Seek Legal Advice as Needed

Seek Legal Advice as Needed

When I was new in this business I knew a lot more than I do now. Yep, thought I knew it all. I admit I tend to “ready, fire, aim.” Many times that’s the only way to get something going. However, there are other situations in which one should exhibit more caution. Legal matters fall into that category, specifically contracts. On my first several lease option arrangements, I ignorantly pulled contracts off the Internet. I shudder to think about it now! Here’s the story:

I put a responsible but struggling family into one of my renovated homes. The husband was receiving disability and the wife was supporting the family with a house cleaning business. They had three kids and a grandchild on the way. My heart went out to them. We met several times to discuss how a lease option works. I have a clear and distinct memory of explaining that the option fee was not refundable, even if they could not exercise their option to purchase the home.

The term of the lease was two years. At the end of the two years, they still were not in a position to qualify for a loan. I extended the agreement an additional six months. At the end of the extension, they were no closer to qualifying. It did not make sound business sense to continue the arrangement. I let them know I would need to sell the house, and unfortunately this meant they had to move. Not surprisingly, they claimed to have no idea the option fee was not refundable and took legal action against me. My attorney did all he could, but my contracts were not worded correctly. What could have been avoided by a couple hundred dollars in legal fees in the beginning ended up costing me thousands.

Don’t be pennywise and dollar foolish like I was. Use contracts for all your transactions and be sure that they are reviewed or created by a real estate attorney in your state.

The Real Estate Closing – Policies and Procedures

The Real Estate Closing – Policies and Procedures

It was quite the transition in my life to go from mom and wife to business mogul! It was a long and winding road for me to really develop a business mindset, especially one that felt comfortable to me in my own head. You cannot be someone else, but you are leaving your old lifestyle behind.

Be patient with yourself. Pay attention to what gets you excited in your new world. That’s where you are going to be most successful. That’s where to put your energy. Once you know where to focus, you will be better at treating it like a business because you will believe in what you are doing. You have to be on guard with your emotions. This is not an emotional business.

One thing that never occurred to me until I was attending an event at a real estate investment club is that I should have policies and procedures for my business. It seems insanely obvious now, but really, it never even occurred to me. However, much like a business plan, you can’t really establish these in much detail until you get some experience. I’ll give you an example of a procedure I have for purchasing a new property:

  1. Inform the title company this will be a remote closing. Documents are to be emailed and sent back overnight.
  2. Get wiring instructions for funds.
  3. If using a private money lender, contact a local attorney to draw up the promissory note and mortgage.
  4. Contact the insurance company and get coverage.
  5. Once email of documents is received, read carefully. Sign documents that do not require notarizing. Go to notary and sign the remaining documents in front of notary as needed.
  6. Go to Federal Express or UPS to overnight and return documents.
  7. Track closing progress with the title company.
  8. Call utility companies.

Now, why is this important? Number one, you don’t want to have to rethink this every time. It’s easy in the rush of the moment to forget something important. Number two, you are building your business so you can sell it. What? You have no intention of selling your business? Well, at a minimum someone needs to be able to step in and run it for a few weeks while you are on a beach in the Caribbean. OK?

Policies, practices, and standards of operation: document what works and revise it over time.

Financial freedom likely sums up what you are willing to do. Is it possible? Is investing in real estate your answer? It can be. You are going to have to work hard, especially in the beginning. You are going to have to be persistent. You are going to have to pick yourself up and push hard when you really don’t want to. You are going to fail a lot on the way to success. Success did not just fall in my lap, and it won’t fall in yours either. You must struggle and strive. It will be worth it.

Calculating Cash on Cash

Calculating Cash on Cash

Knowing what you are earning on an investment is important in order to determine if you are making money or losing money. Understanding the type of investment you have is also vital. Knowing what is going on with an investment helps you make better financial decisions.

There are many ways to calculate investments. In this article we will concentrate on determining the Cash-on-Cash that an investment property will produce. What is Cash-on-Cash? Cash-on-Cash is the amount of return we make on an investment, usually our down payment. We take the money we have put in to the investment and calculate the amount of return we receive on our cash. As mentioned above, we will use the Cash-on-Cash method when using a mortgage to buy a property. What we are going to do is calculate our rate of return on our down payment, rehab or both.  Let’s look and see what kind of money we are making on a deal.

The house we are going to purchase will be sold to us for $200,000. We will put $50,000 down which is 25% of the purchase price. We get a loan for $150,000 at a rate of 3.8%. Our payment will be $699 per month. The rents on the house are $1,300 per month. In addition, the following expenses must be accounted for. A property manager will typically cost 10% of the gross rents, but we are going to manage the property ourselves because it is local and this will increase our rate of return. Vacancy will be 5% of the gross rents. Maintenance and upkeep will be $50 per month or $600 for the year. In addition, the property taxes are $775 per year. The homeowner’s insurance will cost $400 per year.

 

 

Let’s see what all of this looks like:

Rents                       $15,600 per year

Less Vacancy                 $780 per year

Less Mortgage             $8,388 per year

Less Property Taxes       $775 per year

Less Insurance                 $400 per year

Less Maintenance         $600 per year

Net Income                   $4,657 per year

 

Now, we are going to determine the Cash-on-Cash return we will be making with this property. We determine this by calculating the following:

$50,000     your down payment

$4,657     net income the property produced

To determine our rate of return on investment we would do the following:

4,657/50,000 is 9.3%

 

This 9.3% is the rate you have earned on your $50,000 down payment. Before you decide if you are going to buy a property, you can determine if your Cash-on-Cash return is something you would be happy to have. Remember, Cash-on-Cash is determined if you are financing a property. If you pay cash for a property, there will be another way to determine your investment rate. That will be talked about another time.

Social Media and Your Real Estate Business

Social Media and Your Real Estate Business

If you want your real estate investing business to be as successful as possible, then you should strongly consider taking advantage of social media and social media marketing. Investors buy, sell and rent properties online, so taking advantage of the vast number of people who use social media is critical! For example, Facebook alone has over 2 billion monthly users. Here are some of the top ways that you can use social media to promote your real estate investing business.

 

  1. Grow Your Following

 

The larger your social media following is, the easier it will be to grow your business. You can expand your social media following by creating accounts on different social media channels and posting content to them regularly. You can create Facebook accounts, Twitter accounts, LinkedIn accounts, Snapchat accounts, Pinterest accounts, etc. The larger your social media presence is, the more reach your brand will have.

 

  1. Promote Your Listings

 

One of the largest challenges that real estate business owners have is finding renters for their real estate. Many real estate business owners rely on posting ads in newspapers and on sites like Craigslist.org. These methods can be useful; however, they lack the power of social media. With social media, you can make a post about the type of property you would like to buy or sell, and it will instantly be exposed to your entire following. People who follow businesses on social media typically have an interest in the businesses that they follow. So, you will most likely be promoting to an ideal audience when you post your properties on social media. Further, social media content is extremely shareable, and if your content is shared, it can be viewed by higher numbers of people.

 

  1. Inform Your Audience

 

One of the great things about social media is that it can be used to educate and inform your audience about key topics related to your business. For example, in the real estate business, it is helpful for real estate investors to educate potential renters about the best neighborhoods to rent in, the best moving companies to use, tenant rights, how to complete a rental agreement, etc.

 

Take your real estate investing business to the next level by harnessing the power of social media. Getting started is free, and paid advertising is a fraction of the cost of traditional print ads. Promote your real estate investing business on social media today.

How to Start Making Money in Real Estate

How to Start Making Money in Real Estate

Let’s talk for a minute on how to make money in real estate. I am sure you have heard it a million times now: “There is money in real estate” or “Anyone who is sitting pretty has invested in real estate.” While both of these statements can be true, let me share with you the reason why. Real estate is a very lucrative business to be in. The most important note on that topic would be diversification. Without diversification, all of your eggs are in one basket and that isn’t a very promising business plan. Instead, you need to have multiple streams of income.

Cash Flow

You need to have passive income creating assets. For this, I always go by the 1% rule. The 1% rule says that you need to collect at least 1% of your all-in price (including closing and repair costs) in rent. Really, what it comes down to is how much is your money worth to you and what do you need to get back to make it worth your time.

Paying Down Principal

While your tenants may be giving you cash flow, you can also profit by paying down your mortgage. This will give you more equity in your property.

Market Appreciation

The market has a tendency to double every twenty years. It often goes up and down in the short period of time; however, overall it is always rising. This could be a great investment if you have the patience or you could pair it with another strategy, like cash flow, for instance.

Equity Capture

Often times this is seen in a fix and flip situation. If you were to buy a fixer-upper at a discounted price and then fix it up and sell it, your profit would be considered equity that you were able to capture.

Just imagine if you paired all four of these strategies into the same deal. Your profit margins could increase with time.

 

Cash Buyer Leads, How To Find and Generate Leads

Cash Buyer Leads, How To Find and Generate Leads

In the real estate market, cash buyers are considered important because they provide liquidity to the industry. Cash buyers, from the term itself, are people or groups who opt to make real estate deals with cold, hard cash. They can be an investment group, corporations or individuals. Cash buyers may be heirs of estate properties who can easily give out cash as payment for the deal, business owners who are able to pay a big amount of money, or seniors who have saved enough equity from their younger years and are now enjoying their pension benefits. In other words, cash buyers are individuals who are truly able to pay cash for real estate. They attract investors or sellers because of this. They can make deals easy with their cash offers. And, they can become long-term investors once they develop trust and faith in real estate.

Leads, on the other hand, are simply future potential clients. When you have an individual’s name and contact number, or other contact details, then you’ve got yourself a lead. It does not necessarily mean that this person is interested in real estate. It just means that he or she is a potential client because you have his or her contact information, and you can try your luck at introducing yourself, presenting the properties you might sell and getting yourself a deal.

Cash buyer leads, therefore, are just names of potential clients. Now, the question is, how do you identify a cash buyer lead from other types of leads? This is when a basic knowledge of real estate comes in. You need to understand the different between these types of leads to make things easier for you. And, where can you find cash buyer leads, you ask? Everywhere. Like other real estate leads, cash buyer leads can be found anywhere.

To find them you need good and effective marketing. There are a lot of ways to market your business. You may choose to run ads in the newspapers, on bulletin boards, and on the radio. You may also post ads on websites like Zillow, Craigslist, or your own website. If you don’t and can’t have your own personal website at the moment, but still want your ads or posts to be more personal, you can always turn to social media. Market yourself and your business through Facebook, Instagram, Twitter, LinkedIn — the list goes on. There are a lot of options to choose from on the Web.

Furthermore, an even more personal approach is an outreach. It’s more personal because you get to contact people, maybe through email, snail mail, or mobile messages and calls. Outreach is simply reaching out to a list of people with working and valid contact details and offering them your business deal right away, or simply inviting them over for coffee so you can discuss more. Even the open world can be a good source of leads, if you know where to look. One of the oldest yet most effective methods is word-of-mouth. Be free to roam around, knock on houses, talk to people, and the like. It’s a process that requires quite an amount of time and effort, but it still works.

Building Your Credibility as a Wholesaler

Building Your Credibility as a Wholesaler

So, you’re new to investing and you’re focusing your strategy on wholesaling. That’s a great place to start. I know you are all thinking, “How are these investors are going to take me seriously? I have no idea what I am talking about!” And your right, so before you go rushing out to build relationships with investors, do a little research. Let’s talk about some ways you can build your knowledge and credibility.

  • Learn the Lingo: Start by learning the language of real estate. Search out real estate terms online and make some flashcards or something to help you remember the concepts. Learn about the different investment strategies in real estate as well. Once again, just Google it.
  • Script it Out: There are hundreds of scripts you can hunt down on the Internet. Find some of them and make them your own by putting your words and personality into them. Next, practice your scripts with someone. Work out your nerves. You don’t have to be an expert, but be confident on how you present yourself.
  • Don’t Lie: Never make yourself out to be something you’re not. If you are new, let them know, but be confident on how you present yourself. People will want to work with you because of your personality. Never get caught in a lie with investors because if they don’t trust you, they won’t want to work with you.
  • Study Your Market: Get smart about your market by seeking out investment clubs in the area and attend their meetings. This way you will be around people who love real estate as much as you, and you can gain a lot of knowledge from these types of clubs. Next, search out your market statistics online. I suggest bestplaces.net because they have a ton of information for you and make it easy to understand. Also, talk to realtors who work with investors and get their opinion about the market.

These are just a few things I recommend doing to increase your understanding of real estate. Building your confidence using these methods will also build your credibility among your investors. Take your time to learn. Don’t rush out there and make yourself seem uneducated. Real estate is going to be around for a long time, so get yourself setup correctly.

Gypsy Real Estate Investing

Gypsy Real Estate Investing

Gypsy real estate investing is a great way to build a strong rental portfolio. My wife and I started our real estate investing this way by accident. We had a house built and had lived in it for a few years when we decided to move. I had just finished real estate school and received my realtor’s license. While attending real estate school, I met a mortgage broker who introduced me to real estate investing. I decided to research lease options and liked what I found, so I decided to give it a try. We decided to move and do a lease option on our house instead of selling it. After we moved, we acquired a couple of other properties that we lease optioned also. During this time, we kept looking for another great deal on a house for us to live in. When we found one we wanted to buy, we moved and lease optioned the one we had been living in instead of selling it.

The strategy is to find a great deal on a house to live in that gives you a better interest rate and smaller down payment. Live in the house long enough to find another great deal on a new house that you can move into, and then rent out the house you move out of. You can buy ready-to-move-in properties, or you can buy properties that need a little work. You can then work on fixing the house up while you are looking for another great deal.

One thing with this strategy that helped us be successful is to not be in a hurry to find the next deal. We were able to acquire other properties using creative terms in between each move, which helped.

Of all the properties that we have owned and rented out, or lease optioned, the ones we lived in before renting them out have brought us by far the largest returns. Obviously, you have to be okay with moving that often. But if you have a long-term plan, you can create a very profitable passive income using the gypsy method.

5 Ways to Stay Motivated When Starting a Business

5 Ways to Stay Motivated When Starting a Business

Starting a business is very challenging for most people. Not having a plan and clear goals are two of the most common reasons why people fail at getting their business off the ground. Many people love the thought of being their own boss. The freedom of running your own business sounds exciting; however, it takes motivation, discipline and following through to be successful. Here are a few ways to stay motivated while starting your next business venture:

 

  1. Find Your “Why”: Write down why you want to start a business.  This is a reminder of what your true reason and motivation are for making a change. Your “why” keeps you moving forward when things get tough or you’re having a bad day.

 

  1. Set Specific “Goals”: Write down at least 3 – 5 short-term goals with specific deadlines for reaching them. Have 2 long-term goals to reach for. Break your goals down into weekly tasks. Track your progress. Each step forward increases your interest and your confidence.

 

  1. Connect with a “Mentor”: We all look up to and admire someone who has had success. Reach out to that person for advice and counsel. Learn from their successes and failures.

 

  1. Say “No” to Negativity: When external events prevent you from reaching a goal, try not to fall into a negative mindset that will cause you to lose motivation. Surround yourself with positive influences, friends, and colleagues who are supportive through the good times and the tough times.

 

  1. Start a “Routine”: Start every day with a routine. This will help your mind and body be alert, focused and prepared to create new habits. Spend time reviewing your plan and make a list of what you need to do that day or week.

 

Too many people wait to feel motivated before they do anything. The truth is, happy productive people do not wait to “feel” motivated, they just get to work. “To be successful, you have to have your heart in your business and your business in your heart” – Thomas Watson

Why PMI is Not so Bad

Why PMI is Not so Bad

PMI is Private Mortgage Insurance. Most people that apply for a loan will plan on paying PMI. PMI is required for anyone that is getting a loan on a property and does not have a 20% down payment. PMI is not a set amount. It varies depending on the borrower’s credit score and the amount of money they are putting down on the property. The rates range from .03%-1.5% of the original loan amount, and the payments are divided up over the 12 loan payments made throughout the year.

PMI benefits the borrower by helping them get in to a property without having to have a large down payment. This is a big advantage in today’s market, as trying to save for a 20% down payment while the prices of homes continue to increase at a rapid pace could have you chasing prices for awhile. Some PMI companies may even offer job loss insurance coverage, which is something that is not publicized.

There are several options available to get rid of PMI as well. The first option is to refinance your loan. If you have 20% equity in your property, you can get rid of the PMI payment. Another way is to just pay for a new appraisal. An appraisal will cost between $400- $600 out of pocket but can save you on a PMI payment every month. The 20% rule still holds true with this option. If your home has 20% equity in it, you can have your lender cancel your PMI. Another way to get rid of PMI is to improve or add on to your property to where it gives you 20% equity. To cancel your PMI, it must be done in writing, and you may have to prove you do not have any other liens on the property (for example a HELOC). You will also have to be current on your payments and have a good payment history.

PMI serves a big purpose in real estate by helping people without a lot of money get into homes. Talk to your lender about what benefits you have with your PMI. With an understanding of what PMI is and the purpose it serves, you will see that PMI is not so bad.

The Modern Real Estate Agent

The Modern Real Estate Agent

Real estate investing is a fast-growing industry. Although it’s quite risky because it involves investing a large amount of money without a guarantee of your investment’s return, it still dominates a big percentage of the investment industry. One of the many reasons why this industry has been steadily growing is because it has become easier for agents and investors with the help of technology. Like many others, the use of modern tools has been widespread in the real estate industry. In this article, you’ll find a few of the many useful modern tools you can utilize to become a modern real estate agent.

In this industry, it is necessary to have a wide network of contacts. They may be experienced real estate agents who can be your mentors, investors who can be your clients in commercial real estate, or someone else. The list can go on and on that your phone’s memory might not be enough! This is why you should use a CRM (Customer Relationship Management) System like Zoho or Hubspot. These do more than just store your contact list — they manage it. Hubspot can be connected to your Gmail account. CRMs help track and manage your communication with your current and potential clients.

Another dilemma you might need to find a solution for is the wasted time going back and forth to set a meeting with someone. Use a calendar to store your appointment schedules so you don’t forget your meetings or calls. Google Calendar is a simple but very useful option, though there are a lot to choose from on the Web. You might also want to consider using a scheduler. A good example is YouCanBookMe. It’s an online manager linked to your calendar that allows anyone (with the link) to book an appointment with you. It then automatically shows which dates/times are open and directly syncs in with your calendar. Never miss an appointment again!

And, in case you are part of a small group of agents that wish to share tasks, Trello is a great solution for your task management needs. You can assign tasks, keep track of their progress, and even communicate with your teammates using this tool. There are a lot of tools you can use. You just have to find the best ones that fit your business needs.

Rehabbing vs. Wholesaling

Rehabbing vs. Wholesaling

Many first time real estate investors want to start rehabbing houses but are a little timid about risking their money before they know all the ins and outs of the fix and flip business. Some decide to wholesale first in order to get their feet wet without a large outlay of personal funds or the need to borrow money. This article is written to show new investors why wholesaling can be a viable alternative to rehabbing, as well as be just as profitable.

Yes, there is a lot of profit to be earned on a single fix and flip project compared to one wholesale deal, but one must remember that a typical fix and flip takes 4-6 months to complete, whereas a wholesale deal only takes 30 days. If you look at the difference financially, a five month rehab project on a $200,000 home may make a profit of $25,000, but if a wholesaler assigns one property a month and makes $5,000 per assignment, he or she will also make $25,000 in the same five months. The difference being that the fix and flip project will take an investment of $200,000 tied up for five months, and the wholesaling business only requires a $500 earnest money deposit that is returned at the end of each month.

Another difference is that with a fix and flip, an investor spends the same amount of time making offers on properties with motivated sellers. However, once he has a property under contract, he has to close on it with cash, organize and spearhead the entire rehab process, and then market and sell the property to a retail buyer. Depending on how well he or she designs the rehab, stays in budget and is able to sell the home while the demand is still relatively high will determine whether or not he makes a profit on the project. Whereas, the wholesaler will make a guaranteed profit on each assignment and even if he or she analyzes the rehab poorly or pulls unrealistic comps, the worst scenario is the investor terminates the contract and starts over with no loss of money.

In conclusion, when you are just starting out as a real estate investor, whether you have money to invest or not, wholesaling can be a lucrative way to begin and continue making money in the real estate business.

POWER TEAM – PART II BRINGING A REALTOR ON BOARD

Power Team – Part II Bringing a Realtor on Board

Once you get the investor-savvy agent on the phone, you need to verify that they work with investors. “Hi Mike. This is Gena. Angie said you are the rock star agent for working with investors! Is that true?”

You are building rapport and taking the edge off the conversation.   Who doesn’t like to be a rock star? If Mike says that’s him, you are off to the races. If not, ask for someone else, or call another office. Don’t waste your time or Mike’s time.

“So Mike, I’m looking for single-family homes in safe, entry-level neighborhoods. I like three bedroom houses that are 1,000 to 1,500 square feet. I want to renovate these houses, put them back on the market (you can list them for me) and make a nice profit. Can you send me a couple dozen houses that are vacant, need work, and have had a price reduction or have longer than average days on the market?”

Why are these points important? Vacant – someone is paying the bills and no one is living there. Needs work – a traditional homebuyer wants a home ready to live in, not a project. Price Reduction – the seller has started negotiating with himself. He’s getting anxious. Long days on the market – the longer the house sits, the higher the need to sell. In other words, these four characteristics define a Highly Motivated Seller!

