Do More Deals with Novations

It’s not often I hear something new to me in real estate. Today for the first time I’m going to share with you how real estate novations are used by investors. 

We have all heard of innovation. By definition it is the introduction of something new. Innovations are not inventions. They may use existing technology in a new way, or they may combine existing ideas. The focus is on the newness or novelty. So what is novation? According to the dictionary it is “the substitution of a new contract in place of an old one.”

So what is the connection between novation and innovation? I looked it up on wikidiff. (Yes that’s a thing) and basically learned...they are not really connected. Novation is (legal) replacement of a contract with one or more new contracts, in particular in financial markets the replacement of a contract between a particular buyer and seller with contracts between the clearing house and each party while innovation is the act of innovating; the introduction of something new, ideas, technology, etc. 

Apparently the only connection between the two is -- well they are only two letters and one syllable different. The two letters “in” which as a prefix means “not” as “incompetent” for “not competent” or “impossible” for “not possible.” Although the “in” is not used as a prefix in this case it almost works, “innovation” for “not novation.” 

Ok, enough of the dad jokes. Let’s talk about Corey Geary and what how he is using Novations as a real estate investor. Corey is a realtor in Arizona and is a 7-figure Wholesaler and fix and flipper. He’s joining us shortly. 

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News and Resources: 

• Here’s a description of “novations” in real estate.  https://www.millionacres.com/real-estate-investing/commercial-real-estate/what-real-estate-novation/#:~:text=Novation%20in%20real%20estate%20occurs,replaced%20with%20the%20new%20agreement.
• Some examples of novations in real estate. https://www.masterclass.com/articles/novation-real-estate-guide
• Our friend Attorney Bob Floss talks about novations: http://flosslaw.com/blog/2020/12/23/novation-agreement-in-real-estate
• Novations vs assignments: https://familydebtplanning.com/novation-in-real-estate/
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Mindset Moment: 

Knowing Your “Why” Isn’t Enough (Find Your Why, Simon Sinek)

“Why” make give you drive, or a sense of purpose. But it doesn’t move you toward your goals.

Know Your “Whats”

What kind of life do I want?

What goals do I need to reach to get there?

What steps do I need to take to reach those goals?

What is the logical progression to my end vision?

Know Your “Hows”

How do I accomplish my goals?

How is XYZ done?

Questions from Listeners: starr ask…

• Faith from Omaha, NE “Can you explain a mortgage wrap and when I would use it? I’m a new investor and excited to get started.”
• Sandy from McDonough, GA “Would you rather buy one flip where you could make $30,000 or two rentals where you could make $800 per month together?” Kimberly, West Miffin, PA “We have a rental house that will come vacant at the end of March. We are thinking of selling it. Should we wait to list it in June or go ahead and list it? We are thinking in might sell for more during the peak buying season.”
• Frieda, Ocala, FL, “Thanks for the show about mobile home parks. We live in one and love it. We retired to Florida to enjoy doing things with our friends, not take care of a house and yard. This is perfect for us and for everyone in our community. We are saddened to hear that cities and towns are no longer allowing new mobile home communities. Given the need for affordable housing in our nation right now, you’d think that lawmakers would be open to a wider range of possibilities. Stanley and I were able to sell our home, buy our current place with cash, invest the difference safely and lead comfortable lives doing what we want to do. I hope you’ll share this letter with your listeners and encourage leaders to allow more new mobile home communities across the country.”
• Jason, Harrisburg, PA, “is there one best source for deal flow? If there is, what is it?”

Motivational Quote: “Intelligence will help you build a company; wisdom will help you build an empire.” ― Matshona Dhliwayo