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In these days of the real estate sites like Zillow and Trulia, the marketing and lead generation tools on these sites draw millions of page views every month. What you shouldn't be doing as an investor, home buyer or seller is using the value estimates on these sites to make decisions.
Truly good real estate investors know the valuation of their deals is key to insuring success and protecting projected profits. To effectively determine if a deal is a rental building wealth or flip to make some much needed cash, you have to analyze a deal fully. All the market areas covered by REIAComps, insure you easily know which way an investor should go.
Even Zillow will tell you that they aren't always on the money. They have a chart of median error percentages in estimates in major cities, and they run mostly between around 7% and 9%. That's around $16,000 on a $200,000 house, so you don't want that kind of number in your research for a wholesale or flip deal for sure. Feel free to use a Zestimate for a quick idea of approximate value, but what you want to do to arrive at an accurate market value is what real estate agents do; develop a CMA, Comparative Market Analysis. Read More >>
In many past articles I have stressed the importance of knowing the current real estate market. You should take note when property prices are rising, falling or plateauing. If you are a flipper, is your inventory selling faster or sitting on the market longer? If you are a wholesaler, are you having to work harder to find deals or have you suddenly found an abundance of deals? Are the deals you are finding getting easier or harder to sell? If you are a real estate agent or work closely with one, is his/her listing receiving multiple offers and flying off the board? Or are they sitting on the MLS with a few showings here and there? These are questions you should always be asking as a real estate investor.
One can always pick up an article or see a news report about what is going on in real estate but it is usually a report of real estate as a nation not just your market place. Most realtor associations have monthly reports that are helpful but they are not out until the middle of the following month. As an investor, even these reports may be too late in providing the information. If you are in real estate or plan on being in real estate you must keep your finger on the pulse. If you are doing plenty of business you will feel the change in the market and can begin to prepare for it immediately. However, if you only dabble in real estate, you might not know what is coming around the bend. If you dabble or are just getting started make sure to network with people that are full-timers. If you find a deal you plan on flipping or holding on to for a rental, discuss it with a veteran investor. They can mentor you on the best option and possibly keep you from making a mistake. Read More >>
Finding ways to attract motivated sellers to your Real Estate Investing business is probably the most important element in your business, since without the motivated sellers, there are no deals to be made.
There are several different ways to find motivated sellers for your real estate investing business using a shot gun type of approach to locate as many sellers as you can. A shot gun approach is where you “blast” your message out to your market and hope that there are motivated sellers among the bunch. Some of these techniques include yard or vehicle signage, business cards, t-shirts and hats, door hangers, pens, buttons, business card magnets, flyers and auto shades. What I really want to focus on today though, is using business cards to locate motivated sellers.
When having business cards printed, there are a couple of things you want to keep in mind. One is that your business card needs to have a grabber headline and it needs to catch people’s attention by looking different from every other business card out there.
Use bright colors and a benefit driven message on your business cards. List the reasons on your card why that seller should work with you and how you can help them. Remember business cards are a highly effective inexpensive lead generating tool for your business. On your business card, you want to provide your potential seller with a couple of different ways to contact you so they can contact you in the way that is most comfortable for them. So for example your card might include your phone number, your email address and a website for them to check out. The more ways you give a potential seller to contact you, the more of them will. Read More >>
We’ve all been there. We go through and estimate repairs on a property and miss something. Sometimes, that something may be minor however it could be quite significant. This tends to happen when the rehabs are larger in scope or have a structural or foundation issue that needs addressing. I don’t usually see wholesale courses that teach how to address these sorts of things when dealing with these points beyond generalities. However, generalities is usually not going to get this done right and does little to build confidence in Buyers.
While Buyers of course are expected to do their own due diligence, it has more than frustrated countless Buyers when wholesaler numbers end up being way off due to this common ignorance. I thought I would take some time to outline some common figures for our market for a variety of these often overlooked items. Take this and adapt it to your area and this will give you a solid starting point. Read More >>
What will you do when things don’t go as planned? Will you flounder, or will you be able to put into motion a clear set of actions? In other words,
Do you have a System for Success?
