Income Finance

Posts Tagged ‘Estate’

As a new year, including new trends and styles also come in the picture. In many parts of life, a note of these changes and transitions. The product range is no exception, new emerging techniques and one of them is real estate investment in the Internet.

And ‘common to think that real estate is about to hit a bumpy road, in particular, the recession and the current state of the environment. It ‘also expected to continue in the coming years,’ Till the financial crisis, a curse to be removed. It is said that there will be endless calculations of available resources, and increasing project costs. Professionals claim that property values ​​fall and foreclosures cannot be stopped. The field of commercial real estate is said to be, at worst, the last of the Great Depression 1991-92. Even if the forecasts are bad signs that not everything is downhill.

Property experts are finding ways to reduce the impact of the crisis for the industry. Since the current trend is to take things online, even if the property sector adjusted. People join cyberspace marketer’s gain more exposure via the World Wide Web.

The Internet is now the street. This is the day off to get the latest events, shopping, finding the best activities and all necessary information about everything that needed to be known. As such, for goods industry to develop the Internet is among the first to see all available media. This fact shows the importance of having a life on the Internet for your real estate. You would also need to be updated on all the techniques in the online industry.

Recent trends involve getting representatives of real estate online. Agents need to influence their customers through the World Wide Web to market properties. This trend suggests that potential customers are created based on how brokers sold online, making it the most important technique in the world of business ownership on the Internet.

It requires agents to be successful in the real estate market daily to ensure that they are aware of all the latest market values ​​and trends. The way to do this is through visits to specific search criteria, and RSS feeds.

Write a blog is one of the important techniques developed in the past in real estate. Via blogging, representatives of the property you will find information about the properties that were once for sale. This is yet still only works as part of Internet mail order sales.

Create a strong Internet presence and a reputation for big trend in the past. It is also the number of share capital. This is a part of it, because the power of social networks is a human enterprise. It ‘so important that you create a link of social capital and Internet connections with people who have the best connections in the industry.

Due to the collapse of global finance, but have become more difficult for the world of real estate. However, due to modernization and development of online real estate, there is still room for a positive future. The best thing to do is go online.

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Part 1 of 5: Rehabbing Houses

This posing will mark the beginning of a 5 part series in which I will discuss 5 separate real estate investing strategies, along with the benefits and drawbacks of each. There are hundreds of ways to invest in real estate. It is very important in choosing your investing strategy that you consider the time, money, and effort you’re willing to invest. Also make sure to be realistic about your experience level, construction experience and ability to manage others.

After watching Flip this House, real estate investors think that rehabbing houses is the only real estate investing strategy out there. Although flipping houses can bring substantial profit, you can also loose a ton of money. Let’s look in detail at what’s involved.

So you have decided to step in to the big leagues and start flipping houses? First be sure to carefully evaluate your personal commitment to the projects, time available to invest into them and willingness to liability exposure. Having bought and sold over 150 houses, I am here to tell you that rehabbing houses is one of the most difficult investing strategies, but can also be one of the most lucrative.

Estimating Repairs– Okay, so you’ve heard about a great investment property that needs work. Now what? Even though your realtor or friend thinks it’s a great deal you need to run your rehab costs in details. If you’re not experienced in construction get a couple bids from some reputable contractors to give you an idea of rehab costs. Be sure never to get them out of the yellowpages, but instead use websites like servicemagic.com or get referrals from other investors. In generating rehab costs, there are some great repair estimate sheets online you can get to help in the process. In estimating repairs for house flipping it also helps to think about the 5 major systems that may need to be replaced! Roof, windows, plumbing, electrical, & HVAC. Also always make sure the foundation is in good shape as rehab projects with bad foundations are impossible to re-sell. Home buyers expect these major systems to be new, or fairly updated. If they are older than 15 years plan to update them. We have a standard cost for each based on our are. For example, we can replace HVAC systems for $ 5k or less and windows for $ 200 each.

Learning to estimate repairs can be frustrating but is an essential part of real estate investing. You’re not going to be perfect at it overnight, so have patience with the learning process. By utilizing contractors, you can learn to see things how they do and it will get easier with time.

Obtaining Financing

Getting financing to rehab houses is harder now than before the crash, but can still be done. The preferred method to buying houses for rehab is cash or using an equity line of credit. This way if you are dealing with a motivated house you can close right away without the hassle of jumping through a lenders hoops. If this isn’t an option, you can find a private lender to fund your real estate deals. By offering friends, family, and anyone you know 8-10% interest you should be able to raise the money. You can set it up to defer payments to them until the rehab is complete and you sell the property. You will give them a first mortgage and personal promissory note in exchange for the money. This means they get the house if something goes wrong and can come after you personally.

