Do you have what it takes? Advice from a Customer…

Work hard, see the results.

We’ve met a lot of great people over the years – thousands from all over the world – people who genuinely want to change their lives. Their stories are inspiring. As a company, we get together regularly to listen to customer stories – stories about their lives and the things that matter most. All have had to overcome obstacles in their lives. As much as we’d like to say these are just ordinary people, like you and me, we can’t. They aren’t ordinary people. The reality is most people aren’t willing to do what it takes in order to get what they really want. Srinivas Rao, author and host of Unmistakable Creative, put it this way: “If you want to live an exceptional and extraordinary life, you have to give up many of the things that are a part of a normal one.” We found an unsolicited customer review online this morning and felt they shared an interesting perspective of their experience with us.

They offer a good reminder to all of us: be committed and make the most of what you have.

 

If you’re not committed to real estate investing, then the money you spend on tuition packages will never be recouped. Response, for me, has been part glitzy, get-you-excited-about-more-money, prey-on-the-unsuspecting roadshow and ALSO…and more importantly, thoughtful, intelligent, caring instructors who have real value to impart to willing learners.

Our first presenter, Bonita, had a wealth of knowledge to share, which opened our eyes initially to the opportunities in real estate investing. She had some personal hardships that she shared, including the tragic loss of her husband…leaving her with 3 kids to raise on her own. Real Estate investing not only helped her financially with that situation but allowed her to also be able to help others outside her family who were in need.

Our trip to Utah to attend the Expo was full of many more presentations. Again, a helpful overview of many different opportunities in the field. Several talented presenters and an abundance of information. At the expo, there was one company, Veil, which sold their services to the attendees. Otherwise, there was no other real onslaught of selling at the expo.

Our Boots on the Ground session was taught by Joe. He was familiar with the Hawaii market where we live, although he resides in Florida. He was friendly, humorous and lighthearted. He also had a vast knowledge of real estate investing experience to impart.

Our purchase also included a 2-day one-on-one on-site visit and we requested that Joe come back. He was very personable and helpful. He was a great listener and helped us where we were at.

The advisory line is really good. Real people with investing experience that provide one-on-one phone consultation whenever you need it.

Don’t think that because the initial presentation may be free, that subsequent education is free as well. Often, the initial presentations are to open your eyes to the opportunities of real estate investing and to explain (sell) the more advanced training. While not going to post the price for packages, let me just say, it wasn’t cheap… and probably almost twice the price I would have thought they would have charged. Of course, the idea is that you will learn how to make money that you can use to pay off the tuition fee plus more. Also, that your accountant can help you to possibly write off the tuition expenses.

When you are on the side of not having done it yet…you don’t know and you kinda wonder if YOU will ever be able to make money in real estate…and if the load of tuition money spent will have been worth it. And this is an honest question that you should ask yourself. How committed are you to giving it a try? How open are you to learning a whole new vocabulary and to feel out of place and unknowledgeable for a while? Yes, you can spend a lot of money and you can criticize the program and say that they are not teaching anything that you can’t find online. OR, you can be positive and have an open mind. You can appreciate the live, educational setting and the real-life instructors who are wanting to see and assist you with your success. To sum it up…yes there were moments when “Response’s” smooth-talking, convince-you-out-of-your-hard-earned-cash vibe came across loud and clear, but also there was a real sense of caring and humanness too. Is the info original and earth-shattering? I don’t do a lot of extra online research…so I don’t know what else may be out there. But don’t you get that something extra when a real person teaches you something in real time, rather than YouTube? Did I have any buyer’s remorse? Some, but it’s a remorse that will only be predicated on the event that we fail at real estate investing… and the ball is in our court and not theirs.

 If we had spent less money, we would have more easily let this whole real estate investing thing fizzle out. With the amount of financial pain that it inflicted on us, we are committed now to making this thing work…if only to recoup our tuition money…but also to learn by doing something that we wouldn’t have otherwise done before Response. My advice to you if you are considering a Response workshop or package is to ask yourself if you are really committed to real estate investing, committed to learning many new things, and to try to make the most of it. Write down your questions and ask them. Make those presenters work for what they are being paid. Make relevant suggestions. Be civil and courteous. Pray about it. Be on the same page as your partner or spouse. Trust that while there will be mistakes, difficulties and uncertainties, there is also a way through. 

 

We’ve never promised anyone guaranteed results or that results would be easy to achieve. We reap what we sow. If you want what you don’t currently have, you’re going to need to give up those limiting beliefs holding you back. Be willing to do what everyone else isn’t.

5 Reasons Why Seeking Professional Help May Be the Key To Success in Real Estate

5 Reasons Why Seeking Professional Help May Be the Key To Success in Real Estate

As an eleven-year-old boy, I was acutely aware of the danger of being lost or stranded without help. My parents had taken the entire family to the Carlsbad Caverns National Park in New Mexico.  At that time there were no paved walkways in the caverns themselves and the lights were weak and far apart.  Our group of several hundred participants dropped into the cave immediately after several thousand bats flew out of the large opening.  The sights were amazing and our tour guide explained how the caves were discovered.  It wasn’t long before I left the group and started doing a little exploring on my own.  A short time later I was alone and scared.  Fortunately, a Park Ranger found me and guided me back to a common meeting place.  As we journeyed back to the elevators that would take us to the surface, the Ranger showed me where earlier explorers had perished while charting and mapping the caves.  After some three hours, I was reunited with my family.  I realized that if it weren’t for finding the professional help I could have experienced a very different outcome.

What does all this have to do with real estate investing?  The answer is simple.  Now, many years later, I can positively state that without experienced and qualified help, the real estate investor of today could be just as lost as I was at eleven years of age, and experience a very different and possibly much more dangerous outcome than anticipated.  In that light, let’s discuss five simple reasons why seeking professional help when starting in real estate may be the key to your future success.  There’s no reason to experience a dramatic and dangerous outcome when professional help and education is so available.

  1. Professional Help Can Overcome Personal Fear. It’s absolutely certain that almost all real estate investors experience fear of some degree or another.  Perhaps it’s the fear of losing money.  Maybe it’s the fear of interacting with people on a one-to-one basis, or it’s just the fear of acting without enough knowledge.  There are numerous different reasons why fear is such a burden for real estate investors, but regardless of the exact fear, professional help can help alleviate the pressure

Real estate professionals carry with them years of experience in confronting problems of many kinds. When you engage a qualified professional, they have the ability to share both potential problems as well as possible situation.  Take the time to access their knowledge and apply their advice to your personal solution.  When you do so, you will find that your fears diminish and sometimes vanish altogether.

  1. Professional Help Will Teach You the Do’s and Don’ts. It goes without saying that the professional’s primary job is to provide education that will guide you towards personal real estate success.  But there’s much more.  A good professional will be a complete guide that will escort you on the journey from start to finish.  During this time, you will learn new and different investment techniques.  Each of these strategies may have certain things you should do, and other things you definitely shouldn’t do.  We call them the “Do’s and Don’ts of Real Estate Investing.”  It is imperative that you learn and incorporate this information so that you don’t fall off the path leading you to your future success.

If you rely purely on your own experiences to develop your overall real estate strategies, you will be short-changing yourself.  Use the professional and learn from both the successes and failures of others, rather than falling off some unforeseen investment cliff.  A wisely chosen real estate professional can be the National Park Ranger that helps you complete your overall real estate investment journey without falling into some deep and dangerous cavern.

  1. Professional Help Can Be a Guide to Different Real Estate Strategies. There are multiple investment strategies that have been proven successful for real estate entrepreneurs across the globe, but there are never certain guarantees.  It’s a given that you must put forth effort and even invest financial resources.  A well-chosen professional can help you direct your efforts more wisely, as well as provide credible information that will assist you in deciding how to allocate your financial assets.

With such a wide variety of possible real estate strategies available today, it is critical that you get credible help in developing your own potential real estate strategy.  You may initially have an interest in simple renting and landlord strategies, but a wise professional can help you use your existing talents and resources in examining other new and profitable alternatives.

  1. Professional Help Provides Strength in Numbers. All real estate investors learn quickly that numbers don’t lie.  You can’t expect to have success in your real estate journey if you don’t collect accurate and true information.  A good real estate professional should provide the ability to gather and evaluate any numbers dealing with your specific real estate strategy.  When you have help in evaluating and analyzing the true numbers concerning your investment you won’t inadvertently slip off the cliff and experience a fall in value.

Another way that the professional provides strength in numbers is by ensuring that you are no longer all alone.  The real estate investor that relies wholly on himself or herself in evaluating a property or strategy is walking in the caverns without a Ranger to guide him.  There is a tremendous advantage in having someone to talk to and discuss possible investment options.  Allow your real estate professional to provide this strength.

  1. Professional Help Stops Real Estate Investor Paralysis. Paralysis in real estate investing can best be described as the state where you fail to take action.  As you gain knowledge and learn what to do, the one thing stopping you will almost always be the simple act of taking action.  The true real estate professional will help you avoid this state of paralysis.

When you have someone, who can listen to your ideas and provide feedback, you will be more inclined to move from the “knowledge” state to the “action” state.  This one quality of actually taking action will do more for your total success than anything else.  And a good professional will inspire you to move forward and actually do something.  Great ideas are nothing without actually acting upon them.

Seeking help from real estate professionals may improve your actual performance as well as add discipline to your real estate journey.  True professionals don’t magically appear out of nowhere.  You may have to spend time viewing web blogs, searching online, and attending seminars or training events, but the effort you put forth in identifying true real estate professionals is worth the effort.

When selecting someone to guide you on your real estate journey, make sure that the individual, company, or legal entity has the proven experience to help you form accurate decisions.  Never trust someone as a professional unless they can provide you with verifiable information as to their expertise or real estate success.  Take the time to investigate the prior success of the professional and don’t expect the true professional to work for free.  Even though there is generally a cost involved in securing professional help, you may find that the cost of seeking help is beneficial in gaining education and avoiding potential pitfalls down the road.

How To Calculate Fixed-Rate Mortgage Payments

How to Calculate Fixed-Rate Mortgage Payments

When financing a property a common question that investors have is: how to calculate fixed-rate mortgage payments? It is important for any buyer to fully understand how various rates in the agreement are computed. This allows him or her to recognize the right payment plan that fits his or her financial situation and to make better financial decisions. To calculate a mortgage payment, you’ll need to know the following:

Principal amount, interest rate, loan term, market value, mortgage insurance, property taxes, your monthly income, and other relevant fees.

Principal, or loan amount, is the home’s purchase price less your down payment.

Interest rate, usually charged as an annual percentage, is what the creditor charges you for the loan.

Loan Term is the number of years you’ll agree to pay the loan in full.

Property Taxes should also be put into consideration to avoid any issues with the government and unnecessary fees.

Monthly Income is important as mortgage payments will affect your after-expense, after-tax take home net income.

Other Fees may include additional taxes or business liability fees if you’re operating as an LLC or otherwise.

While you can always use an online mortgage calculator or check the Web for available mortgage payment tables covering different interest rates and loan terms, it is also important that you know how to do this manually, especially if you’re in the real estate business. Fixed-rate mortgages have the same payment and interest rate for the life of the loan, regardless of any affecting economic factors. Thus, you will only be needing a few numbers to compute your monthly payment.

To calculate, use this formula: P = L[c (1 + c)n] / [(1+c)n – 1].

Looks confusing? Not so much.

P = Monthly Payment

C = Monthly Interest Rate, which can be computed by dividing your annual interest rate by 12 monthly payments.

N = the total number of months in the term.

L = is the total amount you borrowed from the lender, or the home value.

Knowing this equation and understanding the intuition behind the math will help you better budget and calculate fixed-rate mortgage payments.

 

Nursing Home Bird Dogs

Nursing Home Bird Dogs

Building a team of bird dogs is a great way to get deals done quickly and with more ease. One market I found that has been overlooked is adult dare facilities, such as nursing homes, assisted living facilities and active adult communities. Do a quick google search for these senior living properties in your area.
The way I see it is this, when a senior citizen needs to make changes to their living situation, they will talk to the executive director of a facility to get information about the specific facility’s cost, amenities, services and so forth. They will then budget because Medicare and Medicaid do not cover these costs for them. These administrators will know if the possible client has a property to sell off to help pay for the cost of the facility. This is where you would come in.
I would encourage you to talk face to face with the executive director in charge of admissions and let them know that you are a real estate investor who can buy properties quickly and with cash from their possible clients. You’ll want to ask them for leads to anyone who has a property to sell. This way you can go to the homeowner, or their heirs directly, and work out a deal. If you make a deal happen, then offer the administrator a referral fee, cash at closing. I usually give $1,000 referral fees, but the price is totally up to you. If your offer does not conflict with their business interest, they should be willing to work with you.
Now you are building a captive audience as your bird dogs. Seek out as many of these types of facilities and market to them all. Build your business with leverage — and this is a good type of leverage.

A Couple of No-Down Financing Options

A Couple of No-Down Financing Options

Typically, when you buy a home you must have some sort of down payment.  When you use a FHA loan (which usually requires the smallest down payment) you will need to have a down payment of 3.5 percent of the amount you offer on the property.  There are less known options available to homebuyers that will allow you to get into a home without having to have any down payment at all.
The first option to look at is an USDA loan.  USDA loans will give you 102% of the appraised value of the home, which will cover your closing costs. This loan will be a 30-year fixed rate loan, with an interest rate based on what the market is currently at.  You will need to have a 640 minimum credit score unless you have been through a short sale, then you will need a 660 credit score.  The draw back with this type of loan is that it is only available for specific areas, which are mostly rural communities.  There are income limits as well, which means if you make over a certain amount of money you will not qualify.  This loan is only for a personal home that you plan on living in, but most existing single-family homes and new construction single-family homes will qualify. Some condominiums and modular homes will qualify for this loan as well.  It will work for both first time homeowners and those that would like to move to a different home.   To find out more about this type of loan and to see if you qualify you will need to call mortgage lenders in your area and ask them if they do USDA loans and what the qualifications are.
There are also local banks and credit unions you can work with where you can get into a property without a lot of money out of pocket.  To find these banks, start calling local banks and ask to speak to their mortgage department.  Ask them if they have a low cost, or no down payment option loan to get into a home.  There are a lot of options for first time homebuyers in this area.  My son went through this experience last year.  He found a bank with a no down payment option and got prequalified (Getting pre-qualified is a must to know how much they will loan you to buy a home).  As he went through the process, he had to pay for the appraisal out of pocket which was around $500.  He chose to pay for a professional inspection on the property about $250-$350.   At closing he had to bring in $200-$300 for some closing costs.  All in all, he got into a $150,000 home for around $1,000 out of pocket, of which $250 was optional.
Lending rules have relaxed a little so there are now options to get into a home with little out of pocket money. If you want to buy a home and you do not have a lot of money saved up, consider these options, as there may be a way to get you into a home.

A Unique Way to Invest in Commercial Properties

A Unique Way to Invest in Commercial Properties

One way to invest in real estate is by investing in commercial properties.  Commercial properties consist of retail, office and industrial buildings with a subcategory of industrial buildings that include multiple storage units.  Storage units are a great investment because they are easy to build and easy to maintain.  Storage units are usually block buildings with metal partitions that can have either exterior roll up door entrances or interior hallway entrances.  The units can vary in size from 5’x5’ to 10’x30’ and rent from $50.00 to $175.00 per month.  These would be non-heated units; heated units would rent for a premium of $25.00 per month more.
A great way to create these units is to find one-story industrial buildings that are vacant, outdated and need a lot of work.  Purchase the industrial building for 70% of the ARV (price per square feet of an industrial building in good shape) minus the rehab cost to convert the building into storage units.  Once owned, gut the building and install simple partitions to create a hallway and individual storage units with 4’ to 6’ wide roll up doors on each unit depending on the size of the unit.  Put an electronic security lock on the exterior door and allow each individual renter to put a padlock on their unit.  Put security cameras on the inside hallways and security lights on the exterior of the building.
It is very easy to get a 20+ cap rate on storage units bought this way.  Taxes and insurance are low and maintenance is minimal.  Utilities are paid for by the landlord, but they are minimal also; one light bulb per unit and no gas or water.  You can hire a manager or manage the storage unit yourself.
These industrial buildings should be located near residential communities on a commercial corridor so they are easy to access by renters needing to store furniture and other items.  The industrial building should be a minimum of 4000 sf and 10’ tall on the inside.  The partitions can be built with wood studs and one sheet of plywood or metal studs with corrugated aluminum panels.  The hallways should be a least 5’ wide and have doors at each end for easy access.   You can create 40 units of varying size in a 4000 sf shell and lease them for approximately $1.00 /sf. Smaller units go for more per square foot than larger units.
This is just one more way to make a great return on your money by investing in real estate.

Benefits of Using a Real Estate Agent

Benefits of Using a Real Estate Agent

Though DIY is a very popular trend for all things home décor, one thing that should not be DIY-ed is buying or selling a home.
Real estate agents help homebuyers and sellers every day by putting all their experience into helping you secure your next real estate transaction.  Let’s go over some of the benefits of hiring a real estate agent.
Your Realtor Comes with a Team
Purchasing a home isn’t as simple as signing on the dotted line.  As a homebuyer or seller, there is a whole team of professionals involved in the sale. When you are buying or selling a home these are just some of the professionals you will need to work with:
Home Inspectors
Real Estate Lawyers
Mortgage Brokers
Contractors
Home Stagers
Photographer
When you hire a real estate agent, they bring a team of real estate professionals to your transaction.
Buyer Benefits
As a homebuyer, there are benefits to working with a real estate agent.  They are a partner for all negotiations and have early and sometimes exclusive access to listings.  When hunting for a home, information is key. Work with a realtor to make sure you have access to all the information available.
Seller Benefits
How many homes have you sold in the last year?  There is nearly a 100% chance that you sold fewer homes than a real estate agent, if you sold any at all.  Real estate agents sell homes for a living — take advantage of all that experience.  Real estate agents know how to showcase your home in its best light through photography and staging, so take advantage of the latest digital marketing and ensure that you get the best price for your home.
How to Interview Your Real Estate Agent
There are so many benefits to hiring a real estate agent for both buyers and sellers.  To have a successful partnership, you will have to pick the right agent for your needs.  Some questions to ask when you are interviewing a real estate agent are:
How many homes like mine have you represented buyers or sellers for in the past year?
How long have you been a real estate agent?
Do you offer any exclusive marketing opportunities?
Can you advise on how I can make my home more marketable?
These questions will tell you how well you and your agent will be able to work together.  It is as important to find a real estate agent you can work well with as it is to find a real estate agent at all.  Finding the right real estate agent will make your next real estate transaction a successful one.

3 Financial Benefits of Owning a Rental

3 Financial Benefits of Owning a Rental

There are several financial benefits that come along with owning a rental property.  A lot of investors focus solely on the rental income itself, however, there are other financial benefits to consider.

Rental Income
Owning a rental property, with a tenant occupying the property, enables you to receive rental income.  Let’s suppose that you have one tenant.  Your tenant pays you a monthly rent amount of $1,100 a month.  Your PITI (principal, interest, taxes, insurance) mortgage payment is $700 a month.  By subtracting $700 from $1,100 it will leave you with $400 cash to go into your pocket each month, right?  NO not exactly, there are 2 more costs to consider.

From the $1,100, you will want to assume about 5% a month for vacancy costs, and 5% for maintenance costs.  These are costs that you do not want to ignore.  After deducting these additional costs, you will now have about $290 a month that will count as your cashflow income.

Tax Write Offs
There are huge tax deductions for rental property owners.  For example, you can write-off interest on your mortgage and credit cards used to make purchases for your property.  Other write-offs included; insurance, travel expenses, legal fees, maintenance repairs and property taxes.  You can find a more extensive deduction list on www.Nolo.com.

Appreciation
Appreciation is when your property increases in value over a period of time.  It could also depreciate and experience a decrease in value.  However, real estate is a relatively safe long-term investment because of increasing value or “appreciation” that occurs over time.  Most appreciation happens because of increased demand for properties or a change in interest rates or inflation.

Let’s assume you purchase a property for $100,000.  This property appreciates 5% in value every year for 10 years.  After 10 years, your property will have increased in value by almost $63,000.

Owning a rental property brings immediate financial benefits along with long-term financial benefits, making rental properties a top investment option for investors.  With careful planning, rental properties can be a significant piece of your investment income portfolio.

5 Mistakes Buyers and Sellers Make with Home Inspections

5 Mistakes Buyers and Sellers Make with Home Inspections

What is a Home Inspection?
A home inspection is a mainly visual evaluation of a home’s condition.  Home inspectors typically provide inspection services to determine the performance of the home.  The inspection isn’t just about identifying problems with the house.  A thorough inspector considers the appointment of a master class in your new home. (1)
Not Researching the Inspector
Too many buyers and sellers take whatever name is recommended without doing research.  The inspection is only as good as the inspector doing it.
A few questions to ask:
How long have you been inspecting homes?
How many inspections have you done?
What are your qualifications, certifications and training?
What was your job before you were a home inspector?  (Ideally, your professional was in contracting or building.)
You want a certified professional who stays current.  “There’s a lot of stuff you have to know, and you want someone who’s keeping up with ongoing education.”
You’re looking for an inspector who can analyze the home’s strengths and weaknesses—then explain them. (1)
Not Attending the Inspection
Attendance may not be mandatory, but it’s a good idea.
Just reading the inspection report isn’t enough for most homeowners to get the full picture, so it’s very important for the homeowner to see it so they can understand it.
The inspection will take 2-3 hours to complete, so set aside enough time for the whole thing.
Many inspectors don’t want to give you advice on whether to buy the home, but a good inspector can give you an estimate of how much money you’ll need to put into repairs and upgrades and talk about how well that fits your budget. (1)
Not Reading the Inspection Report
Too many buyers and sellers just glance at the inspection report.
You need someone who uses “clear, concise” language in person and in the report.
One Clue:  Scan a few inspection reports.  Either check the website or ask for a sample.
A knowledgeable profesional will state simply what’s wrong with the house and what it will take to fix.
Reports are often in digital format, with photos to illustrate the home’s strengths and weaknesses. (1)
Not Getting a Presale Inspection
Many sellers elect to leave the presale inspection to the buyers, but that’s a mistake.
When the buyers get an inspection (and if they’re smart, they will), the sellers will have little time to complete repairs and keep the sale on track.
If the sellers have the home inspected before putting it on the market, they have more time to get repairs done and with the extra time, they can shop around and control costs.
Both buyers and sellers often wait too long to engage an inspector.  You should find an inspector long before you have (or make) an offer.  Some buyers and sellers will wait for the second-to-last day before they even call.  “Any good inspector will be booked out.” (1)
Not Prepping the Home
Inspectors are upset when homeowners don’t prepare the house.
“Don’t force the home inspector to empty the closet to get into the attic.”  If you have a crawl-space hatch, move anything sitting on top of it.
Have a lock on a utility closet, basement or shed?  The inspector needs access, so open it or provide keys.
For a seller, the best tactic is to be at home to meet the inspector, introduce yourself, provide your cell number – and then you can take off.
To reduce the need for repeat inspections, hire professionals to do repairs.
Too many times, when faced with a list of needed repairs, a seller will DIY or try to get them done cheap, but that shows up during the re-inspection and could mean another round of repairs – and a 3rd or 4th inspection. (1)

(1)= Dana Dratch (Bankrate.com) January 2016

How to Get a Realtor to Write Offers

How to Get a Realtor to Write Offers

Below is an example of a simple email you can send to a real estate agent that should trigger them into writing your offer so it will protect you from potential loss while giving you the best possible chance to do a deal that makes you money.

Dear (Enter Agent Name Here),

Thank you for your work with me on: 413 Buckthorn Drive Lexington SC 29072.

I would like to offer $70,900.00 on this property under the name (ABC, LLC.). Further I will need the contact info for the title company so I can arrange to wire funds to them. I will give the seller or their “Title Company” a $1,000.00 deposit as soon as they accept my offer or put a check in escrow with my attorney. This offer is subject only to the following 15-day due diligence clause (or your equivalent):
Commencing upon receipt by Buyer’s Agent of a mutually executed Agreement of Sale, a Fifteen (15) day period shall begin (the “Due Diligence Period”) during which the Buyer shall have the right to carry out and perform all reviews and investigations deemed necessary by Buyers, including, without limitation, a physical review and inspection of the conditions of the buildings (if any) and the soil, environmental inspections, review of title, review of zoning, review of any permits and approvals for property deemed necessary by Buyer. In the event Buyer, in its sole discretion, is not satisfied with the review, evaluation or investigation during the Due Diligence Period, Buyer may terminate this Agreement by written notice to Agent for the Seller prior to the expiration of the Due Diligence Period, and at such time, shall receive back deposit(s) if any, and neither party shall have any further obligation hereunder. If such notice is not given, this Agreement shall continue in full force and effect in accordance with its remaining terms.
(Enter Agent Name Here), I would like this offer presented in writing to the seller! Further, I will want you to resubmit the offer every two weeks until the property is under contract. Should the property end up under contract with someone else, could you please ask if we can submit this offer as a back-up offer?

All the best,

(Your Name Here)

The email above is designed to help you get your agent to properly fill out an official “written” offer form. By using this as a template, you can quickly initiate a lot of offers.  Please remember, it is critical that you get your agent to present your offer in writing, as verbal offers almost never result in a “done deal.” Agents have a fiduciary responsibility to submit your offer in writing if you request that they do so.

It does you no good to let real estate agents teach you how to buy at retail so they can make a bigger commission when your business revolves around closing deals that are profitable to you and/or your buyers if you are wholesaling.

Once your agent writes the offer, you should go over it with your agent to make certain that the contract says what you want said.   Many states that approved Real Estate Purchase Contracts (REPC) have a built-in, often even state mandated, “due diligence clause” to protect you as the buyer. However, many agents check the box that says you don’t want this protection because the agent is looking for a quick deal.

Recently, many state contracts have been rewritten to force buyers to use a licensed inspector and continue through with the purchase if the seller is willing to make the changes indicated by the licensed inspector. You or your buyer will want to choose your own inspector, perhaps yourself or one of your contractors.

While you won’t want to mention to the agent that you are using the “Due Diligence Period” to find a buyer, it is obviously paramount that you be able get out of the contract and get back your deposit back if you can’t find a buyer.

This letter is written to help you make your deposits to the title company as opposed to the agent’s brokerage. The reasons for this are that:
The title company has no reason to keep your deposit if the deal falls through.
The title company is unlikely to cash your check unless/until the deal closes.
The deposit in most cases is not due until 3 days after your offer is accepted.

Writing a deposit check to the agent’s brokerage will please the agent. They will almost always deposit the check to their escrow account. Further, they will most certainly keep the money if they can. Expect no mercy if you miss a deadline or make a mistake.

Obviously, this email offer and accompanying explanation is designed to protect your resources and get you only deals that will make you money. Perhaps the most important thing of all to learn is that the listing agent and the buyer’s agent are both paid by the seller. Hence, they will take the sellers side every time. Good luck and may your next deal come quickly and be a big one.

Benefits of Owning a Home

Benefits of Owning a Home

Benefits of Homeownership
You get married, buy a house, have 2.5 kids; people are less and less likely to follow these traditional rites of passages in any particular order, let alone the one listed.  “So why are people still buying houses? Why did the National Association of Realtors report that 5,250,000 homes sold in 2015”?
Buying a house is much more than a symbolic step in your life. It offers long term financial and lifestyle advantages whether you are single, purchasing the home with your partner or buying the home for your family.
Equity and Homeowners
A term that gets thrown around a lot when discussing the benefits of owning a home is equity.  Equity is a financial term that describes the money that results from selling your home after you pay the balance of your mortgage.  “Over the course of a standard 30-year mortgage, each monthly payment goes towards building that equity.”  Instead of throwing money away on rent, your monthly payments go towards building equity.  Also, any improvements, commonly referred to as “sweat equity,” work towards increasing the eventual sale price of your home.  Through hard work and monthly payments, homeowners receive a cash-out when they sell their home and liquidate their equity.
Tax Benefits for Homeowners
As a homeowner, you can receive many tax benefits.  The money you would already be spending on rent is now a tax deduction.  The interest and property tax portion of your mortgage are tax deductible.
Lifestyle Benefits for Homeowners
Communities are built on the collective pride of the ownership of its homeowners.  As a result, some of the best neighborhoods have very high owner occupancy. This leaves very few options on the rental market.  By buying a home, you will have easier access to communities with the best schools, amenities, and other opportunities.
Benefits of Homeownership
To review, buying a home isn’t something that you do because you should, it is a solid financial and lifestyle investment.
“You Build Cash Equity
Are Eligible for Tax Deductions
Contribute to a Forced Savings Plan
Experience Pride of Ownership
Opportunity for Sweat Equity

Overcoming Objections

Overcoming Objections

A natural part of working as a real estate investor is dealing with objections. This might include an objection to an initial offer, an objection during the negotiation process or an objection when making a counter offer.
For example, if your buyer offers you an objection that they are not interested in a property (because of the location) or don’t want to be north or south of a certain street, you have the opportunity to help them by meeting their request and finding a better location or property.
How you handle the objection shows your strength and ability to deal with everyday life as a real estate investor. It also demonstrates your professionalism by simply listening and acknowledging the concern.
Most confusion or conflict can best be avoided all together by simply asking good questions – where specifically are they buying properties and what type of properties do they wish to purchase? Clarify, is it a core item or is it a wish list? For which items might there be some compromise? Let your cash buyers tell you.
Once you get the home under contract, that is usually when the objections will start. If you can’t overcome the objections and you find yourself stuck with a home that no one wants, both you and your buyers are frustrated!
Not all objections are the same. Some are deal-breakers, but most aren’t. And with enough experience, you’ll know that even a deal-breaker objection can be overcome under the right circumstances. Instead of dwelling on what they don’t want, suggest another solution.
As you start any business relationship with a buyer, clarity and good communication throughout the process will help you better navigate and overcome objections.

