The rehabbing business is so much fun. Yea, right! But there are ways to deal with rehabbing that make it manageable.
Most importantly realize All Contractors & Handymen Go Lame!
Many times relationships with a contractor start great! The first job has high quality work and is completed for a great price. But as the contractor get’s busier he becomes less hungry for your business and the laws of supply and demand take over. Prices go up and often quality and service go down.
But when you are a real estate investor you realize all contractors go lame and this should come as no surprise. That’s why it is important that on EVERY project you get multiple bids.
How much can the bids very? I just received 15 bids for one project and the rates varied for $700 to $5510 for the exact same work! The only thing consistent about the bids is they were all over the price spectrum.
With the right tools real estate investing can be easy. That’s why I use the principles and tools in Kick Ass Wholesaling.
Saturday, December 30, 2006
Monday, December 25, 2006
What Real Estate Investors Should Do When In Trouble
Real Estate Investing Tip:
NEVER borrow your way out of trouble. SELL to get out of trouble.
Sometimes you need a creative way to sell your properties. With an open mind you can always find a way.
NEVER borrow your way out of trouble. SELL to get out of trouble.
Sometimes you need a creative way to sell your properties. With an open mind you can always find a way.
Thursday, December 21, 2006
Why Speculators Got Killed When The Markets Turned And What You Can Do So It Never Happens To You!
Speculating in real estate is a bet that the prices will continue to rise. When you are right you look like a genius but when you are wrong you are the fool and must lick your wounds or hang on for deal life hoping to recover over time.
All markets cycle and here’s a rule for you to follow if you are going to get into the appreciation game now or in the future.
Long Term Appreciation Rule:
When buying for appreciation if you have negative cash flow the amount of the appreciation must exceed the amount of negative cash flow.
For example if you bought a property worth $200,000 that had a $500 month negative cash flow you are losing $6,000 per year. If the property appreciated 3% you would be breaking even. If the property appreciated 6% you would be $6,000 ahead in equity.
If you are going to play the appreciation game be sure to run the numbers to see if you expectations are reasonable.
Most speculators lost because they did not run the numbers and expectations for a market to appreciate at 8% or more on a continued basis is a fools folley.
And while speculating can be inviting because of the tremendous profits others are making it is much better to learn sound investing principles and be prepared for any type of a real estate market.
All markets cycle and here’s a rule for you to follow if you are going to get into the appreciation game now or in the future.
Long Term Appreciation Rule:
When buying for appreciation if you have negative cash flow the amount of the appreciation must exceed the amount of negative cash flow.
For example if you bought a property worth $200,000 that had a $500 month negative cash flow you are losing $6,000 per year. If the property appreciated 3% you would be breaking even. If the property appreciated 6% you would be $6,000 ahead in equity.
If you are going to play the appreciation game be sure to run the numbers to see if you expectations are reasonable.
Most speculators lost because they did not run the numbers and expectations for a market to appreciate at 8% or more on a continued basis is a fools folley.
And while speculating can be inviting because of the tremendous profits others are making it is much better to learn sound investing principles and be prepared for any type of a real estate market.
Wednesday, December 20, 2006
There Is No National Real Estate Market
News reports mean little to nothing. Why? Because each report is measuring a different segment of the market and one could be up and the other down yet the report is for just an up or down market.
For example a real estate news report could talk about number of homes sold, number of homes listed, rentals vs. condo’s vs. new build permits vs. new homes sold. In my market I recently looked at three different reports all with different conclusions. Learning real estate investing is the key.
The market that is perceived is never the market that is.
For example a real estate news report could talk about number of homes sold, number of homes listed, rentals vs. condo’s vs. new build permits vs. new homes sold. In my market I recently looked at three different reports all with different conclusions. Learning real estate investing is the key.
The market that is perceived is never the market that is.
Tuesday, December 19, 2006
To Hell And Back
I just got back from an awesome business trip and even though I went through Hell the trip was phenomenal. Allow me to explain…
This trip happened to be on a cruise boat and the sea days were chalked full of education then every night we’d meet from 8 or 9 in the evening and talk business into the wee hours of the morning. When we weren’t at sea we’d take a little time off to go ashore and explore some exotic location.
Our first port day we find ourselves in Grand Cayman, a small tropical island that is flat as board. My buddy Shanu and I catch the tender (shuttle boat) into port to look around check things out.
It's No Harley But At Least I Had The Helmet!
