Here is an easy-to-follow web comic outlining subprime mortgages and how they have impacted the current economy. There is some coarse language, so if you're offended by that, you may want to look elsewhere to learn more.
The Sub-Prime Primer
Just click on the images to advance to the next frame. There are over 40 frames, but each one is pretty simple. Stick-figure simple, actually. Don't look for award-winning graphics here. :)
Enjoy!
Friday, December 12, 2008
Monday, October 27, 2008
FSBO - great profit potential in this rehab / rebuild
REHAB / HANDYMAN SPECIAL!
FIXER-UPPER OR TEARDOWN & REBUILD
Located minutes from Underground Atlanta, Marta, I-20, I-75/85, great location in a historic neighborhood. Views of downtown, capitol building. Lots of renovation going on in this area.
4/2 Brick 1-story single-family home Approx. 1,250 sq. ft. Lot 4,792 sq. ft.
765 HUMPHRIES ST SW ATLANTA, GA 30310
Near Metropolitan Parkway & Ralph David Abernathy off of I-20 Downtown
ONLY $34,900! ALL SERIOUS OFFERS CONSIDERED!
http://www.youtube.com/watch?v=yUNmgPM-7P4
Leave voice mail to arrange viewing 208-545-1241
Option 1: Rehab: Estimated Repairs: $55,000-$70,000 Zillow Zestimate $159,000 as 4/2 1-story --_ $39,000-59,000 equity after repair
Option 2: Teardown & build a 2-story: Estimated $120,000-$140,000 New construction house next door (763 Humphries) sold Sept 2007 for $380,000, another (768 Humphries) sold in Nov 07 for $380,000 --_ $200,000-240,000 equity after rebuild
Call now to arrange viewing or make offer today! All serious offers considered.
SELLER FINANCING AVAILABLE
CONSTRUCTION FINANCING AVAILABLE
*The information provided is deemed reliable, but is not guaranteed.
FIXER-UPPER OR TEARDOWN & REBUILD
Located minutes from Underground Atlanta, Marta, I-20, I-75/85, great location in a historic neighborhood. Views of downtown, capitol building. Lots of renovation going on in this area.
4/2 Brick 1-story single-family home Approx. 1,250 sq. ft. Lot 4,792 sq. ft.
765 HUMPHRIES ST SW ATLANTA, GA 30310
Near Metropolitan Parkway & Ralph David Abernathy off of I-20 Downtown
ONLY $34,900! ALL SERIOUS OFFERS CONSIDERED!
http://www.youtube.com/watch?v=yUNmgPM-7P4
Leave voice mail to arrange viewing 208-545-1241
Option 1: Rehab: Estimated Repairs: $55,000-$70,000 Zillow Zestimate $159,000 as 4/2 1-story --_ $39,000-59,000 equity after repair
Option 2: Teardown & build a 2-story: Estimated $120,000-$140,000 New construction house next door (763 Humphries) sold Sept 2007 for $380,000, another (768 Humphries) sold in Nov 07 for $380,000 --_ $200,000-240,000 equity after rebuild
Call now to arrange viewing or make offer today! All serious offers considered.
SELLER FINANCING AVAILABLE
CONSTRUCTION FINANCING AVAILABLE
*The information provided is deemed reliable, but is not guaranteed.
Tuesday, September 9, 2008
Zillow.com, newspaper publishers form advertising network
Here's some news about Zillow from DM News
"Real estate Web site Zillow.com and 11 major newspaper companies have formed an online real estate advertising network.
In total, 282 newspapers nationwide are represented in the deal through which sales teams for both Zillow and the newspaper companies will offer each other's premium advertising inventory to their respective client bases. The focuses will be on home buying, selling and home-related commerce.
Local newspaper advertisers will be able to reach Zillow's national audience of more than 5 million unique visitors each month. Advertisers can also target visits to specific ZIP codes, neighborhoods or individual homes. Meanwhile, Zillow's advertisers gain access to the local audiences visiting real estate sections of the newspapers' Web sites."
For the rest of the article, go here.
"Real estate Web site Zillow.com and 11 major newspaper companies have formed an online real estate advertising network.
In total, 282 newspapers nationwide are represented in the deal through which sales teams for both Zillow and the newspaper companies will offer each other's premium advertising inventory to their respective client bases. The focuses will be on home buying, selling and home-related commerce.
Local newspaper advertisers will be able to reach Zillow's national audience of more than 5 million unique visitors each month. Advertisers can also target visits to specific ZIP codes, neighborhoods or individual homes. Meanwhile, Zillow's advertisers gain access to the local audiences visiting real estate sections of the newspapers' Web sites."
For the rest of the article, go here.
Monday, August 25, 2008
Simple Formula for Fix & Flip Profits
One of the most common ways to make money in real estate as a real estate investor is to buy a rundown house, repair it, and profit. There are 2 basic strategies here: fix and flip properties, or rehab and rent them. While on the surface this seems pretty simple, many beginning investors make the mistake of buying retail and then hoping for a profit once they fix it up.
I was talking to some other investors over the weekend and one of them put it in a very simple way:
1) Buy a cheap property.
2) Finance through a hard money lender.
3) Rehab it.
4) Tenant it.
5) Refinance it.
So now for a little more detail:
1) Buy a cheap property - this could be a foreclosure, pre-foreclosure, auctioned property, REO (bank-owned) or FSBO. Remember that in real estate, you make your money when you buy, not when you sell, so buy as low as you reasonably can.
2) Finance the purchase through a hard money lender. This is going to be a higher interest rate than a traditional loan, but 2 key advantages are that 1) you can often get the funds in a matter of days, not weeks or a month, and 2) lending decisions are made more on the merits of the property deal than your personal credit score (although having good personal credit makes it much easier to refi out - more on that later). Arrange for no payments for 6 months if you can, to give you time to rehab the property and cover any holding costs while your property is on the market. You may pay more in interest this way, but will likely have fewer headaches caused by banks deciding not to approve the loan at the last minute because the property needs too much work, needs a roof, or any number of other reasons why they won't approve a loan on the property as is.
3) Fix up the property. One thing to consider is that you don't want to over-remodel for the neighborhood. There's no sense in being the only house in the neighborhood with Italian marble floors if all the others are linoleum or tile. Sure, it looks great, but you're likely not going to be able to charge enough of a premium rent to cover the additional rehab expense. Simple things that add nice touches and don't cost much extra are great to do, but going overboard won't do much good for your pocket.
4) Tenant it. I'm a firm believer in having a good property manager handle all this. It's important to buy low so that you've got enough room for profit after mortgage payments, maintenance, taxes, insurance, and property management. And property managers are in the business of doing this, so a good property manager will likely tenant and manage a property better than you would, with far less time & frustration on your part.
5) Refinance into a traditional loan. Now that the house is in great condition, and you've got a tenant in it, you're going to be more likely to get a more favorable loan.
Plus, during the months of rehabbing and finding a tenant, you've gotten some extra time to do those things to raise your credit score, so you can hopefully get a better interest rate on your new mortgage.
Or if you haven't, especially in the current climate, you will hopefully have had time to find a partner to qualify for you. Traditional loans are harder and harder to get these days, especially if you've got a score below the bank's requirements. And those requirements are often strict - if the bank says they need a 700 score to do a loan and you've got a 689, you're not going to get that loan from that bank. So keep that credit score high and shop around multiple banks - there is no global standard, so different banks will have different requirements.
Also try smaller banks too - some of them will be more 'hungry' for your business than the huge banks like Wachovia and Bank of America.
I was talking to some other investors over the weekend and one of them put it in a very simple way:
1) Buy a cheap property.
2) Finance through a hard money lender.
3) Rehab it.
4) Tenant it.
5) Refinance it.
So now for a little more detail:
1) Buy a cheap property - this could be a foreclosure, pre-foreclosure, auctioned property, REO (bank-owned) or FSBO. Remember that in real estate, you make your money when you buy, not when you sell, so buy as low as you reasonably can.
2) Finance the purchase through a hard money lender. This is going to be a higher interest rate than a traditional loan, but 2 key advantages are that 1) you can often get the funds in a matter of days, not weeks or a month, and 2) lending decisions are made more on the merits of the property deal than your personal credit score (although having good personal credit makes it much easier to refi out - more on that later). Arrange for no payments for 6 months if you can, to give you time to rehab the property and cover any holding costs while your property is on the market. You may pay more in interest this way, but will likely have fewer headaches caused by banks deciding not to approve the loan at the last minute because the property needs too much work, needs a roof, or any number of other reasons why they won't approve a loan on the property as is.
3) Fix up the property. One thing to consider is that you don't want to over-remodel for the neighborhood. There's no sense in being the only house in the neighborhood with Italian marble floors if all the others are linoleum or tile. Sure, it looks great, but you're likely not going to be able to charge enough of a premium rent to cover the additional rehab expense. Simple things that add nice touches and don't cost much extra are great to do, but going overboard won't do much good for your pocket.
4) Tenant it. I'm a firm believer in having a good property manager handle all this. It's important to buy low so that you've got enough room for profit after mortgage payments, maintenance, taxes, insurance, and property management. And property managers are in the business of doing this, so a good property manager will likely tenant and manage a property better than you would, with far less time & frustration on your part.
5) Refinance into a traditional loan. Now that the house is in great condition, and you've got a tenant in it, you're going to be more likely to get a more favorable loan.
Plus, during the months of rehabbing and finding a tenant, you've gotten some extra time to do those things to raise your credit score, so you can hopefully get a better interest rate on your new mortgage.
Or if you haven't, especially in the current climate, you will hopefully have had time to find a partner to qualify for you. Traditional loans are harder and harder to get these days, especially if you've got a score below the bank's requirements. And those requirements are often strict - if the bank says they need a 700 score to do a loan and you've got a 689, you're not going to get that loan from that bank. So keep that credit score high and shop around multiple banks - there is no global standard, so different banks will have different requirements.
