March 2024

NEW YORK — On a June afternoon in 2018, a man named Mickey Barreto checked into the New Yorker Hotel. He was assigned Room 2565, a double-bed accommodation with a view of midtown Manhattan almost entirely obscured by an exterior wall. For a one-night stay, he paid $200.57.

But he did not check out the next morning. Instead, he made the once-grand hotel his full-time residence for the next five years, without ever paying another cent.

In a city where every inch of real estate is picked over and priced out, and where affordable apartments are among the rarest commodities, Barreto had perhaps the best housing deal in New York City history.

Now, that deal could land him in prison.

The story of how Barreto, a California transplant with a taste for wild conspiracy theories and a sometimes tenuous grip on reality, gained and lost the rights to Room 2565 might sound implausible — another tale from a man who claims without evidence to be a first cousin, 11 times removed, of Christopher Columbus’ oldest son.

But it’s true. Whatever his far-fetched beliefs, Barreto, now 49, was right about one thing: an obscure New York City rent law that provided him with many a New Yorker’s dream.

On that summer day nearly six years ago, Barreto walked through the hotel’s revolving door on Eighth Avenue and entered a lobby centered by a 20-foot art deco chandelier, a nod to the hotel’s geometric architecture.

When it opened in 1930, to great fanfare, the New Yorker Hotel was not just the largest in the city but the second largest in the world. It was an opulent hotel of the future, with 92 telephone operators, a power-generating plant and a radio with four channels in each room.

Today, the mystique has faded, although the property still attracts tourists with its central location. Less than half the rooms are open to guests, and the hallway carpet is tattered and lined with brightly lighted vending machines of sodas and snacks. Most of the building is occupied by followers of the Rev. Sun Myung Moon, a self-proclaimed messiah who bought the hotel in 1976 and made it his organization’s headquarters.

Even by New York City standards, the room to which Barreto was assigned was small, just under 200 square feet. The beds consumed most of the maroon-and-gold carpeted space. A tiny closet could fit a handful of garments. There was also a 42-inch TV with free HBO.

Over the course of several recent interviews, Barreto described what happened next — events that led to a yearslong ordeal for the hotel.

In conversation, Barreto vacillates between lucid and unstable. He said he experienced panic attacks and seizures but insisted he had never been diagnosed with a mental illness — even as he claimed to be the chief of an Indian tribe he founded in Brazil.

Much of Barreto’s story is corroborated by years of court records, but one crucial moment comes from only his account: On that first night, he settled into his room, high above midtown, with his partner, Matthew Hannan. Before that night, Barreto says, Hannan had mentioned, in passing, a peculiar fact about affordable-housing rules that pertain to New York City hotels.

With their laptops open, he claimed, they explored whether the New Yorker Hotel was subject to a little-known section of a state housing law, the Rent Stabilization Act.

Passed in 1969, the law created a system of rent regulation across the city. But also subject to the law was an assortment of hotel rooms, specifically those in large hotels built before 1969, whose rooms could be rented for less than $88 a week in May 1968.

According to the law, a hotel guest could become a permanent resident by requesting a lease at a discounted rate. Any guest-turned-resident also had to be allowed access to the same services as a nightly guest, including room service, housekeeping and the use of facilities, such as the gym.

The room becomes, essentially, a rent-subsidized apartment inside a hotel.

Despite the reasonable assumption that what they were undertaking had been orchestrated from the start, Barreto claimed the idea only took shape when his and Hannan’s online search stumbled upon the 27th line of a 295-page spreadsheet titled “List of Manhattan Buildings Containing Stabilized Units.”

According to court documents, Barreto left his room the next morning, rode the elevator to the lobby and greeted a hotel employee at the front desk. He handed over a letter addressed to the manager: He wanted a six-month lease.

The employee dialed the manager, and after a brief exchange, Barreto was told that there was no such thing as a lease at the hotel and that without booking another night, he would have to vacate the room by noon. The couple did not remove their belongings, so the bellhops did — and Barreto headed to New York City Housing Court in lower Manhattan and sued the hotel.

In a three-page, handwritten affidavit dated June 22, 2018, Barreto cited state laws, local codes and a past court case in arguing that his request for a lease made him a “permanent resident of the hotel.” Removal of his items amounted to an illegal eviction, he said.

At a hearing that July 10, in the absence of any hotel representatives to oppose the lawsuit, the judge, Jack Stoller, ruled in Barreto’s favor. Stoller not only agreed with his arguments but even cited the same case law as Barreto and ordered the hotel “to restore petitioner to possession of the subject premises forthwith by providing him with a key.”

Barreto returned to Room 2565 within days, now as a resident of the hotel — and soon, as its new owner.

Back in their room days after the ruling, the couple read Stoller’s ruling over and over. In it, there was no order that the hotel provide a lease, no limit on their stay, no suggestion that rent was due.

But one word was mentioned throughout: possession. Barreto was given “final judgment of possession.”

He said he called the court to ask someone to explain what exactly that meant. “You have possession,” Barreto, sharply and slowly stressing every syllable of the final word, said he was told. “You’re not a renter. You have possession of a building.”

And how is possession of real estate recorded? In New York City, it is at the Department of Finance.

With the judge’s order in hand, Barreto and Hannan visited the agency’s lower Manhattan offices. Barreto said he asked a clerk about putting Room 2565 in his name — as a new homeowner would — but was told that would be impossible because the hotel, unlike apartments, was not split up in city records by rooms.

