Archive for January, 2012

Stress Free Investing

Tuesday, January 31st, 2012

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Every real estate investor wants to make as much income as possible. They gather properties hoping to generate cash flow. The best kind of cash flow for investors is passive income. Passive income is money that comes in on a regular basis without the investor having to do anything. How do your investment properties turn from active investments into passive investments?

Keep in mind that you are going to have to take care of all of the tenants, their needs, and the property as a whole.

Multi-Unit Properties

Real estate investing is a numbers game. The more families you have paying rent on one property, the greater your overall income would be. By dividing a property into smaller units, you create more available rental properties. You also pay one mortgage. For example, you have one house at 3,000 sq.ft. divided into 3 units. Your mortgage on the property is approximately $300,000. It’s mortgage is $838 dollars a month. The rent on each 1,000 sq. ft. unit is $700 a month. That leaves you with $2100-838 = $1262 to pay other expenses.

Apartments are Passive?
If you are a hands-on investor and landlord, it would be hard to create passive income. You would be working too hard. If you kill yourself running the properties, you are not going to have time to look for deals for your real estate investment business. Therefore one or more parts of your business will fell neglected. Instead, try handing off some of the responsibilities to someone else.

Property Management Companies

Property management companies are designed to take the responsibilities for caring for properties. They handle all of the responsibilities associated with collecting money, maintaining the property, and handling the tenants. By taking on these day to day tasks, real estate investors can focus on the real estate side of the business. Most of them charge a certain percentage of the monthly rental income for their services. For the peace of mind, they are well worth every penny.

Look for a Certified Property Manager (CPM). These are managers that have taken a series of courses to improve their management skills. Upon completion, the potential CPM takes a big test. When they pass, they receive the CPM designation. They are the property managers you want.

For more information on real estate investing, visit us at HomeVestorsFranchise.com. We buy houses in all conditions, and we would love to buy yours!

 

Getting Tenants or Buyers Means Changing Views

Tuesday, January 31st, 2012

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The good ol’ days of real estate investment had a lot of never’s and always’s. For example:

Always inform the tenant you are the owner.

Always complete all repairs in a timely manner.

Never let the tenant move in without the utilities in his name.

Never give the keys without rent and deposit money in hand.

These laws and rules were designed to help seasoned and inexperienced real estate investors keep from making the same mistakes over and over again. In real estate’s better days, these rules and laws worked well and also helped to keep buyers and tenants from taking advantage of you.

With the market change, the choices for buyers and renters has become very slim. As a result, real estate investors are finding it tougher to keep properties occupied or exchanging hands. The old rules for real estate have their place, but in a tough market, it becomes necessary to rethink some of the rules. This does not mean dropping the rules and allowing buyers or renters to walk all over you and manipulate the system. This means you have to go back to the drawing board, reevaluate the system, and change the rules to work with the current market conditions.

Challenge your business with a little risk. Everyone wants multimillion dollar clients with spotless credit records. Very, very few people have these characteristics. Being successful right now means finding a way to embrace the potential clients in your area. Does your community have a lot of lower income families? Try designing a program that would help them buy a property or move into a property with little or no money.

Does your community have a lot of migrant workers or immigrants? Maybe your business can help them to find housing, get in touch with the right officials for paperwork, healthcare, and schooling, and only do a 3 month or quarterly lease in order to keep them from losing a lot of money in lost deposits.  Maybe you could even wave part of the deposit with proof they were actively enrolled in and attending school.

Desperate times call for desperate measures. Maybe it’s time we start working with the market we have than trying to create a new market for ourselves.

Remember the Tootsie Roll Pop? It has the least amount of sugar than any other candy, but it is hugely popular with kids and grownups. It was created during WWII and the great sugar ration. The company took the materials available, the current market, and the rules and created a unique candy that to this day is a favorite of generations. You can do the same for your real estate investment business…just do a little creative thinking.

For more topics related to real estate investment or real estate franchises, visit us at Homevestorsfranchise.com.

Make Your Moves in the Long Term

Tuesday, January 31st, 2012

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The majority of investors make their money in the stock market. They are caught up in constantly watching the numbers and buying and selling their stocks quickly. Although it is great for an adrenaline pumping day, it is not conducive to a healthy lifestyle. Real estate is another great investment, but it moves in slower terms. The difference between stock market investments and real estate investments is similar to the difference between email and snail mail. They both involve timing, but the means are different. For a longer life and less risk, consider real estate investing.

