they are advertising
the exact same property!
Once we put the properties for sale, either they will sell or they will not. Another unique part
of this system is that if the properties sell for a profit we will create wealth. If they don’t sell
for a profit, we will be able to create more wealth. The system is truly a financial win/win
whether or not the properties sell. We’ll learn more on that later.

7 - Create and Enhance Equity Through Use/Condition Change
STEP
7 Create and Enhance Equity Through

Use/Condition Change
Once the property is for sale we immediately begin the next step. This step is called “Creating
and Enhancing Equity.” In simple terms, we will take the property from what it is and begin
to transform it into what it can become. We refer to this as use and/or condition change.
As we mentioned in the prior step, we put the property up for sale for what it can be, not
for what it is. We then begin the work to shape the property’s future use so that potential
buyers can see it take shape. In our original example, we bought this house on the larger
lot, exposed the higher and better use and then hired an engineer to draft a site plan for
the condominium complex. We asked for and received a simple design with the building
footprint, the parking, set backs, simple landscaping and other minor things.
This allowed us to be able to meet potential buyers in front of the house and show them a
literal drawing of what the property could become. This type of activity allows people that
lack vision to see our vision of the property. The plat also set forth the fact that the use
change was in motion and would take place whether the buyer bought the property or not.
Another reason buyers like to buy projects like this is because they have less to do themselves
to have a buildable product. Builders have told me before that the reason they bought our
project was because a good portion of the work was already done. In essence, they wouldn’t
be starting from scratch.
Fortunately or unfortunately, depending on how you like to build wealth, the property got
an offer and sold for a nice profit. Had it not sold, we would have continued on the step of
creating and enhancing equity until the project was far enough along for someone to buy
the property and finish it or until the project was all finished. If we had continued with the
work and platting the project, we certainly would have continued to raise the price to reflect
the new work that was being done.
Some of the things we do commonly as steps in creating and enhancing equity to change
the value of property are:
1. Conversions
2. Floor plan fixer-uppers
3. Zone changes
4. Variances
5. Waivers
6. Planned unit developments (PUD’s)
7. Subdivisions
8. Flag lots


7 - Create and Enhance Equity Through Use/Condition Change
The whole point of the step of “Creating and Enhancing Equity” is to take a property the
way we find it and change it into what the property can become. We seek to transform the
property to its highest and best use. Again, we intend to finish the project for a profit, but
will gladly sell it along the way for a smaller profit and a quick turn around.

8 - Sell for a Profit
STEP
8 Sell for a Profit

If we list the properties that we find as what they can be instead of what they are and
correctly expose the higher and better use or vision that the properties possess, many of
them will sell for a profit. In fact, many of them will sell for a huge profit. Really, there are
only two things that can happen if a property is for sale. It will either sell or it won’t.
This step of the property selling for a profit is a fairly simple one that most people enjoy and
understand. After the property is purchased and the work of creating and enhancing equity
is under way, normally we list the price for the finished value of what the property would be
worth with all the work completed. We then offer a big discount for someone who wants to
come in and finish the work themselves for a profit. Potential buyers see the opportunity and
make an offer.
We like to sell for a profit to begin the steps of prospering that we will discuss in more detail
at the end of the book. When I teach this principle in my seminars often a student raises
their hand and asks something to the effect of, “Why would you sell the property for a
$75,000 profit when you could do the whole 15-unit project and make $450,000?” That
question makes a lot of sense, but the truth is that there are a lot of reasons why someone
would sell quickly for a profit.
Let’s look at a shortened list of what short-term profits will do for:
1. The quick profit will help us have the financial wherewithal to fund other deals.
2. A quick close builds our confidence and allows us to have financial proof that our
system works. This will drive us to work harder on finding other deals.
3. We can use the proceeds to pay off properties for future credit lines to use again and
again.
4. We learn best through our own experience. Once we see that we can do it, we will
repeat the process.
5. We can do more deals when some of them are short-term deals. How many
quick deals could you do in the time it would take to complete the whole 15-unit
condominium project? What would the profits of all your quick deals total?
6. A quick check helps us improve our lives financially. Most people look at investing
because they want to improve their lives. Getting a quick check certainly helps us
begin that process.
7. A quick deal helps us to have proof of our success to use in our capital raising. One
of the first things people ask when we raise capital is about our experience. Early on, I
started meeting people who I was going to raise capital from at my current or recently
finished investments. I would start the appointment with a tour through the property
and show them what I was doing, how I was doing it, and what I was going to make.
I then asked if they wanted to be a part of a similar investment I had coming up. This
approach made people much more willing to believe in me and what I was doing.