This is not your all-inclusive conversation, but it will get you started. If Mike asks you questions you can’t answer, (which neighborhoods? what price range?) you can rely on his expertise and have him tell you what his other investors prefer. How Mike performs will let you know if he’s your guy. Sometimes you have to kiss a lot of frogs to find your prince, so pucker up!

Your real estate agent is your door to nearly everyone else you will need on your team. An agent who works with investors will know contractors, property managers, mortgage brokers, hard money lenders — everything you need! Referrals are always the best way to go.

What’s the Difference between Residential and Commercial Real Estate?

What’s the Difference between Residential and Commercial Real Estate?

Real estate is simply a property of land, a building, or land and the building on it, including the other resources in it. It has four major types. The two most common types are residential and commercial real estate.

Residential real estate is a property type that includes newly-constructed and renovated homes. These are properties that are either built or rented for residential purposes. This may differ in types in accordance with the neighborhood they belong to and the entity owning the property. Apartments and condominiums are considered residential real estate. They are both individual units in a certain building. The difference between them is that a condominium has facilities that are co-shared with other condo-unit owners, like pools, fitness centers, concierges, and more. Single-family and multi-family houses also belong in this list. Mobile homes, as well, are considered residential real estate even if they are movable on wheels. These, and a lot more, are residential real estate properties because they are acquired for non-business purposes.

On the other hand, commercial real estate (also known as investment or income properties) refers to properties intended to produce a profit. These may be structures or land properties that are either bought or rented for that said purpose. These include office buildings, industrial structures (more known as commercial buildings), warehouses, healthcare units, and a bunch more. Any type of structure that generates income is commercial real estate, even restaurants, hotels, resorts and malls. Even multi-family residences (apartments) can be considered commercial because of their profit-generating status. They do differ in various places and tax obligations.

Commercial properties are known to be more pricey compared to residential properties. Not always but most of the time, they are more expensive because they generate income. And, anything that produces a profit is eyed by a lot of possible buyers or renters. The higher the demand, the more reasons to increase in value.

Doing a Fix-and-Flip Remotely

Doing a Fix-and-Flip Remotely

All over the United States investors are working in markets that are very hot and favor the seller. Like all cycles, this one will eventually swing back in favor of the buyer. However, some markets currently have more properties that will give you the opportunity to make money now.

 

Let’s name a few places that properties are more abundant than where we may live. In no particular order there is Atlanta, Indianapolis, Detroit and Columbus, Ohio. All these cities offer reasonable prices and a nice inventory of homes. But, if we do not live in these cities, how do we pursue opportunities to make money doing a fix and flip in these remote cities?

 

The key is to start with finding a good agent. You need to communicate to your agent exactly what you are looking for in a property. Ask them the following questions:

 

– What price could you expect to sell the property for when the rehab is finished?

– Do you know contractors who can do this type of work?

– Have you ever invested and done this type of rehab project?

– Would you be willing to give updates on the work?

– What suggestions can you give me?

 

The project is going to be done long distance. It can be done successfully, but you must manage your contractors so that you finish on time and within budget. “Carrots” can be given to your agent to help you get your rehab project done. Not only will your agent make a commission on helping you buy the house, they will also make a commission on selling the house when the work is done. In exchange for going by and seeing the progress of the work, your agent will have the listing posted when the house is ready for resale.

 

When looking for a contractor, remember that you make money by staying on budget and on time. Put the scope of work in writing. Hold tight to budgets and deadlines. If it can fit in your budget, give the contractor, in writing, a bonus if things are on time and on or under budget. In your contract have a penalty for being over time or over budget. If you are going to do well, you need to have this phase of the work tightly under control.

 

If it is within budget, fly to the city your property is in. If it is not within budget, have the agent and the contractor send you photos. Keeping yourself involved is the best way to be on top of your projects. It demonstrates that you are on top of things and that you hold others to their commitments.

 

Your agent’s input can be valuable. Ask your agent if he or she has ever done a rehab project. Try to have your agent give some input into contractors. Being local, your agent has more than likely dealt with contractors. Your agent’s input can be very important, especially as they inform you on the progress of the property with photos and verbal reports. Get your agent on board with the idea that there is money to be made in this project for them as well as you. It may be helpful to have a bonus for the agent if things come in on time and under budget, keeping in mind the goal is to make a profit.

 

Success will come if the investor does his or her homework. Though it is remote investing, he or she will do all the same due diligence remotely that they would do in their own backyard. Buy at the correct price, stick to the rehab budget and schedule and sell at a profit.

 

You can do this. Best of luck to you!

Selling Your Home

Selling Your Home

Many homeowners decide to sell their current home for different reasons. Some sell them for relocation or migration reasons. Others opt to sell their inherited or owned home because its size is not fit for them (can be too big or too small). There are even some who sell their home for money reasons, such as people who fell short on budget, so they sell their current home to acquire a cheaper one. Whatever the reason may be, every homeowner will likely undergo the selling process at some point. And it’s not very easy, especially if you don’t have a real estate agent. Here is some advice on how to sell your home for a price that’s reasonable and reflects the value of your property.

Before setting a selling price, you need to first determine your property’s value. What are your desired outcomes from selling your home? Identifying your home’s current market value involves knowing the number of years the property has existed, the current neighborhood it belongs to, the location of the property, the type of property it is, and its current status. The neighborhood it belongs to and its location may affect the property’s value because potential buyers look at these features. Some buyers prefer homes located near the town proper and some prefer homes in peaceful areas, away from the hustle and bustle of city life. The property status matters, as well, because it may require repairs that either the seller or the buyer will need to complete. Thus, affecting the property’s value.

Then, you have to make sure your house is ready for inspection. Make sure every part is clean and all the necessary repairs are done. It’s easier to make a good impression to the buyers with a clean and well-kept appearance in your home. Now, it’s time for pictures. Take beautiful pictures of your home. How do you take better pictures of your home for sale? Make sure you have a good camera, amazing lighting, and proper positioning of the camera when taking pictures. If necessary, check out pictures from the Web or magazines. Redecorate your interior if needed. Make necessary edits to the pictures you’ve captured to make them more attractive. Finally, post them on various business websites where potential buyers can see them. You can make use of websites like Facebook, Instagram, and many others. You may also want to join community discussions in relevant websites like Better Real Estate Tools.

These are only a few of the many things you can do to ensure the sale of your home with a profit that’s truly worth the value of the home, or more.

3 Quick Tips of Rehabbing

3 Quick Tips of Rehabbing

FUNDING

Ideally, you want to have some capital or credit set aside to flip houses.  However, you can also use other people’s money to flip houses and use only a fraction of your own money.

Getting a hard money loan is easier than getting a loan from a bank. There is less paperwork involved and your credit history is not as big of a factor. Most hard money lenders do not check your credit. This is only a brief overview of how hard money lending works.  Every hard money lender has his or her own terms, conditions, and policies. Each state has its own unique laws, rules, and regulations.

FIND A PROPERTY

New investors often get discouraged due to a lack of inventory in their area.  MLS listings are the easiest way to find properties for sale but do not always offer the best deals. While every market is different, you can almost always find good properties to flip. Here are some places to look for cheap real estate:

Bank Owned/REO Properties – Major U.S. banks are motivated to sell their foreclosed properties. Why are banks so motivated to sell these properties?  Banks have “carrying costs” each month a house is in its inventory.  Carrying costs include property tax, insurance, and maintenance, such as landscaping and/or snowplowing services.  There is also the added risk that squatters will vandalize a property. This causes thousands of dollars in damage that the banks are forced to pay for. All of these factors create an opportunity for you to purchase bank-owned properties at a deep discount.
HUD/VA Properties – HUD and VA Homes are also referred to as government foreclosures.  A HUD property is a house with an FHA-backed mortgage that went into foreclosure. A VA property is a house with a VA-backed mortgage that went into foreclosure. You can often pick up cheap HUD and VA properties.

Off-Market Distressed Properties – These are homeowners who need to sell quickly. If you move quickly, you can get houses for 30% – 50% on the dollar.
WHAT REPAIRS TO DO AND NOT DO

Some people get carried away and do too many renovations. They find themselves trying to sell a property that is over rehabbed for the neighborhood. You don’t want to flip the most expensive house on the block. Do renovations that bring a house up to standards on par with other houses in the neighborhood.

Kitchen and Bathrooms: Kitchens and bathrooms sell houses. Remodel them from top to bottom. If you are not sure what materials to use, look at homes that have sold for top dollar per square foot in your area and copy them.

Flooring: In most flips, use laminate hardwood flooring in the major living areas and carpet in the bedrooms. Laminate hardwood flooring is difficult to tell apart from real hard wood. It is not only much more durable, but also scratch resistant.

Paint: Paint every room in the home. If the walls have a lot of minor flaws in them, use flat paint. Otherwise, use eggshell. And always use earth tones. Anyone can decorate around neutral colors.

Landscaping: Donald Trump himself stated that you get a $10,000 return for every $1,000 you spend on landscaping. It is amazing what rocks, trees, and shrubs can do to increase the perceived value of a property. A good rule of thumb is to budget 1% to 2% of the final expected sale price of your home for landscaping.

Roof: If the home needs a new roof, replace it.

HVAC: Make sure the home has a working heating and cooling system. In some areas, air conditioning is now mandatory.

Garage: Other than paint, do not spend much money here.

Back patio: This is an often overlooked but a very important area. A simple $1,500 deck with two chairs and a small table can make a big difference.

Make sure your general contractor has addressed each of these items in his quote.  If you make these simple improvements, you will be able to sell your property for top dollar and maximize your profits.

Having Confidence in Real Estate

Having Confidence in Real Estate

Investing in real estate is a risk. Like many other businesses, you cannot fully guarantee that you’ll get your money back as soon as you want. And, over the years, stories of recession and succeeding foreclosures affect the market. Stories of investors pulling out their shares from investment groups exist in the industry. When you invest in real estate, you invest a big portion of your assets into something uncertain. Thus, a lot of people hold back from investing in real estate.

Through the years, the industry has gone through a lot of forwards and backwards. Similar to other business industries, this is normal and painful, but true. There are some situations you can’t control. And, as a real estate investor, or any business owner for that matter, you need to learn to flow with the changes in the market. Or, better yet, navigate the changes and save your investments. Build confidence in your investments. Yes, it’s difficult to entrust your assets in properties and people. It’s hard to know if you’re making the right decision for your possessions and if you’re investing the right way. That’s why you need to be a well-informed investor. Be knowledgeable about the basics of real estate investing. Always allot time in studying your target market. Understand the difference in each market area and thoroughly review their economic and demographic status. Be very careful and meticulous in determining your goals for investing and the things you’ll have to do to attain those goals. Remember, you can never go wrong with the right amount of know-how.

If necessary, get yourself a mentor. It can be a consultant who’s already an experienced investor. Experienced investors have already been through a lot in the industry and already know how to play and, of course, win the game. Or, you might also want to join investment groups. Especially if you’re a beginner, groups like these can help you become the confident investor you’ve always wanted to be.

Why Landlords Make Great Buyers and Sellers

Why Landlords Make Great Buyers and Sellers

We often deal with landlords when we are looking for investors that are buying rental properties. Calling landlords is always a great way to add to and diversify your buyers list. I want to look at landlords as being a source of motivated sellers as well.

There are usually two conditions that will cause a landlord to become a tired landlord or motivated seller. The first is when they are dealing with really bad renters. The renters have torn up the property or they have been constantly late on the monthly rent payment. Whatever the case, the landlords are tired of dealing with renters. The second type of tired landlord is one that is older and has been dealing with rentals for many years. Sometimes these landlords just need a little push to get them to sell their properties. Here are some questions you can ask when you start reaching out to landlords to give them that little push.

  • I see you have a property for rent; I was wondering if you have ever thought about selling that property?
  • Do you have other properties that you would be interested in selling?
    1. Especially with the older, tired landlords, they my have many properties they are looking to get rid of, so make sure you ask.
  • Do have any friends or business associates that may be interested in selling properties?
    1. Make sure you are always networking for more properties that may have a motivated seller.
  • Are you still picking up properties currently?
    1. This question if very important, especially if the answers to all the other questions are no.

When you call landlords make sure you go through all these questions with them. This is a great way to find motivated sellers and continue building your buyers list.

Things to Consider When Starting a Self-Storage Business

Things to Consider When Starting a Self-Storage Business

Self-storage is one of the best businesses to invest in today, with over 24 million units in the country and almost 10% of households having rented one. Demand continues to rise, either from our overwhelming need to acquire more stuff and store it somewhere or from economic setbacks, which cause companies and families to downsize and then look for additional storage space.

Also, self-storage has higher returns than any other form of commercial real estate; the next closest investment is apartments at 8.8% compared to the national average for self-storage at 34.5%, but you have to do your homework. Here are three important items to consider when investing in self-storage:

  1. One thing that people say about self-storage is that it’s a cash-cow — that once you set up, you can forget and just let it bring in money. It doesn’t work that way; it’s a business and you have to treat it that way. You need to have process-based management in place and you need systems that will help you run it, such as web-based software and kiosks.
  2. A lot of new investors have difficulty finding out if they’re paying too much for their units and actually knowing how much they’re worth. There are a lot of misconceptions that can be solved through the use of self-storage software that analyzes deals or a professional self-storage consultant that can do a proper appraisal of the business and assets. Moreover, you should also take a look at the market demand to determine if it will support the facility. You need to find out what the supply index is within a 5 mile radius around your self-storage facility. You also should check your competition. Can you create a better product with greater curb appeal and ease of access? Plus, what’s the overall demand in that market? Are people moving into the area? Are their new jobs being created?
  3. A solid marketing plan that helps you determine where you’re going to be and who you’re targeting is essential. Just advertising in the Yellow Pages isn’t enough. If you want to dominate your local competition, you need to get every potential renter from five miles around your facility to your website and to your facility.

Finally, after you’ve stabilized your business, you also need to consider expanding and adding new profit centers, such as constructing new buildings and offering additional services like truck rentals, boxes, locks and moving supplies. All of these will add income and help your asset appreciate in value.

Five Common Risks when Buying a Short Sale Property

Five Common Risks when Buying a Short Sale Property

  1. Unpaid liens

 

  • Property tax liens are quite common, and they take priority over every other claim on the property, including the primary mortgage.
  • Mechanic’s or contractor’s liens can be placed on a property when a contractor has not been paid for the work that they have completed on the property.
  • The IRS can also place a lien on a property, usually when the taxpayer doesn’t have enough income to pay back taxes but does have ownership rights to the property.
  • Sometimes we find a “surprise” second mortgage, usually when a homeowner takes a second loan out against the property without telling their spouse.
  • A judgment lien can be placed against a property if a homeowner has been successfully sued in court and the homeowner fails or refuses to pay the entire judgment amount.

 

  1. Deferred maintenance

 

The seller is required to fill out a disclosure form listing everything they know about the condition of the property. Sellers who have been struggling with financial difficulties for a long time have usually ignored maintenance and repairs issues, which may not be readily apparent. They’ll need to list as many of those as possible in order to convince the bank that the house will not sell for much more than the offered price.

 

  1. Incomplete information about the property

 

Bank-owned property disclosure requirements are different than that of an individual seller. Because of that, some buyers take an MLS “short sale” and find out later that it’s on a flood plain or that the neighbors are allowed to build right up against the property line with no setbacks required.

 

  1. Closing drags on

 

Short sales can take much longer to close than any other type of purchase. Legal problems can pop up when trying to resolve liens and can cause a lot of delays. Understand that it may take six months or more to close.

 

  1. The deal falls apart

 

In a short sale situation, the lenders need to approve the sale. The seller may accept your offer but that doesn’t mean that the lender will. The lender will require a lot of documentation from both the seller and the buyer to determine if they want to take the deal or not. If the accepted offer is less than what the lender wants in order to release the lien, then they’ll simply deny the sale. This happens quite often after both parties have done a lot of “hoop jumping” to try and make the deal work over a fairly long time.

How Do You Successfully Negotiate a Real Estate Transaction?

How Do You Successfully Negotiate a Real Estate Transaction?

Closing a deal as a real estate investor requires much more than being a smooth-talking salesperson. Being successful at negotiating a real estate transaction is a matter of doing your homework. Every real estate investor should complete this checklist before bringing a deal to the table. Discover below what you need to do to negotiate a real estate transaction successfully.

Real Estate Investing Negotiation Checklist

Homeowners usually think they know what their home is worth. The problem is this number can be based on anything from sentimental value to market stats from the first real estate bubble. To leave the negation table with a price that the seller agrees to and is a positive cash flow producing investment, be sure to complete this checklist.

Recently Sold Data: Bring a detailed list of recently sold comparable properties in the neighborhood of your prospective investment. Instead of just rattling off facts and figures, consider printing out full detail sheets for the homeowner to review. The more local the comps, the better!

Estimated Repairs: While you might not have time for a full inspection, create a go-to list of estimates for common problems. Most homes purchased by investors have deferred maintenance. The homeowner will have lived with the issues for so long they won’t see them anymore. Respectfully addressing issues and needed repairs will help support your offer.

Closing Date: Investors have the benefit of a flexible closing date. Ask what the homeowner needs and adjust your date to meet their request.

Property Status: Do your research and find out why the homeowner is selling. Is there a lien placed on the property, are they in the beginning stages of foreclosure or is it a down market and they want to make a quick sale? By understanding what the seller hopes to gain from the sale of their home you can better adjust your terms.

If you do your homework before you attempt to make a deal with a prospective home seller, you can successfully negotiate your real estate transaction, no matter the market. Selling a home can be an emotional decision for many homeowners. By presenting the logic behind your price in a detailed manner, you can avoid alienating the potential seller. Take “salesmanship” out of the equation and use a business-minded approach to each real estate investment you negotiate.

Creating a System to Get More Offers Accepted

Creating a System to Get More Offers Accepted

You can benefit from having a system for each of the outcomes that happen when making an offer. Instead of getting the traditional one out of every 25 offers accepted, you could improve that statistic dramatically. Top investors get one out of 6 offers accepted, and some do even better. It is all about taking control. That control starts with understanding what can happen when you make an offer, and it improves dramatically when you develop a standard way of dealing with each possible outcome.

There are five things that can happen when you make an offer. Let’s look at them:

  1. Your offer is accepted.
  2. Your offer is countered.
  3. Your offer is rejected.
  4. Your offer is neglected.
  5. Your offer is not presented in writing or not presented at all by the agent.

You will increase your percentage of closing by having a system for each of these outcomes, as outlined below. Further, practice will also teach you how to increase margins.

Your offer is accepted: Once you have a written acceptance of your offer you should send an email with pictures and a deal analysis to everyone on your buyers list. Then you should follow up with a phone call. If you must leave a message, send a text also. It is amazing how many people will respond to a text that won’t respond to anything else. If this gets your deal sold, great! If your deal is not accepted here, you will want to go to some investment club meetings and drop by some buyers who have money. Never accept mystifying answers from anyone. When they say “no,” find out why. “Too much money for this property? How much is not too much?”

Your offer is countered: You gain control here by using the short time you have wisely. Regardless of what happens, you can resubmit your “same” offer every two weeks. As high as 75% of deals that are completed are on offers that were not originally accepted. If their counter offer is way off from yours, stay firm on your original offer by either countering with the same or something very similar. Resubmit again in two weeks. If they tell you the property is under contract, do everything in your power to be allowed to make a “back up offer.” About 60% of accepted offers by investors don’t close. Stay with it. You may still win.

Your offer is rejected: You already have some level of control here because your seller is communicating. Develop a system to resubmit your offer every two weeks. Set a timeline for trying to get an audience with the seller and/or his agent to go over the reality of the situation in a nice but firm way.

Your offer is neglected: You gain control here by having a system for what you do. Top investors automatically resubmit their offers every two weeks or so just the way they wrote them.

Your offer is not presented in writing or not presented at all by your agent: Ouch! Here you can gain a lot of control by creating an offer template with your agent that gives you what you want, such as the right to assign the offer and a 15-day due diligence inspection clause. Have everything pre-signed and initialed so that your agent only has 4 variables to fill in. Those variables are the date, the seller, the property address, and your offer amount. Since this makes it easier to submit your offers in writing, you will virtually eliminate “phantom offers.”

SUMMARY: Since there are only 5 things that can happen when you make an offer, it’s easy to create an automatic method or system for dealing with each possibility. By doing this, you can improve both the number of offers you get accepted and the profit you make on each one.

New Construction Must Knows

New Construction Must Knows

Have you ever dreamed of building your own home? Today’s market has allowed many to make that dream possible. That means your dream could become a reality sooner than you imagined. New construction is much more accessible when remembering the following three things.

It’s actually quite simple. First is that new construction homes may not be listed on the MLS. Most builders employ their own sales reps that stay on site. This means that the best way to find new construction might be to actually take a drive out to where you are looking to build and see if there are any billboards or signs advertising new subdivisions in the area.

Second, new homes are often sold before they are built. This allows future homeowners to customize the home to their liking. Builders will usually build a couple of model homes that they will stage to help the retail buyer get a general feel for what the home will be like once finished. This helps homeowners feel more secure and visualize the end product.