If you’re planning to get financed by a bank for rehab projects, you will likely need to contact at least ten in your area until you find ones, so don’t be discouraged at first. Don’t waste your time with big banks. Instead focus on the small community banks. If you plan to get financing for rehab projects and real estate investing in general, you will first need to assemble a loan package which lenders will request. It should consist of your last two years personal tax returns, personal financial statement (that shows all your assets & liabilities), a business plan, a cash flow statement (if you currently own property), & a brief description about yourself and the project you are applying for financing on as a real estate investment.

Managing the Renovation:

Flipping houses isn’t an easy job. The process of managing the rehab itself will require excellent organization & people skills. It is also very important that you learn how to estimate repair costs as quickly as possible.

The majority of beginner rehabbers that I know loose their shirt by overspending at the beginning of the job and over paying for the work. A lot of them also get ripped off by paying money upfront before work is done.

Follow these rules to insure you succeed at rehabbing houses:

1.)  Never use a contractor that isn’t recommended by an experienced rehabber or have great reviews online or references.

2.)  Never get a contractor for rehabbing houses out of the yellowpages.

3.)  Never pay money upfront to a contractor. (Instead you can pay the supply house directly for the material orders)

4.)  Always use a contract between you and the contractor that has a hard date that the job must be complete. This must include a per diem penalty for everyday that the job is not done. This penalty amount will be subtracted from what you owe the contractor at pay day.

5.)  Never pay a contractor more than 70% of what you owe him until the job is 110% done!

6.)  Get proof of workers comp & insurance before awarding the job. Keep this paperwork & call to make sure the policies are valid.

7.)  Never, ever break any of the above rules about flipping houses or you’ll be very sorry you did.

If you follow the above rules about rehabbing houses, you will be well on your way to doing a great job. You must have first gotten a great deal on the house. Make sure to join my email list here as I am always sending out new tricks to find houses not listed on the market with a realtor.

Project Management

In rehabbing houses, you or someone that works for you will need to manage the project full time. This means being on the job everyday, ordering materials, working with a designer, getting draws from the lender, paying contractors, keeping the job site locked up every night, ordering dumpsters, communicating with the neighbors, keeping the job site clean, getting bids from contractors, and much, much more.

In closing, rehabbing houses can offer a huge return, but also be a lot of work. You might make money, you might loose money. I offer a Mastery Fast Track Program for serious investors that offer a full rehabbing system and unlimited support throughout the process. You will more than make up for the cost with the money you save on the very first rehab. It’s critical to have a highly experienced partner on your side that can walk you through the process, that you can lean on anytime.

Don’t gamble. Insure your success and sign up today! Make the commitment to your career as a real estate investor and find out what it’s like to have the freedom to build your own house flipping business. Imagine showing your friends that 6 figure. Check that you made on your first rehab deal!

Stay tuned for part 2 next week – Rehabbing Houses for Rental!

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Options are always a nice thing to have, regardless of your situation. In real estate, the option contract can be used for a number of different scenarios, I am going to use this space to focus on just one: let’s call them the “tweener sellers.”

I consider the tweener type of seller to be somewhere between wholesale and retail, but leaning a bit more towards the retail side. The seller lacks the personal/financial distress that drives the immediate resolution necessity of a direct purchase, while they may also find themselves reluctant to list the property with an agent – or may have already done so without any luck.

This was the type of scenario that left me scratching my head in the past, but today, if I am unable to purchase directly or list the property I simply reach into my creative solutions bag and introduce the option agreement to the seller.

What is an option? The option contract is simply an agreement you have in place with the seller that specifies the terms in which you may exercise your option to purchase the property.

On the other hand, you may also choose not to exercise your option to purchase the property and the contract will expire.

How does it work? As with any contract, you can make the terms of the agreement as complex or as simple as you would like; it all depends on the situation. My philosophy with the option contract is to keep the agreement as simple and straight forward as possible, in fact, the agreement I use is only one page.

Let’s take a look at the typical terms of the Option contract I like to use:

The Length: I don’t look to “tie up” the property for an extended period of time – I like 2-4 weeks.

If you are getting the seller’s best off-MLS price, do you really need more than a month?

The Price: This needs to be realistic. At the very least, the price you need to obtain from the seller needs to be market price, minus agent commission, “and then some.” This last part – ‘and then some”- is an indicator of your negotiation skills and the seller’s motivation to sell, the lower the price, the better your chances of finding a buyer. It doesn’t make any sense to option the property if the seller cannot do better than market value. If that happens to be the case, then list the property or learn the mantra every successful real estate investor uses: NEXT…..