8 - Sell for a Profit
8. A check also helps us to feel less immediate pressure in our lives and generates a
measure of financial security. Usually, when we start investing we have to give up
some other income-producing activity. Extended periods of time without success can
be difficult to weather.
The other thing I tell my students is that they do not just have to do one deal at a time.
They could have many projects going at once. Some could sell in the short-term and some
could be held for long-term wealth. Investors who are able to do both prosper on a very
high level.

9 - Refinance for an Equity Position
STEP
9 Refinance for an Equity Position

This is the part that frightens most investors. They think, “I’ll find an incredible property and
sell it for a profit after I put carpet and paint in it. If it sells I will make a pretty good profit.
Wait a minute…..what if it doesn’t sell?” I really believe the reality that an investment
property might not sell keeps a lot of potential investors away from the business when in
fact this is what they should be hoping for.
One of my favorite investment sayings is that long-term wealth requires long-term assets.
Most of us have the unique ability to spend more than we make, no matter how much we
make. Therefore, it is truly important that we have our investments and money producing
additional income for us. Let’s consider our original example again for this part of the
system.
I found my house originally for $260,000 and sold it shortly thereafter as a 15-unit
condominium project in process for $360,000, I made over $75,000 in profit after closing
costs and carrying expenses. This sounds pretty good. Most investors think that if I didn’t sell
the property I would have a single-family home that wouldn’t rent for enough to cover the
mortgage payment and I would probably have a first and second mortgage or have to put
down a large down payment to qualify for my refinance and get out of mortgage insurance.
However, this is where our system takes a vastly different course than others you may have
seen. We continue the “Creating and Enhancing Equity” step in the property until the
condominium project is done. Where would I have found myself financially? Let’s look at
what the numbers may have looked like had I not sold it for a profit.
Purchase Price $260,000

Costs for engineering and architectural work $75,000
Carrying costs $85,000
Site improvements $175,000
Building costs $1,200,000
Sales costs $250,000
Total costs $2,045,000
Let’s assume that the value of each condominium in this market is worth $250,000.
Therefore, if I have 15 of them, my project is worth $3,750,000. I have approximately
$1,705,000 in equity if I sell and $1,955,000 in equity if I don’t. I would only owe
$1,795,000 because I wouldn’t have to pay the $250,000 in sales costs to retain ownership.
If I decided to keep the property I would refinance the property as follows:
$3,750,000 in appraised value

$2,625,000 in 70% first-mortgage refinance of my construction financing

9 - Refinance for an Equity Position
$830,000 cash in my pocket at the refinance ($2,625,000-$1,795,000 owed)

In this case I would be left with a 30% equity position in my property. This would be equal
to roughly $1,125,000! I would have a property that just made me a millionaire, in fact,
almost a multi-millionaire on one deal! With $830,000 of cash in my pocket I would be set
to run that property well as a property manager/owner.
Let’s look at some of the things the ownership of this project would have done for me:
1. Create a net worth of $1,955,000.
2. Leave me with an asset with no mortgage insurance.
3. Reward me with a handsome cash-out payday.
4. Leave me a depreciable asset to shelter my income tax.
5. Put a property in my portfolio that grows in worth while it pays for itself.
6. I generate a monthly positive cash flow from the rents.
7. With my 30% equity position I have created an asset I can use as collateral for other
financing or for a possible commercial credit line.
I would imagine that many of you are now thinking that selling the property for a profit of
$75,000 in 70 days wasn’t such a good deal after all. This system is so good it makes the
decision of selling for a profit or refinancing for an equity position a hard one to make. The
next question I always get at this point is, “Mike, how do you choose to sell for a profit or
refinance for an equity position?”
The correct answer is that I let the market decide. Literally, I put the property up for sale
and if it sells, it is a short-term deal. If it doesn’t sell, it is a long-term deal. If the deal
works in the short-term and the long-term, does it really matter when it sells? Most of the
students I teach would really like a property or two to sell in the short-term so that they
can get a few checks.
I try to convince them that if they do enough properties, some will sell in the short-term and
some will sell in the long-term. Imagine I bought ten homes in this neighborhood instead
of only this one. As a matter of fact, this would be a good idea since all of the homes in
that immediate area would have the same zoning with higher and better use potential!
However, if I had 10 properties that I was working on and five sold in the short-term and
five sold in the longterm, imagine how my life would look. I would have an incredible
immediate income year and an amazing net worth building year!
Again, the Foundation to Success only works if you are creating short-term profits and long-
term equity positions simultaneously.