Lastly, first buyers have a better chance at getting a discount. When a project kicks off, builders want the homes in the area they are building to look extremely desirable. If the builder can say they have 10 homes under contract in a couple of months, that can help motivate future buyers because it looks like a high demand area. Usually builders will build in phases as well. This allows them to get a feel for the market and raise prices as the area appreciates. Discounts can be in the form of upgrades. Most builders will prefer to give an upgrade over a discount on the purchase price so the property or sale values in the area are not affected.

To close, remember that builders don’t have any emotions attached to their properties. They didn’t raise kids there and they don’t have memories fogging what they think the homes are worth. They are simply worried about spreadsheets and if the project will succeed. New construction is a great opportunity in today’s market. Let’s start making your realty dreams a reality.

How to Hire a Contractor

How to Hire a Contractor

Home renovations can be time-consuming, expensive and stressful! Finding the right contractor can ensure that your home renovation doesn’t take over your life and your wallet. But how do you know a contractor is the “right” one for you? Learn more about how to find, then hire the right contractor for your home renovation.

Finding Contractors

Ranging from Real Estate Clubs to Lowe’s and Home Depot to Angie’s List of ads in the local paper, there should be plenty of places to find contractors. So, how do you pick the right one for your project? Step one is to ask for personal recommendations. If someone is willing to vouch for their contractor, that is something you should take into account. If you aren’t able to get any personal recommendations, the Internet is your next best bet. Use YELP, Google+ and sites like Angie’s List to read reviews of contractors. While it is also a good idea to look at their websites because they showcase their best work there, you need to know about ALL their past work as well.

Once you’ve gathered a list of contractors, make sure to run a quick search with the Better Business Bureau. Even with personal recommendations, you want to ensure that there are no pending litigations or major complaints filed. Once you find your list of contractors, it’s time to start the hiring process.

Hiring the Right Contractor

Once you have a list of at least three contractors, it’s time to hire the right one! Before you interview each contractor make sure you can clearly communicate your expectations. Questions you should ask each contractor are:

  • What vetting process do you use for your employees or any subcontractors who will work on this project?
  • Will you be handling all the necessary permits?
  • Can you supply a detailed list of services and expected completion dates?
  • What deposit is required and what is the estimated cost?

Once you have these questions answered by all three of your contractors, compare them. It shouldn’t always be about price. If the lowest priced contractor has no vetting process for their employees, you probably won’t be happy with their quality of work. Find a contractor that offers a balance of value and quality. This will help ensure that the work is done to your specifications. Hiring a contractor is the first (and most important) step of any home renovation. A good contractor should be your partner throughout your entire renovation. They should ensure all work is done to code and finishes are in the best quality, all while sticking to your budget. Don’t forget to take into account what contractor you felt most comfortable with. Not only are they going to be in your home every day, you need to be comfortable discussing tense subjects and financial matters with them. A good contractor can make or break a renovation, so take the time to find and hire the right one for your project.

­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­[1] https://www.upwork.com/blog/2017/11/want-job-filled-faster-5-tips-hire-right-talent

[1] http://smallbusiness.chron.com/manage-subcontractor-67687.html

Finding and Talking to Realtors

Finding and Talking to Realtors

Finding a good, investor-friendly realtor can be harder than you might hope. The way investors do real estate goes against most realtors’ training. Even realtors who have been in the industry for many years are conditioned to only do one deal with you and put in only 3, maybe 4 offers at the most. They are paid strictly on commission, so it is understandable that they would want a deal to close for as much as possible.

Most realtors are not use to putting in the hefty amount of work that often comes when working with an investor. What they often don’t realize is that an investor is looking to do multiple deals. Even though an investor makes offers that are more aggressive and for less money, there is much more money to be made for a realtor who works with investors.

The best way to increase your odds of finding an investor-friendly realtor is to find a property on a website like realtor.com that needs a lot of work and that only an investor would buy. You then contact the actual listing agent of that property. A realtor who lists a property that only an investor would buy is more likely to understand how to work with investors.

When you call the listing agent, you can explain that you are interested in the property they have listed and others like it. You can ask them to send more information on it and others like it. It is also helpful to tell them that you are looking to do multiple cash deals that you can rehab and resale.

You might get lucky and find some good investor-friendly realtors with just a few phone calls. Sometimes it takes many calls to find the right ones. It is important to not let yourself get frustrated if you don’t find good ones right off the bat. Keep at it and you will find good investor-friendly realtors.

Partnerships

Partnerships

I get asked all the time, should I find a partner to work with in my real estate investing business? I say yes, if you can find good partner. There are many ways you can partner up with someone. Regardless of which direction you go, find a partner that will complement your personality and drive. Let’s talk about some key points I feel are important in identifying the right business partner for you.

Personality: It will be important that you spend time getting to know your possible business partner before you rush into doing any work together. Spending time outside of the real estate business is important to see how one behaves. Make sure you like the person you are going to be working with. More importantly, do you like their attitude, drive, focus? Are they kind, patient, result-oriented? Do your due diligence.

Time Management: You don’t want a partner that does things only when they feel like it. Find someone who is good at managing their time and is efficient at completing their tasks quickly. Real estate is a time-sensitive business — no room for laziness.

Relationships vs. Money: I have always lived by the creed, “Chase the relationships, don’t chase the money.” Basically, don’t be greedy. It is too easy for people to be worried about how much money they want to make in this business. That will hurt your relationships. Therefore, find a partner who wants to build lasting relations instead of getting rich quick.

Different Business Entities: I encourage you to have your own separate business entities working together. Don’t put everything under one company because, if things don’t work out, it will be easier to dissolve the partnership.

            Working with a partner can be a great thing. It will take you some time to find the right one. A qualified partner can help you reach your real estate goals a lot quicker. If partnering with someone is what you have been thinking about doing then get out to real estate clubs because they are a fantastic place to network and find like-minded investors.

Building Your Buyers List – Part 2

Building Your Buyers List – Part 2

Step no. 1 Identify the market that you wish to start investing in. This is critical as this will be the market you will start looking for cash buyers in. A real estate market can be defined in a number of ways, such as:

  • City Limits
  • County Limits
  • Zip Codes – this is the most common
  • District – in the larger and more populated cities

Step no. 2 Find realtors to help with your market research and analysis to determine the following:

Step no. 3 Find cash buyers. Here is a list of both online and physical resources you can use:

  • Local real estate agents, such as Keller Williams, RE/MAX, Coldwell Banker and Berkshire Hathaway.
  • Title companies, such as Chicago Title and Old Republic Title.
  • craigslist.com
  • biggerpockets.com
  • Various paid websites that offer real estate software products that allow you to search county records and the Multiple Listing Service for recent purchases of real estate that were done with cash.
  • County records. This can be done online or in person.
  • Real Estate Investor Clubs. Make sure to search online for the local REI club in your area and attend the next meeting so you can speak with cash buyers there.
  • For finding contact information, search the following websites:

Step no. 4 – The Qualifying of Cash Buyers – here is a suggested list, both scripts and questions:

RECEIVING INBOUND CALLS FROM INVESTORS

“Thanks for calling. I apologize, but I put the ad out a little premature. I haven’t got the contract accepted yet, but if this is what you are interested in I’ll call you back once I lock it up. Before I let you go, I assume you’re an investor, correct? What kind of deals are you looking for?”

MAKING OUTBOUND CALLS TO INVESTORS

“Hi, my name is [name]. I found your information online and it says you’re buying houses. I’m a real estate investor too, and I wanted to see if you have anything for sale. I can sometimes get great deals through other investors. Do you have anything available?”

QUALIFYING CASH INVESTOR QUESTIONNAIRE

Where are you investing? (City, County, Zip Codes, etc…)

What type of properties are you buying?

What property characteristics do you look for? (Beds, baths, sq ft, etc…)

What types of repairs do you typically do on your properties?

What is your maximum purchase price?

How much profit do you need?

How many deals can you handle per month?

Why the Holidays are a Great Time to Invest in Real Estate

Why the Holidays Are a Great Time to Invest in Real Estate

The holiday season can be a great time to pick up investment properties. Here are a couple reasons why you should push to make as many offers as possible during this time of year.

One of the biggest reasons is the amount of buyers in the market at this time. The holiday season is a busy time of the year and a lot of investors and retail buyers are not looking at properties. This means there is a lot less competition in the market during the holiday season.

Less competition in the market leads to properties staying on the market a little bit longer. This situation leads me to my next reason why the holidays are a great time to invest. It is the motivation factor of people trying to sell a property. When properties linger on the market longer than usual, sellers become a little more desperate and are more motivated to sell. This creates a great opportunity for us, because without a lot of buyers in the market, our offer may be the one they are waiting for.

To take advantage of this time of year, get your agents to really sift through the MLS for rundown properties that have been on the market for an extended amount of time, usually 30 days or longer. Also do your own marketing to get stressed-out sellers to come to you as well. The best time to make offers on properties is when there are less buyers and offers to compete with. You will be helping some stressed out sellers get rid of a property they are struggling with.

Three Ways Real Estate Can Generate Wealth

Three Ways Real Estate Can Generate Wealth

Real Estate investors can generate millions of dollars through their real estate investments, but how exactly does it all work? Learn more about how real estate can transform into wealth.

For many, real estate is simply buying a home to live in. Real estate investors use properties to generate wealth in a variety of ways. Real estate can generate wealth for investors in the following three ways: appreciation, cash flow, and equity. Though there are many investment styles to choose from, real estate investors use a combination of these three ways to generate wealth from their real estate investments.

Appreciation

Over time real estate increases in value. This process is called appreciation. Though there have been some notable exceptions to this rule (2007/2008), real estate increases in value year over year. For example, home values in the US have gone up 6.7% according to Zillow.com[1]. They expect them to rise another 3.2% in the next year. So, if you bought a home for $200,000 a year ago, it could now be worth $213,400. Appreciation generated over $10,000 of wealth, in just a year.

Cash Flow

Cash flow is the term investors use to describe the amount of profit a rental property generates after revenue from rent and any expenses are accounted for. It’s most often expressed by this simple equation:

Rent – (Expenses + Mortgage Payment) = Monthly Cash Flow

Before purchasing a property, investors ensure that the final “Monthly Cash Flow” number is positive. For many buy and hold investments, this number can be modest; however, when you consider that investors generally have a portfolio of units, it adds up quickly.

Equity

Many investors take advantage of conventional financing to secure rental properties. For example, the $200,000 home they purchase, they put $40,000 down, and then take out a 30-year mortgage on the remaining $160,000. The rent the tenant pays goes towards that monthly mortgage payment. So the investor leveraged $40,000 to eventually build $200,000 of equity. Creating equity in a property is one of the ways investors generate wealth.

Generating Wealth Through Real Estate Investing

There is no simple formula for generating wealth through real estate investing; however, all investors use some combination of appreciation, cash flow and equity to create their personal wealth. Investment style, personal goals and market conditions affect what portion of the investor’s wealth comes from each element, but all work together to achieve the investor’s financial goals.

 

[1] https://www.zillow.com/home-values/

The Items Needed in a Business Proposal for Financing

The Items Needed in a Business Proposal for Financing

To begin, there are 5 questions that all potential investors want answered before they will do a deal. Your entire presentation should center around answering these questions.

  1. How much money do you need?
  2. How much money will I make if I do this?
  3. When will I get my money?
  4. What are the risks involved?
  5. What if something goes wrong? Or more clearly, how do I protect myself if you screw this up?

The secret is to answer these questions quickly and not dwell on anything longer than necessary. For example, the longer you harp on how much money they will make, the less they may believe you. Hence, less is more! It’s not just what you say, but how you say it.

The best way to say anything is to show it as opposed to saying it. Let’s look at to following scientific study for proof:

Lenders are 100 times more likely to remember what they see than what you say!

 

 

 

 

 

The above chart is from Tor Norretranders’ book “The User Illusion: Cutting consciousness down to size.”

The point of the above study is simple. If people are paying attention to what you are saying, you have a 33% better chance of them remembering what you are saying if you make a visual presentation. If people are not paying attention to what you are saying, your chance of them remembering is 100 times better if you are making a visual presentation.

Since we have scientific documentation on the value of visual presentations, it makes sense to present our deal visually. The official term for this kind of presentation is a proposal. This is what will increase your chance of succeeding with your buyers and lenders. Hence, you should study what content a proposal should have. You will find a list of things like this:

Funding Proposals Should Include:

  1. Executive Summary
  2. Romance the Project
  3. Logic of Property Location
  4. Comparative Market Analysis
  5. Projected Profit
  6. Exit Strategies!
  7. About Your Company
  8. Financial Summary

There are 8 items on this list. Completing this proposal could take time. However, you may only need a one-page Executive Summary. Yes, only one page and it should answer all 5 questions that we began with above. You may never need to present anything else. Let’s look at how easy this can be:

Executive Summary

  1. Make a Summary
  2. Be Short and to the Point
  3. Include All Pertinent Information
  4. Make it only one Page!

The Executive Summary is just that, a SUMMARY that is short and to the point. All the pertinent information is included without all the details. Usually just one page with the highlights only. Remember, these are questions your investors and buyers want answered:

  1. How much money do you need from me, the lender, or from me, the buyer?
  2. How much profit for me, the buyer or the lender?
  3. How long does it take me, the lender or the buyer, to get my money?
  4. What are the risks I would take lending you the money?
  5. What if something goes wrong? What they think but don’t say is, “How do I, as the lender or buyer, protect myself if you screw this up?”

Next, let’s go over an example of how a “Real Estate Deal” can be presented so it answers the 5 questions on one page and looks good doing it:

Above is an actual deal where Jake got all the money he needed from John to do a deal. Just for the record, both Jake and John were students of mine. John was a former student at the time of this deal and Jake was a current student. Let’s look at how Jake was able to get John to invest the money based on the information above. Jake’s presentation answered all 5 of the critical questions and did it colorfully, using pictures and charts. See how this is achieved on the next page below:

Question 1: How much are we talking about?… is answered just below the subject property:

ARV = $215,500

Loan = $140,000

Will Pay 4 Points

15% Interest

6 Month Note

Jake is asking to borrow $140,000.00! Hence, he answers question one on the center of the page.

Question 2: How much do I make if I give you the money?

ARV = $215,500

Loan = $140,000

Will Pay 4 Points

15% Interest

6 Month Note

Again, just below center page, Jake answers question two, “How much do I make?” Jake is offering to pay $5,600.00 in points just to borrow the money and 15% thereafter on a 6-month note.

This was an actual deal. Jake didn’t have two nickels to rub together and call a dime. The $140,000 Jake borrowed was everything Jake needed to do the deal. Jake never even made a deposit.

Question 3: How soon do I get my money? Comfort for this question is offered in the top left-hand corner of the one-page Executive Summary.

36 Day Rehab

See Gantt Chart

Here, top left-hand corner, Jake documents skill in organizing and managing a rehab. Further, he specifically shows how and when the rehab will be complete in 36 days. Add to this Jake’s conservative estimate of the ARV for his property and lenders can get a good feel for how quickly they will get their money back.

Below is a simple example of a Gantt Chart. I don’t have a copy of Jake’s. Jake got his funding approved without having to show the Gantt Chart. How he did this will be shown in a recap of question 5.

The Gantt Chart presents what needs to be done and when. Hence, the painting is done before the carpet is installed. The tile is laid before the plumber comes to install the toilet. Gantt Charts can look pretty with a lot of color and graphics.

This specific example above is used to show how you would outline one of the scariest items that could come up in a rehab: a cracked foundation. Jake didn’t have this problem, but you might. Stay calm, let your lenders and buyers know you have your game under control.

Question 4: What are the risks? This question is answered ambiently with this “One-Page Executive Summary.”

 

First. It is easy to see that the comps being shown are the same style, size and in the same neighborhood. This is comforting to buyers, investors, and money lenders because the more similar the comps, the more believable the ARV (After Repair Value).

On just one-page, serious documentation is given to assure this as a “killer deal.” The home styles are similar, the size is the same and they are in the same neighborhood. Conservatively, Jake’s ARV shows his property value at $215,000 and he only asks to borrow $140,000.00. The two comps Jake shows are similar homes that sold quickly. The first sold at $222,500.00 in 45 days. The second sold for $236,000.00 in 61 days. Lenders and buyers center their decision to lend or buy based on “Comps.” The mathematics of these comps is comforting to lenders and buyers. The graphic presentation of the properties themselves and their numbers reduces the fear of risk.

Question 5: “What if you screw this up?” This question is almost never asked at all, much less in such a bombastic manner. Yet it is often the most important question to answer because, it is often the first thing the buyer or lender worries about. You will want to answer this question. Showing that a rehab will rent at a profit if it doesn’t sell is assuring to lenders and buyers alike.

A lot of what Jake showed offered comfortable proof. But, this Rental Exit Strategy is where John decided to do the deal. This property would easily rent for more than $1,400.00 a month. The One-Percent Rule indicates renting at 1% or more of the investment is likely to be profitable. Jake is only asking to borrow $140,000. A profitable rental may be the ultimate exit strategy.

John, the lender, knows if he does the whole deal and lends the $140,000 to Jake he will be able to take a first position lien against the property. Hence, if Jake screws up the deal, John owns a cash-cow rental property. John and Jake did the deal. Thirty-Eight (38) days later, Jake had $36,000.00 cash from the deal on zero investment. John made more than that. Jake has done dozens of deals since, some of them with John.

While Jake was able to get his deal financed in one visit over the phone with John, many interested lenders will ask for more information. The same rules apply. Continue to:

  1. Romance the Project…

Tons of deals get lost because the deal-maker gets sloppy in their presentation. Make everything look neat, organized, colorful, and exciting. You will do a lot more deals and make a lot more money.

  1. Logic of Property Location…

Jake was able to prove that all his comps were in the same neighborhood. But, property location can mean a lot more. If your property is a 20-minute walk to a University, close to a military base, near a hospital, or a shopping center, renting a property can be easy.

Have things been happening to improve the value of the neighborhood, like improved public transportation, shopping centers, parks, etc? Lenders and buyers can be impressed by these things. Don’t forget to make these things a visual part of your presentation.

  1. Comparative Market Analysis…

Notice how the numbers on the comps match the numbers on the map. Remember, your initial presentation should be one page. CMA’s and other details are to be presented once you have an interested buyer or lender.

  1. Projected Profit…

Don’t just scratch your numbers out on a piece of paper. Lay things out so it looks like you know what you are doing.

  1. Exit Strategies…

One of the most powerful exit strategies for a rehab flip is being able to rent it profitably. Because Jake is borrowing $140,000 and the rent rule says you should make money at $1,400 this looks very appealing to a lender. The importance of this exit strategy can’t be overstated. But, remember that a graphic and colorful presentation will seal the deal.

  1. About Your Company

This couple, like Jake, had never done a deal. However, they present their company elegantly. Good chance no one will ask for references. However, just use people who will speak well of you. Neighbors, friends or anyone else who will testify to your skills, likability, and honesty.

  1. Financial Summary…

Your Proposal can’t be too long. But, it can be too boring! Don’t be afraid to make your points graphically.

This is how to make winning proposals. But, don’t put a lot of time into the complete proposal until someone has shown interest from your One-Page Executive Summary.

 

Due Diligence Checklist for Buying a Rental Property

Due Diligence Checklist for Buying a Rental Property

When you invest in real estate, you are investing in a physical asset.  For your investment to be successful, you need to ensure that your asset is in workable condition.  While the property doesn’t need to be perfect, you need to do your best to avoid unexpected expenses.  If you skip your due diligence, you could be setting yourself up to lose money down the road.  Due diligence falls into three categories: financial, physical and legal.

Complete all these items, and you can ensure that your rental property will meet your expectations.

Financial Due Diligence
Financial due diligence is much more than making sure you have enough money in the bank to make the down payment.  Before purchasing a rental property make sure:

  • The property qualifies for conventional financing (if you aren’t paying all cash)
    • You receive a copy of the past 12 months of utilities and/or any other expense items
    • You have copies of the lease and rental history if the property is currently rented
    • You research the tax history of the property

All of this financial due diligence will lead to you being able to complete this equation:

Rent – (Monthly Expenses + Mortgage Payment) = Cash Flow

You want the final cash flow number to be positive after your due diligence.
Physical Due Diligence
A home inspection is an important step in the real estate process.  Unless the property is a brand new construction, it is unlikely that it is in perfect condition.  As an investor, you should expect minor cosmetic renovations with each purchase; however, it’s the big-ticket items you need to look out for.  A home inspection will reveal when you need to replace expensive items such as the:

  • HVAC
    • Roof
    • Furnace

Major repairs like this can dramatically impact your monthly cash flow as an investor. The condition of the home contributes to its value, so make sure the condition of the home matches your monthly cash flow goals.

Legal Due Diligence
If you are purchasing a distressed property, legal due diligence is incredibly important. Make sure that there are no liens or judgments placed against the property.  Many liens convey with ownership of the property and will be your responsibility once you own it.  Consider hiring a professional title company to research the title and ensure it is free and clear.

Due Diligence + Buying a Rental Property
In the fast-paced world of real estate investing it’s easy to see a low-priced property and have the urge to jump on it! Making a snap decision on purchasing a rental property can have long-term consequences so be sure to complete this due diligence checklist before submitting an offer.

Commercial Real Estate Investment Basics

Commercial Real Estate Investment Basics

Commercial real estate is a broad term describing any non-residential property used to generate a profit. Some examples of commercial real estate include office buildings, industrial parks, medical centers, hotels, malls, apartment buildings, parking structures, and warehouses.

