Archive for November, 2012

Investors – Where Are The Motivated Sellers?

Thursday, November 29th, 2012

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1105

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1132

Holding down total operational costs to a minimum is one way real estate investors can maximize their profit margins. The purchase price of a property is by far the greatest contributor to its’ operational costs. Therefore, investors seeking to raise their profits should be preoccupied with seeking and locating the best deals. Motivated sellers are arguably the best source for investors looking to purchase real estate at discounts. These motivated sellers may be struggling to keep up with their mortgage payment or may be in eminent danger of foreclosure. Whatever the case might be, these sellers are generally desperate enough to offer their property below market value and this represents the kind of deals that investors are looking for. An investor’s main task ultimately comes down to finding desperate sellers wherever they may be.

Investors can reach motivated sellers by running ads. There are certain captions that are sure to get motivated sellers to respond. Captions containing phrases like “fast cash”, “any condition”, “all prices”, or “two day closing” are keywords that are highly targeted to the audience an investor wishes to reach. Those who do call will most likely be those with limited choices, like motivated sellers. When these individuals call, an investor’s job is to ask them a list of questions, enough to find out exactly what their condition is, and what their motive for selling is. If they sight financial difficulties or health problems, they may be just the kind of seller an investor is looking for. An investor should not be hesitant about inquiring for further details in hopes of gaining the required information for determining an appropriate offer.

Scanning classified would also turn up motivated sellers if an investor knows what kind keywords to look out for. Phrases like “motivated seller”, “as is”, “handyman special”, “need sale”, or “estate sale” are likely to be ads placed by motivated sellers. Searches should not be limited to any particular type of source. Newspaper ads, FSBO websites and Craigslist ads are all potential sources motivated sellers use. When contacting these sellers, investors should again ask the same kind of questions that they would when they are receiving calls.

There is hardly any shortage of motivated sellers. There are enough homeowners who still find themselves trapped in underwater homes as a result of the fallouts from the housing crisis. There are those who have suffered from unemployment and are barely keeping up with their payments. Investors need to reach out to these people and make every attempt to solicit information from them in order to make an appropriate offer on their property. An investor should be able to engage a seller in a way that isn’t invasive and should be truly interested in helping them ease their way out of their predicament.

Asking questions with these tips in mind will help save real estate investors thousands. For more ideas related to real estate investing, call or visit us a Homevestorsfranchise.com. We are the nation’s number one home buying franchise with over 15 years of experience. Our company has a vast assortment of real estate investment and real estate franchise opportunities available to help you grow your real estate business. Come see us for more information.

Investors – Have A Systematic Plan When Restoring Rehab Properties

Thursday, November 29th, 2012

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1105

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1132

During the real estate market boom, rehabbing had almost taken the form of a hobby. Investors spent a considerable amount of time and resources restoring rehab properties that had fallen into disrepair in the hopes of selling them at breakneck prices. This worked quite well when property values were at their peak. Investors poured money into rehabs without much thought because it was safe to assume that after the property was finished it would be sold for a profit. Of course, in today’s market this is no longer the thought process. Property values are currently at all time lows and selling rehab properties for a profit is no longer considered child’s play. This doesn’t mean that the rehabbing model should be abandoned altogether. It just means that it should be done with a lot more caution and moderation.

The first and most important step in ensuring that an investor doesn’t over spend on a rehab property is to define a reasonable budget right from the start and stick to it. The budget shouldn’t push the envelope of total operational costs and in turn, should fall comfortably below the expected selling price in order to provide a profit.

Once a working budget has been established, it is time to start making calls to contractors in order to compare prices and pick the best estimates. Establishing long-term relationships with the same contractors can save a great deal of capital in the long term.

Developing a systematic plan to carry out the rehab project can prove to be a cost cutting measure. Doing the right things in the wrong order can cost an investor a great deal of capital. One of the first phases of the project should involve tearing down obsolete structures or anything that requires demolition. Attempting a demolition project after other structures have already been built can prove to be a headache. After demolitions, work has to begin on exterior structures including roofs that require repair or replacement. Next, any repairs to wiring, piping, heating and air conditioning. Any repairs or replacements of doorframes, window frames, and any dry walling should follow this. The very bottom of the to do list should involve completing the finishing touches like tiling, installing new cabinets, installing appliances, carpeting and painting.