Also try smaller banks too - some of them will be more 'hungry' for your business than the huge banks like Wachovia and Bank of America.
New Tools Available on Trulia
A couple of months ago I wrote a post here about some of the various sites that allow anyone to come up with estimates of the value of a property.
Trulia has now added a few new things to their site to make it more useful, more interactive, and more convenient.
Here's an exceprt from an article on Inman News:
The latest batch of new features at real estate site Trulia.com includes a simplified blogging platform, mobile tools for property searches that use your phone as a divining rod for for-sale homes in the area, and information feeds that provides customized property listings and other area-specific information -- including blog posts and other user-generated site content -- within the locations that visitors are searching at the site.
Read the rest of the article here.
Trulia has now added a few new things to their site to make it more useful, more interactive, and more convenient.
Here's an exceprt from an article on Inman News:
The latest batch of new features at real estate site Trulia.com includes a simplified blogging platform, mobile tools for property searches that use your phone as a divining rod for for-sale homes in the area, and information feeds that provides customized property listings and other area-specific information -- including blog posts and other user-generated site content -- within the locations that visitors are searching at the site.
Read the rest of the article here.
Thursday, August 7, 2008
Play the Millionaire Maker Game
For those of you in Atlanta, there is a free game-playing event this Saturday evening.
From three-time, bestselling author and Millionaire Maker, Loral Langemeier, comes The Millionaire Maker Game. This game teaches people real world application wealth building skills as they live the life of an entrepreneur- where big deals are done daily.
If you have ever wanted to change your financial destiny - or even your own - here is your chance.
Ready to get into the game?
Join Live Out Loud and a Millionaire Game Facilitator as we help teach you how to become a millionaire in 3-5 years.
Come play The Millionaire Maker Board Game, on this Saturday evening, August 9th in downtown Atlanta. There is no cost for admission; this is a great wealth building and networking opportunity.
Visit www.liveoutloud.com/atlantagame to register, and enter "26625" (without quotes) in the "Referred by" field.
From three-time, bestselling author and Millionaire Maker, Loral Langemeier, comes The Millionaire Maker Game. This game teaches people real world application wealth building skills as they live the life of an entrepreneur- where big deals are done daily.
If you have ever wanted to change your financial destiny - or even your own - here is your chance.
Ready to get into the game?
Join Live Out Loud and a Millionaire Game Facilitator as we help teach you how to become a millionaire in 3-5 years.
Come play The Millionaire Maker Board Game, on this Saturday evening, August 9th in downtown Atlanta. There is no cost for admission; this is a great wealth building and networking opportunity.
Visit www.liveoutloud.com/atlantagame to register, and enter "26625" (without quotes) in the "Referred by" field.
Thursday, June 26, 2008
Inside the Solar-Hydrogen House: No More Power Bills--Ever
Interesting article from Scientific American about a New Jersey man who has converted his house (and his car) to be completely self-sufficient in terms of energy. No more gas (natural or gasoline) or electric bills for him.
It's not cost-effective (yet) but gives us a working example of what can be done with today's energy-efficient technology.
"Mike Strizki has not paid an electric, oil or gas bill—nor has he spent a nickel to fill up his Mercury Sable—in nearly two years. Instead, the 51-year-old civil engineer makes all the fuel he needs using a system he built in the capacious garage of his home, which employs photovoltaic (PV) panels to turn sunlight into electricity that is harnessed in turn to extract hydrogen from tap water.
Although the device cost $500,000 to construct, and it is unlikely it will ever pay off financially (even with today's skyrocketing oil and gas prices), the civil engineer says it is priceless in terms of what it does buy: freedom from ever paying another heating or electric bill, not to mention keeping a lid on pollution, because water is its only by-product."
For the rest of the article, go here
It's not cost-effective (yet) but gives us a working example of what can be done with today's energy-efficient technology.
"Mike Strizki has not paid an electric, oil or gas bill—nor has he spent a nickel to fill up his Mercury Sable—in nearly two years. Instead, the 51-year-old civil engineer makes all the fuel he needs using a system he built in the capacious garage of his home, which employs photovoltaic (PV) panels to turn sunlight into electricity that is harnessed in turn to extract hydrogen from tap water.
Although the device cost $500,000 to construct, and it is unlikely it will ever pay off financially (even with today's skyrocketing oil and gas prices), the civil engineer says it is priceless in terms of what it does buy: freedom from ever paying another heating or electric bill, not to mention keeping a lid on pollution, because water is its only by-product."
For the rest of the article, go here
Monday, June 23, 2008
Mortgage Insurance Changing for Investors
Courtesy of my friend Kim Pace at Sunshine Mortgage in Atlanta...
"Just to give you a heads up of what is coming July 14th with ONE of the larger Mortgage Insurance companies. This might be a sign that the rest will follow and I know how nobody likes to get caught with a major surprise.
Full Documentation Prime (A)
• Investment properties are no longer eligible for mortgage insurance.
This becomes effective July 14th. So if you have any investors that are looking at property you might to share this information with them.
This means borrowers (investors) will either have to put down 20% or arrange financing for 10%. This is not the only MI company but it is a big one."
Thanks, Kim!
"Just to give you a heads up of what is coming July 14th with ONE of the larger Mortgage Insurance companies. This might be a sign that the rest will follow and I know how nobody likes to get caught with a major surprise.
Full Documentation Prime (A)
• Investment properties are no longer eligible for mortgage insurance.
This becomes effective July 14th. So if you have any investors that are looking at property you might to share this information with them.
This means borrowers (investors) will either have to put down 20% or arrange financing for 10%. This is not the only MI company but it is a big one."
Thanks, Kim!
Thursday, June 19, 2008
Holding Property in an LLC Just Got Tougher
Tax Strategist, author, and real estate investor Diane Kennedy, has a new article about new changes from Freddie Mac that can have an impact on investors.
"Freddie Mac, one of the two largest underwriters of conforming loans on the secondary market, have changed their internal rules to state that they will no longer refinance a property that has been inside of a Limited Liability Company (LLC) for any time within the past 6 months."
You can read the full article here.
The good news is that there are other options. And as real estate investors, we either learn to get creative or our businesses suffer. Stay tuned for more developments....
"Freddie Mac, one of the two largest underwriters of conforming loans on the secondary market, have changed their internal rules to state that they will no longer refinance a property that has been inside of a Limited Liability Company (LLC) for any time within the past 6 months."
You can read the full article here.
The good news is that there are other options. And as real estate investors, we either learn to get creative or our businesses suffer. Stay tuned for more developments....
Wednesday, June 18, 2008
A Great Idea But It Still Needs Work...
I came across a "new" site today that is trying to compete with Zillow, Trulia, and other sites that allow anyone to estimate the value of a property.
This one has added text-messaging capability, so you can send a text message with a property address to their site and within seconds, you'll be able to get the information they have on the property.
Sounds great, right?
The drawback is their "extensive databases" (quoted because that's what they say in the "About Us" page on their site) aren't so extensive after all, at least not yet.
I tried searching for several addresses and here's what I came up with:
- NO Estimated Value
- NO Value Range
- "-" for their Confidence Level (meaning the confidence they have in the accuracy of their estimated value)
- Incorrect map / satellite info. For example, I searched for one of my properties and the satellite image pointed out the house next door.
- Some outdated property information from county tax records (for houses that had additions built on but tax records still indicate the previous size). This one isn't Housefront's fault, but it goes to show that you still need to do your own due diligence and sometimes there just aren't any shortcuts to actually seeing the property.
Still, they did better than Lending Tree's Domania, who couldn't even find my personal residence, saying "We're sorry...
Please make sure you have entered the correct Zip code." (I tried 6 times)
I'm sure these sites will continue to get better as they build their databases and improve whatever algorithms they use to calculate an estimated value. But for now, they should definitely be taken with a grain of salt.
This one has added text-messaging capability, so you can send a text message with a property address to their site and within seconds, you'll be able to get the information they have on the property.
Sounds great, right?
The drawback is their "extensive databases" (quoted because that's what they say in the "About Us" page on their site) aren't so extensive after all, at least not yet.
I tried searching for several addresses and here's what I came up with:
- NO Estimated Value
- NO Value Range
- "-" for their Confidence Level (meaning the confidence they have in the accuracy of their estimated value)
- Incorrect map / satellite info. For example, I searched for one of my properties and the satellite image pointed out the house next door.
- Some outdated property information from county tax records (for houses that had additions built on but tax records still indicate the previous size). This one isn't Housefront's fault, but it goes to show that you still need to do your own due diligence and sometimes there just aren't any shortcuts to actually seeing the property.
Still, they did better than Lending Tree's Domania, who couldn't even find my personal residence, saying "We're sorry...
Please make sure you have entered the correct Zip code." (I tried 6 times)
I'm sure these sites will continue to get better as they build their databases and improve whatever algorithms they use to calculate an estimated value. But for now, they should definitely be taken with a grain of salt.
Landlord Tried for Renting to Illegal Immigrants
Here's an interesting article from Apartment Finance Today
The message is clear: be careful whom you rent to - and whom you hire as a property manager or apartment manager. The government is continuing to crack down on illegal immigration and this can impact real estate investors in a big way.
On June 23 in Lexington, KY, landlord William Jerry Hadden and his son Jamey are being tried in federal court, for charges of 24 counts each of harboring illegal aliens and encouraging illegal immigrants to remain in the country.
This precedent means that landlords all over the country can be charged under federal law for renting apartments to illegal immigrants.
Hadden could lose his properties (2 apartments totaling 165 units and worth about $5 million) in addition to facing jail time.
According to the Lexington Herald-Leader, this case seems to be the first time the federal government has tried to prosecute landlords for renting to illegal immigrants.