Although investment strategies for commercial real estate are fairly simple on the surface, many investors don’t fully understand how commercial real estate can work as an investment vehicle.  Commercial investors typically make money in one of three ways:  Through rental income, by purchasing or leasing the property and charging tenants rent in exchange for use of the property, through appreciation in the value of the held property over time, and by brokering or negotiating a deal between a buyer and a seller of the commercial property.

In this article, let’s examine the first of these commercial investment strategies a little more closely.

 

Rental Income

 

  • Offices, office space/cubicles etc.:  A typical tenant might be a marketing firm or sales company or telemarketing company.  The company pays the rent and has lease terms, often in the five to ten year range.

 

  • Apartment Buildings: Apartment buildings, whether multi-use or multi-family, typically have individuals, families or even companies as tenants. Leases can be short term or long term. Most are not longer than a year and some can even be month to month. These buildings can have several tenants and leases to manage and account for each month.
  • Industrial: Warehouses, garages, refineries and factories, etc.: A typical tenant might be a manufacturing and/or distribution company or mechanic or machinist. These properties aren’t generally located in areas that would be very desirable for residential or retail properties. Lease lengths are typically longer terms of five years or more.

 

Building Your Cash Buyers List – Part 1

Building Your Cash Buyers List – Part 1

Many first-time real estate investors start off wholesaling in order to gain the experience and get the exposure they need to become a fix and flipper or a buy and holder. If this is the case, then these first-time investors’ first step is to find cash buying investors or cash buyers to wholesale their properties to.

In this article, we will go over many ways to find cash buyers and discuss how to screen and qualify them.

Before we move forward, keep in mind that cash buyers can be either groups or companies, such as trusts, holding corps or LLCs, as well as individuals.

When wholesaling properties to cash buyers, you need to look at properties from two different perspectives:

  • Fix & Flips – These are properties that you are trying to get at the highest discount you can. For most investors this could be between 25-35% below market or even as low as 40-50%. It’s key to find out from your cash buyer what their rehab budget is, as well as the level of profit they are looking for. This is critical in coming up with your offer amount on the property. A fix and flipper is looking for a specific profit after they buy the property, do the rehab and resale it.
  • Buy & Hold (Rental Property Owners) – This is where you try to get the best discount you can. Usually if you can get an offer accepted at upwards to 20% below market then you have a good deal. You need to understand your cash buyer’s specific criteria on what types of rental properties they are looking for and in which market, the amount of cash flow they are looking for, and the capitalization rates they wish to get. Often, you can find the answers to these questions from the following sources:
    • Real Estate Brokerages
    • Property Management Companies
    • Other investors and those you network with by attending Real Estate Investor Clubs

This will help with your preparation prior to reaching out to cash buyers, and it will help you get specific and detailed knowledge of the following:

  • What type of properties are selling the most and the speed at which they are selling
  • The median price of property sales, as well as the average price per square foot that they are selling for

In Part 2 we will go over some simple steps to consider.

Zoning in on Zoning

Zoning in on Zoning

Knowing what you can and can’t do with a piece of property is crucial; it can make or break many deals. I highly suggest you determine this before getting started in any real estate transaction. This can save you a lot of money, time, and energy. I am not kidding about the money part. So what is zoning, and why is it important?

Local governments create zoning ordinances to map out the physical boundaries of different zoning districts, which can occasionally be modified. To determine what your lot is currently zoned as, you will want to go to the municipal building. Zoning and some other ordinances can often be found online. However, do not, I repeat, do not rely solely on that as your only resource. Always go to the primary source to double check your information, especially if it’s a deal you intend to do yourself or invest in.

Now you are probably wondering, why the big fuss over zoning? Well, zoning determines what land uses are permitted in each district or classification. Some examples of classifications may include, but are not limited to residential, mixed residential, commercial, and conservation. Zoning ordinances also lay out all the juicy specifics, like lot size minimums and maximums, setbacks, and height restrictions. Please remember that land use and regulation laws vary from state to state. Therefore, you need to be familiar with the states you work with or at least know where to find the right information when needed.

Like stated earlier, zoning is a very important variable when doing any real estate transaction. Please familiarize yourself with zoning before you end up paying to do it later. Either way, you will have to know it. Now, take this and get out there and apply it.

Costs to Plan for When Buying a Home

Costs to Plan for When Buying a Home

When buying a home, your focus may purely be on the down payment, but there are other costs associated with buying your home. Learn more about what costs to plan for, what can be avoided and what is not optional.

#1 Closing Costs

According to Zillow.com “home buyers will pay between about 2 to 5 percent of the purchase price of their home in closing fees. So, if your home cost $150,000, you might pay between $3,000 and $7,500 in closing costs.”[1] Closing costs vary from transaction to transaction but include a fee from the mortgage broker and lender, fess from any local and state taxes, and fees for a lawyer to oversee the transaction.

 

#2 Moving Costs

Moving can get expensive! It’s not just your stuff you have to worry about. If you are currently renting, are there any repairs you need to make to get your security deposit back? If you are selling your current home, do you need to make any repairs to get it in sellable condition?

#3 Home Repairs + Personalization

Even if you are buying a brand new, move-in-ready home, there will most likely be some repairs and personalization you will want to do. Picking the perfect paint colors and furnishings is one of the best parts of owning your own home. Make sure to leave some room in the budget to make your new house your perfect home.

#4 HOA fees

The worst thing about HOA fees is they aren’t a one-time fee. While some HOAs will have move-in fees and other upfront deposits, most are a flat monthly payment. When calculating what homes you can afford, make sure you include the HOA fee in your monthly expenses.

#5 Home Inspection + Survey Costs

No matter how expensive a home inspection and survey may feel, they are 100% worth it. Knowing where your property lines are and if there are any costly potential issues with your home will pay off in the long run. Even if a home appears to be in perfect condition, home inspectors are trained to look for underlying issues.

Though buying a home can be costly, most homeowners feel that the pride of ownership is worth every penny. As long as you carefully plan for costs and stay within your budget, purchasing a home will be a fulfilling and pleasant experience.

[1] https://www.zillow.com/mortgage-learning/closing-costs/

Let’s Start Our Power Team – Part 1

Let’s Start Our Power Team – Part 1

Ah, the mysterious POWER TEAM! Why on earth are we so attached to this idea? Believing you must have a power team is something that can hold you back. Since you don’t have a clue what a power team is, who should be on it, or how to draft your team members, you may be perplexed and stuck. Maybe you will stall and do nothing because, after all, your power team isn’t yet assembled. Well, just stop it now before you get started down this path.

Your power team, like your business plan, and even your goals, is something that is going to naturally evolve over time. It is not something you have to fully create before you begin.

You should start at the very beginning, a very good place to start. When we read, we begin with A, B, C. When we invest, we begin with a real estate agent. Finding the right agent might take some doing, but that individual is the key to your success.

Real estate agents do not receive training in investing. They essentially learn how to use the Multiple Listing Service (MLS) contract and how to not get sued. It is your job to find the rare gem of an agent who understands and likes working with investors. Oftentimes, a good place to start is with Keller Williams or REMAX. Those particular offices usually provide at least a little investment training to their agents. However, I have often found a great agent at an office with only one location. This search is part of your great scavenger hunt! Here’s what I want you to do.

Find a real estate office in the general area where you want to invest. Though any agent can show you any property, agents tend to know the neighborhoods surrounding their office the best. The phone will likely be answered by an administrator.

The conversation is going to go something like this: “Hello, It’s a wonderful day here at Keller Williams. This is Angie. How can I help you?” (Yes, they say something like that.)

“Hello Angie (use her name). This is Gena. I’m a real estate investor. I’d like to speak to one of your agents who works with investors.” This will stop Angie from sending you to the agent covering the floor that day or to the next one on her list. You are already in control. You know who you need to speak to, and you have said so. Sometimes Angie knows just what to do, other times she doesn’t have a clue. In the latter case, ask to speak to the managing broker.

With simple guided conversations, you can find a great realtor for your business.

Information on Exclusivity Agreements and Why (or why not) to Sign Them

Information on Exclusivity Agreements and Why (or why not) to Sign Them

An exclusivity agreement is an agreement that limits a buyer from dealing with other sellers. The seller involved on an exclusivity agreement should be the sole provider of the goods that the buyer demands. It is a partnership that gives the seller exclusive rights to supply certain goods or services to the buyer. The underlying significant question here is: Why should a buyer sign up for an exclusivity agreement?

In every decision we make, there will be always be pros and cons. The advantage of an exclusivity agreement is always more apparent for the agent. It could offer a higher selling price for the agent. After relatively securing the time and money involved, agents can control the negotiation time and can easily turn down any offer. It can offer advertising opportunities for the agent. It can save time for the agent because the agreement allows no last minute switching of the buyer to other agents. No paperwork will be wasted at all.

So how does the agreement benefit the buyer?

Signing the exclusivity agreement guarantees better information for the buyer. The agent is automatically committed to providing details and information that will guide the buyer. The negotiations are done faster, saving time for both parties.

It is the buyer’s call to make the agreement happen. As a buyer, who will potentially invest a great amount of money, it is prudent that you weigh your pros and cons before signing an agreement with a specific agent. You can base your decision on how the agent presents the whole agreement. You can actually have the option to put the agreement within a specified amount of time to give you the power to terminate it when you decide it is no longer giving you a good advantage. The agent should also be able to present your benefits when you sign the exclusivity agreement.

Do your research, ask the experts and, if you must, hire a legal consultant when you are having dilemmas on whether or not to sign an exclusivity agreement. You will be investing the money you’ve worked hard for; the lack of knowledge is the last thing you need.

How to Use a No-Seasoned Refinance

How to Use a No-Seasoned Refinance

To use a no-seasoned refinance in your business, you must first understand what a no-seasoned refinance is.

 

There are two parts to a no-seasoned refinance:

  • Seasoning
  • Refinance

 

In the world of mortgages, seasoning is how long you have owned a property and paid the loan. For example: If you have owned a property for 12 months, it would be said that you have 12 months of seasoning. If you have owned a property for five months, again, it would be said that you have five months of seasoning. However, if you have less than three months of ownership, the seasoning would be called “no-seasoning.”

 

A refinance is, well, a refinance. It means that you had financing on a property and then obtained new financing to pay off the old financing. This refinancing can be done for a couple of reasons:

  • To pull out cash from a transaction, assuming you have enough equity in the property
  • Obtaining a better interest rate than you previously had

 

A great benefit of a no-seasoned refinance is that you can quickly refinance a property to pay off your old loan, potentially getting some money out and/or getting a better interest rate than you originally had. For example: You obtain a house with a hard money lender who is charging 15% interest rate. You then quickly turn around and refinance the loan, paying off the hard money lender and getting a new, better rate of 4.25%.

 

If used correctly, a no-seasoned refinance can help you buy and hold properties to rent with little to no money from your own pocket.

How to Get Started in Real Estate

How to Get Started in Real Estate

So you’ve decided you want to be a real estate investor — now what!?! The dynamic and fast-paced world of real estate investing can be daunting for any first-time investor. Follow this step-by-step guide to get your bearings and successfully launch your career in real estate investing.

#1 Define Your Goals

Many would describe the world of real estate investing as “limitless.” Despite the nearly endless potential for success, defining your goals is an important step. Determine what YOU want from your career as a real estate investor. Do you want to supplement your current full-time job and save for retirement? Do you want to eventually have monthly cash flow so you can quit your full-time job? By understanding your goals, you will be able to determine the direction of your real estate investing career.

#2 Find Your Niche and Investment Style

After you define your goals, it’s time to pick the investment style that will best help you achieve them. The common ways to invest are:

  • Buy and Hold: When an investor purchases a rental property, typically with a traditional 30-year mortgage, and uses the proceeds from tenant rent to pay the mortgage and create equity.
  • Fix and Flip: A short-term investment strategy where an investor purchases a property in need of repairs, completes the repairs and then sells the property for a profit. Because the property is in poor condition, a fix and flip deal is primarily a cash deal.
  • Wholesaling: An excellent strategy for a beginner investor, wholesaling is finding real estate deals and then selling the deals to investors who have capital on hand. They then take a commission.

If you don’t have a ton of capital on hand, a fix and flip might not be for you. Research all the investment styles and choose the one that makes the most sense for your goals and budget.

#3 Invest in Your Knowledge

Once you have defined your goals, secured your capital, and determined your investment style, the next step is to determine the best way to achieve your goals. While the Internet is an excellent resource, having the support of a mentor or teacher is invaluable. As a real estate investor, you will need to learn the tools to support your goals. You will need systems to hire the right people, as well as resources to find your ideal investment properties. Finding a teacher or mentor will help you avoid time-consuming and potentially costly mistakes.

Getting Started in Real Estate Investing

If you take your time and define your goals, you can embark on a successful career in real estate investing! Don’t bite off more than you can chew. Take your time and you will reap the rewards.

How a Real Estate Closing Works

How a Real Estate Closing Works

You’ve showed your client the property and he seems very interested in it, then he decides he’s going to buy it. Now you have reached closing, which is the final step in executing a real estate transaction. But you’ll have to go through a few processes before the transaction is actually over.

Several things happen during closing: the buyer and the lender deliver a check for the balance owed on the purchase price. Then the seller signs the deed over and gives it to the buyer. A recorder’s office, which will record the deed, will require the seller’s signature to be notarized. Commonly, the seller delivers possession to the buyer by giving them the keys to the property. Unless otherwise specified in the real estate contract, delivery of possession should be on the closing date, which is usually several weeks after the offer is formally accepted.

A title company, lawyer, notary, or the buyer will register the new deed with the local land registry office or recorder’s office. A declaration or statement by the buyer or seller regarding the purchase price may have to be filed with the government. Conveyancing taxes and recorder’s fees will typically have to be paid, which are part of the closing costs. The seller receives a check or bank transfer for the proceeds of the sale, minus the closing costs and mortgage payouts. Prepayments for real estate taxes and insurance may be taken from the funds allotted for closing costs, and fees charged by other parties are paid. Sometimes, closing in escrow, which is a neutral third party, may occur to prevent the two parties from getting ripped off.

At a closing, the basic idea is this: the buyer gives the seller their money and the seller gives the buyer the deed.

Fast Track to Your First Million

Fast Track to Your First Million

Are you looking to get started with real estate investing? If so, here are a couple of pointers on your first steps to making the big bucks. In order to make millions, you need to start thinking and planning for millions.

The first thing you need to do is get organized. Create some good habits now to better prepare for the hefty paycheck. When getting organized, you are going to want to get a business or entity, phone number, email address, business card, and work space. Establish a schedule and pencil in when you are going to have your weekly company meeting, even if it’s just with yourself. Create a model of what you are doing so it will be easily duplicated when your company expands.

Once you are organized, you need to get going on marketing your company. Go to clubs and send out flyers and other marketing materials. Also, don’t forget to introduce yourself as a real estate investor. Get out and talk with people. Let them know who you are and what you do.

Now that you are organized and are marketing yourself, I want you to get your power team built up. Create a list of resources of different people or companies that could be useful in real estate investing. This list may include investors, agents, contractors, title companies, real estate attorneys, etc.

Don’t forget to surround yourself with like-minded people. Find people in real estate that are killing it and talk to them. Pick their brain. Repeat some of their best practices. Do ride-alongs with them or go get lunch.

Once you have implemented these first steps, you will be on your way to getting some deals going. At this point, it’s all about getting those offers submitted.

How To Acquire a Certificate of Occupancy for Tenant Improvements in a Commercial Building

How To Acquire a Certificate of Occupancy for Tenant Improvements in a Commercial Building

This article is designed to help you through the permitting and construction processes associated with a tenant improvement (TI) project. Tenant improvements are defined as structural or nonstructural interior alterations to an existing commercial or industrial space. This includes electrical, mechanical and plumbing permits, a change in the permitted use or an increase in the permitted number of occupants.

To apply for a tenant improvement permit, you need to stop at the building counter in the public service building in your city and provide them with a complete submittal package. A complete submittal package consists of the following:

  1. A completed Tenant Improvement Worksheet.
  2. Four copies of a Plot/Site Plan showing the general layout of the existing building site, the location of the tenant improvement, the address, and the handicapped path of travel from parking to the accessible entrance(s).
  3. Four copies of construction plans and details, including but not limited to the floor plan, exiting plan, reflected ceiling plan, framing details, lighting plan, electrical/plumbing/mechanical plans and other applicable plans as listed in the Tenant Improvement Worksheet.
  4. Two sets of Title 24 energy compliance documents, when changes are proposed to the mechanical system, lighting or building envelope.
  5. A completed Hazardous Materials Questionnaire.

During the permitting process you will be asked to pay two separate fees: a plan check fee and permit fee. You are required to pay the plan check fee before they take your application for plan check. As for the permit fee, you must pay it at the time of permit issuance. Both fees are determined by the type of construction, the type of occupancy, the square footage and the extent of the tenant improvement.

After the development services technicians (DST) verify that the application package is complete, and you have paid the plan check fee, they will forward a set of plans/documents to each of the four departments/divisions: Building, Planning, Engineering and Fire. Approval from all four departments/divisions is required prior to permit issuance.

After you obtain all the required approvals and pay the permit fee, a DST will issue you a building permit. Now you can start construction. At certain stages during construction, you must schedule an inspection. The following list represents the sequence of required inspections for a typical tenant improvement:

  1. Underground plumbing and electrical
  2. Foundation
  3. Interior wall framing and rough electric
  4. T-bar ceiling and rough trades (electrical, plumbing & mechanical)
  5. Drywall nailing
  6. Electrical service
  7. Final Inspection

After all required inspections are approved and any required approvals from other divisions and/or departments are obtained, the building inspector will notify the utility company to release the electric meter and a Certificate of Occupancy will be issued. The issuance of a Certificate of Occupancy authorizes you to occupy and use the facility based on the permitted use shown on the Certificate of Occupancy.

Five Tips for First Time Home Buyers

Five Tips for First Time Home Buyers

Buying your first home can be an overwhelming experience. These 5 tips will help you stay on track during the emotional experience of buying your first home.

#1 Know Your Budget

Most real estate websites allow you to search by price. Know your budget and stick to it. Don’t be tempted to look at homes above your budget in hopes of “negotiating the price down.” By sticking to your budget, you will be able to enjoy your home long-term without it being a financial burden.

#2 Work with an Experienced Real Estate Agent

Try to get a referral from a trusted friend or family member. Your real estate agent is a very important part of your home buying process. In a hot market, a good real estate agent can be the difference between finding the right home as soon as it’s on the market and being the last to know.

#3 Know What is Your Non-Negotiable

Do you NEED something move-in ready, or are you ok with a bit of a project? Is space the most important thing to you or will you sacrifice that guest room for your preferred location? Know what items you are willing to compromise on and what you aren’t.

#4 Look at a lot of Different Houses in Your Price Range

Even though buying a home can feel like an emotional decision, it is also a financial one. By looking at a lot of homes in your price range, you can get a feel for what your budget will afford you. If you can’t find a single 4-bedroom home in your area within your price range, you may need to expand your search or save up.

#5 Anticipate Closing Costs

Part of tip #1, knowing your budget, is also knowing what to expect from closing costs. In most markets, the buyer is responsible for all costs associated with closing. From inspections to lawyer fees, there can be up to 3% of the purchase price in costs accrued. Knowing what cash you need to have on hand for closing is an important part of the budgeting process.

Buying your first home is an exciting time. Use these five tips to keep your home search on track and on budget.

It’s a Numbers Game

It’s a Numbers Game

Every aspect of real estate investing is a numbers game, and you have to be okay with that. From the number of properties you look at to finding the right deal, to the number of offers you put in to getting one accepted, to the number of realtors you go through to finding a good one, and on and on. It’s all about the numbers.

 

I often hear clients say, “I can’t find a good realtor,” or “I can’t find the right properties,” or “I can’t get a property under contract.” When I ask how many realtors they have talked to or worked with, they say something like, “I have worked with 3 or 5, and I just can’t find a good one.” When I ask how many offers they have put in they say something like, “We have put in 5 or maybe 6 offers and still can’t get one accepted.” This can lead to discouragement, which can lead to frustration, which can lead to giving up.

 

This is one reason many people are not successful at investing in real estate. You have to do what it takes, and if going through 8 or 10 or more realtors is what it takes, you have to be willing to do that. If it takes submitting 20 or 25 offers to get a deal under contract, you have to be okay with that.

 

One of my most used words in real estate investing is, NEXT. Next property, next realtor, next contractor, next lender, NEXT.

 

Sure, some people get lucky and find the right realtor right off the bat or they run into the perfect deal that goes under contract, but that is the exception. How many does it take to find the right one? It takes as many as it takes, and you need to be okay with that.

 

In real estate investing, you will always be shopping for the right deals and the right people. Find ways to stay focused on doing what it takes. Learn to use the word NEXT with a smile. Avoid any negative self-talk. You can do this! Keep at it, and happy shopping.

Wholesaling Rental Properties and the BRRR System

Wholesaling Rental Properties and the BRRR System

Almost everyone who gets started in real estate investing hopes that one day they will own a whole bunch of highly profitable rental properties. Yet due to lack of experience and money, they begin wholesaling properties to experienced, well-funded investors who rehab them and sell them to homeowners. This type of wholesaling has worked for many beginners over time; however, it might not be the fastest way to get to that long-term goal of owning all those “cash-cow properties.”