The Importance of Housing Inventory Statistics

The Importance of Housing Inventory Statistics

We are all aware that statistics have an important role in many aspects of our daily life. They cover weather forecasts, medical studies, insurance, consumer goods, quality testing, the stock market and a lot more. Without statistics the numerical data gathered by marketing firms, companies that delve in the financial world, and researchers would be futile.  This is why any form of statistic is significant.
Housing inventory is simply the number of houses for sale. Its statistics, aside from allowing potential buyers to see meaningful trends and changes in the world of housing, basically includes the number of houses available in the market. Lack of housing inventory statistics could result in low housing sales. Housing inventory could mean many things, whether you’re a buyer or a seller. High inventory means greater selection for potential buyers, while low inventory could push sellers to spike their price. And an increase on the fundamental price of a property may result in buyers choosing to rent rather than buy. A low market inventory could offer sellers high earnings despite having less quality houses. And spending a high amount of money on a junky home means nothing but a distorted market. Inventory statistics can also be determined by the period of time. In USA, if it is spring time, the housing inventory elevates because it is the season where housing activities are increased.
When real estate inventory is extremely low, the economy is being affected.  In a healthy market, housing sales’ contribution to the GDP is roughly 20%. Residential real estate does not only provide housing for families but also could be the greatest source of wealth for many people. It specifically affects the economy through construction expenditures and consumption spending on housing services. When home prices continue to rise, homeowners gain more equity in their homes, making them put their house on the market.
Housing inventory statistics basically influence residential real estate sales. If the homes for sale are not enough, a price hike of the available homes would be the result, regardless of their quality. While higher inventory offers more choices to all the buyers, it also means the more chances of sales, thus the economy gains.

Understanding the Most Accurate Method for Determining a Comp

Understanding the Most Accurate Method for Determining a Comp

Trying to determine the correct value of a property before it has been rehabbed can be a challenge for an investor.  Understanding how to properly obtain the After Repair Value (ARV) of a property can be the difference between a money-making deal and one that fails. We are all in this business to make money.  Understanding the proper way to evaluate a property will help put that money into your pocket.

Let’s look at some different ways folks attempt to get an accurate number to determine the ARV of a property.   Perhaps you have tried some of these:

Some individuals ask their agent to run a report for them that gives the median or average price of the sold properties around the subject property.  They then take the average or median price and try to plug that number in as an ARV.  The problem in doing this is that there is no consideration of the exact square footage of the subject property.  This method might work if every house in the neighborhood were exactly alike. However, no two houses are EXACTLY alike, let alone an entire neighborhood.
Other individuals like to consider the active MLS listings their agent provides to help them determine a price. The problem with an active listing is that the number used is a “wish” price. That is all the asking price is, a simple wish.  Trying to determine an ARV off of a wish can turn bad very quickly for an investor.  The ARV needs to be accurate in order to make money on a deal.
Others like to determine an ARV by using the various estimates from online sites.  They might take the Zestimate or other estimates from real estate sites to try to determine the ARV.  This might give an accurate number, but on the other hand, the offer could be way off of the correct ARV.  By not getting an accurate number for the ARV, an investor could be facing a big financial problem in their rehab project.

So, what do you do to insure accurate number for your ARV?  The best place to start is to have a good real estate agent pull comps for you.  Inform the agent that you need comps that are sold. Tell the agent you would like comps that are within a half-mile of your property.  Let the agent know you would like comps that have the same number of beds and baths.  You would also like comps that are within 20% of the square footage of your property.  Also, let the agent know you want nothing that was sold more than six months ago.  These are the starting points for finding good comps in order to get an accurate ARV. If an agent understands how to find good comps, you are on your way with this property.  If the agent cannot find good comps, you should consider walking from this property.  If you can’t find comps, you may have a difficult time selling the property when the rehab work is done.

Value the property correctly and you will have a great time going to the bank. Have great success in your investing.  You deserve it!

Top-Down Analysis

Top-Down Analysis

The stock market is made up of over 20,000 publicly traded companies. Navigating through this large number of stocks can seem overwhelming just because there is some much information to take in. One simple approach to finding your next trade is called the “top-down” analysis. You begin by looking at the overall market by using technical analysis. What you are looking for is momentum or direction. The market is divided into 10 different sectors. Using these sectors will help you identify the industry group a specific stock is trading in. Find the sector that is the strongest and then drill down into that sector to find the strongest stock. As you practice this approach, you should get better over time, and with the help of technology, you should be able to complete this analysis in only a few minutes. This will save you time and energy and should get you to your next trade faster. This approach has an additional benefit; If you find yourself in a bullish or bearish market, meaning the market is climbing or falling in a direction, you should also find the sector with this same behavior, as well the stock with this same behavior. This is called “trading the trend.” This theory helps in timing the overall market, sector, and stock direction, creating directional alignment with or potential trade. It is not a bad strategy to simply follow the current momentum! This approach makes perfect sense when you are looking to apply a simple strategy, which should answer the question, “What stock should I buy?”

Finding Properties – The Basics

Finding Properties – The Basics

There are many ways to find investment properties in any real estate market in the country. A few examples include marketing to: listed properties, for sale by owner properties, absentee owner properties, distressed sellers, etc. However, this article is not about the specific ways to find properties. Instead, we will discuss free vs. paid marketing. When all the details are extracted, marketing comes down to a cost of either time or money. This is something new investors must understand. To be successful in this business you MUST spend either time or money to find deals.
In real estate investing, money is made when an acceptable property is found. There are only two ways to find such properties. New investors, that don’t have any money, must spend their time searching for properties. One of the quickest ways to find possible deals, without any money, is to scour the Multiple Listing Service (MLS) and make offers on properties that are more likely to accept an investor-type offer. This technique only requires your time in evaluating the properties and submitting offers.
On the other hand, an investor could spend money to find possible deals not yet publicly listed. An example of this would be to acquire a list of probable sellers and then execute a marketing campaign targeting the list. The marketing campaign could be mailing out a series of postcards or hiring someone to place door hangers. An example of some costs associated with this style of marketing would be: acquisition of the list, the media in which you are using to deliver the message, the postage, and/or the person that places the door hangers.
The overarching lesson to be taken from this article is that investors must pay for finding properties with either their time or their money. Both techniques can be effective and one must be practiced consistently before any properties can be found. Therefore, if you find that you are not doing enough deals, then increase either the time/money or both that you put into finding properties.

The Fastest Way to Retire Investing in Real Estate When Starting with No Money

The Fastest Way to Retire Investing in Real Estate When Starting with No Money

If you want to have regular income to retire on in the future, follow these real estate investing steps.

First, start wholesaling properties by finding properties for other cash investors and flipping those properties to them for fast cash fees.  You can make between $5,000 to $10,000 in fees on each deal completed and build up capital for a down payment on a fix and flip of your own.

Next, find properties where you can use seller financing, by either assuming an existing loan, having the seller carry paper or lining up private money financing where you put 25% down and they finance 75% of the purchase price.  Make offers that allow you to make a reasonable profit after paying for private money financing or seller financing.  Start buying, fixing and flipping properties to create profits of $20,000 to $30,000 to continue building capital.  Do fix and flips every 4 months with the same down payment money and earn an additional $75,000 during the year.

Finally, pool your resources and find rental income properties that you can now purchase for cash so you can negotiate a great deal on it.  Find properties from between $50,000 and $100,000 that bring rental income between $750 and $1200 monthly.  These properties should have an ARV that is at least 25% higher than your purchase price after rehab.  Buy the properties with cash, rehab them, put a renter in the properties and then finance the properties with a new loan from a local credit union for 75% of the appraised value.  By buying properties with cash, fixing them and putting them under lease, you can finance them for 75% of the appraised value rather than 75% of the purchase price if you have held them for 3-6 months.  By doing this you will be able to finance the properties for nearly the amount you have invested, getting all your capital returned so you can find and purchase another property for cash and do the same process repeatedly.

An example is as follows:  A property has an ARV of $125,000 and will rent when fixed up for $1100/month.  Using the formula ARV x 75% – rehab = MO you make an offer of $75,000 and negotiate up to your maximum offer of $78,750.  ($125K x 75% – $15K rehab = $78,750) If you were to finance the deal up front, the bank would loan you 75% of the purchase price and you would need to put down 25% or $19,687 and pay $15,000 in rehab cost for a total investment of $34,687.  If you start with $100,000 in capital you can invest in three properties and then you will be out of money.

If you purchase the property with cash, rehab it, put a renter in and then finance it 3-6 months later, the bank will loan you 75% of the ARV ($125K) which is $93,750.  If you paid $78,750 for the property and put $15,000 in rehab, your total investment is $93,750; so, you will get back your entire investment through financing at the later date, making it possible to finding and purchase another similar property every 3-6 months until you have dozens of rental properties using the same $100K of capital.  You will receive a positive cash flow of over $3000 annually on each property with no money invested.  Once you have enough properties to live comfortably, it is time to retire and let the rent pay off the loans.  After a certain amount of years of appreciation, you can refinance again to pull out additional capital for more diversified investments or to just have fun in life.

Understanding Numbers on Buy, Fix, and Sell Deals

Understanding Numbers on Buy, Fix, and Sell Deals

When looking to buy a property to fix and sell for a profit, you have to understand the numbers behind the deal.  Here are the all the relevant numbers we must take in to account when flipping a property.
Rehab cost – This is the total cost to fix the property to get it into a move-in-ready state to maximize profit.
Profit – Make sure your profit margin is enough to make the flip worth your time and effort.
Closing cost – When you by a property, the buyer is responsible to pay closing cost.  3% is a typical number to plan throughout the US for what we will pay for closing cost.   I would suggest doing 3% of the after-repair value (that is the value of the property once it is fixed up and ready to sell).
Real Estate Agent commission – The seller is responsible to pay the real estate agent once the property sells.  A 6% commission rate will be standard throughout the US and Canada.  The Real Estate Agent commission will be figured on the After Repair Value as well.  When you have fixed the property and sold it, you will pay the agent 6% of what the property sells for.
Holding Cost – Holding cost accounts for the money you spend on owning the property while you fix it up to sell. Use 1% per month of the After Repair Value to calculate your holding cost. Holding cost will always very depending on the amount of time it takes to fix the property and the amount of time it takes for the property to sell.  To get these numbers, ask the contractor how long it will take to fix the property and talk to the real estate agent about what the average days on market is for the area your property is in.
When you run your numbers, make sure you take all these items into account.  There is always risk in doing flips on properties, so make sure you do your due diligence and your numbers are accurate before you move forward.

Extending What is Possible

Extending What is Possible

Investors, many times, enter the real estate investing business with little, but increasing, confidence.  During the stages when an investor is seeking to invest in real estate, purchase their own investments or unload investments, there may be times when the investor run out of ideas.  This has also been known as writers block, having a brain fart, or simply being at a loss of ideas.

Here is one of my favorite and greatest ways of opening my creativity box and extending what I think is possible.  This can be used in real estate but may also be used in any facet of life. It is a simple but very effective task.  I have personally used this idea to create new financing ideas, find more properties, open my potential closing and sale opportunities, and much more.

The idea comes originally from Bryan Tracy, a public speaker.  Here is how it works:

Write a question. This can be any question but usually begins with the word “How”.
For example: I may write the question: “How do I market to my prospective sellers without any money out of my pocket?”

Answer the question twenty times.  This may seem simple in the beginning but this format is intended to stretch your imagination beyond what you can currently see.

Remember, no answer is a bad answer.  This is simply a brain storming method to get your creative juices running.

Here is an example of how this may look:
How do I market to my prospective sellers without any money out of my pocket?”
Look for a marketing grant.
Partner with other people that pay for marketing and co-market.
Pay for marketing after a deal has been completed.
Do door to door marketing.
Use services, such as a library, that can help create the marketing
….

Taking the time to answer all 20 questions will give you ideas you may never have thought of and likely ideas others, like your competition, have not discovered.

Get Your Business in Order for the New Year

Get Your Business in Order for the New Year

Let’s start the New Year with a clean slate for your business. Clean out the clutter and streamline your process so you can function effectively. Organization in any business can help you improve your time and functionality so you can generate a positive outcome for your efforts. I will share with you my process of getting my business in order.
Organize your workspace: The place where you work the most needs to be organized. Have filing systems and color-coordinated or labeled folders for different tasks, clean up old files and get rid of old deals, don’t let paperwork pile up on your desk, and make it easy to find what you need, when you need it.
Update your technology: You don’t need the latest or greatest computers, laptops, iPads, smart phones, etc., you just need ones that have the features you use. Make sure you know how to use the features on your gadgets. If you need help, ask someone who is more knowledgeable in technology than yourself.
Marketing budget: Marketing is a must for your business. Take some time to figure out your marketing plan for finding deals or buyers. Also set a budget that is workable for you. Don’t over extend yourself if you cannot afford to market. Instead, find cheaper ways of getting your message out there.
Set your goals: Let’s get you focused with some S.M.A.R.T goals. Specific, Measurable, Attainable, Realistic, and Trackable goals. This method of goal setting will allow you to be flexible with your success but also keep you on track and accountable. Map out your business so you know where you want it to go and how you’re going to get yourself there.
Constant organization will keep you moving efficiently throughout the year. Now is a good time to really get started on the right track. There are many ways you can get organized. Choose your method of choice and get to it.

10 Books To Boost Your RE Business and Focus in 2017

10 Books To Boost Your RE Business and Focus in 2017

Real Estate investing is one of the best ways to build wealth.  As a result, there are literally thousands of books out there on real estate investing.  I, myself, have read a countless number of them.  I have also learned that although real estate gurus may agree and disagree on different strategies, the one thing they all agree on is investing in yourself.   If you have dreams of becoming a successful real estate investor, you have multiple resources to do so.

I’ve compiled a list of my top 10 books for real estate investors:

“The Compound Effect” by Darren Hardy
The Compound Effect is based on the principle that everyday decisions shape your destiny.  Little, everyday decisions will either take you to the life you desire or to disaster by default.  It’s the small daily habits that have compounding results.

“Eat that Frog!: 21 Ways to Stop Procrastinating and Get More Done in Less Time” by Brian Tracey
The whole concept of eating your frog is based on the premise that if you “ate a live frog every morning, that would be the hardest thing you do all day.” This book helps you understand the importance of managing your priorities to get more done.

“The One Thing: The Surprisingly Simple Truth Behind Extraordinary Results” by Gary Keller and Jay Papsan
“What’s the ONE Thing you can do such that by doing it everything else will be easier or unnecessary?”  The book is centered around this one question and the power of organizing every area of your life around ONE Thing.

“How to Win Friends & Influence People” by Dale Carnegie
This book teaches you six ways to make people like you.  The real estate business is as much about people and relationships as it is about properties.  You will learn important principles on how to work with and influence people that can in turn help you create more deals.

“Go Time” by Scott Yancey
“Go Time” brings all of the tools, resources and insider tips to every reader who wants to change their life and become financially independent through real estate.

“Think and Grow Rich” by Napoleon Hill
Napoleon Hill uncovers how to unleash your full potential and achieve guaranteed success in life and work by following principles outlined in this book.  You will learn how to conquer many common fears, such as poverty, ill health, criticism, loss of love and death.  This is a must read for personal achievement.

“The Four Hour Workweek” by Tim Ferriss
“The Four Hour Workweek” shows readers how to live more and work less.

“30 Days to Real Estate Cash” by Dean Graziosi
This book shows you different strategies on how to earn instant money with proven ways to go from zero cash to cash-in-hand in 30 days.  It’s a simple read with doable steps to help you get your first deal done.

“Every Landlords Tax Deduction Guide” by Stephen Fishman J.D.
A guide to learning how rental properties are taxed and what you should know as a landlord.  Every deduction that you should make as a landlord is included as well.

“Millionaire Success Habits: The Gateway to Wealth & Prosperity” by Dean Graziosi
This book is designed with one purpose in mind; to take you from where you are in life, to where you want to be in life, by using easy-to-implement “Success Habits” into your daily routine.  It’s not about adding more time to your day but replacing those things that are not serving your future with success habits designed specifically to assist you on your journey to a better you.  This is a recipe for success that anyone can follow.

The “How” of Financing

The “How” of Financing

The investment world is full of would-be investors tying to find their way in the real estate investing world and most investors have a goal of purchasing properties.  These purchases can be for a buy then hold strategy or a buy then fix and sell strategy.

A large number of investors, in the beginning, particularly, do not feel they have the financing or the capabilities to purchase real estate investments.  They may feel they cannot use their own financing to purchase or more commonly feel they do not have the financial knowledge, know-how or capabilities to invest in real estate.

The truth to anyone’s ability in purchasing real estate investments, at any stage in their career, is actually found in a quote:

“Empty pockets never held anyone back.  Only empty heads and empty hearts can do that.” — Norman Vincent Peale

To get out of the rut of the “financial inability woes” you need to start asking yourself one question each and every time you approach an investment opportunity.  That question is “how?”

Notice that the point is not, “I cannot so I must move on…” It is, “How?”   You are not limited when it comes to your answers.  The “How?” can come in any form as long as you are looking for the “How?”

You do not need to stay within the answers you received in school, from other investors, or from life experiences.  You can find ways to create opportunity for any real estate investment by asking “How?”

Next time you are facing a real estate investment opportunity, ask yourself “How?” “How do I purchase this?” “How do I afford this without money?” “How do I convince the buyer to work with me?” “How…?”  You may surprise yourself that you have found a way to invest, even when it did not seem possible.

Finding the Best Deals

Finding the Best Deals

Eighty percent (80%) of all homes sold are sold to first-time home buyers who are either a neighbor or someone recommended by a neighbor. These people want a 3-bedroom home with more than one bathroom. They prefer ranch style, low-rise bungalows without steps between living areas. In particular, buyers want larger kitchens that open into a family room that exits directly to the back yard onto a slab or a deck.

It does us no good as a wholesaler or even a rehabber to buy a property that people don’t want. It’s not only okay to find deals that need a lot of work; it is preferable, provided the finished property meets the criterion above. Successful rehabbers and wholesalers tend to work in areas where homes are selling quickly but this home has some issues. There are issues that you want and issues you want to stay away from.

You want a property that is regular for the neighborhood but needs work. Please realize that when a property has serious FHA failure points and code violations it will not fetch a mortgage. Unless an interested home-buyer has cash, they won’t be able to buy this home. Hence, you will only need to compete with other investors and that is what you want.

Another criterion that offers a better chance of obtaining a good deal is finding a property that is vacant. Many top investors only work with properties that are vacant. Because no one is gaining any value from a vacant property, it is likely that the buyer doesn’t want it. But, there are other indications of someone not wanting their property. Those include debt, disease, death, divorce, and having to move to another area some distance away.

Knowing which kind of lists to use, where to find them, and how to find the best deals within the lists, can be critical. Real Estate Pro Software can help you find pre-foreclosures, foreclosures and absentee owners who bought multiple properties in each area but live in a different state. Often, these people can become overwhelmed with the task of long distance management and not only can offer good deals but will often owner finance.

If you have RE Pro, just call the advisory line and we will walk you through ways to maximize the data. But if you don’t, everyone has access to Internet websites such as Redfin.com.

Redfin.com provides a simple list that is available to everyone but is seldom used to its maximum potential. Here you can select entire lists by zip code or by area.

Selecting all the Redfin.com properties in Murray, Utah, we find a list of 426 properties/homes. By exporting the entire list to Excel we can begin deleting properties we don’t want to purify our list.

Start by eliminating everything that is not a single-family home and 426 homes becomes 251 homes. This gives you just the easiest homes to sell and the homes that are more predictable price-wise. Homes that are older than 40 years are older than what many people want. Eliminating these older homes also eliminates potential issues with lead paint or asbestos. Eliminate these and you have 113 homes to review.

Homes that have only 1 bathroom can often be slow to sell, so we will eliminate them. Further, since homes with more than 3 bathrooms are not likely to be reviewed by your typical first-time homebuyer, we will eliminate those. This gives you 44 homes to review. In our list, we had 4 homes that slipped through without an address. Hence, we now have 40 homes.

After sorting by square feet, we will eliminate any homes that are over 2000 square feet, as they are often too big for almost all first-time homebuyers. In this list, you will have only 5 properties to review. In many areas, you can sort alphabetically by location and find unsafe “location” areas to eliminate. There were no unsafe areas in this particular list.

Lists will not always reduce down as dramatically as this one did here. Hence, the next item we can review is the price per square foot. This item may require inserting another field and dividing the price by the number of square feet but it will provide you with properties with the best potential to be a good deal.

Price is always important, but when you are wholesaling, it is critical because we have added ourselves yet another expense. Hence, what we bring to the table is the ability to know what is a good deal and to find those good deals for our buyers.

How Often Does an Investor Lose in Florida Tax Liens?

How Often Does an Investor Lose in Florida Tax Liens?

The answer is a resounding “NOT VERY OFTEN.”  Having a full understanding of what to look for in a lien should help to shape your decision on if you should buy a particular lien.  We are going to discuss three things to look for to determine if we will meet our goal of making money.  We should be able to walk away making 18% of our money on a regular basis.  This is the standard by which we should measure our success.  Let’s consider what we should do:

Do your best to buy current tax year liens.  In Florida, a lien is described as having a tax year, as well as a certificate year.  For example, a lien may have a Tax Year of 2016 and a Certificate Year of 2017.  This means the taxes occurred in 2016 and the certificate was issued in 2017.  The redemption period (the deadline for the property owner to pay you) will be in 2019.  Understanding when you are to be paid will help you to maximize your investment.

Check the tax records to see if there are any other outstanding tax liens for the property you are considering.  Having other tax liens can be fine on a property that has enough value to support paying additional liens.  It is when a property has accumulated more tax liens than the value of the property that there can be trouble.  Knowing the number of past tax liens can help us make effective decisions in our investing.  Avoiding properties that have acquired too many tax certificates will keep us from throwing our profits away.

In Florida, a lien will be paid several ways.  It can redeem on time.  It can redeem before its time.  A lien can be paid before the foreclosure.  It can be paid between the foreclosure and the auction.  The property can be auctioned and then the lien holder paid.  All of these ways will result in the lien holder being paid.  A little homework will ensure successful tax lien investing.

If you follow these guidelines, you will invest successfully.  In addition to above, avoid contacting the property owner.  The county will take care of all communications.

It is very difficult to lose from Florida tax liens.  Do not lose track of your certificates, as they act as money.  They have a seven-year statute of limitations.  If you forget about them, you lose.  Stay organized and on top of your investment and you will make good money.  Do not buy tax lien certificates on properties that have so many liens that the money owed in tax liens is greater that the property value.  If you can add and subtract, you can be a successful tax lien investor in Florida.

Goals

Goals

Obstacles are those frightful things you see when you take your eyes off your goal. – Henry Ford

Real estate can be a lucrative business. However, a person can also spend a ton of time spinning their wheels not knowing what to do. There is one way to help you to stay focused and that is to set goals. As my career rolls on, I have realized the importance of setting goals. This article is to serve as a basic guide to setting goals. This guide will help you get started, however, you will eventually create your own ritual for setting goals.
The first step to setting any goal is to be clear about what you want. Do you want to buy rentals, flip homes, or generate quick income? Don’t worry if your goals don’t seem “realistic,” but do be realistic about where you are starting. When working towards your goals, you’ll find that achieving a goal requires work…and the bigger the goal, the more work you’ll be required to do. So, set your goals per the amount of work you are willing to put in.
Next, select the desired time frame in which you want to accomplish your goal. If you don’t have a time frame attached, then it will be difficult to take the necessary actions to accomplish your goal. Without a time frame, life will most certainly get in the way.

Now that there is a time frame attached, what are some smaller steps you can take to move toward your overall goal? I like to set small, frequent goals that will get me closer to the big goal. I set daily, weekly, monthly, and quarterly goals, thus removing the guess work of what I should be doing daily. There are two reasons for doing this; 1) I achieve goals along the way, which keeps me motivated and 2) if I only have one big goal with a time frame of a year, it is easy to lose sight over a 12-month period. Therefore, it’s important to set small, attainable goals to make it easier to get to the big goal.
The research doesn’t lie: goals are a necessity in creating success. To begin, start by deciding what it is you want. Second, set a time frame in which you will acquire your desire. Third, set smaller goals that take you toward your bigger goal. Following this basic, simple process will help you achieve success.

Steps to Pre-Qualify for a Mortgage Online

Steps to Pre-Qualify for a Mortgage Online

Pre-qualification is an estimate of how large of a mortgage you can afford.  It is the first step when looking for a home to buy.  It’s important because it helps you narrow down your options and focus on how much house you can really afford. It is based on your financial situation over the past two years. You will need proof of employment, tax returns from the previous two years (if your self-employed) and a credit report from all three bureaus: Experian, TransUnion and Equifax. You can think of it as a free consultation between you and the loan officer.

The lender will review your income to give you a general idea on how much you can borrow.  When you pre-qualify for a mortgage, you are only getting a rough idea of what you can borrow.

You can apply for pre-mortgage approval online by going to the mortgage loan websites.

Here is some example of questions you will need to fill out.

  • First and Last Name
  • Phone number
  • Email address
  • Zip code where you currently live
  • How soon you’ll be applying for a loan
  • Are you currently working with a real estate agent?
  • How you would like to be contacted (phone vs. email)
  • The purpose of the loan (e.g. purchase vs. refinance)
  • The amount you want to borrow
  • How you plan to use the loan (primary residence, income property, etc.)
  • The type of property you are buying (detached home, multifamily. Condo, etc.)

After providing this information, a representative will contact you regarding your request. They will give you a rough idea how much you can borrow, based on the information you’ve provided. Be prepared for some additional questions regarding your income level.

You can also get a pre-qualification letter. This will let the sellers know that you are serious and that you can qualify for a loan to buy their home.  

You can contact other mortgage lenders about your mortgage pre-approval if you want to.

Pre-qualification is not a commitment between you and the lender. The next step is loan pre-approval. Loan pre-approval is a more in-depth version of this process. The lender verifies your income, your debt level, and other aspects of your financial situation. They want to know whether you can qualify for a home loan and decide how much of a loan they are willing to lend you.

Top 3 HVAC Safety Concerns

Top 3 HVAC Safety Concerns

The acronym HVAC stands for heating, ventilation and air conditioning, and it’s the broadly used term to describe equipment used to keep homes at a comfortable temperature.  In most residential homes, most HVAC systems are forced-air heating and cooling systems that include heat pumps, air conditioners and furnaces.

Your HVAC system is a major part of your home.  It is a complex system with many parts and can often present safety concerns.  Although safety issues involving your HVAC system aren’t common, it’s important to know about them so you can prevent problems and know what to do if they ever arise.

Indoor Air Quality

When your home is sealed up tight during the summer and winter, your indoor air quality becomes especially important.  Without fresh air circulating throughout, you have to pay attention to the quality of the air coming from your HVAC system.  Have your indoor air quality tested, especially if anyone in your home experiences increased asthma attacks, headaches, allergies, or flu-like symptoms.  These could be signs of poor indoor air quality.  Determine ways to improve the indoor air quality in your home by dusting and sweeping regularly and having your HVAC system serviced and air filters changed regularly. (1)

Electrical Shock

If you’re handy, you may be tempted to fix HVAC issues on your own.  Watching a YouTube video doesn’t qualify you to work on even what may seem to be simple systems.  Unless you truly know what you’re doing, don’t attempt to fix and HVAC issue on your own.  Tinkering could void the warranty, cause even bigger problems, and could put you at rick for dangers like an electrical shock.  Unless you’re trained, leave HVAC fixes to the experts. (1)

Carbon Monoxide Poisoning

Carbon monoxide is an odorless gas that should be a big concern for everyone.  Although carbon monoxide poisoning is rare, it is fatal in some cases.  An aging furnace may leak carbon monoxide without you even realizing it.  Symptoms of carbon monoxide poisoning include headaches, fatigue, nausea, and loss of consciousness.  Make sure your family knows the warning signs and has a carbon monoxide detector to keep them alerted and safe. (1)

If your HVAC system breaks down, it’s not a good idea to attempt to fix it yourself.  If you experience problems with your HVAC or have indoor air quality concerns, contact a qualified HVAC repairman and speak with an experienced professional today.