Timing

Unlike day trading, real estate timing is somewhat different. Growth and recession are like pendulum swings that happen in ten year intervals. So specifically timing the correct move is less about staring at the computer screen with your finger posed over the mouse button and more about lots of research, reading, listening, and waiting.

Values and Holding

Most properties increase in value naturally over time. Over the last fifty years, the value of properties has gone through several different growth periods. There have been rapid growth years where property values skyrocketed. Then, there have been periods of time when there was negative growth. The majority of the time, real estate values slowly climb. World events will effect how dramatically the prices climb or fall which causes many real estate investors to rush to sell their investments. However the majority of the time, holding on to these properties is usually the best investment idea.

Appreciation?
Appreciation is the natural increase in the value of the property over time. However, it also depends upon the state of world events and the current real estate market. Buying a property and hoping to sell it after it has appreciated is a decent idea, but there are times when there is little or no appreciation. That can have a very negative impact on your bottom line. Instead of counting on the appreciation of the home to make you money, always try to get a little more savings on the buying end. That way you are more likely to have equity in the home right after purchase.

Reinvesting?

Every real estate investor has the choice of using the cash flow that is brought in monthly or reinvesting it. Bills should be paid off, and there should be food on the table and gas in the car. Reinvesting your extra money into your real estate investments will increase the number of your investment holdings over time. Reinvesting will also double or triple your available cash flow over time the next ten to thirty years.

Long term investment may not have you driving BMW’s immediately, but it will have you comfortably set for life. If you are interested in real estate investing or real estate franchises, call or visit us today at Homevestorsfranchise.com.

 

Get Rid of Foreclosed Homes

Tuesday, January 31st, 2012

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Some people may protest, but the best idea for many real estate investors is to tear down most foreclosed homes. Why? Many foreclosed homes are vacant or abandoned. These homes often get stripped of valuable materials and fall prey to criminals, rodents, and squatters. Gradually, they decline in value and require lots of money in repairs and taxes.

The bad thing about these homes is that they drive down the value of the neighborhood as well. This decreases the tax base for the community and causes others to lose their jobs.  The cycle keeps repeating itself.

Instead of letting the cycle repeat in your town, real estate investors can actually break the cycle. Start by hiring a large group of currently unemployed individuals as your demolition crew. The good news is it doesn’t take a rather large amount of education to tear apart a home. The demo crew can take apart those properties that are actually worth less than the land they are on. This creates jobs in your community and keeps the property values in your from plummeting anymore.

How to Choose

While there are homes that can be torn down, there are also homes that are certainly worth investing in and keeping. The location of the home, property condition, and the real estate market condition will help you determine if the property is a tear down or not.

The location of a property is extremely important. Homes in good areas or close to amenities are more likely to sell or rent quickly. Homes in poor areas or extremely busy ones are less likely to rent or sell.

The location ties in greatly with the condition of the current real estate market. If the market in that area is extremely slow or going down fast, any homes in that area will not be good investments and should probably be torn down. Markets where homes are selling quickly are good locations to keep properties

Property condition is important. It determines how much work will need to be done before the home can be sold or rented to generate income for the real estate investor. If a home needs very little work, that means it can put on the market for sale or rent quickly. A home in poor condition must have a lot of work done and may require quite a healthy time and money investment before it ready to go on the market.

If the property is in a good location but in poor condition, that home is a good candidate for tear down. If the property is in a poor location and the real estate market is poor, that house is a candidate for tear down. If the market is good and the property is in good condition, that home is a keeper.

For more information on real estate investment, visit us at Homevestorsfranchise.com. We are the nation’s number one home buying franchise. We have a ton of real estate investment and real estate franchise opportunities available. Call or visit us today to see what we have for you!

New Housing Market Rules

Tuesday, January 31st, 2012

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In October of 2011, new housing market legislation was passed. The Dodd-Frank act requires lenders to bear part of the risk in mortgages sold to investors. The idea was if lenders were partly responsible for investor lending, the lenders would tighten loan standards and help avoid the catastrophic number of defaults that popped up in the last few years.