Some people find it easier to wholesale rental properties directly to landlords rather than to rehabbers who sell to homeowners. “Gosh,” they say, “there are hundreds of people who own rental properties that they paid for with cash in almost any area of the country. Not only do these people want to buy more rentals, some of them want to sell some of the properties they have.” This can be a goldmine for wholesaling rental properties because of a host of factors. Let’s look at those factors:

  1. It is easy to find buyers and sellers of rental properties through lists, title companies, real estate investing clubs, and even signs and ads posted all over the place.
  2. Rental properties are valued based on three factors:
    1. First is the return on what you put down to buy the property. This is called the “Cash on Cash Return.” To help your financing efforts, remember that many sellers are willing to carry mortgages for little down. Many banks will finance 80% of what you buy the property for.
    2. Second is the return in relation to the purchase price of the property. This is called your “ROI” or return on investment. It is difficult, even impossible, to find safe investments secured by real estate or anything else of stable value that offer such returns as real estate does.
    3. Third is the ability to fund the property. This is called the “DSCR” or debt service coverage ratio. Banks want to see how much you have after expense income in relation to how much the mortgage payment is. For many, this is a difficult math problem. But finding great rental deals is just that, a math problem! It is not based on fickle market conditions.
  3. Rental properties can be wholesaled at a profit based on the money the property makes. They are often even easier to sell if they don’t need work. Hence, you can make money very quickly. You just need to find the deal and present it to your buyer.
  4. Wholesaling rentals as an addendum to your existing wholesaling business will increase the possible deals you can do. Further, the more you learn, the more you can earn because people with money are always looking for skilled people to work with.
  5. Areas that are close to colleges, universities, hospitals, military bases, shopping centers, and fast public transportation are ideal and lend themselves to bigger profits. Homes on main roads that won’t sell to homeowners can often be rented for top dollar to accountants, consultants and other zoned businesses. It is often easy to rent properties on main thoroughfares with a simple “for rent” sign because so many people see the sign. It pays to advertise, and advertising skills are well paid.
  6. Can you manage a rehabber or do licensed rehab work yourself? If so, you can add value to what you offer as a wholesaler.
  7. Can you find a tenant and a property manager or are you a licensed property manger? If so, you can add value to what you offer as a wholesaler.
  8. Do you have or know someone who has money to invest in finding, taking ownership, and fixing a property to make it “rent-worthy” so you can put a tenant and property manager in place? If so, you can add value to what you offer as a wholesaler.
  9. Banks will often refinance a rental property for 80% of 100 times the monthly rent revenues. Hence, every $1,000 a property rents for will be valued at $100,000 and will finance for $80,000. Remember, you are fixing properties to increase their value. Every dollar in increased rent is worth $100 in value. If you can do the things above and find rental properties that will refinance for way more than the cost of buying them and fixing them up, you can add SIGNIFICANT value to what you offer as a wholesaler.
  10. Do all the above or call the advisory line to learn how to do all the above and you can make what other successful wholesalers are making doing what is called the BRRR System of Wholesaling (Buy, Rehab, Rent, and Refinance). There are wholesalers who make anywhere from $15,000 to $35,000 doing the BRRR System and don’t use any of their own money.
  11. Every one of you reading this has “all-you-can-eat” coaching help on the advisory line. Let us help you learn how to do this so you can make the long-dollar!
  12. Are you willing to learn how the numbers work? Spreadsheets to help you zero in on the values are included with this article! A website you can visit to learn how to use these spreadsheets is also included with this article: https://www.youtube.com/watch?v=3h7QmhFO3EI&t=2s

Wholesaling

Wholesaling

If you are just beginning to wholesale and finally have a property under contract, what’s next? Your focus now has to turn to finding a cash buyer, as quickly as possibly, who is interested in the property for a fix-and-flip or a rental. So, how do you find this type of investor?

First, create an email brochure that includes all the information about the property: address, description, price, rehab cost, after rehab value (with comps), pictures, an action line saying, “The first person to bring a non-refundable earnest money deposit of $2,500 will get this property,” and, of course, your contact information.

Next, send a copy of the above email to all the cash buyers you have qualified. Then call and let them know you sent them an email of a deal they will be interested in and get them out to see the property. Then start marketing the property by creating bandit signs and ghost ads that have all the information on the property, except the address. When potential investors call, get their email and send them a brochure giving them the address and encouraging them to see the property.

Next, attend several real estate investor clubs and pitch the deal to everyone there. Then hand out brochures and your business card as you collect their contact information. Also, attend foreclosure auctions and let the bidders know about the deal. Then start calling landlords and pitching the deal to them. Continue by calling “We buy houses” ads online and telling those investors about the project. Follow up by calling members of the Better Business Bureau who are investors and pitch the deal to them.

Lastly, if you are fortunate enough to have Response’s real estate software, you can look up and call cash buyers to let them know about the investment opportunity. Also, contact all your friends and relatives who have money to invest and let them know about the potential profits that can be made fixing and flipping the property or holding it for rental income.

Once you have an investor interested, collect the deposit and get them to sign an Assignment of Contract agreement. Submit both the Purchase Contract and the Assignment of Contract to the escrow company, and they will basically do the rest.

Return on Investment: Finished Basement

Return on Investment: Finished Basement

Basements are a forgotten source of extra square footage in many homes. A finished basement can provide a little privacy or create space to spread out in an open concept home. When done well, a finished basement can be a great amenity for any family home. Though additional space can improve the day-to-day lives of homeowners, for investors, do they actually add value to a home? Let’s learn more about the return on investment you can expect when adding a finished basement to your property’s floorplan.

Cost vs. Value Report

The 2016 remodeling magazine “Cost vs. Value” reported that the average basement remodel cost approximately $60,000. The expected return on investment was found to be 70.3%, one of the highest ROIs in the survey.

To achieve this impressive ROI, follow these best practices:

#1 Check for signs of moisture or foundation cracks before you invest in finishing your basement. Addressing these issues before you modify the space will ensure best results.

#2 Understand local building codes before you finalize your layout. If you are adding bedrooms, be sure they have the proper egress.

#3 Keep your layout simple. The more walls, the more structure you have to add. Many basements have posts that support the entire structure of the home. Do your best to work around these. Incorporating the existing structure into the design can cut many unnecessary costs.

#4 Calculate your ceiling heights. For the basement to feel like part of the rest of the home, the ceilings will need to be at least 7.5 feet high. The ideal height is 8 feet, and in some new construction areas, basement ceiling heights are closer to 10 feet.

#5 Invest in good lighting, especially if windows are scarce. No one wants to spend time in a dark space, and if you don’t have a daylight basement, there can be a shortage of natural light.

If done properly, a finished basement can add value to any home. Whether you are adding a basement to your home or to an investment property, if you do it right, you can expect that 70% return on investment.

The MLS: How Important Is It?

The MLS: How Important Is It?

We’ve all heard it before, “Don’t bring me deals off the MLS.” Why do so many investors tell us this? Well, maybe they feel they can get those deals themselves, and as a wholesaler, they expect you to bring them off-market deals. I say rubbish. Go after deals on the MLS. Believe me, if you get something under contract at the price your investor wants, they will take the deal from you. They just want control of the deal at the right price. We all know realtors can help find and sell deals. According to a recent article by the Housing News Report, on average, 20% of all deals done last year were off-market, meaning not through the MLS and realtors. That also means that 80% of deals that were done were through the MLS. With a number that big, it is in your best interest to work with investor-friendly realtors and use the MLS.

The number of off-market deals is growing because of companies like OfferPad, iBuyer, Network Realty, Zillow and others. As a savvy investor, we need to keep our fingers on it all. Don’t give up on the MLS just because someone tells you it’s too competitive. Instead, use strategies to get offers out quicker than others. One technique I use is the blind offer strategy. Basically, when my agents spot properties I would like, I train them to immediately make an offer at 10% below list price with all my terms staying the same. Now, all I must do is sign the offer and they submit it. This strategy speeds up the offer and evaluation process, which is the most time consuming part of a deal. Once my offer gets accepted, I will do a proper evaluation before I purchase the property. Stay consistent with your methods to find deals, but make the MLS a core search engine for your deals.

How to Run Numbers to Get Your Desired CAP Rate

How to Run Numbers to Get Your Desired CAP Rate

When investing in cash flow or rental properties it is important to understand what your return on investment is going to be. Investors refer to this as a CAP rate. Investors will target a specific CAP rate to make sure the properties they are buying are going to give them the desired return they are targeting. We will go through numbers to show you how your offer amount will be able to give you your desired CAP rate.

CAP rate is defined by Net Operating Income (NOI) divided by the cost of the asset. I’ll call the cost of the asset the all-in cost, which may include rehab costs as well. To get the NOI, I have to know the amount I can rent the property for minus all the expenses associated with owning that property. Let’s go through some numbers to show you how to calculate CAP rate.

Let’s say I need an 8% CAP rate to buy a rental property. The property will also need 15K worth of work to make it rent ready. Once it is fixed up, the property will rent for $1,100 per month. Taxes and insurance will cost me $150 per month. This is information I will need to get my numbers dialed in.

First, let’s get our NOI. We are getting $1,100 monthly for rent but we have to take off the monthly expenses.

  • $1,100 – $150 (taxes and insurance) = $950
  • $950 – $110 (10 % property management company) = $840
  • $840 – $110 (5% for maintenance and 5% for vacancy) = $730
  • $730 * 12 = $8,760 (Yearly NOI)

Now we have our NOI. Here is the rest of the calculations to get our offer amount:

  • $8,760 / .08 (desired CAP rate) = $109,500
  • $109,500 – $15,000 (rehab cost) = $94,500
  • $94,500 – $2,835 (3% closing costs) = $91,665

This formula has given me an MAO (maximum allowable offer) of $91,665. This offer will give me an 8% CAP rate. Now, if we go one step further and want to wholesale this to an investor that wants an 8% CAP rate, we only have to subtract our assignment fee.

  • $91,665 – $3,000 (assignment fee) = $88,665 (MAO for an assignment)

By using this formula you should be able to calculate whatever CAP rate you or your investors are hoping to get from a rental property.

Estimating Remodel/Rehab Costs

Estimating Remodel/Rehab Costs

In general, when investors are looking at properties to fix and flip, they look at the remodel under three categories: light, medium and heavy.

Here is a general breakdown on the categories with the dollar amounts you can assign to them, keeping in mind that these are not the only way to calculate these rehabs.

  • Light – This involves mostly flooring and paint, with a few light and plumbing fixtures included. This can be in the range of $10-$15 per square foot. The range can vary depending on the extent of the flooring and paint to be done, along with the type of materials you choose. In the case of a fix and flip, you should take into consideration materials that could help you reach a maximum profit when the rehab is done and the property is sold. Suggested Time Line: Considering the formula of 1 day for every $1,000 of estimated repairs, this should take less than 3 weeks.
  • Medium – This includes all that is included in the “light,” along with a kitchen and bath remodel. This can range from $20-$25 per square foot, depending on the amount of remodel that is needed. The property’s use after rehab will help you decide the extent of the actual rehab needed. If damage to the kitchen and bath is so bad that an entire tear out and rebuild must be done, you will probably be looking at the upper-end of the scale ($25 per square foot and maybe up into the $26-$28 range). Suggested Time Line: Again, considering the formula of 1 day for every $1,000 of estimated repairs, this could take up to 5 weeks.
  • Heavy – This is the all-in rehab where you look at everything from the “light” and “medium” levels to throwing in major items, such as foundation repair, roof replacement, replacement of appliances such as AC/Furnace, and door and window replacement. This level of rehab typically involves big-ticket items that require the longest amount of time to finish the remodel. The range for this is around $30-$40 per square foot. Suggested Time Line: With the before mentioned formula of 1 day for every $1,000 of estimated repairs, this should be less than 8 weeks.

Remember that these estimated costs are based on retail purchases of the materials, like what you would buy at Lowes or Home Depot. A licensed contractor is able to acquire their materials at wholesale price, which could bring a rehab 10-15% below estimates that are done using retail pricing.

4 Tips for Time Management

4 Tips for Time Management

In this era, people tend to be busy with multiple things every single day. It may be work, studies, family, social life, workouts, projects and more – all these things fill our schedule every single day. We tend to give ourselves a big pile of work and find ourselves unsure of how to get it all done on time. It is indeed hard to manage time, especially if you’re a person with a lot of responsibilities. Here are four tips to help you better manage your time and get things done.

First, determine your schedule in a certain timeframe (it may be within the day, next three days, this week, this summer, and more) and identify the things you need to accomplish. It’s better if you list them in your phone or write them down so you don’t forget something. You can also use your list to check off tasks/appointments you accomplish. After making a list, divide each item into different categories – schedule, urgency, and more. These will help keep you on track.

Second, learn to say “No.” I know for a fact that it’s good to say “Yes” to task assignments, opportunities, promotions and more, but if this will jeopardize your time management and give you too many things to do, then it’s okay to say “No” sometimes. You, of all people, know yourself. You know your capacities and limitations. Don’t force yourself to do something you can’t at the moment.

Third, avoid distractions. As humans, we are easily distracted for many reasons. If you set a time to do something, focus on it. Most of the time, you get something done faster if you give it your total attention. And, you make less mistakes. Be committed to the list you set for yourself. Be persistent to finish the task at hand. Avoid backlogs and save time.

Last and most important by far, enjoy and love what you’re doing. If you don’t enjoy what you’re doing, you will just feel lazy and end up unfulfilled. Engage yourself in the schedule and the tasks you set. Be consistent.

These are only a few of the many tips you can follow to better manage your time. Whatever you decide to do to succeed in time management, remember to keep it balanced. There’s a time for everything – work, studies, family, spiritual growth, social life, yourself, and more.

Understanding Home Inspections

Understanding Home Inspections

A home inspection is an important aspect to consider when buying a home. This process enables the buyer to identify the overall condition of the targeted property. This operation will save the buyer a lot of money in the long run. The result of any home inspection can greatly influence the final decision of the buyer. As a buyer, you need to be very sure about the subject of your investment in order to avoid future trouble.

A home inspection is usually done by a professional home inspector. The expected output of the inspection must be detailed enough to identify system conditions, deterioration, and other aspects of the home that will help the inspector come up with a good recommendation.

One of the common and important aspects to consider during the inspection is the structural state. This is very vital because nobody wants to have a home with a weak foundation. That is just one common example of things to check during an inspection. There are many other features you need to consider if you want your investment to be worth it. These include landscape condition, potential pests that will surely provide some inconvenience, the state of the septic system, and many other details that can potentially cause stress in the future.

A home inspection would be futile without a good inspector. You need to check if the one you hired is experienced enough to offer you a quality outcome. The inspector must be certified and preferably a member of a professional association. Because you are seeking assurance on the overall condition of the home that will shelter you and your family for a long time, it is essential that you are dealing with the right people.

The report after the home inspection can vary in form. It could be a narrative, a checklist, or any rating system your inspector prefers to give you a clear view of the overall state of the property. During the inspection it is also be helpful if you have certain knowledge about what to ask and what to check. You should not fully depend on the inspector. It would be a big help if the buyer is present during the inspection, giving feedback and asking for advice, because it could help the inspector come up with a comprehensive report for the buyer.

Tax Lien Foreclosure

Tax Lien Foreclosure

Tax liens can be a great way to invest and make money. Understanding the process of foreclosing on a lien that has not been paid can eliminate a lot of stress and headaches. Knowing what to do and when to do it will help maximize your income from your tax lien investments.

Since half of the states are tax deed states and the other half are tax lien states, with Florida and Georgia as hybrids, let’s examine liens. Let’s look at the process of foreclosing on a lien.

We are going to go through the steps that are needed to collect on a tax lien that has not been paid in the redemption period. We are going to look at costs, court proceedings and auctions that lead up to us being paid as the tax certificate holder. By knowing what to do, you won’t have to worry about getting your money. Tax lien certificates are a great investment, and you should never lose money if you know what to do and when to do it. Let’s focus on the following three areas to understand the tax lien foreclosure process:

  1. Understanding the redemption period
  2. Working with the clerk of the court
  3. Understanding the auction process

When you buy a tax lien certificate, you will be given a redemption period. This is the amount of time that the owner of the property will have to pay you your principle and interest. This period is usually two to three years. If you are not paid, you can continue to collect interest or you can begin the foreclosure. After your redemption period, you can begin the foreclosure period any time you would like.

To begin the foreclosure process, you will need to contact the clerk of the court or the tax collector for the county where the property is located. The clerk will have the needed paperwork for you to file the foreclosure. There will be a fee charged, but you will receive that back when the foreclosure takes place.   Once the foreclosure is final, an auction date will be set.

At the auction, the starting bid will include everything that you are owed. All the monies you paid for the tax certificate, the interest you are owed, the fees you have paid and the court costs will all be used to determine the starting bid. If someone bids at least the starting bid, you will get your money. If the starting bid is not met then you will receive ownership of the property.

Foreclosing on a tax lien is simple. You do not need a lawyer, nor do you need to worry about costs.   Follow the steps and get the help you need from the clerk of the court. You should never lose money on liens. Take care of business and you will have reaped a very nice return of 12% to 18% from your tax liens.

Don’t let a lien foreclosure affect you. Follow up and it will pay.

No-Seasoned Refinance Overview

No-Seasoned Refinance Overview

In real estate, there is a little known, but highly effective, way to create large wealth using leverage. The method is knows as No-Seasoned Refinance.

 

To understand this concept, we will need to break the information down into two parts:

  • No-Seasoned
  • Refinance

 

You should, by now, know what a refinance is. This is the process of paying off an old loan for a more favorable interest rate or paying off an old loan to get additional cash out of a transaction. Here are a couple of examples of the two types of refinances:

  • You currently own a home on which you are paying 6.5% interest rate. You recently find out that current interest rates are around 4%. You then talk to a bank and refinance, paying off the old loan with 6.5% for a new loan with an interest rate of 4%.
  • You own a home, which you owe $100,000. That home has a value of $150,000. In this home you have $50,000 in equity. You decide to put some of that equity to use and build a new deck for the home. You go to a bank and refinance, paying off the old loan of $100,000 and replacing it with a new loan for $120,000. The additional $20,000 is paid out as cash.

 

Seasoning is a common term in the mortgage and financing industry. Simply said, it is the period of time that you own a home. For example, if you own a home for 12 months and have made 12 payments, it is said that you have 12 months of seasoning. If you have owned a home for 6 months and made 6 months of payments, you will have 6 months of seasoning. However, when you have a home that you have owned for less than 2-3 months, banks commonly reference this as “no-seasoning.”

 

The idea of a no-seasoned refinance is to purchase a home using financing, such as hard money financing, or your own cash, then quickly refinance pulling the cash out and either repaying yourself, if you used your own cash, or paying off the other financing. Once the money is free, you can use the financing or your own cash to purchase another property and continue the process.

How to Use Market, Rental and Housing Statistics to Determine a Market

How to Use Market, Rental and Housing Statistics to Determine a Market

Statistics are used to identify market trends and to measure and evaluate the potential success of marketing programs. The most important statistics an investor should know are the rental and housing statistics. So, how does one use this data to determine a market?

According to current trends, the number people who choose to rent instead of buy properties has gone up. This, in large part, is due to the enormous wave of foreclosures that swept the nation after 2008 and the economic upheaval of the Great Recession. Because more people have decided to rent, the number of sales and the availability of properties has been impacted. Adjustments need to be made when this happens, from house prices to interests rates and transactions. One should look within these current statistics to find the market they should target. They need to identify the demographic and behavioral patterns within these statistics to make sense of which people to target. Focus on what problems can be solved and identify what the demographic needs. For example, those who rent spaces will most definitely rent, so they fall under the target market for rental homes or properties with a negotiable mortgage that would fit their income. The price and costs for housing and renting may differ a lot and the demand for certain properties varies from location to location, so these things should also be considered.

The fine point where all these people’s needs and wants meet in the middle is what should be identified and targeted, and a close observation of the behavior of this demographic will surely produce valuable data. The secret to successful marketing is to identify the target market accurately.

Four Real Estate Myths

Four Real Estate Myths

  1. Set your home price higher than what you expect to get.

This may work at a car dealership, but real estate is a totally different animal. In real estate, if the buyer doesn’t see your home as a deal or a bargain, you don’t make it to the top of their “must see” list and are often forgotten about. If your home is presented or listed as a bargain, then the buyer is going to put it at the top of their “must see” list, even if, over all, it was a little less desirable. When a property looks like a good deal, buyers feel rushed to get their offer in quicker due to the possibility that several other offers are being submitted.

  1. You can get a better deal as a buyer if you don’t use a real estate agent.

If the house is listed with a real estate agent, the total commission is already built into the sales price. Even if you as the buyer don’t use an agent yourself, the seller will still pay the entire commission to the listing agent.

  1. All of the properties listed on the Multiple Listing Services (MLS) are listed online.

This is not always the case. Usually the agent or homeowner has to actually go in and manually post the property online. Realtor.com has claimed that they have everything the MLS does. Yes, they do have a lot of great properties shown from the MLS; however, it is not the full MLS. It is considered limited access.

