All of us want to get wealthy quickly and easily and if it could be done by doing less deals, that’s the way I wanted to do it. That’s when I came to the realization that there were certain deals that brought me in 10 times the amount of profit as the other deals, even though I was doing the same amount of work and taking the same amount of time. From the fattening of my bank account I realized that there is one investment that is far more profitable than anything else in Real Estate investing.
The most profitable investment in Real Estate today, is buying, selling and holding Multi-Family properties. Did you know that you could buy a Multi-Family building using the same no money down techniques that you use buying single family properties. I’ll bet you didn’t know that there were even more creative ways to purchase Multi-Family properties than there are for single families! Think about it. When you dealing with single family properties, you’re usually dealing with the home owner, someone who is emotionally attached to the property.
When your dealing with a Multi-family property, your usually dealing with an investors. Just like you, investors care about the numbers. Would you now agree that investors are more apt to do creative deals?
Successful people profit from the mistakes of others. I learned that doing a Multi-family deal took just as much effort as doing a single family deal, but there is one big difference…there is an extra “0” at the end of the profit check when I closed the deal! That means that the single family property that I flipped and made $20,000, with the same amount of effort I was flipping multi-family properties and making $200,000! As soon as I realized this phenomenon, I focused more of my marketing on multi-family properties! When you start getting those big paychecks you’ll realize that you don’t have to work so hard, you’ll have more time (a lot more time) to do what you want, where you want, when you want and with who you want!
Most people have a goal of making $1,000,000. If you were flipping single family houses with an average profit of $20,000, you would have to flip 50 houses ($1,000,000/$20,000) to reach your goal. How long do you thing that would take? A year? Two Years? Five years? If you were flipping multi-family properties, you would need to flip only 5 properties ($1,000,000/$200,000)! How long do you think that would take? Certainly a lot less time! And remember, it takes just as much work to flip a single family house as it does to flip a multi-family but as you can see by the numbers, it really is going to take you 10x the amount of work and time if you want to earn a million dollars flipping single family houses!
Here’s the another bonus, sometimes when you flip a single family property you hit a home run and make anywhere from $40,000 - $100,000 and more. When you hit a home-run with a Multi-family property your profits are in the $400,000 - $1,000,000 and more range! That’s one deal….same amount of work! How many of those do you have to do before you stop worrying about your retirement?
A student of mine, Rose Morris from Columbus, Ohio is going to profit over $2,000,000 on her first large multi-family deal! One deal.
Justin Anderson from Augusta, Georgia will profit close to $900,000 when the sale is complete on multi-family that he’s flipping!
Does this mean if you’re flipping single family’s that you stop immediately and go after only multi-family properties? Heck no! You can if you want to bu I still flip singles…not as many as in my early years…why do I continue to do it?...because I can! I’m not one to pass up any good deal and I like getting those small chunks of cash coming in for $20,000 - $30,000 a pop but I focus most of my time on multi-family properties because I learned the more multi-family deals I do, the more and better choices I have as to how I can spend my time!
Head these words, the faster you start flipping Multi-Family properties, the faster you’re going to become wealthy. I will already say “Your Welcome” in advance for those of you who take the advice of someone who has been there and done that!
Sunday, August 31, 2008
Real Estate Investing: How To Profit From Foreclosures & Avoid Wasting Your Time, Energy & Money
If you were a real estate investor watching the real estate boom of early 2000s closely, you could have predicted the foreclosure investing opportunities that would become available today in virtually every real estate market in the country.
In the last two years mortgage lenders have been reporting dramatic increases in defaults and foreclosure rates nationwide causing many sub-prime lenders to go under. But that's just a tip of the iceberg.
Will You Be Able To Capitalize On This Foreclosure Boom?
On the surface it seems easy enough. Get a list of properties in default. Contact homeowners. And get the deal done at a juicy discount, before the bank takes the house. Then you can fix it up and flip it, or keep it as a rental with an instant built-in equity profit. Right?
Well, not quite.
Getting into the foreclosure investing game could be an extremely lucrative move that alone could not only feed your family but pay for lavish lifestyle and vacations. Or it could turn into a big black hole consuming all of your time, energy and marketing dollars.
Very few real estate investors actually succeed in foreclosures on a consistent basis. Why? Because, they're using the wrong approach in a very crowded market.
How Will You Differentiate Yourself in a Crowded Foreclosure Investing Field?
To say it's crowded is a huge understatement. The field of foreclosures is probably the most competitive area of real estate investing. It routinely gets more attention from mass media. So more people flock to pursue it. Hundreds of investors in your metro area are mailing to homeowners facing foreclosure. They're even harassing homeowners on the phone and knocking on doors.
In short, if a homeowner is behind on payments, you can be prepared for a major fight for his attention. Just imagine for a moment that person sitting at his kitchen table plowing through a pile of letters from lawyers, bill collectors and investors.
Your mailing piece is just one of many that goes straight to the garbage can. You must find a way to differentiate yourself from the investment crowds. Here's an idea that will put you ahead of the competition.
The Only Ethical Way To Approach Foreclosure Investing
Truth be told, for most people who are behind on mortgage payments and in danger of losing their home - talking to a real estate investor about selling the home is the very last thing on their mind. They often perceive foreclosure investors as sharks taking advantage of their situation.
