Archive for October, 2011

Subleasing, hmm

Friday, October 21st, 2011

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In the south, subleasing is usually something you only hear about in the movies. For many people, it can solve a lot of real estate problems, especially when it keeps you from breaking a lease. For those confused folks or just those northerly challenged, a sublet or sublease is the leasing of a property from one tenant to another while the original contract between the landlord and first tenant is still active.

Breaking contracts can become a costly obstacle to individuals and businesses. It ruins reputations and shrinks the available number of landlords and real estate businesses you can work with. It can also increase the deposit you have to pay by substantial proportions.

Subleasing is becoming increasingly popular everywhere. Not just in apartments, but also in commercial spaces. Most management groups are finding that any rent is better than no rent or continued loss of income.

Drawbacks to Subleasing

Contracts and Terms – Due to the fact that a sublease is actual a continuation of an original lease, the terms don’t change with the new occupants. You just have to accept the old ones and move on. This can be a positive and a negative. If landlords want more money, they have to wait until the original lease is up. If tenants want less rent and better maintenance, they have to wait until the next contract period to negotiate it.

Options – With most contracts,  the renewal or expansion portion relies upon the decisions of the landlord and the original tenant. Subleases are rarely given the opportunity to ask for let alone negotiate these options. In addition, the options for renovation are limited too. Since you are subleasing, there are no changes you can make. This can really turn off tenants.

Commercial space – Many commercial real estate owners do not like to have their spaces renovated or changed. Some feel it brings down the value of their property. Others are just afraid it may make the place too crowded. This can become a problem for many commercial landlords. If you only need a small space, ask if you can get just a small place. There are landlords that will work with you if you talk to them about it upfront.

For many of us, this is a new concept that should be thoroughly thought out. It has the potential to generate some revenue for real estate businesses, even though it does have drawbacks. Remember though, almost everything has a drawback or two.

For more ideas on real estate, visit us at Homevestors.com.

 

Choose Repairs Wisely

Friday, October 21st, 2011

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All real estate investors want to most for their house when they sell it. They will do everything someone tells them needs to be done to fix it up and get it sold. In fact, many will invest multiple tens of thousands to get even bigger returns on their investment. However, in our current market situation, investing that kind of money into a property may not always be the wisest decision. Recently, many homes that have been bought, fixed up, and put back on the market are left sitting there.

Although the cheapest house looks like the best deal and has potential for huge returns, it is not always the smartest real estate investment decision. A lot of that has to do with the standards of the houses already in the homes location and the easy accessibility the new, cheaper homes.

When the housing bubble burst a few years ago, it hurt a lot of real estate investors and homeowners. Property values went way down on just about every type of property, including single family homes and new construction. A lot of people decided not to buy, and many investors were stuck with expensive properties they couldn’t get rid of. When people chose to buy, they would pick cheaper properties or new construction that they could get for the same price, and no one could blame them for choosing a newer property at all.

When a real estate investor chooses a property, he meticulously examines all of the numbers, cost of repairs, and the potential selling price for the property after repairs. Instead of making the house a million dollar masterpiece, a wise investor needs to choose his renovations and repairs carefully.

Consider the location of the home. Most real estate investors do this, but think about what the standard of living is in the location as well as what most of the properties have that yours does not. Those are the standards the investment property will be held upon rental or putting it up on the market. In a neighborhood in one of the poorer areas of the city, these may not be worth the investment of a lot of fancy new appliances and updates. People probably cannot pay what you would want in return for your hard work and investment.

Consider comps

Before you say no to a property, think about the other comparable homes in the area. It is a good possibility that money can be made on a property with very little investment. Instead of immediately adding marble floors, wall tiles, and counters, some homes may have a reasonable rate of return with just clean or new floors and fresh paint.

This is not to say that if major repairs need to be perform on a house that a real estate investor not do them. Remember, you would be the responsible party, and you would be held responsible if they were not done. Instead, do your research ahead of time and make smarter choices on how you spend your money.

For more topics related to real estate investing or real estate franchise opportunities, visit us at Homevestors.com.

Associate Franchise Memberships

Friday, October 21st, 2011

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The real estate business is an exciting game. There are ups and downs no matter what your niche is, and there is always a motivating challenge just over the horizon that can inspire even the most hesitant business owner or investor. That motivation pushes us just a little deeper or just a little further into the real estate business each time.

At some point though, many real estate investors start to get a little board. They own property and manage it, but the appeal and draw of the game has started to stalemate. This is when a lot of real estate investors start to get out of the business. Fortunately with a little creative thinking, there are other opportunities available these days that can keep real estate investors challenged and in the game.

Real estate franchises offer all kinds of opportunities for real estate business owners. They provide marketing materials, brand identification, a solid reputation, and more. They do cost to startup and maintain, but the real estate business owners that use then find it a lot of value in becoming a franchise owner or member.

