With one of the largest demographic populations, baby boomers bring a unique niche to the investor’s marker. However, is investing in a senior community beneficial? Consider these strategies:

Types of senior citizen investments

Since there are numerous kinds of elderly care communities, the opportunities you have are endless. Primarily, the three kinds of investments include:

• Independent living

Independent living houses function almost like a standard apartment complex. When it comes to investing in an independent living facility, there are a couple of benefits. For one, independent living facilities are considered to be low-risk investments. Moreover, such houses have lower operating costs and are subject to little regulation.

• Assisted living

Assisted living facilities are considered to be stable investments. Generally, such facilities generate a higher amount of revenue because of the expanded services offered. Similarly, since they are need-based facilities, they have steadier occupancy rates. Such facilities also occupy the largest share in the senior housing market.

• Communal housing

Since communal housing involves many individuals living together, the amount of revenue generated is more. Plus, communal housing is preferred by many.

Benefits of investing in senior communities

• Quality healthcare

Apart from a warm and pleasant climate, senior communities are also often located close to either a college campus or an active city. This means you’ll find numerous activities nearby along with high-quality healthcare. In fact, retirement communities are generally situated near top universities that are famous for stellar healthcare programs.

• Easy to make a successful marketing plan

Investing in a retirement home in a senior community involves targeting a particular market. Since you know that residents must be at least 55 or older if they want to rent or purchase your property, you can come up with a marketing plan accordingly. You can develop a plan that will appeal to the demographic.

• Increased demand

Most houses in any community are suburban houses, and suburban houses are most suitable for young families. Without a caring family member or a network of young and helpful neighbors, senior citizens living in suburban houses can feel isolated and incapable of maintaining their property. Consequently, there is an increased demand for affordable and safe housing that provides adequate services for senior citizens. So, investing in a senior community is full of opportunities.

Wholesaling real estate is commonly described as the strategy of putting a piece of property under contract with the intent to assign the contract to another buyer.  This type of real estate purchase approach is generally used with distressed properties where the real estate entrepreneur doesn’t plan or fixing up or rehabbing the property.

In order to profit from this stratagem, you will need to put the property under contract at a lower price than the potential market value.  In doing so, you allow the final buyer to make a profit when the property is upgraded or renovated.  The key to effective and profitable wholesaling is your ability to find properties that can be purchased at below market value.  We call properties in this condition distressed properties.

In almost all cases, the sellers of these properties are extremely motivated, and as such, will likely be willing to dispose of the property for a substantially reduced price.  Many, if not most, of these properties require cosmetic repairs, remodeling, or substantial cleaning in order to bring the property up to full market value.  Someone will have to do the upgrading or repairs, but that person is not the wholesaler.

The wholesaler finds the deal, evaluates the repairs, secures a ready buyer who is willing and capable of doing the repairs, and then sells or assigns his or her position to the end buyer.  In doing so, the wholesaler can make an immediate profit from the transaction.  There are no guarantees that you can make a profit when buying and selling real estate and wholesaling is no different.  However, if you, as a real estate entrepreneur, follow a proven strategy, do the proper due diligence, and get the proper education, wholesaling can make a lot of sense.  Let’s review six important reasons why this is true.

Reason #1 – Great Way to Learn and Start Real Estate Investing

Wholesaling real estate is certainly one way to profit from real estate and in order for it to work, it is essential that you are committed to real estate as an investment vehicle.  It is assumed that you will incorporate the proper mindset, have a positive attitude, and be willing to learn from the experiences of others.  You may be new to real estate or you may be a seasoned investor, but regardless of your personal situation, you can gain a great deal of additional knowledge about investing in real estate, negotiating with sellers, and understanding the local real estate market, when you follow the principles of wholesaling.

Real estate in every geographical area has unique characteristics.  As a real estate wholesaler, you will become extremely familiar with the local market.  In order to evaluate deals as to whether they make economic sense, you will need to become competent in determining market values, understanding basic repair and renovation expenses, and adapt at communicating one-on-one with sellers, brokers, and professional title companies.  This may seem like daunting undertakings, but it will happen as you learn and actually start doing something.

Wholesalers also need to learn basic direct marketing techniques as they apply to real estate.  These techniques include everything from drafting flyers, designing signs, and writing letters to home owners.  Successful wholesaling entrepreneurs also learn to use the Internet and how to effectively use websites.  All of this becomes much easier when you follow step-by-step guidance from successful mentors.

Part of your education and learning experience will come from learning how to locate the motivated sellers and distressed properties.  Some real estate wholesalers start by focusing on foreclosure and pre-foreclosure properties.  You can also work with existing multiple listing properties (MLS Properties) once you learn how to distinguish potential motivated sellers.  Remember that you are looking for properties that can be brought under contract at under market value.  There are MLS properties than can be purchased for substantial discounts, but you must learn to understand why individual owners might be extremely motivated to sell.  One caveat, all of these properties are visible to everyone, which makes it more difficult to negotiate the best deals.

Don’t be discouraged if you don’t find the ideal property listed on MLS.  There are lots of other ways to find and locate the distressed properties.  You can start by actually driving around and looking at properties in your locality.  If there are vacant houses, homes with untended yards, and properties in need of repair, these are potential wholesale properties.  This market familiarization process is all part of learning about your local real estate market.

For Sale by Owner properties are also wholesale opportunities.  These sellers may be willing to discount the property in order not to pay a real estate commission.  Real Estate auctions are also possibilities, but you will need to secure cash in advance as almost all auctions require immediate cash payments.

Finally, you will need to take a pro-active role in finding motivated sellers.  You may begin by placing signs (bandit signs), distributing flyers or using direct mail to advertise that you buy houses for cash.  Part of the wholesaling strategy is to secure the property by contract and then to assign this contract to a cash buyer who will act immediately in order to purchase at below market value.

SEE ARTICLE: Building Your Credibility as a Wholesaler

It is highly recommended that you get as much education and training on wholesaling as possible.  Make sure that your training is provided by reputable and experienced trainers.

Reason #2 – Eliminates Need for Credit and Large Personal Capital Investment

Every seller will require that the property is paid for.  Motivated sellers will still need a buyer that can solve their problem with cash or financing.  We can’t ignore the fact that cash will be required to purchase the property.  However, you won’t need a large amount of cash to put the property under contract.  Rather, you will need an earnest money deposit.  The actual cash to close the sale will come from your “buyer.”  This “buyer” will be the one who will actually complete the closing.  You, as the wholesaler, will provide the earnest money deposit.

In addition to the fact that you won’t need a large capital investment in order to complete your end of the transaction, you won’t need to rely on your credit to secure financing.  Your “buyer” will complete the transaction WITHOUT USING YOUR CREDIT.

Be aware that you must ensure that your contract to purchase the property must be assignable.  Generally, all contracts can be assigned unless specified otherwise.  However, you should explicitly state that your contract is assignable.  Be upfront with the seller and let the seller know that you may be using a partner or other investor as part of the purchase agreement.  Rather than hide the fact that you may have a partner or other investor, let the seller know that you may not be the person who actually takes title.  It’s important that the seller understands that the property is being sold, not that you may not be the final name on the deed.

Greed will kill a great deal.  You must allow for the seller to solve their problems, allow the “buyer” to make a profit, and earn a profit yourself.  A part of something is much better than a lot of nothing.  This simply means that you need to find sellers who are motivated to sell at below market value for any number of reasons, and then find a “buyer” who will step in and close the deal in order to make a profit.  When you receive your wholesale training from a trained expert, pay special attention to establishing values.