10 - Prosper and Teach Others This System
STEP
10 Prosper and Teach Others This System

What does it mean to prosper? What does wealth mean? These mean many different things
to many different people. One of my mantras regarding wealth is the following:
“We are not truly wealthy until we have wealth and those around us that we care about
have wealth as well. Individual wealth is loneliness.”
The system demands that we create a Power Team for two reasons. Both of them are very
powerful. The first reason is that we can leverage others in our wealth creation. The second
reason is because I strongly believe that once we have the knowledge to create wealth and
financial freedom, we have the responsibility to share it with others. Only selfish people
choose not to share. Let’s look at these two reasons a little closer.
Leveraging Others
Consider the Law of Leverage.

• The Law of Leverage – The highest levels of success cannot be achieved alone. You
and your life will never be bigger than yourself until you learn
to leverage your skills and talents with other people and other assets.
One main reason to leverage others is to allow you, the leader of your business, to only
involve yourself in tasks that generate income while others do the things that support the
business. Another reason is to create a business that can run in your absence, a business that
doesn’t need you in it every minute for it to be profitable and functional. Other people are
required to help you take care of the non-ncome producing and less important tasks.
Most people think that they have to work harder to make more money. The truth is that we
need to work smarter to do better. We are smarter when we bring others in our business to
work harder. This allows us to work smarter on our business. My company now has over 50
employees and many of them joke that my business runs better when I am not there. We are
very successful when I am finding properties, doing transactions, raising capital and speaking
to new students and clientele while my company is being run by the business experts back in
my office.
I was an average earner in my business until I started adding people to my staff. I learned
that each additional person that I added allowed me to greatly increase the bottom-line
income to the company. If an employee cost me $40,000 per year and I could utilize their
skills to generate an additional $200,000 in company income, leveraging is a good thing. My
business now has over 50 employees and we are more profitable than we have ever been.

10 - Prosper and Teach Others This System
The Responsibility to Share
I was doing well in my business for the first few years I was in it. I quickly enhanced my
business when I started working on it. I also saw that employees and partners had a 9-5
mentality about things because to my business, they were just a cog in the system. I tried to
treat them well, but had mixed results.
Getting people to buy into what I was doing and to be passionate about my vision was
difficult. Clients I was soliciting were often hesitant to work with me. Although they could
see what was in it for me, they could not see what was in it for them. I quickly tired of
chasing others and trying to excel with all the added pressure and demands.
I got to the point where a person very near and dear to my heart left my company because
there was nothing bigger or better about working for me than anywhere else. I begged and
pleaded that person to come back, but they didn’t. I decided then and there I would do
whatever it took to keep others from doing the same thing.
I began to try and make my business about my employees and clients instead of about
myself. This was a very hard process in the beginning. However, I quickly learned that when
you take care of people the profits take care of themselves. I learned that by giving and
serving my profits became much larger. My employees did more for the business because
they started really seeing the benefit of it for themselves.
I also found my life to be full of blessings and more joy for having helped others around me.
I came up with a slogan for my business and it is profitability in service. Most people hide
their secrets for a fear of losing them to the competition. I believe that sharing everything
that we know causes us to become stronge and have more allies. It also gives us access to
more assets and helps us enjoy our life so much more.

Next Level Training
H Next Level Training

You are probably asking yourself at this point, “How can I take this new knowledge and
experience to the next level?” We have listed powerful options below that will steer you in
the right direction. Feel free to chat with an expert advisor online or call 1-866-WATSON5
for additional assistance. These optional tools below can teach you how to build a profitable
portfolio that will generate sustained wealth for you and your family for the rest of your life!
OPTION 1 - Attend an MWI Event
- FREE 2-Day Boot Camp! (with $25 donation)

A highly recommended course for anyone serious about investment profits.
Follow the link below for additional information and locations:
http://www.MikeWatsonInvesting.com/training/events/2-day-camps.php
- Houston Super Camp!

This MWI Super Camp will be held in beautiful Houston, Texas on May 7-9,
2008. Check out the link below for additional MUST SEE information:
www.Mike Watson Investing.com/training/events/super-camp.php
- Other MWI Events

Visit this link for a complete list of training events:
www.Mike Watson Investing.com/training
OPTION 2 - Get a Mike Watson Home Study Course

- We have multiple Home Study Courses available:
- The “Retire In 5 Years” Home Study Course

With Mike Watson’s “Retire In 5 Years” Home Study Course,
you can learn the system that is creating an early retirement for
investors and real estate professionals around the country! This
Home Study Course is an audio recording of Mike’s recent “Retire
In 5 Years” Super Camp. See link below for more information and pricing:
http://shop.MikeWatsonInvesting.com/ProductDetails.asp?ProductCode=HSC%5FRI5

Next Level Training
OPTION 2 (cont.) - Get a Mike Watson Home Study Course
- The “EVERYTHING CHANGES” DVD Set