It is important to get the accounting correct right from the start to ensure that the costs of restoring rehab properties doesn’t come anywhere close to the expected selling price. If it does, then it’s not a project worth undertaking.

Asking questions with these tips in mind will help save real estate investors thousands. For more ideas related to real estate investing, call or visit us a Homevestorsfranchise.com. We are the nation’s number one home buying franchise with over 15 years of experience. Our company has a vast assortment of real estate investment and real estate franchise opportunities available
to help you grow your real estate business. Come see us for more information.

Investors – Become An Expert At Negotiating Wholesale And Retail Properties

Thursday, November 29th, 2012

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1105

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1132

Investing in wholesale properties and retail properties has become a lot trickier than it used to be. Every wholesale and retail investor is both a buyer and a seller and the selling side of things has gotten a little tougher in recent times. In order to make any reasonable profits in this business, the need for investors to keep their offers at a minimum has become absolutely paramount. A threshold maximum has to be established by an investor who is considering making an offer on a property. What goes into determining this maximum value?

The most important factor that investors of wholesale properties and retail properties use to determine their offer is the expected selling price. For retail investors, this value is heavily influenced by the after repair value (ARV) and the repair costs. Wholesale investors who would normally sell to retail investors may have to also factor in an assignment fee that enables them to transfer rights and responsibilities to another investor. To get an ideal estimate for an offer, an investor should deduct these expected costs from a fraction of the expected selling price or ARV, in the case of a rehab property. The fraction should be small enough to allow a comfortable cushion for absorbing any loses. Experts generally recommend about 65% of the asking price.

Even after determining a good offer price that accounts for all costs and profits doesn’t mean that this offer will be accepted. Before making an offer, an investor should seek a seller’s motive for selling to determine their level of motivation. By having a sense of how motivated a seller is an investor can safely gauge how low of an offer they can give. It is generally never a good idea for an investor to present their maximum offer as their starting offer. Normally, most sellers reply with a counter offer, so an investor’s initial offer has to be low enough to allow for some negotiating room.

Determining a good maximum offer for investors of wholesale properties and retail properties is an important first step in negotiating a deal. Starting bids should always fall below this pre determined maximum bid but shouldn’t be so low that a seller loses their motivation to sell or becomes disgruntled and discontinues negotiations. Finding out a seller’s motive to sell can be a guide to setting a reasonable minimum starting bid. Don’t get caught in the heat of negotiating, stay under the maximum price set and don’t get emotionally attached to a property.

Asking questions with these tips in mind will help save real estate investors thousands. For more ideas related to real estate investing, call or visit us a Homevestorsfranchise.com. We are the nation’s number one home buying franchise with over 15 years of experience. Our company has a vast assortment of real estate investment and real estate franchise opportunities available to help you grow your real estate business. Come see us for more information.

Investors – Is There Still A Profit To Be Made On Wholesale Properties?

Tuesday, November 27th, 2012

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1105

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1132

At the height of the real estate market bubble, wholesale property investing (buy and flip) was commonplace. This model of real estate investing involves searching for and buying properties at discounts in the hopes of selling them to retail investors. Many investors made fortunes through this venture. In today’s market, the razor thin profit margins are a hurdle for investors who want to make living selling wholesale properties. Is investing in wholesale properties still a profitable business model?

High demand and the ability to buy at discounts are requirements for wholesale property investing to be profitable. In the current market, investors can still purchase these properties at discounts. With diligent searching and excellent negotiating skills, investors can find deals almost anywhere, especially in regions where the market is particularly hot. There are still plenty of motivated sellers who would gladly settle for an offer below market value.

Being able to find great deals only satisfies one side of the equation. Flippers still need to be able to sell their newly acquired properties. While there is nothing they can do to increase aggregate demand, they can still use certain practices to increase the likelihood of finding buyers. For instance, wholesale investors can identify the parts of the country where economic activities are picking up steam faster than usual and choose to only invest in such areas. Obviously, cities with declining populations and business activities should be avoided at all costs.

The rules of the market place have changed and investors need to adapt to it. In the past, flipping was all about getting rid of inventory as quickly as possible. Today, this concept may be a difficult proposition and flippers may have to hold on to houses a bit longer. These days, being a real estate investor requires a great deal of flexibility and the ability to change one’s strategy at a moments notice. As a matter of fact, diversification might just be what’s needed to sail through these unusual times.

