[Note: To follow is an excerpt of a radio show interview conducted by Peter L. Mosca, host of Income Property Investment Talk dot com, with successful bloggers from realestateinvestmentclub.com or REIClub.com. They are: Phil Pustejovsky, Peter Harris, and Thomas Donald. To listen to the show archive or download an MP3, go to www.IncomePropertyInvestmentTalk.com/021010.]

Mosca: Phil, before we get into your specialty which is short sales, could pull out your crystal ball and just give us your impression on 2010. I know we're about a month and a half into the year, but 2009 for many of us just felt like the worst year in our professional history and I'm wondering do you think we'll feel that way at the end of 2010?

Pustejovsky: I don't want to be a doomsday person here Peter, but the reality is that there's a whole lot more mortgage problems ahead of us, and that means a whole lot more foreclosures and a whole lot more short sales for the next couple years.

Mosca: You personally have negotiated short sales on over 45 million dollars in residential real estate. Could you share a tip or technique that many of us are not aware of in regards to short sales?

Pustejovsky: One of the main misconceptions with short sales is people overcomplicate them. The reality is this: a lender agrees to a short sale for one reason only – it's a better economic plan than letting the property go to foreclosure. There's only one way they determine that, and that's with a percentage of what the value of the property is. For real estate agents, and investors as well who are in the short sale game, they will agree with me here. Lenders have an internal value in which they think that will make more money short sale wise than a foreclosure, and that's what they agree to. Oftentimes, it's not some big fancy negotiations; it's really cut and dry. Either they'll accept your offer or they won't, and once you know the rules of the game, short sales actually become a breeze. Short sales are lender specific. Each lender operates a little bit differently. Also, if the loan is backed by Fannie Mae, Freddie Mac, it's an FHA loan, that can also affect the outcome of how the short sale is done. Every lender is different and they also change, which is awfully frustrating. Just when you think you've got them figured out, they go and change the rules on you.

Mosca: I know you also coach a lot of students around the country. What is your unique value proposition with your seminars or workshops?

Pustejovsky: Real simple: I make money when my students make money. That's the way we operate. When you hire a painter to paint your house, you don't pay him the entire amount to paint your house before he strokes the first brush. You don't do that. So I don't understand why in the real estate education field the same thing is done. What we do is very different. We get paid when our students get paid. We split the profits when the deal closes and therefore our incentives are aligned. If we don't do a great job as a mentor, as a coach, if we don't produce results for somebody, we don't get paid. I think that's our unique value proposition. I don't think there's anyone else out there who operates under those conditions, maybe there are, but I don't know of any.

Mosca: Do you find short sale opportunities and investments for them as well?

Pustejovsky: I like to say we teach a man how to fish, we don't just give him a fish, so we show them how to drive lots of leads at them. Yes, we show them how to automate that process so leads can be coming to them consistently every day without them having to do any work to keep that stream of leads coming at them.

Mosca: Our second guest today is Peter Harris. What is your impression of 2010?

Harris: 2010 is just a staging year for what's to come. There's 170 billion dollars in commercial loans coming due this year. We know the state of the banks right now, and they can't refinance all that. In 2012, go two years faster, two years above, we have 153 billion dollars that are coming due. There's just no way of catching up to that. Focus on one, possibly two things to be exceptional, to be really, really good at. So all of those are good things to become good at, experts at. I prefer to do commercial REOs. I am a large apartment guy and I've recently come across this $20 million note. It's in New Hampshire for $4.5 million and it is 200 brand new apartment complexes for $4.5 million. Those are the type of things that are out there and it's going to get even better as time goes on. You are going to see a lot of foreclosure by breach maturity and basically what that means is a lot of loans for these large apartments are coming due and these apartment buildings are in good shape, they are cash flowing, there is no deferred maintenance on them, they are managed well, and they are going into foreclosure if you can believe that because the loans are coming due and the owner is unable to refinance it. It's very, very sad but a lot of mad owners out there that are really mad at the banks but that's just a fact of where we are right now.

Mosca: They can't get into any kind of new mortgage or anything to keep the properties themselves?

Harris: That's exactly what I am saying. It's a sad fact but that's true. For us who study the market well, we can't operate out of fear and out of emotions because we know that as emotions go up, intelligence goes down. We know that. What we have to do is look at the fear, the panic, and depression and see those as buy signals to jump in this market right now. Right now what we are seeing are generational opportunities. This is a once in a lifetime opportunity.

Mosca: As investors it is time to really get off the fence and make something happen and if you want to learn more about making that happen, you can go to our website at incomepropertyinvestmenttalk.com. I read that you started a mentoring program and have helped over 300 individuals begin their own investment careers. Can you share a little bit about that and maybe a success story or something that might be of interest to our listeners?

Harris: A few years ago I was really struggling in my business and I just broke down. I was asking God what should I do and He told me help people help other people help people. Many years ago I said, “okay,” I'm going to do that. Once I started doing that, my life and my business just turned around, not only my consulting business, but my apartment business. That's what I do. Even though my personal business is doing really, really well, I must continue to give back. On my Web site I will offer beginning investment services for people who are novices who know nothing, who haven't even bought a single family home. I take them from that level all the way up to owning, how to find a property, how to negotiate it, how to find the money, how to hire the management that no one teaches, how to hold the property management accountable, and exit strategies.

Mosca: It's obvious in your voice that you just love helping people.

Harris: You got it Peter. Commercial real estate or the apartment business or short sales or buying commercial REOs is a relationship business. It doesn't matter who you are. You could be a person who doesn't speak English yet. You can be a person who you consider yourself not a social person such as myself, or you can be any other type, an A type personality but you can be your own person in developing your own networking. I think Peter you are proof of that.