So for all you rental property owners, it looks like we all have to be more careful than ever in doing background checks or making sure that our property managers are doing background checks.
The message is clear: be careful whom you rent to - and whom you hire as a property manager or apartment manager. The government is continuing to crack down on illegal immigration and this can impact real estate investors in a big way.
On June 23 in Lexington, KY, landlord William Jerry Hadden and his son Jamey are being tried in federal court, for charges of 24 counts each of harboring illegal aliens and encouraging illegal immigrants to remain in the country.
This precedent means that landlords all over the country can be charged under federal law for renting apartments to illegal immigrants.
Hadden could lose his properties (2 apartments totaling 165 units and worth about $5 million) in addition to facing jail time.
According to the Lexington Herald-Leader, this case seems to be the first time the federal government has tried to prosecute landlords for renting to illegal immigrants.
So for all you rental property owners, it looks like we all have to be more careful than ever in doing background checks or making sure that our property managers are doing background checks.
Sunday, June 15, 2008
Abandoned Properties Are Next Wave of Subprime Mortgage Mess
I found an interesting article on HometownDekalb.com featuring Emory Law School's housing expert Frank Alexander.
"While Congress wrestles with how to ease the subprime mortgage crisis, housing expert Frank Alexander of Emory Law School is looking at what will happen in the future to neighborhoods with an overabundance of foreclosed and abandoned properties.
Alexander testified before a congressional subcommittee last week on how federal funds can be targeted to neighborhoods most affected by rising rates of vacant and abandoned properties. His testimony focused on which data best enable the federal government to target new funds to the neighborhoods most in need.
The proposed legislation is significant, says Alexander, because "it recognizes post-foreclosure REO (real estate owned by lenders) is a very different problem than the housing foreclosure crisis generally."
"Once foreclosures have occurred, the costs of vacant houses are borne by the adjoining property owners, the neighbors down the street, the surrounding community, the schools and the local governments," he says.
"A vacant house drives down the value of adjoining property within one-half mile by one to three percent. In addition, it is quickly vandalized, which drops the value further, calls to police and fire departments increase, and property tax revenues decline."
As revenues decline, the problem is exacerbated. "Every state in the country is facing deficits, along with many city and county governments," says Alexander. He predicts that as the foreclosed property inventory continues to grow over the coming months, federal legislation to deal with the issue will become increasingly important.
Alexander's testimony focused on H.R. 5818: Neighborhood Stabilization Act of 2008, which would allocate $15 billion to state and local governments hardest hit by the foreclosure crisis. The bill proposes that the communities most affected acquire and convert foreclosed properties into new productive uses, including affordable housing."
For the rest of the article, go here
"While Congress wrestles with how to ease the subprime mortgage crisis, housing expert Frank Alexander of Emory Law School is looking at what will happen in the future to neighborhoods with an overabundance of foreclosed and abandoned properties.
Alexander testified before a congressional subcommittee last week on how federal funds can be targeted to neighborhoods most affected by rising rates of vacant and abandoned properties. His testimony focused on which data best enable the federal government to target new funds to the neighborhoods most in need.
The proposed legislation is significant, says Alexander, because "it recognizes post-foreclosure REO (real estate owned by lenders) is a very different problem than the housing foreclosure crisis generally."
"Once foreclosures have occurred, the costs of vacant houses are borne by the adjoining property owners, the neighbors down the street, the surrounding community, the schools and the local governments," he says.
"A vacant house drives down the value of adjoining property within one-half mile by one to three percent. In addition, it is quickly vandalized, which drops the value further, calls to police and fire departments increase, and property tax revenues decline."
As revenues decline, the problem is exacerbated. "Every state in the country is facing deficits, along with many city and county governments," says Alexander. He predicts that as the foreclosed property inventory continues to grow over the coming months, federal legislation to deal with the issue will become increasingly important.
Alexander's testimony focused on H.R. 5818: Neighborhood Stabilization Act of 2008, which would allocate $15 billion to state and local governments hardest hit by the foreclosure crisis. The bill proposes that the communities most affected acquire and convert foreclosed properties into new productive uses, including affordable housing."
For the rest of the article, go here
Tuesday, May 20, 2008
Useful tool for rental property owners and renters
Here's another very useful online web tool for real estate investors with rental properties.
It's called Rentometer and allows you to enter a rental property address, current monthly rent, the number of bedrooms & the number of units in the building, and it will automatically do an analysis and tell you whether it thinks you're charging too little (or too much) for rent.
Of course, this will be best used as another tool in your due diligence toolbox - I wouldn't reccommend making decisions that have a financial impact based on only one source of information. Nevertheless, it's a very easy way to get an estimate of market rents for a specific area.
It's called Rentometer and allows you to enter a rental property address, current monthly rent, the number of bedrooms & the number of units in the building, and it will automatically do an analysis and tell you whether it thinks you're charging too little (or too much) for rent.
Of course, this will be best used as another tool in your due diligence toolbox - I wouldn't reccommend making decisions that have a financial impact based on only one source of information. Nevertheless, it's a very easy way to get an estimate of market rents for a specific area.
Monday, May 19, 2008
4/2 Investor Special available in 30310 - only $39K
INVESTOR ALERT!
REHAB / HANDYMAN SPECIAL!
FIXER-UPPER OR TEARDOWN & REBUILD
Located minutes from Underground Atlanta, Marta, I-20, I-75/85, great location in a historic neighborhood. Views of downtown, capitol building. Lots of renovation going on in this area.
4/2 Brick 1-story single-family home Approx. 1,250 sq. ft. Lot 4,792 sq. ft.
765 HUMPHRIES ST SW ATLANTA, GA 30310
Near Metropolitan Parkway & Ralph David Abernathy off of I-20 Downtown
Front view from street
Rear view
ONLY $39,000!
make offer soon - this will not last! cash or hard money preferred
Option 1: Rehab: Estimated Repairs: $55,000-$70,000
Zillow Zestimate $159,000 as 4/2 1-story: $50,000-65,000 equity after repair
Option 2: Teardown & build a 2-story: Estimated $120,000-$140,000
New construction house next door (763 Humphries) sold Sept 2007 for $380,000, another (768 Humphries) sold in Nov 07 for $380,000: $200,000-240,000 equity after rebuild
W 3 Group, LLC
David Wright
Real Estate Investing – Marketing
770-216-9908 or 208-545-1241
REHAB / HANDYMAN SPECIAL!
FIXER-UPPER OR TEARDOWN & REBUILD
Located minutes from Underground Atlanta, Marta, I-20, I-75/85, great location in a historic neighborhood. Views of downtown, capitol building. Lots of renovation going on in this area.
4/2 Brick 1-story single-family home Approx. 1,250 sq. ft. Lot 4,792 sq. ft.
765 HUMPHRIES ST SW ATLANTA, GA 30310
Near Metropolitan Parkway & Ralph David Abernathy off of I-20 Downtown
Front view from street
Rear view
ONLY $39,000!
make offer soon - this will not last! cash or hard money preferred
Option 1: Rehab: Estimated Repairs: $55,000-$70,000
Zillow Zestimate $159,000 as 4/2 1-story: $50,000-65,000 equity after repair
Option 2: Teardown & build a 2-story: Estimated $120,000-$140,000
New construction house next door (763 Humphries) sold Sept 2007 for $380,000, another (768 Humphries) sold in Nov 07 for $380,000: $200,000-240,000 equity after rebuild
W 3 Group, LLC
David Wright
Real Estate Investing – Marketing
770-216-9908 or 208-545-1241
Cool tool to check average rents
Here's a useful tool in researching average rents in an area. The Rentbits website says their tool is designed to help renters find rental residences, but it can also be very useful in your due diligence as an investor looking for areas to buy rental properties, whether they be single-family homes, x-plexes, apartments or condos.
You can either enter a ZIP code or a city and state. Enjoy!
You can either enter a ZIP code or a city and state. Enjoy!
Monday, May 5, 2008
Lunch & Learn to Earn
There will be a Lunch & Learn to Earn session on Thursday, May 8th, 2008
12:00 PM-1:00 PM
Nancy's Chicago Pizza (Buckhead location)
3167 Peachtree Rd
Atlanta, GA 30305
Phone: (404) 842-9997 (Nancy's Pizza)
1-866-225-6162 (To register)
1-212-990-6555 (Opportunity overview call recording)
Cost: $5.96 per person (This includes Pizza, Salad & Soft drink)
Please join us for an exciting presentation overviewing a lucrative income opportunity involving real estate investing and marketing.
Learn how you can earn $9750 per month or more while learning to invest in real estate in the current economic climate.
12:00 PM-1:00 PM
Nancy's Chicago Pizza (Buckhead location)
3167 Peachtree Rd
Atlanta, GA 30305
Phone: (404) 842-9997 (Nancy's Pizza)
1-866-225-6162 (To register)
1-212-990-6555 (Opportunity overview call recording)
Cost: $5.96 per person (This includes Pizza, Salad & Soft drink)
Please join us for an exciting presentation overviewing a lucrative income opportunity involving real estate investing and marketing.
Learn how you can earn $9750 per month or more while learning to invest in real estate in the current economic climate.
Monday, April 7, 2008
10 Advantages of Investing in Real Estate Instead of Stocks
Here's a very interesting post outlining 10 Advantages of Investing in Real Estate Instead of Stocks
"Here are 10 reasons why you should put your money in real estate instead of stocks.
1) Leverage. The most powerful reason for investing in real estate is because you can use other people’s money to buy it. A bank will loan you 80% to 90% of the purchase price for a house and ask you only to provide the remaining 10% to 20%. This allows you to do so much with so little. Moreover, you–not the bank–realize 100% of the appreciation in value of that house. If the house gains 10% in value over two years, and you decide to sell it, the bank doesn’t take an 80% cut. You get to keep that entire 10% gain.