Today’s market might not be the most ideal environment for wholesale property investing but this doesn’t mean that there aren’t opportunities to profit from wholesale investing. Remember that wholesale investors may have wait until selling opportunities present themselves. A little extra research may be required, expectations might have to be lowered and above all, investors need to have an applicable exit strategy. Before considering investing in wholesale properties, remember that the current market requires that investors have access to greater cash reserves since they may need to hold on to houses longer than usual.

Asking questions with these tips in mind will help save real estate investors thousands. For more ideas related to real estate investing, call or visit us a Homevestorsfranchise.com. We are the nation’s number one home buying franchise with over 15 years of experience. Our company has a vast assortment of real estate investment and real estate franchise opportunities available to help you grow your real estate business. Come see us for more information.

Investor Tips To Staying Clear Of Legal Trouble

Monday, November 26th, 2012

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1105

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1132

Real estate investing can be rather complicated. There are convoluted accounting problems to deal with, decisions involving difficult choices to be made, and of course numerous risks. It is very easy for an investor to get wrapped up into working their way through these challenges, while completely ignoring the seemingly unimportant details that could well be grounds for legal trouble down the road. Real estate investors have an obligation to familiarize themselves with legal matters that can directly affect them or their business if they want to stay clear of the wrong side of the law.

When filling out real estate contract forms, it is absolutely crucial that these forms are filled out correctly with the guide of a legal expert. The higher the stakes, the more important it is to read every line and the fine print before signing on the dotted line. The importance of having these forms reviewed by a real estate attorney cannot be overemphasized. Many investors learn the hard way when they have been sued for violating the terms of a contract that they wouldn’t have signed if they knew the details.

Investors also need to steer clear of discrimination if they want to avoid legal trouble. Rental property investors in particular should be very clear on what connotes discrimination. Denying tenancy to any individual based on some arbitrary criteria could well be interpreted as a violation of the Federal Fair Housing Act. State laws also have strong anti-discrimination laws that investors should be aware of.

Federal and state non-disclosure laws are another area that some investors may not be aware of but they should realize that violating them can carry huge civil penalties. Investors involved in selling or renting property must be aware of disclosure laws and abide by them in order to stay away from future litigations. Running online ads in an attempt to raise capital from private investors is yet another area where investors may unknowingly cross legal bounds if they are not aware of laws governing securities regulations. Hiring labor under the table in an attempt to avoid the payment of withholding taxes, worker’s compensation, and unemployment taxes, is a sure way the attract the attention of the IRS.

There is no full proof way of avoiding legal trouble. The law has such a vast reach and touches just about every aspect of business dealings that it is impossible to guard against every possible scenario that might land one in legal trouble. However, by using the above steps as guides, investors can greatly limit their chances of landing themselves in legal trouble. Investing in a good real estate attorney turns out to be a worthwhile investment for investors who want to operate within the confines of the law.

Asking questions with these tips in mind will help save real estate investors thousands. For more ideas related to real estate investing, call or visit us a Homevestorsfranchise.com. We are the nation’s number one home buying franchise with over 15 years of experience. Our company has a vast assortment of real estate investment and real estate franchise opportunities available to help you grow your real estate business. Come see us for more information.

HomeVestors Knows How To Refinance A Property Through A No-Cost Loan

Wednesday, November 21st, 2012

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1105

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1132

For investors who are considering refinancing their loan, a no-cost loan may be the best option if they are planning to sell their property quickly.

Dallas, Texas HomeVestors is the nation’s number one home buying franchise and has helped real estate investors purchase 50,000 properties over the years. The company knows that refinancing is one way that investors can gain leverage. Through refinancing, an investor might be able to lower their interest rate and their mortgage payments. If the property has some built up equity, they may even be able to free up that equity through a cash-out refi. Either way, they have more access to available funds to spend on other promising ventures. There are usually costs associated with refinancing, which if sufficiently large, may render it pointless. An investor seeking maximum leverage may want to consider applying for a no-cost loan, where most, if not all the closing costs are eliminated.

Obviously, a mortgage loan where the investor doesn’t have to pay the appraisal fees, loan origination points, underwriting fees, and the processing fees, is beneficial. However, just like everything in life, there must be a catch. In this case, the savings the borrower enjoys by skipping closing costs are spread over the life of the loan through higher interest payments. So the no-cost loan really all boils down to a deferred payment. The borrower is excused from paying an upfront amount of capital, only to pay it back later.