Hell Has The Only Official Post Office In Grand Cayman
A Grand Cayman Squirrel.
As we cruise around Grand Cayman we see a lot of new construction and existing homes on the market for sale. And while it is a pretty tropical island it’s not really a place I would want to call home.
But I know there are some great deals to be found. Here’s a picture where a resort may have met its demise from a hurricane. Definitely a real fixer property but the demolition has already been completed.
This trip happened to be on a cruise boat and the sea days were chalked full of education then every night we’d meet from 8 or 9 in the evening and talk business into the wee hours of the morning. When we weren’t at sea we’d take a little time off to go ashore and explore some exotic location.
Our first port day we find ourselves in Grand Cayman, a small tropical island that is flat as board. My buddy Shanu and I catch the tender (shuttle boat) into port to look around check things out.
My Good Friend Shanu & I Heading To Shore
When I’m someplace new I like to get off the beaten path to get a feel for the area and locals. Today we decide to rent some scooters and cruise the island.
After talking to a few locals we decide to take a scenic drive up 7 mile beach. The roads are English style and it takes a little getting used to driving on the left. There is something liberating about the open road and while a Harley would have been better the scooter was a close second.
When I’m someplace new I like to get off the beaten path to get a feel for the area and locals. Today we decide to rent some scooters and cruise the island.
After talking to a few locals we decide to take a scenic drive up 7 mile beach. The roads are English style and it takes a little getting used to driving on the left. There is something liberating about the open road and while a Harley would have been better the scooter was a close second.
It's No Harley But At Least I Had The Helmet!
One of the famous locations in Grand Cayman is a place called Hell. Having been told to go there on a few occasions we decide to check it out. Unfortunately we end up lost on a dead end dirt road. In need of some help we cruise up to some locals on our manly scooters.
My buddy Shanu is originally from India and when one of the islanders asks if he works on the boat I nearly fall off my bike from laughing so hard. But Shanu is a good sport and this would not be the last time people jumped to the wrong conclusion.
After some chit chat I ask for directions to Hell and the islander tells me to turn around and drive straight pointing out to the ocean and says “Just keep goin' man and you gonna find it!” A little island humor.
Next thing I know they tell us to follow them and "we all goin’ to Hell." We figure we have nothing to lose because if they had bad intentions we were already in a remote enough location where it would not have mattered.
Four or five guys jump into the van and after about 10 minutes we arrive in Hell. We talk for a bit and the islanders are fun loving and welcoming.
My buddy Shanu is originally from India and when one of the islanders asks if he works on the boat I nearly fall off my bike from laughing so hard. But Shanu is a good sport and this would not be the last time people jumped to the wrong conclusion.
After some chit chat I ask for directions to Hell and the islander tells me to turn around and drive straight pointing out to the ocean and says “Just keep goin' man and you gonna find it!” A little island humor.
Next thing I know they tell us to follow them and "we all goin’ to Hell." We figure we have nothing to lose because if they had bad intentions we were already in a remote enough location where it would not have mattered.
Four or five guys jump into the van and after about 10 minutes we arrive in Hell. We talk for a bit and the islanders are fun loving and welcoming.
An Easy Going Cayman Islander
I have to admit it was hot in Hell and I did burn a bit but overall it was much nicer than expected.
Hell Has The Only Official Post Office In Grand Cayman
Hell Is Named After What It Looks Like!
From Hell we cruise around on the Island, grab lunch then leave the restaurant and see this iguana.
A Grand Cayman Squirrel.
As we cruise around Grand Cayman we see a lot of new construction and existing homes on the market for sale. And while it is a pretty tropical island it’s not really a place I would want to call home.
But I know there are some great deals to be found. Here’s a picture where a resort may have met its demise from a hurricane. Definitely a real fixer property but the demolition has already been completed.
Grand Cayman Fixer Upper. Oceanfront With View!
When I talk about real estate investing I’ll often talk about the nine D’s of real estate and why real estate works in every market. For your review here are the 9 d’s:
1. Death
2. Divorce
3. Despair / Life Changes
4. Delinquent Tenants
5. Debt Service
6. Distance
7. Disinterest
8. Downsizing
9. Damage (fire, flood, vandals)
And now it looks like we can make it the 10 D’s of Real Estate and add:
10. Disaster
No matter where you find yourself there is almost always opportunity for real estate investors. The key is learning how to buy properties right because once you master buying at steep discounts you control your income and future.
