By - Kris Koonar
<)))
Price is one of the most critical factors in the world of sales, as it can make or mar the deal between a seller and a prospective buyer. It is essential to set a genuine price for your real estate property, so that it simplifies the selling process. The price should be congruent to the present condition of the house because this is the key to sell it within a reasonable period of time. The set price should neither appear as blown up nor set too low because it will deter buyers, eventually making your house seem undesirable for purchase. It is necessary to determine probable profit while buying a property. Always try to buy low and sell at high price.
There are certain tips that will help you set the right price for your real estate property. They are as follows:
Understand the property value: It is important to research and understand the actual worth of neighborhood property. It is one of the most critical steps that often benefit you. You should visit the property you wish to purchase and compare it with other neighborhood properties. Always maintain a detailed record of neighborhood selling prices for run down and better property. You can obtain information from local real estate brokers, tax assessor office, county clerk office and real estate appraisers. The process of gathering and analyzing information is known as a comparative market analysis.
Estimate the project cost: The next most important step, after gathering information on property value is to start estimating the expense and expected profit. There are a number of costs that need to be considered, such as acquisition costs, which include the taxes, purchase price and origination fees. Try to get estimates from many lenders and compare them. Besides, it will also include repair costs, which involves everything that goes into improving the condition of the property. This is one of the main benefits of visiting the property. You tend to get a better idea about the repairs required. In addition, there are other costs like inspection fee, survey cost and title-search fee, fee for certificate of occupancy, utility costs and other unexpected repair costs.
Determine the feasibility of the project: After understanding the property values in the neighborhood, it is important to evaluate the feasibility of your project. You can begin with the current value of the unimproved property. Add the renovation project costs and estimated interest in order to get a complete project cost. Then you can add your minimum profit to the total cost. If the total cost amounts to more than what you can get from an improved home sale in that particular neighborhood, then the project is not considered feasible.
Calculate the maximum purchase price: It is advisable to figure out the maximum amount one should pay for the property. You can begin with the final selling price you can get in your neighborhood. Then deduct the renovation costs, profit margin along with selling costs and other project costs. The amount that you figure out will be the maximum amount you will be required to pay.
About The Author
Real Estate Investments are now easy with Realnet USA’s step by step Real Estate Investing process. We help you find your Real Estate Investment, to view live inventory please visit http://www.realnetusa.com/.
Showing posts with label real estate. Show all posts
Showing posts with label real estate. Show all posts
Tuesday, July 3, 2007
Monday, July 2, 2007
Finding IRS Real Estate Auctions
By - Barry Waxler
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Among the many opportunities that can be found to purchase investment Real Estate under market value, Government auctions of seized property is one of best. Finding IRS Real Estate auctions has gotten a big boost from the advent of the Internet.
When the Internal Revenue Service seizes property from a tax payer for non-payment of tax obligations, it sells this property through a public auction. The proceeds of the sale are applied to the tax debt. The Internal Revenue Service is not in the Real Estate business and they sell the property at auction using sealed bids in order to move it as quickly as possible. They are not concerned with the fair market value, but only with getting whatever they can get as quickly as they can get it.
This is bad news for the poor homeowner who has lost his property and most likely will not even have his tax debt reduced close to what it should have been. It is good news for a potential investor. The basic principle of Real Estate investing is buy low and sell high. The IRS Real Estate auction gives the investor the opportunity to do just this. The sealed bid method of sale requires some skill and a bit of luck. The bid amount must be carefully determined to attempt to be the highest without going over the good investment limit.
How do you go about finding IRS Real Estate Auctions? The internet and the personal computer have made this process fairly simple. The Government has websites that list all auctions Nationwide. These sites give a great deal of information concerning the type of property including pictures and legal descriptions. The location is given so that personal inspections of the property are possible before a bid is submitted.
The auction listing generally has a minimum bid amount. This gives you a good starting point for the establishment of your own bid amount. Any encumbrances on the property will be given as well as the methods and terms of payment. Of course, the time and date of the sale is given as well. There is also a contact person listed for further information regarding the property or the sale.
The Internal Revenue is not the only Government agency that auctions seized property. These auctions represent a good potential source of investment property as prices far below market value. The computer and the websites have made finding them extremely easy and accessible to the investor. What is required is a bit of savvy at determining the best price to bid and a bit of luck. The good thing is that there is not a lot of trouble or expense involved in the bidding process, so you have much to gain and very little to lose in the process.
About The Author
Barry Waxler provides real estate IRA solutions through UFCAmerica.com.
Article Source: http://EzineArticles.com/?expert=Barry_Waxler
<)))
Among the many opportunities that can be found to purchase investment Real Estate under market value, Government auctions of seized property is one of best. Finding IRS Real Estate auctions has gotten a big boost from the advent of the Internet.