So is it really worth the trouble of taking out a no-cost loan? If the subsequent interest rates to be paid on the new mortgage are low enough to justify the income that could be generated with leveraged funds, then a no-cost loan is worth it. If not, the investor may need to re-think their options. Another case where it might make sense to take out a no-cost loan is when the investor has short term plans to sell the property, perhaps to invest in a more profitable undertaking. The extra funds saved can go a long way towards paying for the new investment.

No-cost loans are becoming increasingly popular and investors who can benefit from them shouldn’t hesitate to apply for one. At this point, a word of caution must be sounded. Taking out no-cost loans might not be a very good idea when interest rates have reached rock bottom, as they are today because from that level, there is only one direction in which they can head and that is upwards. Interest rates are expected to rise again and this can negatively affect anyone who refinances with an adjustable rate plan. So, only those investors who really stand to make a substantial profit from the leverage they gain through no-cost loans are those who intend on flipping the property quickly.

About HomeVestors of America Inc.

Dallas-based HomeVestors of America, Inc. is the largest buyer of houses in the U.S., with 50,000 houses bought since 1996. HomeVestors trains and supports its independently owned and operated franchisees that specialize in buying and rehabbing residential properties.  Most commonly known as the “We Buy Ugly Houses®” company, HomeVestors strives to make a positive impact in each community.  In 2012, for the seventh consecutive year, HomeVestors was among the prestigious Franchise Business Review’s “Top 50 Franchises,” a distinction awarded to franchisors with the highest level of franchisee satisfaction.  For more information, visit www.HomeVestors.com.

HomeVestors Knows How To Capitalize On A Sale Lease Back Agreement

Wednesday, November 21st, 2012

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1105

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1132

Investors who have a great deal of capital may consider purchasing a sale lease back due to the relatively safe nature and respectable cash flow the investment provides.

Dallas, Texas HomeVestors is the nation’s number one home buying franchise and has helped real estate investors purchase 50,000 properties over the years. The company knows that it is easy for investors to get overwhelmed by the different investment choices available. There are a myriad of real estate investment types ranging from buying and selling little family homes to owning stockpiles of commercial properties. Some of these investments are riskier than others, some more profitable than others, and some are better suited for certain classes of investors. For investors with easy access to funding, an investment that may prove quite profitable is a sale lease back agreement.

A sale lease back, as the name implies, involves the sale of a property whereby, the seller leases the same property they just sold. The buyer of the property earns an income from the lease payments. In the case of real estate, this type of arrangement typically involves commercial properties with rental spaces like offices, retail outlets, or apartments. The kind of property that typically gets sold in this way would be one that generates regular income by way of rents or otherwise.

Why would an owner want to sell a useful income-generating property just to turn around and assume the role of tenant? The most common reason is that the seller needs the capital. They may wish to expand their business operations but due to lack of funding, are unable to. By selling their property through a sale lease back, they can get the funds they need, without giving up control over the management and income stream it generates.

A common example of a sale lease back is the purchase of a planned community when it is still under construction. The developers would sell the property to raise the funds necessary for completion and once the project is completed, would rent out or sell the units to the public. The owning investors are then paid the agreed upon monthly rent according to the terms of the contract. The agreement usually takes the form of the buyer owning the property for a few years and then reselling it again to the seller. Developers would opt for this type of deal when credit opportunities are limited.

Sale lease back agreement requires investors to be well funded since the sale usually involves large-scale properties. Investors with such huge cash reserves as are required to fund one of such projects, may well invest those funds in a sale lease back deal since it results in a good cash flow and is a relatively safe investment.

About HomeVestors of America Inc.

Dallas-based HomeVestors of America, Inc. is the largest buyer of houses in the U.S., with 50,000 houses bought since 1996. HomeVestors trains and supports its independently owned and operated franchisees that specialize in buying and rehabbing residential properties.  Most commonly known as the “We Buy Ugly Houses®” company, HomeVestors strives to make a positive impact in each community.  In 2012, for the seventh consecutive year, HomeVestors was among the prestigious Franchise Business Review’s “Top 50 Franchises,” a distinction awarded to franchisors with the highest level of franchisee satisfaction.  For more information, visit www.HomeVestors.com.