Recently, a colleague of mine had two contractors burn him on a job. It should have been a quick fix, three days maximum, light work… paint, cleaning, and light bulbs. But neither contractor had a system to get the job done right, and he did not have a system to fire contractors and still come in on budget. The upshot is that, without a system, you risk losing time and money.
Often, when things don’t go as planned (and this can be often!), we have fear. We become paralyzed, perhaps we focus on the negative. To be successful, we need a plan that keeps us from feeling this way because what we want is success.
What does a good system give you? Read More >>
“What size property is right for me to start with?” This is a question I get asked all the time. My answer is usually the same. “Depends on how much of a loan you can qualify for”.
Unless you already have all the cash you need to buy your next apartment deal (and I am assuming you don’t) then you are going to need to get a loan. Understanding what it takes to qualify for a loan is one of the best ways to decide on a property size when you are starting out. If you try and go too big you are limiting the chances that you will complete the project. 80% of your efforts in finding deals should be spent looking at deals that have the highest chance of closing. What has the best chance of closing? Ask your sponsor.
In almost all loans commercial lenders want to see that you have the net worth equal to or greater than the loan amount. For example if you want to borrow $1,000,000 then you need to have a total net worth of at least $1,000,000 or more. Now, the nice thing about this situation is it doesn’t have to be just your net worth, it can include the net worth of your sponsor. A sponsor is a high net worth partner that you get to join you in the deal who brings the balance sheet you need to satisfy your lender. That is the great part of the multifamily business. We can get partners that will help us build our business and there is enough cash flow and equity for us all. Read More >>
I am so excited to tell you about a trend that I am finding on short sales that I am negotiating! You have read in my previous articles and I also mention in my Home Study Course about an interview that went worldwide on 60 Minutes which named Wells Fargo, Chase, Citibank, just to name a few, as Lenders and Banks who were falsifying documentation regarding Notes that Docx Company had destroyed. The interview referenced all of the “Robo Signings” that were occurring. After this was announced to the Public, the Lenders and Banks that were involved in falsifying documentation were fined big time. However, the Lenders and Banks were very smart on helping Homeowners who were taken advantage of. What they did was they looked at 2nd loans on properties that were in default and forgave them. When choosing the loans that were in default, they were able to add all their interest and late fees on top of what was owed, so that when they forgave the debt, they were forgiving a loan that probably would have been put in their collection department and eventually written off anyway. I would recommend that each of you go to www.60minutesovertime.com and type in Robo and find the airing of the show so that you will know all the Lenders and Banks that you should be looking for on 2nd loans. The Lenders and Banks would just file a discharge of lien against the property and as to whether or not they really notified the Homeowners, I am unsure about. The reason I state this is that many Homeowners who aren’t paying their loans on the 2nd mortgage, they probably aren’t paying their loans with the 1st mortgage either. Meaning that the property is probably in foreclosure on most transactions. The Homeowners who are in default have probably moved from their homes and they would ignore all the paperwork that’s coming in their mail and would never even see a notice if their debt was actually forgiven. Read More >>
A common scenario…
You find a deal and the Seller is motivated to sell. You walk through the property and notate everything you think the property needs. You come up with some quick estimates, do some negotiating with the Seller and get the property under contract. Woohoo! Your blood is flowing. It’s time to sell it. You send it to your Buyers list and you have interest. Things are looking good. Buyers check out the house. The excitement then dwindles…
The reason? Repair estimate is too low. In some cases, very low. Before you know it, you are getting few offers and the few you get are simply too low…
Does this sound familiar?
This story plays out several times per week in our office from wholesalers that send us deals. The reality is, it is common for wholesaler repair estimates to be low. The majority of wholesalers I meet have never rehabbed a property. Selling to a rehabber is one of those things where it is best to walk in their shoes before trying to sell to them.