When the Internal Revenue Service seizes property from a tax payer for non-payment of tax obligations, it sells this property through a public auction. The proceeds of the sale are applied to the tax debt. The Internal Revenue Service is not in the Real Estate business and they sell the property at auction using sealed bids in order to move it as quickly as possible. They are not concerned with the fair market value, but only with getting whatever they can get as quickly as they can get it.
This is bad news for the poor homeowner who has lost his property and most likely will not even have his tax debt reduced close to what it should have been. It is good news for a potential investor. The basic principle of Real Estate investing is buy low and sell high. The IRS Real Estate auction gives the investor the opportunity to do just this. The sealed bid method of sale requires some skill and a bit of luck. The bid amount must be carefully determined to attempt to be the highest without going over the good investment limit.
How do you go about finding IRS Real Estate Auctions? The internet and the personal computer have made this process fairly simple. The Government has websites that list all auctions Nationwide. These sites give a great deal of information concerning the type of property including pictures and legal descriptions. The location is given so that personal inspections of the property are possible before a bid is submitted.
The auction listing generally has a minimum bid amount. This gives you a good starting point for the establishment of your own bid amount. Any encumbrances on the property will be given as well as the methods and terms of payment. Of course, the time and date of the sale is given as well. There is also a contact person listed for further information regarding the property or the sale.
The Internal Revenue is not the only Government agency that auctions seized property. These auctions represent a good potential source of investment property as prices far below market value. The computer and the websites have made finding them extremely easy and accessible to the investor. What is required is a bit of savvy at determining the best price to bid and a bit of luck. The good thing is that there is not a lot of trouble or expense involved in the bidding process, so you have much to gain and very little to lose in the process.
About The Author
Barry Waxler provides real estate IRA solutions through UFCAmerica.com.
Article Source: http://EzineArticles.com/?expert=Barry_Waxler
Thursday, June 28, 2007
What is Preconstruction Real Estate Investing?
By - Karen Kusumakar
<)))
Investing in pre-construction real estate is one of the most profitable investing opportunities available in the market today. Even though it’s a fairly old strategy, very few investors have a good understanding of it. Preconstruction real estate investing can be best explained with an example:
A developer is planning to build a 100 unit condominium development in a very popular location. The developer has already worked out the numbers and thinks that the project will make a handsome profit. Since he doesn’t have the required amount of capital to complete a project of such magnitude, he approaches banks to request financing.
But before banks lend out millions of dollars to the developer, they want to know that the project has the potential to sell after completion. Since there is no way to know the future and banks like to reduce risk as much as possible, they require the developer to pre-sell a certain number of the units (usually 25%-50%) before they will lend money. In this example a bank agrees to finance the developer if 40% of the units are sold before construction begins.
There are very few home buyers who are going to commit to buying something without actually seeing it with their naked eyes. So the developer has no choice but to approach real estate investors who understand the risk and reward of such ventures. In order to reward these investors for their risk, the developer gives them a 10% discount off the appraised value (after construction value) of the condos if they sign a purchase agreement (contract).
This creates a win-win situation where the developer is able to secure financing and the investors are able to get built-in equity by getting the property below appraised value. The investors who buy these condos before the construction is completed are called pre-construction investors, and this investment strategy is called preconstruction investing.
In this example it was a development from the ground up, but the term “pre-construction investing” can be used for any purchase made before the actual completion of a real estate development. The development may be from ground up or just a renovation project i.e. A condo conversion project where preconstruction investors buy before the renovation is complete is also an example of pre construction investing.
In general, pre construction pricing is 5% - 15% lower than the market value of the finished property. Sometimes the developer may offer other financial incentives instead of a price discount. Some examples include cash back after closing, closing cost credit, free upgrades, rental guarantee or lease back, paid property taxes, waive assessments waived, management fees waived, etc. However, in most cases the developer will offer a combination of a price discount and other financial incentives in order make the deal sweeter for preconstruction investors.
After the construction or renovation is complete, pre construction investors’ have two options to exit. Either they sell their property and make a quick profit, or they can hold the property as a long term investment and build equity. Sometimes investors can also profit by assigning the contract to a fellow investor for a small profit even before assuming title to the property.
Below is summary of the process of preconstruction investing:
The pre construction investor buys a house, condo or townhouse from a reputed developer in the preconstruction phase at a price discount and/or other financial incentives.
The pre-construction investor waits for the construction or renovations to be completed.