The property had one entity on file, the hotel itself, identified in city records as Block 758, Lot 37. So, citing the judge’s order, Barreto filled out paperwork declaring his ownership of that.

“If I have the right to register it all,” he recalled thinking, “then I will register it all.”

In New York City, a change of ownership is recorded in the voluminous Automated City Register Information System, or ACRIS, which holds the real estate records for every property. Thousands of documents such as deeds and mortgages are received and published daily, too many for the city’s Department of Finance employees to scrutinize before posting online.

Barreto tried repeatedly to file for a deed but was rejected over various technicalities. After his sixth attempt, a clerk told him he needed to contact the sheriff’s office. (In New York City, the sheriff’s office is a division of the Finance Department.)

Barreto said he spoke to a sheriff’s deputy, an investigator in the department, who asked why he was filing so many times. He said he responded that he had been given possession of the property but was having technical difficulties.

At the same time, the hotel’s owners had filed their own lawsuit to evict Barreto, claiming the hotel was exempt from the housing law’s hotel provision. Ultimately, the lawyers could not produce documentation from May 1968 to prove the hotel’s weekly rate was at the time more than $88 a week. The judge dismissed the suit.

Meanwhile, Barreto filed for a deed for a seventh time. It was accepted.

On the afternoon of May 17, 2019, nearly a year after Barreto booked his one-night stay, he was identified in ACRIS as the owner of the New Yorker Hotel, a 1.2 million-square-foot building.

Barreto now had a recorded deed showing he had ownership of the hotel, but the true and only owner since 1976 was still the Unification Church.

Barreto’s next moves went far beyond the rights of a now-permanent guest.

He immediately fired off an email to a lawyer for the hotel, demanding to know about the property’s recent finances, and included a claim that he was owed $15 million in profits.

“That payment is past due,” he wrote, “and is due immediately.”

A few days later, another demand: The 38th floor needed to be cleared of guests. “I need to do an inspection of the building with my architect ASAP,” he said.

The lawyer quickly responded, “What are you referring to?”

“I have ownership rights in that building,” Barreto replied. “That’s what I’m referring to.”

He also wrote about wanting to make upgrades, including to the revolving door at the hotel’s entrance on Eighth Avenue between West 34th and West 35th streets. “That area looks like a war zone,” he said.

While the lawyer scrambled to file a lawsuit to revert ownership of the hotel, Barreto sent off an email to Wyndham Hotels and Resorts, which manages the property, notifying it that he now owned it. A Wyndham representative asked for a litany of legal and sales documents to be sent as proof. (They were not.)

Barreto sent a memo to M&T Bank, the hotel’s lender, and asked for all accounts to be put into his name. (They were not.)

Next, Barreto walked into the Tick Tock Diner, which is connected to the lobby by double doors. He dropped off a letter addressed to the owners. Monthly rent checks, he wrote, should be sent to a new address: Room 2565.

One of the diner’s owners, Alex Sgourgos, recognized Barreto. Since he had moved into the hotel, Barreto, along with Hannan, frequently ate at the Tick Tock, a round-the-clock restaurant styled as a 1950s diner with neon lights, red booths and a laminated menu. The two men often ordered breakfast, sandwiches and chicken entrees, Sgourgos said, and always paid in cash.

“They looked like strange guys,” he added.

After reading the letter, Sgourgos called the Unification Church, which told him to ignore Barreto’s demand. The couple continued to eat at the restaurant, he said, and never mentioned the rent payments again.

Two days after Barreto walked into the Tick Tock, the lawyer for the hotel was in court, explaining the situation and pleading with a judge to issue an order to stop Barreto from representing himself as the owner.

The lawyer, Matthew Meisel, said his law firm partners had “never seen such an egregious set of circumstances.”

In court, Meisel said he believed that Barreto was under investigation by prosecutors in the Manhattan district attorney’s office, although he did not specify for what.

Across the country, it is not uncommon for overworked municipal recorders to accept property filings under the assumption that they are legitimate, and for real estate speculators to take advantage of the system.

But Bill Lienhard, a lawyer who has represented many victims of deed theft in New York City, said he was stunned by the apparent ease with which Barreto transferred a 41-story Manhattan hotel into his name.

“Boy,” he said, “this takes the cake for the city’s record department not paying attention.”

Representing himself in court, Barreto insisted he had done nothing wrong. “As for me proclaiming to people I was the owner, I only did that after I had the deed,” he said in court.

A few months later, the judge issued a ruling: “The subject deed is a forged deed by all accounts,” he wrote. Barreto did not own the property.

But that was not the end.

Despite the judge’s ruling about ownership, Barreto was still a legal resident of the hotel.

His home, Room 2565, is near the end of a long narrow hallway that zigs and zags from the elevators. Around the corner is Room 2549, where Muhammad Ali spent the night in 1971 after losing the so-called Fight of the Century to Joe Frazier at Madison Square Garden.

With no job, Barreto said, he spent hours in his room every day, researching his family’s history in Brazil, where he was born and raised in the southern river town of Uruguaiana. He has an angular, youthful face and a military-style haircut and fidgets with his clothes as he talks.

A relative said he had excelled in school in Brazil, had never gotten into trouble and moved to the United States in 1990s. As a teenager, he was considered particularly gifted — the smartest child in the family.

But in recent years, he developed an obsession with his genealogy, claiming to have uncovered a direct connection to Columbus through Portuguese royalty. In Civil Court, he started to invoke the explorer’s name — “My family name ‘Muniz Barreto Columbus,’” he wrote in a 2021 filing.