So, if you want your phone to ring with people in foreclosure, contact them with an offer to 'keep the home'.
Here are 3 Reasons Why You Should Offer Homeowners Facing Foreclosure the Chance to Keep Their Home, Even if You're Really Interested in Buying it
- First, trying to help a family in financial trouble is the ethical thing to do. You'll be preserving the American Dream.
- Second, you'll actually make money doing it. You can help them negotiate a repayment plan with their current lender (the process is called Loss Mitigation) and collect a fee for your service. There're several companies nationwide with an in-house list of Loss Mitigation department contacts for literally every lender in the country that will do all the work for you. So, even if you never buy a single home, with tens of thousands of foreclosures in your hometown, offering Loss Mitigation services could turn into a lucrative income stream by itself.
- Third, this is the most profitable approach. In many cases you will end up buying the home. Remember, the Loss Mitigation process will only work for those owners who got behind, but now recovered their ability to pay. Most won't qualify for a repayment plan because they can't prove their hardship is behind them. And they won't know it until you helped them to pencil their income and expenses on paper and submit it to their lender. Now they have undeniable proof they can't keep it. Once the reality settles in, they'll start talking 'sale'. Who will they sell to? You, of course. You have now earned their trust and it's the only next natural step to take.
Saturday, August 30, 2008
How to Profit from Property
Secured Loans
www.accepted.co.uk |
aving recently learnt that the decision has been made not to offer the tax benefits associated with putting residential property in SIPPS, it is worth reminding ourselves of the long term objective of property investment.
Regardless of whether you put residential property into a SIPP, you should remember that on average, historical figures show that property doubles in value every 10-15 years. So if someone said that you could double or even triple your money in some cases, even if it took longer that this, then you would still consider investing wouldn’t you even if it wasn’t within your personal pension. Plus, you can still put commercial property into a SIPP so you still have the opportunity of mixing your investments which every good property investor would be doing.
How to make £166,500 in 15 years
According to research from the Centre for Economics and Business Research (CEBR), the average cost of a home in the UK could be £300,000 by the year 2020. Currently that figure stands at around £157,000 in 2005 which represents an increase over the next 15 years of 91%.
This figure of £300,000 is achieved by the economic forecaster basing its prediction on the ever increasing population compared to a slower production of house building. As with many commodities, it is the result of lower supply and higher demand that will push up these prices.
With buy to let residential investment property, the maximum loan you can apply for is 85%. Based on an average value property in 2005 of £157,000 this would require you to put down a deposit of 15% £23,550 subject to valuation and rental cover which can vary between 115% to 130% in most cases.
Potentially over the next 15 years, this one investment could realize a return of £166,550. This is based on selling the property at £300,000 less the loan of 85% of the property value in 2005.
Over previous years there have been times when property has declined in value and other times where it has signifcantly increased in value but a good property investor will clearly see the benefits in both a rising and declining market and will utilize the facilities of a good buy to let mortgage provider to assist in this.
For example:
During a rising market, a property investor may decide to use this window of opportunity to release some of that equity realized in the value of the property, to use for additional property investment. However, the property investor is less likely to use that capital released during a rising market. Instead, the landlord will wait until the market has re-stablised itself or experiencing a decline. At this point, they will then use this window of opportunity to purchase lower priced property and the circle continues. That is why property investors are in it for the long term and why they see the market as being profitable to them in all conditions. And when you consider that property prices only need to increase by an average of 4.4% year on year, it is easy to see why this type of investment is so achievable.
Successful property investors will do a lot of research on areas that they believe will become property hotspots and areas which are less likely to perform. There are many areas experiencing high levels of growth and financial investment with a lot of regeneration programmes in place or planned in the future. Even by simply monitoring publications such as Construction News can give a good indication of where new commercial premises are being built which can be a good indicator of new businesses moving to the area which it turn can lead to an increase in demand for property locally.
It is the general consensus that interest rates have stablised and there is even speculation of a drop but either way, they have been steady for a good number of months now. Slower capital growth does result in buyers having to put more effort into managing and developing their portfolios. And more importantly making a profit from property. Buying property at discounted prices can be done but you must do your homework to make sure they are genuine discounts and incentives. And don’t forget that in a slowing market, vendors will be more likely to listen to your offers. Albeit if they are a bit cheeky. In particular, you can use the negative press that is often surrounded by the property market to your advantage. For example when the media are circulating stories of a dropping property market, then vendors are even more keen to listen to your offers.
How to Get Started in Buy to Let
• Do as much research as you can. You can even get some free publications including Free Buy to Let Guides. Click Here for more information.
• Find out what properties are selling for. A good way of doing this is by contacting estate agents and researching on the internet. A good way is to look at property house price websites.
• What is the level of demand for rental properties in the area.
• What type of property is most in demand. For example, if it is a university city, then the demand for shared student accommodation may be much higher than property for professional sharers.
• Find out what rent is being achieved on those properties and the likely time to get the property let out. Speak to letting agents and local businesses that may be letting properties already in the area.
• Raising deposits for your investment properties, may be easier than you think by releasing equity from any of your existing properties.