Before we go further, you must learn to construct good deals that allow for realistic profits.  Buyers from your buyers list will not act unless they firmly believe that they will be able to earn a profit.  They need to rely upon actual numbers as to what the property will be worth after repairs and renovation, and they must have a reliable estimate as to what those repairs will cost.  If you have actual numbers, you will be in a position to make a deal that works for you, the “buyer”, and the seller.

How do you find buyers who will step in and provide the cash to close the deal?  You must develop a good organized buyers list.  These are people who have the cash or credit to immediately act on a good deal.  Great training from qualified experts can provide valuable resources.  You can start with advertising for buyers with a website or craigslist.  You will need to develop a professional plan.  Many wholesalers join real estate investment clubs and network with other real estate entrepreneurs as a way of meeting “buyers”.   Don’t forget about friends and family as potential “buyers.”

Reason #3 – Teaches Negotiation Techniques

Wholesaling is a person-to-person business and you will need to learn proven negotiation tactics and techniques.  The more training you can receive on dealing with negotiation, the better your success will be in real estate wholesaling.  In every real estate negotiation, the seller wants one thing and the buyer wants something else.  Your goal as a negotiator is to find the common ground that will structure a great deal.

SEE ARTICLE: The 6 Key Elements for a Successful Real Estate Purchase Negotiation

Each time you meet with a seller or property owner you are in the process of learning how to negotiate.  Everything starts with learning why the seller is selling, or if the property is not actually for sale yet, why would the owner consider selling.  Is the property in foreclosure or does the seller have some immediate cash requirement?  There may be any number of reasons why the property is available, but you need to know the most important ones.  The more you know, the more money you might make.

As you gain experience talking to sellers, to “buyers”, and to other investors, you will gain confidence – both in what to say and what not to say.  It’s important to allow all parties in a real estate negotiation to come out ahead.  The moment you become to self-centered or greedy, the deal will vanish.  J. Paul Getty once said, “You must never try to make all the money that’s in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won’t have many deals.”  As you learn to follow this advice, your personal confidence will naturally improve.

The negotiation process is all part of understanding why the seller is selling.  Once you know what the seller’s true objectives are – the sooner you can find a way to solve them.  As you learn to become a problem solver, you will quickly become a better negotiator.

Reason #4 – Entrepreneur Can Build a Powerful Success Team

Every successful real estate wholesaler learns that success comes with having a powerful support team.  This team may help in determining renovation costs, establishing true market values, providing legal advice, structuring proper and successful closings, and building a list of “buyers.”  You may want to do all of this yourself, but it just won’t work.  You will need the help of others, and wholesaling will help you build a powerful support and success team.

A success team will communicate with each other and provide accurate information.  Each member of your team will support and contribute towards an eventual success.  Because every deal relies heavily on establishing a final market value of the property, you will want to find an appraiser who is credible and experienced.  The appraiser can assist you in not only establishing a present value, but an after-repair value as well.

It’s critical to be upfront with the title company when completing any wholesale transaction.  You will need to work with a title company that understands what you are doing, how you are structuring the deal, and how the assignment of contract (or double closing) will work.  The title officer must know what to say when setting up the closing and working with all the parties – seller, “buyer”, and yourself.

You will also need to work with contractors and cleaners.  You may not actually do the contracting work, but you must know actual costs to finish the work.  In most cases, you may need to do some cleaning and initial work to present the deal to your buyer.  Actual realistic estimates and bids will help tremendously in your negotiations with your “buyer.”

Finally, you will need to establish a great buyers list.  This will be your stable of money people who will be anxious to step in and make a profit from your work in structuring the deal.  If you learn to structure win/win deals where both you and the “buyer” make money, you can soon have a list of people waiting to work deals with you.

Reason #5 – Can Reduce Risks

It’s already been established that we don’t have to have a large cash investment in order to effectively do real estate wholesaling.  When you eliminate the need for a substantial cash investment, you automatically reduce your risk of personal financial problems.  When you have to generate a huge cash investment, you oftentimes borrow excessively or create other financial problems.  Wholesaling can eliminate this problem and risk.

Another risk we eliminate by wholesaling is the risk of damaging your credit.  Your credit rating is valuable and every time you take on additional debt by borrowing, you are raising your risk.  A major benefit of wholesaling is the ability to structure a deal without borrowing money.

If you were to rehab the property yourself, you are susceptible to the risk associated with cost overruns and excess expenses.  Because you have assigned the contract to another party (the buyer), this risk is also eliminated.

Reason #6 – Can Create an Immediate Positive Cash Flow

We all want a positive cash flow, and most of us want that cash flow to start immediately.  When you learn to wholesale real estate and have an organized list of buyers ready to step in and complete a win/win deal, cash flow can start right away.  You are assigning the right and obligation to purchase the property, and this automatically allows you to make a profit when the assignment takes place.

The property owner or seller also can benefit from a quick closing of the property itself, which generally solves the problem the seller had with the property.

Real Estate wholesaling is a proven strategy that can benefit the seller by providing immediate cash for the property from the “buyer.”  It is also a great way to make a profit when you structure a win/win deal.  There are motivated sellers with distressed properties who actually need your help, there are “buyers” looking to make a profit, and you can succeed by structuring great deals.  The best way to make all this happen is to find a credible and qualified mentor or trainer who will guide you step-by-step in making real estate wholesaling a viable strategy.

Wholesaling real estate is commonly described as the strategy of putting a piece of property under contract with the intent to assign the contract to another buyer. This type of real estate purchase approach is generally used with distressed properties where the real estate entrepreneur doesn’t plan or fixing up or rehabbing the property.

In order to profit from this stratagem, you will need to put the property under contract at a lower price than the potential market value. In doing so, you allow the final buyer to make a profit when the property is upgraded or renovated. The key to effective and profitable wholesaling is your ability to find properties that can be purchased at below market value. We call properties in this condition distressed properties.

In almost all cases, the sellers of these properties are extremely motivated, and as such, will likely be willing to dispose of the property for a substantially reduced price. Many, if not most, of these properties require cosmetic repairs, remodeling, or substantial cleaning in order to bring the property up to full market value. Someone will have to do the upgrading or repairs, but that person is not the wholesaler.

The wholesaler finds the deal, evaluates the repairs, secures a ready buyer who is willing and capable of doing the repairs, and then sells or assigns his or her position to the end buyer. In doing so, the wholesaler can make an immediate profit from the transaction. There are no guarantees that you can make a profit when buying and selling real estate and wholesaling is no different. However, if you, as a real estate entrepreneur, follow a proven strategy, do the proper due diligence, and get the proper education, wholesaling can make a lot of sense. Let’s review six important reasons why this is true.

Reason #1 – Great Way to Learn and Start Real Estate Investing

Wholesaling real estate is certainly one way to profit from real estate and in order for it to work, it is essential that you are committed to real estate as an investment vehicle. It is assumed that you will incorporate the proper mindset, have a positive attitude, and be willing to learn from the experiences of others. You may be new to real estate or you may be a seasoned investor, but regardless of your personal situation, you can gain a great deal of additional knowledge about investing in real estate, negotiating with sellers, and understanding the local real estate market, when you follow the principles of wholesaling.