By contrast, if you asked a bank to loan you money to buy stocks, they would laugh you out of the building. Why is that?
2) Less Risk. A bank will loan you money to buy real estate, but not stocks, because it thinks that real estate is a less risky investment. And it is. Real estate is a physical, tangible asset. A share of stock may be pegged to a business, but, in the end, it remains a paper asset that, if managed poorly, can lose the majority of its value. Just a couple of weeks ago, Bear Stearns lost over 93 % of its value in two days. That doesn’t happen with real estate. In the last 20 years, the largest drop in real estate prices has been about 14 %, which occurred over a two-year period from 2006 to 2008"
For the rest, go here
He brings up an interesting point about leverage - most traditional banks will not lend you money to buy stock, even if it is stock in their own bank! However, Margin Accounts are quite common. Basically, brokers loan investors money to buy stock, and the stock is collateral for the loan. If the stock price drops enough, the investor may be forced to either deposit more cash or sell the stock(at a loss).
Point #2 is crucial - real estate does have substantially lower risk than stocks. Even if the house on it burns to the ground, the land still has value. The value of a property simply can't go to zero, barring a severe toxic waste problem or the like, while stocks can and do go to zero, even huge companies with household names. Compare the Fortune 500 list from a few different years...or just look at Enron.
I'm not saying not to invest in stocks - that would be one-sided and could keep you from making some profits on the gains in stocks. Just don't keep all of your eggs in one basket. My strategy at present is to have a large portion of my investments in real estate, but also some in individual stocks, index funds, precious metals, and other investments.
To your success,
Dave
Creating Real Estate Investors
"Here are 10 reasons why you should put your money in real estate instead of stocks.
1) Leverage. The most powerful reason for investing in real estate is because you can use other people’s money to buy it. A bank will loan you 80% to 90% of the purchase price for a house and ask you only to provide the remaining 10% to 20%. This allows you to do so much with so little. Moreover, you–not the bank–realize 100% of the appreciation in value of that house. If the house gains 10% in value over two years, and you decide to sell it, the bank doesn’t take an 80% cut. You get to keep that entire 10% gain.
By contrast, if you asked a bank to loan you money to buy stocks, they would laugh you out of the building. Why is that?
2) Less Risk. A bank will loan you money to buy real estate, but not stocks, because it thinks that real estate is a less risky investment. And it is. Real estate is a physical, tangible asset. A share of stock may be pegged to a business, but, in the end, it remains a paper asset that, if managed poorly, can lose the majority of its value. Just a couple of weeks ago, Bear Stearns lost over 93 % of its value in two days. That doesn’t happen with real estate. In the last 20 years, the largest drop in real estate prices has been about 14 %, which occurred over a two-year period from 2006 to 2008"
For the rest, go here
He brings up an interesting point about leverage - most traditional banks will not lend you money to buy stock, even if it is stock in their own bank! However, Margin Accounts are quite common. Basically, brokers loan investors money to buy stock, and the stock is collateral for the loan. If the stock price drops enough, the investor may be forced to either deposit more cash or sell the stock(at a loss).
Point #2 is crucial - real estate does have substantially lower risk than stocks. Even if the house on it burns to the ground, the land still has value. The value of a property simply can't go to zero, barring a severe toxic waste problem or the like, while stocks can and do go to zero, even huge companies with household names. Compare the Fortune 500 list from a few different years...or just look at Enron.
I'm not saying not to invest in stocks - that would be one-sided and could keep you from making some profits on the gains in stocks. Just don't keep all of your eggs in one basket. My strategy at present is to have a large portion of my investments in real estate, but also some in individual stocks, index funds, precious metals, and other investments.
To your success,
Dave
Creating Real Estate Investors
Some basics on investing in rental properties
I stumbled across an interesting blog today and thought I'd share an article the author posted on Investing in real estate for cash flow .
"Creating cash flow through real estate is my favorite method for making money. Simply put, this form of investing involves buying a property (an apartment, a house, etc.) and renting it out. The rent payments cover the mortgage, insurance, and tax payments. What is left over after you subtract the mortgage, insurance, and tax payments is passive income. That is the kind of cash flow that liberates people from jobs.
"This is not “flipping” properties or buying foreclosed properties. This type of investment involves buying and holding a property. There are various details, including incredible benefits such as tax-free rental income and 1031 exchanges, associated with investing in real estate for cash flow..."
For the rest of the article, go here
A few things to consider is that of course your numbers will differ depending on market conditions where you invest, your credit, and other factors.
For one, investor loans are typically anywhere from 0.5%-1.5% higher than mortgages for people buying a personal residence. This will impact your cash flow.
Also, once you get more than just a few properties, you’ll likely want to hire a property management company to handle the tasks involved with running your properties. This will help you avoid the “landlord trap” where landlords spend all their time managing their properties and have no time left to go out and acquire more properties, thus placing a ceiling on their income and nearly eliminating one of the most common reasons why people invest in real estate: time freedom.
Property managers’ fees vary, and in real estate nearly EVERYTHING is negotiable, but you can expect to pay up to the amount of one month’s rent for them to find you a tenant, and an ongoing monthly management fee which varies widely. As you acquire more and more properties, economies of scale start to work in your favor here, too
Additionally, the author states in the beginning of the article that this strategy is not buying foreclosures. I'd suggest that buying foreclosures is merely one more tactic that can be part of your overall property acquisition strategy. The more different strategies and tactics you can use, the better your chances of making a profit from a property.
Many landlords do make the "mistake" of buying at full retail, then renting it out. While this can provide cash flow and appreciation in value over the long term, buying properties at a discount can substantially increase your profits.
I put "mistake" in quotes above for emphasis - if they are investing in properties, they are at least doing SOMETHING that many people don't, in order to escape the rat race. That's a definite plus. But paying retail for a property is essentially leaving money on the table. In real estate, you make your money when you buy.
To your success,
Dave
Creating Real Estate Investors
"Creating cash flow through real estate is my favorite method for making money. Simply put, this form of investing involves buying a property (an apartment, a house, etc.) and renting it out. The rent payments cover the mortgage, insurance, and tax payments. What is left over after you subtract the mortgage, insurance, and tax payments is passive income. That is the kind of cash flow that liberates people from jobs.
"This is not “flipping” properties or buying foreclosed properties. This type of investment involves buying and holding a property. There are various details, including incredible benefits such as tax-free rental income and 1031 exchanges, associated with investing in real estate for cash flow..."
For the rest of the article, go here
A few things to consider is that of course your numbers will differ depending on market conditions where you invest, your credit, and other factors.
For one, investor loans are typically anywhere from 0.5%-1.5% higher than mortgages for people buying a personal residence. This will impact your cash flow.
Also, once you get more than just a few properties, you’ll likely want to hire a property management company to handle the tasks involved with running your properties. This will help you avoid the “landlord trap” where landlords spend all their time managing their properties and have no time left to go out and acquire more properties, thus placing a ceiling on their income and nearly eliminating one of the most common reasons why people invest in real estate: time freedom.
Property managers’ fees vary, and in real estate nearly EVERYTHING is negotiable, but you can expect to pay up to the amount of one month’s rent for them to find you a tenant, and an ongoing monthly management fee which varies widely. As you acquire more and more properties, economies of scale start to work in your favor here, too
Additionally, the author states in the beginning of the article that this strategy is not buying foreclosures. I'd suggest that buying foreclosures is merely one more tactic that can be part of your overall property acquisition strategy. The more different strategies and tactics you can use, the better your chances of making a profit from a property.
Many landlords do make the "mistake" of buying at full retail, then renting it out. While this can provide cash flow and appreciation in value over the long term, buying properties at a discount can substantially increase your profits.
I put "mistake" in quotes above for emphasis - if they are investing in properties, they are at least doing SOMETHING that many people don't, in order to escape the rat race. That's a definite plus. But paying retail for a property is essentially leaving money on the table. In real estate, you make your money when you buy.
To your success,
Dave
Creating Real Estate Investors
Thursday, March 27, 2008
How To Sell High Ticket Items (Like Real Estate) To Many People At Once
Here's an short but sweet post from Jimmy Vee and Travis Miller of Gravitational Marketing
How To Sell High Ticket Items (Like Real Estate) To Many People At Once
Put 'em on a bus!
Seriously. I saw a sign this weekend, and it really got my gears turning. Brilliant idea:
Orlando Foreclosures
Bus Tour
Call _______
That's a fantastic! They can haul a busload of potential buyers/investors around at once and show off these rare-find foreclosure homes. Yes! Sure beats showing home 1 at a time to 1 buyer at a time.
What can you do to emulate this idea in your business?
The original post is here
To your success,
Dave
www.creatingrealestateinvestors.com
How To Sell High Ticket Items (Like Real Estate) To Many People At Once
Put 'em on a bus!
Seriously. I saw a sign this weekend, and it really got my gears turning. Brilliant idea:
Orlando Foreclosures
Bus Tour
Call _______
That's a fantastic! They can haul a busload of potential buyers/investors around at once and show off these rare-find foreclosure homes. Yes! Sure beats showing home 1 at a time to 1 buyer at a time.
What can you do to emulate this idea in your business?
The original post is here
To your success,
Dave
www.creatingrealestateinvestors.com
Top 10 Cash Flow Property Markets
Here's an interesting article for you buy-and-hold investors:
NuWire's rankings of the areas with the best potential for cash flow
Published on: Thursday, January 03, 2008
Written by: Cali Zimmerman
Cash flow is one of the most important considerations investors face when making real estate purchases, particularly now that so many markets across the country are struggling. Those seeking high-income property should take cash flow into account first and foremost when deciding whether or not to buy.
Cash flow refers to the amount of cash coming in relative to the amount going out. In ranking the top 10, potential for future appreciation was not considered; this list is ranked on cash flow alone. While appreciation is often the most significant form of profit for real estate investors, cash flow is easier to determine and lower risk.