A Good Idea?

The new Dodd-Frank act is a good idea in theory if you are a lender. If you are a potential home buyer or real estate investor, it makes it nearly impossible to get a mortgage. Some worry that this move may backfire and actually worsen the real estate market and economy. Lending critics, bankers, and bank lobbyists believe the new legislation the reverse of what the housing market needs in order to grow.

The new law redefines what is a responsible loan and narrows recipients to only those people with the best credit scores.  Similar terms were used in previous years for loans, but a person could still get a mortgage if they qualify by purchasing mortgage insurance.

Normally, lenders could sell defaulting loans to third parties that packaged mortgages into securities. The defaulted and foreclosed loans caused securities to tank and the push for better loan underwriting. Under the recent Dodd-Frank financial-reform act, mortgage lenders must retain a minimum of 5% of the loan risk.

The new law also redefines qualifying residential mortgages. Real estate investors and home buyers must have a 20% down payment. There should be a cap on the borrower’s debt-to-income ratio, loan term restrictions, among others.

The rule is supposed to protect everyone and insure that loan originators and securitizers share in the consequences of the failed loan.

Loans considered qualifying will be easiest to securitize, increasing banks’ liquidity and lowering their costs. Loans that fall outside the guidelines, by contrast, will be much harder to move off a bank’s books, reducing liquidity and increasing costs. Some say banks could stop underwriting non-qualifying loans altogether or would charge higher interest rates to offset their increased costs.

The numbers show that an estimated that 10% to 20% of residential mortgages would qualify under the new standards. Thus leaving the other 80-90% being thankful they got their loan beforehand.

If loans were hard to get before for real estate investing, they will only increase in complexity since the Dodd-Frank Act. For more information on real estate investments and financial matters, visit us at Homevestorsfranchise.com. We are the nation’s number one home buying franchise. We have a large assortment of real estate investments as well as real estate franchise opportunities to choose from. For more information, call or visit us today.

New Way to Find Properties

Monday, January 30th, 2012

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The largest problem real estate investors have is time. There is a large amount of work required in finding, financing, and managing real estate properties. The good news is there are methods that enable real estate investors to look for and find properties without your constant attention or presence.

Real estate investors can find properties through the web. It sounds crazy, but with the Internet, the right domain name, and web page linking will help you to find the perfect real estate investment properties for your business.

Property Wanted Page

Start by setting up a property wanted webpage. This idea is similar to setting up a property wanted ad in the newspaper. A property wanted page states your contact information, a contact form, as well as the crucial words – property wanted. The good news is you can forward visitors to your property wanted page to your real estate business home page.  It costs a little to have page forwarding, but it is worth it to bring in interested clients. A good idea is to forward your property wanted webpage to the page on your home website about wanted property. This saves you the time of having to build an extra webpage. It also means whenever your property wanted domain is typed in, it automatically forwards to your destination domain.

Other Web Site Linking

You can link from other web pages to your property wanted page. It sounds crazy, but it is possible and easy. Simply place a link that says (Neighborhood or City) Property Wanted or (Neighborhood or City) Rental Property Wanted on other pages, including blogs, agent sites, and more. Then, any person in selling or renting a piece of property in that area is brought right to you from another page. This back linking is legal, but be careful. Some web pages get upset if you over use this capability. Make sure anything you put on these other pages is related to the subject they are discussing or representing. If not, you may find yourself removed and banned from their sites.

Finding new real estate investment properties does not have to take hours and hours of work. Smart thinking and use of technology can cut a lot of this work in half. For more information on real estate investment, visit us at Homevestorsfranchise.com. We have a lot of real estate investment opportunities as well as real estate franchise opportunities available. Call or visit us today to see what we have for you.

 

 

Mentor Magic

Monday, January 30th, 2012

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Real estate investment is a complex world of research, planning, buying, and managing. Having a mentor can be a good thing. In fact, the right one can create magic for you inside and out of the real estate world. People get tense when the subject comes to real estate mentors do to all of the unethical so—called gurus that rip people off.

Key Things to Remember

Get to know your subject. There are so many facets to real estate investment that it is completely impossible for a beginner to know everything, including wholesaling, lease options, and subject-‘s.  The less you know about your subject, the more easily you can be taken advantage of or cheated.