So how Do you know if you have bought a good investment
Well there is always an element of risk but providing you follow the main logic you should eliminate most of them. It is also important to make sure you continue to review your buy to let mortgage funding on a regular basis as this can have a big impact on your success and cash flow. As we have said above, the property market can rise as well as fall so providing that you have some cash funds in the bank to help you through any tougher market conditions then you could reap the rewards in years to come. But it’s important that you calculate these carefully into your projections to ensure that whatever funding you may need to input into the investment property that it will be outweighed by the eventual gain.
Providing that you are buying a good quality property in a good area with strong rental demand then it’s worth considering. Don’t just buy a property because it is cheap. You might buy a property at a very discounted price, but if you can’t let it, you could find yourself covering the buy to let mortgage payments for months to come which will see a big dent in your profits. Find out why it is cheap. Is there an increase in crime in the area, have plans been submitted for a large industrial unit to be built behind the garden etc, etc. Do your research. And don’t be afraid to develop a property for profit. Buying at the right price, in the right area and doing the right renovation on the property, can also see you return a decent profit. Re-financing the property on completion and letting it out could give you the best of both worlds.
Having taken into account all the considerations above, to calculate if it is a good investment, you need to ensure that your annual rental income exceeds the cost of your monthly buy to let mortgage repayments and maintenance costs. And it is more likely that your annual rental income will be stronger if you select an investment property in area with a strong and growing rental demand as it is less likely that you will experience rental voids and be supplementing the monthly buy to let repayments.
So in conclusion the property market is likely to remain a prime choice for property investors as long as they are will to commit to the long term.
Making A Good Profit From Buying And Selling Repo Real Estate
Buying and selling of repo real estate can make you a good profit since there is a good market from the real estate sector. If you will consider the good margin that you can get from selling repo real estate which you have bought at a reasonably low price, you will realize that indeed it is wise to look into repossessed properties during state auctions. However, it is not enough that you only have the enthusiasm to engage in such activity in order to make a profit. The secret to making a good profit from buying and selling repo real estate actually depends on many factors.
One important factor is your ability to research well into prospective properties and buying the right ones. If you can pick out the good properties at a low price and sell them at a good price, then you are on the right track of making a good profit. State auctions are a great way to acquire a really good property at a low price. When you attend one, be sure to look for bargains. You have to keep in mind that the prices of repo real estates can range from cheap to very expensive and that their quality can run from good to bad. So, you have to take your time in finding a good quality repo real estate at a low price.
Another factor is your attitude on dealing with discouragements. Since a lot of people are also interested in the activity you want to engage in, some of these people will try to discourage you from being a participant in state auctions. How you take discouragements will have a significant effect on your goal to make a good profit from buying and selling repo real estate. If you take any discouragement as a challenge, you will be determined to find what you really need – and that is a good property at a low price. But if you sway too easily from these discouragements, then you can bid profit goodbye.
Your resourcefulness also plays a big factor in making a good profit. You should always be on the lookout for events related to state auctions. You should never rely on single source alone. Make sure that you check your local newspaper daily or see other sources for the updated listings and auctions that are going to take place. You should also ask friends, relatives, and colleagues if they know some events related to this. But there is one convenient and reliable source that you should never miss – and that is the Internet. By going online, you can find comprehensive and updated information regarding latest auctions and repo real estate for sale. Take advantage of this reliable source and you will see how far you will go in engaging in buying and selling activity.
These are the factors that you need to remember if you really want to achieve your goal of making a good profit out of repo real estate. If you will consider all these, you will have bigger opportunity to make it big in the real estate sector. However, you should never take out the possibility of failing because you might get too frustrated once things did not turn out the way you expected. In this activity, always hope for the best, yet expect for the worst.
Land For Sale Profits - How An Investor Turned 1,000 into 3.5 Million In 11 Years
Mark Guard was a small investor who bought land for sale to make profit and sold it after 11 years for a staggering £3.5million as the land was eventually developed for housing.
You may not make these sorts of gains, but it shows the potential for profits in land for sale, however 50 – 100% gains are being made by savvy investors and you could to.
Land is easy to understand, is cheap and even better with the right location you can beat almost any other investment in terms of growth achieved to downside risk.
Land investment has been the “secret” of the world’s richest families and wealthiest investors for years.
Well know investors such as Donald Trump and Howard Hughes made billions from land investment. Bob Hope was also a big fan and there are countless others.
They all knew land for sale profits could be huge and the downside risk was low.
So what are chances of making good land sale profits?
The answer is good. All you need to do is to do your homework and follow a few a few rules and you can start getting in on the action.
The real key is of course location you need to buy in an area where land will be developed and you can sell to a developer at a profit.
It’s obvious but this is the key to big land sale profits.
So where are the best locations?
For this you need to look at the new boom countries and great opportunities are available in Central America, with Costa Rica the country of choice for most investors.
There are others but these represent the best profit potential and lowest risk.
What countries should I avoid?
1. Well established countries such as the US and UK. You can make land sale profits but it’s much harder and your investment needs to be much bigger
2. You should also avoid countries that are predicted to “take off” most never do and you will lose look for countries where land is fairly priced and upside is good.
3. Avoid countries that don’t protect your investment. For instance in Eastern Europe you can buy off one owner and then find someone from before the war (when they owned the land) has a counter claim!
