Archive for June, 2013

Investing In Real Estate Comes Down To Positive Cash Flow

Wednesday, June 19th, 2013

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It is difficult to be a real estate investor without earning positive cash flow.  Those investors who calculate the profitability of their investments before getting involved in them are able to determine their positive cash flow.  Those real estate investors who put in the work necessary when it comes to researching properties and determining accurate numbers are able to take advantage of their effort, as they will be able to have a rough idea of their positive cash flow.

When calculating positive cash flow, it is important to realize all the sources of negative cash flow and calculate them correctly.  Factors that are considered negative cash flow include the mortgage, the taxes, the maintenance, the insurance, the costs associated with tenants, in the case of a rental property and any other costs associated with holding, buying or selling property.

According to the 50% formula, many investors who invest in rental properties just assume that these costs, not including the mortgage, will cut into 50% of the positive cash flow.  The mortgage in turn, cuts into the other 50%.  Investors should be looking for a bit of capital left over at this point.

For example, let us assume that the combined rent comes to a total of $5,000.  For simplicity sake, we will assume that our negative cash flow of all miscellaneous fees, not including the mortgage will be $2,500.  If the mortgage costs $2,500, we may get lucky and break even.  Ideally the mortgage should be less then $2,500.  If the mortgage is only $2,000, we could make an estimated $500 a month in positive cash flow.

Only choose to invest in properties that are likely to result in a positive cash flow.  Investors who don’t perform the calculations and end up with a property that they are putting money into every month only have themselves to blame.  The 50% formula is easy to perform and every investor should at least be using it to calculate his or her positive cash flow.  Investors who are looking for a more detailed formula will have to calculate each of their negative cash flow factors separately in order to determine the profitability of a property.

If a property has been determined to not have a positive cash flow, an investor has two options.  They can either pass on the property or they can negotiate with a seller and obtain a better price.  Don’t elect to purchase a property that is likely to result in a loss of money even if it is assumed that the property will go up in value over the course of the investment.

Positive cash flow is the lifeblood to any real estate investment.  Those who can accurately determine that they are going to make money on an investment can purchase properties with confidence.

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.

Get Rich Slowly By Holding Property

Wednesday, June 19th, 2013

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Those who become involved in real estate investing, usually do so because they have aspirations to become rich.  Many beginners get involved in real estate, excited by quick riches.   After these ideas fail, these investors generally become more informed and end up choosing a long-term approach to real estate.  One of those strategies is holding property over the long-term, while renting it out in order to pay down the mortgage.

Holding property has many benefits that other real estate niches can’t provide.  Those who have a long-term plan and access to leveraged capital can become involved in holding property.  Investors can benefit from long-term appreciation and earn equity in their property over time.

When deciding on holding property, look for asset property.  Avoid property that is located in an undesirable location and one that has too many problems associated with it.  Fixer uppers are for rehab investors and most long-term holders don’t want to get involved with these properties.  Be sure that one has the available funds to pay for the investment month after month.  The best way to do this is to rent out the property and pay down the mortgage with other people’s money.

Most people, who end up holding property, rent it out in order to benefit from leveraged capital.  Those who secure a bank loan are able to leverage about 80% of the capital, while only supplying about 20% of their own capital in the deal.  They are then able to have renters pay for their loan month after month.  In the best case scenario, an investor doesn’t have to put any more of their personal capital into the investment, all while earning equity in the property.

When holding property, don’t cut corners, as the physical condition of the property is of utmost importance.  Put in the time and money to make repairs, while putting in maintenance when necessary.  A good way to maintain a property is to find a responsible tenant who takes pride in the location and wants it to look its best.

It is also important to purchase a respectable insurance plan in case anything goes wrong.  Most investors put a good majority of their capital into such a project and they should protect it in case anything goes wrong.

Holding property is the get rich slow strategy that many investors have employed over the eons.  Those who understand the benefits of holding property and renting it out are able to benefit on the short-term and over the long-term.

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 Announces Key Ways to Get Buyers and Tenants to Commit

Monday, June 17th, 2013

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A little something extra can make the difference in whether they say yes or no.