There are some people that hesitate greatly at the mention of becoming a part of a national franchise or real estate chain. These real estate business owners have heard all kinds of drawbacks or other challenges that make them stop in their tracks. The good news is some real estate franchises offer another level of ownership or membership that allows these hesitant real estate business owners to get their feet wet or try their franchise out.

Associate franchise memberships are the next step for real estate investors and real estate businesses that need a challenge but are afraid to become full fledge real estate franchises.  Depending upon the franchise, there is a fee or some sort of cost, but it is usually much smaller than that of a full member. For that small fee, the associate members gets a taste of the benefits of franchise ownership, and as well as the support and mentorship of an experience real estate franchise team. Many franchises have started offering this option of membership in hopes that the associate franchise member will eventually become one of their full fledge real estate franchises. Since that is how the franchise will grow and expand, you can expect they will be pretty accommodating and willing to help you along the way.

If a challenge is what you need, visit us at Homevestors.com. We have lots of real estate investing tips as well as information on real estate franchises opportunities both great and small.

Real Estate Investors: Ride the Wave

Friday, October 21st, 2011

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Real Estate Investors don’t have it easy. Everyone thinks that they just have to fork over a little money and BAM! They are millionaires. Unfortunately, real estate investing takes a lot more than that. It takes experience, knowledge, and a lot of guts.

Know your area!

What works in one area or state isn’t necessarily going to work in another. It doesn’t matter what the internet gurus tell you. Instead, look around at what is occupied and what has currently sold recently. That should give you a pretty good indication of which real estate is more profitable to invest in. Then, find the clientele in your area that aren’t being sold to, and market to them. That’ll help bring in clients and increase chances of success.

Get Creative

A rollercoaster market means you have to get creative in order to grab people’s attention. Using video and social media is great way to get started. Sometimes, you have to be even more inventive. Why not attach a sock to the open house flyers that say “This one will knock your socks off!”

When Opportunity Knocks

Carpe diem, or seize the day. Every once in a great while, a really good deal on a property you don’t normally handle pops up. Instead of hemming or hawing, check your facts and numbers. Then, if it looks good, GRAB IT!

But Be Cautious

Sometimes when opportunity seems like it’s knocking, it’s really a prankster with a pie for your face. So, be sure to check through the peephole (or data) to make sure it really is a sound investment for you and your real estate business. If it’s not, say no. It’s better to pass than to be stuck with a great opportunity that doesn’t make you any money.

Cash Flow

Remember with real estate investment, it’s all about cash flow. Your investment properties should be bringing in month every month by the truckload. If they are sucking everything out of your savings, you need to try and get rid of them before everything you have is gone. Some investments just turn sour.

Real estate is one exciting day after another, if you know how to work the system correctly. For more information on real estate investment or real estate franchises, visit us at Homevestors.com. We are expanding our “We Buy Ugly Houses” franchise, and we would love for your company to be a part of it.

 

Real Estate Industry Forecasts

Friday, October 21st, 2011

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The roller coaster ride of the US credit, the stock market, and the real estate market have put most real estate investors and real estate businesses in a complex twisting conundrum. Every time you think things are going to right themselves, the whole cart takes off spinning in a new direction.

How do things look?

Unless you’ve been in a cave the last few weeks, you know the national credit rating was lowered. The stock markets around the globe have vastly fluxuated like riding ripples in the water. The real estate numbers have been steadily on a slight incline.

Banks still have lots of properties they have previously foreclosed on they need to get rid of. In addition, they have lots of defaulted properties they haven’t foreclosed on yet. Some forecast say this might create another downturn for real estate prices. Others say it’ll have either no effect or the opposite effect. It may continue rising property values. The truth is at this time, it is anybody’s guess as to what the real estate market is going to do. We all have to sit on our hands and wait…and not do anything crazy.

Change Your Mindset

The best thing you can do as a real estate investor is look at your property as tangible property and cash flow source and not as a liquid asset. By being able to touch it and handle it and know it’s yours, this keeps you from panicking as prices rise and fall.

Invest in Tangible not Stocks or Papers

If you can see it and use it, then it’ll have some value whether stocks go up or down or the nation’s credit soars or plummets. Stocks or certificates depend on other factors for their worth. There may be a time they may be worth less than the cost of the paper they are printed upon.

Diversify

Don’t just buy one type of property in one area. Spreading out your assets to different areas and different types of properties, including single family homes, condos, lofts, and duplexes.   You will have less risk of all the properties not renting or selling and have a better chance of having consistent cash flow.