  1. Custom Air, Inc. – 2016

Differences Between Tax Liens and Tax Deeds

Differences Between Tax Liens and Tax Deeds

I often hear people talk about tax liens and tax deeds.  As they talk, they often get the two confused with one another.  In this article, I would like to lesson some of the confusion that takes place when discussing these two investment instruments.  We are going to take a look at the differences between a lien and a deed. Here are some of those differences:

  1. In general, a tax lien occurs when an individual does not pay property taxes on time.  When this occurs, the county where the property is located generates a tax lien certificate.  The county will then offer these certificates at an auction or over-the-counter. (Over-the-counter is when you buy the lien directly from the county.) The redemption period on these certificates ranges from six months to three years. (The redemption period is the period of time in which the owner of the property must pay off the investor.)  The interest rate ranges from 12% to 18%.  A lien does not result in ownership of the property.

The county generates the deeds after a period of time when the property taxes are not paid. Depending on the state, there will be an auction to buy the property.  In most deed states, the winning bid will result in ownership of the property.  Typically, no interest is paid on a deed.  Ownership of the property is the result of being the highest bidder at the deed auction. 

  1. When purchasing a tax lien certificate, you may be able to reserve the certificate with as little as two dollars.  You can often reserve a lien for a short period until you pay the county in full.  On a tax deed, your payment will be required almost immediately.  Like most auctions, you will have a short time to pay for the tax deed.  Understand and know what your deadlines will be for payment before you participate in the auction. 
  2. Finally, know whether your state is a lien state, a deed state or a hybrid.   The states are evenly divided as lien or deed states.  Georgia and Florida are the only hybrid states.  Deed states, in general, operate using auctions.  Lien states tend to operate on an over-the-counter basis.  An investor will make money by understanding the how the different states sell liens and deeds.

6 Signs Your Air Conditioner Needs Repairs

6 Signs Your Air Conditioner Needs Repairs

It’s actually not difficult to tell if your air conditioning system is in need of repairs, but sometimes inexperienced homeowners might wonder whether the air conditioner is really not working or it is all in their head.  Other homeowners might feel that though their air conditioning system is showing signs that it needs repairs, it is better to look after the problem before it gets worse or before their air conditioning system stops working completely.

Some of the signs are fairly obvious, while others are more subtle.  Knowing the warning signs will help you search for professional service before the problems gets out of control. (1)

  1. No Cool Air

At some point, you may find that your air conditioning system simply isn’t doing its job.  Even at full blast, the air coming from your vents just isn’t as cold as it used to be, or isn’t cold at all.  This could be a sign that your system is in need of serious repair.  For instance, lack of cool air could mean that your systems compressor has failed.  It could also mean that your systems Freon levels are too low.  When that time comes, you might have to replace the unit. (1)

  1. Poor Air Flow

If you are noticing weak or little air flow through your AC vents, the unit’s compressor may be failing.  In case your areas or rooms in your home are getting cold air while others are not, then the trouble might be with your duck work and it’s a sign that your AC system needs urgent repair. (1)

Over time, debris can get stuck in your air conditioning vents.  Not only this obstructs airflow, but it also presents a health risk to you and your family.  Having your air conditioners ducts cleaned is a great way to restore airflow and ensure that your AC system is working well when you need it most. (1)

  1. Thermostat Problems

At times the trouble is not with the air conditioning unit, but with the thermostat itself.  One way to tell if your thermostat has a problem is if one part of your house is very cold while another part remains at the same temperature. (1)

  1. Moisture Where It Shouldn’t Be

(1)

Moisture or leakage around or near your system can be an indication of problems.  When you see leaks from your air conditioning system, it can mainly be because of two reasons. (1)

In the most serious cases, the leak could be refrigerant.  Refrigerant leaks can cause serious health risks to you and your family and need to be repaired at once.  You must call an air conditioning repair expert right away. (1)

Water pools adjacent to your air conditioner might show that the drain tube, which disposes of the air conditioner condensation, is either blocked or broken.  This is not as serious of an issue, but should be tackled quickly to avoid less important problems like mold growth. (1)

  1. Strange Sounds

Squealing, grating, grinding sounds from your air conditioner might be a sign that you need a replacement unit.  These noises imply that something is wrong inside the unit.  Failure to service the unit could result in a pricey breakdown. (1)

A squealing noise means that the belt has slipped out of place.  It may also indicate that a metal component in your air conditioner requires more lubrication.  A grinding sound may mean that your motor’s bearings are broken. (1)

  1. Strange Odors

Pungent or foul smells from your air conditioning vents normally mean that your conditioner’s wire insulation has burned out.  Musty smells generally indicates that there is mold inside your unit or ductwork, which must be taken care of without delay. (1)

In order to keep away from these issues, it is important to maintain your air conditioning system regularly.  It is a costly appliance and must be cared for to add to its lifespan and lessen the need for pricey repairs. (1)

Even if your unit doesn’t need replacement, getting it repaired or serviced can boost up its efficiency and save you money.

Most repairs on air conditioners are quite simple, but homeowners frequently avoid calling a technician as they fear a large bill.  In case your AC unit is new, you may find that the repair is covered under a manufacturer’s warranty.  Even if it is not under warranty, it is good to fix a small problem quickly than to delay and let it grow into a larger problem. (1)

  1. Homewarrantyreviews.com 2016

7 Warning Signs That Your Roof Needs Replacement

7 Warning Signs That Your Roof Needs Replacement

How often do you look at your roof?  If you’re like me, you run in and out of the house, shuttle the kids back and forth, and glance up at the roofline only occasionally as you back out of the driveway.

But inspecting your roof regularly and making little fixes as needed can prevent some costly repairs down the road and keep those raindrops from falling on your head.  There’s another benefit, too: Keeping your roof in good condition will also be a big plus if you decide to sell your home.

A solid roof above your head is pretty crucial if you’ve become accustomed to having a warm, cozy, and leak-free home.  Here’s how to notice and deal with potential issues before they become big ones. (1)

1. Understanding the age of your roof.

An asphalt shingle roof should last between 20 and 30 years, says Claude McGavic, executive director of The National Association of Home Inspectors.  “If you have a 40 year old roof, there could be a problem, even if it looks good from the ground.” (1)

2. The shingles are curling.

Shingles can curl in two ways: There’s cupping, which happens when the edges of the shingles turn upward; and there’s clawing, which is when the edges stay flat and the middle starts to come up.  Both are signs of weathering and indicate that potential problems are relatively close and repair is eminent.  (1)

3. Entire shingles are missing.

From a functional standpoint, there should be no problem with just replacing a few shingles here and there.  What you do need to be prepared for is the fact that it’s just about impossible to get a new shingle to match the color of an old one, says Graham. (1)

Granule colors have changed pretty significantly over the years.  Plus, the colors change slightly with weathering.

You can keep patching until a bigger issue presents itself, but if a roof starts to look like a checkerboard, people often opt to replace the whole thing. (1)

4. The shingles are cracked.

Cracked shingles are typically a result of wind damage.  If just a few shingles are cracked, you can certainly replace them.  If the cracking isn’t isolated to one particular area and it’s random throughout the roof, that’s a sign you should start thinking about a new roof, says Graham. (1)

5. You’re finding granules in the gutter.

If you just got a new asphalt shingle roof and you see a bunch of granules in the rain gutters, there’s nothing to worry about: Those are just loose, extra ones.  But if it’s been 10-15 years, that’s a sign of a bigger problem.  Granules help keep the sun off the asphalt, says McGavic.  Once the granules fall off and the shingles start to bake, the quality will deteriorate in a hurry. (1)

If you have a new roof and you just started to notice the granules in the gutter, the shingles are probably halfway through their lifespan, McGavic estimates. (1)

6. The shingles are covered with moss or algae.

Okay, this is actually no reason to panic. It’s just a cosmetic issue, say McGavic.  People may choose to replace the roof just because they don’t like the aesthetic (a lot of new shingles are algae-resistant).  Whatever you do, don’t take matters into your own hands by power washing or scraping away at the green stuff.  That’s a good way to chip off all the granules, which again, essentially renders your shingles useless. (1)

7. You can see sunlight from your attic.

You don’t need me to tell you that this isn’t a good sign….because it’s not.  If light can shine through the roof of your home, so can rain, cold air, and snow.  Check for light and also look for water stains.  If you find any, watch them over a few rainfalls and if they change shape or size, that means you’ve got an active leak, says McGavic. (1)

Watch for the warning signs to be sure to give yourself plenty of time to add the project to your TO DO list.  For help with a roofing project, you should consult a roofing specialist in your area. 

Ask your roofing contractors for referrals of jobs they have recently completed to help you make the best decision when hiring a contractor.

                                                                                                                                      (1) Beth Kaufman- Good Housekeeping

How to Calculate After Repair Value Based on the Cost Per Square Foot of Comparables

How to Calculate After Repair Value Based on the Cost Per Square Foot of Comparables

When calculating the after repair value or ARV of a property, we always suggest using comparables or comps. from a real estate agent.  Let’s go through the math of how to use these comparables to get the best ARV possible.  As a quick review, remember the best comps have 3 important factors: They are close to your subject property, they have sold recently, and they are similar to your subject property. 

When you get comps from your agent, you will need 2 numbers for each comp you receive: the amount that the property sold for and the number of square feet in the property.  Once you receive this information, you will want to calculate the cost per square foot for each comp you have.  You get the cost per square foot by taking the amount the property sold for and dividing it by the square feet in the property (for example a property of 1000 square feet sold for $100,000, so take $100,000 / 1000 = $100).  In this example the cost per square foot is $100.  You will need to perform this calculation for each comp you have. 

Now that you have the cost per square foot for each comparable property you received, you will need to evaluate those numbers.  If you have 6 or more comps, you can take the high cost per square foot and the low cost per square foot and throw them out.  With 5 or less you will use all of them.  This will help dial in your ARV a little better.   

Once you have the cost per square foot on all the comps you are going to use, you will need to get an average cost per square foot.  To do that, take the cost per square foot on all the comps you are using, add them up, and divide by the number of comps used. (example: You have 4 comps with a price per square foot of 103, 98, 90,108. 103+98+90+108=399, 399 / 4 = 99.75).  $99.75 is your average cost per square foot. 

The last calculation you need to do is take the average cost per square foot and multiply it by the number of square feet in your subject property.  Let’s say are subject property is 1100 square feet, so take 99.75 * 1100 = $109,725.  $109,725 is the ARV.

This is a great way to calculate your ARV, because it is based on what similar properties in the neighborhood are selling at right now.   

Benefits of Using Private Lenders

Benefits of Using Private Lenders

Private lenders and hard money lenders are very similar but have a key difference.  Private lenders differ from hard money lenders based on where their money comes from when they lend it to you.  Private lenders’ money will come from investments outside of real estate, whereas a hard money lenders’ money is part of a business built around real estate and real estate investing. 

Private lenders can often be new to real estate investing, which may make them a bit naïve.  However, that doesn’t mean you should avoid them.  Rather, be patient and willing to work with them, as their money might just be one of the greatest ways to obtain funding for your real estate transactions.

Here are a few reasons to use private lenders’ money for your real estate transactions:

  1. Private money is quickly accessible.  Because private money comes from investments such as CD’s, stocks, mutual funds and other similar investments, the money can be quickly converted to cash.  This accessibility can allow you great strength and speed when purchasing real estate.
  2. Private money is cash.  Cash gives us strength when making offers on real estate.  Buyers without cash have a hard time competing against those that can offer cash.
  3. Private financing is easy to obtain.  Private lenders often look at the quality of a real estate investment over you, the borrower.  If paperwork, credit checks, and income reviews are not part of what you want in your real estate investment career, private lenders will often over look all of this when the investment is good enough.

Purchasing real estate can be very rewarding and getting financing through private lenders can make the process easy, quick and additionally rewarding.

Successfully Working with Realtors

Successfully Working with Realtors

Since over 80% of real estate is sold through realtors, it is important to learn how to work successfully with realtors.

First, let’s look at what an agent can do for us:

  1. Promptly provide complete and accurate comps.
  2. Literally unlock the door to potential deals so we can see the property at our convenience.
  3. Submit all our offers immediately as requested with our amount and our terms.
  4. Promote our low offers to the seller and other agents, improving our chance of acceptance.
  5. Help us get the seller to finance the deals.

Realtors can help you find properties using the MLS (multiple listing service).  Not only can realtors help you find properties to make offers on, they can also help you obtain information on similar or comparable sales, also known as comps, using the MLS.  Comparable sales can give you an idea of what investment houses will sell for.  Realtors provide the most up to date and accurate comparable sales.  These comparable sales are one of the most important items to know when calculating offers.

Anyone serious about wholesaling or rehabbing properties needs to look at properties that are vacant and in need of work/repairs. Realtors can help you here. Realtors are the only legitimate way to see listed properties that meet the criteria of needing work and being vacant. Here is where a realtor can help promote your low offers to the seller and dramatically increase your chance of getting your offer accepted. Your offer is much stronger if you include as an addendum captioned pictures up close and ugly showing what is wrong with the property. This can make an amazing difference in getting your offers accepted.

While it may seem that all realtors will be happy to work with you, such is often not the case. Eighty Percent (80%) of new agents are out of business within the first year.  Worse, some realtors don’t even want to submit offers or give the third degree about your credit worthiness. They do this because they fear doing a lot of work and not getting a sale. You need to train them to work with you your way. Does it make sense to invest in learning how to buy at wholesale and then let a realtor teach you how to buy at retail and they make a big commission while you lose money?

A new investor will often come across to the agent community with what is referred to as “rookie-breath.” The agents think the newbie investor doesn’t know what he or she is doing and will attempt to get rid of them. This is a sign to them that they must do a lot of work with no commission money in return. Further, they see your low offers as an embarrassment in front of the seller who was expecting them to get them “all the money.” Hence, they refuse to submit those offers, don’t return your phone calls, or insist you do things that are difficult, costly or even impossible, such as making a huge deposit and proving you have cash ready to complete the transaction.

Finding good agents, and training them is the first, best, and easiest way to become successful in investing, especially wholesaling. The good news is that even if they don’t want to submit your low offers, they have a fiduciary responsibility to do so. It is not their job to decide the acceptability of offers. They are merely there to submit the offer presented to them and let the seller decide.

You can remind them of their responsibility. You can present the problem to their broker or/and the local real estate association. Do this and see how quickly they decide to submit your offer.

Don’t let realtors get away with submitting your offer verbally over the phone.  Remember that verbal offers will never work. Your offer must be submitted in writing to have a chance. Further, you will want to resubmit your offers ever two weeks or so. As high as 75% of the investment deals that are done are either on resubmitted offers or offers submitted as a back-up to a deal that is under contract. Hence, you will want your agent to resubmit your offers.

Finding agents who are also investors can be a great strategy. They see and understand what you are doing. They may even be willing to partner with you on deals. Hence, they will be quick to recognize the value of getting seller financing. Typical Realtors see seller financing as negatively delaying their commission collection.

To find investing realtors just ask receptionists if they have any realtors that are also investors. Then ask to visit with them. Not only are you more likely to get your offers submitted, these realtors can often show you where the bones are buried. Just a little selectivity and training of realtors can dramatically increase your success in real estate investing.

Make More Money by Finding Off the Radar Deals

Make More Money by Finding Off the Radar Deals

Off the radar deals are properties that are not listed with an agent. They have the potential to be more profitable because there is less competition. Obviously, being able to notice these quickly is critical because if it is a good deal it will go quickly.

The ability to find deals is critical, and it is equally important to find either buyers or investors for your deals. Hence, you will want to work on both areas all the time. In many cases, you can earn a year’s pay on a single deal!

Here are the six areas of focus to find Off the Radar Deals:

  1. Out of the Box Deals (Off Market)
    1. Probate/Estate
      1. Nursing homes (make certain your sellers are not senile!)
      2. Obituaries
      3. Funeral Parlors
    2. Preforeclosure: You can buy property with a built-in mortgage by getting a quit-claim deed. A properly drawn up Power of Attorney for your “mortgage assumption” can open the communication door with the mortgage company for the duration of the mortgage. A good attorney can help you put your property in a Land Trust where you become a beneficiary and executor. Good marketing will find buyers who love the fact that their down payment is their credit approval.
    3. Vacant Observation: You will want to learn how to spot vacant properties and then find the owners through software like “Real Estate Pro.” You can find cell phone numbers and even email addresses, in many cases, using websites like www.Intellius.com for $20.00 a month or less.
    4. “Don’t Wanters”
  2. Investor Clubs – Learn how to use and exploit these clubs.
    1. People with Money: Everyone you know either has money or knows someone who does. “Ask, seek and knock!”
    2. Hidden Deals: Watch how quickly inside secrets are shared as you smile and greet others.
    3. Rehabbers & Contractors: These people go to the meeting and could be your inside track to future success.
    4. Buyers: People who are looking for deals you can easily find will be there.
  3. Landlords – Key to the Mother-Load.
    1. Find Signs: Take pictures of “For Rent Signs.” Call them. Some will be looking for more deals, and some will have deals to sell you.
    2. RE Pro Software: Ask your sales person to cut you a deal.
    3. Lists Anywhere: Start looking for lists. Just about everything is in a list somewhere.
  4. Serious Marketing – What It Is and Why It Wins.
    1. Yellow Signs: More testimonies of success with “Yellow Signs” than anything else.
    2. One-on-One Visits. Go and see the people who can help you. Remember, people like to do business with people they like. Become a friend.
    3. Free Marketing: Learn to use emails, text messages, Facebook, Craigs List, YouTube, Smart Phones etc.
  5. Reticular Awareness – Develop a sense of what a good deal looks like. Learn how to smell the money.
  6. After They Say NO! – Master the art of offer resubmission. Change nothing! Resubmit offers every two weeks. Between two out of three and three out of four offers we initially rejected!  Ask to be a backup offer on deals under contract. Sixty percent (60%) of deals under contract fall through. Your chance of getting a good deal is much better once a deal falls apart.  Always do a thorough “dead deal autopsy.” Find out what the winner of the deal is doing with the property and who they are using to help them. How did they beat you?

Tips for Saving for a Down Payment for a Mortgage

Tips for Saving for a Down Payment for a Mortgage

Buying a home is typically the largest single purchase a person will make in his or her lifetime. When you are preparing to make a big purchase in real estate, it is important to understand the complexities of what you can afford, what everything will cost, and how to prepare for your purchase.

Before you start looking at homes, your first step is deciding what you can afford and what you want from a home. List your basic requirements such as location, size, and other features.

Then, you will need to save for a down payment for your home.

Different mortgage programs require different amounts for a down payment. If you qualify for a FHA home loan, you can purchase a house with 3.5% down. In addition, many other mortgage programs allow a down payment as low as 5% of the purchase price of the home.

If you are financially able to put 20% down, it can be beneficial. Lenders will not require you to purchase Private Mortgage Insurance (PMI). PMI is an additional cost built into your mortgage that protects the lender in the event of a default.

Here are some tips to help you save for your down payment:

  • Pay yourself first. Make saving a priority by setting aside a certain amount each month.
  • Consider having money automatically transferred in your savings account each month. If you never see the money, you are less likely to miss it.
  • Cut back on your Spending. Choose one item to give up or cut back on and put that money in the bank. This item could be a drink, which is a small expense that tends to add up quickly.
  • If you have the option, consider working overtime and add that money to your savings.
  • Get a second job or do freelance work to earn more money.
  • Sell stuff on eBay. eBay is the ideal place to offload your unwanted household items in return for money. You can convert your clutter into cash.
  • Eliminate the luxuries. For example, put your cable television subscription on hold.  Take your lunch to work every single day. Don’t go shopping for new clothes.

Over a period of twelve months, you could easily save a few thousand dollars. 

Why You Should Perform a Dead Deal Autopsy

Why You Should Perform a Dead Deal Autopsy

It is never too late to gain quality information from a DDA (Dead Deal Autopsy). However, somewhere between two-thirds and three-fourths of all deals are done after the original offer is turned down. Hence, resubmitting offers on a regular basis is great strategy to prevent a Dead Deal in the first place.

Gathering information about what could lead to future done deals or gaining a clearer understanding of why a deal was lost may be the “secret sauce” to success in real estate investing.

Obviously, when a deal is lost it can be invaluable to determine who got the deal, at what price and why. In almost every case, it is easy to find out who got the deal. Stopping by the property on lost rehab deals shortly after losing the deal could afford an opportunity to find out who now owns the property and just what kind of rehab they are doing. Getting business cards from contractors and sub-contractors is usually a snap, and the quality and speed of their work may be why you were outbid.

A little investigation could also uncover how the purchaser presented a higher bid but still made money. Maybe they saw how to open a kitchen, add a bathroom, or dynamically enhance the curb appeal.

Once you get in contact with the new owner, talk to them and see if they will share critical information on how they are able make a profit bidding higher than you. It is amazing the information people will share if asked.

On rental units, the concept is the same. Skilled investors will often show you how slight improvements to the rental units can make a large increase in the value of a property. For example, if rent can be increased by $100.00 a month, the property value goes up $10,000.00.

What you learn may not be what you want to hear but it will be what you need to know. If you do enough DDAs you will find there were cases in which you never had a chance. Your offer was only there to keep their favorite buyer honest. Wholesalers can lose deals to someone who just waits for your contract to expire.

In summary, mastering thorough DDAs will open doors to success. You will, one, meet the key people who can help you in the future and, two, understand how to correct your mistakes so you can win the next deal and make money on it.

3 Ways to Stay Connected to Your Cash Buyers

3 Ways to Stay Connected to Your Cash Buyers

In the real estate world, cash buyers are people who are able to purchase properties without needing to take out a mortgage or loan. They can be private individuals like retirees, lottery winners, heirs/heiress, or foreign or local investors. They can also be corporations with the capacity to buy properties with cash. If you have successfully built a massive cash buyers list then the next thing to do is to make sure you stay connected with them.

Having a good relationship with cash buyers can be very beneficial for real estate investors. They do real estate transactions faster than buyers relying on financing. Financing requires a lot of inspections, making the transaction more complicated, and, oftentimes, the buyer can fail to get approved for the mortgage loan. This would mean that the seller would have to repeat the same process all over again, spending precious time and money looking for new buyers for the property. These disadvantages that affect a real estate transaction are less severe when you are dealing with cash buyers, making cash buyers very important players in the real estate industry.

The relationship between the buyer and the seller is usually transactional, meaning it ends after the sale; however, this need not be the case each time. Instead, the relationship can be nurtured, making your past cash buyers a continuous flow of reoccurring business referrals and possible future clients. Of course, everything would depend on how well you were able to complete the real estate deal. You always want your clients to think of you as a nice, honest, competent, and trustworthy person so they are willing and wanting to call the next time they want to do business.

Here are 3 tips real estate experts shared how to successfully keep in touch with past cash buyers.

  1. Add Them On Social Media, Send Emails and Call Them

Online networking websites can let you contact and invite past clients to stay connected with you in a friendly and informal footing. For example, invite former clients to be your friends on Facebook. It’s a sure-fire way to keep in touch with them. Send emails or give phone calls to remember birthdays and any special occasions in their lives. Share home improvement insights and relevant real estate related news that they might find useful. These are just some of the ways you can make sure they won’t forget you.

  1. Drop By Bearing Thoughtful Gifts

Visit new homebuyers after they move in and bring them unique housewarming gifts like potted plants, a basket of goodies, a framed sketch or watercolour of their new home or a bottle of wine. It is also important that you make your timing right. Let them settle down in their new home first. You don’t want to barge in uninvited when they have just moved in and still have plenty of work to do. Visit them once or twice a year, especially on holidays, as an excuse to get reacquainted.

  1. Send Newsletters

Whether it is via email or snail mail, sending newsletters to your clients is a great way to stay in touch with them and, at the same time, give them useful information on what they might need and a gentle reminder of the services you offer.

Getting clients to remember you for future business may be tricky but the key is consistency. Nurture business relationships with your cash buyers and you will surely reap the best results over time.

Why Hard Money Financing is an Option for Investors

Why Hard Money Financing is an Option for Investors

Every investor must start investing somewhere.  If you are like me, you likely purchased a program, saw an infomercial, or went to a seminar and saw the great potential real estate can offer you.  You discovered that you can change your life with real estate investing. 

Investors often start with a “quick” cash method to “get money coming in.”  This quick cash method often involves starting their real estate investing business with a wholesaling technique, such as assignment of contract, double closing, or even bird dogging.  However, if you are like me, you have the goal to get into purchasing properties to rehab and then sell on the market for a significant profit.

As investors begin they may feel that investing in buy, fix and sell properties is out of reach for them.  However, it does not have to be.  Hard money financing can provide an opportunity for you or any investor to begin purchasing properties to repair and resell.

Hard money financing has a stigma that comes with it, which is that financing is extremely costly and extremely dangerous for an investing business.  Though it is true that hard money financing does carry with it a 12-18% interest rate, it is very important to understand that the financing obtained through a hard money lender is likely only going to be used for three to six months.  Hard money loans are short term loans; you want it that way.  It is also important to understand that you can, and should, deduct the costs of a hard money loan in your offer formula.  Deducting the costs in your formula helps you afford the financing and still make the profit you were hoping to make.

If you use a creative hard money lender, you can potentially get into properties with little out of your own pockets.  If you account for the additional costs of the lender you can still purchase real estate, even in the beginning, to fix and resell and, the best part, make far more money than you would likely make wholesaling properties.

Three Tips for Buying Tax Liens in Any State

Three Tips for Buying Tax Liens in Any State

Buying tax liens can be a very lucrative way to make income.  An investor can make 12% to 18% in states that sell liens.  Also, an investor can control their own investment without putting their money in the hands of another person.  However, understanding some strategies that will insure you have a profitable venture will make your investing easier. 

  1. When you buy a lien and fail to get paid within the redemption period you are going to need to foreclose in order to get paid.  Understanding what that foreclosure process will entail will help in your decision-making.  For example, will you need to hire an attorney to help you go through the foreclosure process?  If so what will his/her legal fees cost you?  Will you be able to recoup those fees when the judgment is rendered?  Knowing the answer to all of these questions, as well as understanding the process, will free you of a lot of stress and help make your investment profitable. 
  2. You need to know and understand what the redemption period is of the liens you are holding.  Redemption periods can go from six months to three years.  The redemption period is the time the homeowner has to pay you, the investor.  After the redemption period, you can proceed with a foreclosure. Each state will have a different period.  If you get involved with a lien deal, you are going to need to know how long it is going to take for you to get your investment to pay off.  There are secondary markets where you can get rid of a lien early, but you will usually pay a steep price to do so.  Having a good understanding of how long your money will be working for you is important.  You are going to want to know when you get paid.
  3. Understand the way you will buy your liens and collect your money when it’s due.  Will the county accept a personal check or require a credit card?  Will your money be mailed to you or will it be direct deposited to your bank account?  Will you be able to buy your liens using an LLC?  All of these things will be important as you move forward with your investing.  Understanding the correct way to pay and receive your money will go a long way in helping you succeed in your investing.  Understand the details and you will make the dollars. 

Understanding the Investor’s Mindset as a Realtor

Understanding the Investor’s Mindset as a Realtor

Most of your traditional buyer clients are probably very similar in what they’re looking for in a property.  They want a property that is within their budget (or below their budget), that has as many bells and whistles as possible, and that is in a prime location.  Most of your buyers want as much as they can get for a price they can afford.

When you work with buyers like this, who are looking for a residential property, you will likely discuss various finishes, square footage, and building features.  Many of these buyers will purchase based on whether or not a property feels like home to them.  Little research or thought may be put into figuring out whether their dream home is a good investment, even though their home purchase is often one of the largest investments that they will make.

Many homebuyers are accidental investors.  They’re looking for a home that appeals to their “American Dream” ideal, and they end up making one of their biggest investment decisions in the process.  Although the real estate investor is looking at the same market as Sue and Joe first-time homebuyers, the investor is looking at the market through a very different lens.  By understanding the differing mindset of the investor, you will be able to serve your investor clients more effectively.  While Sue and Joe first-time homebuyers want to know about school districts, landscaping, and kitchen layouts, your investor client is less emotional about the transaction and more focused on these particular questions in his/her decision:

  • What is the potential value in a property?
  • How much will it cost financially and in terms of resources to receive the property’s potential value?
  • What are the risks associated with this acquisition?

Typical buyers (accidental investors) may end up making profitable decisions and coming out ahead simply because their goal of finding an appealing property means that they acquired a hot property that will most likely appreciate at a steady pace.  This is the mindset of many buyers.

The strategy of real estate investors, however, is very different from this “ideal property” mindset that most of your buyer clients possess.  Investors are looking for deals.  They are looking for properties that will return more than the initial investment.  If investors lose sight of their wealth-building goal and purchase a property on a whim or because of its “bells and whistles,” they may end up making a dangerous, costly investment error that will take them a long way from their wealth-building goal.

Part 2 – Getting Started with Residential Land Development

Part 2 – Getting Started with Residential Land Development

Part 1 of this series discussed the initial steps to getting started with residential land development. We covered financing options, finding partners, and finding properties. Part 2 will pick up where we left off and teach you 3 more steps you need to take. Because we covered 3 steps in the first article, we will number the following steps 4, 5, and 6.

4. Preliminary Due Diligence

After identifying a potential property, you will need to explore the codes, zoning regulations, and development processes for the local municipality or jurisdiction. Although you can go through the process to change the zoning or use for the property, it is typically a long and painful process that doesn’t guarantee your proposed changes will be approved. It’s ideal to keep your development conforming with existing codes and regulations.