Why Costa Rica?
Because it has all the ingredients to make land sale profits including:
1. Land is cheap with good upside potential
2. There is a track record of investors making 50 – 100% gains annually
3. Investment and migration in are rising increasing demand for prime land for development
4. It's safe and stable and when you buy you get the same rights as residents
5. It's tax efficient
6. Your investment is liquid and you can buy and sell quickly
Land for sale is perhaps the most under rated investment of all despite the fact it’s easy to do and there companies to help you buy and sell in the best locations.
If you consider you can make 50 – 100% potential profits with no experience with little downside risk then it’s an ideal area to target to to build wealth quickly.
Look at this investment for yourself and you will see the potential in land sale profits and Costa Rica is a good place to start.
Five Ways To Profit In Real Estate Investing
Using the systems that I teach, there are basically five ways to profit in real estate investment. These quick turn transactions fall into five main categories: 1. rehabbing and retailing; 2. wholesaling; 3. getting the deed; 4. lease options; and 5. options.
One of the easiest methods of investment to understand is retailing. The concept is simple. You are basically finding houses to buy at a low price, doing some minor repairs and then selling the house at a retail price and cashing out. There is BIG money to be made doing this, often resulting in a profit of $20,000 to $35,000 per deal. There is a whole simple strategy for finding these deals and learning how to turn a profit quickly.
Wholesaling is simply securing a deal to sell a house and then selling the deal to another investor who will actually buy the property. So in essence, you are just a broker who gets paid for finding a motivated seller, negotiating a selling price and then flipping the deal off to another buyer. You can walk away with anywhere from $1,000 to $5,000 just for locating this deal and selling it to another buyer. Little effort involved and you pay nothing while collecting the check. How easy is that?
Getting the deed means that you acquire ownership of a house by taking over the existing deed from the owner. Basically, you are taking the title "subject to" the existing loan on the house, so you do not need to use a bank or credit. You do not assume the loan in this transaction, but the deed gives you ownership. Motivated sellers in certain financial situations need help getting relief from their mortgages, so this creates a "win win" situation for all parties involved. This is a very lucrative method of investment.
Lease options allow you to gain control of a property without ever taking title to the property. You can either sell for cash or put a tenant/buyer in the home to lease purchase from you until they can cash out or you can cash out by getting enough free equity.
Finally, options allows you to agree to option a property at price A with the intention of selling it at price B, with the difference being your actual profit. This particular method alone is a HUGE pay day resulting in a multi thousand dollar deal each time, depending on the price of the house. I personally know someone who used this method using $100 as his initial investment and making a profit of $2,000,000. No this is not a typo!!
As you can see, real estate investment has several creative strategies to it, all which take little to no money out of pocket yet can yield a HUGE pay day. If you are serious about investing in real estate, it gets no simpler than this. Take action today!Real Estate - Putting Those Profits Where They Belong in Your IRA Account & Your Pocket!
I'm going to talk about my favorite subject in a little more detail today...Real Estate, and how it can put more of that green stuff where it belongs...in your wallet!
A self directed Roth IRA invested in real estate allows the owner to keep more profits in the account, rather than handing them over to the government. Some of you may have little knowledge about purchasing real estate in your IRA. Many people still think that the only investment options are stocks and bonds or certificates of deposit. Well, there is a lot more that you can do!
Whether you want to buy raw land, single family homes, commercial property, an apartment building or a mobile home, you are surely hoping to make a profit. You may want to hold the property for several years and wait on the value to grow or you may be a rehabber, planning to flip the property for a quick profit. Either way, the self directed Roth IRA invested in real estate has several advantages, and here are a few.
First, there are no capital gains taxes. All returns are either tax-deferred or tax-free, depending on the type of account that you have and the withdrawals that you make. Purchasing real estate in your IRA can be easy. It just takes some time and knowledge, as well as the right custodian.
Many brokerages will not handle a self directed Roth IRA invested in real estate. It's not that the IRS doesn't allow it. The laws regarding retirement accounts allow people to invest in almost anything. It's just not a traditional investment type and most brokers are not familiar with it. And, you would be better of to choose someone who is.
So, in order to begin purchasing real estate in your IRA, you need to find a company that is familiar with the option. Otherwise, you could run into problems down the road. Let's say that you decided to let the new broker down the street manage your account.
You knew about the advantages of a self directed Roth IRA invested in real estate, so you took the plunge and bought a single family home, using funds from the account. The property is held in your custodian's name and all income and profits are returned to the account.
Your son needed a place to live, so you decided to let him rent the property, since it was vacant. Being unaware of the self-dealing rules, the custodian allowed this to go on. Once the IRS saw that rental income was going into the account from one of your relatives, the account was audited, the tax-deferred status was lost and you were forced to liquidate the account. Why?
Because one of the rules about purchasing real estate in your IRA is that family members may not live in the homes that you buy. You can't even buy a house that you plan to live in after retirement and hold it in your retirement account. It all falls under the self dealing laws and if your custodian is unfamiliar with them, then you will become the loser.
If you have knowledge and expertise about buying and selling property, then a self directed Roth IRA invested in real estate is simply another way to grow your portfolio. If you need to learn, there are people who can help. So, get some help and start investing in your future.