Dallas, Texas HomeVestors, America’s number one home buying franchise, has seen its number of problems with real estate investments. After 15 years, they have seen many potential buyers and tenants come in and out of their doors. With over 50,000 properties bought and sold, they have learned a few things that make renting or selling properties easier.

Buyers and renters are often hesitant when they are looking at new properties. They have their own needs and wishes for the property, including the quality of fixtures and appliances. They are looking for the perfect fit, much like searching for the perfect mate. As a result, they will see dozens of properties before they make a decision. There has to be something that makes a property stand out or makes the buyer-tenant bite right off.

One area that real estate investors can use is the incentive. Incentives are the little extra things that can be added to sweeten the deal. These offers could be special gift certificates or meal  coupons for registering that day. Another option is twenty-five to fifty dollars off the first month’s rent. Some properties even offer a month of free cable or free utilities for signing a lease or contract on-site. For properties that are sold on site, a free TV or other item makes a great incentive. Another great incentive is the buyer/tenant incentive program. By making recommendations to their friends, these individuals get a little something extra, like cash or a gift card, if their recommendation makes a commitment.

The second item that real estate investors can use to get buyers and tenants to commit is the art of negotiation. Some people believe it is just one person talking and forcing a yes out of the other person. Negotiating truly is an art form. It requires listening to the needs of the prospective buyer or tenant. Then, figuring out how the property can fulfill those needs and making the right offers to convince the prospect that the property can fill those needs. This takes time and experience, but the key thing is to listen. If a real estate investor can truly pay attention to what the prospect is saying, he can find a way to get them to come back and sign an agreement. That personal touch is what will make all the difference.

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 Announces Real Estate Problem Prevention

Thursday, June 13th, 2013

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Common issues can make investing a chore. Preventing these issues can save time and money.

Dallas, Texas With real estate investment comes a multitude of potential disasters. After 15 years in the business, America’s number one home buying franchise, HomeVestors, has had the opportunity to work through them all. That’s why they are releasing a handful of the best prevention methods for real estate investing.

Real estate investors cannot be successful unless they have a plan for success. It does not have to be anything extravagant. It does however need to spell out what it is that the investor hopes to achieve. This should include the number of properties the real estate investor hopes to purchase as well as what his plans are for the properties after they are purchased. By having this written, the investor can keep his goals in mind whenever he faces a hard day or an important purchasing decision.

A real estate investor is only as good as the weakest person on his real estate business team. Although the investor may be a jack-of-all trades, he cannot possibly handle all of the aspects of his business alone. This is especially true if the business is going to grow big. As a result, the real estate investor must choose the best individuals to work with. These are ones that will believe in the investor’s plan for success. The best real estate business team will include a real estate agent, real estate attorney, title company, financial lender, and contractor. These professionals will help the real investor to make sound business decisions and to stay focused on the investor’s goal.

Emergency funding is crucial for any investment, especially in real estate. There are always events or natural disasters that will create a need for repairs or replacements. The smart real estate investors will establish an emergency savings account to be used for those issues that spring out of nowhere. This can be alone or in addition to a major asset repair fund. Either way, the smart real estate investors will have several months and even up to a year’s worth of mortgage payments, property taxes, insurance payments, and other repair expenses ready.

The best tip for real estate investors is to find a way to separate work from home. This requires the investor to turn off the phone and only check emails and voice messages at certain assigned times. In addition, it means establishing separate bank accounts for personal and business expenses. This helps to avoid potential financial difficulties when keeping records and doing taxes.

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 Declares Townhouses Great Investments

Monday, June 10th, 2013

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Picking the perfect property can be a problem. Townhomes offer great opportunities for all investors.

Dallas, Texas HomeVestors has had the opportunity to work with properties of all sizes and shapes the last 15 years. Every property has potential. However, townhouses are some of the best investments for beginner real estate investors.

Apartments have a mystique that attracts a certain clientele. Although most of these are reputable individuals, townhomes attract a slightly different clientele. As a general rule, townhomes are considered the upper end of rental properties. They are well crafted with upper end finishes. Therefore, their clientele generally consists of middle class and upper end individuals. This also means the clientele is willing to pay a little more for the pleasure of living there.

The great thing about townhomes is they can be located just about any place. Elegance differs among communities. Since townhomes set the standard for elegance, they can be modified to fit into any neighborhood. In fact, even one with basic features is still very desirable.