Although many elements combine to influence cash flow, one of the most important ones is the surrounding market. Areas with lower home prices are more likely to have positive cash flow.
To determine our top 10 cash flow real estate markets, NuWire adjusted the average rent payment for the area according to the rental vacancy rate before comparing it to the amount spent monthly on mortgage payments and upkeep, including utilities, taxes and insurance. Mortgage payments were estimated based on an average loan—30 years at 80 percent loan-to-value and a rate of 6.5 percent—and the median cost of a home in the area. Statistics were gathered from U.S. Census data.
1. Rochester, New York
Despite the fact that Rochester's population fell by 6.74 percent, from 219,773 to 204,963 between 2000 and 2006, and the fact that it has the highest rental vacancy on this list at 17.9 percent, Rochester still managed to claim the lead as the city with the best cash flow for
investors. Homes in Rochester are affordable, at a median price of $67,600, and median monthly upkeep costs and estimated mortgage payments are low, at $418 and $341.82, respectively. The median gross rent in the area is $669.
2. Montgomery, Alabama
Montgomery is the capital city of Alabama and an important regional trade, processing and shipping center. The city was home to 202,443 people in 2006. The median home price in Montgomery is $106,300, with low monthly upkeep costs of $323 and an estimated mortgage payment of $537.51. The rental vacancy rate is lower than in Rochester and most
other cities on this list, at 9.6 percent. The median gross rent is $669 per month. Montgomery ranked third on our list of the Top 10 Places to Invest for 2007.
3. Birmingham, Alabama
Birmingham had a population of 217,131 as of 2006. The median price of a house in Birmingham is just $82,000. Median monthly upkeep costs are $347, with the estimated mortgage payment at $414.64. Monthly gross rent is $620.
4. San Antonio, Texas
San Antonio ranked number one on our list of the Top 10 Places to Invest for 2007 and second on our list of the Top 10 Foreclosure Markets for 2007. Home to 1,273,374 people as of 2006, San Antonio retains affordable home prices, with a median of $96,300, in spite of its growing population. Median monthly upkeep is only $374 per month, with an estimated mortgage costing $486.95 per month. The rental vacancy rate for the city is 10.3 percent—on the lower side of this list—and the median gross rent is $678 per month.
5. Garland, Texas
Garland was number two on our list of the Top 10 Places to Invest for 2007. With affordable housing—the median price is $116,100, upkeep costs are $544 per month and estimated mortgage payments are $587.06 per month—in addition to its growing population, which increased 11.64 percent from 2000 to 2006, Garland is attractive to investors. Garland's median gross rent is $862 per month.
6. Buffalo, New York
Buffalo has a median gross rent of $579 per month despite the fact that its population fell more than 10 percent from 2000 to 2006. As of 2006, 257,758 people lived in the city. The median home price is low, at just $60,900, with upkeep costs at a median of $430 per month and monthly mortgage payments estimated at $307.94. The rental vacancy rate is 10.6
percent.
7. Corpus Christi, Texas
Markets in Texas have been doing well recently; cities in the state took up half of our list of the Top 10 Places to Invest for 2007 . Featuring a slowly but steadily growing population that was at 285,175 in 2006, Corpus Christi's median home price is $95,100. Upkeep costs of $467 per month and estimated mortgage payments of $480.88 per month are affordable and the median gross rent is $714 per month.
8. Shreveport, Louisiana
Shreveport is the cultural and commercial center of the Arkansas-Louisiana-Texas area, and is likely to receive an extra boost from the upcoming Cyber Innovation Center and provisional Cyber Command Center, which together are expected to create 10,000 new jobs in the
area, according to KTBS.com. The population of Shreveport was 203,914 in 2006 and the median home price is only $97,000. With a rental vacancy rate of 10.3 percent, low upkeep costs of just $287 per month and mortgage payments estimated at $490.48 per month, Shreveport is a very affordable area for investment. The median gross rent is $585 per month. Shreveport was ranked tenth on our Top 10 Places to Invest for 2007 details.
9. Detroit, Michigan
The Motor City was home to 834,116 people as of 2006. The rental vacancy rate is slightly higher than the average on this list, at 13.5 percent; this is likely at least partially because of the city's 12.32 percent decline in population between 2000 and 2006. Median monthly
upkeep costs are low, at $455, and the estimated mortgage payment is $463.69 per month. The median price of housing is $97,000 and the median gross rent is $712 per month.
10. Philadelphia, Pennsylvania
With a population of 1,448,394 as of 2006, Philadelphia has a high population density compared to the other cities on this list, which helps to drive up rental rates to $746 per month. Home prices are affordable, at a median of $115,500, and upkeep costs are low, at $393 per month. Average mortgage payments are estimated to be approximately $584.03 per month.
NuWire's rankings of the areas with the best potential for cash flow
Published on: Thursday, January 03, 2008
Written by: Cali Zimmerman
Cash flow is one of the most important considerations investors face when making real estate purchases, particularly now that so many markets across the country are struggling. Those seeking high-income property should take cash flow into account first and foremost when deciding whether or not to buy.
Cash flow refers to the amount of cash coming in relative to the amount going out. In ranking the top 10, potential for future appreciation was not considered; this list is ranked on cash flow alone. While appreciation is often the most significant form of profit for real estate investors, cash flow is easier to determine and lower risk.
Although many elements combine to influence cash flow, one of the most important ones is the surrounding market. Areas with lower home prices are more likely to have positive cash flow.
To determine our top 10 cash flow real estate markets, NuWire adjusted the average rent payment for the area according to the rental vacancy rate before comparing it to the amount spent monthly on mortgage payments and upkeep, including utilities, taxes and insurance. Mortgage payments were estimated based on an average loan—30 years at 80 percent loan-to-value and a rate of 6.5 percent—and the median cost of a home in the area. Statistics were gathered from U.S. Census data.
1. Rochester, New York
Despite the fact that Rochester's population fell by 6.74 percent, from 219,773 to 204,963 between 2000 and 2006, and the fact that it has the highest rental vacancy on this list at 17.9 percent, Rochester still managed to claim the lead as the city with the best cash flow for
investors. Homes in Rochester are affordable, at a median price of $67,600, and median monthly upkeep costs and estimated mortgage payments are low, at $418 and $341.82, respectively. The median gross rent in the area is $669.
2. Montgomery, Alabama
Montgomery is the capital city of Alabama and an important regional trade, processing and shipping center. The city was home to 202,443 people in 2006. The median home price in Montgomery is $106,300, with low monthly upkeep costs of $323 and an estimated mortgage payment of $537.51. The rental vacancy rate is lower than in Rochester and most
other cities on this list, at 9.6 percent. The median gross rent is $669 per month. Montgomery ranked third on our list of the Top 10 Places to Invest for 2007.
3. Birmingham, Alabama
Birmingham had a population of 217,131 as of 2006. The median price of a house in Birmingham is just $82,000. Median monthly upkeep costs are $347, with the estimated mortgage payment at $414.64. Monthly gross rent is $620.
4. San Antonio, Texas
San Antonio ranked number one on our list of the Top 10 Places to Invest for 2007 and second on our list of the Top 10 Foreclosure Markets for 2007. Home to 1,273,374 people as of 2006, San Antonio retains affordable home prices, with a median of $96,300, in spite of its growing population. Median monthly upkeep is only $374 per month, with an estimated mortgage costing $486.95 per month. The rental vacancy rate for the city is 10.3 percent—on the lower side of this list—and the median gross rent is $678 per month.
5. Garland, Texas
Garland was number two on our list of the Top 10 Places to Invest for 2007. With affordable housing—the median price is $116,100, upkeep costs are $544 per month and estimated mortgage payments are $587.06 per month—in addition to its growing population, which increased 11.64 percent from 2000 to 2006, Garland is attractive to investors. Garland's median gross rent is $862 per month.
6. Buffalo, New York
Buffalo has a median gross rent of $579 per month despite the fact that its population fell more than 10 percent from 2000 to 2006. As of 2006, 257,758 people lived in the city. The median home price is low, at just $60,900, with upkeep costs at a median of $430 per month and monthly mortgage payments estimated at $307.94. The rental vacancy rate is 10.6
percent.
7. Corpus Christi, Texas
Markets in Texas have been doing well recently; cities in the state took up half of our list of the Top 10 Places to Invest for 2007 . Featuring a slowly but steadily growing population that was at 285,175 in 2006, Corpus Christi's median home price is $95,100. Upkeep costs of $467 per month and estimated mortgage payments of $480.88 per month are affordable and the median gross rent is $714 per month.
8. Shreveport, Louisiana
Shreveport is the cultural and commercial center of the Arkansas-Louisiana-Texas area, and is likely to receive an extra boost from the upcoming Cyber Innovation Center and provisional Cyber Command Center, which together are expected to create 10,000 new jobs in the
area, according to KTBS.com. The population of Shreveport was 203,914 in 2006 and the median home price is only $97,000. With a rental vacancy rate of 10.3 percent, low upkeep costs of just $287 per month and mortgage payments estimated at $490.48 per month, Shreveport is a very affordable area for investment. The median gross rent is $585 per month. Shreveport was ranked tenth on our Top 10 Places to Invest for 2007 details.
9. Detroit, Michigan
The Motor City was home to 834,116 people as of 2006. The rental vacancy rate is slightly higher than the average on this list, at 13.5 percent; this is likely at least partially because of the city's 12.32 percent decline in population between 2000 and 2006. Median monthly
upkeep costs are low, at $455, and the estimated mortgage payment is $463.69 per month. The median price of housing is $97,000 and the median gross rent is $712 per month.