There’s much more to this journey but one of the best benefits from the entire trip was sharing the experience with others. Do your best to surround yourself with like minded people and not only will you learn, grow, and recharge your batteries you’ll have a lot of fun in the process.
Now go buy a house!
Gerald Romine
www.geraldromine.com
PS - Now is the time to crank up your buying and this wholesaling system will make things happen for you like you never imagined!
Sunday, December 10, 2006
What To Do With Upside Down Properties
Are you seeing more and more properties coming at you where the seller is financed to the hilt and just looking to get out from under their debt? Maybe this sounds familiar…
"This week I have had maybe 75 properties come across my desk and a majority of these properties are in the exact same situation. They have 80-20 loans and are at 100% of value. While I know from my education that it dose not qualify for a short sale. The reason being that the properties need no major repairs and while the payments are behind many of the owners especially out of state have other assets. The owners are afraid of the lenders coming after them. Even though I believe Az. law does not allow this.
My question is are there any other ways to attack the situation that you might add? Taking properties "Subject To" is not an option with such high payments and the fact that it seems harder to move with a lease option of late. Is it just a waiting game, still?"
Patrick
Patrick is not alone because overfinanced sellers are a dime a dozen. So what can you do if one of these "deals" comes your way?
If you are lucky enough to live in a market where you can cash flow the property then buying them "subject to" is an option. Yes, you’ll become a landlord with tenants or lease option buyers but it can put you on the path to becoming wealthy. My advice would be to make sure you net $150-200 per month and that is after all expenses including taxes, insurance, maintenance allowance, and property management.
Some of us are lucky enough where we can cash flow these properties and if that is you consider yourself lucky. Now is a great time to build your inventory and later when the markets change you can cash out for the big bucks.
NOTE: I did not say buying properties without equity is a good idea. There is a viable strategy in buying for cash flow and it can be done at full price… although I prefer to get fr.ee equity even when getting the deed.
Unfortunately Patrick is in Phoenix Arizona so buying for cash flow is pretty much a thing of the past. So what can you do if you are in a market where the mortgage payments exceed the market rent for the homes? Short of moving there is an alternative.
If the payments are behind you can go for a short sale and In.stant Real Estate Profit Pro, www.realestateprofitpro.com, can prepare the entire packages for you.
As the times change so must our investing strategies. A year ago I would not have chased a property that is 100% financed with an 80/20 loan. But today I would consider it. Why? Because the banks are changing with the markets and accepting discounts that are hard to believe.
For instance this week I was speaking with a seller that purchased a house just 5 months ago and is now having trouble making the payments. I forget the exact loan balance but it was around 500K. To make matters worse home values have dropped substantially in her area and newbuilds of the same model are selling for considerably less from the same builder.
Right now she is not even in foreclosure and she has spoken with the bank - they told her they would be willing to discount the loan to around 70% if she could find a buyer. Imagine what they will do after she misses a few more payments and they have to start a foreclosure. (Please read this paragraph about three times. It's that important.)
So forget everything you thought you knew about foreclosures and what banks are willing to do. Times are changing and new opportunities are coming our way.
My advice would be if the payments are not current to consider a negotiating with the lender for a discount or short sale. You never know what they will accept. And when you want to create short sale packages in under 5 minutes the In.stant Real Estate Profit Pro is the answer. www.realestateprofitpro.com.
Just so you know the short sale section of In.stant REPP does the following:
Creates two offers to the first lender
Creates two offers to the second lender
Creates estimated Hud 1 Settlement Statements
Creates Cover Letters to lenders
Creates Offer Letters to lenders
Shows the lenders how you arrived at your offer price
Includes Financial Statement for sellers to complete
And that is just the short sale section. There is an entire get the deed section that has every document you need to buy the property including the right addendums to use when dealing with foreclosures. Or the Automatic Offer section when you want to buy wholesale or with owner terms.
Now go buy a house!
"This week I have had maybe 75 properties come across my desk and a majority of these properties are in the exact same situation. They have 80-20 loans and are at 100% of value. While I know from my education that it dose not qualify for a short sale. The reason being that the properties need no major repairs and while the payments are behind many of the owners especially out of state have other assets. The owners are afraid of the lenders coming after them. Even though I believe Az. law does not allow this.
My question is are there any other ways to attack the situation that you might add? Taking properties "Subject To" is not an option with such high payments and the fact that it seems harder to move with a lease option of late. Is it just a waiting game, still?"