HomeVestors Knows That Some Investors Are Willing To Work For Sweat Equity

Wednesday, November 21st, 2012

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1105

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1132

Consider joining or creating a real estate investment group for sweat equity and work towards the long-term goal.

Dallas, Texas HomeVestors is the nation’s number one home buying franchise and has helped real estate investors purchase 50,000 properties over the years. The company knows that in the current economy many individuals are working for stock options, known as sweat equity, instead of cash. This is especially true of small startups that are not having an easy time raising money, but have no shortage of highly skilled and motivated individuals, ready to work for little or no pay. This partnership can be employed by real estate investors and can prove to be an individual’s ticket to being part of a successful real estate venture.

Some real estate partnerships may be financial equity partners and others may be sweat equity holders. Holders of sweat equity typically tend to be members of the managerial team and other experts involved in the smooth running of operations. Such individuals could include the likes of attorneys, brokers, accountants, appraisers, architects and surveyors.

Why would an individual with marketable skills be asked, if they want to be rewarded with sweat equity instead if being paid a normal salary? The most obvious answer may be that there really might not be that much money to go around. For example, an underfunded startup may only have stock options available. Another reason could be that the company may be perceived to be very valuable in the future and an expert with desirable skills wouldn’t mind forfeiting pay for the time being in anticipation of big future rewards. This may also be the best option for young fresh out of school professionals whose lack of experience makes their skills less marketable to well established firms. Others who may be motivated to contribute sweat equity would be those professionals with brilliant money making ideas who are very confident about their own abilities.

Owning sweat equity is one-way individuals without much capital but plenty of relevant skills can become a part of the highly lucrative real estate investment market. It is best suited for entrepreneurial professionals who are highly driven and harbor big dreams about building something from scratch, but who aren’t given much of a chance to prove their worth in the labor market. There is an intrinsic advantage to joining a partnership made up of such individuals. Those running the business have a vested interest to succeed and hence would likely be more efficient in their jobs than their counterparts.

There are some downfalls associated with working for sweat equity. An overly optimistic professional can dedicate all their precious time earning sweat equity, which may turn out to be a losing bet if the business fails to deliver. Sweat equity investors should be mindful about how much of their irrecoverable time and effort they dedicate to their investment.

About HomeVestors of America Inc.

Dallas-based HomeVestors of America, Inc. is the largest buyer of houses in the U.S., with 50,000 houses bought since 1996. HomeVestors trains and supports its independently owned and operated franchisees that specialize in buying and rehabbing residential properties.  Most commonly known as the “We Buy Ugly Houses®” company, HomeVestors strives to make a positive impact in each community.  In 2012, for the seventh consecutive year, HomeVestors was among the prestigious Franchise Business Review’s “Top 50 Franchises,” a distinction awarded to franchisors with the highest level of franchisee satisfaction.  For more information, visit www.HomeVestors.com.

HomeVestors Knows The Dangers Associated With Pyramiding Capital

Tuesday, November 20th, 2012

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1105

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1132

Leveraging money is a necessity for most real estate investors. Investors need to be careful of taking the leveraging concept too far and pyramiding capital.

Dallas, Texas HomeVestors is the nation’s number one home buying franchise and has helped real estate investors purchase 50,000 properties over the years. The company knows that leveraging capital is one of the principal means of expanding the scope of one’s investments in the real estate industry. With the exception of publicly trading real estate stocks through companies like REITs, there aren’t many ways for investors to fund larger real estate projects. Investors need to use various leveraging techniques to raise the necessary funds, but at the same time, they need to be careful not to take the leveraging concept too far. Excessive leveraging or pyramiding capital is when an investor systematically uses the equity in one property to finance the purchase of another property. In the current market, pyramiding capital is a risky leveraging technique that should be avoided.

During the last real estate boom, leveraging capital through pyramiding was common because investors could always count on the future appreciations of their current assets and the availability of buyers. The most obvious problem with pyramiding capital is the huge debt to asset ratio it generates. Under such circumstances, any event that interrupts cash flow can trigger a cascade of other events that will inevitably lead to defaults and other negative outcomes. For example, any delay in payments from tenants may trigger such a cascade. If a house proves a little more difficult to sell than anticipated, or the investor suffers any sort of loss of income, they may wind up in a financially undesirable situation.