Barreto also delved into the Unification Church’s origins on the Korean Peninsula, its expanding economic interests on other continents and its business connections with North Korea. He started to believe that leaders of the church were sending its income, including from the hotel, to North Korea in violation of sanctions imposed by the United States.

In an interview, Barreto said his concerns about the finances of the religious organization had become the main driver for staying in the hotel. He called it his patriotic duty as an American citizen, likening his efforts to someone having been able to stop one of the hijackers before 9/11.

“I’m sorry I disrupted your attempt to finance weapons of mass destruction,” Barreto said. “It’s Mickey Barreto versus North Korea.”

While Moon, who died in 2012, was born in what is now North Korea, his church’s current ties to that country are unclear; it once operated factories and a hotel there. The church came under intense scrutiny in Japan after the 2022 assassination of Shinzo Abe, the former prime minister. The alleged killer believed that Abe had ties to the church, which has long been accused of preying on vulnerable people for donations, in Japan and elsewhere.

Barreto voiced similar claims to relatives, about both the church and his family’s genealogy, leaving them confused about whether his statements were tethered to reality.

“It was something that was just hard to believe,” said the relative, who asked to remain anonymous because of sensitivity within the family. “I was thinking maybe it’s true, I don’t know. With Mickey, it’s hard to say.”

A Unification Church spokesperson declined to comment about Barreto’s allegations, his residency or the lawsuits.

Barreto had prevailed in two separate court proceedings; he had a right to a rent-stabilized lease for a room at the New Yorker Hotel. He had access to room service, housekeeping and all the hotel’s facilities.

But he refused to sign a lease — or pay rent.

The hotel’s first offer of a lease, according to him, exceeded the legal rent for a rent-stabilized room. He also declined additional offers over the years, claiming he was concerned about the church’s finances.

Last year, the hotel’s owner succeeded in court against Barreto. A judge ruled in the hotel’s favor, citing Barreto’s refusal to pay or sign a lease. He was evicted in July.

Even while that second eviction case had been working its way through Housing Court, Barreto had not stopped portraying himself as the property owner. In September, he submitted another deed showing that the hotel had been transferred once again into his name, and that the city had accepted it.

The transfer caused the hotel to lose a property tax exemption, resulting in a $2.9 million increase on its property tax bill.

Back in court, the hotel’s lawyers urged a judge to hold Barreto in contempt, and a judge signaled on Feb. 7 that there would be another hearing in the case.

A week later, police officers showed up before sunrise at the apartment on the Upper West Side where Barreto had been staying with Hannan.

Barreto was arrested and arraigned later that morning in a Manhattan court on 24 counts — including 14 felony fraud counts — in what prosecutors said was a criminal scheme to claim ownership of the hotel. Hannan, who Barreto said was not involved beyond staying with him at the hotel for much of five years, was not charged or accused of any crime.

Barreto is now awaiting trial in state Supreme Court in Manhattan and facing several years in prison if convicted. In jail before he was released on his own recognizance, Barreto said he used his one phone call to dial the White House, leaving a message about his whereabouts.

There was no reason to believe the White House had any interest in the case or any idea who Mickey Barreto was. But you could never quite tell with Mickey — he had been right once before.

Building a personal brand takes time and effort, but the following steps can help you get started:

Step 1: Define Your Brand and Develop a Goal

To define your brand, start with introspection.

Ask yourself:

• Who am I?
• What do I stand for?
• What do I want to be known for?
• What is my vision?
• What are my values?
• What are my goals?
• What are my strengths?

From there, start to outline who YOU are and what you want to be known for.

Step 2: Establish Your Online Presence

Having an online presence is crucial for personal branding.

This includes:

• Creating up-to-date social profiles
• A personal website
• A well-written blog

Get started by updating your current social profiles.

Make sure your social media profiles:

• Feature a consistent visual brand, including the same background image, headshot, bio, etc.
• Highlight your achievements and projects
• Speak to your audience (who you want to help).

From there, you can build a streamlined website and drive traffic via your social posts.

Step 3: Produce Valuable Content

Creating valuable content is a cornerstone of personal branding.

Share your insights, stories, experiences, and client success stories.

Focus on delivering quality content that offers solutions and value to your followers.

• Write blog posts or articles relevant to your niche.
• Share insights on social media
• Participate in podcast interviews (or start your own).
• Create videos or webinars to educate and engage.

Content is a powerful tool to showcase your expertise and build a loyal audience.

Pro Tip: You can never give away too much value. Don’t hold back.

Step 4: Engage With Your Community

Building a brand is not just about broadcasting; it’s about interaction.

Here are a few ways you can interact with the community you’re building:

• Respond to every comment on your social posts
• Engage with other posts on all social platforms
• Attend live networking events and engage with your peers
• Offer help and support where you can
• Join or create online groups that align with your brand

By engaging with your community, you can build meaningful relationships and establish yourself as an expert in your field.

Step 5: Continuously Learn and Adapt

The digital landscape and industries are constantly evolving.

Stay relevant by:

• Keeping up-to-date with trends in your industry.
• Adopting new tools and platforms where appropriate.
• Upgrading your skills with courses or certifications.
• Asking for feedback and making the necessary adjustments.
• Following this field guide (woohoo)!

A commitment to learning and adaptation shows your audience that you’re a forward-thinking leader in your field.

Example: I learned recently that “cheat sheets” on LinkedIn perform better. Guess what? I’m now posting cheat sheets and monitoring the data.