Real estate in every geographical area has unique characteristics. As a real estate wholesaler, you will become extremely familiar with the local market. In order to evaluate deals as to whether they make economic sense, you will need to become competent in determining market values, understanding basic repair and renovation expenses, and adapt at communicating one-on-one with sellers, brokers, and professional title companies. This may seem like daunting undertakings, but it will happen as you learn and actually start doing something.

Wholesalers also need to learn basic direct marketing techniques as they apply to real estate. These techniques include everything from drafting flyers, designing signs, and writing letters to home owners. Successful wholesaling entrepreneurs also learn to use the Internet and how to effectively use websites. All of this becomes much easier when you follow step-by-step guidance from successful mentors.

Part of your education and learning experience will come from learning how to locate the motivated sellers and distressed properties. Some real estate wholesalers start by focusing on foreclosure and pre-foreclosure properties. You can also work with existing multiple listing properties (MLS Properties) once you learn how to distinguish potential motivated sellers. Remember that you are looking for properties that can be brought under contract at under market value. There are MLS properties than can be purchased for substantial discounts, but you must learn to understand why individual owners might be extremely motivated to sell. One caveat, all of these properties are visible to everyone, which makes it more difficult to negotiate the best deals.

Don’t be discouraged if you don’t find the ideal property listed on MLS. There are lots of other ways to find and locate the distressed properties. You can start by actually driving around and looking at properties in your locality. If there are vacant houses, homes with untended yards, and properties in need of repair, these are potential wholesale properties. This market familiarization process is all part of learning about your local real estate market.

For Sale by Owner properties are also wholesale opportunities. These sellers may be willing to discount the property in order not to pay a real estate commission. Real Estate auctions are also possibilities, but you will need to secure cash in advance as almost all auctions require immediate cash payments.

Finally, you will need to take a pro-active role in finding motivated sellers. You may begin by placing signs (bandit signs), distributing flyers or using direct mail to advertise that you buy houses for cash. Part of the wholesaling strategy is to secure the property by contract and then to assign this contract to a cash buyer who will act immediately in order to purchase at below market value.

SEE ARTICLE: Building Your Credibility as a Wholesaler

It is highly recommended that you get as much education and training on wholesaling as possible. Make sure that your training is provided by reputable and experienced trainers.

Reason #2 – Eliminates Need for Credit and Large Personal Capital Investment

Every seller will require that the property is paid for. Motivated sellers will still need a buyer that can solve their problem with cash or financing. We can’t ignore the fact that cash will be required to purchase the property. However, you won’t need a large amount of cash to put the property under contract. Rather, you will need an earnest money deposit. The actual cash to close the sale will come from your “buyer.” This “buyer” will be the one who will actually complete the closing. You, as the wholesaler, will provide the earnest money deposit.

In addition to the fact that you won’t need a large capital investment in order to complete your end of the transaction, you won’t need to rely on your credit to secure financing. Your “buyer” will complete the transaction WITHOUT USING YOUR CREDIT.

Be aware that you must ensure that your contract to purchase the property must be assignable. Generally, all contracts can be assigned unless specified otherwise. However, you should explicitly state that your contract is assignable. Be upfront with the seller and let the seller know that you may be using a partner or other investor as part of the purchase agreement. Rather than hide the fact that you may have a partner or other investor, let the seller know that you may not be the person who actually takes title. It’s important that the seller understands that the property is being sold, not that you may not be the final name on the deed.

Greed will kill a great deal. You must allow for the seller to solve their problems, allow the “buyer” to make a profit, and earn a profit yourself. A part of something is much better than a lot of nothing. This simply means that you need to find sellers who are motivated to sell at below market value for any number of reasons, and then find a “buyer” who will step in and close the deal in order to make a profit. When you receive your wholesale training from a trained expert, pay special attention to establishing values.

Before we go further, you must learn to construct good deals that allow for realistic profits. Buyers from your buyers list will not act unless they firmly believe that they will be able to earn a profit. They need to rely upon actual numbers as to what the property will be worth after repairs and renovation, and they must have a reliable estimate as to what those repairs will cost. If you have actual numbers, you will be in a position to make a deal that works for you, the “buyer”, and the seller.

How do you find buyers who will step in and provide the cash to close the deal? You must develop a good organized buyers list. These are people who have the cash or credit to immediately act on a good deal. Great training from qualified experts can provide valuable resources. You can start with advertising for buyers with a website or craigslist. You will need to develop a professional plan. Many wholesalers join real estate investment clubs and network with other real estate entrepreneurs as a way of meeting “buyers”. Don’t forget about friends and family as potential “buyers.”

Reason #3 – Teaches Negotiation Techniques

Wholesaling is a person-to-person business and you will need to learn proven negotiation tactics and techniques. The more training you can receive on dealing with negotiation, the better your success will be in real estate wholesaling. In every real estate negotiation, the seller wants one thing and the buyer wants something else. Your goal as a negotiator is to find the common ground that will structure a great deal.

SEE ARTICLE: The 6 Key Elements for a Successful Real Estate Purchase Negotiation

Each time you meet with a seller or property owner you are in the process of learning how to negotiate. Everything starts with learning why the seller is selling, or if the property is not actually for sale yet, why would the owner consider selling. Is the property in foreclosure or does the seller have some immediate cash requirement? There may be any number of reasons why the property is available, but you need to know the most important ones. The more you know, the more money you might make.

As you gain experience talking to sellers, to “buyers”, and to other investors, you will gain confidence – both in what to say and what not to say. It’s important to allow all parties in a real estate negotiation to come out ahead. The moment you become to self-centered or greedy, the deal will vanish. J. Paul Getty once said, “You must never try to make all the money that’s in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won’t have many deals.” As you learn to follow this advice, your personal confidence will naturally improve.

The negotiation process is all part of understanding why the seller is selling. Once you know what the seller’s true objectives are – the sooner you can find a way to solve them. As you learn to become a problem solver, you will quickly become a better negotiator.

Reason #4 – Entrepreneur Can Build a Powerful Success Team

Every successful real estate wholesaler learns that success comes with having a powerful support team. This team may help in determining renovation costs, establishing true market values, providing legal advice, structuring proper and successful closings, and building a list of “buyers.” You may want to do all of this yourself, but it just won’t work. You will need the help of others, and wholesaling will help you build a powerful support and success team.

A success team will communicate with each other and provide accurate information. Each member of your team will support and contribute towards an eventual success. Because every deal relies heavily on establishing a final market value of the property, you will want to find an appraiser who is credible and experienced. The appraiser can assist you in not only establishing a present value, but an after-repair value as well.

It’s critical to be upfront with the title company when completing any wholesale transaction. You will need to work with a title company that understands what you are doing, how you are structuring the deal, and how the assignment of contract (or double closing) will work. The title officer must know what to say when setting up the closing and working with all the parties – seller, “buyer”, and yourself.

You will also need to work with contractors and cleaners. You may not actually do the contracting work, but you must know actual costs to finish the work. In most cases, you may need to do some cleaning and initial work to present the deal to your buyer. Actual realistic estimates and bids will help tremendously in your negotiations with your “buyer.”

Finally, you will need to establish a great buyers list. This will be your stable of money people who will be anxious to step in and make a profit from your work in structuring the deal. If you learn to structure win/win deals where both you and the “buyer” make money, you can soon have a list of people waiting to work deals with you.