  1. Open houses sell properties.

Buyers who visit an open house hardly ever purchase that home specifically. Open houses are really used to benefit the real estate agent, as they are a great opportunity for them to find other buyers.

Real Estate Investing Due Diligence

Real Estate Investing Due Diligence

\As a real estate investor, you will be presented with properties in a variety of financial and physical conditions. Depending on your investment style, location and financial goals, you may be looking for something very different than your fellow investors. No matter what type of property you are looking for, be sure to complete your due diligence before it ends.

Financial Due Diligence

As a real estate investor, you are an investor first and a homebuyer second. While your personal home search was about forming a connection to your future home, an investment property is very different. As an investor, it’s all about the numbers.

When doing your financial due diligence, complete this checklist:

  • Is the price fair? Understand what has sold in the area and for how much.
  • Are there any liens on the property or is the property in the process of foreclosure? Tax liens come with a property, so knowing how much they are before purchasing the property is critical.
  • Does the property have a tenant in place and/or a rental history? If you are purchasing the property as a buy-and-hold investment, you will need to know how much monthly income to expect.
  • Does the property require any specialty insurance? Flood insurance can be a large annual expense.
  • What are the average utility costs and, as a landlord, will you be responsible for any of the utilities?
  • What is the cost to maintain the property?
  • What is the going rate for a property management company?

As you can see, financial due diligence is much more than just getting the best price. Answering these questions will help set any investor up for long-term financial success.

Physical Due Diligence

The physical condition of a property is closely tied to its financial value. No matter how well the numbers from the financial section add up, the physical condition of the investment needs to be accounted for.

Before purchasing an investment property, find out:

  • When the major home systems were last replaced (HVAC, water heater, major appliances, )
  • How many years are left on the roof
  • If there is any structural damage
  • If there is evidence that routine maintenance has been completed
  • If the flooring need to be replaced
  • What year the home is and if you will be dealing with any code violations

To get that new feel to your investment property, new carpet and a coat of fresh paint are recommended. However, as an investor, you need to look out for the big-ticket items that will require cash up front. Taking the condition of these items into account will help you determine your initial investment, as well as your capital investment over the course of owning the property.

Finding the Right Investment Property

Due diligence is a critical element in finding the right real estate investment property. Many “real estate gurus” claim they “go with their gut,” but nothing can replace due diligence! Don’t be tempted by a “too good to be true” price. Complete your due diligence to ensure the property will meet your investment goals.

First Flip Checklist

First Flip Checklist

So, This is Your First Flip? Where is Your Checklist?

Let’s talk about flipping. More specifically, let’s talk about what your checklist of items should include. Following the right process when buying a property will save you money and time after you have purchased the home. My list of the most important items that need to be addressed before and during the purchase of a property is below. Of course, there will be some flexibility to this — you decide where that will come in.

  1. Financing: Get your financing lined up. Find out what lender you will use and what their requirements will be for you to borrow funds from them. Also, find out their terms and repayment schedule so you can work that into your numbers.
  2. Insurance Agents: Talk to your insurance agent and find out what kind of coverage you will need while the renovation is taking place and how much it will cost.
  3. Contractors: Get some quotes on the rehab. Look for contractors that are licensed, bonded and insured. You don’t want to cut corners just to save a few bucks. Fix things right the first time around.
  4. Investor Friendly Agents: Make sure your agent has your best interest in mind throughout the entire process of purchasing the property. Never let your agent lead you astray. Make sure your agent is providing all the information you need to close the deal correctly.
  5. Interior Designer: Find one whose design aesthetics you like and one you can afford. A good designer will help you sell your properties quickly. They will work closely with your contractors to get things done right.

Before you start your search for the perfect property, find a financing lender, insurance agent, contractor, and interior designer with fees and requirements that fit your budget. Once you have your power team players in place, use your realtor to find the right deal. During your due diligence period, once you have a property under contract, you can have your contractor and interior designer walk through the property and give you bids. Contact your insurance agent and make sure the insurance will be in place and is affordable. Do all of this before your due diligence period ends, that way if something is not working you can cancel the deal.

There are some other minor things that need to be done during this process, but the items I’ve gone over are very important. Your list should look similar to mine. Remember to take things slow. Don’t rush into a deal, and never get into a flip if it feels like too much to handle. I suggest that first time flippers start off with a light or medium rehab. If you make a checklist before you start, you should have covered all of your bases to make money on your investment.

What is a Real Estate Absorption Rate and How Does It Apply to You?

What is a Real Estate Absorption Rate and How Does It Apply to You?

In real estate, absorption rate is basically the length of time it takes to sell a house that is listed on the market. The rate is mostly based off of the number of months it takes before the home is sold. Absorption rate is a concept that helps people in the real estate world determine prices and sales activities.

Let’s take a large, urban area for an example. In the past six months, there were 20,000 homes sold. Six months is the common baseline when it comes to home sales. The number of homes sold will now be divided by 6. The result will be 3,333. This number will then be used as a divisor to the number of homes listed on the market. If the number of homes listed for sale is 15,000, the outcome will now be 4.5. Therefore, there will be 4.5-month supply of homes for sale on the market.

It is easy mathematics but that does not make it less important. In order to anticipate home prices and market activities, the absorption rate history of a certain market will be necessary. Absorption rate is vital to real estate agents because agents regularly need to determine the value of the properties they are selling. It is also helpful for buyers to understand the state of demand and supply for properties that agents will be presenting to them. All in all, absorption rates aid in decision-making when it comes to buying a property.

Most potential property buyers are wise and do extensive research before going face-to-face with real estate agents. If you are a seller who cares less about the absorption rate of your market, you’re making a big mistake. To become a top producing realtor, you must be well-equipped with knowledge about absorption rates and market activities. Awareness of the absorption rate of a specific market will help your success.

How to Take Better Pictures of Your House for Sale

How to Take Better Pictures of Your House for Sale

The Internet has become a very useful tool in the today’s society. It has become a necessity for most of us because it has a variety of uses. Even sales and marketing is made easy with the Internet. Nowadays, people and establishments use the Internet to advertise the products and/or services they offer. One good example of this is real estate.

Yes, people come looking for houses, apartments, villas, or other properties online, too. So, if you’re planning to sell a property, expand your marketing horizon and attract buyers by having realistic and attractive photos of your house online. How are you going to do that? Well, if you are under the assistance of a real estate agent then you need to make sure they can provide a good photographer for you. If they can’t, get one yourself. But, if you’re selling your home without an agent and you’re on a budget, you can opt to take the pictures yourself. Here are some things to consider.

Before taking pictures, prepare and organize everything you need, like a good quality camera. Smartphones may work but, if you can, it might be good to invest in a digital camera. Nevertheless, either of the two will work. You’ll also want to have a tripod for taking sharp photos, and, of course, prepare your house by cleaning, removing unnecessary stuff, and redecorating the interior if needed.

When taking pictures, it’s better to have a tripod because the composition of your shots is important. Only frame what you want your viewers to pay close attention to. A good photo should lead the viewer’s eyes around the entire space. Good arrangement of elements in the photo – space, furnishings, colors, frame, lighting, positioning, angle — play a role in making your home inviting to buyers. Also, consider how high your camera is off the ground. Shoot from a lower angle, as this should create the illusion of a path that walks the viewer into the room. Take note that it’s better to use natural light streaming in from the windows. Avoid using your camera’s flash. Also, know the best time of day to capture perfect, natural light for both your interior and exterior shots. For outdoor photos, dusk might be a great time to catch the last bits of daylight to yield dramatic and soft shots. Plus, always pay attention to distortion that often happens when taking photos. Some lenses may cause this to occur.

After you photograph, choose your best photos and touch them up a bit. There are photo editing tools available on the Internet, or you may ask somebody skilled to do it for you. Adjust the lighting, if needed, crop, remove noise in the photo, correct colors and more. Remember that you should produce great and inviting photos. But, don’t make your house look like something it’s not; be realistic and truthful. Finally, think of an attractive description to go with your photographs.

How to Calculate the Value of a Multi-Unit Property

How to Calculate the Value of a Multi-Unit Property

A multi-unit property is a building with separate housing units that are available for residential inhabitants. There are various forms of multi-unit properties, such as duplexes, quadruplexes, and townhomes, but the most common is an apartment building. Multi-unit properties are designed to house families by giving them separate units that are clustered in one structure.

If you own a multi-unit property, calculating its value is not a difficult task. All you need is the operating data. The NOI (Net Operating Income) is an important inclusion for the calculation of the value of the property. This is because the computation will derive from an income approach appraisal. NOI can be obtained by subtracting all the expenses from the gross income generated by the property. These expenses usually include management, landscaping, taxes, repairs, insurance, and maintenance.

The next important thing to consider is the capitalization rate. We need to divide the NOI using the value of the capitalization rate to come up with an accurate market value. Capitalization rate can be determined with the help of brokers, lenders, and appraisers. They are expected to know the market cap rate, which is the average of the cap rates for properties with common characteristics in one specific region. These cap rates are computed by dividing the purchase price with the NOI; variables that are presented upon purchase.

When the NOI and the capitalization rate are finally known, you can start calculating the market value of a specific multi-unit property by using the following formula:

Capitalization Rate/ NOI = Property Value

 

For example, if the capitalization rate is 7.5% and the NOI is $330,800, we will have the following equation:

$330,800 / .075 = 4,410,666.67

Property Value = 4,410,666.67

 

It is important to note that these variables are not constant. You should be able to understand how they work together to quickly come up with an accurate market value. Once you have the accurate operating data and accurate information from the real estate experts, computing the market value of a multi-unit property is just a calculator away.

First-Time Home Buyer Programs

First-Time Home Buyer Programs

Buying your first home is no easy task. You will go through stressful steps that include paying fees and dealing with people. Purchasing your first home is a huge responsibility but also an opportunity; an opportunity to design your own space. But before we jump to the paintings and landscape of your first home, you need to go through some important steps, like finding the right real estate agent and determining your budget.

The money you borrow to buy your first home is usually considered a first mortgage loan. If the amount is a little less, it’s called a junior loan, enough to help you pay the down payment. The good news is there are many programs that can help you get ready. These programs come in a variety of forms. You just have to remember that, as a first-time home buyer, you need to be guided on what financial steps to take. This is why first-time homebuyer programs exist.

One common program is the FHA loan, where the lenders insure the mortgage. They are protected and will not take a loss if you default the loan. Some programs focus on the area you cover. If you are targeting a rural area for your first home, there are available programs that can help you, like the U.S Department of Agriculture assistance program. There are also loans specific for veterans and surviving spouses, which are usually provided by U.S Department of Veterans Affairs. Unique programs like Good Neighbour Next Door also exist. They provide housing aid for law enforcement officers, firefighters and emergency medical technicians.

You need to be prepared before finally experiencing the sweet taste of having your first home. That is the main purpose if these programs, to get you prepared. There are various organizations that can help you obtain affordable loans while also protecting the lenders against the borrowers’ defaults. There are also programs that will require you to attend a homebuyer education course if you are a first-time homebuyer. This course will help you understand the importance and responsibilities of homeownership.

Owning a home is equivalent to having the freedom to blueprint; the color of your walls, the garden, kitchen, and bedrooms, they are all in your hands. However, blueprinting will only be possible after taking the initial significant steps, which include getting approved for a mortgage, finding the real estate experts, and choosing the home that fits your financial capability. Now it is time to assess your eligibility and start evaluating the available programs that will help you get a hold of your first home.

Determining Market Value

Determining Market Value

A key first step in real estate investing is determining the Market Value or ARV – After Repair Value of a property.

Criteria used by many real estate investors and professionals includes the following:

Properties that –

  1. Were sold less than 1 mile away
  2. Were sold less than 6-8 months ago
  3. Have square footage that is 20% more or less than the square footage of the property you are looking at. For example:
    1. If you’re looking at a property with 1,400 sf then your range is 1,200-1,600 sf.

You should be looking for 3-5 comparable properties that are as close as possible to the number of beds, baths and square footage you want. Also try to find the same style of construction, as it is difficult to justify comparing a single-story ranch style home to a multi-level property.

Look at both online sources and sources from real estate professionals. With that in mind, here is a 3-step process:

  1. Local real estate brokers and agents have a great source of market knowledge, especially for obtaining both the average price that properties are selling for and the average price per square foot that the same properties are selling for.
  2. “Paid Sites” has their advantage in that the software they have available pulls from both County Records as well as the Multiple Listing Service (MLS). Do your homework and look for online customer reviews and compare them with other websites with the same claims. Here is a short list of some of those sites.
    1. https://www.realquest.com/jsp/rq.jsp?action=switch&page=main
    2. You can also check with the MLS in your area and ask about the fee for their temporary/limited access for investors. This is a great tool to use for searching and evaluating properties and determining market value.

There are many others but these are quite adequate for getting started.

Understanding the Amount of Your Buyer’s Profit on an Assignment Deal

Understanding the Amount of Your Buyer’s Profit on an Assignment Deal

One thing that is not stressed enough in our presentations to our buyers is how much profit is on the table for them. By understanding the buyer’s profit, we can better inform our buyers as to the amount they can expect to make. It also can strengthen our position when negotiating the wholesale fee.

When calculating an offer, understanding the type of market we are in will make us more effective. If we are in a cold market, the buyer has a stronger negotiating position. In a hot market, the seller has the advantage. We are currently in a hot market. Therefore, we need to use strategies that will strengthen our offers and help our bottom line.

Let’s run through some calculations and see what we can do to make our offer more competitive. As we run the numbers on an assignment deal, pay close attention to adjustments that can be made to strengthen our offer:

Asking Price- $179,000

ARV- $250,000

Buyer’s Profit- 20%

Rehab- $30,000

Wholesale Fee- $8,000

Now, let’s calculate what our max offer will be with this information:

$250,000- ARV

X .8- Buyers Profit 20%

$200,000- All-In Price

Less $30,000- Rehab

Less $8000- Wholesale Fee

$162,000 Max Offer

$179,000- Asking Price

 

Now, let’s calculate what our buyer can expect to make on this deal. We must first determine if we are in hot or cold market, as this will influence some of our decisions regarding the property. Our current conditions tell us that market conditions are hot. So, this is how to determine the profit our buyer will make from the above offer:

First, we must subtract the all-in price from the ARV. Next, because it is a hot market, our buyer should consider paying costs such as real estate fees, closing costs and holding costs. This would cost about 40% of the gross profit. The buyer would keep 60% of the gross profit or the net profit. Let’s look at it as a formula:

 

$250,000- ARV

Less $200,000- All-In Price

$50,000- Gross Profit

X .6- Buyers Percent of Gross

$30,000- Buyer’s Net Profit

 

This $30,000 profit would be attractive to most buyers. However, closing the gap between the asking price ($179,000) and our max offer ($162,000) may be hard to overcome. So, let’s look at the things we could adjust to present a more competitive offer:

$250,000- ARV

X .85- Buyer’s Profit 15%

$212,500- All-In Price

Less $30,000- Rehab

Less $5,000- Wholesale Fee

$177,500- Max Offer

 

As you can see, our new max offer ($177,500) is much more competitive and the gap with the asking

price ($179,000) is much easier to bridge. Let’s calculate the new buyer’s profit and see if it is a good

deal for our buyer:

 

$250,000- ARV

Less $212,500- All-In Price

$37,500- Gross Profit

X .6- Buyer’s expenses 40%

$22,500- Net profit for buyer

 

It is a smaller net profit for the buyer than the first offer. I will not try to tell you if the $22,500 is a good or bad profit because that is for each buyer to decide. With a few adjustments to our offer there is a greater chance that our second offer would be accepted. We don’t always make the money we want; however, $22,500 is better than nothing.

Best of luck in your investing. Be creative and you will complete more deals than those who do not think outside of the box.

Inexpensive Repairs for Home Sellers

Inexpensive Repairs for Home Sellers

Before selling a home on the traditional real estate market, many real estate agents recommend home sellers complete repairs. “According to the Real Estate Staging Association, homes that have minor repairs completed before going on the market sell 90% faster.”[1]   Home repairs can quickly become expensive home renovations, if you aren’t careful. Inexpensive home repairs will make ready any home for the sale on the traditional real estate market.

Curb Appeal

You only get one chance to make a first impression! There are so many great inexpensive repairs homeowners can complete to increase curb appeal:

  • Trim back bushes and trees
  • Spread fresh mulch in your flowerbeds
  • Repair any loose stones in your walkway

In addition to yard work, some paint can spruce up your entry and even add perceived value. “In a recent survey conducted by the Real Estate Staging Association, 79% of home staging professionals said that a colorful or statement front door can increase the perceived value of the home.”[2]

A Fresh Coat of Paint

A fresh coat of paint is a great inexpensive way to instantly clean up a home. If you’ve ever watched an episode of House Hunters, you know how prospective buyers can fixate on paint colors. New paint is a great way to make a space neutral and ready for any buyer.

Paint can also update your kitchen. Did you know, some kitchen cabinets can be painted? This task is best left to the professionals but is significantly less expensive than a whole new kitchen.

Weekend Walk Through

If you are handy, this repair can be free! Take a weekend to walk through your home with only basic tools. Check for anything from loose door knobs to broken screens to leaky faucets. While these repairs may seem minor, they all add up. Most buyers don’t want to purchase a project, so complete as many tasks as you can!

Listing a home on the traditional real estate market can be a long (and sometimes costly) process. For this reason many home sellers choose to sell directly to a real estate investor. When selling to an investor there are no repairs to complete; they purchase homes in as-is condition.

 

 

[1] http://www.realestatestagingassociation.com/

[2] http://www.realestatestagingassociation.com/

Seven Ways to Get More When Selling

Seven Ways to Get More When Selling

Nobody likes taking a hit when they go to sell something, especially when it is one of the largest investments of their life. Purchasing real estate is a huge investment and selling it can be an even bigger one. In this article, we will go over seven ways to get more for your home. Hopefully some of these tips will help and you will be able to put them to good use.

 

  1. List for less than market value. This will make your home look highly desirable in a tight market and create some urgency with your buyers. Buyers will act faster because they don’t want to lose out on a deal and this should increase your odds of multiple offers.

 

  1. Brighten up the place. Clean out the windows, open the blinds and turn on the lights. Open concept is what many new home owners are currently looking for, and you can help create some of that simply by making the home look more open and spacious with some light.

 

  1. On that same note, clean out the closets. You can make a home look like it has more storage by removing at least 50% of everything in your closets. This will definitely help sell your home.

 

  1. First impressions are key, so paint the front door. While you are painting your front door, go ahead and install a nice, sturdy doorknob and lock. The fresh coat of paint and new lock will help make the place feel newer and less used. Everyone wants to feel safe at home and putting in that new, sturdy lock can help create that sense of security your buyer is looking for.

 

  1. Clean. Clean. Clean! Dust from the ceiling fans all the way to the floorboards. Don’t forget to pull the weeds and grass growing between the cracks in the driveway as well.

 

  1. Make everything neutral. Yes, the pink nursery looks great for you and your home; however, you are trying to sell it. Since it will no longer be your home, you need to help the buyer feel like it could be theirs. What if they only have boys? Pink might distract from all the other amazing features your home has to offer. A fresh coat of paint in a neutral color can help make a huge difference when it comes to the atmosphere the home brings.

 

  1. Put away the photos. Again, little Suzie is adorable; however, you need the buyers to feel at home and not like they are invading someone else’s home.

 

Now get out there and get the SOLD price you are looking for!

Six Habits of the Successful Investor

Six Habits of the Successful Investor

The keys to success in real estate, as with most endeavors, are achieved not in great big leaps and bounds but in small, positive actions and habits that are consistently repeated every day. That’s what all of the sports coaches will tell you if you are trying to become a professional athlete. The same applies to becoming a successful real estate investor. Listed below are some of the daily habits you can adopt to become a successful real estate investor.

 

1 – Dream a little dream every morning

Start the day with a clear vision of what you want and why you’re doing what you do. Spend some time answering the question, “If everything was exactly the way that you want it, what would your life be like?” Be detailed in your dreaming. Where will you live? What will your house look like? What kind of car will you drive? What will you do with your time? Will you travel? Where will you go?

 

2 – Set up a plan for your day before you begin

Figure out what you need to do each day to conform to your financial goals in order to obtain the lifestyle you want. Be specific with timeframes to start each task, what the outcome should be and how long you’ll work at each task.

 

3- Take time to obtain knowledge

Study the information that successful people make available. Make sure you are reading material that is relevant and helpful to your ultimate plan. Remember that the best help available to progress from where you are now to where you want to be is the knowledge you gain and the people you meet along the way.

 

4- Give back

Find ways to help people without any expectation of what you’ll get in return. Share your knowledge, time, and resources with others who need help. Giving to others without expecting to receive anything in return will help you gain more enjoyment from the effort.

 

5 – Follow your plan

It’s really tempting to run right out and take action with the first opportunity you come across. After all, action is necessary to make progress, right? While that is true, you really need to focus on the big picture and keep your end goal in mind. If the “deal” doesn’t move you towards your ultimate goal then you should probably pass on it. Your ultimate success will come by thinking more clearly about your direction, asking better questions about the opportunities, and identifying the solutions that will move you toward your dream.

 

6 – Connect with at least two new people each day

If you meet and get acquainted with just 10 new people each week, they should be able to bring you enough leads to fulfill your goals. Some of those people are going to need to buy properties. Some of them will have properties to sell. All of them can introduce you to others who can help you with your real estate goals.