5. Obtain Estimates For The Development

You will likely need to talk to several different contractors to get bids on the work that needs to be done. It’s wise to use contractors that have done similar projects within the area. They will have more experience working with the local city. Their experience will help them understand the requirements and costs for the project in the area. In addition to getting bids from the contractors, make sure you talk with multiple city officials multiple times. You need to make sure all of the stages of the application and approval process are covered. This process can include, but is not limited to:

  • Filling out and submitting paperwork
  • Meeting with city officials
  • Various 3rd party tests and permits
  • Purchasing water rights
  • Application fees
  • Construction inspection fees

6. Negotiation

Now you should have a good estimate on the timeline and cost to execute the development. You are ready to run numbers and make an offer to the seller. One of the keys to making an offer and negotiating is understanding if there’s any part of the development process that the seller is willing to complete. If it’s a big enough project, the seller may be willing to seller finance or subordinate the property. With the amount of information needed for a development project, it’s usually a good idea to have at least one meeting with the seller to discuss as many details as possible. Then you should present an offer that contains multiple options to make the deal happen.

Bear Market Looming

Bear Market Looming

Growing up as a kid, no matter how bad it got, there was always the giddy feeling in the back of my mind around Christmas. Christmas endears presents, family, and time off from work or school and all that entails. I feel the same way about bear markets. Once the trend reverses, stocks and markets move fast. As an option trader, I see potential, opportunities, and lots of volatility. Put contracts are the method of operation and best choice for bearish markets. The put contract has a natural advantage over its call cousin, and that is in addition to deltas and gammas working for you. Puts also have Vega’s working alongside the other two. That is because as markets fall, volatility rises, and Vega is the measurement of how the option price increases as volatility rises. Options generally prefer faster movement of the underlying due to time decay. Since markets tend to fall faster than markets rise, this provides ideal conditions for put. Fast moves, increasing option prices, and leverage all point to the put contract.

Dow Theory suggested markets move in cycles. Cycles last 4 to 7 years on average. With 2016 being at the markets 7 year high, the Bear market is overdue. Now I don’t suggest we run around like Chicken Little saying the “sky is falling.” However, if we are prepared, we shall not fear, and maybe even profit from it. Draw your lower trend lines, your support levels, check your moving average cross overs, and then when the market changes, change with it and buy some puts.

Three Questions to Ask Yourself Before You Start Investing

Three Questions to Ask Yourself Before You Start Investing

As you start investing in real estate, ask yourself these three questions:

First:

What are your real estate goals? Outlining what you want your investments to accomplish will help guide you in the right direction. When you first start, it is like planning a vacation or cross-country trip. Discuss with your spouse or partner the core reason you are investing. Is it for retirement, for your children or grandkids and/or for supplementary income? Different strategies are needed for different reasons. Some yield returns more quickly (such as wholesaling), while others are for longer-term investments (such as buy-and-hold rental properties).

Second:

What is your time commitment? How much time are you dedicating to your efforts? Is this more of a hobby or do you want it to replace your day job? You need to be honest in your assessment of timing and what you are willing to give-up or reschedule. There are limitations to your weekly obligations.

If you are already busy with a full-time job, school or the kids, then you should asses your schedule carefully. Experts and seasoned real estate investors say beginners should realistically evaluate how much time they will be able to carve out of an already full schedule.

Third:

What is your focus? Where do you want to start investing? If you need money in the short-term, then you should focus on wholesaling. If you have the time and the expertise (or the network), then you might undertake buying a fix and flip. If you want residual income, then a buy-and-hold property would be a good strategy for you.

Assessing where you are financially will also help you decide where to start. Wholesaling takes little to no money down, while doing a fix-and-flip or buy-and hold will take a significant amount of cash. Some investors do not understand that many lending institutions will only lend a portion of the funds for a purchase and will not lend additional money for repairs.

Summary:

Assessing your goals, time-commitment and financial focus will help you be more strategic in your efforts to be a successful real estate investor. Additionally, being clear on your objectives will help you focus your efforts and avoid wasting time.

How to Check and Repair Your Credit

How to Check and Repair Your Credit

People who never had to do anything with credit scores and then encounter them for the first time when applying for a loan can often be baffled by what they learn. A

or a school, car or mortgage loan, your credit score will help determine your approval.

Even insurance companies charge higher rates to people with poor credit history.

 

Where To Check Your Credit Score

 

It is important to know your credit score, particularly if you are planning to apply for a credit card or a loan. You can have more than one credit score and your credit score can vary when you check it. You are entitled to a free credit report from each of the three credit reporting agencies: Equifax, Experian, and TransUnion, once every 12 months. You can also review your credit score for free at www.AnnualCreditReport.com.

 

The Difference Between no Credit Score and a Bad Credit Score

 

Credit scores can be determined through factors like your payment history, amounts owed, length of credit history, total debts and recent inquiries. However, there are times when a person has no credit score. This happens when a person has never used a credit card or never had a loan payment to make.

 

There are also cases of people with bad credit scores. It is harder to improve a bad credit score than it is to build a credit score when you don’t initially have one. Bad credit is defined as a past failure to make your obligated credit payments on time, resulting in a credit score below 620.

record items, and too many inquiries.

 

Whether you have no credit or bad credit score, you need to work on improving your credit.

 

Ways To Fix Credit Scores

secured credit card is backed up by a savings account to be used as collateral on
secured credit card is backed up by a savings account to be used as collateral on
the credit available on your card and can help establish the credit rating of the

 

People who find themselves in a situation where they have no credit scores are usually advised to apply for a secured credit card to start their credit history. A

 

 

cardholder. The key to increase your credit score after obtaining a secured credit

another credit card.

 

People with bad credit scores can begin the “repairing” process by requesting free credit

company who listed the information on your credit report and wait for their response for at least 45 days. If you were successful, the bureau will make the necessary changes and alert other credit bureaus of the changes. You will be able to receive an updated copy of your credit report.

 

It is also wise to deal with past dues as it affects 35% of your credit score. There might be instances where some of your accounts are charged off but if you want to get approved for new credits and loans, settle your charged offs. Remember that you are still responsible for your charged off balance and they can make loan applications in the future hard or even impossible to get.

 

There are several free credit consultation companies who are willing to assist and advise you with ways to improve your credit history.

 

Applying for a secured credit card is also a good way to quickly rebuild your credit score, as these cards are designed to help people with a credit problem.

 

Repairing your credit scores cannot happen overnight and some negative marks can remain on your credit report for as long as seven years. That is why it is very important to maintain your credit score.

Best Ways to Find Off-Market Properties

Best Ways to Find Off-Market Properties

Most seasoned investors and home buyers know that one way to find a great deal in real estate is to buy properties that are off the market. The reasons why property owners skip the process of officially listing their home on MLS vary but there can be no denying that these hidden gems are there, just waiting to be unearthed.

Nothing can be more frustrating to a homebuyer than finding out that they are swamped with a lot competition for their dream house. What they don’t know is that there are a lot of great properties for sale that are not on the market. These properties are called off-market properties and also commonly known to real estate professionals as “pocket-listings.” Having said that, let’s discuss more ways to find off-market properties to benefit from.

Real Estate Agents

After finding the neighbourhood you want to buy a property in, you’ll want to find the top agents in the area and ask them for any pocket listings they have. Hiring an experienced agent that has numerous contacts with other top real estate professionals is not a bad idea, either. Remember that these real estate agents network with other agents who might have a list of homeowners thinking of selling their homes.

Direct Marketing

If you’re willing to spend extra cash to lure possible property owners to sell, then direct marketing is another strategy you can use. You can send out direct mail cards or postcards with straightforward messages saying that you’re willing to buy their property. There are a lot of practical tips to do this. One real estate professional even advised to handwrite the name and address of the homeowners your sending the letter to for a personal touch.

Estate and Divorce Attorneys

Real estate and divorce attorneys are also good sources of information about off-market properties. Reasons like death, illness, and divorce often cause people to keep the sale of their home quite so they can avoid the additional stress involved in the selling process.

Joining the local networking groups like BNI or attending auctions are great ways to meet estate and divorce attorneys.

Local Contractors

Local builders and tradesmen are great sources of information for finding potential real estate investments. Since they deal and work with people and other investors on a regular basis, they are the more likely to know about homeowners selling their property off-market.

Public Records and Expired Listings

Checking your local newspapers and government websites can help you find properties that will be auctioned soon.

Selling a house can sometimes be frustrating for some sellers when their listings expire. Following an expiration of their listing, sellers might refuse to put their property on the market again. However, this does not mean that the seller no longer wants to sell.

There are many ways to locate great off-market properties. It’s just a matter of finding the one that works for you.

5 Ways to Get Past the Gatekeeper

5 Ways to Get Past the Gatekeeper

Who is the gatekeeper? The individual who perceives that it is her/his job is to control the flow of information or limit what information is shared. A person or “technology” that blocks or withholds information needed to complete a job.

Gatekeepers are just doing their job, trying to be efficient and protect those in their office from distractions. So, how does one get around the gatekeeper who is doing a great job?

Below are five suggestions to help you navigate around the gatekeeper. These ideas are not in any particular order, however, the first two are ALWAYS critical.

  1. Treat the gatekeeper as a person. Call them by name and treat them with respect. Don’t be awkward or demining. Actively engage with them. Don’t get too personal, don’t pry, but you can gently probe. When they sense you are a professional and respect their position, your ability to accomplish your job increases. Treat Gatekeepers Like Gold.
  1. BE HONEST because integrity counts. They are honest, and they leave nothing for the listener to disagree about in evaluating if they will send you along (to the person or a voicemail). Be direct but truthful about the purpose of your visit and why you hope to connect with them (remember, you are there to help THEM make money).
  1. Practice good communication skills; learn to listen more than you speak, and be prepared with a simple, rehearsed script of why you are calling/visiting. Let the gatekeeper take the opening position. Listen carefully to their thoughts and concerns. Great negotiators learn to flip the discussion around politely and quickly – then ask.
  1. Relax! If you are nervous, stressed or tense, you will show those emotions and it might transfer to your voice, your behavior and your choice of words. If you are stumbling for words or for control of yourself, this will have an impact on how the gatekeeper perceives you and how they receive your request for access or information. Take some deep, slow, quiet breaths to put yourself at ease. When the Gatekeeper answers or greets you, smile and confidently tell them with energy and ease why you are calling (or visiting the office).
  1. Keep it short and sweet: no long speech for the gatekeeper. They have great deal of important information about the potential cash buyer or real estate agent. The gatekeeper has positional power and influence. One of them has the power to connect you with the right person. However, they do not hold any authority. When the gatekeeper asks, “may I tell him/her what it’s regarding,” it is not the time to fill in the gatekeeper. It will waste your time and it might irritate them because they still cannot make the decision. Using a relaxed and calm voice, speak slowly and articulately and don’t divulge more than necessary.

Negotiation in Real Estate

Negotiation in Real Estate

You might have heard the expression, “everything in real estate is negotiable,” and it is true! Nearly every part of the purchasing phase of a real estate transaction is negotiable. Understanding more about the negotiation process creates additional options, and confidence increases the chance of getting the outcomes you desire.

Negotiating is the process by which two or more parties with different needs and/or goals work to find a mutually acceptable solution. Because negotiating is a process, each negotiating situation is different and influenced by the process and what compromises are available.  We often look at negotiating as unpleasant because it implies conflict, but negotiating need not be characterized by bad feelings or angry behavior. 

If you do not think you are good at bargaining, just reflect on how much we all negotiate in our daily personal and professional lives.  Everything from when a project is due to when a meeting is scheduled is negotiated. 

Sometimes it is easy to negotiate; however, if there is a great deal at stake or we are anxious about getting a particular property, then it seems more daunting and even difficult. 

Here are several tips to improve your effectiveness in negotiating:

Timing Matters

There are good times to negotiate and times that limit a deal. In real estate, the longer the home has been on the market, the better! If someone has just listed a home, then they are far less likely to negotiate.  Additional considerations include: Does the listing say it must sell fast? Is the home already vacant? Gathering additional data and choosing when to make an offer is critical to your ability to time the offer.

Evaluate the Data 

Negotiation includes doing research and, ultimately, both parties are trying to find a solution acceptable to close a deal. Ideally, one needs to understand the other person’s needs and wants, with respect to the listing. How much did they previously pay for the home? What is the condition of the property? What data do you have about the listing? Is the home vacant?

Remaining Neutral 

It is normal to become emotional during the negotiation process.  However, if one gets more emotional, they are less able to channel their negotiating behavior in a constructive way.  It is important to maintain control and not let pure emotions control the deal. There are also times that the purchaser gets to emotionally attached to a property.

Explore Options

Before entering into a deal, prepare some options that you can suggest if your preferred solution or price is not accepted.  Anticipate why the other person may resist your offer, and be prepared to counter with an alternative.

No Need to Argue  

Negotiating is about finding solutions and arguing is about trying to prove the other person wrong.  When negotiating shifts into an effort to prove the other one wrong, no progress is gained. Do not waste time arguing. If you disagree with something, state your disagreement in a gentle but assertive manner, emphasizing what you want to achieve.

Conclusion    

Negotiating is a complex process; however, it can be mastered. If you focus on what you want to have happen, practice these suggestions and utilize the professionals on your power-team, you will be a strong negotiator and win over the deals you desire.

Getting Started with Residential Land Development

Getting Started with Residential Land Development

There are those of you who would like to pursue land development, but you lack the knowledge and courage to do so. I’ll try to help you learn a little more about it with 3 basic tips. The courage part is something you’ll have to work on yourself. Get some guts dude!

  1. Discuss Financing Options with Banks, Brokers, and Private Lenders

It’s common practice to have a discussion with a bank before buying a car or house. This helps you figure out what you can afford. It also helps you understand the shopping process and what you need to do to secure the loan. The same applies to pursuing a land development project. Find out how much money is needed for a down payment and what loan terms are available. This will help you understand what types of projects will work for you. You will also know if you need to bring on any partners. This takes us to tip number 2.

     2. Find Some Partners

Don’t let greed get in the way of bringing the right partner into your project. You’re likely to lose a lot more money with ‘rookie mistakes’ than you would lose by sharing the profit with a good partner. I use 3 different types of partners to do development projects.

  • Private money lenders will loan the money needed for the project and have some advice or resources that will help you.
  • Joint venture partners are also a great option. They invest their own money and can offer expertise and effort.
  • Other investors and developers are important if you want to pass on the project for a finder’s fee.

      3. Find Some Property

As with most real estate, a good real estate agent can be helpful in finding the right property. Search the MLS or websites like Redfin.com for properties that are oversized compared to the surrounding properties. These are the types of properties that can be subdivided into smaller lots. You can also drive around your local market and search Google Maps for oversized properties.


    Go through these 3 steps and start finding some development opportunities. You can learn and network while you go through the process. Peace be the journey.

Suggestions for First Time Flippers

Suggestions for First Time Flippers

Buying real estate properties for a bargain, fixing them up and then reselling them for a profit is a great way to make money as a real estate investor. This is often referred to as “house flipping” or doing a fix-and-flip.  You look for a home, buy it cheap, fix the home up, then sell it for more than what it costs you to buy and fix it up.  You can make a huge profit. There are a few ways to improve the experience or ensure you do not lose money.

Plenty of real estate savvy investors are making money with fix-and-flips, but while it looks and sounds easy to do, house flipping has some risks involved. If there are more repairs than estimated, the flipped property does not sell immediately and/or you encounter other unexpected issues, one might not break-even.

Here are several suggestions to help you be successful:

  • Get a Mentor:

Successful “flippers” educate themselves and know the ins-and-outs of the real estate market. If you are just getting started, one of the ways you can get off on a good foot is by finding a successful house flipper to mentor you. The things these seasoned investors have experienced or learned along the way are invaluable. Offer a percentage of your profit for advice if you need to. Then do your research on properties in your local area and find a house you want to make an offer on. 

  • Save Money On Materials

Buy the materials to fix up your house yourself.  Contractors do supply materials but they will mark up prices. If you buy the materials yourself, you will save money and only pay for labor. 

Because costs for materials vary, it’s best to get to know your local stores. Some stores who offer discounts to contractors will give you the same deal if they know you are an investor and plan to do more than one house. Don’t be afraid to ask for a discount.

Home Depot, Lowe’s and Costco offers great deals. Also watch for any clearance sales on materials. You can also go to second-hand stores to find great deals at a lesser price than buying new materials.

  • Save Money on Labor

Some investors buy a house during off-season. This way they can complete the job on time since contractors have less of a workload on their hands and can focus more on the job you have for them. Contractors are sometimes cheaper in the off-seasons.

Hire reputable sub-contractors instead of a contractor and run the job yourself. This will save you money because a contractor also marks up the price of the sub-contractor they hire. 

Doing some of the work yourself will also cut labor cost.

  • Save Money and Time by Using a Realtor

Once the home is fixed-up and you’re ready to sell the house (vs. keeping it as a buy-and-hold property), studies show if you use a reputable real estate agent, your property will sell quicker than selling without one. The longer you hold on to the property, the more holding cost you incur. Realtors know plenty of possible buyers and having them list your house on the MLS helps sell your property faster. While they are selling your house, you can spend your time looking for your next deal.

Overall, utilizing a few basics will help you in the process of doing a fix-and-flip. All it takes to be successful is having the right attitude and information. And getting out there and doing it.

Knowledge + Action = Results

4 Steps to Overcome Analysis Paralysis

4 Steps to Overcome Analysis Paralysis

Most beginning investors will deal with analysis paralysis or overthinking a situation so that action is never taken.  A couple of the biggest causes behind analysis paralysis are lack of confidence and fear of failure.  Beginning investors feel like they do not know enough to take action.   Here are some steps that can help one overcome analysis paralysis.

  1. Remember your goals and what you would like to accomplish with real estate.  Write you goals down somewhere you can look at them on a regular basis.  If you have not set goals, you need to.  Having goals in front of you will help give you the motivation to take action.
  2. No one is going to do it for you.  This is your business so don’t count on someone coming to help.  You need to take action because if you don’t, things won’t happen. 
  3. Find your fuel.  This is a key in getting moving.  This is also different for everyone.  Why do you want to invest in real estate?  What will investing in real estate help you achieve?  Lite that fire within you, start taking action, and never look back. 
  4. Are you willing to do what must be done?  Investing in real estate is not easy.  It takes perseverance.  You will be told no over and over again.  The investors that are successful figure out how to get through whatever obstacle is put in front of them.  They are willing to do what must be done to be successful. 

Taking action with investing is the most important thing we do.  Of course we need knowledge but if knowledge never turns into action we will never make money.  It is important to understand that we will not be perfect as we get started investing and we will make mistakes, but it is all part of the learning process.  As we continually take action, we will make money investing in real estate.   

Confidence Gains Gains

Confidence Gains Gains

The year was 1984, and I was living in Southern California. I loved to ride my skateboard everywhere I went. That summer I spent most of my time at the bottom of pools and half-pipes, riding what I could, not daring venturing to the top, for it was too high and I had too much fear.

In skateboarding, dropping-in is the method of standing on the tail of the skateboard, hanging over the edge of the empty pool or half-pipe and then stepping on the front of the board so you drop yourself over the edge. I remember spending most of that summer staring over the edge, never actually dropping-in and never realizing the benefits that come from dropping-in because I was too afraid to do it. I always walked down into the bottom of the pool and had to pump myself up, requiring more work and less reward. I finally did drop in at the end of that summer, with an uneventful fall. But I got up and did it again. I could probably do it even to this day because the fear is gone and the confidence remains.

As a new trader, I learned the rules of proper trading. As I became better and gained experience, my trades did too. However, what I learned did not always translate into trading profits.  Knowing and doing are two separate things. Confidence in your trades can really translate into more profits. Act on your beliefs! Trying and failing is far less painful than not acting and missing the trades due to fear and lack of action. Confidence is said to breed more confidence. Have faith, trade your rules, and drop-in when the trades present themselves. Life is better when you take a chance, a well-planned and practiced chance, where odds are calculated. Never-the-less, “act or not to act” is the question and the answer.

Three Common Obstacles for New Investors

Three Common Obstacles for New Investors

The career of a real estate investor is riddled with obstacles. The very job of an investor is to find and fix problems and overcome obstacles. However, there are difficulties that can blindside new investors and stop them before they even start. This article will illustrate three common obstacles investors will face upon entering the business.

  1. First and foremost, new investors will be hit with the realization that real estate investing is not a get rich quick program. This job can be equated to running a marathon rather than a sprint. Although a person can make sizable sums of money rather quickly, a person will not get rich overnight. In order to make it long term, a person must be persistent and consistent. There must be discipline to complete the necessary tasks to be successful. Therefore, the first obstacle is to overcome the idea that you will be able to retire with little effort.
  2. The second obstacle is gathering the right people for your power team. A successful investor will need other industry professionals to help with their business. The right person for your power team is someone that will support you in what you are trying to accomplish. We need to surround ourselves with like-minded individuals and limit our interaction with negative people. There are many industry professionals that have a limiting mindset and will only serve to bring you down; therefore, these connections should be avoided at all costs. Work to bring positive and supportive people onto your power team.
  3. When a new investor jumps into the game they are usually anxious to gobble up all the information they can get. There are countless “experts” in the field that have a special way of making the business work. You can jump from video to video and article to article outlining all the “best” ways to make money in the real estate industry. This information overload should be avoided at all costs. A new investor should find one strategy and focus on it until they are comfortable enough to move forward without new information throwing them off track. It is easy to hear so much information that it places you in a state of inaction. Beware of this trap.

All new investors will encounter obstacles that are unknown until they pop up. All new investors should prepare themselves to overcome the three difficulties outlined in this article. Remember, stay focused and be consistent to meet with success.

How to Find International Real Estate Investors

How to Find International Real Estate Investors

The United States real estate market is for sale. Over the last several years there has been a lot of international interest in our housing market. The majority of foreign investors are buying in Florida, California, Texas, New York and Arizona. Canadians lead the international front for the most foreign investors in our economy. Combined, these investors have bought about $102 billion dollars’ worth of real estate, and 50% of them are buying with cash, per statistics from the National Association of Realtors. As a wholesaler, you do not want to ignore this class of cash investors. Sharpen your pencils, and let’s get to work. Let’s discuss some fantastic ways for you to find these investors, especially if you work in any of the states I listed above.

  • Realtors: Build relationships with realtors in your area that specialize in working with international buyers. Let them know you are an investor who wants to bring investment deals to their clients. You can find international agents at larger brokerages like Sotheby’s, Keller Williams, ReMax, and many others.
  • Foreign Realtors: Make sure to build relationship with foreign realtors as well. Talking to agents in the home countries of these investors is a great, quick way to get to them. Let these realtors know you want to work with them. Let them know you can bring great deals to their clients who are interested in investing in the United States.
  • Local Community Groups: Find local community groups with an international presence like the Asian Chamber of Commerce. Go to their events and network. Find people in the group who can connect you to foreign investors.
  • Get Online: Setup accounts on sites like LinkedIn. The online community is vast. Search out online groups for international investors and advertise yourself as a wholesaler who can help foreign investors find deals.
    • Try to work with the Association of Foreign Investors in Real Estate. Their website is http://www.afire.org/. This site has a wealth of information on foreign investment trends in the states and many other topics that can help grow your business.
  • Network: Get out to local international community events in your area. Talk to everyone let them know you are an investor who can help them or anyone they know find great real estate investment deals.

This is a market missed by MANY wholesalers who are trying to grow their business with real, committed investors. Don’t be afraid to approach these investors just because you are new or wholesaling. They all care about the numbers on the deal, and I know you can help them find many transactions. Add this group of investors to your buyers list, and I know it will make a great impact in your business.

6 Ways to Use Facebook to Build Your Real Estate Business

6 Ways to Use Facebook to Build Your Real Estate Business

You have probably noticed plenty of advertisements for various products and services on your Facebook page every time you log in to your account, and you may have even clicked on some of these ads to learn more about it.  Initially, you had no plans of buying, but because of the time you spend on Facebook and the frequency of these ads passing your page, you somehow found yourself convinced and planning to purchase. 

The use of social media such as Facebook as a means to platform your real estate business will prove to be one of the best moves you ever make.  According to a recent study, Facebook is the most used social networking media among real estate professionals and other businesses because literally almost everybody has it, and you can easily spread the word about your business through ads, conversations, or by creating a business page.

By harnessing the power of Facebook, I have found these tips helpful to building my real estate business.

  1. Be Visible

First things first, setup a Facebook page for your business.  Make your presence known by sending invites to “LIKE” your page to your contacts and clients.  Ask family and friends to share or recommend your business page.  Having your presence known makes it easier for prospects and clients to connect with you, increasing customer retention and loyalty.

  1. Post Stunning Photos with Detailed Captions

Make sure that the pictures of real estate homes or properties you are posting are appealing enough to make it to sell.  People love beautiful things and there is nothing better to capture your prospective clients’ attention than beautiful pictures of the properties you are selling.  As an added bonus, people may even share them, making more people see what you are selling.

Don’t forget to post pictures of your buyers with their new home.  People love real life stories with happy outcomes!

  1. Share Interesting but Valuable Information Related to Real Estate

Give practical advice like how to increase the value of a real estate property through DIY projects or share links about interesting real estate topics.  Encourage people to interact with you by asking real estate trivia questions or by answering their questions about the real estate business.  Not only does this make your business page active and interesting to your followers, answering their queries will create connections with possible loyal clients in the future.  Fans and likers may even recommend you to people in need of your services if they like you.  It really pays to be helpful.

  1. Building Relationships with Your Fans and Likers

As I mentioned earlier, having conversations with your fans and likers creates a connection between you two and, in the long run, builds relationships.  Like any other relationship, trust and dependability are very important, especially in business.  In the real estate world you are not just selling houses, you are also selling yourself.  There are plenty of studies that show that people are more likely to talk and do business with you if you are warm, trustworthy and dependable.

  1. Post Regularly

Now that you have made your presence known in the Facebook community, being able to maintain a consistent presence may be a challenge when you are struggling with your busy schedule.  It is wise to always remember to incorporate it with your daily routine until it becomes second nature.  Other realtors make a big mistake by not continuing to stay active after setting up their business page, not realizing that Facebook is an interactive media platform.  By posting regularly, you are letting people know that you are still in business, and it keeps their interest in your page active.

  1. Connect Your Facebook Page with Other Social Media

After successfully launching your business page on Facebook, don’t sit back and stay content.  Facebook allows you to connect with other forms of social media, so take advantage of it by letting your followers know where they can find you.

The Importance of a Positive Attitude in Real Estate Investing

The Importance of a Positive Attitude in Real Estate Investing

Having a positive attitude is extremely important to becoming successful in real estate investing, as it is in any successful endeavor in life.  Negative speech and thoughts can be debilitating and keep a person from accomplishing their goals.  Learn to change the way you talk to yourself and others and you will change the outcome of your life’s journey. 

For example, let’s look at the subject of attempting to get into better and healthier physical shape.  If your thoughts and speech follow the lines of, “I can never lose weight,” or “I can’t stop eating sweets,” or “No matter how much a work out, I never get more muscular,” you will create a mind-set that causes you to lose faith in the fact that with proper eating and exercise you can lose weight, get stronger, be healthier and look better.  It is important to start have the right self-talk. Try changing the phrases you repeat over and over again to, “I know I can lose weight if I eat healthy foods and exercise regularly,” “I will gain muscle if I work out 3-4 times a week consistently,” and “I enjoy eating healthy protein, vegetables and fruit, and I feel better when I do.”

This same technique works when it comes to investing in real estate.  If you keep making statements to yourself and others such as, “I can’t ever find the time to do this business,” “There are no deals to be found in this area,” “There are too many other investors in my area to compete with,” or “People will know I’m not very knowledgeable in investing when I talk to them” then stop. Change your self-talk to, “If I use proper time management I will find the time to be successful at this business,” “The more offers I make, the more deals I will create for myself,” “By being persistent, I will be the one to find the deals in my area,” and “The more times I talk with people, the more confident and knowledgeable I will become.”

Every endeavor and business adventure is a learning experience. With faith and confidence in yourself, you can be successful at the things you work hard for.  Talking in a positive manner can help build confidence and faith with which you can succeed, especially as your experience starts to prove your statements true.  Whatever you say and think will become your reality. Change the way you talk to yourself and others and you will change the direction of your life.  Now, go out and make it happen!

What is a Real Estate Power Team and Who Should be on Your Power Team?

What is a Real Estate Power Team and Who Should be on Your Power Team?

Investors who have been in the real estate business for quite some time are familiar with power teams and often belong to one. A real estate power team is the assembly of a group of people who sell products or services to the same customer without taking business from each other. This group of individuals agreed to form a team that will work together and committed to bring referrals to each other. They are important when building a business empire because they are allies that protect each other from financial harm, quickly generate finances, and assist each other in achieving business goals.

It may take a while for you to put together a successful power team, and one good way to find possible team members is through referrals. Another way to find team members is by contacting your local REIA where you will be able to meet other investors who might want to be part of your team.

There is a long list of possible people with complementary professions that would be great for your power team, and if you are just starting in the real estate industry, these people are the most important to establish a working relationship with.