The 5 Most Effective Real Estate Marketing Tools
Ask ten different real estate agents what the best tools for marketing are and you will get ten different lists. So perhaps the title of this article should have "in Brandon's experience" tacked onto the end.
What I've created below is a list of what I feel are the best ways for real estate agents to promote themselves (and their listings) in the modern economy.
Item #1 - An Effective Website
These days, a real estate agent without a website is an agent who will lose a lot of potential business. Aside from referrals (see item #5), most home buyers and sellers find their real estate agents online.
Maybe they do a Google search for agents in their area. Maybe they stumble across an online article that links back to the agent's site. Or maybe they "stumble across" the agent's website when researching the local real estate market. But for any of this to be possible, a real estate agent needs a solid website filled with useful content, tools and resources.
Here are some of the things you should build into your real estate website:
- Listing data of some kind
- Consumer education resources
- Plenty of original, keyword-rich content
- Lead generation systems
- Regular updates, perhaps through a blog
- Basic website usability and organization
Secret to Success: The number of real estate websites has exploded over the last few years. You need to work hard to make your website better than those of your competitors -- more organized, more informative, and better designed. It takes a lot of time, energy and money to get it right, but the rewards are ever lasting.
Item #2 - Internet Visibility / Web Presence
A few years ago, an agent could publish a 5-page website to generate business. People would eventually find the site, because there weren't many of them competiting for attention. Obviously, that has all changed. In order to be found online today, you need more than a basic real estate website -- you need a highly visible multi-part web presence. This might include the main site, search engine optimization (SEO), a blog, online articles and press releases, and other publishing strategies.
When you increase your online activity in this way, you are capitalizing on something that is already occurring. People are already going online by the thousands to conduct research into their local real estate markets. So when you improve your web presence, you are tapping into an online marketplace that already exists.
Secret to Success: Of course, all of the web traffic in the world won't do you any good unless you convert some of that traffic into leads and inquiries. So while your Internet visibility is certainly important, you also need to focus some of your energy on developing effective lead-generation systems for your website.
Item #3 - Direct Mail (When Used Properly)
A lot of real estate agents waste their time and money on postcard marketing, but only because they go about it all wrong. I know this for a fact because I've worked for more than one direct mail company. But with postcards, it's not the marketing medium that's broken -- it's the flawed technique that many agents use.
One of the primary benefits of this strategy is that you know where your direct mail pieces are going. You can choose certain neighborhoods, a zip code, or your entire city. You can get a list of people who live in apartments and send them a targeted message about moving up to homeownership. You are practically guaranteed that everyone who receives your postcard in the mail is going to at least glance at it (more than you can say for other forms of marketing).
Secret to Success: You need a really good reason to send a postcard out to a large audience. "I'm a new real estate agent in town" is not a good reason. Start with a big idea, an event, a unique product or service, and build your direct mail campaign around that.
Item #4 - The Yard Sign (An Oldie But a Goodie)
Aside from basic word-of-mouth marketing, I would say the real estate sign is the absolute oldest from of real estate marketing. As long as properties have been bought or sold, there have been people putting up signs to direct traffic toward the sale. Okay, so they're not as glamorous as a brand-spanking-new website or a glossy brochure. But they have been getting the job done for decades!
Secret to Success: Don't over-think the process of procuring real estate signs, and don't overspend when purchasing them. All you really need is a professional looking product with basic information on it. Don't waste valuable sign space with slogans or other useless items. Keep it simple.
Item #5 - Great Service Toward Clients
For many real estate agents, referrals still generate more business than any other real estate marketing technique. People are more willing to trust those they know. So when a friend or family member says good things about a real estate agent, it does more to persuade the person than anything the agent might say.
The key to getting referrals, of course, is to provide great service. By being proactive during the real estate transaction, and by keeping your client informed along the way, you will have a better chance of getting referrals later on down the road. Of course, it also helps if you can help them buy or sell a home effectively!
Secret to Success: Don't be afraid to follow up with clients after the sale either. This is a good way to stay in their minds, which can lead to even more referrals. There are many occasions where you can send a brief email or postcard to past clients -- on their birthdays, around holidays, on their one-year home buyer anniversary, etc.
The Basic Foundation of Real Estate Investing
Thanks to the great housing boom that has taken place over the last few years, real estate investing has become one of the hottest opportunities for the common man. As many have come to find, a little bit of research and the right moves in the right place can bring forth many interesting and exciting opportunities for creating a perpetual cash flow. One of the biggest aspects that make real estate investing so attractive to many is that it entails no formal requirements or education in order to start. With time, effort and a good measure of common sense, the results can be extremely rewarding.
Not to be taken too lightly, real estate investing is an area that does require a game plan. It can be a great educational tool on how to take calculated, well informed financial risks, something that is taught in very few other places in life. For many, a risk is equated with danger or a possible loss of control. With real estate investing, investors are in charge of their risk. There is no need to invest large amounts of money right away. One has the choice to start small, gain practice and later move on to bigger and better ventures if they so wish. The experience can be as large or as small as the investor chooses.