Keep your ear to the ground.

3. Insurance Fees

Buyers nearly always purchase a property insurance policy to protect against fire, storm, and other damage. Known as homeowner’s insurance or landlord insurance, mortgage lenders require it, and responsible property owners buy a policy even if they buy the property in cash.

You can also choose to buy your own title insurance policy that protects you against future title problems.

If you buy a property with a Fannie Mae or Freddie Mac mortgage, such as by house hacking, and put down less than 20%, you will have to pay for private mortgage insurance (PMI). In addition to ongoing monthly payments, you must pay a fee up front. Federal Housing Administration (FHA), United States Department of Agriculture (USDA), or Veteran’s Affairs (VA) mortgages require an up-front payment of 1.75% and then will continue with a monthly payment for the mortgage insurance premium (MIP).

4. Taxes

The government always gets their share.

When a property changes hands, both state and local governments typically charge transfer taxes on it. Usually, both the buyer and seller pay a portion of these.

Local governments also charge recordation taxes and fees to record the new deed and mortgage note.

The buyer also becomes liable for their portion of the annual property tax bill, as of the day of settlement. In most cases, the seller has already paid for property taxes for the year, so the buyer owes prorated property taxes to reimburse the seller.

In some instances, property taxes are deductible within your federal income tax statement. However, this varies, so be sure to consult with a tax professional prior to purchasing to see how you will be financially affected.

Seller Closing Costs

Sellers owe their own set of costs during the property selling process as well.

1. Real Estate Commission

Generally, sellers pay 5-6% of the total purchase price to cover the average real estate agents’ commissions. The seller pays for both the listing agent’s fee and the buyer’s agent fee, normally around 3% to each.

2. Unpaid Bills & Taxes

The seller owes the local municipality for any unpaid water bills, fines, or other fees at the time of settlement.

Additionally, the seller must pay their portion of the year’s property taxes if that year’s tax bill has yet to be paid.

Seller Concessions

Most buyers would rather negotiate a seller concession than a lower purchase price. A seller concession occurs when the seller agrees to pay a certain amount of money to help the buyer cover closing costs.  The purchase price is mostly borrowed from a mortgage lender, while the closing costs must be paid for out of pocket.

Sellers don’t have to offer concessions, of course, but it can help them move their property faster. Consider it just another part of the sales negotiation — everything in real estate is negotiable!

While many sellers refuse to offer any help toward the buyer’s closing costs, seller concessions become far more common during buyer’s markets. In a seller’s market, sellers have little incentive to offer extra perks like money toward the buyer’s closing costs.

However, even if seller agrees to shoulder some of the closing costs, there are maximum amounts for concessions with different homeowner loans. Here are some of them:

While portfolio loans and other privately-held investment property loans don’t limit seller concessions, they’re far less common in investment property transactions between professional investors.

It’s not news: the Seattle area is one of the least affordable places in the country. The median single-family home in King County now goes for an eye-watering $914,000, up 14% from a year ago, and buyers now need to make an average of $214,000 a year to afford a home without being stretched too thin — more than anywhere except California.

But while some residents have found ways to stay in this expensive area, others have had enough and moved to less costly communities — or even less costly states.

Some of these real estate refugees are retirees looking for a less burdensome mortgage. Others are younger, would-be first-time buyers who simply can’t figure how to stay in Seattle and still have the dream of owing a home.

The Seattle Times is looking at how higher housing prices have changed not only how people live, but where — and what these changes mean for the Seattle area’s economy, culture and future.

If you left town in search of a more affordable home, or if you are giving it serious thought, we’d like to hear your perspective. What was the tipping point for your decision to leave? How far did you have to move to find an affordable home? What other changes, good or bad, have come with move? And would you ever come back?

Use the form below and we’ll be in touch.

Now, let’s get into the nitty-gritty of sales forecasting using a CRM.

As a reminder, sales forecasting can mean the difference between sleepless nights.

• Sleepless Night A): Worrying about your business
• Sleepless Night B): Partying in Vegas with your sales on autopilot.

Here are the top two easiest ways to predict sales as an SMB owner.

1. Forecasting by Sales Funnel (My Favorite)

Forecasting by Sales Funnel involves analyzing each sales funnel stage to predict future sales.

The sales funnel typically includes stages like lead generation, lead qualification, proposal, negotiation, and closure.

Businesses can forecast sales volume and revenue by examining the conversion rates and time spent at each stage.

Example:

Here’s an example of what each stage of the funnel looks like:

• Initial Prospects: 10% likelihood of conversion
• Qualified Prospects: 25% chance of progressing
• Proposal Stage: 50% expected conversion rate
• Negotiation Phase: 75% likelihood of winning
• Finalizing Deals: 90% probability of closing

Business owners can project sales outcomes more accurately by quantifying the potential success rate at each of these crucial milestones.

Pros:

• Detailed Insight: Offers a detailed view of the sales process, allowing for targeted improvements at each stage.
• Customizable: Can be tailored to the specific sales process and stages of a business.
• Predictive Power: Helps in predicting sales volume by analyzing historical conversion rates.

Cons:

• Data-Intensive: Requires detailed and accurate data on conversion rates and time spent at each stage.
• Complexity: It can be complex to set up and maintain, especially for businesses with long or complicated sales cycles.
• Assumption-Based: This relies on the assumption that past performance indicates future results, which may not always hold.

2. Forecasting by Lead Score

Forecasting by Lead assigns a score to each sales opportunity based on its closing likelihood.