Mentors 

Generally, people would be honoured if you asked them for advice, and looking for someone who has successful experiences in the local business is a smart way to become successful yourself. One thing to remember when you find someone is to offer financial compensation for his or her valuable time and never expect someone to help you for free. Time is money in the real estate industry. In fact, time is money in any businesses whether it is in real estate or not. Also, be aware that mentors are not there to do the things that you cannot do. They are there to share their experiences.

Realtors

A licensed and established realtor on your team can help you find the right properties in your local market worth investing in. They are a fountain of knowledge about the housing market conditions and the neighbourhood. Having a reputable real estate agent on your team will ensure that you will be given accurate information about the property — its condition, price and value.

Accountants

A real estate business will require a good business accountant.  They should be chosen carefully and should be able to calculate if your business is making a profit through the inflow and outflow of cash. They should also be able to minimize expenses, save on taxes and create an accounting system that you can easily use when tracking your expenditures and incomes.

Lawyers

Purchasing and selling properties is a legal process and having an attorney who is specialized in real estate law on your power team is very important. A good lawyer will be able to protect your company from litigations and assist you with any legal particularity related to your business organization.

Contractors

Finding a good contractor is tough because they are always in demand. However, if you already have one on your team then you are in possession of a great asset. Contractors can give you useful information about the building processes, like how much work a property needs and how long it would take to get that work done. They need to be really handy with repairs and remodelling of a property. They could also point you to useful and reputable sub-contractors like electrician, plumbers and landscapers that they have worked with before.

By now I hope you have a good idea about the people to look for when starting your real estate power team. As you grow in your real estate business, there will be more people that you will need on your team to help your business empire run smoothly.

Top 5 Reasons for Working with a Real Estate Power Team

Top 5 Reasons for Working with a Real Estate Power Team

In order to successfully manage a successful real estate business, a smart investor needs a good power team for help and support.  A power team is group of people with complementary professions working together with the same clients without taking business away from each other. One of the biggest mistakes rookie investors make is thinking that they have to do things themselves at the beginning of their career and build a power team later when they are successful. Working hard is not enough. It’s time to work smart!

There are plenty of reasons why good teamwork is vital to a business. Not only does it get work done on time, it also gets the job done well. Here are the top 5 reasons why investors should consider being part of a great power team.

Your power team can help you find deals.

In real estate investing, it is important that you find deals — most of which you will get from referrals. Referrals can easily come your way if you’ve made a strong working relationship with people in the same business industry. Sending referrals to your other team members can help you establish a good working connection with them and will make them want to help you in return by referring you to clients who might be in need of your services. Take for example, an events coordinator referring a client to a good florist and caterer on her power team. Of course, the florist or the caterer will also recommend the events coordinator to clients in need of one.

Your power team can help you set up business.

According to experts, when setting up a business you might want to consider employing the help of people who can advise and help you set up and run your real estate business. These are people who are professionals in their own fields like accountants, lawyers, and computer consultants who could do a better job that you would. To illustrate, if you are a lawyer then you can write all the legal documents of your business yourself; however, you would still need the services of an accountant to help you manage the financial aspect of your business, especially when tax season comes.

Your power team can help you market your business.

In order for you to thrive in this real estate investment business, you will need a good marketing manager. A marketing consultant in your team should be well versed with marketing strategies like online and offline advertising, including speaking engagements, direct mails and promotional pieces, to help you market your business and increase your sales.

Your power team can help you when repairing your properties.

Real estate properties will need on-going maintenance, remodelling, and repairs in order to stay on top of the game. Working regularly with a good and reliable contractor can get the job done faster and at a lower cost. Also, having a trusted contractor on your team will provide practical advice, like where to find supplies and materials at a cheaper cost.

Your power team can help you with financial planning and solving business-related problem.

Let’s face it; there are projects that are just too big for one person to handle. Sometimes it takes a collaborative effort of people who specialize in different areas of the real estate business to find the best solution to a problem. It also matters a lot if the people on your team are experienced and successful in their particular industry. For example, an insurance agent can best help you understand the ins and outs of real estate investing by educating you of your liabilities as an investor and what must be done to protect your investments.

Assembling a power team does not happen overnight. If you want to be part of a real estate power team, join a local REIC to get an idea of what services can be useful in your business.

Being a REALTOR and an Investor

Being a REALTOR and an Investor

When new investors discover that I am a licensed real estate agent AND an investor, the usual question that follows is: “What are the benefits to obtaining a real estate license?” I then explain that there are both pros and cons to being a licensed agent AND an investor. In this article I will review both.

Cons

  1. Question: What do you get when you cross a used car salesman and a lawyer?

Answer: A real estate agent.

The stereotype is that agents are usually salesmen that will do anything for a commission. Therefore, when potential sellers learn that I am an agent there is an emotional wall that is immediately built. This division sometimes makes it difficult to proceed with a conversation about their property. Because of this, I have a reply that I use every time to overcome their objection.

  1. Another downside of maintaining a real estate license are the annual dues and fees. Every state has fees to renew the license. Additionally, costs for required continuing education, an MLS subscription, and dues to the various real estate boards can be in the thousands of dollars. Real estate investors without a license don’t have any expenses outside of normal business costs.
  2. A licensed real estate agent must use a state-approved real estate purchase contract. Therefore, with a license I am unable to draw up a contract with my own terms contained therein.

Pros

  1. With a real estate license and an active MLS subscription, properties can be found without the assistance of a third party. I can scour the MLS database for properties without having to wait for an agent. Similarly, I can submit offers directly to sellers or seller’s agents, again, without having to wait for an agent.
  2. Another positive is that any property I buy from the MLS to rehab or add to my portfolio will pay me a commission. Therefore, adding another possible stream for income.
  3. If, for some reason, the seller and I cannot come to terms for me to purchase the property, I can list the property on the MLS for the seller, thus earning a commission when the property is sold.

I have outlined a few of the pros and cons for having a real estate license AND being an investor. In the end, the decision to get a license is up to the individual or partnership. Final thought, it is not requisite for a person to have a real estate license in order to be an investor or even to make money in the real estate industry.

Five Mistakes Investors Make When Building Their Business

Five Mistakes Investors Make When Building Their Business

Being in the real estate industry over the last 20 years has allowed me to see many forms of success and failure.  I have learned a lot from each of these categories.  You might think I’m going to tell you how to make sure you run your numbers correctly or not overbuild for the neighborhood.  You might think I’m going to suggest that mistakes are made by not seeing all the hidden costs in a fix and flip property.  Yes, these things are important and I’ve made my share of mistakes with these along the way but the biggest mistakes I’ve seen in my 20 years of experience is that real estate investors forget to PLAN for their success and they don’t realize the most important success habit is your mindset.  Investors seem to have a hazy idea of what they want to happen and then they just throw all their efforts at it to see if it sticks without really taking the time to create the success they want.  I’m going to share some of the top mistakes I have seen over the years and the success markers I’ve implemented in my business and have helped successful real estate investors implement in their business. 

The first mistake I see entrepreneurs make, especially real estate investors, is they are not clear about what they want.  They say “I want to be a successful real estate investor” but they really don’t know what that means nor have they taken the time to really find out what that means.  In order to be successful, you need to know what it’s going to take to be successful.  You need to know what education you are going to need, what foundation of your business you are going to need to build and how to create a power team around you to help you build your success.  For example, take some time today to ask yourself. 

  • “How much money do I want to make on each of my real estate deals?” 
  • “How many will I need to close each year to accomplish the dollar amount goals I have set for myself?”
  • “What needs to be done to make this happen?”

As you can see, there is some planning that needs to go into setting yourself up for success.  When you begin to ask these questions, then what needs to be done to make it to the next level of success in what want to accomplish will become clearer.

The second mistake I see entrepreneurs make is not prioritizing what needs to be done to create their own success.  Too many times I hear the excuse, “I don’t have enough time.”  My answer is a little blunt and not really easy to accept if you are committed to this excuse.  I gently say we all have the same 24 hours in a day.  The way that we use those 24 hours will determine our success.  My suggestion is to make a list at the beginning of each week of everything you NEED to get done for the week.  Then make a second list of all the things that you must do to be successful as a real estate investor.   Go through both of your lists and prioritize each activity with an A, B, or C for priority level.  Sometimes it also helps to put a time frame on each item.  Then grab your PAPER calendar (yep, we’re going old school for a minute) and put all the “A” activities on your calendar for the week, then add your “B” activities.  Your “C” activities will fill in any free time you find for yourself during the week so keep your list handy throughout the week.   This is going to be a work in progress and I will GUARANTEE…. Yes….. GUARANTEE you will fail the first week you put this in place so realize that this is going to be a work in progress and you are going to have to keep doing it to get better at it.  Remember that failure is just information.  It doesn’t mean you give up; it means you do it better the next time.  Your calendar is going to be somewhat flexible but you are also going to start becoming very responsible with your time and learn to manage it, so you can master it.  My favorite saying for time management is, “Either you run your day or your day runs you.” 

The third mistake I see investors make is giving up.  The commitment level is there when the hope is high and the excitement level is at its peak but when it comes to doing the hard work, putting in the hours, staying persistent, trying something new when one thing doesn’t work, I hear, “This doesn’t work”.  I want to say, “Does this not work or do you not work?”  Sometimes success is not found overnight.  In fact, I would say in most cases success is not found overnight.   If you interview any successful entrepreneur, they will tell you it was a long climb to the top and they fell down a few times.  They will also tell you that staying the course and being persistent with successful habits is the reason they found success.  Decide now that you are “in it to win it,” that “if it is to be, it’s up to me” …whatever silly mantra you need to come up with to remind yourself to stay the course and be consistent and persistent with your efforts.

The fourth mistake I run into over and over when working with new real estate investors is they are blown like a plastic bag in the wind with everything they read or are told.  They become consumed with what everyone else is saying instead of doing the research themselves and coming up with their own opinion.  They go to a real estate investment club and listen to everyone whine and complain about “how hard it is right now.”  They jump right on that band wagon and complain that this can’t be done.  I’ve got news for you.  It can be done but you have to do what others are not willing to do so that you can have what others will never have.  It’s really that simple.  What you focus on you will create.  If you are going to dwell on what someone else said and drag it along as your victim story, you are not focusing on the solution.  You are not creating something new. You are stuck, and I promise you are not going to go very far, and you will end up right back up in mistake number three —  giving up!  You must be aware of the people you are surrounding yourself with, the news you are allowing to come into your life, and you must determine that you will only “listen” to what is working.  The great thing about real estate is that when it’s good, it’s really-really good and when it’s bad, it’s even better but you have to know what strategies to employ.  You must become a problem solver. You must know that there is always a solution, and you must be determined to find it. 

A fifth mistake I see people make when building their real estate business is they forget to take a little time to evaluate what has worked in the past, what could be done better and what needs to be done completely different.  Taking a step back to evaluate every so often — maybe monthly, maybe quarterly or maybe even more often — helps you to build on the strengths and define where the weaknesses might be.  This isn’t a time to dwell on the problems and what’s not working, it’s a quick evaluation to see what needs to be tweaked.  When you can identify what is working and what is not, you can play to your strengths and put practices in place to build the weaknesses into strengths.  For example, if you are getting more properties than you know what to do with and you’re getting accepted offers but your cash buyers are not interested, then maybe you need to re-evaluate how you are running your numbers.  Take a little time to question what is working — and do more of that.  Then making sure if something is not working, you find a solution. You are learning equally from your failures as well as your successes, both have great information to share with us on our journey to success.  By evaluating what is not working and finding a solution to make it work, then evaluating what is working and doing more of that, you keep “building” a successful foundation for a thriving business. 

These are the top mindset mistakes I see real estate investors make.  There are other mistakes you will make along the way and that’s ok. As long as you have the right mindset, you will make it through the other slip-ups.  Remember to plan your way to success, make small and attainable goals.  Become friends with your calendar and make it work for you.  Make sure you are aware and conscious about what you are putting your focus on and commit to your success with consistent and persistent effort.  After putting all these success habits in place, stop from time to time to do an evaluation of your efforts and make them better.  Buying a house to flip in the wrong neighborhood is not as detrimental of a mistake as doing the same wrong thing over and over and over again.   You must have a plan for your success, so take some time today to make it happen.  Good luck and happy investing!

The Pros of working with REOs

The Pros of Working With REOs

A class of property owned by an investor, such as the government, the bank or an agency, after an unfortunate sale at a foreclosure auction is known as Real Estate Owned. These properties are owned by a bank or financial institution.

Advantages of working with REOs include:

  • The properties are free from liens/encumbrances. The banks completely remove unwanted records attached to the property; hence no reclaim can be done. The unwanted records attached may include taxes, second & third mortgages or mechanic’s liens.
  • REOs/Bank owned properties are always vacant because once the bank owns the property, they evict the previous owners, which saves the buyer’s money, time and the hardships of the eviction process.  The properties are well maintained; hence they are safe and good for new owners. Financiers can save an incredible amount of time and energy because the dislodgment process has been taken care of by the bank.
  • Lower market prices and payments with low-interest rates is another advantage of working with bank owned properties. The banks usually don’t sell the properties at the market price since they have the need of selling to compensate their loss and removing property from their books.

There is a great deal of competition involved when buying bank owned properties. Working with REOs attracts more customers, but involves less risk because the properties are free from any liens; therefore, it’s easier for the investor to weigh their options and negotiate.

Unlike properties at foreclosure auctions, REOs can be inspected prior to making offers and are listed with real estate agents. While many foreclosures are often in deplorable condition, REOs are typically restored to at least a readily salable condition by the lending institution. The bank or lending institution that owns the property will often offer financing with better deals than they would offer on traditional properties.

REOs are an awesome win, win for everyone involved.

Three Ways to Obtain Owner Financing

Three Ways to Obtain Owner Financing

As we look to build our real estate portfolio we need to learn what we can about the different ways to finance a property or other income-producing asset.  Understanding owner financing can help us grow our portfolio.  Understanding what to do in order to obtain owner financing can be an important tool in our quest to be a successful investor.  Let’s consider some things we can do to utilize this important tool:

  1. Perhaps you have found a property where you don’t have the cash for a down payment, but your credit would allow you to finance the rest of the house.  Talk to your seller.  She may be willing to carry a note for your down payment.  Let’s say she sells you the house for $100,000 and the bank is willing to loan 80% loan to value.   The appraisal shows the loan can be made for $80,000 from the bank.  The seller could finance the other $20,000.  The key is to not be afraid to ask.  You could amortize the loan and make the payments over time or arrange to make a balloon payment.  Always be thinking of ways to get a deal done.
  1. Though not technically owner financing, lease options are a creative way to finance a deal.  Look for an owner who is having a difficult time selling a property.  (This really works in slower markets.)  Approach the owner and ask them if they would consider a lease option.  Let’s use the following as an example: Perhaps you could offer an option of $5,000 and agree on a sale price of $100,000.  You agree to lease the property from the owner for $800 per month.  Try to negotiate the longest possible time you can get to exercise you option.  For our purposes let’s say that option is for two years.

You will then look for a buyer who will lease the house from you.  Offer your buyer the opportunity to purchase an option from you.  For example, your buyer leases the property from you for $1,100 per month and offers a $10,000 option.  Now, let’s say your buyer exercises his option after one year.  You would then exercise your $5,000 option.  You would make $5,000 on the option and another $3,600 on the rents.  Your total profit would be $8,600 for the year you were involved with the property.  We didn’t even consider what you could have made if you offered the property at a higher price than what you had optioned. 

  1. Finally, let’s look at what you could do with mobile homes with a property owner who would be willing to work with you.  Quite often in older mobile home parks there will be homes that have been abandoned.  These homes are often left with repairs and renovations needing to be done.  They are often an eyesore in the trailer park.  It is costly for the owner to do the repairs and costly to move the mobile home.  This is where we can take advantage of a situation and make money.  Ask an owner to allow you to take ownership of the mobile home with the stipulation that you will find renters or find someone to buy the mobile home from you.  Quite often you will find owners who are willing to consider and execute such an agreement.  You are now in for the cost of rehab and the owner has a decent mobile home in their park.  You will then sell or rent the mobile home.  You have just created an income or a profit.

Use your imagination and do not be afraid to talk to people and propose your ideas.  These are some effective creative financing tools that allow you to use a seller’s money.  Best of luck in your investing!

3 Common Mistakes New Investors Make When Working with An Agent

3 Common Mistakes New Investors Make When Working with An Agent

Like any other business, real estate investing needs to be carefully planned and seriously scrutinized. In an industry where competition is rampant, it is crucial to avoid making mistakes as much as possible. While there are many new investors starting out with the best intention of making a career out in real estate, only a few succeed.

Ideally, a working relationship between an investor and a real estate agent is a win-win alliance. However, there are a lot of misconceptions about these two characters in the real estate world. These problems usually start when an inexperienced investor chooses the wrong kind of real estate agent, thinking he or she is the one best suited for the job.

Here are the 3 most common mistakes new investors make when working with an agent:

Hiring an agent with the cheapest commission.

Newbies in the real estate business tend to think that they will be saving a lot of money if they choose an agent with the lowest commission, without thinking about how marketing and advertising their property can be expensive. To equate the situation, reduced commissions often means reduced marketing resources in promoting to get your property sold. So, don’t go with the cheapest but go with the best.

Not being honest with your real estate agent.

Agents are professionals trained to appraise properties in a manner that can be different from yours. In order to get your agent to best help you, provide him with the necessary details about your plans and expectations about the property. Lying or keeping things from your real estate agent can be toxic for your working relationship, especially if they find out about your deception and decide not to work with you anymore. Bottom line here is, without the necessary information, your real estate agent won’t be able to do their work for you correctly.

Thinking all real estate agents know the same thing.

One of the most common myths about agents is that they are all the same; therefore, they know the same things. Wrong. Real estate agents have different experience levels, different skills and different specialties that they have acquired after years of being in the business. Think of it this way, a real estate agent who deals with buyers may not have as much skills to sell a property than an agent who spent years selling them. Also, choosing the wrong real estate agent can affect your financial situation for years. You wouldn’t want to be financially burdened for the next 2-5 years just because you chose the wrong real estate agent.

3 Ways to Make Money with a Home Equity Line of Credit

3 Ways to Make Money with a Home Equity Line of Credit

When investing in real estate most people don’t realize that their home can be a great source for funding deals.  Using a home equity line of credit or HELOC can provide the cash needed to do real estate deals. Here are 3 simple ways to use a home equity line of credit to fund deals:

  1. Flips – If you have enough cash from your HELOC you can buy a property for a fix and flip.  Another option, if you do not have enough money available to do a fix and flip, is to use the cash you have available to get a hard or private money loan.  Hard money and private money lenders are much more willing to lend you money for a flip if you have some cash available to put into the deal.  They usually like you to have 20%-30% of the purchase price of the property plus rehab costs. 
  2. Rentals – If you have enough cash you can buy rental property outright.  With interest rates as low as they currently are, the rent you collect from a rental will cover your HELOC payment and give you a good cash flow as well.  You could also use your HELOC for a down payment on a rental property.  The down payment is usually 20%-30% of the purchase price.  Keep in mind you will still have to qualify for a loan to cover the rest of the purchase price.
  3. Lease option or seller financing – These work for those who have a limited amount of money available from their HELOC.  Lease options and seller financing allow you to get into deals with a smaller amount up front and without having to qualify for a bank loan. 

Another benefit of using cash from a HELOC is that a cash offer is a much stronger offer and will give you a better chance of getting your offer accepted.  You still need to do your due diligence to make sure the deal makes sense.  Keep in mind that there will be a monthly cost to repay the HELOC so factor that in when you are running your numbers on the deal.   Interest rates are at all-time lows, which makes a HELOC some of the cheapest money you can tap into. 

3 New Strategies to Find Motivated Sellers on the MLS

3 New Strategies to Find Motivated Sellers on the MLS

It is estimated that 85-90% of properties that are sold in the United States are listed for sale through a real estate agent.  This would mean it’s a good practice as a real estate investor to develop good relationships with your real estate agent(s).  Typically, as a real estate investor, we are looking for properties that are vacant.  We also want to find properties that are distressed or need some updating.  Third, we are looking for a motivated seller.  This is the typical criteria you want your real estate agent to be looking for when he or she is searching for properties for you.  After you have a steady stream of these types of listings flowing in from your realtors, you might want to ask then to add a few other categories to your search parameters. 

Three simple additions will give you more properties to look through and research so that you can be making even more offers each week.  Ask your agent(s) to send you expired listings, withdrawn listings and listings that have gone back on the market.  These three categories will each come with their own unique characteristics to research, so let’s dive into that.

1. Expired Listings.  These are houses that were listed on the MLS and did not sell.  The purchase price may have been too high or there may have been other issues that you will need to research.  The best strategy is to contact the homeowner and let them know that you noticed that their house had been listed in the past but is not currently listed.  Ask if they are still interested in selling and let them know you work with a team of investors and can offer cash for their house.  Because their house is no longer listed, the listing has expired, they will no longer be working with a real estate agent and, therefore, the agent’s commission will not need to be a part of the purchase price.  On a typical transaction the selling agent and the buyer’s agent will have a commission total of about 6%, so taking this out of the equation might help the seller net what they wanted on the property.  This might be a really attractive offer to the seller because they don’t have to pay that commission.  It may also be attractive because it can be a fairly quick sale and not include a buyer needing to get financing from a bank.   

You’ll need to contact them and ask some questions to determine how motivated they are to sell and if you will be able to deliver a cash offer that will satisfy their motivation.  Keep in mind that these home owners might be getting calls from other real estate agents trying to get them to re-list their house with them so you want to set yourself apart as a real estate investor interested in their home. You can say something like, “My partners have been working on a few houses in this area and noticed that your house was on the market and now it’s not.  Are you still wanting to sell your house?”  This can start the conversation.  Make sure you are leading the conversation to find out what is really going to motivate them to sell so you can take quick action to address their motivation.

2. Withdrawn Listings.  Withdrawn listings are properties that were listed for sale but for some reason the owner of the property cancelled the listing with the real estate agent.  There are numerous reasons this might happen.  They might have changed their mind about selling, they may not have liked keeping the house clean for the showings, they may have decided that they wanted to do some work on the house in order to get a better asking price or maybe they did not like the way the real estate agent was marketing their property.  Whatever the reason for withdrawing the property, they could potentially be a motivated seller if you can offer a cash price quickly without a real estate agent.  This phone call would go something like, “Hello Mr. Seller, I noticed you withdrew your house from the market.  Are you still interested in selling your property?” Then let the conversation start from there.  Again, just like with expired listings, you want to be leading the conversation to see if there is still any motivation to sell.

3. Back on the Market.  This category is my favorite and has been a very successful strategy for me and many other investors.  When a property goes back on the market it is because the sale has failed for some reason.  It may be because the inspection yielded unfavorable results and the potential buyer didn’t want to buy the property any more.  It could also mean that the potential buyer was not able to obtain financing for the property.  Whatever the reason, this is good news for us because the seller is a bit more motivated because they thought that their property was sold and they were headed to the finish line.  Now their thoughts are along the lines of, “Ugh!  I have to start this whole process over” and their real estate agent is thinking the same thing.  This is when they may entertain a lower offer with the promise to close much quicker.  Again, it always depends on the motivation of the seller. If you can have your real estate agent do a little homework with the selling agent before you make the offer then you can find out if they are more motivated by a quick close offer or getting the right price.  I have personally found that once the process has been started and they thought they would be closing soon, they are much more likely to take a lower offer just to be able to close near when originally planned.

In the first two scenarios above, expired listings and withdrawn listings, you will be getting the listings from your real estate agent but they will not be getting commission on the deal so make sure you have a conversation with them up front on how you might be able to give them a referral fee if you close on one of their properties. By doing so, they will be much more likely to want to assist you.  As in all of entrepreneurial ventures, it’s important to think outside the box and look for more ways to bring in deals.  Spend some time thinking about what a motivated seller is and where you can find them.  Then come up with a plan to get in touch with them.   Get creative in other ways you might be able to use your real estate agent and the MLS.  As always, happy investing!

Can I Get Rich Quickly Doing Fix and Flips?

Can I Get Rich Quickly Doing Fix and Flips?

Most people think that real estate investing is a quick and easy way to get rich. The popularity of the “fix and flip” shows on television have led a lot of amateur investors into believing that investing in flips is quick and easy. This is so far from the truth. Making a lot of money in this business takes time. Before you get started, identify what “feeling rich” means to you. Have a financial goal set. There are a lot of things to consider when doing fix and flips. Even though these types of deals can produce a large payday, they come with one of the highest risk factors among investment strategies. To give yourself the best opportunity to get the deal done right consider the following items:

1. Run Your Numbers Correctly: Find a good agent to help you get correct, recently sold comparables. Compare similar properties to each other and run your numbers off of your after repair values (ARV).

2. Account for All Costs/Expenses/Fees: When you run your numbers you need to account for all of your costs involved with the purchase, fix-up and resale of the property.

Lender Fees: All lenders will have a cost for the loan. You can get this number from the lender.

Purchase Cost: Usually this will include appraisal and inspection fees. These will generally be around $300-$500 for the appraisal and $400 for the inspection.

Closing Cost: The easiest way to get this number is directly from your title company. Closing costs include things like documentation prep fees, taxes, recording fees, etc. You should generally use 3% off ARV to cover these costs. 

Holding Cost: Taxes, insurance, maintenance, HOA (Home Owner Association) dues, mortgage payments or hard money interest payments need to be covered while you are fixing up the property. There are other items that can fit into this category, so cover your bases.  A general rule use 1% of ARV for as many months as you feel it will take to fix up and sell the property.

Realtor Fees: If you plan on using an agent to resale the property then account for 6% of ARV for this cost.

3. Rehab Cost: Get a good contractor and please, please do some research on them before you hire them. Make sure the contractor you go with is licensed and bonded! You can always ask for a copy of their license and bond. Make sure they are in good standing. Also get them to give you some referrals that you can talk to and ask for reviews. Then get rehab bids from at least three contractors. I usually go with the highest bid as the number I will use for my rehab cost, during my analysis of the numbers.

How to Find Responsible General Contractors or Sub-Contractors

How to Find Responsible General Contractors or Sub-Contractors

The business of rehabbing homes generally involves hiring a general contractor to manage the project or lining up several sub-contractors yourself as an owner/builder.  If you are not a general contractor and don’t had any experience rehabbing or building homes, I suggest you hire a general contractor to organize and manage the construction of your project.  If you have some experience or feel you are a pretty good manager of people and resources, then hiring sub-contractors individually can save you a general contractor’s fee.

For those in the first category, you will want to find a general contractor with a good reputation for quality work, dependability and being reasonably priced.  You will want to get referrals from people you trust who have used these general contractors and have had a great experience with them.  If you don’t know people who have built in the past, then drive around and find homes that are being built or remodeled in the neighborhood and call the owners to inquired about their experience with their general contractor.  After finding 3 to 4 highly recommended general contractors, have them individually bid your project and consider the one that gives you the best price.  Be sure to compare the allowance items that each includes in their bid for items such as plumbing fixtures, appliances, tiles, countertops, light fixture, etc and make sure they are using the same amount.  The best way to approach the bidding process is to give each contractor a list of specifications with a unit amount for each category in which you have not yet made an exact decision. 

Be sure to get a fixed price from your contractor so you know upfront that they will do the work within the budget you have allotted.  Then go over the specifications up front and pin down exactly what will be included in the bid and make sure everything you want done is included so you don’t have additional charges after you start.  Then see to it that your contractor does everything they promised.  Keep track of their progress and keep the line of communication open so that the job moves along smoothly and on time. 

If you are going to sub out all the work, then follow the same procedure with your sub- contractors. Get referrals from other people you trust who have used tile men, granite counter top companies, electricians, plumbers, etc, and are satisfied with the results.  Then get bids from at least 3 sub-contractors in each field and consider the one that gives you the best price.  Be sure they are all recommended and that the feedback from those who have used them is that they do high quality work, they are dependable and they finish on time.  After signing a contract with the sub-contractor, be sure to stay in touch with them and keep encouraging them to follow through with the agreements they have made.  Remember, the squeaky wheel gets the grease.  If you use quality sub-contractors, you should get the job done properly, as well as to code, without needing to know how to do the work yourself.  If you have time, watch the sub-contractors and learn from them so you can supervise other sub-contractors in the future.  Use your managerial skills to organize each sub-contractor to get their job finished on time so the next sub-contractor can begin their work and finish on time.  If you are supplying the material, be sure to have them on the job site on time so there are no delays.  Better yet, have the sub-contractor bid material and labor so they are responsible for supplying the materials and you don’t have to worry about it. 

In all of this, be sure you stay within your budget.  Getting several bids on each item that needs to be rehabbed will insure you get the job done for the best price.  You will be amazed at how far apart the sub-contractors bids can be.  When a sub-contractor is very busy and doesn’t need work, his or her price can escalate rapidly.  When a sub-contractor is out of work and needs to keep his men working, his price can become very reasonable.  If all of the bids you receive are over your budget, negotiate with each sub-contractor and see if one of them will come down to your budget price.  Many times they will if they want the work.  Remember, if you run over your budget, every dollar comes out of your profit, so stay on budget.