Selecting a decent townhome investment is not difficult. Real estate investors should look for properties that have recently been built. By housing standards that is usually within the last five to ten years. These properties will need fewer repairs now, and the majority of the rental money can be used to pay off the mortgage, reinvest in the property, or save for major asset repairs.

Properties that are older are not bad properties. They will simply have to have more repairs and replacements in a shorter time frame. Older properties can usually be negotiated to a cheaper price if the right supporting evidence can be produced.

Townhomes provide real estate investors with many benefits.They are easy to manage. All of the properties are located in one centralized location. This makes collecting rent or fixing repairs quick and easy. Townhomes also make providing clients with top quality security easier.

In addition, the multiple units reduce the impact of one vacancy upon an investor’s bottom line. With rental homes, one empty house does not have other tenants to make up the rental difference. With townhomes, there are fewer major assets to repair. For example, instead replacing lots of roofs, there are only two or three large ones to take care of. Real estate investors looking for an easy to manage investment property will benefit from choosing townhomes.

About HomeVestors of America Inc.

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 Hands out Handy Renting Clues

Saturday, June 8th, 2013

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A real estate investor’s primary cash comes from his monthly rental properties.

Dallas, Texas HomeVestors has spent the last 15 years expanding its real estate franchise to include investors across the nation. Rental properties are the key to investor success. Without them, investors lack the monthly capital to sustain their real estate business and build their investment empire. That’s why HomeVestors is handing out these renting clues.

Consistent renting depends upon happy clients. Good maintenance goes a long way towards client happiness. It not only makes investment properties last longer; well-maintained properties attract tenants consistently when they are well kept. Real estate investor should have quarterly and yearly maintenance walkthroughs to look for preventative maintenance issues. This also helps the real estate investor build a relationship with his tenants. That way if something does go wrong at 2am, the client knows they have someone they can depend on to fix it.

The second thing real estate investors can do is being upfront with their clients. The client should know about everything about the property before they ever sign on the rental contracts dotted line. This includes knowledge of the property’s condition. Before clients move-in, investors should do a walkthrough of the property with them. Pictures should be taken as well as a list of problems that need attention made. When the client signs the move-in contract, this list of problems should be included. That way the problems are on record, and the client feels like they are guaranteed the problems will be fixed.

The third thing real estate investors can do to have more successful rentals is to start out with properties that are desirable. Cheap homes have their purpose, but most of them require a lot of work before they are usable for rentals. By spending a little more initially, real estate investors can start off with a rental ready property. Investors stand a better chance of keeping their properties rented that way.

If real estate investors start with nice properties, keep them well maintained, and keep upfront with tenants, they have a better chance of having constant renting success.

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 States Procrastination Big Problem

Friday, June 7th, 2013

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Real estate investors must get moving to have success.

Dallas, Texas HomeVestors has worked withmany real estate investors over the last 15 years to create the nation’s number one home buying franchise. Through their efforts, they have discovered that real estate investors face a one huge problem…procrastination. HomeVestors knows the key to real estate business success is to avoid procrastination.

Many real estate investors want to succeed, but they keep putting it off. First, they have to set up the business office. All their efforts are focused on picking out office furniture, setting up their desk, getting the right feng shui, etc. Nothing can be started until they have the perfect place to work.

Next, they have to officially set up their business. This requires the right logo, check book, and business cards. It also requires picking out the correct type of business entity and filing all the right paperwork.

Then, investors continue to come up with excuse after excuse to keep from making that first investment. The problem is this procrastination is just delaying the inevitable. Instead, their efforts should be focused on something besides the office or the business setup.

Beginning real estate investors should be working on more important things. They should be figuring out the fine details of the business. Instead of the type of business entity, the investor should be deciding what kind of investing he is going to pursue. Instead of the right office furniture, the investor should be picking out which neighborhoods to invest in for the most success.

The difference between these beginning moves and the others is the fact that these decisions continue to move a real estate business forward. The other decisions make no attempts at forwarding the business. They just make it pretty and take up time. While there is nothing wrong with a pretty business, investors can make a business pretty while they are attempting to make it successful. Some mentors would even say there is no sense in creating an office for a business that doesn’t exist. Take HomeVestors advice. Stop procrastinating, get up, and get a real estate investment. Then, go set up an office.

