Archive for April, 2013

Investors – Consider Everything Rental Property Has To Offer

Wednesday, April 24th, 2013

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Rental property is one of the best investments and has been so throughout time. While many fads will come and go, investing in rental property will always be a solid investment that allows its investors to leverage time and money, if done properly. Rental property is usually purchased in a traditional way and almost anyone with the initial deposit can own his or her own rental property.

The first benefit of owning rental property is that most investors can use borrowed funds to obtain their property. If an investor has 20% of the properties’ value and the proper credit score, they can obtain a rental property. This is an example of leveraging capital at its finest. How many other investments can be purchased this way?

Rental property also has tax benefits while most other investments do not. Rental property owners are able to write off a great deal of expenses including depreciation. Rental property investors can also take advantage of the current rental rate increases throughout the industry. This can allow them to earn even more profit, month after month. Not only that, but property values across the board have been increasing in 2013, giving rental property owners another advantage to being in the market.

Be sure to purchase rental property in a desirable location and have an understanding of future trends within the area. Is population moving in or out? Ideally population and jobs should give an investor all the information they need to know when considering purchasing a rental property.

When searching for tenants,be sure to properly screen them as they are the source of your business and are the ones who ultimately determine if you make it in the business. These tenants will be paying the mortgage, funding repairs and paying for the maintenance. In the end, a small profit should be made month after month.

In order to properly leverage time, many investors hire an outside company to handle all the issues associated with the property. These property management companies allow an investor to literally sit back and put their property on autopilot. The property management company takes care of finding tenants, collecting rent, and paying the taxes. This can allow an investor to find other investment properties, if they have the funding and continue the cycle.

Rental property can offer investors just about anything they want. They can choose the amount of work they want to put in and some investors have figured out how to let their property work for them. These investors understand the power of leverage when it comes to time and money.

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 – How To Handle Closing Objections

Wednesday, April 24th, 2013

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Investors who can handle closing objections are able to obtain deals that other investors can’t. Handling closing objections is part science and part art. It takes practice and the goal when handling closing objections is to get to the source of the objection and address it. Most often investors look at things from a purely mathematical perspective and will argue numbers with another individual. It is more important to understand where this person is coming from and go from there.

The first step to handling closing objections is to neutralize their statements. For instance, if a seller explains to an investor that their offered price is too low, simply acknowledge it with a simple “Ok.” This will confuse most individuals because dealings are rarely done like this. Then follow “Ok” with; is that your only concern? Usually people have an emotional attachment to a property and may want to see it go into good hands or want to see their plans materialize.

In order to find out a seller’s closing objections, continue to ask questions about what this person is looking for. The answers they supply may be shocking and investors who can get to the root of their motivation for selling are able to negotiate meaningfully. Figure out a way to meet their needs because the issue may not reside with the price at all. Many times emotions are the reason a seller is not cooperating with negotiations.

For instance, if a seller explains that this was their deceased mother’s house and that the memories mean a lot, find out a way to keep the memory of their mother alive in the house. Consider offering to put in a bench with their mother’s name on it or something similar in order to show respect to her and the family.

This will shock many sellers and some might find the concept soothing. If so, they may be willing to sell the property to an investor at their asking price in exchange for a relic in remembrance of their mother. The closing objections in this case wasn’t the price, it was the thought of losing all those memories without paying a proper tribute.

Investors who understand that many sellers have an emotional attachment to the property they are selling are able to find out their true closing objections. Get to the real root of why they are hesitant to sell. While many sellers will immediately state that the price is too low, there may be other factors that weigh heavily on sellers.

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 Crunch The Numbers When Dealing With Rehab Properties

Wednesday, April 24th, 2013

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Many beginning investors choose to invest in rehab properties and should be prepared when it comes to planning their budget.

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 those who work on rehab properties need to be concerned with their bottom line and should always overestimate costs when determining their expected profit margin. Beginning investors who are getting started with rehab properties need to be especially careful and should consider getting advice from an experienced mentor when determining costs and time.

Let’s look at an example rehab property and determine a profit cushion when trying to determine if it is reasonable. A property has been determined and is expected to earn $150,000 when it has been fixed up, otherwise known as the ARV. After inspecting the property we have determined that $48,000 will be necessary to fix up the property. We have determined that $60,000 is the price we are willing to pay in order to ensure a profit. We have calculated in our $4,000 for closing costs.

Now we have to consider how much the hard money loan is going to cost us. This is based on our expected time in the property. If we have determined that the property can be fixed up in two months and sold in two months, we can then calculate how much our interest payment will be on our hard money loan. At this point, it should be roughly $4,600 if everything goes as planned. If this is all true we will be putting in $116,600 and receiving a profit of $33,400.