Seller’s Rights: Under this agreement, the seller can sell the property on their own and cancel or extend the agreement anytime they like. If the contract period runs out and the seller does want to extend, I look for a significant drop in price.

Marketing: My target for this type of property is a retail buyer! I do not run this property by my investor list and I would suggest you don’t either if you want any of your investors to continue to open your email. Given the high percentage (87%+) of home buyers that use the internet to search for property, I post the listing to a number of different high traffic websites with a compelling headline/picture that will draw the attention of a ready, willing, and able buyer (read: pre-approved) seeking to find a good bargain. I then use blogs, video, and social networking sites to drive traffic to the property listing.

And that is all I do: no newspaper/radio/television ads, signs, phone calls, voice, or email blasts. In my experience listing REO’s, the lenders certainly got one thing right, price the property correctly and it will sell. If you insist on over-pricing the property, you will continue to own that property regardless of where you choose to advertise. Put a well-priced property in front of a large pool of willing buyers and you have yourself a great wealth building formula.

When I field calls on the property, I give the potential buyer a pretty good grilling. Why? Because I don’t want to drop what I am doing and interrupt the seller’s life in order to meet a tire kicker at the property!! Naturally, you’ll need to do this a few times – as I have – in order to appreciate how vigilant you must be about pre-screening your buyers.

Once the property is seen and the buyer moves forward with the seller to the contract stage, I get paid an assignment fee: I am assigning the terms of my option contract I have with the seller to the end buyer. Given the amount of work I do in this type of transaction (next to none), the fee isn’t outrageous. I look to gather all of my fee up front from the end buyer and exit the transaction as soon as I can: my piece is done, buyer and seller have been brought together. There are times when this isn’t the case – complications, larger numbers, difficult buyers/sellers…If necessary, I gather as much of my fee up front, make it non-refundable after home inspection, and collect the remainder at closing.

Oh yeah, so what happens if you have yourself a pre-approved buyer, you meet them at the property, and it turns out they don’t want the property? Hmmm, I wonder if I can find them another property that they may like….if you’re not an agent, do you think any one on your investor’s list might be interested in showing your buyer some of their properties?

This is another example of a win/win/win transaction: the seller gets a good price in a timely manner, the buyer gets a property at a bargain price, and I get paid an assignment fee for bringing the two parties together.

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Investing in real estate market involves less risk than many other types of investments. But investing in real estate without having sufficient knowledge on the market can be risky. A savvy investor can make large profits in the property market, despite the fluctuations. Similar to the stock market, investing in real estate can fluctuate widely, and there may not be rapid price declines of the night.

The economy is a key role in determining the property value. Because when the economy suffers, so property values ​​will also be down. When the number of properties have been offered a good price for the property market, so it’s a good indicator of changes in market trends.

If the number of properties listed on the market should be low, then prices will rise because of supply and demand theory.

Price fluctuations in the housing market occurs seasonally. The critical factor in the real estate investor is to be careful when making a decision about buying or selling a property. The investor should analyze the value of the property before he / she decided to buy the property. A real estate investor should plan the strategy for the purchase or sale in the housing market. There is no room for speculation in real estate.

The real estate investment strategies are:

• Pre-Close Features: This is a method of buying real estate where the owners are in arrears with their mortgages and the foreclosure process reported.

• Post-Execution Properties: These properties were officially seized and confiscated by the lender or the lending banks.

• Distressed properties, distressed properties are below market assessment are available on the market.

Be knowledgeable about the price of its labor market and the real financial costs, repairs, maintenance and sale before venturing into this type of transaction.

• Sale New Development: This is a strategy that involves buying homes early in the first phase of a new housing development. Again, this strategy will be to your advantage if you’re in a real estate market with rapid real appreciation.

• The purchase of land for construction: This method requires economic resilience and knowledge you can make big gains by buying land and then build a house. One of the best scenarios is to buy enough land to build and sell houses or apartments finished.

• Buy and hold: buying homes or more units and keep it long enough to be the strategy ensured the victory. But it is necessary to analyze the impact of the funding for the cost, the factors of messages, taxes, real estate, management, maintenance, etc.

• Flip Strategy: Buy a house for a quick return strategy is also a regular. With this method, you have the flexibility of a little cheaper; it will not be holding the property for a long period of time.

Although there are many strategies, not all real estate strategies to work successfully in all markets. You must arm yourself with knowledge and tools to implement the strategy for your particular market.

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