Patrick
Patrick is not alone because overfinanced sellers are a dime a dozen. So what can you do if one of these "deals" comes your way?
If you are lucky enough to live in a market where you can cash flow the property then buying them "subject to" is an option. Yes, you’ll become a landlord with tenants or lease option buyers but it can put you on the path to becoming wealthy. My advice would be to make sure you net $150-200 per month and that is after all expenses including taxes, insurance, maintenance allowance, and property management.
Some of us are lucky enough where we can cash flow these properties and if that is you consider yourself lucky. Now is a great time to build your inventory and later when the markets change you can cash out for the big bucks.
NOTE: I did not say buying properties without equity is a good idea. There is a viable strategy in buying for cash flow and it can be done at full price… although I prefer to get fr.ee equity even when getting the deed.
Unfortunately Patrick is in Phoenix Arizona so buying for cash flow is pretty much a thing of the past. So what can you do if you are in a market where the mortgage payments exceed the market rent for the homes? Short of moving there is an alternative.
If the payments are behind you can go for a short sale and In.stant Real Estate Profit Pro, www.realestateprofitpro.com, can prepare the entire packages for you.
As the times change so must our investing strategies. A year ago I would not have chased a property that is 100% financed with an 80/20 loan. But today I would consider it. Why? Because the banks are changing with the markets and accepting discounts that are hard to believe.
For instance this week I was speaking with a seller that purchased a house just 5 months ago and is now having trouble making the payments. I forget the exact loan balance but it was around 500K. To make matters worse home values have dropped substantially in her area and newbuilds of the same model are selling for considerably less from the same builder.
Right now she is not even in foreclosure and she has spoken with the bank - they told her they would be willing to discount the loan to around 70% if she could find a buyer. Imagine what they will do after she misses a few more payments and they have to start a foreclosure. (Please read this paragraph about three times. It's that important.)
So forget everything you thought you knew about foreclosures and what banks are willing to do. Times are changing and new opportunities are coming our way.
My advice would be if the payments are not current to consider a negotiating with the lender for a discount or short sale. You never know what they will accept. And when you want to create short sale packages in under 5 minutes the In.stant Real Estate Profit Pro is the answer. www.realestateprofitpro.com.
Just so you know the short sale section of In.stant REPP does the following:
Creates two offers to the first lender
Creates two offers to the second lender
Creates estimated Hud 1 Settlement Statements
Creates Cover Letters to lenders
Creates Offer Letters to lenders
Shows the lenders how you arrived at your offer price
Includes Financial Statement for sellers to complete
And that is just the short sale section. There is an entire get the deed section that has every document you need to buy the property including the right addendums to use when dealing with foreclosures. Or the Automatic Offer section when you want to buy wholesale or with owner terms.
Now go buy a house!
Friday, December 8, 2006
Why Land Trusts Give You Privacy and Protect Your Assets
Today I want to answer a few questions from a newsletter subscriber about how land trusts can help you maintain privacy and protect your assets. Important for real estate investing and even if you only own your own house. So let’s get right to it…
First, land trusts keep your name off public records. Why is this important to a real estate investor? The short answer is it helps keep your assets out of harms way.
Let’s say you have 10 properties and a tenant slips, falls, hurts themselves and then sues. Who do they sue? The owner of the property and if you, your LLC or your corporation own all 10 properties then all 10 can be attached in a judgment. In short, you have risked all of your properties and their equities because they have the same owner.
But when you use a land trust for each property then each has a different owner with only one property is at risk when the tenant sues. The best part is when you have the right land trust you can create them as needed at no cost and the only person that keeps the land trust on file is you (that’s real privacy). There are no requirements to register the land trust with the state or to give anyone a copy.
Some states like Arizona require disclosure of the beneficiary when you take title in a land trust so an additional step is needed to maintain privacy. What to do? Simple, create another land trust to be the beneficiary of the first and you’ve met the state requirements for disclosure. Plus the only person that knows who the beneficiary in on the 2nd land trust is you and your trustee.
Caution! I see a lot of people screw up land trusts by making themselves the trustee or the beneficiary. If you’ve done this you blew it. I’ve even seen the self inflicted double lobotomy when people have been both the trustee and beneficiary at the same time!
Using land trusts can be easy and if you want more information be sure to check out http://www.land-trust-seminar.com/.
Now go buy a house!
Gerald Romine
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