The problem with this theoretical yield is that these numbers always change. Things go wrong and the rehab is stretched out to 4 or maybe 6 months. After the house is ready to sell, it may end up sitting on the market. What if our rehab costs end up costing $58,000 and not $48,000? These are all things to consider and even experts occasionally end up paying more money then they planned.

In order to properly evaluate rehab properties, always assume the worst. This can enable an investor to see things for how they are likely to go. The problems with investing in rehab properties is that beginning investors see that they can make $33,400 and assume that it is set in stone. The biggest factor to consider is how much hard money is likely to cost when sitting on the property for a period of time. Overestimate the numbers when investing in rehab properties and come out ahead.

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.

Investors – Residential Property Is A Gold Mine In 2013

Wednesday, April 24th, 2013

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Residential property is recently becoming quite popular among investors on all financial levels. Huge corporations are putting billions of dollars into residential properties and small time investors are searching for the perfect residential property investment. This is in part due to the low overall prices in most markets and investors are staking claim in these areas in hopes of earning a profit on the rebound. There are a number of different tactics that residential property investors can employ that we will examine here.

The first goal when investing in residential property is to find buyers who are desperate to sell. There are quite a few of them and developing a system to target them is the first step. Desperate sellers occupy most neighborhoods in America and beautiful property in the suburbs is up for grab. Investors who can target these people first, have the best shot of purchasing their properties for under market value. These individuals can be found through advertising or by directly pursuing them. One way to find out who may be desperate to sell is to look through tax records and send a letter to those who aren’t up to date. Chances are that they are not able to pay them and are looking for a way out of their property.

After working through negotiations in obtaining these properties, the next step that a residential property investor can do is fix up these properties and get them ready to sell. Most of these properties won’t require a great deal of rehab, but a little TLC goes a long way. Consider making the kitchen, the bathroom and the landscaping look its best.

When waiting for the market to come back and pinnacle, it may be best to rent out these properties while the rental rates are high and the demand for rental units remains elevated. This can pay for the mortgage while earning a little profit every month. Some investors decide to stop at this step and let the property pay for itself over the course of the mortgage.

Investors who look to flip these residential properties do so when they feel they stand to earn the greatest profits. Get the properties ready for showings, find a real estate agent and sell the property in the traditional fashion.

Huge corporations and small time real estate investors both share the same path when investing in residential properties. These properties are hot now, as the market has been favorable to investors for the last couple of years. As the markets turn, the time to invest in real estate is now, before the prices return to where they were before the crash. Investors who get in the market now stand to earn profits.

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.

Commercial Property Or Residential Property In 2013

Wednesday, April 24th, 2013

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Investors who are trying to decide whether to invest in commercial property or residential property in 2013 should understand the benefits of both. Those who have the ability to invest in 2013 can likely invest in almost anything and come out ahead. Those who are looking to earn the most amount of capital have to think a bit deeper and understand the market of 2013.

The commercial property sector has stabilized and cap rates are becoming tighter, as investors are facing more competition in this sector. While there is still a profit to be made in commercial properties many feel that residential properties are where the money is at in 2013. Huge corporations like Black Stone have focused their capital on the residential property market and investors who do the same stand to come out ahead.

These giant corporations were able to purchase these properties at pennies on the dollar, as they were buying these properties in bulk. They purchased distressed properties with a plan to fix up them up and rent them out over the course of the year. Small time investors can do the same because there are still many distressed properties on the residential property market. While they won’t be able to obtain the best deals, they can certainly take advantage of what the market is giving them.

The key here is finding these distressed properties before they hit the market. There are many ways to target these individuals, like searching through tax records for those who haven’t paid their taxes and finding probate house owners in order to find a willing seller. Purchasing foreclosures from REO companies is not currently the best way to go about finding residential property. These foreclosures are currently commanding higher prices due to lack of inventory on the market.

Those who plan to purchase these residential properties can rent them out after taking the time to give them a general rehab. As rental property is in high demand at this point, investors who choose to do this can leverage their money when pursuing residential properties. This can be part of a larger plan and many investors plan on selling these properties within the next few years in order to profit on the currently increasing market values.

While investing in commercial properties are likely to allow investors to earn profits over the year, residential property seems to be in the lime light. Those who can take advantage of this are likely to earn profits in 2013 and beyond.

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.

Great Time To Own Rental Property

Wednesday, April 24th, 2013

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2013 is a great time to own rental property as a myriad of factors are giving rental property owners incentive to invest in real estate. Even though the rental property market continues to grow the demand is still not being met. Many individuals are not able to purchase houses and have no other choice but to rent. Rental property owners can benefit from just about any rental property at this point in time, but those who choose mid to up scale rental properties tend to fare better then those who tend to focus on bottom tier housing.