Buy Wisely

Don’t just buy because someone tells you to. Buy what you know you can afford right now. As your needs change, you can sell and buy a different property that’s better suited to your needs. In addition, if your budget doesn’t allow for lots of yard maintenance, you may want to invest in a mower for yourself or in a condo where you don’t have to worry about it.

Real estate forecasts are just that – forecasts. Just like the weather, you can look at the signs and make predictions, but a sudden tornado may come out of nowhere and shake things up. Before you make any real estate investment, look us up at Homevestors.com. We have lots of information on real estate investment and real estate franchise opportunities.

 

 

Rental Income and Real Estate Purchases

Tuesday, October 18th, 2011

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The last recession with its rollercoaster ride of bank problems and the burst of the housing bubble really hurt a lot of states. As a result, new laws were put in place that change the way financing is arranged for real estate purchases and rental income properties. Real estate investors need to be aware of these differences before they decide to take on a second or third home.

Rental Income

Under the new rules, rental income can be included in qualifying income. However, it can only appear if it is documented in the homeowner’s tax return for the previous year. What this really changes is how the qualifying numbers for a mortgage are figured. This means if you are buying a property to use as a rental property, the future income generated by the property cannot be used to qualify you for the mortgage. It is wiser to buy the home as your primary residence. Later on, it can become a rental property for you.

If you decide to buy the property to rent out anyway, the financing is considered an investment loan and not a home loan. Unfortunately, investment loans have a higher price and a higher down payment than home loans. These are also harder to get.

Dipping Prices

In the good ol’ days, buyers would rent out their first home and use that to help pay the mortgage on their step-up home. They would borrow or use the equity they had in the first home to make a big down payment on the new home. With the downturned housing market, this isn’t working out for buyers wanting to move-up now. The dip in home prices has caused a loss of  equity, and the change in the rental income law has pretty much eliminated move-up buyers becoming landlords.

Alternate financing

Some people considering real estate investment will have problems obtaining traditional financing under the new laws. For these individuals, creative, out of the box thinking can actually help them come up with the financial resources. Partnering with other investors to buy the property is a pretty common way to solve it. Borrowing the money from places other than banks is another way. There are lending institutions other than banks that may charge a little more interest but are usually willing to work with nontraditional buyers/investors.

Researching and understanding the new rental income laws can help your real estate business make better investment decisions. For more ideas and information related to real estate investment or real estate franchises, visit us at Homevestors.com.

Investing in Target Specific Real Estate

Tuesday, October 18th, 2011

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As the baby boomers continue to move into retirement, many communities are opening up for specific clientele, for example the 55+ crowd. Some real estate investors may say that an investment in a property for a specific market is too risky a purchase. However, for many real estate investors, it is actually a grand idea.

Who’s in the area?

Many business people forget to keep the demographics of their area in mind when making purchase decisions.  Knowing who is in your community and what their needs are can help you make smarter real estate investments, including those in target specific real estate.

For example, your community has a growing number of lively older people. Offering real estate options for them is a sound decision. If your community is low on young adults, offering targeted specials for that crowd may turn into wasted money.

A second example is a community that is primarily low to lower middle income. Offering high end, million dollar homes in the middle of the neighborhood doesn’t make sound financial sense. Rental properties with a few middle to upper end touches make more sense, and they keep your properties stocked with tenants.

The Key is Diversify

Target specific properties are great real estate investments, but think carefully before making them your sole investment type. The problem many real estate investors face is lack of diversification. When the market or desire for their type of real estate goes down, they often get stuck with properties they cannot move or rent.

Before investing, talk to several real estate agents in the area that have recently sold homes in your target area neighborhood. This will give you a better idea of the desirability of the location and the estimated monthly expenses, including maintenance costs, operating costs, and homeowner association dues. If the market looks good and the demographics match for the area, go ahead and make the investment. You may be filling a need no one else has thought about yet.

Real estate investment has the potential to be a great money making adventure over time. Like with any investment, do your research, juggle the numbers, and decide if it’s a sound financial decision. If it’s not, wait for the next one.

For ideas and information on real estate investment or real estate business, visit us at Homevestors.com. We also have fabulous real estate franchise opportunities.

High-demand Real Estate

Tuesday, October 18th, 2011

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It’s easy for a real estate investor to buy a property. It’s harder for one to get a property in a high demand area, especially now. The turbulent economy, stalled real estate market, and crazy banks make it almost impossible to get a good return on real estate transactions. As a result, more homeowners are choosing to try and stay with the home they have.

In many high demand areas, the listings available in these coveted areas are overpriced or market need a lot of work. A fixer upper will allow you to acquire high demand property you can use, but it will require hours of work and lots of time. A good general contractor on your real estate investment team can help you determine if the fixer upper will be worth the time and money.