Pick your niche. Once you know the business better, you can pick which avenue or niche you are truly interested in pursuing. Knowing this will help you to pick the best mentor to support your efforts and pursuits.

Pick the best, and question the rest. Research who in your area and your field has the best knowledge of your subject area or niche. Pursue or follow these experts as your mentors. The rest of the so-called experts, question thoroughly. Never be afraid to ask questions or challenge someone you aren’t sure has your best interests at heart.

Before you hire an expert, do more research. Ask to see properties owned by potential mentors. This will let you see for yourself a few examples of their purchasing experiences. In addition, get past student references. While testimonials are fine, it is better to actually talk to former students that truly benefitted from what they learned from their mentor. Talking to them in person without the mentor hearing will give you a chance to judge their sincerity.

Get it in writing. The best way to avoid getting taken advantage of is to put everything in writing. You need the expectations, the goals, etc. If the potential mentor refuses to do this, he is not worth your time or efforts in pursuing.

No intimidation. – Sometimes we are so taken with someone that we do not see the evidence that they are unscrupulous, or when we do, they use intimidation to keep you silent. Whether or not you are paying someone, do not let their prestige or position keep you silent. Ask questions and don’t be afraid to tell people if you are being cheated.

Where to Look

Friends or relatives – If you know someone, they are the best place to start. They have more knowledge specific to your area. The good news is they will cost very little or even nothing.

Organizations and Associations – These are local and national groups that help to promote the interests of real estate business owners. They usually have individuals that are trained and experienced at mentoring other real estate business people.

If you are looking for a mentor, start locally first. National mentors worth your time will come along as your knowledge and experience increase.

Cost

Depending on the quality of the mentor, you may have to pay some for his knowledge, materials, etc. Sometimes, this just may require buying a lunch or two. Other times, it may require a special weekend training session or two that may cost hundreds or more.

The right real estate mentor can give your business that magic touch it needs. Or more information on real estate investment or real estate franchises, visit us at Homevestorsfranchise.com. We have love of real estate opportunities for you!

Real Estate Investment Financing

Monday, January 30th, 2012

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For beginners, finding money for investments can be confusing and hard. Many people think that only complex, big boy strategies work. However, with a little creativity and ingenuity, you can find an alternative way to solve your investment funding goal problems or barriers.

Creative Financing & Funding Sources

Investors and Partners – If you know other real estate investors in your area, partnering with them on a deal will bring need funds to get you started and also help encourage you to succeed so you can return their money plus interest.

Financial Lenders – These are the typical funding sources for most real estate purchases.

Friends and Family – Although you hesitate borrowing money from them, some family and friends trust you enough to invest their money  in your real estate pursuits.

Other Property Collateral can be used to help secure funding with financial lenders.

Property Equity can be borrowed against or pulled to obtain a new property.

Realtors on your team can help put you in touch with other individuals that might be interested in investing with you.

Buyers and Renters consistently send money your way to pay for the right to your property. Pitching them ability to buy into your investments may bring more funds your way. In addition, renters’ deposits and rents can be counted as credits in your HUD settlement statement. This lessens the amount you have to come up with at closing.

Options & Leases allow you to purchase properties without having to have all of the money upfront.

Seller Financing can be used to obtain new properties. This usually involves a special arrangement with the seller, a down payment, and a good binding contract that keeps the seller from being able to forfeit or sell the property to someone else underneath you.

First Time Home Buyer Programs, Local Government Down-Payment Assistance & Loan programs are designed to help buyers, including real estate investors, purchase properties for personal or investment use. The guidelines and rules will have to be followed, but they give you an extra avenue for funding.

Existing Mortgages can often be refinanced to include funds for other properties. Combining mortgages or loans will increase your principal amount, but it may also help you to obtain a smaller interest rate.

401K Borrowing isn’t something that is normally recommended. However, borrowing money from it can help you put money down on a property.

Credit Card Checks are often given as promotional items with new credit cards. Using these can give you access to funds you didn’t have before.

If you are trying to figure out how to finance a real estate investment, creativity and ingenuity will bring you the funds you are looking for. For more information on funding and real estate investments, visit us at Homevestorsfranchise.com. We have a ton of real estate investment and real estate franchise opportunities available. Call or visit us today for more information.