Factors such as customer engagement, buying signals, and historical data are used to calculate these scores.

Sales teams can then use these scores to prioritize efforts and forecast sales revenue.

Example:

Imagine assigning a numerical value to each lead source based on its likelihood to convert:

• Referrals: Scored at 8.1, referrals often bring in high-quality leads due to the pre-established trust.
• Email Campaigns: With a score of 7.2, they can target and nurture leads effectively with personalized content.
• Landing Pages: Designated at 6.5, these are the bread and butter for capturing interested parties and gathering data.
• Social Media: Scoring a 5.4, social platforms enable you to engage with a broad audience, though with varying levels of intent.
• Cold Calling: Rated at 3.6, it remains a tool for outreach, despite its lower conversion rate in today’s digital age.

Pros:

• Prioritization: Helps sales teams prioritize their efforts on the most promising leads and opportunities.
• Dynamic: Scores can be updated in real time based on new data, making the forecast more responsive to changes.
• Efficiency: Increases sales efficiency by focusing resources on leads with the highest likelihood of closing.

Cons:

• Complex Scoring Models: Developing and maintaining accurate scoring models can be complex and require advanced analytics capabilities.
• Data Quality: The accuracy of forecasts depends on the data quality used for scoring.
• Adaptability: Scoring models may need frequent updates to remain accurate as market conditions and customer behaviors change.

Both Forecasting by Sales Funnel and Forecasting by Score offer powerful insights for sales forecasting.

The choice between both is up to you!

Sometimes (I hate to say this) sales is more of a feeling than a fact…

Not many new real estate investors enter the game with unlimited funds. Most of us need to figure out how to invest in real estate with little money.

In fact, some people start investing in real estate with just $1,000.

But that limits your options, so how do you invest in real estate with no money, or with little money?

We have plenty of our own thoughts on the matter, but to broaden the ideas, we polled a series of expert real estate investors on their tactics to invest without much money.

Why Invest In Real Estate?

With the broad range of financial instruments available to people—stocks, bonds, derivatives, deposit accounts, etc.—you might be asking why bother with real estate specifically?

Well, that’s because real estate offers multiple benefits that don’t inherently come with other financial instruments. Here are some of them:

Notice number 4 on the list: leverage. As indicated, real estate investments allows investors to get into the game with little to no money. 

Doing that, of course, requires further discussion. 

Ways To Invest In Real Estate With Little To No Money

 There’s a big world of creative financing available to you when you get into real estate. So, let’s look at your options: 

Live-in Flips

You know all about flipping houses. But have you ever considered moving into the property while you renovate and flip it?

Liz Hulz from The House Guys explains how she got into flipping: “Finding the seed money for your first project is the first and often the most challenging hurdle to overcome. A good solution is to make your first investment property your temporary home. This method works well for youngsters who have yet to get on the property ladder.

“Living in your investment property can cut down costs significantly. The money saved on rent and costs associated with renting a property can boost your renovation budget. Being on site cuts travel costs to and from the property. It also means you will be readily available to answer contractor questions avoiding delays based on communication.

“Having more time in the property, you can tackle easy DIY tasks yourself. Every small task you complete yourself reduces expenses and increases the return on your investment. Certainly, for the first investment you will find yourself counting every dime. After several investments, finances become easier and you have the confidence to take on more challenging projects that have a higher return on investment.

“My partner Andy and I bought our first house just after college, and it was so successful that we ended up starting our own real estate investment business! We love flipping houses and living our best lives together.”

As an added bonus, you can take out an owner-occupied mortgage, such as through Credible. That keeps both your interest rate and down payment lower than they would be with a hard money loan.

House Hacking

Deni and I are huge proponents of house hacking, and have each used several house hacking tactics over the years.

The classic house hacking technique involved buying a small multifamily property, moving into one unit, and renting out the others. You can use conforming mortgage loans for properties with up to four units, and again take advantage of lower down payments, lower interest rates, and lower minimum credit score requirements. Check out this duplex house hacking case study for details on exactly how it works.

But multifamily house hacking isn’t the only way to skin that cat. I’ve rented out rooms to housemates, covering the bulk of my mortgage payment. Deni has rented out storage space in her garage, and even went so far as to host a foreign exchange student for four years. The stipend covered most of her monthly payment.

You can also rent out an accessory dwelling unit (ADU) to cover some or all of your mortgage.

And if you don’t like the idea of sharing part of your property with long-term neighbors, no one says you have to sign a long-term lease agreement. You might prefer renting to short-term guests on Airbnb, and possibly earn higher returns to boot.

Real Estate Wholesaling

Also known as flipping contracts, wholesaling real estate involves putting a property under contract at a bargain price, then selling that contract to another investor — with a margin built in for you.

“For example, suppose you locate a $85,000 home and put it under contract for $55,000,” explains Corey Tyner, founder of Buy Yo Dirt. “You then sell the rights to that contract for $65,000 to another real estate investor. At the closing table, the seller receives $55,000, you receive a $10,000 finder’s fee, and the real estate investor gets a fantastic deal on a home.

“If everything goes right, you will never have to take title to any properties. You do, however, make a healthy profit.

“It won’t cost you much money; all you’ll need is a bit earnest money deposit to pay the seller, which might be as low as a few hundred dollars. Many first-time real estate investors begin by wholesaling to learn how to invest in real estate with little money. After a few wholesale deals, they have enough wealth to start retaining properties for themselves.”

Real estate wholesaling requires you to master two skills: scoring great real estate deals and building a network of real estate investors to sell to.