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 States Investors May be Illegal

Tuesday, June 4th, 2013

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Real estate investment is a great way to make money. Unfortunately, it’s easy to accidentally violate a few laws.

Dallas, Texas – After 15 years in the real estate business, HomeVestors has purchased over 50,000 properties. They have also had the opportunity to participate in hundreds of real estate investment opportunities. One of the main things investors need to remember is to think carefully before they invest.

Inexperienced real estate investors make mistakes all of the time. However, some mistakes can cost investors more than just money. They can also cost jail time, poor credit scores, and more. Ignorance of the law people does not excuse people from following it.  The good news is accidental illegal activity can be avoided.

The real estate investor must be upfront and honest in everything that he does. When talking to potential sellers, he must thoroughly explain his job, what he wants a property for, and how he arrived at his offer for it. In addition, he must not be pushy. A hastily made decision can quickly turn into a regretted one. With buyers and tenants, the real estate investor must also be upfront as well. All known facts about the property should be disclosed, especially if they will cost the buyer money or endanger the health of the occupants.

Real estate investors must have all contracts written, read, and proofed by a real estate attorney. These professionals are trained in the letter of the law, and they will be able to pinpoint any potential problems. Make sure the working is gone over with a fine tooth comb. The wrong phrase can mean the difference between success and going to jail.

Time is a real estate investor’s friend. Use it wisely. Investors should allow all sellers and buyers time to thoroughly consider contracts without feeling pressured to sign them. Real estate investors would want their attorney to check their contracts. Sellers and buyers should also be allowed the time to have their attorney check their contracts.

The main thing that real estate investors should remember is to never take a commission. The only professionals that may take a commission in real estate are licensed agents and brokers. Real estate investors may take a fee like an assignment fee, but staying away from fees and commissions is probably the smarter choice.

Real estate investment has the potential to make investors a lot of money. Staying smart and making wise choices will save real estate investors more money.

About HomeVestors of America Inc.

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.

Choosing between Two Cities for Your Next Rental Investment

Monday, June 3rd, 2013

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There comes a time when investors like you will be faced with tough choices. One of the most difficult choices will come down to location.  Here’s a prime example: in your search for your next real estate investment, you find two equally promising properties located in two different cities. You already have the information you need – both have clean titles, both require no rehabbing, and both are within your price range. The only difference they have is they’re located in two different cities. How do you choose? Here are the things you need to consider:

Know the overall demand for rental properties in both cities, including the current rent prices. Disregard the hype about rent prices and find out what the real figures are. Real estate professionals use a formula in determining this rental demand and prices, but the general rule is if both of your options offer the same ownership expenses, prioritize the one where the rent prices are higher. That way, your profits are also higher.

Check and compare the taxes in both cities. This is a no-brainer. If both properties are priced the same, the city that charges the higher taxes will most likely be a least favorable option. Then again, there are still more things you need to look at.

Determine the state of infrastructure. Sure the property looks great, and rent prices are high, but is it a convenient place for commuting tenants? You need to remember that many renters these days are previous homeowners who lost their homes to foreclosures. If they lost their homes, it’s highly possible that they’ve also lost their cars. You need a place where bus and coach services are easily accessible.

Consider the locals’ perceptions about each property’s neighborhood. Ask the locals instead of real estate agents. Agents who are desperate to sell properties from either location will not have the motivation to do extensive research or to provide you with the complete information. Talk to the locals and ask them: Are they happy? Is the place safe and livable? Is it somewhere many would consider staying or is it one that many would avoid? It’s useless to have an attractive property in a great investment city if the neighborhood has a bad reputation.

Take into account the availability of the property managers in both cities, including their professional fees. Although you’ll be able to find good property managers, the search process usually takes time. False starts are also possible so go for a property manager who allows cancellation of contract by either party without penalty, with a 60 days’ notice. A good and honest property manager will agree to this kind of setup and will not lock you into a one-year contract.

Choosing between equally promising rental properties in two different cities can be hard, but if you consider the different factors, you’ll be able to arrive at a smart decision. For more real estate investment tips, talk to us at Homevestorsfranchise.com. We know real estate investing so call us today or visit our website for more details.