Reason #5 – Can Reduce Risks

It’s already been established that we don’t have to have a large cash investment in order to effectively do real estate wholesaling. When you eliminate the need for a substantial cash investment, you automatically reduce your risk of personal financial problems. When you have to generate a huge cash investment, you oftentimes borrow excessively or create other financial problems. Wholesaling can eliminate this problem and risk.

Another risk we eliminate by wholesaling is the risk of damaging your credit. Your credit rating is valuable and every time you take on additional debt by borrowing, you are raising your risk. A major benefit of wholesaling is the ability to structure a deal without borrowing money.

If you were to rehab the property yourself, you are susceptible to the risk associated with cost overruns and excess expenses. Because you have assigned the contract to another party (the buyer), this risk is also eliminated.

Reason #6 – Can Create an Immediate Positive Cash Flow

We all want a positive cash flow, and most of us want that cash flow to start immediately. When you learn to wholesale real estate and have an organized list of buyers ready to step in and complete a win/win deal, cash flow can start right away. You are assigning the right and obligation to purchase the property, and this automatically allows you to make a profit when the assignment takes place.

The property owner or seller also can benefit from a quick closing of the property itself, which generally solves the problem the seller had with the property.

Real Estate wholesaling is a proven strategy that can benefit the seller by providing immediate cash for the property from the “buyer.” It is also a great way to make a profit when you structure a win/win deal. There are motivated sellers with distressed properties who actually need your help, there are “buyers” looking to make a profit, and you can succeed by structuring great deals. The best way to make all this happen is to find a credible and qualified mentor or trainer who will guide you step-by-step in making real estate wholesaling a viable strategy.

Having just finished a two day one-on-one training in Vero Beach, Florida, I discovered some great investment opportunities.  These opportunities will present themselves in many areas across the United States and throughout the world.  The common factor being an explosive market in a high-end neighborhood.  Vero Beach is unique in that it is located near the Atlantic Ocean and sits between the ocean and inlet bays and canals which create the ability to have docks in one’s backyard with water access to the ocean.  There are many smaller older homes in the neighbor with exceptional potential to be torn down and rebuilt into new larger estate homes.  Many retail buyers with the necessary means are looking for a location on the water but do not want a tiny old home, nor do they want to be involved in a major remodel.  What they want is a brand new modernly built home of reasonable size with all the updated amenities on a property in the right location.  The opportunity for an investor is that the difference in price of a small outdated home and a new undated home is staggering; as much as $500,000 to a million more in price, making it very profitable to add a new roof or second story and upgrade all the finishes or even to demolish the existing home and build a new structure from the ground up.

The typical older home in the Vero Beach area costs between $400,000 to $800,000 depending on whether it is located on the water and a newly built home goes from $800,000 to 2 or 4 million depending on its size, location and view.  The building costs in the area are between 200 and 240 per square foot and the resale price can be as high as 650 per square foot, leaving plenty of room for buying the property, demolishing the house and building a new structure.  Here is an example of a typical project:

Purchase an existing older small home on a Bayfront property with dock for $650,000 to $800,000.  Demolish the home for $25,000 and rebuild a new 4500 square foot structure at $220 per square foot for $990,000.  Then resale the home for $2.9 million.

Price of home:                                                    $2,900,000.00

Land cost:                                                – $800,000.00

Cost to build home:                                   -$990,000.00

Demolition cost:                                        – $25,000.00

Realtor fee (5%):                                      – $145,000.00

Closing and holding cost (5%)                   – $145,000.00

Financing for construction loan:                  – $60,000.00

Profit:                                                        $735,000.00

The initial investment with be to buy the house with cash and pay buyers closing cost. The building can be financed with a construction loan, including the demolition cost.  Everything else with be paid from the proceeds of the sale of the property.

Return on Investment is the profit of:                 $735,000.00

Divided by the initial investment of:                   $840,000.00

NOI equals:                                                       88%

Not a bad return for a 10-12 month project.

New real estate investors quickly learn that investing in real estate is far from easy.  Success is possible, but it is almost totally dependent upon the ability of the investor being able to acquire a strong work ethic.  The term “work ethic” is commonly described as having a belief that hard work and diligence have a moral benefit and demonstrate a high value in strengthening character.

Your ability in developing a great work ethic will ultimately determine the degree of success you obtain in real estate investing.  Regardless of whether you decide to invest in rental properties or determine to find good fix up properties and flip them for a profit, the work ethic you demonstrate to buyers, sellers, or other investors can be paramount in reaching your real estate goals.  This being the case, let’s examine 7 specific elements of a great work ethic and apply these elements to real estate investing in the economy of today.

Element #1 – Taking Responsibility for the Work from Start to Finish

Once you determine which specific strategy you are going to follow in your real estate investment endeavor, you must assume the role of principal leader.  Yes, you may have partners and investors that are part of your team, but you are responsible for your actions and for the work of your team.  You may hire competent individuals to assist you in finding properties, performing fix up and repairs, appraising, doing inspections and a myriad of other tasks, but it is still your responsibility to ensure that the work is done and done correctly.  You can’t assume that other individuals are doing what you asked them to do unless you check on them and review what they do.

As the responsible party, you must always be aware of what the other members of your investment team are doing.  When we talk about being responsible from start to finish, we are indicating that we won’t blame others when something doesn’t go as planned.  If you have hired a contractor to repair a sidewalk and you don’t give exact instructions on how the work is completed, and then you aren’t satisfied with the end result, don’t blame the contractor.  You must be involved and give specific instructions if you want specific results.  When you blame others when you haven’t given adequate and detailed previous instructions, you are showing the world that you have the exact opposite of a good work ethic.

Responsibility is often referred to as the state or fact of having the duty to deal with something or having control over someone.  This control doesn’t imply that you are mean or belligerent to others, but rather, that you are the final decision maker and the one who bears the blame or the rewards for the results that occur.  When you fully assume the role of responsible party, you are accepting the consequences of your actions and decisions.  However, with responsibility comes the ability to take action and direct changes when circumstances dictate.

In order to make changes, you must learn all you can about the real estate strategy you are going to follow.  The more you know, the better equipped you will be in directing others toward joint real estate goals.  As you develop the ability to assume the mantle of responsible leader, your real estate success can and should also increase.

Element #2 – Demonstrating Honesty in all Areas of Your Investment Strategy

Honesty means much more than just returning borrowed tools from your neighbor.  A truly honest person is recognized as being honest in all areas of his or her life.  If you aspire to be an honest person, you must first understand what honesty is in business, and specifically in real estate investing.  Honesty is basically defined as the straightforwardness of conduct along with the absence of lying, deceit, cheating, theft and the list can go on indefinitely.

A truly honest individual will always be trustworthy, loyal, sincere, and fair.  When you apply these traits in investing in real estate you quickly realize that you aren’t going to deceive another party.  When you are selling a property, you are not going to hide obvious defects in the property, nor are you going to say things that are not true.  Your ability to state the facts as you know and understand them will help you acquire properties that pay both short and long-term dividends.

Some new real estate investors may be tempted to overstate figures and facts, and when this happens, failure is soon right around the corner.  Always be truthful in your disclosures and in your goals and objectives.  When you do this, you will find that people trust you and will behave as you would want them to.

It’s been said that honest people don’t hide their deeds.  In real estate you can expect people to trust you if you do what you say you are going to do.  This level of trust then becomes reciprocal.  James Altucher once said, “Honesty is the fastest way to prevent a mistake into a failure.”  Almost all real estate investors make some kind of mistakes.  When it happens, own up to your mistakes and be honest with other people who may be involved.  When you do this, you are almost always rewarded in the future with respect from others who cherish your ability to be honest and straightforward.  If you make appointments and are running late, be honest and let the other people involved know of your delays.  The more honest you are with others, the greater respect you will receive, and this respect will directly affect your ability to achieve success.