Borrow the Down Payment: Business Credit

Who says you have to come up with a down payment out of your own savings?

One way to invest in real estate with no money is to borrow the down payment from a business credit line or credit card. Because they’re not secured by collateral, they tend to come with relatively low credit limits and high interest rates. But you can combine many different credit lines and business credit cards to come up with the down payment, and then quickly pay it off with the flip profits or cash flow from the rental property.

In fact, many business credit cards come with an introductory 0% APR period ranging from 12-24 months. As long as you pay off the balance before then, it’s an interest-free loan.

Check out this video on how to open unsecured business credit lines as a real estate investor, using credit concierge service Fund&Grow. And while you’re at it, read up on other creative ways to come up with a down payment for a rental property.

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HONOLULU (AP) — A woman who purchased a vacant lot in Hawaii was surprised to find out a $500,000 house was built on the property by mistake.

She’s now mired in legal wrangling over the mix-up.

Annaleine “Anne” Reynolds purchased a one-acre (0.40-hectare) lot in Hawaiian Paradise Park, a subdivision in the Big Island’s Puna district, in 2018 at a county tax auction for about $22,500.

She was in California during the pandemic waiting for the right time to use it when she got a call last year from a real estate broker who informed her he sold the house on her property, Hawaii News Now reported.

Local developer Keaau Development Partnership hired PJ’s Construction to build about a dozen homes on the properties the developer bought in the subdivision. But the company built one on Reynolds’ lot.

Reynolds, along with the construction company, the architect and others, are now being sued by the developer.

“There’s a lot of fingers being pointed between the developer and the contractor and some subs,” Reynolds’ attorney James DiPasquale said.

Reynolds rejected the developer’s offer for a neighboring lot of equal size and value, according to court documents.

“It would set a dangerous precedent, if you could go on to someone else’s land, build anything you want, and then sue that individual for the value of it,” DiPasquale said.

Most of the lots in jungle-like Hawaiian Paradise Park are identical, noted Peter Olson, an attorney representing the developer.

“My client believes she’s trying to exploit PJ Construction’s mistake in order to get money from my client and the other parties,” Olson told The Associated Press Wednesday of her rejecting an offer for an identical lot.

She has filed a counterclaim against the developer, saying she was unaware of the “unauthorized construction.”

An attorney for PJ’s Construction told Hawaii News Now the developer didn’t want to hire surveyors.

A neighbor told the Honolulu news station the empty house has attracted squatters.

Just like most things in life, there are frameworks for goal setting.

I would highly suggest NOT reinventing the wheel.

Choose a framework and stick with it.

S.M.A.R.T

The oldie but goldie, SMART goals (Specific, Measurable, Achievable, Relevant, and Time-bound) have been my go-to for structured planning.

Golden Circle

Dig into the ‘why,’ circle through the ‘how,’ and then land on the ‘what.’ Simon Sinek’s Golden Circle flips the traditional model on its head.

Goals Pyramid

Stack your goals from the base up, with your mission at the bottom and your tasks at the top.

Locke and Latham’s 5 Principles

These principles pivot around Clarity, Challenge, Commitment, Feedback, and Task complexity to make goals stick.

B.H.A.G. (Big, Hairy, Audacious Goals)

Not for the faint-hearted, B.H.A.G.s are transformative goals that shift how you think about scaling and growth.

HARD

Heartfelt, Animated, Required, and Difficult – HARD goals tap into your emotional energy and fully engage you in the goal-chasing quest.

WOOP

This mental strategy stands for Wish, Outcome, Obstacle, Plan – a mental contrasting technique that helps cement goal achievement.

Here’s a cool graphic that I created about all these B.A. frameworks.

Pro Tip: If you’re new to setting goals, start easy. You’re looking for a goal snowball where you CRUSH a goal and then set another one.

When you make your goals too lofty, you lose steam when you fall short.

Coming up with a down payment for a house presents the greatest barrier to buying for homeowners and real estate investors alike.

But do you have to put down a down payment on a house when you buy it? Are there creative workarounds that homebuyers and real estate investors can use to minimize the down payment?

It turns out there are ways to minimize down payments, especially for real estate investors. Of course, they have to come up with a far larger down payment than the average homeowner.

Why Is There A Down Payment Requirement For Most Real Estate Loans?

For the lender’s side, down payments are used to hedge against the risk of a non-paying client. It also gives the impression that the clients are capable of managing their finances to meet loan obligations over a long period.

For the borrower, a down payment can affect the overall state of your loan, including interest costs and monthly payments—and, yes, it also reduces risk on the buyer’s side. Higher down payments can lead to lower interests and monthly payments, or even shorter loan times.

How Much of a Down Payment Do I Need?

Homeowners must typically put down 5-20% of the purchase price when buying a house.

While it’s commonly known that 20% is the expected amount, this has changed in recent years, with the average down payment for a home in the US coming in at 14.4%. However, the government does sponsor some loan programs with particularly low down payments.

As we can see, FHA loans require only 3.5% down from borrowers with credit scores over 580. On the conforming side, Fannie Mae offers a 3% down mortgage program, as does Freddie Mac. Military veterans can even score 0% down mortgages from the VA!

Several factors impact the down payment required by your mortgage lender. Your credit history makes a huge impact, so if you have a few dings on it — or haven’t established much credit history — work to repair or build your credit fast. Lenders also look at the stability of your employment and income because they ultimately price and structure loans based on the perceived risk that you will default.