10. Philadelphia, Pennsylvania
With a population of 1,448,394 as of 2006, Philadelphia has a high population density compared to the other cities on this list, which helps to drive up rental rates to $746 per month. Home prices are affordable, at a median of $115,500, and upkeep costs are low, at $393 per month. Average mortgage payments are estimated to be approximately $584.03 per month.
Monday, March 24, 2008
Mixed Economic News Bodes Well For Real Estate Market
Here's an interesting post from fellow real estate investor Bryan Ellis's blog:
"Some “mixed” news was announced by the National Associations for Realtors today. But I think the news is FAR more positive than negative.
First, the “bad” news: In February, median home prices took a sharp dip of 8.2% nationally. Clearly, the carnage in the real estate market continued last month with a vengeance, as that drop is the sharpest in history.
But the silver lining is this: Buyers are returning to the market. Existing home sales increased 2.9% in February. That’s the first time in six months that there’s been any positive movement in existing home sales. This suggests to me that the prices are becoming too good for buyers to overlook. And that’s a very positive thing for the U.S. (and world) economy."
For the rest of the article,go here.
"Some “mixed” news was announced by the National Associations for Realtors today. But I think the news is FAR more positive than negative.
First, the “bad” news: In February, median home prices took a sharp dip of 8.2% nationally. Clearly, the carnage in the real estate market continued last month with a vengeance, as that drop is the sharpest in history.
But the silver lining is this: Buyers are returning to the market. Existing home sales increased 2.9% in February. That’s the first time in six months that there’s been any positive movement in existing home sales. This suggests to me that the prices are becoming too good for buyers to overlook. And that’s a very positive thing for the U.S. (and world) economy."
For the rest of the article,go here.
Monday, March 10, 2008
10 Ways to Build your Potential Buyers List
I've heard a lot of people asking about how to go about building a list of potential buyers for wholesale real estate deals. Here are ten free or inexpensive ways to build your list:
1) Classified ads - craigslist, local newspapers, community newsletters, local real estate publications, etc. Many of these are free, such as Craigslist and kijiji , while others are paid placement but still affordable. Be sure to use key words such as “rehab” “fixer-upper” and so on. Another option is to advertise a free list of 55 foreclosed / distressed homes – this works because people save time getting a list of 55 properties rather than having to look at 55 different ads. If you don’t have a list of properties to send them, you can have a realtor put together a list for you, then email it out to the people who responded to your ad.
2) eBay - Post a property for sale on eBay - you will receive the contact info of all bidders. After the auction is over, contact each bidder, find out what sort of properties they are looking for, and contact them when you find something suitable.
3) Networking – go to lots of networking events, chamber of commerce meetings, workshops, seminars, boot camps, etc. In addition to learning from the speakers at these events, you’ll make valuable connections and potential partners.
4) REIA meetings - go to your local Real Estate Investor Association meetings, meet people, exchange business cards, and make note of what they are looking for. If there isn’t a REIA group in your area, why not start one?
5) Roadside signs – posting your own signs can get expensive, particularly since they are often removed by local authorities and “quality of life” units. Thursday or Friday nights are often a good time to place these signs out, since they have a better chance of staying up over the weekend (since enforcement of these signs happens most during the week). So why not capitalize on the signs that others put up? Jot down the number of every “we buy houses” and “we sell houses” sign, contact the person and see whether it makes sense for them to be on your list. The odds are that it does. Also ask them if they wholesale houses, and ask to be put on their list if they do.
6) Call realtors – ask them if they have any cash buyers who are looking for wholesale deals. Of course you want to make it worth their while to refer these buyers to you – realtors are, after all, in business to make money just like anyone else. One approach is to offer the realtor a 2-3% fee, or perhaps a percentage of the profits on deals that their buyer purchases from you. In fact, you may want to take this a step further and pay them each time their buyer purchases a deal from you – this resolves the realtor’s fear that their buyer doesn’t buy from them because they’ve purchased a property from you. Also make sure to ask the realtors to alert you if they find any really good deals, particularly if you can close in cash within 2 weeks.
7) Talk to your current buyers. Home buyers often know other buyers. Let them know you will only call the referral if they pass on a property, or if it is outside the area they focus on.
8) Talk to landlords and out-of-town owners – people often ask these people if they’d like to sell their properties, but they don’t often ask if they’d like to buy additional properties
9) Bird-dogs – typically, investors use bird-dogs to find properties, not buyers. Why not give each of your bird-dogs a stack of your cards, and encourage them to find buyers for you as well?
10) Call contractors, rehabbers, painters, etc. – find out whether they work with any investors and, if so, if they can refer you to them. The benefit to them is that when the investors they work with buy more properties, they need more help to rehab them and prepare them for resale or rental.
When building your list, have your potential buyers be as specific as possible in regards to what they are looking for in a property. The more specific they are, the less likely you will waste your time or theirs by calling them about a property that does not meet their criteria. For example, if they’re looking to purchase cheap houses only for section 8 rentals, it wouldn’t make sense to call them about an $800K property even if you’re able to get it for $200K. Ask them what percentage of market value they are interested in buying, what areas of town they are interested in, types of properties, level of repairs needed (whether it’s just cosmetic, paint & carpet, full rehab, teardown and rebuild), and so on.
Be a little ruthless in maintaining your list. It just doesn’t make sense for you to keep people on your list if they aren’t going to buy. After all, it is a buyers list, not a tire-kickers list. I know of one wholesaler who does hundreds of deals a year and his strategy is simple. It’s easy to get on his list, but he follows a strict two-strikes rule. If he calls you once with a property fitting your criteria, and you don’t buy it, no problem. If he calls you a second time with a property fitting your criteria, and you don’t buy it, no hard feelings, but you’re no longer on his list.
Another wholesaler takes a different approach – he charges people $20 to join his list, refundable by request if, after 6 months, they haven’t bought any properties through being on his list. This can be useful for people just getting started in wholesaling, as it provides a little bit of cash up front. It also helps separate the doers from the talkers by forcing people to put their money where their mouth is.
To your success,
David Wright
www.creatingrealestateinvestors.com
1) Classified ads - craigslist, local newspapers, community newsletters, local real estate publications, etc. Many of these are free, such as Craigslist and kijiji , while others are paid placement but still affordable. Be sure to use key words such as “rehab” “fixer-upper” and so on. Another option is to advertise a free list of 55 foreclosed / distressed homes – this works because people save time getting a list of 55 properties rather than having to look at 55 different ads. If you don’t have a list of properties to send them, you can have a realtor put together a list for you, then email it out to the people who responded to your ad.
2) eBay - Post a property for sale on eBay - you will receive the contact info of all bidders. After the auction is over, contact each bidder, find out what sort of properties they are looking for, and contact them when you find something suitable.
3) Networking – go to lots of networking events, chamber of commerce meetings, workshops, seminars, boot camps, etc. In addition to learning from the speakers at these events, you’ll make valuable connections and potential partners.
4) REIA meetings - go to your local Real Estate Investor Association meetings, meet people, exchange business cards, and make note of what they are looking for. If there isn’t a REIA group in your area, why not start one?
5) Roadside signs – posting your own signs can get expensive, particularly since they are often removed by local authorities and “quality of life” units. Thursday or Friday nights are often a good time to place these signs out, since they have a better chance of staying up over the weekend (since enforcement of these signs happens most during the week). So why not capitalize on the signs that others put up? Jot down the number of every “we buy houses” and “we sell houses” sign, contact the person and see whether it makes sense for them to be on your list. The odds are that it does. Also ask them if they wholesale houses, and ask to be put on their list if they do.
6) Call realtors – ask them if they have any cash buyers who are looking for wholesale deals. Of course you want to make it worth their while to refer these buyers to you – realtors are, after all, in business to make money just like anyone else. One approach is to offer the realtor a 2-3% fee, or perhaps a percentage of the profits on deals that their buyer purchases from you. In fact, you may want to take this a step further and pay them each time their buyer purchases a deal from you – this resolves the realtor’s fear that their buyer doesn’t buy from them because they’ve purchased a property from you. Also make sure to ask the realtors to alert you if they find any really good deals, particularly if you can close in cash within 2 weeks.
7) Talk to your current buyers. Home buyers often know other buyers. Let them know you will only call the referral if they pass on a property, or if it is outside the area they focus on.
8) Talk to landlords and out-of-town owners – people often ask these people if they’d like to sell their properties, but they don’t often ask if they’d like to buy additional properties
9) Bird-dogs – typically, investors use bird-dogs to find properties, not buyers. Why not give each of your bird-dogs a stack of your cards, and encourage them to find buyers for you as well?
10) Call contractors, rehabbers, painters, etc. – find out whether they work with any investors and, if so, if they can refer you to them. The benefit to them is that when the investors they work with buy more properties, they need more help to rehab them and prepare them for resale or rental.
When building your list, have your potential buyers be as specific as possible in regards to what they are looking for in a property. The more specific they are, the less likely you will waste your time or theirs by calling them about a property that does not meet their criteria. For example, if they’re looking to purchase cheap houses only for section 8 rentals, it wouldn’t make sense to call them about an $800K property even if you’re able to get it for $200K. Ask them what percentage of market value they are interested in buying, what areas of town they are interested in, types of properties, level of repairs needed (whether it’s just cosmetic, paint & carpet, full rehab, teardown and rebuild), and so on.
Be a little ruthless in maintaining your list. It just doesn’t make sense for you to keep people on your list if they aren’t going to buy. After all, it is a buyers list, not a tire-kickers list. I know of one wholesaler who does hundreds of deals a year and his strategy is simple. It’s easy to get on his list, but he follows a strict two-strikes rule. If he calls you once with a property fitting your criteria, and you don’t buy it, no problem. If he calls you a second time with a property fitting your criteria, and you don’t buy it, no hard feelings, but you’re no longer on his list.