For many, the key to real estate investing is the ability to keep emotions on the backburner. Investing too much sentiment can leave one dangerously open to various hazards. This is said to be true even for the most seasoned real estate investor with the most scrupulous of judgment. With some preconstruction investment opportunities selling out in only a matter of hours, real estate investing requires one to be able to make quick and confident decisions. Many an investor has regretfully learned their lesson about sitting on the fence and missing out on an opportunity, especially when it turns out to be quite lucrative.
Just the same, real estate investing is one that requires investors to remember to look out for their own best interests. Often, brokerages or developers of preconstucted sites are looking to make the highest percentage of a sale for themselves. In these cases, it is extremely important to do one's research in order to ensure a solid investment. No matter how convincing the pitch, the happiest and most confident investors are the ones that know they will not be getting rich overnight but through a series of intelligent, calculated moves. Although they do pay attention to trends, they are not easily won over by the hype.
Home Loans - A Basic Introduction
The most popular method of financing a home purchase is with a mortgage. This is a loan that is secured over the home. There are a number of different mortgage suppliers and you will have to shop around in order to get the best deal. Given that your home is probably the single biggest purchase you will make in your lifetime, you must make sure to take the care and attention that the transaction merits. Mortgage rates can vary greatly from lender to lender and the amount your rate is set at can make a huge difference to the amount your repayments will amount to. Even a small difference in rates could save you thousands of dollars or allow you to have your home paid off years sooner. So do your homework.
Fixed or Variable
When looking for the best loan, there are certain terms you will need to be familiar with. For example, mortgages generally come as either a fixed rate mortgage or a variable rate mortgage. The fixed rate loan will keep the same interest rate and monthly repayment for the whole lifetime or term of the loan. This will generally be for a period of 10, 15, 20 or 30 years. If the rate is fixed for a period, such as the first 2 or perhaps 5 years, and then reverts to a variable rate it is known as an adjustable rate mortgage or ARM.
When the ARM rate becomes adjustable, it will move up or down periodically according to a specified market index. These can include the Prime Rate, the LIBOR or the Treasury Index among others.
With the adjustable rate, some of the risk of changing interest rates that would otherwise fall on the bank is transferred to the borrower. They are therefore cheaper averaging somewhere between 0.5% to 0.2% lower than a 30-year fixed rate mortgage. If the rate is particularly volatile or difficult to predict than a fixed rate mortgage may not even be possible.
In the majority of cases, the savings of an ARM outweigh the risks of a rising interest rate. Especially where the mortgage is for ten years or less.
Fees
Lenders may charge various fees when giving a home loan or mortgage. These include entry fees; exit fees, administration fees and lenders mortgage insurance. There are also settlement fees (closing costs) the settlement company will charge. In addition, if a third party handles the loan, it may charge other fees as well.
Banks usually charge a valuation fee, which pays for a surveyor to visit the property and ensure it is worth enough to cover the mortgage amount. This is not a full survey so it may not identify all the defects that a house buyer needs to know about. Also, it does not usually form a contract between the surveyor and the buyer, so the buyer has no right to sue if the survey fails to detect a major problem. For an extra fee, the surveyor can usually carry out a building survey or a (cheaper) "homebuyers survey" at the same time.
Basic Rules of Preconstruction Investment Real Estate
Although the preconstruction real estate investing option has been around for many years and is nothing new, it just recently became well known to the masses and real estate investors all over the world are scouring the web for the best new construction and preconstruction real estate projects in areas where real estate prices are skyrocketing (Baja Mexico, Costa Rica, Bulgaria, Cabo San Lucas, Orlando). While the sudden increase in demand has influenced many legitimate developers to offer more projects and developments, it has also seen the emergence of many ill-prepared developers into the market. Here are just a few ways you can properly screen your preconstruction real estate developer / brokerage and make sure you are not signing with a less then reputable developer:
1. Read Small Print – Before investing in a development, be sure not to fall victim to the curse of the small print. Avoid ending up the subject of those horror stories about real estate investors who are suckered into scandalous contracts with real estate developers. Some real estate developers will not let you sell the property until years after it is finished and others will charge huge penalties if the property is sold early. Always, have an attorney look at every contract before you sign anything.
2. Find a Preconstruction Brokerage – Unless you are VERY well connected in the area's preconstruction market, it's a good idea to go through a real estate brokerage that specializes in preconstruction real estate developments. There are several reasons why using a quality brokerage can help you, but most importantly, they know the developers and can discern between which can ensure quality and which are "accident prone".
3. Research the Developer's Past Projects – If the developer has had huge delays in past preconstruction projects, it will probably happen in the next several projects. Remember that your time is money – even if you get your full deposit back 2 years later, because of constant delays you may lose hundreds of thousands of dollars worth of wasted time and resources.
***Note*** As real estate developers have learned that the word "preconstruction" alone can sell out a project, they have created a new trend in the industry by labeling every phase of the project a "preconstruction phase." Often these are low-quality condo conversions or condotels that are not worth half the asking price. BE SURE you are buying in the actual preconstruction phase before purchasing!!!
Just remember, the bigger the preconstruction real estate market gets, the more you have to watch out for fly-by-night developers and unethical brokerages that don't have your best interests in mind.