Remember that if you put down less than 20%, you must pay private mortgage insurance (PMI). PMI can add $1,000 or more to your annual mortgage costs, seriously affecting your budget.

Real estate investors, in contrast, must typically come up with a greater down payment. Expect to put down between 15-30%, with strong borrowers generally putting down 20-25% depending on their credit, investing experience, and the lender.

That higher down payment requirement leads some investors to get creative and look for loopholes in using homeowner financing to buy investment properties.

Tips To Minimize The Down Payment On Your House

 Let’s go over your options on how to lower the down payment for your next house purchase. 

Loophole 1: Occupy the Property for One Year

To qualify for a homeowner mortgage, you must live in the property for at least one year. After a year, you can move out and keep the property as a rental.

This strategy keeps your down payment and interest rate low. Some conventional loan programs require just 3% down! You can compare instant prequalified interest rates and down payments on Credible*.

That said, this strategy has several drawbacks. First, it sets a speed limit of one property per year. If you’re relying on owner-occupied financing, you can’t build your rental portfolio faster than that.

Second, these mortgages all report on your credit. One or two mortgages reporting on your credit can boost your credit score, but five or ten? They can ruin your credit.

Third, most conventional mortgage lenders limit the number of mortgages that can appear on your credit. For many loan programs, that limit is four—after that, you’ll have a hard time getting a mortgage.

Finally, you have to buy the property under your name rather than under an LLC or other legal entity to maintain your privacy as a landlord and avoid personal liability in the event of a lawsuit. If you want to borrow a loan for an LLC, plan to get a proper rental property mortgage from a portfolio lender.

This strategy is how the Hoeflers built their rental portfolio and reached financial independence. It worked especially well for them because they combined it with house hacking.

Loophole 2: House Hack a Multifamily

Another way real estate investors can use homeowner financing to minimize their down payment and interest rate is through house hacking a multifamily property.

While there are many ways to house hack to live for free, the classic model involves buying a small multifamily, moving into one unit, and renting out the others. Take Tim, for example, who house-hacked a duplex. His neighboring renters pay enough to cover his monthly mortgage payment and much of his maintenance and repair costs.

And, like the Hoeflers, you can always move out after a year and buy another multifamily!

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When Rhonda Burnett went to sell a home in 2016, she knew she would have to pay a commission to her real estate agent.

The house was a second home — she and her husband, Scott Burnett, had purchased the three-bedroom house in the Hyde Park neighborhood of Kansas City, Mo., as a place for their oldest son to live after he was accepted to law school in Kansas City in 2008.

Her real estate agent presented her with a form that detailed how much commission they would pay, with choices in four boxes: 6%, 7%, 8% or 9%.

Burnett was instructed to select one, and she picked 6%.

The rest of the form, which stipulated that the commission would be evenly split among the buyer and seller agents, was already filled out; Burnett asked if she could lower the commission paid to the buyer’s agent, but her agent told her doing so would discourage agents from showing her home.

“I shop sales,” Burnett, 70, said with a laugh. She spent three decades as a stay-at-home mother while her husband, Scott Burnett, 72, worked for a waste management company and spent 20 years working as a local legislator. “I’m always looking for a break. But when I asked her if I could negotiate, she said, ‘No, you really can’t.’ ”

Three years later in 2019, Rhonda Burnett became the lead plaintiff in a landmark legal case about home sale commissions against the National Association of Realtors that led to a settlement this month that real estate experts say will rewrite the housing industry in the United States.

The settlement followed a federal jury verdict in October in favor of the Burnetts and four other plaintiffs, on behalf of 500,000 Missouri home sellers, that ordered NAR to pay $1.8 billion in damages. Under the agreement, sellers’ agents will no longer be able to make offers of commission to buyers’ agents on most of the databases where homes are listed for sale, a shift that will, experts say, lower commissions across the board. For decades, most agents in the United States have charged an industry standard of between 5% and 6%, which is higher than in nearly any other developed country.

The plaintiffs argued that NAR and several large real estate brokerages had conspired to inflate real estate commissions, pointing to several NAR rules that required a seller’s agent make an offer of commission to a buyer’s agent. Those commissions, the home sellers argued, were negotiable in name only, and unnecessarily high, forcing home sellers to pay unnecessary fees to close a sale.

Burnett spoke for both herself and her husband. She told the jury how she felt that the rules of the real estate industry had seemed fixed, and she believed she was forced to pay a commission that was never truly negotiable.

In an interview, Burnett stressed that she didn’t blame her real estate agent, whom she believes was just doing her job. Burnett spent several years as an advocate for the Kansas City public schools, meeting with educators and parents that helped her district. Her real estate agent was also a school advocate, and they often saw each other at district meetings. She blamed the industry, and the powerful National Association of Realtors, which had set the rules.

“It’s not the Realtors. But the Realtors are controlled by a huge spiderweb,” she said. “After I joined the lawsuit, I learned so much about how the industry is run. It goes all the way to the brokerages and up to NAR.”

Despite the settlement, which is pending a federal judge’s approval, NAR continues to deny any wrongdoing in terms of its rules for agent compensation.

“NAR does not set commissions, and commissions were negotiable long before this settlement. They are and will remain entirely negotiable between brokers and their clients,” the organization said in a recent statement.

Before the lawsuit went to court, NAR — a powerful trade organization with 1.5 million members, more than $1 billion in assets and a cash-flush lobbying arm — seemed impregnable. It had fended off a Justice Department inquiry into anti-competitive behavior for more than a decade, and successfully sued upstart real estate companies that challenged its stance. The Justice Department inquiry is ongoing.