Element #3 – Displaying Self-Discipline in Your Investment Strategy

Naturally, you must have learned and adopted a specific investment strategy before you can begin the process of being disciplined in following it. If you are interested in finding great rental properties, you must spend the time learning what are the attributes of such properties. There is a difference between short and long-term rentals, and you must first understand what these differences are.  Some rental properties are geared toward young families, while other properties are much more suited towards larger families.

Disciple means that you are willing to spend the time and effort in following through with your goals and aspirations.  Applying this to finding the right rental properties means that you will spend your time and efforts becoming more knowledgeable about market conditions and properties.  Being disciplined means that you have the strength to withstand hardships and setbacks as they occur.  And they will occur at one time or another in your real estate investment career.  Perhaps you will have a deal that doesn’t go happen as planned.  When this unfortunate event occurs, what will you do?  Will you give up or will you evaluate your mistakes and move forward?  You must have the fortitude to overcome setbacks and see them as stepping stones.

SEE ARTICLE: “How to Convert Stumbling Blocks into Stepping Stones.”

This ability to master self-discipline is best achieved by adopting clear goals and following simple steps.  In other words, develop an execution plan.  Know in advance what you will do in unexpected circumstances.  Planning for the unexpected prevents unexpected results. The more time you take in following pre-planned strategies, the better your short and long-term results will be.

Self-discipline has been defined as “the ability to control one’s feelings and overcome one’s weaknesses, or the ability to pursue what one thinks is right despite temptations to abandon it.”  In real estate investing this temptation to abandon a strategy is far too common.  Oftentimes investors become tempted to give up because of the amount of time and effort required to achieve tangible results.  When you are discouraged because you haven’t found the right property for the right price, hang in there and put in the extra effort required to achieve the results you are looking for.  As you learn to control your feelings and move forward when discouragement happens, you will develop more and more self-discipline.  When this happens, you will become more successful in your investment strategies.

Element #4 – Being Respectful to all Your Associates

Respect is something earned and not given, and when you learn to show respect to others, you will earn respect in return.  This is especially true when you are developing a real estate investment team.  How you deal with the people you come in contact with will directly impact how successful you will become in real estate.  These one-on-one contacts include interactions with real estate agents, property owners, buyers, and real estate professionals.  As you interact with these individuals, you should always show them respect through your words and actions.  This respect is demonstrated by the regard you give to others’ feelings, wishes, and beliefs.  The first time you show disrespect by disregarding the feelings and beliefs of others, will be the first real estate failure you encounter.

Some of the simplest ways of showing respect to others are through easily learned skills.  Start by learning to listen to what is being said.  This is more than just staying quiet while words come out.  True listening implies empathy towards the other individual.  The words “silent” and “listen” have the same letters, but have totally different meanings.  When you truly listen to another individual you are trying to understand what the person is feeling and implying, not just the words.  As you develop this skill, you will develop the ability to receive and interpret messages.

Consider meeting with a seller and asking him why he is selling the property.  You may be tempted to just listen for the price, but there should be much more.  You need to understand the reasons for the sale.  When you do this, you will make a better deal and will also show respect to the seller by listening to the reasons for the sale of the property.  You could also encourage the other person to reveal more and more information.

The more encouragement you offer someone else in revealing information, the more respect you are showing.  As you learn to do this, you will also develop better one-on-one relationships.  Encouragement implies giving support, confidence, and hope.  Once the other individual feels this level of support, the better he or she will feel about you as a person and a potential partner of some kind.

Element #5 – Showing Professionalism in Your Actions

Professionalism is a word used far too often and far too often misunderstood.  By definition the word implies confidence and skill.  And, yes, you do want to be a professional in your real estate investment endeavors.  How then do you develop and demonstrate confidence and skill as a “NEW” real estate investor?  Since you are new in the real estate investing world, confidence may still be lacking.  However, you still have certain skills.  Perhaps you have developed the ability to speak clearly.  If this is the case, demonstrate it.  Do a self-analysis and determine areas where you have skills and demonstrate and use these skills.  How you dress can also demonstrate professionalism.  If you are looking for investment partners, dress appropriately.  It’s often been said that how you dress impacts what you achieve, and this can certainly be true in real estate.

Professionals do what they say they are going to do.  If you want to be perceived as a professional, you must do the same thing.  If you set an appointment for a certain time, then keep it.  If you say you are going to show the seller of a property financial information that explains how you are going to pay for the property, then do it.  If you tell a potential buyer of a property that you will show where there was a leak in the roof, then show it.  Simply stated, do what you say you are going to do.

Element #6 – Exhibiting Teamwork when Developing a Real Estate Team

It is extremely doubtful that you will achieve success in real estate all by yourself.  You will undoubtedly need a team of some kind.  You may involve friends and family as investors. These could be silent or public partners.  Maybe you will include real estate agents and attorneys as part of the team.  Additionally, you may want to have a good financial partner as part of the team.  In a short period of time, your team could include many individual people who have different skills and talents.  How you develop that team will be crucial to the success of your real estate adventure.

Having the team is important, but how you operate the team is much more critical.  This is what we call teamwork.  The definition of teamwork is the combined action of a group of people, especially when effective and efficient.  Your real estate team must be both effective and efficient.  The failure of the team to exhibit this quality is the best definition of ineffective teamwork.

Teamwork implies a common goal achieved by collective efforts.  It is imperative that your team work together.  The only way this happens is when you lead it effectively.  This starts when you make teamwork a priority and reward the efforts of both the individuals and the team.  Your goals and the team goals must be one and the same.  When you are working together, you will achieve success.

Two qualities that are very important are trust and communication between team members.  If you are searching for the right rental property and are using a buyers agent, then you must communicate with the agent exactly what type of property you are searching for, and then trust the agent to locate potential properties that fit your criteria.  Ken Blanchard once said, “None of us is as smart as all of us.” This is certainly true when developing a team that works together in real estate.  When you rely solely on your own decisions, you are eliminating the power of teamwork.

Element #7 – Taking Pride in the Quality of Work

Work is the foundation of success in real estate.  Work is what fuels the engine that drives you toward your goals and aspirations.  As you complete goals, you should take pride in your accomplishments.  Others will see what you accomplish and value your efforts.  When you take pride in doing good work and accomplishing your goals, you are exhibiting the benefits of a great work ethic.  It’s only when you value what you do that you’ll be able to do what you dream of doing.  Learn to enjoy every facet of your real estate journey.  When your work becomes joy, your work ethic will increase.  Pride in the quality of your work is the deep pleasure or satisfaction that comes from accomplishing goals and achievements.  The key is the word “quality”.  Only when we meet our expectations can we truly say that we have achieved quality.

A great work ethic is something every real estate entrepreneur should desire.  When you develop these seven elements, the goal of a truly great work ethic is now attainable.

Creative Ways of Financing Your Business Project

Getting a business off the ground costs approximately $2,000 up to $5,000 for home franchises and $3,000 for micro-businesses, according to Business News Daily. True to the words of Sol Luckman, “It takes money to make money.” The sad reality is that despite having brilliant billion-dollar business ideas and all the data in your favor, sourcing finance to start or finish projects can be quite taxing, especially for emerging entrepreneurs with little-to-no credibility. For this reason, budding entrepreneurs should take a minute to understand the changes in business funding over the last decade and come up with creative ways of securing the money bags for their business projects.