5 Basic Steps to Commercial Real Estate Investing
Commercial real estate investing is an exciting and rewarding industry that yields results to which no other industry can quite compare. In fact, commercial real estate is one of the easiest ways to become extremely wealthy with limited knowledge, personal financial investment and time.
With commercial real estate you are able to return millions of dollars within a matter of a few years, and use other professionals to make it happen. If you can find the deals, get financing, and find the people to do the work, you are officially a commercial real estate investor. Below you will find 5 basic steps that involve commercial real estate investing. It may be simple- almost too simple. However, commercial real estate investors follow these basic guidelines often.
The first step in becoming a commercial real estate investor is to locate actual deals. This can be done through finding potential properties on the internet, the local newspaper, brokers and agents, and for sale by owner (FSBO) signs. There are so many places to locate properties. Be sure to set criteria for the properties that you are going to work with such as type of property, price as compared to actual value, size of lot or building, number of units, condition, etc. Keep in mind that the properties where you can create value that does not currently exist are the best properties with which to start. Once you become a seasoned investor, you can then purchase properties just for their income. Until then, you must perform the work to increase the value of a property.
The second step is to prescreen properties according to the guidelines you originally stated. It may take calling on several properties to find one that fits your specific criteria. Establish quick identifiers so you can quickly move through properties that do not fit your criteria, and uncover the ones in which you would be interested. The more properties you filter through, the more likely you are going to find the deals that will return the best results.
The third step to commercial real estate investing is, after you locate and prescreen a property that you feel is workable under your guidelines, you must create and submit an offer. There are many ways to purchase a property. Using seller financing, borrowing from banks, and using commercial lenders or private lenders are all viable options. The idea is to use other people's money (OPM) to purchase the property you want. This can be done quite easily by understanding the lender's criteria. Meeting seller's wants and needs can be as simple as asking. Remember that the asking price is not always what a seller is expecting to get, so be sure to perform solid research before constructing and submitting an offer. It is a must to identify the current market value of a property that you are considering to buy.
The fourth step is to follow-up with solid due diligence. This entails getting every bit of information you can on a property including actual highest and best use, after developed or future value, any issues or concerns there might be with the soil or environment, or the city or municipality. This is your time to verify all the information you either have been told, or have assumed prior to submitting the offer. This is also your time to locate financing, if you find that the deal is as you had thought originally. This is perhaps the most crucial step, as it will save you from making a terrible investment that could cost you wasted time, effort and money.
The final step is following through with your exit strategy. Depending on what type of investment strategy you are currently using, such as buying properties in poor condition and fixing them up, or perhaps you are looking to purchase properties only to have them generate income, an exit strategy is necessary. You could quick turn a property after increasing the value, sell at retail, or even refinance. It is always a good idea to have multiple exit strategies in mind so that, if one does not work out, you have others to fall back on.
When commercial real estate investment is broken down into these five simple steps, investing is really put into perspective. Follow these five basic guidelines with every deal you find. Once you become more educated on the various types of commercial properties and how to best obtain financing, you are well on your way to becoming a true investor.
Real Estate Investors - Three Basic Types of Banks for Your Real Estate Investing Needs
There are many different types of banks and when it comes to lending money to real estate investors, each serves different customer needs. For our purposes, we will divide banks into three main categories: Nationwide, Regional, and Local.
Many of the nationwide banks offer several lending products to assist homeowners, commercial investors, real estate developers, and more. These large institutions provide many consumer and commercial mortgage businesses with several options. In the beginning however, for the most part they offer little or no flexibility for the short term real estate investor. Do not totally discount them though because once your business is established you may be able to secure a business line of credit.
Regional banks are smaller and often have several branches spread across one or perhaps several states. Local banks are similar but normally have even fewer branches than regional banks. These are the two types of banks that provide real estate investors the best options. Why?
Because these are portfolio lenders, which means that these banks hold the loans "in house" (as opposed to nationwide lenders who normally sell the loans to a secondary lender). This gives smaller banks the utmost flexibility to set terms and guidelines. They will often determine whether or not to loan money after they assess a borrowers' financial situation and the deal. These lenders will require a borrower to fill out a loan application, provide tax returns and pay stubs; they will also analyze a borrowers' credit. Likewise you can arrange a meeting directly with the President of the bank or the person who actually makes the funding decisions.
For the most part, this is not a quick process. It will often take 30-60 days for the process, especially for first-time borrowers. However, the overall costs and rates are comparable to the larger banks as opposed to fees imposed by Private Money Lenders.
It's worth noting too that not all regional and local banks operate under the same lending guidelines. Because they are independent of larger corporations, they have different underwriting rules, lending criteria, and risk evaluation. They also offer different rates and fees. Real estate investors need to first find the right kind of bank to borrow from and then find out what the lending requirements are to see how you can match those requirements.
The easiest place to find out which banks have the type of product(s) you are looking for is to go to the real estate investors who are already borrowing from them. Attend your local Real Estate Investor Association (REIA) meetings to find other investors who are borrowing money from local or regional banks.
Basic Guidelines for Real Estate Business
Investing in real estate business sounds like some guaranteed formula for consistent cash
flow. This notion, no doubt, has been prevalent over the time. But aspiring agents often
overlook the fact that there cannot be any gain without bearing some amount of pain.