But in U.S. District Court for the Western District of Missouri, the home sellers were speaking directly to a jury of their peers. It offered them an opening.

Michael Ketchmark, 58, a plain-spoken personal injury lawyer who became lead lawyer on the case, sensed his advantage on the first day of the trial.

Stepping to the front of the courtroom on Oct. 17, he gestured to his mother and father, who are in their 80s and attend all of his trials. On that day, Margaret and Eugene Ketchmark were seated in the front row.

“I told the jury that everything I needed to know about this lawsuit, I learned from my mom and dad when I was in kindergarten,” Ketchmark said in an interview. “If you take something that doesn’t belong to you, you have to give it back. And that’s what this case was. It was a refund case. It was about giving the money back.”

Ketchmark was referred to the case by a friend and fellow attorney who knew the Burnetts. He then began looking for other plaintiffs across Missouri who might have similar grievances.

Ketchmark had never tried a housing case before, but he was no stranger to big wins — in 2002, he won a $2.2 billion civil judgment against Eli Lilly and other drugmakers, claiming that they failed to uncover the scheme of a Kansas City pharmacist who was diluting chemotherapy drugs. The drugmakers, who never admitted any wrongdoing, later settled for $72.1 million.

Ketchmark had a similar upbringing to the plaintiffs in the case against NAR, with parents who didn’t make a lot of money and who saw a house as their biggest investment. He grew up in West Des Moines, Iowa, as one of four children, and his father worked at a bank. His mother didn’t finish college until he himself was in law school — she put herself through night school.

He had a strategy: Talk to as many average Americans as he could about the case, and find out what resonated. His team began running and filming mock trials.

“We would watch the tape, and start developing out the themes of the case,” he said. By the time they got to trial, Ketchmark estimates he had watched 2,000 hours of video of mock jurors discussing the case.

“I intuitively knew when the trial started that if we could win this, that if the jury followed the law and reached the right result, that it would change the industry. And it has,” he said.

He pressed Burnett, who grew up in Georgia and met her husband when they were both working in President Jimmy Carter’s White House — Scott did field organization, Rhonda worked as an administrative aide — to describe her childhood with a stay-at-home mother who sold Tupperware and a father who worked at the federal penitentiary and took on shifts selling sporting goods at the local Sears for extra cash.

Burnett’s agent listed the house for $275,000 but it sold for $250,000. Burnett paid $15,298 in commission.

Ketchmark guided Jerod Breit, 42, another plaintiff in the case, to share stories of working as a police officer in St. Louis before saving up enough to buy his first home in south St. Louis. And he encouraged Hollee Ellis, 53, to tell the jury about her mother, who worked as a real estate agent.

Ellis, a former high school English teacher who now works in nonprofits, talked about joining her mother at real estate showings as a child, and later even working as an assistant at her brokerage at one point. She joined the lawsuit, she told the jury, not in spite of her mother but because of her.

If real estate agents were actually able to negotiate commissions, she said, she believed her mother could have made more money, rather than less.

“She operated under that assumption and that practice and that standard for so many years,” Ellis said of the split 6% commission. She shared with the jury that her mother is now suffering from Alzheimer’s and has advanced dementia. “Whereas I know she worked very, very hard for some of her buyers and possibly could have negotiated a different rate.”

Ellis described selling a modest three-bedroom, single-level brick house in 2016 and feeling that she could not negotiate the 6% commission she paid that was split between her agent and her buyer’s agent. “It’s not about money at all,” she said of the case. “It’s about reversing a practice that I feel is unfair.”

Ellis and her husband, Jerry Ellis, a forklift driver, were looking to sell their house in Ash Grove, Missouri, because Hollee Ellis had a new job opportunity at a nonprofit in South Carolina.

They owed $107,000 on their mortgage. They hired a real estate agent who sold the house for $126,000, netting them just over $18,000. Forty percent of that ended up going to real estate commissions for both their agent and the buyer’s agent.

“It was a hard pill to swallow that we were walking away with so little,” she said.

Breit also said he felt he had money taken from him.

He spent more than a decade as a police officer. He bought his first home, a two-bedroom brick Tudor in south St. Louis he described as a “gingerbread house,” with the help of a fellow officer’s father — a retired paramedic who worked as a real estate agent on the side.

When it came time to sell that home, Breit said, that same retired paramedic offered to help again, he said, and promised he would only take the “law enforcement special” of 5.5% commission.

Breit took issue with the commission to his buyer’s agent, and had joined the class-action lawsuit when lawyers began reviewing the contracts of his home sale. It was only then, one day before he was scheduled to take the stand, that he learned he hadn’t been offered a law enforcement special anyway.

He sold the home for $149,900 in 2017. He was charged $4,946.70 in commission to his seller, and $4,047.30 in commission to his buyer, totaling $8,994. When the numbers were brought to his attention, he did the math in his head several times, disbelieving. His agent, using forms that were preprinted, had gone ahead and charged him the full 6%.

“I know people say it’s negotiable,” he said. “But it’s really hard for me to believe that it’s negotiable when the documents are pre-filled and we don’t question it.”

Breit left the police force in 2017 and now serves as a regional executive director for Mothers Against Drunk Driving.

“I’m just a person who sold a house,” he said. “I don’t go to Jiffy Lube to pay for an oil change next week, and I don’t pay for someone else’s Hulu account because we live on the same block. People should only have to pay for what they use.”