Capture the energy and excitement of the investing event that changed
everything! Join Mike Watson for three full days of groundbreaking instruction.
On this DVD video set, you will learn the basics of Mike’s proven system, as well
as many advanced techniques that Mike uses on a daily basis. See link below for
more information and pricing:
http://shop.mikewatsoninvesting.com/ProductDetails.asp?ProductCode=DVD%5FEC
For ALL Home Study Courses and other MWI training products please visit:
http://shop.mike watson investing.com.
OPTION 3 - FREE MWI Online Community Forum - Open to Public!
- MWI Online Community Forum

Post your questions and other investors (AND Mike Watson himself) will help
with answers. You can also share your expertise with others in the community.
For direct access go to:
www.Mike Watson Investing.com/tools/forum.php

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Table of Contents

Step 1: Know the Foundation to Success ..................................................................... P. 6

Step 2: Know Your “Who” and Your “Why”................................................................ P. 8

Step 3: Learn How to Find Incredible Properties ......................................................... P. 10

Step 4: Evaluate the Properties . ................................................................................. P. 19

Step 6: Put the Property Back Up for Sale . ................................................................. P. 27

Step 7: Create and Enhance Equity Through Use/Condition Change .......................... P. 30

Step 8: Sell for a Profit ............................................................................................... P. 32

Step 9: Refinance for an Equity Position ..................................................................... P. 34

Step 10: Prosper and Teach Others this System .......................................................... P. 36

Next Level Training ...................................................................................................... P. 38

10 Steps Any Investor Can Use to Create Immediate Investing Results 

10 Steps Any Investor Can Use to Create Immediate Investing Results 

Here are the Ten Steps of the Foundation to Success:

10 Steps Any Investor Can Use to Create Immediate Investing Results 

1 Know the Foundation to Success

10 Steps Any Investor Can Use to Create Immediate Investing Results 

10 Steps Any Investor Can Use to Create Immediate Investing Results 

2 Know Your “Who” and Your “Why”

I decided I would do whatever it took to be successful. I knew I could do it if I made the

Let me share them with you.

10 Steps Any Investor Can Use to Create Immediate Investing Results 

Steps to take in forming your Who and Why Statements:

1. Ascertain your Why

Here are some helpful hints in writing your motivating statements.

The Why Statement

Part 1 – The Why

My Why Statement goes as follows:

Part 2 – The Who

My Who Statement goes as follows:

10 Steps Any Investor Can Use to Create Immediate Investing Results 

3 Learn How to Find Incredible Properties

Non-Competing Methods for Property Location

A competing method by definition is a property procurement technique that others are

10 Steps Any Investor Can Use to Create Immediate Investing Results 10

Purchase Price after Negotiation (Asking Price $129,000) $115,000

Purchase Price $129,900

10 Steps Any Investor Can Use to Create Immediate Investing Results 11

18,000 Square Foot Lot, 8k min. lot size

18,000 Square Foot Lot, 8k min. lot size

Duplex / Twin Homes

10 Steps Any Investor Can Use to Create Immediate Investing Results 12

10 Steps Any Investor Can Use to Create Immediate Investing Results 13

Competing Methods for Property Location

Powerful MLS and Advertising Search Remarks

Another non-competing technique we use is driving around neighborhoods looking for

10 Steps Any Investor Can Use to Create Immediate Investing Results 14

Finding Distressed Properties

Finding Distressed Sellers

Another non-competing idea we have is to undertake a comprehensive study of the city

10 Steps Any Investor Can Use to Create Immediate Investing Results 15

Ask the Questions of MimicryTM

10 Steps Any Investor Can Use to Create Immediate Investing Results 16

10 Steps Any Investor Can Use to Create Immediate Investing Results 17

THE PROPERTY “BEFORE”

THE PROPERTY “AFTER”

10 Steps Any Investor Can Use to Create Immediate Investing Results 18

4 Evaluate the Properties

10 Steps Any Investor Can Use to Create Immediate Investing Results 19

The formula is very simple:

Step 3 - Cash Flow (Lesson 4 Video Includes Optional Step 7)

10 Steps Any Investor Can Use to Create Immediate Investing Results 20

10 Steps Any Investor Can Use to Create Immediate Investing Results

10 Steps Any Investor Can Use to Create Immediate Investing Results

10 Steps Any Investor Can Use to Create Immediate Investing Results

10 Steps Any Investor Can Use to Create Immediate Investing Results

10 Steps Any Investor Can Use to Create Immediate Investing Results

10 Steps Any Investor Can Use to Create Immediate Investing Results

10 Steps Any Investor Can Use to Create Immediate Investing Results