Another wholesaler takes a different approach – he charges people $20 to join his list, refundable by request if, after 6 months, they haven’t bought any properties through being on his list. This can be useful for people just getting started in wholesaling, as it provides a little bit of cash up front. It also helps separate the doers from the talkers by forcing people to put their money where their mouth is.
To your success,
David Wright
www.creatingrealestateinvestors.com
Wednesday, February 27, 2008
Comic relief - The Landlord
I'm not normally much of a Will Farrell fan, but this had me laughing hard! It's a video with sound & curse words...maybe best with headphones or at home away from kids.
Will Farrell meets with his landlord
Frankly, I think he's a lot funnier when he keeps his clothes on (which, fortunately, he does in this video).
Enjoy!
Will Farrell meets with his landlord
Frankly, I think he's a lot funnier when he keeps his clothes on (which, fortunately, he does in this video).
Enjoy!
Wholesale properties available
I'm working on a number of wholesale deals right now and am accepting investors who want to join my buyer list. These deals typically have AT LEAST 40% equity and some of them need little to no rehab. They are primarily single family homes, with some duplexes, 3-plexes, 4-plexes and townhouses. I may occasionally do a condo if the numbers are really good, but I tend to avoid those since the options for increasing condo value are more limited than with other types of properties.
Let me know, as specifically as you can, what kinds of properties you want so that I don't waste your time or mine calling you about a property that doesn't fit your criteria.
You can visit www.creatingrealestateinvestors.com for my contact info.
One example property is available now:
Large 2-story Decatur Townhouse for sale CHEAP!
Price: $50,000
Great investor property in an Atlanta suburb
Comps range from $91K - $114K
That means you can buy this property for 44% - 55% of its value: get over $40,000 in instant equity!
Convenient to I-20 and I-285
Over 1600 Sq. ft. with Fireplace
2 BR / 2.5 BA
Carpeted floors
Reserved parking
Near lake, golf course / country club (but not so close you’d get broken windows from errant golf balls!)
I can also refer you to a good property manager if you'd like.
Let me know, as specifically as you can, what kinds of properties you want so that I don't waste your time or mine calling you about a property that doesn't fit your criteria.
You can visit www.creatingrealestateinvestors.com for my contact info.
One example property is available now:
Large 2-story Decatur Townhouse for sale CHEAP!
Price: $50,000
Great investor property in an Atlanta suburb
Comps range from $91K - $114K
That means you can buy this property for 44% - 55% of its value: get over $40,000 in instant equity!
Convenient to I-20 and I-285
Over 1600 Sq. ft. with Fireplace
2 BR / 2.5 BA
Carpeted floors
Reserved parking
Near lake, golf course / country club (but not so close you’d get broken windows from errant golf balls!)
I can also refer you to a good property manager if you'd like.
Friday, February 8, 2008
Most and least expensive rental markets in the US
Here's more from Forbes.com - 2 slideshows profiling the most expensive and the least expensive rental markets in larger U.S. cities. Both slideshows are dated January, 2008, so this is pretty current information.
First, the most expensive rental markets.
Now for the least expensive rental markets.
For beginning investors, this can be a useful learning tool, since they also outline a few of the factors that impact the rental market. You can apply this to your own local market to gain a better understanding of it. Then adjust your investment strategy accordingly, so as to help maximize your profits.
To your success,
David
www.creatingrealestateinvestors.com
First, the most expensive rental markets.
Now for the least expensive rental markets.
For beginning investors, this can be a useful learning tool, since they also outline a few of the factors that impact the rental market. You can apply this to your own local market to gain a better understanding of it. Then adjust your investment strategy accordingly, so as to help maximize your profits.
To your success,
David
www.creatingrealestateinvestors.com
Homes of the Mega-Rich
Here's a slide show from Forbes.com briefly profiling homes of several billionaires, including the homes of Mark Cuban, Michael Dell, Larry Ellison, Bill Gates (who wouldn't want a 60-foot pool with an underwater sound system?), Oprah Winfrey, Stephen Spielberg, David Geffen, and more.
Billionaire Homes slideshow
You can either stand in awe of these beautiful houses or use them as a motivational tool to help you get to the point where you can have your own...
Billionaire Homes slideshow
You can either stand in awe of these beautiful houses or use them as a motivational tool to help you get to the point where you can have your own...
Thursday, February 7, 2008
REIT overview video
Another way to invest in real estate is through a REIT (pronounced "reet", rhymes with "beet"), or Real Estate Investment Trust.
There is a 30 minute video here that is an introduction to a specific REIT, meant to solicit investors in this particular REIT, but it also provides a good overview of what a REIT is, what some of the regulations are, tax issues & benefits of REITs, and more.
Enjoy!
(Disclosure: I have no financial interest in this REIT, and am providing this link as information, not to solicit your investment. I have no personal or business connections to Shopoff Securities and this is not meant to be considered personal financial advice. Before investing in this or any investment trust, consult with your financial / tax advisor for advice to your particular situation.)
To your success,
Dave
www.creatingrealestateinvestors.com
src="http://pagead2.googlesyndication.com/pagead/show_ads.js">
There is a 30 minute video here that is an introduction to a specific REIT, meant to solicit investors in this particular REIT, but it also provides a good overview of what a REIT is, what some of the regulations are, tax issues & benefits of REITs, and more.
Enjoy!
(Disclosure: I have no financial interest in this REIT, and am providing this link as information, not to solicit your investment. I have no personal or business connections to Shopoff Securities and this is not meant to be considered personal financial advice. Before investing in this or any investment trust, consult with your financial / tax advisor for advice to your particular situation.)
To your success,
Dave
www.creatingrealestateinvestors.com
src="http://pagead2.googlesyndication.com/pagead/show_ads.js">
Real Estate Investing Podcast
Here's an interesting site. It's geared towards real estate investors, both beginners and seasoned professional investors. One cool thing is that there is a podcast where you can subscribe for free and automatically have audios sent to your iTunes or RSS feed.
www.getrealrei.com
To your success,
Dave
www.creatingrealestateinvestors.com
src="http://pagead2.googlesyndication.com/pagead/show_ads.js">
www.getrealrei.com
To your success,
Dave
www.creatingrealestateinvestors.com
src="http://pagead2.googlesyndication.com/pagead/show_ads.js">
Wednesday, February 6, 2008
Outsourcing for Success in Real Estate Investing
I found this interesting article on Early To Rise, an ezine to which I subscribe. It has some good points on successfully investing in real estate.
"When small and mid-size businesses outsource work, it allows them to focus more on their core competencies. In many cases, this approach to outsourcing is a smart way for businesses to add value to their operations."
Nancy Pechloff
Outsource and Income: Using Specialists to Accelerate Your Real Estate Success
By Dave Lindahl
Real estate investing is much more than finding and buying the property. There’s more to do once the deal is completed - and you may own (and have to take care of) the property for months, and more often for years. Certainly you don’t want another job or obligation in your life. That’s why real estate investing appealed to you to begin with! So to get that free time and passive income you dreamed of when you got into real estate, outsource the jobs you don’t want to do.
In fact, if you work with a realtor or mortgage broker, you may already know some of the people who can help you.
Don’t forget that, as a real estate investor, you’re the CEO of your own company. CEOs don’t do the work - they hire specialists to get it done. Your job is to oversee it all, to manage your real estate investing portfolio… not to fill out landlord forms, chase tenants, mow lawns, and collect rents. And your favorite job will be to take checks to the bank (a task you’ll never want to outsource!).
The rest of the article is here: http://www.earlytorise.com/2007/08/07/outsource-and-income.html#main
Key points:
Step 1. Expand your geographic investing area.
Step 2. Find specialists for all aspects and all phases of the work.
Step 3. Use real estate investor courses to learn fast and learn right.
These are all keys to successful investing in real estate.
The bottom line is that you're going to pay for your education as an investor one way or another. Whether it's making mistakes that you end up learning from, or paying for it through a quality educational program, or some combination of both.
One crucial thing to bear in mind is that last year, over 500 Million dollars were spent on real estate investor education. The sad truth is that with most of these courses, very few people actually achieve results. That may be because a course might be missing something, it takes more time than the pitch says to make it work, a lack of money or credit, or the number one reason why people fail to act: FEAR.
So you need more than just a course or two, or a weekend bootcamp, to kick-start your investing. You definitely need the education, but you also need properties, income, and a community or network of people to help you succeed. I've only found one company that offers all this: go to www.creatingrealestateinvestors.com for more information.
"When small and mid-size businesses outsource work, it allows them to focus more on their core competencies. In many cases, this approach to outsourcing is a smart way for businesses to add value to their operations."
Nancy Pechloff
Outsource and Income: Using Specialists to Accelerate Your Real Estate Success
By Dave Lindahl
Real estate investing is much more than finding and buying the property. There’s more to do once the deal is completed - and you may own (and have to take care of) the property for months, and more often for years. Certainly you don’t want another job or obligation in your life. That’s why real estate investing appealed to you to begin with! So to get that free time and passive income you dreamed of when you got into real estate, outsource the jobs you don’t want to do.
In fact, if you work with a realtor or mortgage broker, you may already know some of the people who can help you.
Don’t forget that, as a real estate investor, you’re the CEO of your own company. CEOs don’t do the work - they hire specialists to get it done. Your job is to oversee it all, to manage your real estate investing portfolio… not to fill out landlord forms, chase tenants, mow lawns, and collect rents. And your favorite job will be to take checks to the bank (a task you’ll never want to outsource!).
The rest of the article is here: http://www.earlytorise.com/2007/08/07/outsource-and-income.html#main
Key points:
Step 1. Expand your geographic investing area.
Step 2. Find specialists for all aspects and all phases of the work.
Step 3. Use real estate investor courses to learn fast and learn right.
These are all keys to successful investing in real estate.
The bottom line is that you're going to pay for your education as an investor one way or another. Whether it's making mistakes that you end up learning from, or paying for it through a quality educational program, or some combination of both.