Besides the risks associated with the ever-increasing debt obligations brought about by pyramiding, pyramiding capital also dramatically reduce an investor’s cash flow. If all the investor’s excess reserves are tied up into some sort of non-liquid asset, it may be very difficult to raise capital for any emergencies, like crucial repairs. Pyramiding capital is inefficient because every time an investor acquires an additional piece of property, they have to pay new commissions, closing costs, and other buying related expenses. Doing this repeatedly may end up costing them a great deal.

While some amount of leveraging is certainly good and remains the only way most real estate investors can reasonable expand their businesses, excessive leveraging or pyramiding capital should be avoided for the reasons outlined. This is especially true for a market such as todays, where there is immense competition among sellers for the attention of the ever-shrinking pool of buyers. Leveraging capital should always be used modestly with the understanding that there is a breaking point beyond which it becomes more detrimental than beneficial.

About HomeVestors of America Inc.

Dallas-based HomeVestors of America, Inc. is the largest buyer of houses in the U.S., with 50,000 houses bought since 1996. HomeVestors trains and supports its independently owned and operated franchisees that specialize in buying and rehabbing residential properties.  Most commonly known as the “We Buy Ugly Houses®” company, HomeVestors strives to make a positive impact in each community.  In 2012, for the seventh consecutive year, HomeVestors was among the prestigious Franchise Business Review’s “Top 50 Franchises,” a distinction awarded to franchisors with the highest level of franchisee satisfaction.  For more information, visit www.HomeVestors.com.

HomeVestors Knows How To Purchase Pre Sale Properties

Tuesday, November 20th, 2012

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1093

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1105

Warning: Illegal string offset 'status_txt' in /home/britips/public_html/wp-content/plugins/share-and-follow/share-and-follow.php on line 1132

Investors who are looking for an investment in a new housing development could consider purchasing a pre sale property.

Dallas, Texas HomeVestors is the nation’s number one home buying franchise and has helped real estate investors purchase 50,000 properties over the years. The company knows that new housing projects are among the choicest investment opportunities. They can include condos, family houses, or apartment buildings that investors can purchase. New housing units are appealing to most buyers and under certain circumstances can make for great investments. An investor looking to buy a property in a new housing project would typically buy one as a pre sale property, which means, they buy it before the construction is completed. It is not unusual for such properties to get sold out before the completion date.

It is important for investors considering the purchase of a pre sale property to be aware of timelines, as their income earning potentials depend not only on where the funds are allocated, but also on the timing of these allocations. It may take months or even years for construction of new housing projects to be completed and whatever funds are diverted towards initial deposits won’t be available for other potentially profitable projects.

Pre sale agreements govern the purchase of a pre sale property. The interested investor would be given a chance to preview what the final product will look like. The agreement spells out the buyer’s rights and obligations regarding the sale. It may address questions about payment schedules and deadlines. It may include clauses on how changes to the construction plan are to be handled, clauses that addresses the rights of the buyer if the seller cancels the project midway, and clauses that protect the seller if the buyer decides to call off the deal at some later date. Pre sale agreements are legally binding documents and hence, the need for expert representation is crucial. It is very important for an investor to bring their own agent to the negotiating table and avoid using the agent that is designated to represent unrepresented buyers. Such agents typically belong to the same brokerage firm as the seller’s agent and as such may not have their client’s best interests at heart.

Buying a pre sale property can represent an investor’s window of opportunity to a great investing career. In order for the property to be a good investment, it doesn’t only need to have the potential to generate good cash flow, but also needs to be completed within a reasonable timeframe. The timeframe should be such that it doesn’t divert funds from other profitable projects for any considerable length of time.

About HomeVestors of America Inc.

Dallas-based HomeVestors of America, Inc. is the largest buyer of houses in the U.S., with 50,000 houses bought since 1996. HomeVestors trains and supports its independently owned and operated franchisees that specialize in buying and rehabbing residential properties.  Most commonly known as the “We Buy Ugly Houses®” company, HomeVestors strives to make a positive impact in each community.  In 2012, for the seventh consecutive year, HomeVestors was among the prestigious Franchise Business Review’s “Top 50 Franchises,” a distinction awarded to franchisors with the highest level of franchisee satisfaction.  For more information, visit www.HomeVestors.com.