Social Media Marketing

In a world where people look to social media platforms like Facebook, Instagram, Snapchat, and Twitter for advice on how to eat, drink, live, dress and act, social media marketing can be instrumental in securing funding for business projects. How so? Well, for starters, marketing on social media platforms enable you to reach investors from the large pool of 2.77 billion Internet users in the world. Advancing your business via social media can also be done through influencer marketing. This is where you pay or partner with an influencer who has a huge following to post about your products or services and why people should invest in or buy them.

Going live and posting videos on your social media feeds is another way to help secure funding. Doing so creates awareness about your project, grows a fan base and promotes brand loyalty thanks to the fact that visual content is shared 40 times more than written or audio content. This fan base could help support you financially. Additionally, once investors see a huge number of people like and re-share your content, they will be more than eager to finance your project.

Participating In Saving Challenges

Saving is one of the best ways to create a fund pool for starting, expanding or finishing any business project. This is because it comes with zero baggage, seizure threats or debt.  Participating in any of the many saving challenges on the Internet is a fast, guaranteed way to source finances for your business idea over a defined period of time, say 52 weeks. These challenges state the time duration and the amount of money you will raise over the stated time. It is then up to you to find ways to source the money to deposit weekly, biweekly or monthly depending on the challenge. This could be through formal employment, side hustles or hiring out one’s talents and skills.

Approaching Angel Investors

Getting access to a good investor in this Internet age has become simpler. Getting them to invest in your project, therein lies the rub, as they are bombarded with constant requests. Social proof, a well-planned out business strategy, and specific objectives on how you’ll get your project finished are things that will give you an edge over all other applicants. Additionally, you want to look for an angel investor in your field. Having an angel investor who has succeeded in the same field as yours means they are in a position to connect you with all the power players in the field from suppliers to manufacturers and authority contacts. They also have invaluable insights on what might or might not work and you will, therefore, have your work cut out for you. Often your Angel Investors can be web based business and have an understanding of hands off investments.

Sometimes, traditional methods of sourcing funds like bank loans, peer-to-peer lending, venture capital, grants and crowdfunding fail. During such times, think of out-of-the-box ideas to generate the money needed to complete your project. Social media, angel investors and saving challenges are a great place to start.

6 Easy-to-Follow Steps that Can Stop Disappointment from Turning into Deathly Discouragement for the Beginning Real Estate Investor

When you first start any new activity, it is entirely possible that you will experience pitfalls, set backs and even disappointments.  This is almost inevitable for most new real estate investors as they attempt to duplicate the success of others.  However, long-term discouragement that can cripple your investment efforts need not be the final result of real estate expectations that don’t come to pass as planned.

The words “disappointment” and “discouragement” may sound alike, but that is certainly not the case.  Disappointment comes from unfulfilled or broken expectations and is generally a short-term effect.  Discouragement, on the other hand, happens when you can no longer see the light at the end of the tunnel or when you abandon hope.  As a new real estate investor, you are setting out on a path toward success, and success is a continual process.  As you progress towards your goals and objectives, you will encounter both small and large things that may disappoint you and possibly lead towards discouragement.  Our goal is to learn from these disappointments and avoid discouragement.

Let’s suppose that you have decided to go into the business of finding good properties that can be used as rentals.  You have read and studied about the requirements for such properties and decide to find your first rental property.  After reviewing advertisements and using your spare time to drive and survey the area in which you want to invest, you notice a For Sale sign on a property with the number of the listing agent.  You note down the number and make a call to see the property.  After meeting with the listing agent, you are convinced that this is “the right property.”  You have studied how to fill out an offer to purchase, but you elect to have the agent you met at the property help you fill out the offer.  As you are making the offer, the listing agent says there is another offer on the property and maybe you can outbid them.  Before long, you have gone through a couple of different counter offers and you were outbid.  You lost the property and are extremely disappointed, but should you be?

Ask yourself, “What went wrong?  What could you have done differently?”  Now is the time to become proactive and change those things you can control.  The real question is, “How do you change your attitude and what specific strategy can you take to ensure that a simple disappointment, like a rejected offer or a lost property, doesn’t lead to long-term discouragement that can bring death to your new real estate investing business?”  Let’s examine a simple strategy of six steps that can make all the difference in the world.

Step #1 – Identify What Went Wrong

This identification process contains three individual elements: review, describe, and record.  Unless you can identify exactly why something happened that lead to disappointment, you will never be able to make the changes necessary to stop disappointment from happening again and again.

1. Review exactly what happened. Before you can understand how to solve any problem, you must know exactly what the problem is and how it happened.  As a new real estate investor, you must know what strategy you are following.  There is a difference in finding a property that works as a fix up property and one that might be ideal for a rental.  You must also be acutely aware of why the problem occurred.  Why were there multiple offers on the property?  Did you wait too long or did you fail to follow a proven strategy in locating the property?
2. Describe in detail the problem that occurred. In our example of being outbid because of multiple offers, there were multiple reasons why you may have lost the property.  Let’s start by examining what happened when you first saw the property.  You immediately called the listing agent and made an appointment to see the property.  What’s wrong here?

The listing agent is not your friend and he or she certainly doesn’t represent you.  By law, the listing agent is representing the seller and will do all in his power to get the very highest price possible for the seller.  Because the agent is representing the other party in the transaction, you have no control in the negotiation process.  In effect you were bidding against yourself.  Finally, the price you might have paid for the property was probably too high.  If you are forced into paying more than the current market price for the property, you are already in a losing position.

As you are doing an analysis of why a problem occurred, make sure that you are realistic in that review.  Don’t hide behind sayings like, “It was not my fault.”  The truth of the matter is that it might have been your fault from the time you decided to look at the property.

Record your findings.  It’s true that we can learn from our mistakes, but unfortunately, we often hide or forget those mistakes.  When you actually write down what happened and why it took place, you have something you can refer to.  I like to call these mistakes “min failures.”  They are not major failures because you can correct them.  Dale Carnegie is recognized as a foremost authority on self-improvement.  He once said, “Develop success from failures.  Discouragement and failure are two of the stepping stones to success.”  There is real value in recording these mini failures.  You can use this record to create an ongoing learning experience because identification of a problem truly is the first step in this all-important strategy.

Step #2 – Describe Corrective Behavior

Understanding what went wrong is important, but if you can’t correct the mistake, it will surely happen again.  When it does, you are on the road to long-term discouragement.  Identifying the problem should allow you to come up with possible solutions to the specific problem.  These are the corrective steps you can take to get past the disappointment and avoid long-term discouragement.

Let’s go back to our earlier example of losing a property to a higher bid.  What corrective steps could you take if you were to start over again?  In essence that is what you are going to want to do – start over again and find another, and perhaps better property.  In your journal or record, open up your mind and explore all the different ideas.  First of all, you are going to want to ensure that you have an agent who is going to work for you and not for the seller of the property.  Second, did you spend enough time finding the right property?  What could you have done differently?  Take the time and try and come up with multiple ideas and explain why each one might have been a better solution.  Be specific and give the reasons behind the choices.

What you are doing is moving from a reactive situation to a proactive one.  Just by doing this, you will become more positive, but even more importantly, you will become more realistic.  Writing it down will help you remember what to do when the time comes.