'But wait, I don’t want to be a rehabber!’ you may be thinking. That’s ok, you don’t have to be. The solution is simple yet overlooked by the vast majority of wholesalers… Read More >>
Want an easy, free way to make your business look more professional and polished? Customize your forms. QuickBooks has the tools.
As a Real Estate Investor you may be asking yourself “Why do I need to do this? I don’t send out invoices or statements” – You may, on a very rare occasion, need to do just that for a late paying tenant or invoice them for repairs that they are responsible for. Or you may need to provide financial documents from QuickBooks to a lender/investor.
You probably don't get as many paper forms in the U.S. Mail as you used to. But when you do, do you draw conclusions about the business that sent them based on what their forms look like?
Whether or not you think you do, most people make judgements on businesses based on collateral materials. You might notice that there's no company logo, or that there are unnecessary blank fields. Maybe the print is very light or blurry, and there's no message at the bottom thanking you for your business and your payment.
How you present yourself on paper does matter. There's a lot of competition out there, and you need to use all of the tools available to you to stand out. QuickBooks provides one way to do so with its simple forms customization features. Read More >>
When you know the best pockets or market areas around the U.S. to find discounted real estate, you are half way home. All that is left is evaluating the inventory for maximum profit. For those of you connected to REIAComps , the control and feeling of confidence you have over your deals is priceless. Using REIAComps to investigate the value of “Shadow Inventory” houses as they come to market, against the recent sold comparables, will provide you a solid position to “make your profit when you buy”.
First, let’s define “Shadow Inventory”. The general definition goes like this; the current stock of properties in the shadow inventory, also known as pending supply, by calculating the number of properties that are seriously delinquent, in foreclosure or held as REO by mortgage servicers, but not currently listed on multiple listing services MLS’s.
CoreLogic has released its National Foreclosure Report with a supplement featuring quarterly shadow inventory data. According to CoreLogic analysis there were 46,000 completed foreclosures in the United States, down from 64,000, a year-over-year decrease of 29 percent. On a month-over-month basis, completed foreclosures decreased 8.3 percent, from 50,000 in one quarter. Read More >>
I am always excited by the opportunity to share as many ideas as I can with regard to locating motivated sellers for your real estate investing business. After all, without the sellers, there are no deals. I also like having the opportunity to share ideas for both the beginner investor and the seasoned investor alike within a variety of budget constraints. One of my favorite techniques is using flyers to get the message out there that I buy houses.
Flyers are a great way to target and locate motivated sellers. They can be used to target specific neighborhoods and subdivisions where you want to buy houses. You can either hire a company to hang them door to door for you, or hire older children to hang these flyers for you.
Do follow up by driving by the area to make sure the work got done. When using a company to lay flyers for you, make sure you get references from satisfied customers first. There are some companies out there that will take you money and not get the work done, so you want to check their reputation before hiring them. Flyers are a wonderfully inexpensive way to locate sellers and this technique can be repeated either monthly or quarterly depending on your time and budget. When we used to lay flyers door to door ourselves, we would take one weekend morning to do this. My husband and I would each take one side of the street and lay flyers door to door. We would keep a chart of the neighborhoods we had done so we could track our results. You always want to be tracking where your leads are coming from so you know which of your marketing campaigns are working best. Interested potential sellers will hold on to these flyers until their situation changes and they are ready to sell, so laying flyers door to door becomes one of your long term marketing techniques. Read More >>
Boy was Mike ever excited! He found his first real estate investing deal; a property he planned to keep as a rental. Knowing that Kim and I loaned money to purchase investment homes, he gave me a call.
Mike’s contract was a gem of an opportunity – at least according to him. The seller told Mike that six other buyers were lined up with cash money. If Mike wasn’t able to close within a week, the seller would let another lucky stiff…errrr…I mean investor…have the home.