 

7 – Recharge your batteries

Always make sure to get enough rest and relaxation. It’s very easy to get too caught up in the everyday rush of investing and forget about your energy levels. Take time to do other things with your family and friends. As you recharge your mental and emotional batteries, you’ll think clearer and make better choices.

Reality TV vs. Real Life Fix and Flips

Reality TV vs. Real Life Fix and Flips

I really love golf. I used to watch it on TV all the time. Then I decided to take it up. Wow, what a wake-up call. It is a lot harder than it looks, and I need to practice all the time. Why do I tell you this? Well, reality fix and flip shows are a lot like golf. It looks easy and fun on TV but in real life it is serious work! The popularity of these shows has brought a lot of newbies to the business that get frustrated quickly because things do not go as planned. The shows mislead people into thinking it is so easy. Although this business can be lucrative, you need to understand how things work. Let’s go over what I feel are the missing links for people getting started in this business.

  • It’s all about the numbers: The TV shows only show the basic numbers on a deal and make their profits look so big. What they fail to tell you is how much investors must pay back to their hard moneylenders. This cost is known as holding cost, which also includes insurance on the property while it’s being fixed up. So, the bottom line might be shown on TV as $60k in profit, but it might actually be $30k. That is still a good profit but maybe not to everyone.
  • It takes time: Trust me, finding deals takes time and a lot of searching. You don’t get every deal you make offers on. The shows make it look easy to find a deal, look at it, and get an offer accepted. Well, in real life, you will probably get 1 out of every 25 offers you make.
  • It’s scripted: Most importantly remember you are watching a show and it is scripted. The way they find the house, do the bidding, complete the rehab — it’s all for your enjoyment. Real life will have twist and turns that are more outrageous than what you see on TV.

If you are serious about getting into real estate investing, go to a local real estate club to talk to investors and visit with a local realtor who works with investors. Educate yourself on the industry and the processes. Prepare yourself for this business. If done right it can give you great results and even change your life.

It’s All About the Numbers

It’s All About the Numbers

One of the things I love about real estate investing is that it is all about the numbers. As long as I stick to my numbers, I make money. My wife and I have been investing in real estate for many years. We walk through several properties every week, and still, as we walk through a property my wife gets caught up in how nice this or that is, and I am behind her doing numbers and more often than not end up saying, “Well it’s not that nice, NEXT.”

Finding the right deal is a matter of numbers. It can take a lot of offers to get a deal. Many new investors will put an offer in and then wait and hope it gets accepted. But by doing that, it is keeping them from putting in more offers. Putting in offers is a numbers game. I have found that by developing a mindset of always focusing on the next offer, I am able to make the numbers work for me. All the information from each offer I submit is saved on my computer. This allows me to put an offer in, forget about it, and focus on the next offer. I continue to focus on the next offer until I get a counter offer from one of the previous offers I put in. I then go to the information I have saved on my computer and can refocus on getting that deal.

By always focusing on the next offer, I can keep frustration from sneaking in. When you put an offer in and then wait and hope for it to get accepted, it can easily lead to disappointment if someone else gets the deal. If you do this too many times, it can lead to frustration. But by understanding that this is a numbers game and that the more offers you put in, the sooner you will get a deal, you can stay focused and motivated.

How to Motivate Your Realtor

How to Motivate Your Realtor

When you put your home on the market, it’s no secret you want it to sell as quickly as possible. So how do you motivate your real estate agent to sell your property fast? Real estate agents can have dozens and dozens of listings, so how do you make sure your home gets the attention it deserves? Take advantage of any of these three tips to motivate your real estate agent to sell your home quickly.

Offer Additional Commission

Money talks! Offer a commission incentive to get your home at the top of every agent’s list. You can offer a bonus to your listing agent if they close within the first 3 months. Another option is to offer an incentive to the buyer’s agent. Buyers’ agents recommend properties to their clients. If you are offering extra commission, you may get more showings. More showings mean a greater chance that you will find a qualified buyer!

Offer to Pay for Additional Marketing

One of the most important parts of a real estate agent’s job is marketing your property. If you offer to pay for additional marketing you are making their job easier; also, you are not only getting additional exposure for your home, you are getting additional exposure for your agent. Everyone wins when you offer to pay for additional marketing, and your agent will thank you for it!

Ensure Your Home is in Top Condition

Ensuring your home is in top condition before you list it will instantly make you your real estate agent’s favorite client! Homes that don’t need repairs sell faster than those that do. Spend the money to stage and make minor repairs to your home before you put it on the market.

All three of these tips do involve spending extra money but could mean getting your home sold quickly. The sooner you sell the sooner you can be on your way to your new home and new life.

How to Fix Your Credit Score

How to Fix Your Credit Score

Having good credit is an important part of investing in real estate. With good credit you can get financing easier and you can also get better interest rates. Now, if you have a poor credit score here are some steps you can take to improve your credit.

  • Pay all your bills on time. This is a no-brainer, but make sure all your bills are paid on time, even if it is the minimum payments.
  • Don’t open too many new accounts at once. One thing that credit agencies look at is the age of your accounts. By opening several new accounts at once, the average age of your accounts will be reduced.
  • Do not cancel any unused cards. Another aspect of credit is the amount of credit you have used compared to the amount of credit you have available. The lower the percentage used, the better. Ideally you want to keep the ratio of credit used to credit available below 30%.
  • Keep your credit balances low. This ties in with number 3 in that you should not max out your credit. Keeping your credit balances low will help keep your credit score high.
  • Have a variety of different credit types. Paying on a car loan, a credit card, and a mortgage will show you are able to juggle and maintain payments on different credit types.
  • Debts in collections needs to be paid off. If you have any accounts in collections they will need to be paid off. Until they are paid off, your credit will suffer.
  • Get a personal loan to pay off credit cards. This can be a very effective way to lower your interest rates and pay off your debt faster.

In real estate investing having good credit will increase your opportunities to invest. As mentioned, it will save you money, give you better interest rates and help you qualify for better loans. Keep these 7 tips in mind, as they are great ways to maintain and improve your credit score.

How to Build a Social Media Following

How to Build a Social Media Following

Social media isn’t just for looking at cute videos of puppies and kittens or seeing what your old high school acquaintances are up to. Social media can be a powerful tool for growing your real estate investing business. Successful real estate investors use social media to: host content, make connections and advertise properties.

Use Social Media to Host + Promote Content

While you might have your personal social media account set to private, you can and should set it to public if you want to promote your business. When you set your business account to public, any interested individual can view your curated content. You can use your social media profile to promote your originally written blogs or share articles from your go-to sources.   Quality content will both engage and grow your audience.

Connect with Potential Investors, Client, and Co-Workers

Social media is called “social” for a reason! Instagram, Facebook, and Twitter all allow people to connect over business and ideas. However, LinkedIn is one of the most powerful platforms for making business connections. LinkedIn is a business-centric network focused on those looking to grow their business and careers. Use your LinkedIn page to share content that will engage these potential business connections. Pro Tip: LinkedIn isn’t meant to be a platform for shameless self-promotion. Don’t use your account to promote yourself, rather use it to make long-term connections.

Advertise Your Investment Properties

No matter what real estate investment strategy you choose, you will need the power of advertising eventually.

  • If you are a buy and hold investor, use Facebook’s marketplace to advertise your vacant properties to potential tenants.
  • If you are a fix and flip investor, use Instagram to showcase your spectacular before and after photos, attracting potential buyers to the finished project.

You can even boost posts to reach an even broader group beyond your personal network. One of the great things about social media is the low cost of advertising on it. A modest $10 budget can reach of 1,000 people.

Use Social Media to Leverage Your Business

Social media is a great way to grow your real estate business for a reasonable cost. Use the power of social connections to close more deals and watch your business grow!

How to Accumulate Rental Properties with Very Little Money Down

How to Accumulate Rental Properties with Very Little Money Down

Do you want to own rental properties but have very little money or none at all? Then you need to listen to the following article on buying rental properties using seller and existing financing. In today’s seller’s market, it can be difficult to purchase properties to fix and flip because you have to buy the property for a price that allows you to make a quick turnaround profit and that usually means making offers at 25-30% below the asking price with very few offers accepted. Rental properties, on the other hand, can pencil out financially, even if full price offers are made, as long as the rental income is sufficient to justify the investment and especially if seller’s financing is put into place.

Here is what you do. Look for properties that are already rental properties with tenants that are taking good care of the property so there are no rehab costs. Then make offers on the property at no less than 90% of the asking price so that sellers are interested. Ask the seller to carry a note for 99% of the offer price. Then take the property subject to the existing loan so that the owner is only carrying paper for the difference between the 1st mortgage and your offer price minus the 1% down payment. An example is as follows:

The asking price is $100,000 so you offer $90,000 and ask the sellers to carry a note for $89,000 with a $1,000 down payment and take the property subject to the existing 1st mortgage of possibly $75,000. You will then pay the seller a month fee based on the total loan amount of $89,000 at an agreed upon interest rate amortized over 30 years with a balloon payment at the end of 5-10 years. You will set up an escrow account with a bank or title company (neutral third party) who will collect your payment and make the payment on the 1st mortgage. You now have a rental income property with a loan in place for 1% down, no origination fees and a reasonable monthly loan payment in place. You have no out of pocket cost for rehab and the place starts paying rental income immediately.

All you have to do is make sure the rental amount is sufficient to return a positive cash flow that makes you a sufficient return on your investment. An example is as follows:

The house cost $90,000 to purchase with only $1000.00 down. The monthly payment on the seller’s financing at 6% interest amortized over 30 years is $539/month or $6,432.00 annually. The rental is $1,000/month or $12,000.00 annually with a net income after expenses of $7,800. 00. The net income minus the mortgage payments equals $1,368.00 annual income along with paying the principle debt off. Since your investment is only $1,000.00, the income of $1,368.00 equals a 136% return on investment.

With $10,000.00 you can purchase 10 homes and let them pay themselves off over time until you eventually have 10 homes bringing in $7,800.00 each annually for a total annual rental income of $78,000.00. Plus the original value of each home will increase over time by 3-5% annually.

Networking at Local Events or Festivals

Networking at Local Events or Festivals

“You should always be networking and marketing your business,” said my mentors to me when I first got started in the business over a decade ago. At first, I was a little embarrassed to do so. I felt like I was being pushy and needy, but I did it anyway. It turned out to be one of the best pieces of advice I have ever gotten. I tell you this because you must realize you are the catalyst to your business. There is no boss spending money on marketing, networking or advertising for you to bring in business. You are the boss and this is your business. You control your success. Networking is a very easy thing to do. Just let people know what you do or what you want.

Summer is upon us, so that means more people we be out and about. I encourage you to get out to the masses, attend all local events or festivals that will are taking place. Be a walking billboard for your business. I usually wear black or yellow pants with a yellow polo (golf shirt) with a collar. I have written in black lettering on the front, “I want to buy your home” and on the back, “Ask me how I can give you a THOUSAND DOLLARS.” This outfit is a conversation starter. Whenever someone approaches me I tell them who I am and what I am looking for. For instance, “I am a real estate investor looking for deals. If you bring me a property and I close on the deal, at closing I will pay you $1,000 cash” or I will tell them, “I am a real estate investor and am looking to buy distressed properties in any condition, and I will pay you cash and close quickly.” Either way I have somebody’s attention and they might sell me their home or bring me a possible deal. Regardless, you will be getting your name out into the community and getting noticed. Also, bring a stack of business cards with you to give out to people.

Networking, marketing and advertising are closely related. In the opportunity above, you get to do all three at once. This does not have to cost you a ton of money in order to be effective. Get creative with how you get noticed and make it happen. Don’t be afraid to talk to anyone about yourself and your business. You will be amazed of how many people love real estate. You never know where the next deal will be coming from.

Mindset in a “Seller’s” Market

Mindset in a “Seller’s” Market

As seasoned real estate investors will tell you, we’ve seen a lot of ebbs and flows in the housing market throughout our years of investing. As you gain experience, you too will come to see that even in the toughest and hottest of housing markets, investors can still create great deals. In today’s “seller’s” market it’s time to start thinking outside the box. Below are some suggestions as we all move forward in this, and any market.

 

As you go about looking for properties to make into deals, have you asked yourself this question: Have I told everyone that I know — friends, relatives, co-workers etc. — that I’m looking to buy a home from someone that is behind on their mortgage, behind on their taxes, or has inherited a home they aren’t interested in maintaining or keeping?  If you haven’t, do it. The result may be a pleasant surprise. Another option is to focus on homes that have a listing that has expired.  An overpriced house typically won’t sell causing sellers to get frustrated, and in some cases, let the listing expire or terminate their contract with their realtor, thus becoming an expired listing. Don’t contact the sellers right after their listing expires, as this is when realtors are contacting them and trying to get them to relist. Give the sellers some time. Look at listings that have expired 2-3 weeks prior. As a general rule, your success rate will be higher. In a “seller’s” market, making a purchase must be handled carefully, with planning, and a sense of calm and calculated urgency. We want to move quickly, but also in a smart manner.

 

Stick to your numbers! Let them be your beacon, and do not deviate from them. Run your numbers. At the end of the day, the numbers in your analysis don’t lie. Also, remember to not get emotionally involved with any offer you make or let the market condition determine your success. The offer will work or it won’t. Don’t go chasing a bad deal because you “have to get into the market” or run around like Chicken Little proclaiming the sky is falling because you have to get creative. Run your numbers, make the offer and move on to the next; whatever that is. Success only comes by moving forward.

 

A “seller’s” market doesn’t mean there aren’t deals out there to be made. The strategy of buy-and-hold is a great one to look at in this market. As you negotiate a deal, remember the property will still likely go up in value. In this “seller’s” market, instead of focusing on large, “home run” deals, focus on what you can control: you. When you focus on volume, you spread your risk across multiple deals. Don’t shoot for 2 or 3 “home run” deals a year; hit singles every 2 or 3 months and when one doesn’t work out, you still have the rest of the deals to bring you up. And remember, every deal is a learning experience. The more you do, the less anxious and overwhelming the market and conditions become. Do your research on the market and know it. Don’t go off what someone is telling you.

 

In this market, even though there appears to be fewer listings and prices are higher, investing wisely based on ratios, profit margins, and market trends will still allow you to make money. No matter the market, people are always going to buy and sell houses. It may not always be smooth sailing for us real estate investors, but learning to ride the rollercoaster known as real estate is half the fun.

Pros and Cons of Condo Ownership

Pros and Cons of Condo Ownership

Condo ownership is appealing to many prospective homebuyers. With convenient locations and low-maintenance living, it may seem like the ultimate solution! Before you go all-in, take a look at the pros and cons of condo ownership:

Pros of Condo Ownership

Amenities: Many condo associations offer resort-like amenities. Because the cost of the pool, gym, and common spaces are split across so many owners, you can get access to luxurious amenities for a fraction of the price.

Security/Safety: Some condo associations offer a doorman or private security. Apart from security, proximity to neighbors provides peace-of-mind.

Price: Condos are often much more affordable than single-family homes, especially for their location. Many condos are located in desirable neighborhoods, city-centers or resorts, making them an affordable option for first-time homebuyers who don’t want to sacrifice their ideal location.

Maintenance: The biggest advantage of buying a condo is that maintenance is included. Exterior maintenance and lawn care are all taken care of by the homeowners association. While you do pay dues, unexpected expenses are kept to a minimum.

 

Cons of Condo Ownership

Homeowners Association Fees: On top of a regular mortgage payment, most condo owners are responsible for monthly homeowners associations (HOA) payment. Most HOA fees range from $200-$400 per month[1]. This can be costly on top of mortgage payments.

Privacy: If you live in a condo, be prepared to share a wall with your neighbors. Even though proximity to your neighbors can offer increased security and safety, condo owners do give up privacy.

Rules and Regulations: Most condo developments have strict rules and guidelines for residents. There are small rules such as no outdoor grills or parking restrictions. You are also limited to the improvements you can make to your unit. If you want to install solar panels, for example, you will have to get permission from the HOA.

Appreciation: Condo owners are purchasing a unit, not the land. Land is one of the main forces behind appreciation, so condos appreciate slower than single-family homes[2].

Pros and Cons of Condo Ownership

Condos ownership is an excellent option for a prospective homeowner looking for a safe, low- maintenance, affordable living situation with access to amenities. If you are looking for freedom from rules and regulations, an appreciating asset, low additional monthly expenses and privacy, condo ownership many not be the best option.

 

 

 

[1] http://www.investopedia.com/articles/mortgages-real-estate/08/housing-appreciation.asp

[2] http://www.investopedia.com/articles/mortgages-real-estate/08/homeowners-associations-tips.asp

How to Find a High-Quality Real Estate Agent

How to Find a High-Quality Real Estate Agent

Want to find a good property for a good cost? Find yourself a good real estate agent for an effortless real estate transaction. Where can you exactly find one? Agents advertise themselves through yard signs, direct mail postcards, paper listings, social media or online ads. How do you know if it is the right agent for you?

First, identify your criteria. When is an agent a high-quality real estate agent? What are the qualities that they should possess? The best agents won’t necessarily be found in giant brokerage firms; it depends on their work ethics and how passionate they are to help you find the best property for you. Second, ask for referrals from friends or acquaintances in the area you desire to invest in. Agents are good agents if their top priority is to guarantee the satisfaction of their clients. Pick the agent people would recommend because they go above and beyond their responsibilities. If possible, ask for recommendations from professionals, people who have knowledge about real estate.

Select the agent with relevant and correct credentials. There are different specializations that an agent can take. There’s an Accredited Buyer’s Representative (ABR) – this kind of agents represent the buyers in transactions. If the property you need an agent for is for residential purposes, you might need to look for a Certified Residential Specialist (CRS) – this agent has completed additional education in dealing with residential estate. There are other specializations, credentials and memberships like NAR (National Association of Realtors) that you can check. Realtors who are members of NAR are members who swore to stand by the association’s code of ethics. A realtor is different from a real estate agent. But, you may choose to hire either of the two, whoever you think fits your needs and standards. Then, conduct interviews to get to know your agent. Ask relevant questions, like character and professional references, recent sales, how long they’ve been working as a real estate agent, and the like.

These are only some of the tips on how to find the agent to match your needs. Whatever you choose to do in order to get one, make sure you got an agent that is top-of-the-line and also fits your budget.

How to Surround Yourself with Positive People

How to Surround Yourself with Positive People

We are overwhelmed with life’s challenges every single day. When you are down, do not let negativity personify you. Think positively and surround yourself with people who can help you do that. There are already a lot of exhausting things life has to offer, so don’t allow negative people to weigh you down. But, how exactly do you do that?

First, be yourself and be positive. Optimism is a basic ingredient to your career and life’s success. To attract the right people into your life, you have to be yourself and let your personality shine. Make people see the real you; the real ones will be drawn to you. When you find them, find common ground between you two. Find the good in them that you want to absorb. It may be their attitude when things go wrong, their work ethic, their amazing time-management skills, their humor, or anything at all that makes them positive people. Make them influence you positively.

Then think. What really makes them positive people? Is it their outlook on life? Attitude? How they deal with people? Here are some of the traits that a positive person must possess to be considered good company.

  • People who give their best in everything they do because they treasure every opportunity as if it’s a one-shot chance
  • People who have big dreams and the drive to follow and achieve them
  • People who treat everyone they meet fairly, regardless of economic status, gender, age and the like
  • People who does not only listen but understand and give relevant advice; those who have empathy and compassion
  • People who can cope with frustration, anger, sadness and other emotions and life situations
  • People who can make time for work/school, spiritual life, family, and social life
  • People who value themselves like they value others, and vice versa

The list above is only a guide; it may differ, depending on your perspective. It is hard to draw people like this into your life because it requires you to attract positivity in your own life, and that does not happen overnight. It will require you to make an effort to change your mindset and find people who treat positivity as a vital ingredient of success. Whoever surrounds you, you must remember that positivity comes from within. Be positive, attract positive people in your life, and live a happier and more optimistic life.

The Advantages of Building When Zoning Changes

The Advantages of Building When Zoning Changes

In this market, it is getting more and more difficult to find deals where an investor can simply fix up a home and flip it for a profit because sellers expect to get higher prices and there is an abundant of investors looking for the same deals. So don’t follow the crowd; find older homes in areas where the zoning has changed and build a new structure that will increase the value of the property. Here is an example of a deal I am working on in Los Angeles, California:

 

There is an area in North Hollywood near Universal Studios that is very desirous to live in. In this area, the zoning changed from single-family homes to multi-unit condos (three story condos with underground parking.) Because of the change in zoning, the property values in the area have risen tremendously, but that is okay, because the price of the condos units, when completed, are very expensive also; thus a great profit margin can be achieved. For instance, a friend of mine just inherited his mother‘s home which looks like a small, very old starter home: three bedrooms, two baths, and about 1500 square feet. It is not the house that is worth the money, but the property in its location. He was offered a $1,000,000 for his property by the next door neighbor. Should he take it? Maybe, but not necessarily. He asked me for advice.