Step #3 – Change Your Mindset

Simply by following the first two steps of this strategy, you are becoming a more positive person.  You are in effect starting to change your mindset.  When you adapt your thinking in a more positive manner, you are moving to a positive mindset.  When you have a positive mindset, you are able to control what happens around you.

The first thing you want to control is the environment in which you live.  Don’t become a negative person who wallows in self-defeating thoughts and actions.  If there is anything around you that influences you in a negative manner, you need to get rid of it.  That may mean that you need new friends and associates.  Negative thoughts feed on other negative thoughts.  Anything you can do to rid yourself of these negative influences will benefit you.  Willie Nelson, the country singer, once said, “Once you replace negative thoughts with positive ones, you’ll start having positive results.”  He may not have been the greatest philosopher, but he certainly had wisdom when he left that thought.

Once you start thinking in a positive manner, you will be able to see clearly in the fog of depression that often accompanies disappointment.  In a short period of time you will be able to have a positive mindset.  When this happens, you will begin to express the traits of a new positive mindset:

• Optimism. You will have the willingness to make an effort in your real estate strategies and to take a chance instead of assuming your efforts will fail.
• Acceptance. Soon you will acknowledge that everything doesn’t turn out exactly as you thought it might.  This allows you to step back and then move ahead in life and in your real estate strategies.
• Resilience. You will have the ability to get back up when things in your real estate adventure seem to knock you down.  When you meet stumbling blocks, you will smile and realize that next time things will go better.
• Gratitude. You will appreciate the opportunities you are given and be thankful for learning from them.

The important thing to remember when adopting this positive mindset is that you should never “go it alone.”  Loneliness is the enemy of a positive mindset.  The last thing you want to do when meeting a disappointment is to separate from the world and believe you are alone.  Find friends and associates who are willing to build you up and support you in those times of mini failures.  Consider working with other real estate entrepreneurs and possibly coaches and mentors.  If you have the opportunity to attend live training events with other real estate entrepreneurs like yourself, do so.  It is a great way to create friendships with positive minded people.  It is also an opportunity to learn real estate investment strategies from experts who have gone through similar disappointments.

Step #4 – Explore Your Options

Now that you have recorded your alternative options and begun to think in a more positive manner, you are ready to change outcomes.  It’s time to control what is going to happen in the future.  The old saying “If you get thrown from a horse, get up and get back on” is true in the field of real estate investing.  You may need help getting back on the horse, but the ride will be worth it.

Once again, you must be realistic in why your disappointment occurred.  As you come to grips with why you were disappointed, you may have the tendency to move toward discouragement with real estate.  This is a negative thought and should not be part of your new positive mindset.  However, if you find yourself in this situation, consider asking for help.  Start by using all available educational options that discuss and explain your specific real estate strategy.  If you were going to invest in rental properties, make sure you understand all you can about how to find, fund, and purchase the right properties.  Continue your studies to find out everything you can about landlord experiences.

If at all possible talk, to other investors like yourself.  Spend the effort to meet with professionals who can guide and mentor you.  Once you decide to engage a professional mentor or coach, make sure that they have both the experience and the knowledge to help you on your journey to success.

Now, go ahead and make concrete goals and objectives for moving ahead in your real estate adventure.  Be specific with timetables and exact objectives.  If you are going to engage a buyer’s agent, write down exactly how you are going to find the right agent in your area.  Whatever the task, write down how you will go about completing it.  Every option or goal should have a specific action step involved.  The very act of describing future behavior ensures that positive results can occur.

Step #5 – Focus Your Behavior Through Personal Action

Your initiative will create positive results.  It really is up to you to move the ball forward and to ensure that your real estate goals are achieved.  Up to this point, you have identified the problem and found corrective options, but now it’s time to actually make some changes.  It’s time to complete your goals through personal action.

There are specific reasons why direct personal action is crucial to your success when starting to invest in real estate.

1. Action activates information. You can gain all the knowledge imaginable from multiple sources, but the knowledge will remain silent and without meaning until it is activated by action.  Only when you personally take action will the knowledge be changed into results.  Only through direct action can real estate knowledge come to life.  This is especially true when solving real estate investment disappointments.
2. Action helps eliminate techniques that don’t work. Your time is valuable and you must be able to focus on things that work.  Trial and error is only valuable in real estate if you take action and do something.  Yes, there are times that things don’t work, but unless you take action and try, you will never know.
3. Action create positive habits. The strategy of eliminating discouragement in real estate is a process and that process is based upon developing positive habits, and these habits can only be developed when action is involved.
4. Action builds self-worth. As you accomplish anything in life, your confidence grows.  When investing in real estate, this new confidence helps you move forward, while at the same time it creates a value in your accomplishments.  Success is built upon action and personal real estate success is built upon personal action.

Step #6 – Understand the Past, But Always Move Forward

Disappointments should be the key to learning, not the foundation of failure.  You must be aware of exactly what went wrong, but once you determine the cause, don’t dwell on past outcomes.  Your goal is to live both in the present and to move toward the future, not to continue to worry about events in the past.  Now it’s time to focus on learning how to improve your real estate success by eliminating the causes of those setbacks.

Be specific about making changes.  It’s not enough to say “I’ll do it differently next time.”  Rather, you need to be able to say exactly HOW it will be different.  Recommit to taking positive action.  Make your goals realistic and then publish them and let others know what you are doing to change your life.  When you tell others about your future goals, this will give you the incentive to take positive action.  Perhaps even more importantly, you won’t want to disappoint your family and friends.

As you start to have success, reward yourself with each small achievement.  You’ve done the work, now it’s time to start collecting the rewards.  If you find a property below market value that fits your investment criteria, that is a success, even if you personally don’t purchase it.  Go ahead and treat yourself to something as it is a step in the right direction.  Even better, reward yourself by making an offer on the property (through your personal buyer’s agent).

Above all else, eliminate emotion from your investment decisions.  Never believe that you “must have” any property.  Such a belief will lead to more discouragement than anything else.  When emotion in real estate is eliminated from the equation, answers will always make more sense – and yes “CENTS.”

Don’t let disappointment turn into discouragement that can destroy your real estate future.  Try this strategy of six simple steps and eliminate discouragement from your investment outlook.  Real estate investing can become a vehicle for financial success but achieving that success will be a process.  When you learn from your disappointments and leave discouragement behind, that process can truly be the key to your future.

There is NEVER a Bad Time to be a Real Estate Investor

I had the privilege of beginning my investing career working with the Father of Creative Real Estate, Dr. A.D. Kessler.  Dr. Kessler had the wisdom of over five decades as a real estate investor and had seen several cycles of real estate ups and downs.  One of my favorite lessons from Dr. Kessler is: “Fortunes have been made in real estate investing in good times, bad times, and in-between times.  There is NEVER a bad time to be a real estate investor.”

After adding my 21 years of real estate investing to Dr. Kessler’s vast experience, I have realized that he was correct in this statement.  And now as I work with many other investors, it is my opportunity to remind you that investing works best when you add a long-term perspective to the short-term one.

What goes up must come down, and what goes down must come up.  These are the cycles in the real estate market, and no matter what the brilliant financiers and masterminds behind the Fed’s manipulation of interest rates may do, these cycles are still going to play out.  The “crash” in 2008 was going to happen with or without the issues of subprime or dishonest hedge funds. It may have happened with a little different timing, or a little more gradually, but it was the result of prices rising beyond the ability of many buyers to purchase properties.  And when it bottomed out, a reversal needed to occur because too much money was sitting dormant—it was “burning a hole” in people’s pockets.