Investment in real estate business requires some serious thought on part of the investor
because without his dedication and hard work, fruitful results would be an anathema.
For those venturing into the field of real estate, it is important to follow some basic
guidelines. The concerned person should use his prudence with regard to the choice of the real estate. He should be imaginative enough to plan out sales strategies even of unused or abandoned properties. He should always be on the look out for properties that have the potential of developing into popular commercial or residential centers in future. In a way, a real estate agent is thus like a treasure-hunter always on a hunt for precious treasures.
Another simple but important point to remember is your attitude towards your business. It
has become quite common for most of us to consider this business as a child's play. Many of them consider devoting only one or two days of the week enough to bring profit to their business. Such a casual attitude towards your real estate business will hardly end up
bearing fruits. On the contrary, you can find yourself sunk in deep losses as well. So its advisable to the beginners to pay proper attention to their business and work hard to
enjoy the gains that this business can deliver.
It is not really necessary to make huge investments while beginning your business. But you should invest soundly and have the patience to wait for the desired results. Real estate business is not some instant reward formula where you can get huge rewards with minimum investment. Always remember, if you want to gain, you must be prepared to lose.
Besides for those who face some problems initially, approaching an experienced real estate agent is advisable. These agents are skillful enough to convince the prospective buyers of the plus points of their purchase. As such, one can always learn some important business tips from them. Beginners, therefore, should never hesitate to clarify whatever doubts they have on their mind. They should remember that the only obstacle on their way to success is their attitude and effort. Ultimately, they will reap the benefits of their own toil.
Distributing Real Estate Flyers - Basic Strategy
It is easier than ever these days to target your audience and distribute flyers effectively. Advertising with real estate flyers enables you to target specific verticals, quickly generate new leads, and track your results.
First, you need to think about your ideal prospect and where to reach them. For example, if your target audience consists of married women, you will want to place your flyers in beauty salons, malls, and other locations that correlate with the demographic. Researching your target audience is always a great way to start your advertising campaign. Information is power in advertising.
You should also be careful as to how you distribute your flyers. You always want to deliver your ad in a professional manner. Don't just leave your flyers lying around everywhere. Be sure to place them in key areas with high visibility such as waiting room tables, under windshields, on bulletin boards, and most importantly - in multiple publications. Distribution through newspapers and other targeted publications will yield the highest response rates, lend credibility to your business, and build your brand. There is more value to print advertising than simply generating leads; it will also build your business and reputation for the future which is key for long-term success.
While all you probably need is one conversion to justify your investment, print advertising is a process that requires risk-taking, creativity, and patience. Print advertising is a time-tested and proven marketing method, however, like any other ad campaign, it takes time to mature. Numerous large-scale advertising studies have shown that real estate flyers work best after readers become familiar with your brand. Studies indicate that it may take up to seven exposures for your ads to reach their peak response rate. If you want to benefit from advertising, be prepared to advertise long-term and make sure you are in it for the long-haul. Success doesn't happen overnight.
Basic For Real Estate Management
Many of my friends have already invested their hard earned money in real estate. Some have invested, like many of us, for the dream house they always want for all through the life. Some other friends invested their small savings in the real estate field to gain some good returns by purchasing properties at low price and selling it off at a higher price in a short span of time. Some have let out their properties as well to gain an income.
Recently I purchased a property. Of course I got it really at a low price. But I do not want to sell it off immediately to gain short term gains. I know many investors do this. I have decided to keep it for few years before selling it off. Then the option left with me is to rent it out to be a credible tenant. This assures me a steady income from the property. Many investors follow this route also. But here is a challenge.
Real Estate Management is easy.
The challenge I mentioned earlier is the management of the real estate. Letting out a property requires a perfect real estate management 101 process. I know many people, landlords as well as tenants, having sleepless nights due to the problems with the rented properties. Real estate management is not an easy job. I have many friends who just keep their property idle in order to avoid the hassles of letting out to a third party.
The fundamental of management 101 is to find out excellent tenants with good credibility and good credit records. It also involves collecting the rent from the tenant at the right time and passes it over to the landlord. Real estate management should also help both parties in ensuring that Landlords as well as tenants do their duties perfectly at right instants.
Real estate management has to make all the documents regarding the tenancy agreements in time and perfectly error free. They should see that the property is in a perfect condition at the time of renting out. They should make sure that all repairs are done and maintenance like painting, polishing and other minor works are done on the property.
Do you feel that it is not possible for you to handle all these difficult tasks?
What is the best option for you to have a better real estate management?
There is really a hope. You can hire a real estate management firm, which can carry out all these activities. They will spend their valuable time and efforts and make sure that both parties move in tandem.
The real estate management firm will charge a small amount as commission for doing these awesome works for you. If you compare the conveniences you gain from the services of the real estate management firms, you will absolutely convince that the amount you are paying as commission is very minimal.
You have to do much homework before selecting a perfect real estate management firm. As in any field, here also many firms are out there good and bad. You have to check and convince the credibility of the firm before hiring them.
If you hire a good real estate management firm, they will assure you that your property is occupied all through the period without any gaps and also you can be assured of getting uninterrupted rent month by month without any hassle.
Remember to master management 101 - basic of real estate management.
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