Pre-Foreclosure: The Secret Sauce to Success

Pre-Foreclosure: The Secret Sauce to Success

Pre-foreclosures are the secret sauce to success because they can be extremely profitable, are easy to find, and are low risk.  Pre-foreclosure begins when someone receives a NOD (notice of default) letter or in some states this is referred to as a “Lis Pendens” (legal action started) letter. There is a distinct advantage to reaching people going through foreclosure quickly before they are inundated with letters, emails and phone calls from collectors or competitors. At the time most recipients get an NOD letter, they will not yet have their property on the market.

Approximately, 60% of the people who receive a NOD letter are able to save their home by working things out with the mortgage company or supportive government entity such as HUD.gov, Fannie Mae or Freddie Mac.

The other 40% is where the deals are. However, most of these people are in denial and many remain so until a day or two before the actual auction is to take place. Like any other kind of deal, look for owners who don’t want the property. One of the best signs of a winner is finding the home to be vacant but still in pre-foreclosure.

In most cases if they vacate the property, they are planning to let it go back to the bank. Unlike “rehab flips” it will be easier to sell the property or get a lease option if it is in good condition because you are not wholesaling but selling directly to someone who will live in the property.

Odds are good that the people who are going through pre-foreclosure are being continuously harassed by all manner of bill collectors. Hence, the type of people who have the most success knocking on the doors of people going through pre-foreclosure are women under 5’3″, slight of build, with a baby or two in tow. Men, who are tall of stature and have larger build can be intimidating and have an uphill fight to get their message across.

If the property is vacant, one or more of the neighbors may know how to reach the owners. Once, the owners are reached, the message is simple. “Thank you for your courtesy in seeing me. I’ll be brief because it is very possible I can help you immensely. Your name came up as having received an NOD or Lis Pendens letter. There are many things you should know about what that means. Are you familiar with the loopholes in the foreclosure process?”

This will give you a good chance of being able to continue the conversation. “Loopholes” has a nice ring to it. Obviously, it is important to know what those loopholes are. But, it is even more important to know how to find out if you are dealing with someone who wants or doesn’t want the home that is being foreclosed on.

The next move is, “I would be happy to share what I know about how to avoid pre-foreclosure or at least be able to buy the time necessary to resolve the situation. There is no charge now or in the future for this, I ask only one thing.” Ideally, wait for a “What’s that?” “I only ask that should you decide that you don’t want this home, you would allow me a chance to buy it from you with your approval at a very fair price. Some people call me a ‘full price offer guy.’ Would it be ok to discuss some ideas on strategy that might be helpful to you?”

“During the depression banks often foreclosed on homes where the owner was both current on payments and also had substantial equity. Obviously, this was an abusive process and fortunately the federal government has mandated some new regulations to protect homeowners like you. As a general rule, in most states including this one, the NOD/Lis Pendens letter gives the homeowner 90 days to clear up unmade payments owed to the bank with a minimum of extra legal expenses.”

“Once the 90 days is up, they must publish their intention to foreclose three weeks in a row. This can take as little as 15 days. After that, the earliest they can hold an auction is 10 days after the third printing of notice. Hence, in the worst possible case, homeowners going through pre-foreclosure will get at least 115 days from the date of the original letter.” … “At this point, it would be good to find out where you stand so I can help you develop your strategy. Could you give some kind of idea about how far behind you are money-wise to catch things up?” WHATEVER THE AMOUNT “Well the obvious question is, what is the likelihood that you can raise that money before the bank lowers the boom? Further, is it wise or more simply, do you want to keep the house?”

If they indicate that it doesn’t make sense to try to save the house, then say, “I would be happy to try to help you avoid foreclosure by making an offer on a short sale if you owe more than the house is worth, or better yet, catching up the mortgage by paying what you are behind and then putting the home in a trust where you might be able to at least get something if there is value in excess of the mortgage. This would, if possible not show up as a foreclosure against you but would show you caught up the mortgage and every payment that I make in the future would help improve your credit.”

“While I would need a copy of your mortgage, I promise to show you comps so you can get a feel for what it is worth. Further, I will make the best offer I can and you can judge for yourself the best direction for you to go. Is that fair enough?”

The market has changed a great deal since the melt down of 2007-2008. Banks are exempt from any “equity theft” laws. If the bank makes money on a foreclosed house, they keep it. Mortgage contracts contain a “due on sale” clause. This doesn’t mean the mortgage isn’t assumable, it just means the bank can call in the note upon sale. A home in pre-foreclosure is on their books as a non-performing asset. Hence, if you catch up the mortgage, it goes on their books as a performing asset.

It isn’t generally wise for the bank to call in the note unless current mortgage rates are much higher than the existing mortgage. Banks aren’t stupid! They just want the money. When purchasing a home that is behind on the mortgage, banks are usually quite willing to accept the money to catch up the mortgage. However, problems can come up later in dealing with the bank because the mortgage is in the previous owner’s name.  Previously people who bought homes subject to the existing mortgage were able to present an “authorization to release information form” and the bank would cooperate giving all the current mortgage details. Banks tend to look at this form with a purpose of paying off the mortgage and getting a new one. Hence it is seldom honored after three months to a year at the most.

Because the banks no longer honor this form after a few months, it is critical to get a “Durable Power of Attorney” authorizing you to discuss the details about the mortgage with that bank and or their assigns. This form should be for the entire term of the mortgage. Including “and or assigns” is critical if the bank turns the mortgage over to another institution.

It is also critical to get the previous owners to properly sign a Quit Claim Deed. This deed should be recorded with the county or parish once the bank has accepted the catch-up payment. Further, there may be liens or encumbrances against the property. Due diligence would be wise.

There is clear logic to putting the ownership of the home in a Land Trust. First, a trust with multiple beneficiaries has dignity in a court of law because it is clearly not one person hiding behind the entity. Beneficiaries could include the previous owner, you for services, the person who lease options the home and, of course, the agent who lists and sells the home.

Further, properly configured trusts can be exempt from the “due on sale” clause. This is another reason to make the previous owner a beneficiary. As an executor of a trust, it is easier to communicate with the bank or financial institution once you have a Durable Power of Attorney.

If you can find someone willing to pay what the mortgage is behind, for an option to purchase the property, you have a deal regardless of the amount. In the event you don’t have someone ready to buy or option a purchase, a good rule of thumb is if the arrearage of the mortgage is no more than 10% of the value of the property. Of course, the mortgage payment should be reasonable for that kind of home in that area. The logic here is that most people who want to buy a similar home in the area and go to the bank for a mortgage will have to put 10% down. There are plenty of people who can come up with 10% down but still can’t qualify for a mortgage from the bank. They will welcome this kind of opportunity.

A marketing headline that has been successful in finding option buyers is “Your Down Payment is Your Credit Approval.”

Should the homeowner indicate that they want to keep the property but acknowledge they have no way of catching up in the prescribed arrearage, you can ask them, “If you weren’t behind right now, would you be able to make your payments like you used to?” If they say yes, ask, “Have you spoken with the bank?”

Either way, if they have spoken with the bank or not, they need to be reminded that the federal government has instructed banks to try to work things out with these people if they can make the original payment. The banks can put the arrearage on the back of the loan if they want to. Helping someone in this way is a karma worthy service.

If the home is vacant or you can’t get them to open the door, you will want to try different techniques to reach them. Emails, text messages and phone calls can work great, especially in combination!

Current contact information of people who are going through pre-foreclosures and have moved can often be found at: <http://www.intellius.com> or <http://www.Spokeo.com>.  Both of these sites will often provide both landline phones and cell phones. They may even provide email addresses. Intellius costs about $19.00 per month and Spokeo starts at about $60.00 for 6 months.

Below are some critical criteria for becoming successful in doing pre-foreclosure deals.

1. Find “Don’t-Wanters.” Look for people who no longer want to own the property.

2. The money needed to catch up their mortgage is less than 10% of what the home is worth.

3. The home is move-in ready. Homeowners who buy will want this home to be move-in ready. So will tenants willing to rent.

4. The pre-foreclosure property has a marketing advantage because it comes with a built-in mortgage through the mortgage assumption.

5. Get the previous owner to deed over the property. This is critical and Quit Claim Deeds or Mortgage Assumption Deeds are often used.

6. Put ownership into an LLC or a land trust. Document that the owner going through pre-foreclosure was paid something or, if you are using a land trust, make the previous owner a beneficiary for a small amount of money. This offers protection from equity theft suits.

7. Only record the deed once all the details are worked out such as covering the arrearage on the mortgage and having a POA (Power of Attorney) enabling communication directly with the current or future assigned mortgage company.

8. Get the current owner to write, witness and notarize a Durable Power of Attorney allowing communication with the mortgage holder. This needs to be written to enable full communication with the mortgage holder and their assigns for the entire term of the mortgage.

9. Put the property in a trust so you can control receiving your profit over time. This will require help from an attorney. Do this yourself without an attorney at your own GREAT risk.

Assuming mortgages on pre-foreclosure properties can be rewarding to all concerned. The banks get to turn a non-performing asset into a performing asset. The previous owner avoids getting a foreclosure on their records. The lease option buyer can buy his or her own home when turned down by the bank.

Always remember that few people have a problem with paying out profits later, so make sure you become a beneficiary and the executor as well. A good attorney will show you how to do this. One word of warning, collecting rent from an option to purchase and not paying the mortgage could land a person in jail. Hence, it will be wise to use an escrow company to handle the finances.

Pros of Working with Tenants in Common

Pros of Working with Tenants in Common

Tenants in Common refers to an arrangement whereby two or more individuals co-own real estate without having a right of survivorship. This kind of ownership allows each owner to choose who inherits his or her interest once he or she dies. This is unlike the joint tenancy ownership where the interests of each of the co-owners pass to other co-owners upon dying (Clifford 29).

Tenants in Common have become very popular today. This popularity has been motivated by the continued rise in of real estate prices while communities are adopting an ever-stricter growth restriction. This situation has caused people to turning to tenancies in common as a way of maximizing their selling and buying power. These arrangements usually lower real estate prices while increasing buyers’ choice through allowing them to pool resources. This arrangement further increases marketing options and sale prices for sellers by allowing them to sell their share of real estate at a price higher than the one they would have received from single buyers. The popularity of Tenants in Common has further been enhanced by the introduction of fractional loans that allow co-owners to have their own mortgages. This arrangement substantially decreases the risk of co-ownership.

The other advantage of working with Tenants in Common is that each tenant has the ability to sell his or her tenancy in common interest anytime he or she wants. This is contrary to the belief among most people who are unfamiliar with Tenants in Common.  The sale of these interests involving group loans are subject to rights of first refusal in addition to buyer approval to insure that the other co-owners can first verify the prospective buyers and make sure they are fully qualified. At the same time, marketability is enhanced if the group has a complete track record of paying its bills and solving its problems, something that greatly reduces the risks of the buyers.

The other pro of working with Tenants in Common is the ease in which decisions are made. In tenant groups that are small, decisions are usually determined by the owner vote. Here, there is distinction between decisions made on a day-to-day basis and those made by a majority, which involves purchasing very expensive non-emergency improvements, repair or alterations in the allocation of expenses, which are made by unanimous vote. The manners in which decisions are made in these groups are often transparent, thereby allowing all members to take part.

The other benefit of Tenants in Common is that it enables investors in real estate to maximize their investments’ value. They are able to achieve this fete through marketing their property as SACCO Tenancy in Common, a strategy that results in not only the quickest sales but also the highest price as a result of the presence of more single-unit buyers than investors in today’s marketplace and a rapid increase in sale prices in most communities. At the same time, Tenants in Common also offer the flexibility of selling compared to selling the entire property. This flexibility allows owners to replace tenants with Tenants in Common owners in a gradual process while diversifying his or her real estate portfolio (Karp and Klayman 53).

Works Cited

Clifford, Denis. Make Your Own Living Trust. Berkeley, Calif: Nolo, 2009. Print.

Karp, James and  Klayman, Elliot. Real estate law. Chicago: Dearborn Real Estate Education. 2003. Print

Real Estate and a Magnifying Glass

Real Estate and a Magnifying Glass

In real estate investing there is a tendency to jump from one subject of training to another or from one geographical area to another with the expectation that “the grass is greener” on the other side.

It is often very tempting to think that where you are investing is not the best or where you are putting your efforts is not the best.  Often, this feeling is because, if you are like me, you compare yourself to other investors that have been in real estate for years and have carved their niche with hours and hours of specific work.

Comparing yourself to others, working in multiple areas, jumping areas and working multiple training directions can really slow your business.

I suggest, heavily suggest, you pick one, yes one, geographical area and work one training direction in that area to get the fastest results for your business.

To help explain that idea I want to talk about a magnifying glass:

  • Magnifying glasses can be used to … well … magnify items, or, what little boys use them for: burn things.
  • When a magnifying glass is used to burn things, the energy from the sun is focused to a fine point and, in fact, the finer the point or focus, the faster things burn when under the magnifying glass. 
  • However, if the focus point is spread or unfocussed, the speed of the fire decreases because the energy of the sun has been spread.
  • Once a fire has been started, you can move the energy without fear of the item you are burning going out.

The real estate investing business is no different than a magnifying glass.  If you work two geographical areas, then you have spread the energy or focus of your business and slowed your ability to “burn” quickly.  Though there are hundreds of methods for purchasing real estate, you can imagine that the more methods or trainings you implement, the less focus you have and the slower your business runs.

After you have successfully created a business in one area and with a specific method or training, you can move your energy.  It is a lot easier to move areas or work on other methods once the “fire” of success is burning.

Focusing energy in your real estate business can help you succeed or “burn” quickly. 

Planning your Trade

Planning Your Trade

Summers are full of family vacations. Picture a large family cruising down the highway traveling to a distant destination. This doesn’t just happen; meaning, we don’t just leave the house, pile into the van and take off. My wife and I make a plan. We plan for us and for our kids. We plan what we will eat, drink, and even what clothes we will bring, depending on weather conditions. Even after all the planning, things come up that we don’t account for. Like family trips, our trades should have a plan.

In trading, there will always be some unknowns. Will the underlying stock go up, go down, or remain the same? Depending on our bias, we place trades that should pay-off, if our assumptions hold true. But what if the stock only goes up half of our intended move, or not at all? What if it goes opposite of our intended direction? Planning ahead allows us to prepare for these outcomes and prepare for the decisions we will face because of them. Making decisions when powerful emotions like fear and greed are involved are often not based on sound thinking. But, if we have a plan for each outcome, we can decide in advance what we should do. We can account for such possibilities when we are calm and execute the proper orders when we see them, rather than in the spur of the moment when we may not be thinking clearly. Trading can be an adventure, but it doesn’t have to be a stressful one. We can reduce anxiety if we will plan ahead of time and make decisions in advance, helping us be in control no matter the outcome.

Suggestions for First Time Flippers

Suggestions for First Time Flippers

Buying real estate properties for a bargain, fixing them up and then reselling them for a profit is a great way to make money as a real estate investor. This is often referred to as “house-flipping” or doing a fix-and-flip.  You look for a home, buy it cheap, fix the home up, then sell it for more than what it cost you to buy and fix it up.  You can make a huge profit doing this, and there are a few ways to improve the experience or ensure you do not lose money.

Plenty of real estate savvy investors are making money with fix-and-flips but while it looks and sounds easy to do, house flipping has some risks involved. If there are more repairs than estimated, the flipped property does not sell immediately and/or you encounter other unexpected issues, an investor might not break-even.

Here are several suggestions to help you be successful:

  • Get a Mentor:

Successful “flippers” educate themselves and know the ins-and-outs of the real estate market. If you are just getting started, one helpful thing to do is to find a successful house flipper to mentor you. The things these seasoned investors have experienced or learned along the way are invaluable. Offer a percentage of your profit for advice if you need to. Then do your research on properties in your local area and find a house you would like make an offer on. 

  • Save Money On Materials:

Buy the materials to fix up your house yourself.  Contractors do supply materials but they will mark up the price of the material. If you buy the materials yourself, you will save money and pay them for labor only. 

Although costs for materials vary, it’s best to get to know your local stores. Some stores who offer discounts to contractors will give you the same deal if they know you are an investor and plan to do more than one house. Don’t be afraid to ask for a discount. Home Depot, Lowe’s and Costco offer great deals. Also, watch for any clearance sales on materials. You can also go to second hand stores to find great deals at a lesser price than buying new materials.

  • Save Money On Labor

Some investors buy a house during off-season. This way they can complete the job on time since their contractors have less of a workload on their hands and can focus more on the job. Contractors are sometimes cheaper in the off-seasons as well.

Hire reputable subcontractors, instead of a contractor, and run the job yourself. This can save you money because a contractor also marks up the price of the subcontractor.  Doing some of the work yourself will also cut labor costs.

  • Save Money and Time by Using a Realtor

Once the home is fixed-up, and if you plan to sell the house (vs. keeping it as a buy-and-hold property), studies show if you use a reputable real estate agent, your property will sell quicker than selling without one. The longer you hold on to the property, the more holding cost you incur. Realtors know plenty of possible buyers and having them list your house on the MLS helps sell your property more quickly. While they are selling your house, you can spend your time looking for your next deal.

Overall, utilizing these few basic tips will help you in the process of doing a fix-and-flip. All it takes to be success is having the right attitude and information. And getting out there and doing it.

Knowledge + Action = Results

3 WAYS TO SELL YOUR FIX AND FLIP QUICKLY

3 Ways To Sell Your Fix and Flip Quickly

The worst thing an investor can encounter when trying to sell their investment property is to have it sit stagnate on the market. I would always suggest trying to have the property sold before you even finish with the renovations and start marketing your property before you even start renovations. The following are my top three ways to sell your fixer-upper quickly:

  1. Market the Property from Day 1: This means the minute you get the keys, advertise the property. Before the renovations even start, post the property everywhere. Online ads have become a new way for buyers to search out properties. Advertise it as a “build to suit” or “custom design your new home,” as these are attention-getting headlines. Let the buyers chose their style, color, layout, etc. I would advise that if you attract buyers using this method, have the contract written up and extend for the time period it will take to complete the upgrades. Also have them put down at least 3% of the purchase price as non-refundable earnest money, this way they will be committed to the deal.
  2. Market the Property to the Neighborhood: This is a simple technique I’ve found that helps sell a property quickly. Make some flyers about the property, and then on a weekend, walk the neighborhood (for your safety, don’t walk alone, take a friend with you). Knock on every door and let the neighbors know you are an investor and you are fixing up the ugly house and you want their help to sell it. Tell them that if they refer a buyer to your deal, then you will give them a $250.00 finder’s fee (the fee can be whatever you want). The majority of homes sold are by neighbors telling their family and friends about a house in their neighborhood.
  3. Run the Numbers Correctly: One of the biggest reasons homes don’t sell is because they are overpriced. Make sure you run accurate after repair values, and set a tight rehab budget. Get good comparables from your real estate agents. Be sure to not over improve a home, as this will not always get you more value and it will be difficult to sell at a higher price.

The methods I mentioned in this article have helped many investors sell their properties quickly. These tips can be applied to any area. Don’t be afraid to think outside the box when it comes to marketing your property for sale. Get creative and have some fun with it.

3 Ways to Market Properties to Cash Buyers

3 Ways to Market Properties to Cash Buyers

We all probably know that cash transactions have been a rising trend in today’s real estate market. In fact, 30% of real estate sales are cash payments made by local and international buyers. It won’t be a surprise if paying cash for real estate properties becomes a more common practice than the traditional way.

Investors tend to favour cash buyers due to various benefits entailed with cash buying, such as people who have enough savings to purchase their dream home or are on the hunt for hot locations and are offering to buy with cash. There are a lot of reasons sellers are holding out for cash buyers and one of them is getting their hands on the money fast. A cash sale can be done in a matter of a few days with less paperwork and no waiting for loan approvals that could get denied in the end. Buyers can also save a lot of money on closing costs and other fees associated with a mortgage loan by paying with cash. Think about the money you would save on interest alone!

It is for these very reasons that plenty of investors are after cash buyers. So, where do you find cash buyers and how can you make your property stand out against other competitors? There are a lot of creative ways to make your property attractive to cash buyers but we will just narrow it to three.

“Old-school” or Conventional Method

Although the Internet offers a convenience that makes most people underestimate the use of selling their property the “old-school” way, there’s no denying the fact that prospect buyers still rely on their trusted realtor when purchasing a property. Hiring an agent to enlist your property could still be one of the best methods to sell your property quickly. Remember that real estate agents with years of experience have met and know a lot of cash buyers in the business.

Even by just putting a simple FOR SALE sign in the yard could be a good opportunity to attract a prospective cash buyer. You never know when one will pass by your area and notice your sign.

Attending real estate auctions, where there just might be a flock of real estate investors armed with cash looking for great deals, is another opportunity to market your property.

Internet Marketing Method

Post your property for sale on various real estate websites for all the world to see. There are websites where you will have to pay to advertise your property but there are also websites that will let you post your advertisement for free. Take advantage of using websites like Craigslist, Zillow, eBay classified and ForSaleByOwner.com as plenty of investors are on the lookout for deals.

Network with Other Investors

Make connections by contacting people in the industry to see if they know people who are actively looking for investment properties. Get in touch with people like building inspectors, appraisers and other people that often deal with buyers in the real estate market. Offer them referral fees for buyers they send your way.

To make your property attractive to buyers, you must be ready to sell it slightly lower than its market value. Although you might be getting a price that is lower than what it is expected to sell at, just think about the benefits mentioned earlier, like not having to go through the hassles of selling a property traditionally.

Finding Off-Market Deals

Finding Off-Market Deals

To be a successful investor you need to have a pipeline of potentials deals. It is no secret that the Multiple Listing Service (MLS) is the common source for finding properties to make offers on. However, the investor that can find deals outside of the MLS will find that there is less competition and more possibilities. In order to capitalize on these deals, an investor must utilize some less common tactics. In this article I will outline three techniques for finding off-market deals. Disclaimer: There are many techniques for finding off-market deals but for the purposes of this article I will outline three.

First, is direct mail marketing. A direct mail campaign can be extremely valuable if it is implemented correctly. Begin by identifying your target list in which to mail. One such list is absentee owners. This list contains people that own the property but don’t live at the property. A more common name for these owners are landlords. Some landlords want to be in that position while some landlords want to unload the burden of being a landlord. It is the job of the direct mail piece to find the landlords that are motivated to sell. A key component to implementing a direct mail campaign is to be consistent. This technique rarely works if you only mail a one-time piece. Therefore, you should mail a marketing piece to the same list multiple times in a year.

Another technique for finding deals is “Driving for Dollars.” You can implement this technique in two different ways. One, you can intentionally drive neighborhoods in which you want to invest looking for houses that are vacant, with overgrown yards, or deferred maintenance. On the other hand, most of us travel to the same places every day. We go to the office/work then back home utilizing the same streets, turns and maneuvers so often we could travel the route with our eyes closed. Therefore, the second way to implement this strategy is to take a different route home every time you make the trip. By doing this, you will effectively kill two birds with one stone. This strategy is as old as the hills but still very effective.

The third technique is networking. The saying goes, “Your net worth is directly related to your network!” This is true in many industries but especially real estate. There are many deals that are completed between investors. Co-wholesaling, partnering, and joint venturing are all common tactics in real estate investing. Therefore, if you are looking for off-market deals, networking with other investors and real estate professionals will yield hearty results. One of the best places to find other investors is at a real estate investing club. When attending a meeting, make it a goal to meet 10 new people every time. This tactic will substantially grow your network over time. All of these people can be valuable sources for off-market properties.

In this article I have outlined three common techniques you can use to find off-market properties. If faithfully implemented, these techniques will be valuable resources for finding deals with less competition.

3 Ways to Keep Going When Things Get Tough

3 Ways to Keep Going When Things Get Tough

When you are an investor it can become really hard to press forward when things get tough. Some problems you may encounter might include: nobody answers their phone, nobody will reply to your messages, your offers are not being accepted, you can’t find any good comps and so on. But, when things get tough, that’s when it becomes worth it to press past your tough point and move forward. It’s similar to when exercising muscles; you will see progress for a period of time and then things will plateau and no progress will be seen.  This is the time that makes a difference between those who are going to succeed and those who are going to give up and amount to nothing. So how do we press forward?

  1. Set goals that are smart.

    Specific – We need to know not just that we want to make a lot of money but how we are going to make that money.

    Measurable – Is your goal something that you can measure? Can you keep tract of your progress?

    Action Oriented – Have you set a goal that will motivate you to get going?

    Realistic- Are your goals something you are actually able to reach?

    Time Oriented – We need to give ourselves deadlines to push us to get things done.

    Setting goals is important in all aspects of life, and when we don’t set goals, we won’t see success.

  2. Find a solution to the problem.

    We may come to a time when we feel things are just not going well and it’s not going to work out, but in these times we can stop, take a breath and find out how to solve the problem. If our agent is not sending us comps to look at after we ask them over and over to do so, we need to get a new agent. If our cash buyers are not interested in our properties, we can interview them again to better understand what they are looking for. If we don’t work at getting rid of our problems, we are just going to be digging ourselves into a deeper hole.

  3. Reward yourself.

    When you set a goal and reach it, its time to reward yourself. From going out to ice cream with the family to eating out with that special someone, reward yourself with something you enjoy. You may not have become a millionaire, but you are going to find satisfaction in reaching your small goals that are going to lead you to accomplishing your big ones.

All investors hit hard times and feel that there may not be a way to press forward. But the difference between the successful, wealthy investors and the poor, angry ones is that one complains about their problems and the other takes the bull by the horns and blasts threw them.

Tips for Maximizing Profits Using a Rental Contract

Tips for Maximizing Profits Using a Rental Contract

When we buy rental property our primary goal is to make money.  In this article I would like to give some tips on how to maximize your profits by using the rental contract.  Not only can you increase profits, you can also increase the control you have on your property.  Let’s consider the following things you can do to help yourself:

  1. Consider when you make the rent due.  On most contracts the rent is due on the first of the month and then there is usually a three to seven-day grace period.  Stop allowing these grace periods.  Your cash flow is important and you should expect your money on the first of the month.  Understand you are making a free loan when you use a grace period.  None of us are in the business to provide free loans. 
  2. An effective way to maximize your investment is to offer a discount instead of having a grace period.  Let’s say we want to have a rent of $600 on our rental unit.  Tell the tenant that the rent will be $700 per month, but a discount of $100 will be extended if the rent is paid on or before the first of the month.  This will be beneficial to you in a couple of ways.  First, you are getting your rent paid on time.  Second, in the event there is a dispute regarding non-payment of rent, you will be able to claim the $700 as rent and not the $600.  At times judges may not allow all of the late fees, but rents are always allowed to be recovered. 
  3. Typically, we sign rental contracts for one year periods.  By so doing we are giving a lot of control of our property to our renters.  Try evicting a renter who is not taking care of the property, but is paying rent.  A solution to taking back control of your property is a month to month contract.  You can then raise the monthly rent each month until they leave or begin to take care of the property.  With the proper notice you will be able to raise the rent and have more control of your investment.  Also, consider the fact that the world’s greatest renter would break their lease in the event of a job transfer or other major life changing events.  Why should you be giving such control to someone else?  Instead you maintain control and maximize your investment.

   By taking a few simple steps you can make a rental contract more effective for you.  Be aware however, if you are going to have Section 8 renters you will have to use the government contract.  For all other renters use these simple techniques and have fun making your bank deposits!

Real Estate Demographics Research – Rental Rates

Real Estate Demographics Research – Rental Rates

There are many things that could affect the real estate market.  The main factors that forecast the trend in the real estate market are the economy, the population growth, the rates of interest for loans, and the demographics.  In fact, according to a study conducted in 2014, there will be an increase of demand for housing over the next few years.  The reason for the increase in housing demands is the surge of population growth.  Population growth depends on two basic components, natural and non-natural population growth.  Natural population growth is rate of live births that occur in the area.  Non-natural population growth refers to the migration of people in a place affecting the demand and supply for food, housing or other needs in that environment.

Demographics are defined as the study of a population’s characteristic. Age, sex, race, education level, economic status and other factors used by the government and private sectors for many purposes, such as forecasting and identifying the buying capabilities of a population on a regional or national basis.

POPULATION

Real estate researchers have forecasted the surge of population growth.  If the data from the research proves to be true, there are four generations in today’s market on the lookout for housing and two generations play a very significant role in the development of housing demands.  The economic capabilities of today’s population tend to favour more on rental rather than homeownership.  The recession has greatly impacted the demand for owning a property and the demographics show that many people are opting to rent rather than own.  Even property owners who had initially planned to sell their homes are renting them out instead because rental rates and high tax rates are lower for rental investors.

GEOGRAPHIC REGION AND JOB OPPORTUNITES

Since the current market is now recovering from the recession that lasted from 2008- 2011, unemployment rates are going down.  A lot of Americans now find themselves moving or migrating to areas where work is available.  This migration makes a lot of people choose to be practical by renting rather than buying a house.  There are certain cities across the country like Los Angeles and New York where rental rates are surging due to the demand for rental properties.  Even industrialized parts of these cities are transforming into residential areas to accommodate the ever-growing number of young people who want to live there.