Mike explained that the house was built in 1955, had three bedrooms and one bath, needed a good bit of work, the neighborhood was okay but not great, and like-kind houses in the area rented for $800 per month. The seller told him the home’s fair market value was $115,000, but he was willing to let Mike steal it for $89,000.
Mike was chomping at the bit with no time to waste. He needed a purchase money loan and he needed it now!
After digging into the guts of this “deal,” here’s what we discovered. Read More >>
I want to take this opportunity to talk to you a little bit about commercial property. I've got a lot of experience in commercial property from developing vacant land to income-producing properties of all kinds. My favorite is development.
But first, let's talk about what is commercial property. And, in the world of residential it's anything over 4 units. So, a 4-plex is not commercial, but a 5-plex is considered commercial. And, some of the properties that I have dealt with actually had income from tenants. I've had office buildings, I've had apartments, I've had retail and two or three other things, heck, I even had a mobile home park at one time, and over the years I've pretty much dabbled in everything.
I've specialized in nothing in the commercial world because I'm more of a generalist than a specialist, and of course we could have this discussion for hours. I think the smartest thing to do is to be a specialist because you can get good at one thing and not have to do so much and go through the learning curve that I had to go through. Read More >>
“One machine can do the work of fifty ordinary men. No machine can do the work of one extraordinary man.” ~ Elbert Hubbard
Camfind is a new app that makes some big promises. It claims to be able to identify literally anything just by snapping a picture. I was quite skeptical since my past experience with Google Goggles left me hoping for more accuracy. But from object to QR codes, Camfind is far better than Google’s long forgotten product.
I used Google Goggles way back in 2010, but it has never been updated, so I haven’t touched it since. But I was intrigued by Camfind just because of the application to real estate needs. It could be a great way to identify a specific style of house, if you are looking to replace hardware in the home, perhaps a specific door knob, this has the potential to be very useful in this field. Read More >>
This month I will continue explaining what I believe to be one of the best ways to add additional income to your wealth building strategies investing in Paper Assets.
There are two types of promissory notes "performing" and" nonperforming". The performing promissory notes are the ones being paid by the borrower every month as agreed. The nonperforming promissory notes are not being paid as agreed and in many cases are in default and in the foreclosure process. Depending on what the asset is that has been used as the collateral for the note, if not being paid as agreed, it may be in jeopardy of being foreclosed upon and the real estate may be taken back or the borrower of non-real estate may be taken to court by the lender to get a judgment against borrower to try to reclaim the money they lent to the borrower. I believe every real estate investor needs to understand how paper assets can be a huge part of their wealth building plan.
One word of caution I want to mention, if you decide this is something you might like to participate in ALWAYS be sure to do your due diligence before ever purchasing any paper asset. The reason I say that is because I recently looked at a portfolio of defaulted notes held by a major bank. When I did my due diligence I found several properties that had a promissory note and mortgage attached to them had been bulldozed and no longer existed and all that was left was a vacant lot. A vacant lot is not worth anywhere near the amount owed on the promissory note. If I had not done my homework and I had bought those particular promissory notes and I decided to continue with the foreclosure that those properties were already involved in there would be no way I would ever get back as much as I might have paid for the promissory notes. Read More >>
The process is supposed to be simple. If you have a securitized mortgage, you make your payments to a servicing company. The servicing company is granted the authority by the certificate holder of the loan to collect the payments and enforce the terms of the loan. But what if that servicer never actually had the right to collect? Even if they had the right, what if they covered all of your missed payments to the certificate holder and its trust that owns your mortgage? If this were the case, your loan is current. Would the servicing company have the right to foreclose on your loan that is current with the certificate holder/trust?