I have the opportunity of speaking with numerous investors every day.  Many are new to the process and concerned because the current market is moving rapidly. Prices are going up, and there are housing shortages in many areas around the country.  This is what is called a “seller’s market.”  These investors are concerned because it is more difficult to make deals on properties at low investor prices.  For them, they are having a bad time in real estate investing.  It is harder to get good deals.   The funny thing is that if it was a buyer’s market it would be easy to get the deals, but it would be harder to sell the properties at a good profit.  Gosh, it starts to sound like you can never have the ideal market.

My perspective learned primarily from Dr. Kessler is that it’s always a good time to be a real estate investor, and we just need to learn how to work with things as they are.  The secret to success in a seller’s market is to become a Master of Marketing to find properties. Every business understands that they need to do marketing to find customers—the life blood of business.  In real estate, our marketing is to find properties, and to find people who want properties.  And the savvy real estate entrepreneur recognizes that they need to put together a diversified and effective marketing plan to find these properties and buyers.  In a seller’s market, it is easier to find buyers than properties, so we need to create a successful marketing plan to find properties.

Unfortunately, many new investors think they can simply line up a real estate agent, let them do all the work and go home and watch “Dancing with the Stars” and wait for the properties to roll in.  Well that will get you what most investors are getting—very little.  That isn’t a marketing plan, and every business in the country would fail if they only had one way to generate customers.

I’ve had the opportunity to work with some of the most successful investors in the country—the ones who write the books and have the television programs.  I’ve helped edit their books, and even been on their tv programs.  So I also had an opportunity to ask how they find properties.  Do you know what their answer has consistently been?  “Every which way we can!”  They know that in real estate, like every other field, there is no magic pill—no magic way of finding properties.  They cite online classified ads, multiple real estate agents, wholesalers, other investors, property managers, driving for dollars in neighborhoods, door knocking, attorneys and insurance agents, resubmitting on rejected offers, foreclosures and pre-foreclosure lists, calling on rental properties, probate properties, and many other methods as the ways to find properties.  Most importantly, they all have a marketing plan with at least a dozen or more methods that they use regularly, and they track their results.

Every investor must treat their investing as a business or it will wither and die.  Marketing can never become an afterthought. It must be front and center in your investing time. The allocation of time blocks must be created and used effectively.  If you need additional lists of ways to find properties, contact our office. We have lengthy lists that you can select from to create your marketing plan.  Let me ask a few questions to see if you have begun to think creatively about how to “turn over more stones” to find off-market properties.

• Have you contacted any property managers to see if any of their clients are buying or selling?
• How many neighborhoods have you driven through in the last two weeks to look for properties that are for sale?
• Do you work from lists of foreclosures or pre-foreclosures to follow up on properties through direct mail, phone, or knocking on the property’s door?
• Have you spoken to any probate attorneys to see if there is a way you can assist people with estate properties that they are handling?
• Have you spoken to any administrators or marketing directors for assisted living or nursing homes? They often have potential residents who cannot move in until “mom or dad’s” house is sold.
• Do you have online sources that list properties for sale and also properties for rent that you check daily?
• How many wholesalers have you linked up with to see if you can do co-wholesaling together, where one of you brings the property and the other brings the buyer?
• Are you checking on tax delinquencies in your area?
• Do you have any bird-dogs finding properties for referral to you? I, at one time, had dozens of pizza delivery guys forwarding properties to me.
• Do you know which areas of town have the most boarded up houses? And when was the last time you spent a couple of hours driving those neighborhoods?

Real Estate investing is not difficult, but it does takes diligence and an organized plan.  And at the root of that plan is your marketing plan.  I challenge you, on behalf of the entire program, to develop a marketing plan within the next two weeks that will have at least one dozen different methods of finding properties.  It may take longer to implement them all and establish tracking to make sure that they work, but a diversified and effective marketing plan will allow you to elevate and ramp up your success.  And if you already have a dozen, move to having two dozen methods and make sure that they are all producing successful results.

You will discover that this process alone will not only provide you with more and better property opportunities, it will also keep you so busy with success that you will forget about whether it is a seller’s market or a buyer’s market or an in-between market, and you will be many steps closer to building your own fortune!  Best wishes, and we’ll see you on the road to success!

Joint Ventures on Spec Building

One way to invest in real estate is to joint venture with property owners by building a new home on their property for resale.  Buying a building lot and constructing a home on it for resale is called investing in a spec house because you are building it on speculation that it will sell for a profit.

To do this, you want to look up all the vacant properties in the neighborhood of interest and find those that are paid for free and clear.  Then contact the owner and propose the idea of joint venturing with them on a project on their property.  Ask them to sell their property to a joint venture partnership for a reasonable price. You will then build a house on their property and sell it, and after paying them the agreed price, split the remaining profit.  As the managing member of the partnership, you will obtain a construction loan to pay for the house building and the owner will subordinate his or her home to the construction loan.  Through this process an investor can start a project with zero monetary invested and make half of the profit.  An example is as follows:

Owner’s property:                                                                     $100,000

Construction cost to build house:                                               $150,000

Price of the finished home:                                                        $350,000

Other expenses:

Taxes, insurance, closing costs, commission:                    $35,000

Total Profit from Sale:                                                                 $65,000

Split 50/50:                               Each partners share:       $32,500

Not a bad profit for not investing any of your own money.  Your job is to line up an architect to design the home, get a general contractor to build it and procure the construction loan.  The owner’s job is to put up his property as collateral for the loan and, in doing so, make the agreed upon purchase price and the additional profit.  Of course the more expensive the project, the more money that can be made.  Imagine the profit in a multi-million dollar home still with no money out of pocket.

Banks are completely willing to do these loans when the property is free and clear because their loan will be less than 50% of the appraised value of the home when it is completed.  Of course, if you are a general contractor, you can build the home yourself and make an additional general contracting fee.  If you are a real estate broker, you can make an additional commission for listing and selling the property.

Real Estate Investing and Technology

There was a day when real estate investing was done in person with carbon copy contracts. Just imagine working with a 25:1 acceptance ratio and having to go out and visit each and every property. That was the day where your CRM or lead data base consisted of a three-ring binder or notebook. This process was long and very drawn out, especially in comparison to today.

By simply logging in on the internet you are now able to access a sea of leads and knowledge. Anywhere from pre-foreclosure leads to probate or FSBO. You can also access the processes and information to help walk you through any of these transactions.

You are now able to view homes through pictures provided from online listings. You are able to run your numbers and submit your offers via phone or email.

Marketing online allows you the opportunity to reach out to a larger group of individuals and even customize it to be more direct. Don’t get me wrong, good old door hangers are still a great option, they just take a lot of time and online allows for you to keep marketing even when working on other things. This is a great and healthy form of multi-tasking.

There are tools and resources like software and programs that can be used to help with the process as well, whether it be evaluating a deal or simply data or lead organization. The number of apps that are geared towards this profession are amazing. Apps as simple as a mileage tracker can save an investor loads of time and energy that can now be used for other things.

Technology has made it so that you can invest remotely, or even simply just at home in your jammies at two in the morning. The way technology is changing this field of work is absolutely amazing and I only see it continuing to grow and continue to get better over time.