Positive Cash Flow

Thursday, January 26th, 2012

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Cash Flow is the amount of money that flows in and out of your pocketbook every month. When you have more money spent than coming in, you have debt. To have money in the bank or savings, you need positive cash flow. Positive cash flow is having more money coming in every month than you have going out. With ordinary jobs, this can be a tedious budget crunching process. The good news with real estate is the cash comes in, and you decide how much you work.

Cash Flow is pretty interesting. Your real estate properties have their expenses every month, including mortgage, taxes, and insurance. Your tenants pay their monthly rent. The property’s expenses come out of the rent, and whatever is leftover is your cash flow. If the rent is $700 a month and your expenses are $400 a month, your cash flow is $300 every month. That cash flow can be spent, reinvested in other real estate properties, or saved for later. With multi-unit properties, that cash flow is multiplies by the number of units you have. If you have a 3 unit property, your cash flow is $900 a month. If you have a 6 unit property, your cash flow is $1800 a month. As long as your incoming rent is greater than your expenses, you are going to have positive cash flow to work with.

When you select your real estate investment properties, make sure you are carefully choosing your investments and crafting your offers. You can purchase properties for way more than you can bring in as cash flow. This creates a sticky situation. Your real estate business will be left with negative cash flow you will have to compensate for every month. This means you will either have to raise rents or find other ways to pay for it. By choosing properties with smaller asking prices, you will have less risk of negative cash flow.

Of course, real estate has other benefits as well. Properties appreciate in value. This increases their worth and your equity. Each property has tax benefits you can use every year. In addition, you are providing a service which everyone needs, housing. As long as there are people around, they are always going to need a place to live and work.

Positive cash flow is a great income source that real estate investment can provide. If you are interested in real estate investments, contact us at Homevestorsfranchise.com. We have a large variety of real estate investment opportunities as well as real estate franchise opportunities available. Come see what we have for you!

Contractors and Contracts

Thursday, January 26th, 2012

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Sooner or later, real estate investors need to hire a contractor. It does not matter what form of real estate investing you are into. Whether you are doing full blown rehabs, subject to, agreement for deeds, buying apartment buildings, lease option or even wholesaling, every real estate investor will eventually need to use a contractor to take care of necessary repairs.

Simple Rules for Working with any Contractor

Before hiring a contractor, run a thorough background and credit check as well as check his/her references. Do not skip this step because you are in hurry. It can mean the difference between getting robbed or getting the job done.

Listen to your intuition. If something doesn’t feel right, don’t hire the potential contractor. Sometimes your intuition knows better than your logical reasoning.

Do not pay everything upfront. You may end up with a vanishing contractor.

Have the contractor sign a Contractor Agreement. This spells out how the job progresses towards completion.

Contractor Agreements

The wording of a contractor agreement can make a huge difference in how protected you are.
1) Scope Of Work  or what is to be done – Be as bluntly specific when describing the scope of work. This includes the job, type and manufacturer of materials required, application process, etc. The more specific you get, the more protection you will have.

2) Change Order – If there is any change in the work from the original contract, there must be a Change Order signed by the both of you. This proves the deviation from the original contract, and protects you from unauthorized additional expenditures or work.

3) Contractors Home Address And Phone Number – Always know how to contact your contractor. This helps you keep them on the job.

4) Penalty Clause – Some contractors like to charge you for their extra hours and dates. A penalty clause charges a contractor a certain amount per day for each day he is over passed the proposed finish date.

5) Draw or Payment Schedule – Set up a fair schedule for paying your contractor. Make sure the contractor has enough to cover the supplies and to pay his hands. Split the money into equal payments.

6) Damages Clause – Contractors should pay for any damage done while they are onsite. This clause has a huge potential to save you money and keeps your interests protected.

7) Clean Up Clause – Make sure your contract says your property will be left in a clean and orderly state at the end of every day. This makes surprise visits to your property less embarrassing and reduces the chances of accidents while the contractor is away from the property.

Before you run away from hiring your next contractor, use these simple ideas to help protect you and your real estate business. For more ideas and information on real estate investing, visit us at Homevestorsfranchise.com. We have fabulous real estate investment and real estate franchises opportunities available. Come see what Homevestors has for you!