Rental property owners aren’t usually in the real estate market for the glory; they are steadfast individuals who understand the value of a good investment. They understand that their greatest asset is the property itself and that income will continue to flow in every month for the course of the investment.

Rental property owners can leverage money by utilizing the services of a lending institution in order to finance their property. They are able to pay for their loan throughout the period by using the cash flow from their tenants. This cash flow should effectively pay for the maintenance, the taxes, and the marketing and even unexpected repairs.

Before investing in a rental property take a look at the local market. Which properties seem to be the best investments and require the least amount of needless work? Focus on properties that are likely to inhabited by young professionals and families. This can contribute to an overall pleasant atmosphere and tenants who can pay their rent.

Consider the cap rate formula when trying to decide on the best rental property. Find out the cash flow and the overall investment in order to determine if the property is likely to make a profit. Take into account how to deal with non-paying tenants and tenants issues. Be sure to understand that vacancies are a part of working with a rental property and make sure that a solid market plan is instilled in order to fill the property as quickly as possible.

Consider hiring a rental management company who can take care of the basics regarding the property. They can market the property, find tenants and deal with all the issues that come up. Rental property owners who don’t want to receive calls about an over flowing toilet will find that a rental management company is a great way to avoid this.

Rental property stands the test of time and individuals who want to pursue a solid income stream should focus on finding a profitable rental 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.

Avoid Real Estate Investor Pitfalls In Order To Become Successful

Wednesday, April 24th, 2013

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Investors who are able to sidestep real estate investor pitfalls set themselves up on a path to success. The best way to avoid these pitfalls is to become educated and have a well-rounded understanding of the industry. After becoming involved in the market there are numerous other pitfalls that need to be avoided or they will end up wreaking havoc for an investor.

Putting forth a great deal of effort in market research is one way to avoid real estate investor pitfalls. Don’t jump into a purchase and don’t feel pressured to complete a transaction. While real estate investing is based on logic, don’t get involved in a deal if it doesn’t feel right. When analyzing properties have a good understanding of the neighborhood and know what kind of people it attracts. Make sure that a solid understanding of property values is well understood in order to purchase properties that can be negotiated for below market value.

Every investor needs financing in order to avoid real estate investor pitfalls. Understand the terms and conditions of any financing. Don’t get involved with bad financing or get involved with exotic mortgage options. Stick to mortgages that are 30-year fixed rate in order to properly leverage financing and limit risks.

Investors who believe they can do it all alone should understand that a lot more can be achieved with a team mentality. When a lawyer’s knowledge is necessary, hire them. When the plumbing starts leaking, hire a professional to handle the job. While everything could be handled alone, but it just doesn’t make logical sense and is another one of the many real estate investor pitfalls.

One of the biggest real estate investor pitfalls is overpaying for a property. Real estate investors need to purchase properties at deals, many would argue, at values below 80% of property value. Those who don’t properly do their research or accept an inflated price pay the consequences in the end.

Don’t underestimate expenses that are involved with maintaining a property. These expenses all add up and investors who calculate their cash flow should take all these expenses into account when deciding the best course of action regarding their investment.

Those who avoid real estate investment pitfalls don’t procrastinate. If something needs to be done, do it, don’t make excuses. Investors who stay up to date with any needed issues don’t end up falling behind and forgetting about small issues. These issues eventually turn into big issues that need to addressed and end up costing a great deal of money.

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.

Avoid Investor Mistakes In Order To Profit

Wednesday, April 24th, 2013

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Those investors who limit investor mistakes obviously stand to do better throughout their career. While it is impossible to completely avoid mistakes, investors who have a solid education are aware of situations they should avoid. Many investors don’t understand basic investor knowledge that needs to be addressed in order to capitalize in the business.

Some investors like to brag about how much money they made on a transaction. This in itself is a bad practice, as no one wants to hear someone boast. How many of these investors are telling the whole truth? Many of them simply ignore transaction costs when explaining how much money they made on a deal. In real estate, transaction costs need to be factored into any equations regarding cash flow, as they are generally quite large. In a sense, many of them are simply lying in order to seem more profitable then they really are. These two investor mistakes are off-putting and self-detrimental.

Other investor mistakes involve miscalculating cash flow. Those who use cash flow to judge the profitability of an investment need to understand how to determine the true value. Here is how to properly calculate cash flow from a rental property. Income from the property found on IRS 1040 Schedule E is added to the depreciation also found on the Schedule E. Now subtract the amount of the annual mortgage payments and subtract the annual capital expenditures, found on IRS Form 4562. This is the true cash flow of the property.