 

First, I could see that the zoning had changed because all the properties surrounding him had three story condo complexes built on them. I investigated what the condo units were selling for and discovered that a 1450 sf condo demanded $700,000 and sold like a hot cake, and there were not a lot of units for sell. Then I laid out a building plan on the property after calling the building department to discover the set-backs and height requirements. I estimated that we could get 14 units on the property with a semi-underground parking structure. Fourteen units times $700K each equals $9,800,000.00 in retail sells. Then I calculated the building cost after talking with a local contractor to be $4,500,000.00 and I contacted a few financial institutions for a construction loan. By having the property paid for and the appraisal of the project as high as it was, one was willing to loan us the money to construct the building at a reasonable rate of 1 ½ points and 5.2 % ARM.

 

The projected profits, after paying to design and construct the building and demolish the old building, as well as taking away the financial charges, the marketing cost to sell the units, the closing costs and the holding costs for taxes, insurance and utilities, and paying my friend $1,200,000.00 for his property ended up being $2,562,500.00. I told my friend I would do a joint venture with him where he would put the property up as his investment and I would procure the construction loan and supervise the project: line up the architect, hire the contractor, see that the interior finishes are up to par with what is selling, line up the real estate company, create all contracts (using an attorney) and oversee the project. My friend would receive $1,200,000.00 for his property out of the proceeds first ($200,000 more than he was offered) and half of the remaining profits after all expenses are paid for. I would receive the other half of the profits with no money invested, but dong all the work. (A cool $1,281,500 in a year to a year and a half, with no money down). The key was finding the construction loan and that is why it pays to network with cash investors who may end up becoming lenders on future projects.

 

So, look for those unique deals that are a little out of the ordinary and think about building new.

The Importance of Demographic Research

The Importance of Demographic Research

Demographics is statistical data relating to the population and the particular groups within it. It is the kind of information that makes working in the real estate world a pretty challenging feat. Also, it is an indispensable part of the business, since it plays a great role with marketing houses and properties.

How important is demographic research? Well, this research provides the data that describes the composition of a population, such as age, race, gender, income, migration patterns and population growth. These statistics are an often overlooked but are a significant factor in how real estate is priced, what types of properties are in demand, and who is interested in buying what. Major shifts in the demographics of a nation can have a large impact on real estate trends for several decades. For example, the baby boomers who were born between 1945 and 1964 are an example of a demographic trend which will likely influence the real estate market.

There are numerous ways this type of demographic shift can affect the real estate market, but for an investor, some key questions to ask might be: How would this affect the demand for second homes in popular vacation areas as more people start to retire? Will they be able to even find buyers for their homes if they do decide to sell their property? These and other questions can help investors narrow down the type and location of potentially desirable real estate investments long before the trend has started. Basically, the ever-changing results in demographic research determine the demands, prospective buyers and also the prices of properties. Who is buying what? Who is interested with what? Is it part of their priorities?

Know this important data in your market because the more information at hand, the better decisions you will make.

Common Tenant Issues

Common Tenant Issues

Each of us encounter problems every day. Sometimes we enounter the same problems every single day. For example, a landlord may have to deal with the same issues over and over again. As a landlord, you would love to have the best tenants to occupy your properties: tenants who pay rent on time, keep the area clean and pleasant, treat their neighbors right, and so on. But, more often than not, no matter how well you maintain your properties and how much you care for the welfare of your tenants, some problems will arise and, if you are unfortunate enough, these problems may bug you every day.

Rental Payment Issues

One of the main issues causing disputes between tenants and landlords is delayed payments or withheld rents because of countless reasons: temporary unemployment, health issues, cash flow shortages, repair or maintenance refunds, and a lot more. Whatever the reasons are, cases like these can’t happen all the time. What landlords and tenants can agree upon to solve issues like these are: transfer to smaller and cheaper units, an improved payment arrangement, and adding penalties for late payments. It is up to you on how you will react and solve this issue.

Maintenance and Pest Problems

To avoid high turnover in properties, it is the landlord’s duty to maintain the property in the same condition as it was on day one. On the other hand, it is the tenants right to have a surrounding that is well-maintained and conducive for living. Pest problems can easily be solved with the help of exterminators and a clean environment. Both parties are in-charge of maintaining the areas in the property that are within their scope of liability. Responsibilities such as maintenance, repair and redecoration may also depend on their lease agreement.

Neighbors

If you’re a tenant who lives in a building with other neighbors, you may find it both a good and a bad thing. It may be good to have others to talk to, spend time with and enjoy the pleasure of belonging to and living in a community. On the other hand, others may find it bad because sometimes your neighbors may give you headaches and things to worry about like excessive noise, dirty or smelly surroundings, security issues and more.

Knowing the troubles that can come from tenants can help you ready yourself for being a landlord.

Why You Should Promote Yourself from Landlord to Investor

Why You Should Promote Yourself from Landlord to Investor

There is a difference between being an investor and a landlord. Simply owning an investment property doesn’t make you an investor. If you are highly involved in the day-to-day operations of your property, you are a landlord. Investors treat their properties like any other investment: hiring professionals to manage the day-to-day operations and investing the profits from their property into their portfolio. Many real estate investors begin as landlord. Below are the three reasons why you should take the leap and promote yourself from landlord to real estate investor.

Get Out of the Daily Grind

Being a landlord is a fulltime job, if you do it right! From completing routine maintenance to answering emergency calls, keeping a rental in pristine condition is no easy task — not to mention all the work that comes with vacancy. Landlords are responsible for screening tenants, marketing the property and completing any other move-in related tasks. Real estate investors outsource all this work to a property management company. Not only does this get the work done, it ensures it’s being completed by a seasoned professional, and it can even decrease vacancy!

You Can Focus on Purchasing More Properties

Once you are out of the daily grind of being a landlord, you can focus on being a real estate investor. Finding deals and/or rehabbing properties requires focus. If you are wearing all the hats of your landlord responsibilities, it can be difficult to find the hours in the day to close more deals. You can also focus on making the most of your current investments. The better your current investment properties do, the more money you have in the bank for growing your portfolio.

Investors Are All About the Bottom Line

As an investor, your focus is simply on positive cash flow. You don’t have to worry about keeping tenants happy or your properties occupied. That is the responsibility of your property management company. Investors can enjoy the profits from their rental properties while also enjoying an additional check each month or even early retirement.

Many investors start their real estate investment journey as landlords. Successful investors, the ones enjoying financial independence and early retirement, take the risk and make the jump from landlord to investor.

The Importance of Rental Market Prices to Purchases Prices

The Importance of Rental Market Prices to Purchases Prices

If we are going to decide between renting a house or flipping one, we only make the right decision when we consider the appropriate guidelines. These guidelines include the aspect of home prices, mortgage rates and rental rates. By considering the above aspects, you will be able to understand if it’s more sensible to flip or rent a house on a long-term basis, economically.

We are dealing with prices, which automatically means doing math. And it is very important that you do the math correctly to avoid financial waste in the end. This is where the rent ratio comes in. A certain property will always have a fundamental price, and that fundamental price will be divided by the rental price. The product is the rental ratio. And according to experts, the tipping point of rent ratio is 15-20. The higher the ratio, the more it would require a spike in housing prices in the coming years to justify the price you are paying today. For example, in a market where a 2-bedroom house costs $250,000 and the annual rent for a similar home is $12,000 ($1,000 per month), then the ratio is about 21. It would make sense to consider flipping the property.

One more thing that should also be taken into consideration is our current financial stand. Buying a home always comes with a financial impact, especially when we are talking about mortgage rates, property taxes and homeowner’s association fees. If you are compromising future plans when buying a home, then it’s best to set aside rental ownership for the time being.

We will never know when high levels of economic uncertainty hit us. It is just prudent to make lifestyle changes that would suit your financial status. Be knowledgeable about the proper guidelines when deciding whether to rent a house or flip it. The financial income that comes with renting is always assured if you know how to calculate certain elements together with rental market prices and purchase prices.

What Paint to Paint

What Paint to Paint

You’ve started a project that requires paint, and you now find yourself heading to Home Depot. You think to yourself, “Its just paint. How hard can it be?” Once you arrive, you navigate your way over to the paint department and go to the wall of colors. Now what? I am sure a million and one questions are running through your head and they all start with, what type, color and finish do I need?

 

Well my friend, you are in the right place. In this short but sweet article, you will learn everything you need to know about paint so that you never look like a Moaning Lisa by the wall of colors ever again.

 

First, let’s discuss water vs. oil-based paints. How do you know the difference? You can determine this by taking a wet washcloth and rubbing it against the paint. If the surface transfers to the wet cloth or the surface becomes lighter or softens once rubbed, then it is water-based paint. Water-based paint is a latex paint usually used on walls and ceilings. Water-based paint will stick to oil-based paints but will not stick to high-gloss finishes. On the other hand oil-based paint is great for molding cabinets and furniture. Oil-based paint has a smooth finish and is often used as a protective coat.

 

Now that we have determined if we need water or oil-based paint, we need to determine what color/ colors are needed for our project. Right now monochromatic colors (shades or tints of one color) are really popular. You can get this look by adding a touch of grey into the paint to create a tone. The cooler colors are in right now. What I mean by that is grey and whites. Warmer colors would be your beiges and browns.

 

We are almost ready to get our paint mixed and head out of the store. We have our paint type and color, now all we need to do is determine the finish, which can also be referred to as the gloss or sheen.

 

– Matte/flat: smooth finish, hides surface imperfections, hard to clean, suffers damage easily, and best for low traffic.

-Eggshell: Velvety, easy to clean, still pretty flat look, and better for hardwearing areas.

-Satin: Silky, pearl-like finish, stain resistant, resists moisture and mildew, and best for high-traffic kitchens & bathrooms.

-Semi-Gloss: Sleek, radiant, high resistance to moisture, and best for cabinets, doors or windows.

-High Gloss: Very durable, easy to clean and best for trim and molding.

 

Congratulations you are now able to navigate the paint aisle like a pro. Get out there and start your next project using these tips.

The Importance of Zeroing in on Your Buyer’s Tolerance for Profit

The Importance of Zeroing in on Your Buyer’s Tolerance for Profit

The language of business is numbers. So it is with doing profitable real estate deals. There are three (3) very popular rules for calculating your offer. They are referred to as:

  1. “The 70% Rule:” (Offer equals the ARV (After Repair Value) times 70% less cost of repairs.)
  2. “The 75% Rule:” (Offer equals the ARV (After Repair Value) times 75% less cost of repairs.)
  3. “The 80% Rule:” (Offer equals the ARV (After Repair Value) times 80% less cost of repairs.)

The “80% Rule” offers the least profit. However, it offers much greater likelihood of getting the offer accepted than “the 70% Rule.” What’s exciting is that there are investors who use “the 80% rule” and still make more money on the deal than investors using “the 70% Rule.” You will want to find them.

Regardless of which rule is used, there are closing costs, holding costs, and selling costs. Generally, those costs total 15% and break down like this:

  1. Closing Costs: (3%) Paid to the title company to insure the deed is free of liens or encumbrances.
  2. Holding Costs: (6%) These costs are mostly the costs of borrowing the money to do the deal, but also include taxes, insurance and utilities etc.
  3. Sales Costs: (6%) Usually paid to the realtors who help close the deal.

As a wholesaler, it is critical to find the buyer who will pay the most for the property. Some buyers have their own money. This eliminates most of the holding costs. The same buyer may also have the property already sold or have an agent on board that eliminates their sales costs. The buyer who doesn’t have many holding or sales costs can use the 80% rule and make more profit than another buyer who has borrowing and sales costs but uses the 70% rule.

When we interview buyers, we want to find out their “tolerance for profit.” Do they have money? Are they an agent or do they partner with an agent? Going out to the job sites of successful bidders can help you find those buyers who do rehabs more efficiently and at a lower cost.

Asking this simple question can help you sort out the buyers who should be at the top of your list. “Suppose I have a property you know you can sell quickly for $300,000.00, but it is going to cost you $30,000.00 to rehab. Your ad says you buy houses, where would I have to be pricewise for you to buy this one?”

Simply put, the greater your buyer’s “tolerance for profit,” the more money you will make and the more deals you will do.

Staying Motivated

Staying Motivated

Staying motivated in your real estate business is critical to your success and can sometimes be hard, especially when you are first building your business. Here are some ways to help you get motivated and stay motivated.

Goals: Goals are the first step to motivation. Knowing why you are doing what you are doing allows you to create a road map that you can use to guide you. Make sure you have a long-term goal that really excites you. Work that goal backwards so you have some intermediate and short-term goals. You want to break it down to weekly goals and daily action steps. Be sure to have your goals written down and read them daily.

Vision: Create a vision of your long-term goal. Imagine (visualize) it as if it is already real. Imagine it in enough detail that you catch yourself smiling. The emotion you feel while imagining your vision is the power that will fuel your motivation. Spend a minute or so when you first wake up imagining your vision, and again as you are falling asleep at night. This is called, “Feeding Your Vision.”

Vision Board: A vision board is another tool you can use to bring your goal to life. You want to find images that represent your goal as completed. You can put these images on a poster board or a corkboard. Be creative and have fun. You want to put your vision board where you will see it often. The power in a vision board comes not from just looking at it, but from taking 20 to 30 seconds while looking at it to let it take your there, so you can feel motivated and catch yourself smiling.

One last tip: When you wake up in the morning, ask yourself, “What do I get to do today”?

 

 

Jump Start Your Career In Real Estate Investing

Jump Start Your Career In Real Estate Investing

So you’ve done your research and due diligence and are ready to start your career as a real estate investor. How do you take the step from considering investing in real estate to becoming a full-blown investor? Follow these 5 ways to jump-start your career as a real estate investor.

 

#1 Stop Waiting for the Perfect Moment

You can track market trends and interest rates forever and never pull the trigger. If you ask any real estate investor what their biggest regret is, it’s most likely not starting sooner. Stop waiting for the perfect market and instead focus on finding the right deal, right now, for your long-term investment goals.

 

#2 You Don’t Have to Start Small

There is no rule that you have to start with a small property. Carefully examine the pros and cons of large and small properties and see what works best for your financial and personal goals. The same rule applies for your real estate investment portfolio, invest in additional properties as soon as you are able.

 

#3 Focus on Appreciating Assets

You can buy and sell in hot markets across the US. However, you won’t see the full potential of real estate investing until you wait and cash in on appreciation. This sounds counterintuitive, but you can jump start your career in real estate investing by holding on to appreciating investments for future paydays.

 

#4 Get Creative with Financing

You don’t have to have a full cash offer on hand before investing in your first real estate deal. Get creative with finding the money for your first investment property. You can use traditional, low down payment financing or even use your IRA to purchase your first investment property. Once you start seeing monthly cash flow, you will have the funds to invest in future properties.

 

#5 Network in Person and Online

Don’t let the deal of a lifetime pass you by simply because you didn’t know about it. Create a network of professionals online and in your local community and always be in the know. From social media to networking sites, like biggerpockets.com, there are endless opportunities to make connections in the world of real estate investing.

 

Once you have the tools and resources, jump start your career in real estate investing today!

How to Get More Out of a 24-Hour Day

How to Get More Out of a 24-Hour Day

There is one constant that we, as real estate investors, all have to deal with. That constant is time. There are only 24 hours in a day and that is something we are not able to change. If you manage your time wisely and work hard, you can get a lot done in a day, but you still only have 24 hours. In this article, we will talk about ways we can make that 24 hours grow. The key to this is leveraging members of your power team to work for you.

One of the best power team members you can get to add hours to your day is a real estate agent. Agents are experts at finding properties. If you take the time to train them on what you want them to do and the type of properties they send you, it can greatly increase your daily production. Training them may take a little time to do but the payoff will be big in the long run. To clarify this point, make sure your agent is sending you vacant, as-is properties. You do not want access to the MLS or them to send you every property that hits the market. This will detract from your time, as now you must sort through all the properties the agent should be sorting through. Also, have them create a template for your offer, as all your offers will be the same, just with a different property and a different price. Multiply that by 3-4 agents and you have added hours to your day by leveraging other people’s time.

Another thing you can do is get some bird doggers or property finders. You will have to give them specifics on the type of properties you want. Once they understand what you need, having them look for and send properties to you will help increase the amount of offers you are able to submit. You can always offer to compensate anyone sending properties to you, especially once you close on a property.

By leveraging out people’s time and resources, you can greatly increase your productivity and output. It may take a little time at first to train them on your needs, but the end results of adding time to your day is well worth it.

How to Create Wealth through Real Estate Investing

How to Create Wealth through Real Estate Investing

There are many ways to make money investing in real estate, but how do you create real wealth? There are four key factors that contribute to your long-term success and wealth creation in real estate investing.

 

Positive Cash Flow 

Real estate is an investment, and your cash flow is the return on the investment.  Your cash flow is the money left over after all expenses are accounted for.  Whether it’s the difference between the purchase price + repairs + carrying costs after a fix and flip OR the monthly rent – expenses – mortgage on a buy and hold investment, the numbers must add up to a positive cash flow.

 

Potential for Appreciation 

There are two types of appreciation when looking at real estate:

  • Appreciation over Time: The US real estate market has traditionally shown a 3% increase year over year, and if you buy in a “hot market,” you can hope for appreciation above the average.
  • Forced Appreciation: An increase in value due to improvements made to the property.

 

Paying Off a Loan

When you purchase an investment property using a traditional mortgage, the rent you collect from your tenant helps pays off your loan.  Even if your monthly cash flow is modest, you are rewarded with the eventual payday of cashing in on the equity that you build over the years through your tenant’s rent checks.

 

Tax Benefits 

There are significant tax benefits to generating income through real estate investing.  These benefits differ from state to state and property to property, so be sure to consult a tax professional before each purchase.

 

Building Wealth Through Real Estate Investing

Every property will not check off all four boxes.  If you purchase a fix and flip home, you will not be collecting monthly rent to slowly pay off the mortgage.  A fix and flip property is all about the forced appreciation you collect when you sell the home at its increased value.

 

Making sure these four factors are represented in some combination in your real estate investment portfolio will help you create wealth through real estate investing.

 

  • Cash Flow Potential
  • Appreciation
  • The Prospect of Loan Pay Down
  • Tax Benefits

Foreclosure Process on Tax Liens in Florida

Foreclosure Process on Tax Liens in Florida

Tax liens can be a great way to supplement your income or your retirement nest egg.   In the United States, each of the states is either a tax lien state or a tax deed state. There are two hybrid states, Georgia and Florida. All of the other states are divided evenly along the line of being a deed or lien state. For our purposes with this article, we are going to consider tax liens in the state of Florida.

We are going to go through the steps that are needed to collect on a tax lien that was not paid in the redemption period. We are going to look at costs, court proceedings and auctions that lead up to us being paid as the tax certificate holder. By knowing what to do, you will be able to worry less about getting your money. Tax lien certificates in Florida are a great investment and you should never lose your money if you know what to do and when to do it. Let’s focus on the three following areas to understand the tax lien foreclosure process in Florida:

  1. Understand the redemption period.
  2. Working with the clerk of the court.
  3. Understand the auction process.

When you buy a tax lien certificate in Florida, you will be given a redemption period. This is the amount of time that the owner of the property will have to pay you your principle and interest. This period is usually two years. If you are not paid, you can continue to collect interest or you can begin the foreclosure. After your two-year redemption period, you can begin the foreclosure period any time you would like.

To begin the foreclosure process, you will need to contact the clerk of the court for the county where the property is located. The clerk will have the needed paperwork for you to file the foreclosure. There will be a fee charged, but you will receive that back when the foreclosure takes place.   Once the foreclosure is final, an auction date will be set.

At the auction, the starting bid will include everything that you are owed. All the money you paid for the tax certificate, the interest you are owed, fees you have paid and court costs will all be used to determine the starting bid. If someone bids at least the starting bid, you will get your money. If the starting bid is not met, then you will receive ownership of the property.

Foreclosing on a tax lien in Florida is simple. You do not need a lawyer nor do you need to worry about costs.   Follow the steps and get the help you need from the clerk of the court. You should never lose money in Florida liens. Take care of business and you will have reaped a very nice return of 18% from your Florida tax liens.

Best of luck in your investing! You can do it!

Commercial Real Estate Investment Basics

Commercial Real Estate Investment Basics

Commercial real estate is a broad term describing any non-residential property used to generate a profit. Some examples of commercial real estate include office buildings, industrial parks, medical centers, hotels, malls, apartment buildings, parking structures, and warehouses.

Although investment strategies for commercial real estate are fairly simple on the surface, many investors don’t fully understand how commercial real estate can work as an investment vehicle.  Commercial investors typically make money in one of three ways:  Through rental income, by purchasing or leasing the property and charging tenants rent in exchange for use of the property, through appreciation in the value of the held property over time, and by brokering or negotiating a deal between a buyer and a seller of the commercial property.

In this article, let’s examine the first of these commercial investment strategies a little more closely.

 

Rental Income

 

  • Offices, office space/cubicles etc.:  A typical tenant might be a marketing firm or sales company or telemarketing company.  The company pays the rent and has lease terms, often in the five to ten year range.

 

  • Apartment Buildings: Apartment buildings, whether multi-use or multi-family, typically have individuals, families or even companies as tenants. Leases can be short term or long term. Most are not longer than a year and some can even be month to month. These buildings can have several tenants and leases to manage and account for each month.
  • Industrial: Warehouses, garages, refineries and factories, etc.: A typical tenant might be a manufacturing and/or distribution company or mechanic or machinist. These properties aren’t generally located in areas that would be very desirable for residential or retail properties. Lease lengths are typically longer terms of five years or more.