One crucial thing to bear in mind is that last year, over 500 Million dollars were spent on real estate investor education. The sad truth is that with most of these courses, very few people actually achieve results. That may be because a course might be missing something, it takes more time than the pitch says to make it work, a lack of money or credit, or the number one reason why people fail to act: FEAR.
So you need more than just a course or two, or a weekend bootcamp, to kick-start your investing. You definitely need the education, but you also need properties, income, and a community or network of people to help you succeed. I've only found one company that offers all this: go to www.creatingrealestateinvestors.com for more information.
Tuesday, February 5, 2008
Click a mouse and buy a house?
Have you thought about buying investment properties online, without ever going to see the property for yourself? Sounds crazy, no?
Well that's exactly what thousands of Nouveau Riche community members are doing through the Investor Concierge™, a service provided by The Real Market Experts Franchise, Inc.™ exclusively to customers of the Nouveau Riche Corporation.
How does it work? RME (Real Market Experts) is a franchise with several locations across the US, and they are in business to find properties for Nouveau Riche investors. They'll find the property, detail a recommended funding strategy for that particular property, will fix the property (if it needs it, which many don't), tenant the property for you, and manage it for you. And all this without you ever having to go see the property! They do provide LOTS of photos of the property itself, the street views, surrounding neighborhood, and so on. Talk about a hands-off investing strategy!
Many people are worried about buying online...particularly houses. Just think...10 years ago almost no one bought stocks online - now who hasn't heard of e*Trade (they also had some of the funniest commercials during Superbowl XLII)? I saw a billboard recently for eBay Motors, saying they sell a car a minute online! So properties are a logical progression, particularly with the abundance of online tools that can help you conduct your due diligence. For example, Google Earth is one site where you can get a satellite view of pretty much anywhere on the planet.
RME chose a franchise model for one reason - consumer protection. Franchises are regulated by state and federal agencies, such as the FTC. RME franchises are run by licensed real estate professionals and are regularly audited by an SEC-licensed firm.
The catch? Well, the only one I can think of is that you have to be a Nouveau Riche community member...but that's not exactly a "catch" in my opinion. There are just so many benefits to NRU that I can't explain them all in one blog post (disclosure: I am also a registered ISA, or Independent Student Advisor, authorized to market Nouveau Riche's investor education). I personally know lots of people who have bought properties through the Investor Concierge and have had 100% positive experiences.
To find out more, go to www.investorconcierge.com. You can click the "guest" button on the right to see how it works and to see actual properties that have been sold through this site.
You can then go to www.creatingrealestateinvestors.com to find out more about how to get started if this is what you've been looking for.
To your success,
David
http://www.creatingrealestateinvestors.com/
Well that's exactly what thousands of Nouveau Riche community members are doing through the Investor Concierge™, a service provided by The Real Market Experts Franchise, Inc.™ exclusively to customers of the Nouveau Riche Corporation.
How does it work? RME (Real Market Experts) is a franchise with several locations across the US, and they are in business to find properties for Nouveau Riche investors. They'll find the property, detail a recommended funding strategy for that particular property, will fix the property (if it needs it, which many don't), tenant the property for you, and manage it for you. And all this without you ever having to go see the property! They do provide LOTS of photos of the property itself, the street views, surrounding neighborhood, and so on. Talk about a hands-off investing strategy!
Many people are worried about buying online...particularly houses. Just think...10 years ago almost no one bought stocks online - now who hasn't heard of e*Trade (they also had some of the funniest commercials during Superbowl XLII)? I saw a billboard recently for eBay Motors, saying they sell a car a minute online! So properties are a logical progression, particularly with the abundance of online tools that can help you conduct your due diligence. For example, Google Earth is one site where you can get a satellite view of pretty much anywhere on the planet.
RME chose a franchise model for one reason - consumer protection. Franchises are regulated by state and federal agencies, such as the FTC. RME franchises are run by licensed real estate professionals and are regularly audited by an SEC-licensed firm.
The catch? Well, the only one I can think of is that you have to be a Nouveau Riche community member...but that's not exactly a "catch" in my opinion. There are just so many benefits to NRU that I can't explain them all in one blog post (disclosure: I am also a registered ISA, or Independent Student Advisor, authorized to market Nouveau Riche's investor education). I personally know lots of people who have bought properties through the Investor Concierge and have had 100% positive experiences.
To find out more, go to www.investorconcierge.com. You can click the "guest" button on the right to see how it works and to see actual properties that have been sold through this site.
You can then go to www.creatingrealestateinvestors.com to find out more about how to get started if this is what you've been looking for.
To your success,
David
http://www.creatingrealestateinvestors.com/
Thursday, January 31, 2008
The importance of a good property manager
If your investing strategy includes rental properties, there are 2 main ways to do it:
1) Manage it yourself. This may seem like a cheaper way, but it does have risks. For one, you run the risk of falling into the "landlord trap" where you end up spending a lot more time than expected dealing with tenants, making repairs (or overseeing the contractors who make repairs), and you also limit the number of properties you can effectively manage, thereby placing a cap on your income potential. This also limits you geographically and increases the risk that you will lose money or miss out on opportunities if your local market gets into an extended slump.
2) Hire a property manager or managers. This has higher apparent costs, as property managers typically charge both a monthly fee (for ongoing management) and fees to place tenants in the property. Still, this approach (when done right) frees up more of your time so that you can focus more on finding additional investment properties and can enable you to diversify geographically so as to reduce your risk in having all your "eggs" in one market "basket."
Hiring a good property manager or managers is crucial to making this approach work for you. Unfortunately there are lots of bad property managers out there, so it's vital to do your due diligence before committing to a property manager.
This article highlights some of the bad things that can happen when bad property managers are used:
Unethical Business Practices Attract Criminal Tenants
http://broadcastatlanta.com/index.php?option=com_content&task=view&id=7088&Itemid=2134
The owners could have avoided many of these problems by properly screening the property management companies, not deciding on fees alone (the cheapest isn't necessarily the best), and through regularly overseeing their activities (such as making sure the bills are paid, getting a periodic report of financial statements, tenant info, and so on). As the article shows, having a bad property manager can not only negatively impact your cash flow from the property - it can place good tenants at risk for their safety, negatively impact the property values in the area, and even become a drain on public resources and waste taxpayer dollars. When the police have to respond to calls from your property, that keeps them away from doing their jobs anywhere else and also costs the taxpayer.
So it's important to bear in mind that just because you have a property manager, you shouldn't expect that you can be totally hands-off with that property. Set up a system to work with / check in with your property manager(s) and do it regularly. This shouldn't be too time-consuming and can save you a LOT of money and prevent a lot of headaches.
That being said, I personally would prefer to use property managers rather than a total DIY approach. I'm investing to achieve financial freedom and passive income, not to create a full-time job for myself. It's important to buy right - if you pay too much for the property, it's hard to make it cashflow with or without a property manager.
Real estate investing is a high-stakes game where the rewards can be huge, and mistakes can cost a lot. I find it easier to learn from mistakes others have made. Of course I do make mistakes too - after all, I am "only human" - but I'm a firm believer that educating yourself helps reduce the number of mistakes you'll make, and therefore reduces your costs and increases your profits.
To your success,
David
www.creatingrealestateinvestors.com
1) Manage it yourself. This may seem like a cheaper way, but it does have risks. For one, you run the risk of falling into the "landlord trap" where you end up spending a lot more time than expected dealing with tenants, making repairs (or overseeing the contractors who make repairs), and you also limit the number of properties you can effectively manage, thereby placing a cap on your income potential. This also limits you geographically and increases the risk that you will lose money or miss out on opportunities if your local market gets into an extended slump.
2) Hire a property manager or managers. This has higher apparent costs, as property managers typically charge both a monthly fee (for ongoing management) and fees to place tenants in the property. Still, this approach (when done right) frees up more of your time so that you can focus more on finding additional investment properties and can enable you to diversify geographically so as to reduce your risk in having all your "eggs" in one market "basket."
Hiring a good property manager or managers is crucial to making this approach work for you. Unfortunately there are lots of bad property managers out there, so it's vital to do your due diligence before committing to a property manager.
This article highlights some of the bad things that can happen when bad property managers are used:
Unethical Business Practices Attract Criminal Tenants
http://broadcastatlanta.com/index.php?option=com_content&task=view&id=7088&Itemid=2134
The owners could have avoided many of these problems by properly screening the property management companies, not deciding on fees alone (the cheapest isn't necessarily the best), and through regularly overseeing their activities (such as making sure the bills are paid, getting a periodic report of financial statements, tenant info, and so on). As the article shows, having a bad property manager can not only negatively impact your cash flow from the property - it can place good tenants at risk for their safety, negatively impact the property values in the area, and even become a drain on public resources and waste taxpayer dollars. When the police have to respond to calls from your property, that keeps them away from doing their jobs anywhere else and also costs the taxpayer.
So it's important to bear in mind that just because you have a property manager, you shouldn't expect that you can be totally hands-off with that property. Set up a system to work with / check in with your property manager(s) and do it regularly. This shouldn't be too time-consuming and can save you a LOT of money and prevent a lot of headaches.
That being said, I personally would prefer to use property managers rather than a total DIY approach. I'm investing to achieve financial freedom and passive income, not to create a full-time job for myself. It's important to buy right - if you pay too much for the property, it's hard to make it cashflow with or without a property manager.
Real estate investing is a high-stakes game where the rewards can be huge, and mistakes can cost a lot. I find it easier to learn from mistakes others have made. Of course I do make mistakes too - after all, I am "only human" - but I'm a firm believer that educating yourself helps reduce the number of mistakes you'll make, and therefore reduces your costs and increases your profits.
To your success,
David
www.creatingrealestateinvestors.com
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