Good research will let you know if a property has been on the market for awhile. Homes that have been on the market for awhile are nearing a priced reduction. If the property you are looking at has been on the market for awhile, it is probably overpriced for the area. Research will also price comparable comps in the area. Those comps can help you determine the true value of the property and a possible price that the current sellers may go for. A listing that has been on the market for some time is likely to be o is probably overpriced. Try making a low offer. You might be able to negotiate a mutually acceptable price. Before making an offer, ask your agent to find out if the sellers are planning on reducing the price. If so, make your offer quickly. When listings are lowered to the market price, more than one offer can appear.

Another option for real estate investors wanting high demand property is to have the agent on your real estate investment team search the MLS to look for withdrawn properties from the market. Sometimes homes just sit on the market til they are pulled, but owners will still. Make an offer if it’s a property you like, and see if the owners bite.

Hot real estate investment properties are available everywhere. You may have to be a little more creative in how you look for and purchase them. For more information on real estate investment, visit us at Homevestors.com. We also have real estate franchise opportunities available.

Mold & Real Estate

Tuesday, October 18th, 2011

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As a real estate investor, it’s important to know the impact a seemingly common but potentially dangerous substance can have. Before investing, you may tour some homes that have a slightly strange smell. Other homes may have a rather pungent odor. If you walk into a place that puts your nose on alert, get out. The smell may initially seem trivial, but without an inspection or test, you won’t know the true potential of the hidden danger.

Mold has been on the earth forever. Unfortunately, it is considered a toxic substance by many people due to its effect upon the air quality. Mold spores are in the air. They take root where there is persistent or excess moisture. Then, they grow and spread. Finding mold growing like this is a sign of water damage or a water leak. Mold can also grow where there isn’t enough ventilation. In homes where energy efficiency is the most important thing, mold and moisture run rampant due to insufficient ventilation or air exchange.

There have been other toxic substances in the last few decades that have also caused havoc for real estate investors. Each of them has its own dangers and removal or protection methods. None of them have matched up to the high publicity given to mold.

There are toxic forms of mold, and they have potentially harmful health effects. Mold grows by leaps and bounds, and there have been some homes that had to be completely demoed due to the amount of mold in the home. However, most homes can have the mold abated and removed pretty easily.

As a real estate investor, the question you have to ask yourself is, can I fix the mold problem now? If you currently own the property, cleaning and abatement procedures now can save you lots of headaches when buyers or tenants move in. If you are buying the property, find out if they will help pay for the abatement services or if you can afford them.

The catch comes later. If you are trying to sell the property or moving in new tenants, make sure you disclose the presence or former presence of mold. If possible, have liability release papers drawn p by your lawyer. These will hopefully release you from any legal responsibility for the buyers/ tenants exposure. Lots of people these days are coming up with mold allergies of differing severities. By not disclosing the possible presence, you are putting the health of every person that enters that property in danger. In addition, any home that makes you sick when you enter it should be removed from the market. This is your ethical responsibility as a real estate investor and as a human being.

For more information on the dangers of mold or other substances, visit us at Homevestors.com. We have information for all of your real estate investment needs.

Build relationships instead of networks

Tuesday, October 18th, 2011

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As everyone tries to grow their real estate investment businesses, we all contemplate the addition of online marketing and social media to build our networks. This is in hope to gather enough connections from our network to make our business grow. Networks are great and certainly have their uses and their place. If you want to truly grow, your real estate investment business has to have something other than just a network.

Having a network is like playing the lottery. There are fifty numbers, and you need the right combination of six to win it all. Sometimes, you’ll get lucky and have one or two numbers right. This gives you a little bit of success, but you want the whole thing. So, you keep reworking the numbers again and again to find the right combination. Very few people ever find the right combination, and you end up losing a lot of money over time.

Our friends, our relations, and our clients are more than just a network to be reworked to try and find the winning combination to make the big bucks. They are people, and they are the ones that come back to us repeatedly for our real estate services. If we keep trying to work them over, we lose sight of them as individuals, and they just become a number to us. That’s when we lose them to other companies and agents.

The question then becomes how do we keep our current clients and attract new ones? We can still use social media and online marketing to attract new customers. The shift of your attention should not be upon the return on your investment (ROI). It should instead be upon the type of quality connections you can build with the people around you. This involves basic things like keeping your word, listening, problem solving with the customer, and good ethics. That means more than anything else to most people, and they don’t mind paying a little bit more for your services or referring other people to your services.

As you build your networks and gain your one millionth friend, think about who is in your network. Also think about the kind of connection you have with those people. Instead of gaining thousands of connections you don’t really know, work on the relationships with the 20 or 50 that you really do know. That will grow you real estate investment business faster than anything else.

For more ideas and information on real estate investment, visit us at Homevestors.com. We also have fabulous resources for real estate franchises.