Those investors who don’t put a monetary value of their time are working for free. When considering whether it would be more profitable to fix a certain problem yourself or hire a contractor, think of the entire picture. Chances are a contractor would be able to do the job quicker and possibly better. Those investors who decide to do these jobs themselves are unable to focus on doing something more valuable with their time.

Those who commit investor mistakes usually come out behind rather then ahead. Investors who ignore risks when considering an investment don’t understand the true nature of the business. This risk needs to be considered when deciding upon an investment and should be weighed against the advantages. Target ways that can limit risk or look for another investment that carries less risk.

Investor mistakes compile on each other so one mistake usually leads to a chain reaction that ends up compounding. Avoid investor mistakes in order to make it in the business and don’t lie to yourself when it comes to calculating formulas.

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.

Flipping Houses Requires A Dedicated Commitment

Wednesday, April 24th, 2013

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Flipping houses requires a dedicated commitment and those who are willing to view hundreds of houses before finding the one they are looking for may be up for the task. Flipping houses is touted as an easy way to earn money in real estate, but this couldn’t be further from the truth. Flipping houses requires a thorough understanding of the industry, generally a team of people, access to capital, and most importantly, patients.

Those who are dedicated to flipping houses and understand what the process entails should be able to weather the downs and come out on top. Unfortunately, most who try to flip houses end up failing. Before deciding on the real estate niche of flipping houses realize the top problems that most investors end up dealing with.

The first problem with flipping houses is that investors need to have cash or access to capital. Most who try and fail don’t have enough capital on hand to cover certain expenses. Many don’t include a budget for unexpected costs and therefore find themselves on the losing end of the proposition. Investors who are relying on loans need to factor in all the costs associated with them. Many investors rely on hard money loans and flipping a property quickly is of the utmost importance. As such, many rush through the process and commit costly errors.

Those who are flipping houses need to understand the time expenditure necessary. Be prepared to commit almost every waking hour to the pursuit. Research will end up consuming most of your time, but it is well worth it because the next property might be the one. This chase is what keeps investors on their toes; even though the process is tedious, the ‘next property mentality’ is the rush that keeps them going.

Many investors who commit to flipping houses don’t have the necessary skills to do so. As such, many of them contract out any necessary rehab work involved in the flip. Those investors who can perform this work by themselves are able to reduce costs, if they can do it quickly and accurately.

Investors who don’t have the knowledge regarding flipping houses shouldn’t end up trying it without getting the necessary education first. Flipping houses comes down to finding the right house, in the right location and getting it for the right price. Investors need to have the skills to make all these variables fall in place.

Flipping houses requires loads of patients and those who don’t have the patients necessary are going to fail. Take time when finding the right house and flip it in order to earn a modest profit. Flipping houses is not a get rich quick scheme, but rather requires a great deal of work.

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.

Gain An Advantage In Real Estate Investing

Wednesday, April 24th, 2013

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In order to gain an advantage in real estate investing, one must have a sound understanding of the field as a whole. There are certain factors that make real estate investing profitable and those who hone in on these issues are able to get the most out of them. Become entrenched in the real estate field; know the history, the local market, the national market, and know everything within a certain niche area of the market.

When analyzing the local market, understand the prices and where they are likely to be headed. Understand the city as a whole and the neighborhoods when deciphering why certain neighborhoods are doing better then others. Know the factors that are causing these neighborhoods to excel, while others remain the same. Understanding these factors can give insight into future trends in the area and allow an investor to gain an advantage in real estate investing.

Many investors know that job growth in a certain area usually leads to an increase in real estate prices in that area. This is logical, as job growth gives people a reason to live in a certain vicinity. Other factors that could indicate an increase in market values are road construction and new roads, making it more desirable to live there. Land development is another sign of growth and investors who notice these things gain an advantage in the real estate field.

Understanding taxes can give one an advantage in real estate investing, as tax rates can indicate where to invest. Find out what the tax rates are in the local areas and find out when a reassessment is set to take place. If a city is becoming over populated, chances are the tax rates are likely to go up in order to pay for the required infrastructure.

Find out how the school systems rank in relation to each other. More people move to districts that have better schools and these areas give investors more opportunities. Another way to gain an advantage in real estate investing is to survey the outskirts of town. These may be profitable places to invest, if the price is right. If a city is beginning to expand, chances are these outskirts will become part of the city within the near future.

Those who gain an advantage in real estate investing are able to see the future for what it is likely to be. These individuals are able to target locations that allow them to earn the most amount of profit. The only way to find these locations is to research and compare them.

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.