Mosca: Thank you. I appreciate that. What is your golden nugget?

Harris: Once you find your passion for a property type, study it like a madman. The secret to making money as a small investor is what I call “duplication by replication.” Basically duplicate the expert's habits of success and their best practices and replicate it exactly. That's the key. Most of the how to is there, we just have to do the work. Find the expert, see what they do, and duplicate what they do by replicating it. There is no reason to go out and reinvent your own technique. All of the techniques are there and if you look on Peter's past shows and you'll spot a lot of experts that will tell you exactly what to do to be successful in this business.

Mosca: Tom, 2009 was a challenging year at best for many of us. Do you think we'll feel the same way at the end of 2010?

Donnell: I absolutely think we will. We're still in this recession, at least for another year or two. We're just a stepping stone for what's to come. As a matter of fact, he had mentioned about the $170 billion in loans that are coming due, and I know he was speaking in reference to commercial property. However, back in my neck of the woods, in the New Mexico area and surrounding states – Texas, Colorado – areas that I deal deeply with properties and such in different areas that I deal with, I'm seeing a trend that's pretty consistent and monotone. Over the last couple years I've really transitioned from the foreclosures, which are still there, but I do a lot of lease option programs and contracts and hold for a period of time. That's because I'm starting to realize, especially right here in my hometown city of Albuquerque, New Mexico, we are still in a position where we weren't affected as bad as the surrounding states, but I really stay focused on a certain area with the positions of foreclosures of what I've really focused on and then transitioned over to lease options but back to your original question: 2010. I don't forecast us getting out of the deficit of the economic transition quite too soon yet.

Mosca: You've done a lot of rehabbing and flipping of properties. Is there a way that you can share something that we are not aware of, a tip, a technique, or a story that helped you to build this multimillion dollar business through foreclosures, rehabbing or flipping?

Donnell: Be willing to step out and be different. You have to have no fear and don't attach your emotions to anything you're doing but do get passionate about what you are going to get involved in. That's what I did in the beginning stages of developing my company. I did a lot of footwork, I did a lot of reading, I did a lot of education through other investors of other successors. If I could pick up a book, I can read it within two to three days, a week, what have you, I could learn a lot of knowledge, and reap some of those rewards and apply it to my business. I did a lot of footwork in the beginning with rehabbing and flipping properties and got my name out there. You have to really market yourself. Exposure, exposure, exposure is key in this business and your character and your integrity. When I first started rehabbing, I did a lot for work, got my name out there, and met other investors, met other contractors, acquired property, assigned those contracts for a few thousand dollars at the time but at the same time, I was exposing my company and my name. Then I started redeveloping those funds from those rehabs and flips and putting it deeper into my properties to hold long term. Before you know it, one thing leads to another, you start getting more exposure, you start getting your name out there more, word of mouth, advertising.

Mosca: A lot of people across this country have used real estate to build wealth and to move up the ladder. In your bio you talk about your “circle of wealth.” What is that?.

Donnell Circle of wealth team came about again a couple of years back when I started to transition into the lease option program that I developed and realized that there are a lot of good people out there that could afford a home on a mortgage monthly payment, but they just can't qualify for all of the different laws that have changed and the financial institution underground situations that have occurred. What I ended up doing is through my years of exposure and meeting a lot of good people is I developed the team of individuals that I have to deal with on a real estate transaction, meaning lenders or broker/lenders. I have a phenomenal broker/lender who owns his own brokerage firm here. He has been in the top ten as far as earnings and developing his business here in the state of New Mexico for at least ten years. Title companies, realtors, escrow officers, all of those people that make up a transaction as far as a purchase and sale of some sort in the real estate market and what I have done is when I acquire these properties on a win-win situation whether it is through someone saving a black mark on their credit, getting then out of a situation where they just can't afford a home anymore because of the subprime lending phenomena, I have been able to take these individuals, these families, get them into a lease option contract for anywhere from 1 to 5 years. During that time frame, here's the key, here's what's different in my company compared to other investors who are doing lease options, I work with them through the whole transaction of a 1 to 5 year term. I cannot be successful unless they are successful in a home ownership. We work together in getting their credit fixed if that's the challenge. We work together on getting them the financing if that's the challenge. I send them over to my broker and from day one when they come under my programs everyone on my Circle of Wealth team knows what my goal is to accomplish what the family or the individual is coming into my property.

Mosca: What is your golden nugget?

Donnell: The greatest value in life is that you have to live a good life. Here are five key things that I utilize on a daily basis: productivity, good friends, spirituality, family, circle of friends. You don't want to miss anything. Those things are crucial. Be passionate about what you are doing and just enjoy life on a daily basis.

Published: March 18, 2010

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Peter L. Mosca is president and founder of BAK Communications, Inc. He has over 22 years of communications and media consulting experience, serving a variety of nonprofit organizations, including the CCIM Institute and the REALTOR Association on all three levels – national, state and local. He is the Spokesperson Trainer for the CCIM's Jay Levine Academy and trains hundreds of residential REALTORS nationwide to be effective industry spokespeople. He is consistently ranked as "excellent" by about 90% of those who attend his presentations. While his principal consulting focuses are public speaking and media relations development and content delivery and management, Peter is also the host of the Voice America Network's weekly radio program, "Income Property Investment Talk," a one-hour program that brings the powerhouses of commercial and residential real estate to property investors every Wednesday at 11 a.m. EST. Peter is married 17 years to his wife Barbara. They have two children: Ashley, 15 and Kelli, 12. Hence, the name BAK Communications, Inc.