AGE

Age is another demographic variable the greatly affects the rise in demand for rentals.  Young people ranging from 18-35 years old are the largest percentage of renters.  Traditionally, these young people would have become first time homebuyers as they advance in their careers.  They are predicated to choose renting versus owning due to changes that happened in the economy (recession, job loss, low-income).  Another reason young adults find renting a more attractive choice is that they don’t feel the need to be burdened with a mortgage loan.  Most young adults believe could not afford to own a house and face the financial obligation that it entails.

Demographics cannot be ignored because it greatly affects, if not, dictates the fate of business investments. The basic rule of supply and demand tells us if there is a high demand for a certain product, the more valuable the product becomes.  If there is a high demand for rentals in an area, the higher the rental rates become.

Qualifying Hard Money Lenders

Qualifying Hard Money Lenders

There would be instances when a real estate property owner or investor would find himself hard pressed for cash and time to finance his investment. As opposed to going to the banks to apply for a much needed loan, some would-be borrowers go to a hard money lender. For whatever reasons real estate investors can choose to go to hard money lenders for a loan. One big attraction to these lenders is how quickly you will be able to get the loan.

Requirements for Hard Money Loans

Hard money loans are considered as mortgage loan since the lender will be using a real estate asset as the collateral for the loan. The amount of money the borrower will be able to get is primarily based on the value of the property itself and not on the credit standing of the borrower. However, it is wise to take note that hard money loans are short term loans and are usually expensive compared to bank financing. The interest rates for this type of funding varies – ranging from 10-18% with additional charges called points.  It is often that hard money lenders charge 3-8 points (points are an percentage of the loaned amount.  For example: $100,000 loan charged 3 points or 3% would be $3,000). Although the higher interest rates would seem to be scary for first time borrowers, seasoned investors are less daunted by it. They would simply reason out that the benefits of being able to get the much needed financing quickly outweighs the higher cost it entails.

Qualifying the Lender

Not all lenders are created equally.  Also, not all lenders lend the same.  Unlike traditional bank financing that have similar interest rates, similar costs and similar qualification methods hard money lenders are quite different.  Think of it this way: Lender 1 is your neighbour and Lender 2 is an unfamiliar person from a real estate investment club you attend.  They will both lend differently and will charge you different interest rates while also having different lending requirements.

Get to know the Lender

The absolute best thing you can do is to determine how the lender will do business.  A ten-minute conversation can give you great insight into how they will lend to you and what their requirements would be.

Questions to Ask

Here are a series of questions that will help you understand what the lenders will consider.  However, before you go running and calling the lenders keep in mind most lenders are not asked this many question so they may   But, these questions will also show that you know what you are doing better than most the lenders may speak with.

  • What are their points?
  • Can points be charged at the end of a loan?
  • What interest rate do they charge?
  • What is their LTV?
  • Will they lend the LTV upon the value or purchase?
  • Will they fund repairs?
  • Can you pull cash out of a loan?
  • Do they lend in residential financing?
  • Do they lend in commercial real estate?
  • Do they have a pre-payment penalty?
  • Do they offer a Proof-of-Funds?
  • Do they check credit?
  • Do they look at the property more than you?
  • Do they have an application fee?

Hard money lenders are widely used in real estate but when you use them think: “Are they good enough to work with me?”  This will help you understand the purpose of qualifying the lender and find the best funding for you and your business.

Private Money Lenders

Private Money Lenders

What is a Private Money Lender?

A private money lender is a company or individual that loans money, usually secured by a note and deed of trust or mortgage, for funding real estate deals. Private money lenders are typically considered more relationship based in comparison to hard money lenders.

Three places to Find Private Money Lenders

  1. Real estate investment clubs

Real estate investments clubs are a great way to find any part of your power team including private money lenders. Be proactive in networking with as many people as possible when you attend. The point is to let people know you’re doing deals and looking for more possibilities on raising capital. This is a great way to find out if the person you are speaking with is a private money lender. If they aren’t you may get a referral to people that are.

  1. Online searches

You can find just about anything with online searches. There are several websites out there that have lists of private money lenders or lenders that have their own website. A good place to start is www.privatemoneylendingguide.com and browse the lender directory. When contacting a private money lender, you could say “Hi, my name is John Doe and I found your information on the Private Money Lending Guide directory website. I have a deal that I’m working on that I would like to discuss with you. Do you have a few minutes?”. If they have a few minutes to speak, this is the time to start asking any and all questions about the potential loan you need (points, interest rates, terms, etc.) and how the lender operates. If they don’t have enough time, schedule an appointment with them so you’ll have the time to discuss things.

  1. Referrals

I briefly touched on this with real estate investment clubs, but don’t underestimate the power of referrals. Typically, referrals come from people you trust that have had dealings with the private money lender they are referring to you. The great thing about referrals is you can get them anywhere. Family and friends, co-workers, social media (LinkedIn, Facebook), Realtors, etc. The old adage goes “if you don’t ask, you don’t get”, so don’t be afraid to ask for what you need.

Using these methods can help you find the private money lenders you need to make your real estate business a success. Having Private money lenders lined up can also give you confidence in your deals knowing the money is there when you need it.

REO Properties: Marketing to Buy REO Properties

REO Properties: Marketing to Buy REO Properties

Nowadays, the cost of purchasing a house or any real estate properties has skyrocketed so that people are now looking at other alternatives to acquire a property. A lot of buyers would search for properties at auctions and sales while others opt to buy bank owned properties in hope of saving money by getting a great bargain.

REO properties or real estate owned properties have been foreclosed by the bank or the lender after the previous owner failed to make payments on their mortgage loan.  These types of properties have undergone the necessary foreclosure process and are usually auctioned unsuccessfully, making the bank or the lender the default owner of these properties. The bank would consider these properties as liabilities that would need maintenance. If the property would sit long on the market, it would usually be found in a rough shape and in need of repairs. For this very reason, REO properties would sell for less than its average market value.

Where to Find REO Properties

Take note that even if the bank has many REO properties in their inventory, they will not advertise it for a very low price. If you are interested in purchasing REO properties, the best way to do so is to find a reliable real estate agent who will do the searching of REO properties for you from various banks or lenders and guide you on the right price. If you want to do the searching yourself, you could contact the lenders directly and ask for their list of REOs.

Making an Offer

Banks foreclose the property to recover what was owed to them by the borrower and although they would be eager to get REOs off their hands, be prepared to negotiate hard. There are other investors such as yourself also interested in making a great bargain, too.

Lenders would prefer cash offers for REOs especially when there are multiple offers for the property. Another reason lenders would prefer cash is because most of these properties need so much work that these properties cannot qualify for traditional financing.  Even though some banks may aprefer cash some would be willing to consider financing if the price is right. To increase the chance of landing your desired property, be prepared to make an offer closest to the lender’s asking price.

Savvy homebuyers will usually make an offer on an REO properties 20% below its asking price. Other buyers would rather get a great deal and offer more than what is expected than missing out of a great deal.

The bottom line is buying REO properties can be very stressful.  However, having your real estate agent to advise you will help you navigate through paperwork and legalities to shorten your negotiation process and make REOs a valuable investment for your portfolio.

Demographic Research – Housing Inventory

Demographic Research – Housing Inventory

There are many statistics a real estate investor should pay attention to. One of those statistics is housing inventory. This statistic is commonly referred to as “months of inventory”. A simple definition could be, “The number of months it would take to sell all of the homes currently on the market.” For example, ten months of inventory would signify more of a buyer’s market, meaning more homes to choose from. Whereas four months of inventory would denote more of seller’s market meaning fewer homes for retail buyers to choose from. Knowing this statistic would help an investor tell where the market is and what strategy would be most beneficial.

One of the best ways to research the housing inventory is visiting www.realtor.org. This website is hosted by the National Association of Realtors (NAR). The NAR has an interest in gathering housing statistics so that REALTORS and other real estate professionals can keep their eye on housing movement. At the tops of the webpage you will see a tab entitled “Research and Statistics.” By clicking on this tab you will find many types of statistics including housing inventory.

Another resource to find these statistics is your states’ board of REALTORS website. You can find this website with a quick google search. The state’s Board of REALTORS will also keep tabs on housing inventory to help local real estate professionals. An investor is able to use this information to help in evaluating deals.

The previously mentioned techniques will give you good statistics. If you want local statistics, and you do want local information, you should turn to your real estate professional. A REALTOR who has access to the Multiple Listing Service (MLS) would be able to research housing statistics for an individual neighborhood if you need data as specific as this.  The data from the MLS is much more accurate and local than other resources you will find. Simply ask a REALTOR for the data on the current housing inventory. A good REALTOR will supply you with this information along with other statistics that will benefit your business.

Using the housing inventory statistic to determine the market is important for the investor. If we are in a seller’s market then a buy, fix, and sell strategy would be a good choice. Conversely, an investor in a buyer’s market would be better served using a buy & hold strategy. Therefore, the housing inventory statistic is key to determine the market we are currently in.

How to Qualify Private Lenders

How to Qualify Private Lenders

Private lenders can be a great way to start your “fix and flip” real estate business.  Typically, a private money loan is meant for short term lending purposes and then the property is either sold or refinanced.  Private money lenders base their loan on the equity of the property and not the purchasers credit or income credentials.  Private money lenders are typically a private individual or group, not an institution.  When speaking with private money lenders it’s important to qualify them to find out what you can expect from them and what they expect from you.  You’ll want to know the terms, the conditions and just how much they are going to be involved in your project.  They will also have their own qualification process of you and your property but for now we will focus on the information you will want to obtain from your private lenders.

First of all, you will want to know the terms of the loan you will be getting from your private lender.  Typically, the interest rate will be quite a bit higher than if you were to go to a conventional bank, don’t panic, as long as you run your numbers correctly and there is a profit at the end of things, this is a win-win for everyone until you can make enough profits to buy the property with your own capital.  Also, make sure you ask if there will be any points charged in this transaction.  It is very common for a private lender to ask for 2-3 points when the property is sold.  These points are equal to 2-3% of the purchase price.  This might seem like a lot but it’s all about running the correct numbers.  Keep in mind that once you prove yourself to your private money lender, they may be willing to negotiate the terms of your next “flip” because they now trust that you will be able to renovate and sell the property and they want to keep you as a customer.  The next thing you will want to know about the terms of your loan is how much the private lender is willing to lend to you.  For example, they may be willing to give you 90% of the purchase price but you will need to come up with the final 10% as well as the rehab costs.  In other instances, you might find a private money lender that is willing to give you the rehab costs for a higher interest rate and you will approach another source for the majority of the purchase price.  You will also want to discuss if and when any payments will be due during this process.  Keep in mind, because this is a private individual or group, they get to set the terms.  Some will require monthly payments and others will not require a payment until a certain number of months have passed.  It is imperative that you understand exactly what terms your private lender is giving to you, so that you can make sure you are running your numbers correctly and ensure you will make a profit.

Another thing you want to find out from your private money lender is what will happen if you go past the agreed upon number of months they are lending.  In some cases, the interest rate will go up.  Other times, payments with penalties included will begin.  In the rare occasion that the property is not sold within the allotted time you need to know what your private lender is going to require.   This is a rare situation but it’s better to have this conversation up front and know what needs to be done so that there are no surprises for either party if the situation arises. 

The last thing that you want to talk about with your private money lender is how much they plan on being involved in your project.  Some private money lenders want to have a say in the plans, the colors and the selling of the property.  They feel because their money is involved they have a right to some of the decisions.  Then there are other private money lenders that will quietly let you run the project unless they see a huge red flag and need to step in with their opinions.  Either way, you want to prepare yourself for which type of “partner” you are teaming up with so that you will not be insulted if your private money lender wants to have a say in your project.

At the end of the day, a private money lender is an excellent way to get your foot in the door as a “fix and flip” real estate investor if you don’t have the capital yourself.  Getting creative about using other people’s money to help you get started is a great option to begin this process.  There are a lot people out there with money that want to make their money grow and you want to make your new “fix and flip” real estate business grow.  By using their money to start your business, it’s a win-win for both of you.  Just make sure you communicate clearly the terms, the conditions and what expectations you have of each other so that the relationship can continue through many more projects.

How To Find Private Lenders

How To Find Private Lenders

A great way to leverage your funds in a deal is to work with some private lenders. I would define a private lender as a private individual or company that loans money, for the purpose of funding real estate transactions. The lenders will usually secure their loan to you with the note on the property or some other kind of collateral from you. They are more flexible than hard money lenders and usually less expensive.  There are several ways you can find these lenders.

  • Online Searches: Use your favorite search engine like Google, Yahoo or Bing. Do a search for “private money lender, your city and state”, this should produce a list of places you can contact and qualify to see if they would be a good lender for you.
  • Family or Friends: You would be amazed how many of your family and friends want to get into real estate investing and how much they might have to lend you. One thing to remember, always be cautious which family and friend you want to work with. Make sure they have some business savvy, also make sure they can afford to lose the money they invest into your deal, not that you are going to lose that money but if something were to happen then the loss would not ruin them or you.
  • Real Estate Investment Clubs: This is one of my favorite places to find good lenders. Attend your local real estate investment club meeting. At this meeting you will usually run into private lenders and that face-to-face meeting will help you establish a working relationship with these guys.
      • www.meetup.com on this site, get to the search button, type in “real estate investment club”, then select your city and distance you want to search. Then you will get results of club in or around your area. Click on each club individual, read about who they are and contact the organizer and get registered to go to their next meeting.
      • www.creoline.com from this site, search your area and a list of clubs will be listed out. Contact the organizer and get registered to attend their next meeting.
  • Networking Sites: The following sites will allow you to network with people and/or specific groups within these sites that will give you good leads to the lenders.

Appreciation Rates

Appreciation Rates

When investing in rental income properties, two sources of income come into play in determining an investor’s total ROI (return on investment).   One is the cash flow return on investment and the other is the appreciation rate of return.  The cash flow is determined by total income from rents minus all expenses and the appreciate is determined by how much the property increases in market value over time.  In many States throughout the Midwest and Central East a typical cash flow return might be 10-12% while the appreciation is only 2-3% creating a total ROI of 12-15%.  In other States, especially the west coast and sunbelt areas, the cash flow return may be much lower such as 6-8%, but the appreciation can be as high as 5-15% annually, creating a ROI of 11-23% depending on the state of the economy in those states.  These areas can also depreciate the same amount at times where the value of the properties drop dramatically.

Some investors are more interested in the cash flow return so that when house prices drop they still receive a good return on their investment.  Other investors speculate on house prices going up rapidly and aren’t as concerned with the amount of cash flow return on investment from rents because they are banking on making a great deal from appreciation.  This will be the case as long as prices are going up, but if the economy shifts and prices drop then those investors will not make out as well as investors who make sure the net rental income returns are healthy.

So, what effects appreciation rates in different areas.  The simply answer is supply and demand.  As more buyers move into a market place with the same amount of properties available, the prices will increase.  When people hold off on buying and lots of homes are being manufactured, the prices will start to come down.  Highly desirable areas, like sunbelt and coastal regions, attract more migration and higher demands when the economy in those areas is good and there are plenty of jobs.  Smaller towns, with harsher weather, have less growth and can even decrease in population as people move out to find more pleasant environments.  But these trends go in cycles with people moving to the fair weather States when prices are deflated and moving back out when prices become too expensive; opting for less pleasant weather as a trade-off for a lower cost of living.

Building trends also effect the economy.  When large builders stop developing new subdivisions because of a stagnant economy, supply lessens and demand eventual catches up with it.  Then as buyer’s confidence in the economy returns a buying frenzy can pursue driving the prices up rapidly in areas of high demand. The reverse also happens when builders start constructing massive subdivisions, adding a multitude of homes to the market, and the stock market drops or interest rate raise causing investors to become apprehensive of the future thus holding off on purchases.  Then prices can drop rapidly because supply out paces demand. 

So take appreciation into your financial scenario when determining the overall ROI of an investment, but remember that cash flow will continue pretty steadily in any area, whereas appreciate can fluctuate drastically in areas where it has a tendency to go way up or down.

3 Tips for successful Apartment Management and Operations

3 Tips for successful Apartment Management and Operations

Becoming an investor in apartment complexes is a big step in real estate investing. Depending on how much time and ambition you have, you are going to either manage yourself or you are going to pay a management company to do that for you. Typically, investors will hire a company to do the work for them when the complex is 20 units or bigger. When this is the case you are passing a lot of the stress and work of to someone else.  When you are looking at a complex that is under 20 many investors will take on the management responsibility themselves. Being an owner of rentals as well as having managed a 72-unit complex in the past I’m going to give you my 3 tips to being a successful apartment investor when managing them yourself.

  1. Hire a live in property assistant manager

Obviously this is not what you need for a fourplex but when you are looking at 8 units or more this can be a big help. You are still the owner and manager of the property but you’re handing off some of the responsibilities. For example, have them do showings, collect the monthly rent, take maintenance calls, and even take care of some basic lawn care needs. All of this can be done for just giving a discount towards their rent. If you have a bigger unit where you have an office at the complex, they can staff that as well and receive free rent.          

  1. Set a standard and keep to it

The biggest mistake you can do in an apartment complex is start giving special privileges.  Once you let one tenant have a pet or accept late rent they are all going to take advantage of you. Decide from the beginning what your line is going to be and don’t change it. 

  1. Have a solid contract with a solid damage repair cost contract

It may be overwhelming at the beginning for a new tenant but it’s there to protect them as much as it is there to protect you. This way you can start off showing “I have rules and I expect you to keep them”. It will also protect you from having someone damage your property and not get all the funds you need from them to repair it.

  

These are just a few tips on what I believe helps being an investor in apartments to be a good experience rather than a bad one. Just make sure to do you your research and talk to those with experience before you take the big step.     

9 Keys for Successful Comps.

9 Keys for Successful Comps.

Using comparable properties, also known as comps or comparables, is the best way for you to get an accurate after repair value (ARV) for a property you are interested in making an offer on. Your goal is to get a minimum of 3 good comps, you will take as many as are available, but you need at least 3.   Here are 9 steps that will help you get the best comps on potential properties you would like to make an offer on:

  1. All comps have to be sold properties.  You do not want listed properties or properties that are under contract.  The sales process has to be completed.
  2. No fore-closures, short sales, or rehab properties. You want move in ready properties only.
  3. Look for comps that have sold within the last 3 months.  If you need to go back further because you did not get at least 3 comps. you can, but you do not want to go back further than 1 year. 
  4. Comps should be within a half mile to one mile away from your subject property.  If you do not have enough comps with in the mile radius you can expand your area further to find sold properties that would make good comps.  This is most common in rural areas and I have seen comps go out to 3 miles away the subject property. 
  5. Interior square footage needs to be similar.  Use a range of 500 square feet or 20% whichever is greater.  Here is an example of how to use your square footage range:  Your subject property is 1258 square feet, so, you should get all properties that fall into a range from 1000 square feet to 1500 square feet.  That gives you your 500 square foot range.  When using the 20% rule take 20% of your subject properties square footage for your range.  For example: your property is 3500 square feet.  When you take 20% of the square footage you get 700 square feet.  Now you will use 700 square feet as your range.  Your comp range would be 3150 to 3850
  6. Your comps should have the same number of bedrooms and bathrooms as your subject property.
  7. Structure of the comp property needs to be the same as your subject property.  For example: If you have a 2 story home you want 2 story homes for comparables. 
  8. Acreage or lot size of your comps needs to be similar to your subject property. 
  9. Age of properties comps should be within 20 years of your subject property. 

The closer you can get your comps to what your subject property is the more accurate your ARV will be.   By using these steps, you can assure yourself that your comps will give you the best ARV available and helping you create a more accurate potential value for your subject property.

3 Reasons to Use Hard Money Lenders

3 Reasons to Use Hard Money Lenders

Hard money lenders are private people or companies that use their own money or lines of credit to finance real estate. These lenders are often familiar with real estate. They have often built lending companies as well as purchased, sold and exchanged many forms of real estate throughout their business life. Because of a hard money lenders extended knowledge their prices, interest and other costs are set. Their interest rates usually run about 10-18% with additional costs (called points) around 3-8% of the loan amount being lent to you. These large costs may deter first time and new investors from using hard money lenders for their real estate investing businesses. However, here are three large reasons you should consider using hard money financing in your own real estate investing businesses:

  1. Cash Financing

    You have likely heard “cash is king”. In no other business is this truer than in real estate.

    Think: if you were selling a house and you received two offers. One was cash and the other was traditional financing. With all other items being equal you would be more likely to accept the cash offer. Cash gives strength and power to your offers. Hard money financing is often considered as “cash” financing and gives you the same strength, power and value as actual cash.

  2. Speed

    One of the similarities and benefits of cash and hard money financing is the speed.

    If you were at a grocery store to purchase a candy bar and purchased the treat with cash it would only take you minutes to purchase the candy. Similarly, real estate purchased with cash or hard money financing can be completed very quickly. Unlike the candy bar real estate purchases have a need to clear title. However, after a cleared title real estate transactions can be completed in days. This speed can also give large strength to your offers.

  3. Easy qualifying

    Hard money lenders do not have the same lending requirements as a bank. As you may know or have experienced: banks often require down payments, good credit scores, years on a job and sizable bank statements. This is not likely the case for hard money lenders; instead, their evaluations are usually on the property and the equity you are purchasing as a part of their property review rather than on you.

    Easy qualifying allows more investors like you and I to purchase.

Reading these easy steps, you can see the value of the financing offered by hard money lenders. To add to the benefits of these types of lenders if you know their costs you can deduct the costs from your offer formulas so that there is little to no change to the profits you could make in real estate transactions. Consider using hard money lenders to finance your next real estate transactions.

Portfolio Deltas Simplified

Portfolio Deltas Simplified

Our family has a dog named Hans who loves retrieving tennis balls. Hans will pester you night and day to throw him the ball. And if there happens to be more than one tennis ball lying around, he will put as many as he can into his mouth. One ball is easy for Hans to manage. But, if there is more than one ball, Hans begins to lose focus and, with each additional ball, it becomes more complicated for him to keep them in his mouth. The same can apply for those who trade the markets. One trade is easy to focus on, but adding more positions, with varying sizes, can make trading much more difficult to manage.

Delta is the rate of change. That definition is what one will often hear when talking about options. It has little meaning to the novice investor. Delta may be better understood by thinking of it in terms of shares of stock. Consider the following: if you own 77 shares of stock and the stock goes up a dollar, you would have made $77 dollars. If you own an option with 77 deltas, and the stock goes up a dollar, you would also make the same $77 dollars. So, a better working definition of delta is the number of shares you are trading. If you have multiple contracts in a trade, then your deltas would be multiplied (5 contracts x 80 deltas = total of 400 deltas.) That trade has 400 deltas, or would act like your trading 400 shares. The more shares one holds, the more deltas the portfolio has. So, delta can be thought of as the amount of risk or exposure to the market. If you are trading 1,000 deltas in a portfolio, you would have considerably more risk in your account than if you were only trading 100 deltas, so the larger the portfolio’s deltas are, the more the portfolio is exposed to market movement. Therefore, managing deltas is of the upmost importance to the individual trader.

Knowing when the markets are overbought and oversold can be pivotal points of interest for your total deltas. If markets are at tops, reducing deltas may help reduce the risk to a portfolio. How does the individual trader shrink the number of deltas one holds in a portfolio? Exiting trades and placing bearish trades that come with negative deltas will both reduce deltas and exposure to market conditions. If the markets have found a level of support and the markets are expected to go up, adding deltas to a portfolio may add to your returns.
In the end, a delta is a quick an easy way to view your portfolio and a mathematical value that quickly shows the amount of risk that one has to their portfolio. If Hans could talk, he would tell you one ball provides more focus, more enjoyment and less anxiety. And like one ball, a portfolio delta provides a single number, better focus and clarity to your bottom line.

Networking by Attending Foreclosure Auctions

Networking by Attending Foreclosure Auctions

To most people, being a real estate investor is all about making a lot of money through buying and selling properties. Although that idea of real estate investing is not far from the truth, there’s more to it than that. To make it to the top, real estate investors need a lot of help from other people inside the real estate industry. That’s where networking comes in. Networking is the inexpensive method of establishing friendly and professional relationships with other people in order to increase their number of business contacts and future prospects.

One of the many networking events an investor must not miss is a foreclosure auction. Attending foreclosure auctions does not mean you have to join in the bidding. Instead, just get to know people. Because foreclosure auctions are a great way to acquire properties below market value, they attract a large numbers of local and non-local investors. You’ll meet serious buyers that are fast deal closers and pay with cash. These are the people you’ll want to network with and put on your growing lists of buyers. If you know someone attending a foreclosure auction, ask him or her to show you around and introduce you to different people.

For beginners or even seasoned real estate investors, having a database of people from the same business is very important in building a career. As like many other industries, the more people you interact with, the more business prospects you will get. It’s practically impossible to run a real estate business without the right contacts.

Referrals

Establishing strong business connections with the right people can be beneficial when starting in the real estate world. Accumulating a large network of real estate agents means getting many business referrals.

Mentorship

Business networking can offer a variety of opportunities such as being educated and mentored by people who have already made a successful career for themselves. Learning from these people with varying talents and techniques can help you and guide you in becoming a success investor.

Potential Business Partnerships

Networking is also a great way to meet other investors that could become potential business partners. Investors work, help, and makes deals with their fellow investors, so keep in contact with each other.
Meeting Service Providers

Reliable contractors can easily be found if you just ask around. Since most properties in foreclosure auctions are not in good shape, a skilled and trusted contractor is someone you want to have on your networking team.

Working with Purchase Contracts

Working with Purchase Contracts

When making an offer on a property, either through an agent or FSBO, a purchase contract will always be used. All the details of a purchase contract will not be discussed so if you have specific questions talk to your agent or attorney.

Eighty-five to 90 percent of properties that are for sale are listed with an agent. If you are making an offer on a property where this is the case, the agent over the property will be required to use a purchase contract (unique to each state) and will fill out for you. When the agent fills out the contract, there are certain things you will want to have them change or put in the contract to protect you.

The first thing you’ll want to have in the contract is a 14-day inspection period. Every state will have a different standard for their inspection period but make sure it’s changed to at least 14 days. In states where the inspection period is longer than 14 days, feel free to keep the standard inspection period. Sometimes the inspection period will be called the due diligence period. The due diligence or inspection period gives you 14 days to cancel the contract without losing any of your earnest money in the chance that you find out something you don’t like about the property.

A second change you can make in the contract is the amount of earnest money you will put down. In general, it’s a good idea to keep earnest money between $500-$1000. Some government foreclosures like Fannie Mae or HUD may require up to 10% earnest money, so you might have to go over $1000 on those specific foreclosures. Push your agent to put in the lowest amount of earnest money possible.

The last part of the contract you need to pay attention to is the addendums or additions. This is where you can give yourself the right to assign the contract, the right to show the property, or include a partner’s inspection and approval. Additionally, anything that is not in the contract that you would like included or anything in the contract you want to change will go in here.

When making an offer, you’ll need to tell the agent the specifics you want in the contract and then double check to make sure they were put in before you sign. You do not have to be an expert on contracts, you just need to know how to protect yourself, and by checking these three elements, you can.

Vertical Spreads and Alice

Vertical Spreads and Alice

In Lewis Carroll’s Alice in Wonderland, Alice asks; “Would you tell me, please, which way I ought to go from here? That depends a good deal on where you want to get to. I don’t much care where – Then it doesn’t matter which way you go.” Vertical spreads would agree with Alice, we don’t care much where the trade goes. Stocks will go up, down or sideways, up a little or down little. Of the five directions a stock may move, verticals will benefit the trader in 4 out of 5 of those possible directions. Like Alice, it doesn’t really matter where the stock goes.
Which is easier, picking where the stock will go or where it won’t go? The answer is where it won’t go; you will be right 4 out of 5 times. Most strategies face much harsher odds. Trying to pick where the stock will go will be correct only 1 out of 5 times. Verticals are much more forgiving. Let’s look at a hypothetical trade. XYZ stock is trading in a range between $100 and $110. The stock has run up to $110 resistance on low volume and seems to be turning over with a current value of $108. The trade will be to sell out of the money calls at $112 with another call bought at $113 as a hedge. The purpose of this trade is to have both options expire worthless. The $112 call is the reason for the trade, the $113 is for insurance against the unlikely event the stock changes direction, breaks resistance and moves above the $113 dollar value. Selling about 30 days before expiration will provide little time for the trade to achieve $112 value. If all goes according to plan, the trade will achieve success if the stock remains below the $112 value.

Stock price at expiration Success or Failure
$114 Fail
$112 Success
$110 Success
$108 Success
$106 Success
$104 Success
$102 Success

As you can see from the chart above, most scenarios will prove successful with only one situation where the trade would fail. This is considered a high probability trade. If the stock trades anywhere below $112, this vertical spread will be at max profit. As long as the trade stays in the $10 range between support and resistance the trade will be profitable. Like Alice’s comment “I don’t much care where,” verticals tend to work the same way. When setting up verticals, we pick the time frame, the situations where the stock price may go, and where the stock price may not go. Verticals have flexible rules, plenty of setups, and a lot of solutions.