In most cases the servicers are making the mortgage payment to the certificate holders (the owners of the debt), whether the borrower makes their payment or not. This means that the certificate holders of the loan are getting paid, therefore there is no default giving them a reason to foreclose. This certainly explains why you very rarely see a declaration by the certificate holders or their trusts claiming a default! The servicer makes the payments and collects their service fees until they decide to foreclose, despite the fact that the certified holder of the debt never experiences a default. Once they foreclose on the loan, they can collect even more fees. Pretty sweet racket for the servicers, right? Read More >>
When stock markets are volatile, investors (rightly) get nervous. After all, many people have most of their wealth in the stock market. If the stock market goes down, then they see their wealth shrinking...and for people close to retirement, this is a scary prospect indeed. But it doesn’t have to be this way. With Real Estate IRAs, many people learn that retirement income doesn’t have to depend on the quality of the Dow Jones Industrial Average. Instead, retirement income can depend on your strength as an investor, and the wisdom it takes to know what true diversification really is.
And just what is that “diversification” we’re talking about? Some people will tell you that investing with diversification means having the right mix of stocks and bonds, of having stocks split up into small cap, medium cap, and large cap equities. But all that really means is that you’re invested in two different investment categories, all the while ignoring all of the very real possibilities for retirement income that are out there.
If you’re sick of feeling nervous every time that stock ticker heads into the red, then it’s time to broaden your horizons as a wise retirement investor and look into what diversification really means. Read More >>
You find a good piece of income producing real estate that you decide to buy.
You have little money to buy it, but you decide to use whatever money you have as part of your down payment.
You get qualified for a 90% LTV loan.
You call around and you are able to raise the remaining money from your close friends and family for the remaining down payment. You promise to pay them a generous interest rate of 8% for lending you their hard-earned money.
The following month, you find another good real estate property that you decide to buy.
You have no money to buy it, but you know you can raise the money.
You get qualified for a loan with 90% LTV.
You call around and you are able to raise some of the money from your close friends and family. Again, you promise to pay them a generous interest rate of 8% for lending you their hard-earned money. This time, you remember about a line of credit you have, and so you decide to use all of it to close the deal. Now, you have raised all the money to buy this property. Read More >>
Kim and I have been managing rental property and tenants since 1997. We still own the very first single-family investment property we bought way back then!
Between then and now, we’ve made every landlording mistake in the book. We’ve bought bad rental properties, rented to awful tenants, and let tenants get three or four months behind in rent.
Here’s the important thing to remember: With every mistake we made, we learned what not to do. And with everything we did right, we learned what to keep doing. That said, here are the top 10 landlording lessons I’ve learned over the years.
Number 10: Take the magic nickel. Why own rental property? If you flip a house, you make a dollar. The only way to get another dollar is to find and flip another house. With rental property, you only make a nickel. But it’s a magic nickel that you get every month for as long as you own the house!
Number 9: Begin an eviction ASAP. Over the years, we’ve had tenants not pay us on time. In the beginning, we’d work with them only to be left holding the bag after three or four months of non-payments. When a tenant defaults on the lease, immediately file for eviction in order to get the eviction clock started. Read More >>
“Investment personality?” you might ask. “What’s an investment personality? I want to make more money than I have. That’s my investment personality.” Okay, we’ll admit it: the idea of an ‘investment personality’ might not seem to have a lot of merit at first—until you realize that you do have a set of clear priorities and preferences based on your experiences. To one person, Real Estate IRAs—for example—might fit perfectly in line with their investment personality. For someone else, a Self-Directed IRA of a different sort might be more appropriate.
The question becomes: what exactly is your investment personality, and how can you know it? Let’s look through some basic questions to find out exactly what yours is – and whether or not Real Estate IRAs are the right match for you.
Basic Investment Personality Questions: A Short Quiz
Your investment personality might not be the same as your normal personality. Some people who find themselves perfectly risk-averse and introverted in their personal lives might enjoy a riskier approach to their investments…and vice-versa. Let’s take a few moments for some questions that may just reveal some things about your investment personality: Read More >>