Tips for Getting An Investment Property Ready To Sell

Tips for Getting An Investment Property Ready To Sell

Getting an investment property ready to sell does not need to be difficult or stressful but somehow many investors find it becoming just that. Some investors become emotionally attached to their property, some become nostalgic and find it painful to let their property go, and some have difficulty selling a tenant occupied property. Regardless of the reason, when selling a property, the key is to keep things simple. The minute you decide to sell, you need to stay firm on your decision and your emotions need to stay out of it. Here are a few tips that can help make the process of selling your property easier and more stress-free.

Deciding to Sell

When deciding to sell an investment property, think of your property as an investment and figure out how to make a profitable deal out of it.
For Landlords, it can be quite a dilemma when you want to sell a property with tenants in it. Most landlords will want to wait until the lease or contract is over before selling the property because, typically, the fewer the people involved, the fewer the complications. Although a vacant rental property could mean fewer complications, whether or not you have tenants, you can still sell your property. It’s just a matter of finding the right buyer. There are new investors out there that would like to start their investing career by becoming a landlord, and buying a tenant occupied property might be just what they’re looking for.

Hiring An Agent

Find a real estate agent that you can comfortably work with. After all, they should have your best interests in mind. Real estate agents are very knowledgeable and can give sound recommendations for those that are new to real estate investing. Agents will evaluate your property and provide a CMA or comparative market analysis for your property. Make sure to choose your agent carefully since they will handle the legal requirements of selling your house. Agents are also in charge of the advertising, marketing, and showing the property to perspective buyers.

Preparing The Property

Make your property appealing by understanding your selling audience. Are you planning to sell your house to an owner-occupier or an investor? Different buyers will likely have different ideas on what to look for in a property. Prospect owner-occupiers need to “fall in love” with the property. If you can afford it, staging your property can do wonders.

Declutter unnecessary items to make your property spacious. This does not necessarily mean that you have to remove everything inside and present your buyers with a cold and vacant property. Buyers need to experience the property in its “lived-in” state without having too many personal belongings in the way.

Paint the walls with neutral colors. Buyers are usually excited to have a fresh start to their new homes. Give the place a fresh coat of paint to make your property look new and clean.
Clean the property. If the property is clean, it will smell clean. Unpleasant odors inside the property are a big turn-off to buyers. Pay special attention to the bathroom. If you can afford it, make it look like a spa. Fix holes in the wall, broken windows or anything that needs to be mended. Buyers need to see that the property is well maintained and, of course, nothing makes a property more appealing than cleanliness. It’s cheap and shouldn’t cost a lot money.
Make sure the exterior of the property looks beautiful as well. Don’t become the property that buyers refuse to enter because of an unkempt landscape. Boost your curb appeal by trimming the shrubs, painting the door and keeping the walkway clear. First impressions matter.
Not only will these preparation tips help you sell your property faster, they will add value to it.

Pros of Using Trust Deeds

Pros of Using Trust Deeds

Buying and holding trust deeds is a great way to offset buying and holding a property. Trust deeds are also known as real estate notes, seller financed notes, and/or mortgage notes. Notes are usually created by the seller of the property to help finance all or part of the transaction. This service the seller provides usually attracts a lot more buyers for them. The terms, conditions, down payment, interest rate, due dates, payment amount, late charges (if any), length of the loan, and anything else associated with the note will already be negotiated between the buyer and seller of the property. Therefore, you do not have to renegotiate anything. As the investor buying the deed, you need to review the entirety of the note and decide if this is something you want to buy. Deeds are a great investment opportunity for investors. The pros of using trust deeds as an investment tool are as follows:

  • Usually a higher rate of return, meaning better cash flow for you.
  • Less risky than owning the property out right or investing in stocks.
  • No management of the property is needed.
  • No need to pay mortgages, taxes or insurance.
  • You are in first lien position on the property, meaning the trust deed is secured by the property.
  • You can possibly sell your note to other investors, usually at a higher profit than at what you acquired it.

Simply put, you are acting as the bank when you own a trust deed. Your investment is secured by the property, which means if the borrower is not able to make payments to you, you have the right to foreclose on the property, as long as you are in first lien position. Investing in deeds is a great investment strategy to add to your portfolio. I would suggest only getting notes that are first lien position notes. You can find other type of notes, but for now stick to these kinds and you will be in good shape.

Lessons Learned from a Professional Poker Player

How do the same professional poker players find themselves sitting around the same final tournament table each year? Do the good cards naturally fall into their hands? They must be luckier than the rest of us. Or, can we learn a few things from these professional card players? Below is a list of skills that these players have that could transfer to any stock and option traders.

Ability to adapt is a skill that is necessary to a poker player, as well as participants trading in the stock market. Conditions change and hundreds of new factors will cause the topography of markets to change. Knowing how to navigate the new and ever-changing landscape is essential to successful trading. Simply put, trade the trends. A trader’s ability to observe market conditions when trends change and adapt to these new conditions is the key to success. Holding to old beliefs after markets have changed is the best way to lose money. Be flexible and have the ability to adapt when conditions change.

Varying the size of your bet can help put the odds in your favor. Placing larger bets when using higher-probability strategies or when conditions mathematically are in your favor will allow larger size wins when you are right and can help pay for smaller losses when you are wrong.
Emotional control is essential to investing, like it is in professional poker. Trading is a long-term battle. What happens in a single trade is of little meaning to your portfolio unless it causes the trader to give up. Focusing on your goals and eliminating your emotions when making decisions is crucial to success. Of course, it’s easy to be happy when right and sad when wrong, but making decisions should be void of emotions. Trading plans can help overcome emotions and keep them at a distance. Following rules can minimize anxiety and the feeling of being out of control.

Attention to detail is the last skill we’ll discuss. Poker players are like sponges; they watch everything. Every bit of information they can obtain from what each player does with the cards dealt, to how much money every player has, to which players raise and which players check, is important. Like poker players, we should know the markets and sectors, current market conditions, market cycles, and how the market behaves at each level of support and resistance. Traders should be students of history. In the end, we absorb all relevant information, focus on what matters most (trends, reward and risk, and mix of bullish and bearish trades) and ignore the less important. Trade your plans and follow your rules, and you will feel more confident having a systematic approach to the ever-changing market. There is much to be learned from these professional card players. As we develop their skills, we will be prepared when we find ourselves and our portfolios sitting in the big game.

The Benefits of Using a Real Estate Attorney as Part of Your Power Team

The Benefits of Using a Real Estate Attorney as Part of Your Power Team

For most people, the purchase and/or sale of their home will likely be the largest financial transaction they will make. Likewise, as a real estate investor, you will be involved with numerous and large financial transactions. The amount and risk of such transactions merits the use of a real estate professional. Additionally, several states require the use of a real estate attorney in the sales transaction.

From the time you make your decision to buy a home or investment property, there are a number of important decisions that must be made and which have legal consequences. There are several aspects of the sale and different ways your attorney will assist you in evaluating, assessing and closing the real estate transaction.

Prior to closing, instructions from the lender are sent to the real estate agent and/or attorney. The attorney is responsible for evaluating the details of the sale, preparing necessary closing documents, assisting in scheduling the closing, explaining the necessary closing documents and then ensuring the title company has properly executed and recorded all the documents.

A real estate lawyer’s primary focus is to ensure that the real estate transactions are executed according to all local (state) laws and the process of document preparation and review follows correct procedures. This includes the review of sales documents, the negotiation, assessment of the terms and conditions, and finally, the transfer of titles.

Real estate attorneys may also be consulted to ensure that real estate laws and regulations are followed when buying or selling real estate. When a breach of contract or a real estate fraud occurs, real estate lawyers assist to correct the problem and represent their clients to resolve any actions or issues.

Overall, real estate lawyers serve two major primary functions in the real estate world. They either act as litigators and oversee the legal aspects of real estate transactions or they defend the rights of their clients as they try to protect their interest. Real estate attorneys focus on real property and mediate real estate transactions that have legal issues.

If you are investigating a property and have questions concerning the legal meaning of any portion of the real estate purchase contract, you should consult your attorney before engaging in the legal transaction and signing the contract. This contract is a legal document and is binding for both the seller and the buyer.

Various real estate lawyers are skilled at consulting a specific aspect of real estate law. Some attorneys focus on litigating fraud cases and others might specialize in mortgage fraud, while some concentrate on land use (including zoning laws). Their expertise can also be focused on residential or commercial real estate.

Thus, an attorney’s role in real estate is broad, but they ensure that real estate transactions are done according to the law. This work is done in coordination with the buyers, sellers, realtors (agents), and/or lenders. The attorney’s main purpose is to assure that this complex procedure is legal and assists all involved in fulling their wishes to buy and sell the property. Therefore, choosing to work with an experienced real estate attorney is essential to safely handling purchases and closing real estate transactions.

Marketing to Cash Buyers

Marketing to Cash Buyers

When you begin marketing to cash buyers, there are several ways you may want to go about doing it. You could set up a direct mail campaign or even send a postcard with some jazzy marketing hoopla. Of course, there’s also the option of using bandit signs, which our students have found to be wildly successful. As you can see, there are a number of ways that you can market to cash buyers, but before you begin your marketing campaign, whichever way you choose to structure it, it is important to know the mindset of a cash buyer. Over the years I have had the pleasure of working closely with several cash buyers on projects, and I’m going to share a unique look into the day and life of a cash buyer so you can have a better understanding of just who they are. When you know who your client is, you will better understand how to solve their “problem,” and marketing is all about letting your client know that YOU are the solution to their problem.

First of all, cash buyers are busy! They are on a timeline and they are moving as quickly as they can to get from point “A” to point “B,” and they do NOT like to waste time when they are working. A cash buyer usually has a time frame in which he needs to complete his “fix and flip” project, and he sets his days, weeks and months to be as efficient as possible. You won’t find a cash buyer lollygagging on social media or strolling through the mall. Cash buyers are precise and focused in their daily routine. They have their job planned from start to finish, and they know the specifics of how long each task should take to accomplish in order to move on to the next task. When you create a marketing piece or if you are simply calling a cash buyer, keep this in mind: Let them know that you are aware of how busy they are and that you respect their focus. If you can tell they are too busy to talk to you, don’t be offended. Instead, offer to call them back at a more convenient time for them.  **Hint Hint…this is an excellent way to illustrate to a cash buyer just how valuable you are to them. Also, let them know you will be finding them properties so they can stay focused on what they do best, flipping properties! Can you see how you can show them that you are the “SOLUTION” to their problem…? Even if they didn’t know it was a problem…? Yep, that’s called marketing!**

Next, remember that a cash buyer is all about his bottom line. He is good at what he does because he knows how to walk through a property, put together a budget for the property, and stick to it so that he can make a profit. A cash buyer has a box that he must stay in with each project. It’s not emotional; it’s all business. If the numbers don’t work, the answer is “no.” There is no need to take anything personal; it’s just the way he runs his numbers. The better you know how he runs his numbers, the more valuable you will become to him. A cash buyer also knows that there will always be little things that pop up that weren’t accounted for in the budget. However, a cash buyer will usually have given himself enough room on his profit to have a little cushion. When he is negotiating a deal, he is firm but flexible. He knows that getting a deal is better than not getting a deal. He also knows that he has competition, and he’s always on top of his game to put together an aggressive offer.

A cash buyer is also a master of project management. He knows where his time is best spent and what projects to leave to his experts. As he dives into a project, he is able to see where he can save a little time and money and then invests that time and money into something else that may have not been in his original plans. Any little details you can suggest might make you an invaluable part of his process. When developing rapport with a cash buyer, make sure you let them know you understand how important HIS bottom line is to you and that you will be negotiating aggressively to find him a smokin’ hot deal.

Responsibilities of a Real Estate Agent

Responsibilities of a Real Estate Agent

A real estate agent is someone who holds a state license and represents a buyer or a seller in a real estate transaction. Real estate agents are the people you deal with face to face when buying or selling a property. Agents execute many functions, such as showing homes to perspective buyers and negotiating transactions on behalf of their clients. Agents work on a 100 percent commission basis, which means their pay depends on their ability to find properties suitable for their clients and to close transactions. The purpose of this article is to discuss the responsibilities of a real estate agent.

The First Step is to Guide: Prior to touring a home, an agent will need to understand their client’s budget, preferences and wants/needs, as well as their motivation. They will then narrow the search and identify each priority.

The Second Step is to Educate: A real estate agent should offer information on homes in the local market and comparable sales. This process can be complicated and a good agent will advise and counsel the client every step of the way.

The Third Step is Networking: A real estate agent must be familiar with the target neighborhood and know the homes for sale before they are formally listed. Experienced agents should know and have a good working relationship with other agents in the area. Additionally an agent should be capable of referring a client to trusted professionals such as lenders, contractors and home inspectors.

The Fourth Responsibility is to be an Advocate: Buyers should work with an agent who can fully represent them. Your agent should be an expert who is looking out for your best financial interests and is contractually bound to do everything in their power to protect you.

The Fifth Responsibility is to Negotiate: A Real Estate agent handles all the negotiation details such as preparing all offers and counter offer forms. After the home inspection is complete, an agent can be beneficial in making sure the repairs are done in a timely fashion.

The Sixth Step is Managing Minutia: A good real estate agent understands the deadlines and details of all the paperwork involved in a deal and can help navigate this complex process. They will make sure all the boxes are checked, all initials are in the right places and all the paperwork is complete before submission.

The Seventh and Final Step: The final role of a real estate agent is to “look out” for you. Any form of errors can damage a deal before its closing. These errors can include a lender failing to meet financial timelines, unclear house titles or a seller failing to disclose a problem with the property. Any small error can kill a deal. A great real estate agent knows to watch for trouble and can skillfully deal with challenges as they arise.

In conclusion, the road to home ownership can be bumpy and can be filled with unexpected turns and detours, but having a real estate agent’s assistance can help guide the way. They are crucial in the real estate business.

Lemonade Stands and Liquidity

Lemonade Stands and Liquidity

June is upon us, and the hot weather has sprouted young entrepreneurs in the form of lemonade stands popping-up all across the neighborhood. My boys are part of this business cycle, and are reaping the rewards of my neighbor’s loose change. One of the boys exclaimed “Dad, we are cleaning it up out there” pointing to the curb where there business venture begins each day. I didn’t have the heart to tell them the hard truth. The truth is, like all business ventures, there is a financial cost to things like; sugar, lemons, ice, and plastic cups. If I was to tell them that the first 25 cups sold, barely cover the cost of operations, they might have a change of heart. Sitting in the sun for the hottest part of the day just too breakeven doesn’t seem to have the same entrepreneurial appeal.

Options work the same way! If we choose to do business by placing calls and puts while forgetting entry and exit costs in the form of bid and ask spreads, we, like the kids on my street, may naïvely feel to exclaim, we are cleaning up! When In reality, we haven’t begun to breakeven. See the table below, notice the various cost of doing business for at-the-money options 30 days out on some popular stock’s options. Cost column indicates costs that vary between the bid and ask prices depending on their liquidity. The more the options are traded daily, the tighter the bid ask spread might be. But if one doesn’t pay attention to slippage (difference between bid and ask prices) they might be having to dig themselves out of a deep hole. As a general rule, I try to never place trades with bid/ask spreads greater than 10% of the ask price. So, if we use AAPL as an example, the ask price is $2.10, and ten percent of that price would be .21 cents. Since the bid ask difference is .04 cents, this trade would be fine. Looking at HAE, the costs are 70% which is too great to incur and we would be best to go elsewhere.

 

Stock Bid Ask Cost
AAPL 2.06 2.10 1.9%
AMZN 17.65 18.20 3.0%
SPY 2.31 2.35 1.7%
HAE 2.00 6.70 70%

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So, enjoy the summer and remember, costs are costs, and keeping costs low is always good business. Trading stocks that have high option liquidity and low costs is good business.

How Do Real Estate Agents Get Paid?

How Do Real Estate Agents Get Paid?

Real estate agents are individuals who are licensed to assist clients when buying, selling, or renting real estate property. Unlike other professionals who get paid by the hours they spend on the job; real estate agents will only get paid once a transaction has successfully closed. The agent is then paid by receiving a commission for their services. The commission is calculated based on a percentage of the selling price from the sold property.

A typical real estate agent fee can be as much as 6%. However, the agent will not receive 100% of this fee. To better understand how real estate agents are paid, it would help to first know about the relationship between a broker and an agent.

The broker runs the real estate office. In the real estate industry, the broker has acquired more skills and experience having underwent more education and intensive training. A broker is legally responsible for all real estate transactions he has done himself and/or by his sales agents. He can work independently or with another broker as an associate broker. A broker can also act as an agent in a real estate transaction. All real estate commissions must be paid directly to the broker. It is the brokers responsibility to split the commission as stated in the Broker/Agent contract and with any other agent involved in the transaction. Usually, the broker and the agent split the commission 50/50 or depending on what was agreed in the Broker/Agent contract.

A sales agent works for and under the broker. An agent cannot work independently and is prohibited to accept payments directly from clients. The agent is the person the clients will personally work with throughout their transaction.
Generally, there will be 2 parties involved in a transaction – the listing agent with the listing brokerage and the buyer’s agent with the buyer’s brokerage. Sometimes, the real estate agent can be both the listing and the buyer’s agent depending on the deal.
How much do real estate agents really get paid? The example below will better illustrate the process.

Mr. Client wants to sell his property, for $280,000.00. He meets a real estate agent named Bob, who works for the WiseBuy Realtor. Mr. Client agrees to pay a 6% commission, of the selling price. Bob and Mr Client sign a listing agreement. Bob lists the property on the MLS and puts a “For Sale” sign up in front of the property. Bob is contacted by Agent Sue who has a client that is looking for a house. Agent Sue takes Mrs. Buyer to Mr. Client’s property and shows her the house. Agent Sue submits an offer, on behalf of Mrs. Buyer, for $275,000.00 that was accepted by Mr. Client.

The agreed 6% commission paid by Mr. Client was split 50/50 between the selling agent’s brokerage and the buying agent’s brokerage. Agent Bob’s brokerage received $8,250.00 and Agent Sue’s brokerage received $8,250.00. Since Bob is on a 50/50 commission split with his brokerage WiseBuy Realtor, his total commission is $4,125.00.

The breakdown of commissions earned by Bob and his broker.

  • Total commission paid by the seller $16,500.00 (Typically, the seller pays the realtor fee unless otherwise negotiated)
  • Total commission paid by the buyer $0.00
  • Bob’s commission $4,1250.00
  • WiseBuy Realtor brokerage commission $4,1250.00

Real Estate Investment Clubs

Real Estate Investment Clubs

Real estate is not a property business; it is a relationship business. In order to be successful in real estate, the new investor needs to build a network of other investors and real estate professionals. There are many ways to accomplish this task, however, attending real estate investment clubs is a good way to jumpstart the networking process.

Real estate investment clubs are typically held one night a month and are free to attend for the first time. After the first attendance, you will either have to pay at the door or become a member. It is recommended to become a member as there are benefits to members that exceed the cost of the annual membership fee.

There are 3 main reasons to regularly attend investment club meetings:

  1. Find other cash investors to work with
  2. Network with professionals that will support you in your business.
  3. Learn about the local market.

Finding cash investors is crucial to building a successful investing business. Many times, homes are bought and sold through/with other investors. Most investors will not buy every deal they come across therefore, the investor will sell the property/information to another investor using a wholesale technique. Having a network of cash investors provides options to get a deal completed.

An investor is an expert in buying and selling property. They are not experts in taxes, legal issues, keeping the books, insurance, property management, and other facets of real estate. Therefore, the investor should surround himself/herself with professionals to take advantage of their expertise. In doing this, the investors time is freed up to focus on the business of finding, buying, and selling properties.

We all know the real estate market is constantly shifting. Techniques to find deals are continually evolving. A quick way to find out what is working in the local market is to attend investment clubs. Investment clubs are great places to share ideas, knowledge, and techniques that are working for the current status of the market. Many times, investors willingly share their techniques in an effort to find other deals. A successful investor’s belief is that there are enough deals out there for everyone therefore, the more people they help the more deals will come their way.

Remember, real estate is not a property business, it is a relationship business. A great way to build those necessary relationships is to attend real estate investment clubs.

Staging Investment Properties

Staging Investment Properties

In today’s market, property owners have found it worth their while to invest in staging their home when they plan to sell their property. Property staging is the art of decorating a property to help it sell faster. Statistics have also shown that staged properties are perceived to have a much stronger value meaning a higher selling price that would result in more money for the property owner.

Recent studies have shown that a beautifully staged property can draw in more potential buyers as it makes the property visually inviting to prospective new home owners. By creating an ambience of comfort and warmth, would-be buyers are given an example on how to plan out their own designs to use in the property rather than being presented with a large empty room.

You get one chance to make a first impression when trying to sell your home, therefore, it is really important that it is presented at its best. It is ok if you want to do the staging yourself but it does not necessarily mean that you can do it as well as a professional home stager would. Remember, staging can require a lot of time, skill, and energy so it would be wise to be realistic about whether you have the patience to take on this important task yourself or hire a professional. Here are some basic tips when staging a house:

  1. PAINT: Light neutral colors are recommended to help inspire prospective buyers in visualizing where to put their own household items in the house. Neutral colors are also the easiest colors to decorate with.
  2. CLEANLINESS: A clean, well-maintained property is always the first thing buyers will notice when entering your property. Scented candles will make the house smell good and clean.
  3. DE-CLUTTER: De-clutter and remove personal items. Home staging is beyond your normal redecoration. Do not forget that the house is now a commodity you are planning to sell and stop thinking of it as your home.
  4. FURNITURE: Buy or rent new furniture to replace anything old and shabby looking. Old, ugly, and outdated furniture can be an eyesore and could be the reason holding you from making a home sale.

Hiring a staging expert and how much it would cost would depend on the property and how much work is needed. Contact various home stagers and ask for estimates. A home stager will want to look in the property and make recommendations. It could mean stripping your house of all furniture and furnishing your property from top to bottom if needed to improve the appeal and marketability of your property. A professional home stager will showcase your property to make it stand out against its competitors. Although it sounds like it would cost you a lot of money, it is a wise investment. Staging your property will help you get the highest price for your property and help it sell faster.

Why Hire a Property Manager

Why Hire a Property Manager

Having a competent property manager on your power team can add substantial value to your investment. I would recommend investors who are planning on doing a buy and hold strategy to get a good property manager to work with them. They can save you time, money and legal issues from tenants. I will outline eight reasons you should hire a property manager.

Screening Tenants: PM’s (Property Managers) have a lot of experience in screening for the right tenants for you. They know how to quickly analyze a good tenant from a bad one, saving you hassle in the long run.

Tenant Retention: It will be important for you to have long term tenants and one way to insure the tenants are happy is to have a good PM taking care of the tenants needs. A good PM will have general business practices that will ensure good tenant retention, so be sure to ask them what programs they have in place.

Rent Collection: Too often when investors try to manage properties themselves they let tenants walk all over them. A good PM will be your barrier between yourself and your tenants. PM’s are doing a job and will follow the terms of the lease and tenants know they don’t make the final decision, you do, and they don’t have access to you. Therefore, this process keeps you out of the light and lets the PM do their job.

Maintenance Cost: Knowing who to call to fix problems with your property is huge. Most PM’s know experienced contractors who have already been vetted by them, who can also give you price discounts on repairs. Keeping the properties in good condition will save you on costly repairs and keeps your tenants happy.

Vacancy: Shorter vacancy time is better for your revenue. A good PM can help improve and prepare the property for rent to maximize profits. They can determine proper rental rates to maximize the units. Lastly they can effectively market your properties to potential renters via many advertising mediums.

Legal Problems: Seasoned investors can tell you that a troublesome tenant can cause enormous legal problems. That’s why a good property manager is important to have because they will have knowledge of the most current landlord-tenant laws and can save you from any potential law suits.

Taxes: Most PM’s can help you understand what tax advantage you can claim. They can also help organize all your paperwork to give to your accountants.

Owners Benefits: A good PM will keep your stress level low because they will handle all the day to day activities on your properties. They have a network of people they will utilize so you don’t have to go searching around. They can free up your time so you can focus on other aspects of your business.

It will take time to find the ideal PM, so use this outline to find the right one for you. They can help protect your assets and keep your cash flow coming in. Make sure to interview several to get an idea on whom to go with.

What is a Home Inspection Report?

What is a Home Inspection Report?

A home inspection report is a useful tool in the real estate market for both buyers and sellers. A home inspection is an examination of the conditions in a house. These conditions are those that affect the property values and include such items as structure and mechanicals. “The home inspection takes the uncertainty and emotional barriers out of buying a home.” (Gonzalez)

A home inspection is not an appraisal. An appraisal is a method of determining property value and takes into consideration items such as square footage and property value. The home inspection will take these factors into consideration but also accounts for the inside prospective of the home.

The home inspection report is unique to residential properties and is used to determine and diagnose the property characteristics.

We will explore the expectations of a buyer or seller when entering into a home inspection. During the home inspection, the condition and structure of the home will be documented by an inspector after taking a simple visual assessment of the property.

After the exterior is visually inspected, the heating, ventilation and air conditioning systems are examined and their performance recorded. The inspector will not disassemble the equipment but turn it off and on to see if it is in working condition. The inspection will report any observed material defects.

Plumbing is an important component of a home and the inspector will visually examine the operation of the plumbing system. The water flow is expected to be free of any obstruction so clear, clean flow of water should occur. The inspector is making sure that sewage and waste return is separate from the fresh water supply. Additionally, the inspector will visually check the water heater.

The electrical system is also visually inspected and lights and outlets randomly checked. The notation of the type of electrical box as to whether the service is fuse or switch triggered will be documented in your inspection.

In conjunction with the electrical and heating review some inspectors will offer a thermal imaging inspection using an infrared camera to give the information on heat loss and any electrical problems that are not visible to the causal observance.

Choosing a home inspector can be a difficult process in some areas because of the large amount of inspectors available and their different levels of education and competency. When considering a home inspector, there are several approved education institutions, and although not national, they can be found on the individual state sites such as nachi.org or npiweb.com. These national home inspection schools add credibility to the training given to the inspector. These sites will also give a list of the inspectors in your area by zip code.

The average fee for this service is between $350 and $500 and varies according to location, size and type of inspection needed. The home inspector will ask several questions before quoting a price so it is best to call and discuss prices with a few inspectors in your home area. It is prudent when buying or selling a home to get a home inspection. This will save money on expenses later on after the purchase and in some cases help to firmly set the selling price.

 

 

References

Gonzalez, Britttany. “American Society of Home Inspectors.” 2012. Financial Firsts:. [online]. 18 January 2016. Accessed January 2106.

Bates, Ronals. NPI. 2015. http://npiweb.com/. [online] Accessed January, 2016.

NACHI (National Association Certified Home Inspectors) – http://nachi.org

Buying a Rent Ready Property

Buying a Rent Ready Property

When looking for properties to purchase as rentals, many investors prefer to focus on “rent-ready properties”.

The first and most important part of buying a rental property should be to learn about the current market conditions of the area. Always keep in mind that this is a rental, not a high end home. However, the way that your property stacks up to the direct competition in the area determines your rental amount and occupancy rate. You should make an effort to learn about what type of rental properties you’ll be competing for renters with, to make sure that you’re buying a property that’s in a comparable condition. This should of course be done before you even make an offer on the property to begin with.

 

Always keep in mind that this is will be your own property even though you are not going to live in it yourself. Make sure that the outer shell of the property is sound and in good condition and that all necessary improvements are completed. If the exterior of your building is compromised in any way, then the inside will be at risk as well.

Also decide what appliances you are going to provide by learning what other rental properties in the area are providing. As you evaluate a prospective property, look for possible liability risks more than minor blemishes. If you can’t physically visit the property yourself make sure that you get a copy of an inspection report.

 

Here are some issues to look for

  • Are all of the electrical plates present and in good repair?
  • Are there enough smoke detectors and are they placed properly?
  • Are there any issues with lead paint, mold or asbestos?
  • Check the handrails for a good tight fit.
  • Assure that the there are no plumbing leaks.
  • Pay particular attention to the big replacement cost items such as:
  • the Heating system – boiler, furnace, heat pump, etc.
  • air conditioning/cooling system
  • water heater
  • dish washer
  • garbage disposal

 

Make sure that the house you’re buying looks good so that you can retain the best tenants but you shouldn’t expect custom cabinets and granite countertops in a rental. High end fixtures are typically not required. Just make sure that it looks nice and clean. It’s ok to buy a lower grade home to use as a rental but make sure that it is actually livable.

 

Remember, if you agree to buy a property in “as-is condition” then you will need to make any necessary repairs that are needed. If you don’t want to do that, you should negotiate with the seller to fix things before closing.

 

Once you’ve owned the house for a while you may need to replace or repair some things. When you need to replace something in the house, try not to be too cheap. Some investors will take the attitude of “It’s a rental, we’ll just put in the cheapest products that they make and call it good. After all, renters typically are not as careful with houses as they would be if they owned the place.” Unfortunately for you, plastic faucets and cheap door locks break easily and can cost you more in the long run. If while your renter calls you to say that the faucet is leaking, or a locked door handle won’t turn, {because they’re cheap}, you have to fix it. Consider putting in just a bit higher quality than the absolute cheapest, especially if it doesn’t cost a whole lot more.