After completion of the construction or renovation, the preconstruction investor sells the property immediately for a profit. Or the pre construction investor holds the property to build additional equity due to appreciation and by paying off principal using the rental income. In some cases, exit by assignments is also possible.
About The Author
Karen Kusumakar is the co-founder of Preconstructionfind.com and is an expert at bringing profitable pre construction projects to real estate investors. For a current list of preconstruction condo & home opportunities please visit http://www.preconstructionfind.com
<)))
Investing in pre-construction real estate is one of the most profitable investing opportunities available in the market today. Even though it’s a fairly old strategy, very few investors have a good understanding of it. Preconstruction real estate investing can be best explained with an example:
A developer is planning to build a 100 unit condominium development in a very popular location. The developer has already worked out the numbers and thinks that the project will make a handsome profit. Since he doesn’t have the required amount of capital to complete a project of such magnitude, he approaches banks to request financing.
But before banks lend out millions of dollars to the developer, they want to know that the project has the potential to sell after completion. Since there is no way to know the future and banks like to reduce risk as much as possible, they require the developer to pre-sell a certain number of the units (usually 25%-50%) before they will lend money. In this example a bank agrees to finance the developer if 40% of the units are sold before construction begins.
There are very few home buyers who are going to commit to buying something without actually seeing it with their naked eyes. So the developer has no choice but to approach real estate investors who understand the risk and reward of such ventures. In order to reward these investors for their risk, the developer gives them a 10% discount off the appraised value (after construction value) of the condos if they sign a purchase agreement (contract).
This creates a win-win situation where the developer is able to secure financing and the investors are able to get built-in equity by getting the property below appraised value. The investors who buy these condos before the construction is completed are called pre-construction investors, and this investment strategy is called preconstruction investing.
In this example it was a development from the ground up, but the term “pre-construction investing” can be used for any purchase made before the actual completion of a real estate development. The development may be from ground up or just a renovation project i.e. A condo conversion project where preconstruction investors buy before the renovation is complete is also an example of pre construction investing.
In general, pre construction pricing is 5% - 15% lower than the market value of the finished property. Sometimes the developer may offer other financial incentives instead of a price discount. Some examples include cash back after closing, closing cost credit, free upgrades, rental guarantee or lease back, paid property taxes, waive assessments waived, management fees waived, etc. However, in most cases the developer will offer a combination of a price discount and other financial incentives in order make the deal sweeter for preconstruction investors.
After the construction or renovation is complete, pre construction investors’ have two options to exit. Either they sell their property and make a quick profit, or they can hold the property as a long term investment and build equity. Sometimes investors can also profit by assigning the contract to a fellow investor for a small profit even before assuming title to the property.
Below is summary of the process of preconstruction investing:
The pre construction investor buys a house, condo or townhouse from a reputed developer in the preconstruction phase at a price discount and/or other financial incentives.
The pre-construction investor waits for the construction or renovations to be completed.
After completion of the construction or renovation, the preconstruction investor sells the property immediately for a profit. Or the pre construction investor holds the property to build additional equity due to appreciation and by paying off principal using the rental income. In some cases, exit by assignments is also possible.
About The Author
Karen Kusumakar is the co-founder of Preconstructionfind.com and is an expert at bringing profitable pre construction projects to real estate investors. For a current list of preconstruction condo & home opportunities please visit http://www.preconstructionfind.com
Monday, June 11, 2007
Quickly add $20,000 or more to your balance sheet
By - Jeff Beaubien
This is such a fast and easy way to add $20,000 to your balance sheet, I'm surprised it's not being done by every free person in this great country of ours. Since you're probably skeptical, I am going to use a real-world example of how I accomplished this recently.
Note: This technique requires that you be pre-qualified for a mortgage.
I received a phone call from one of my Realtors, Cindy. She told me that an agent in her office had listed a home that morning and that the sellers were about to be foreclosed upon. Within 30 minutes of her phone call, Cindy and I went out to see it.
It wasn't anything fancy, a 3-bedroom, 1-bath ranch with a 2 car attached garage. The sellers were asking $89,000 - about $5,000 less than what the home was actually worth.
I made an offer on the house that looked like this: $85,000 with $1,640 back at close for improvements (that I will actually use to help offset the down payment on the home). The sellers accepted my offer so we arranged for a closing date in three weeks.
While I waited for the closing date to arrive, I ran a classified ad in my local newspaper that read, "Don't Rent. Why Rent? Rent-to-Own! $4,995 down and $995 per month." When the ad came out I had over forty calls on the house.
I couldn't possibly find the time to show the home to all these people on such short notice so I let them drive by and peek in the windows. I got a phone call from a potential tenant/buyer who said that she wanted the house (without even seeing the inside). She agreed to my terms which looked like this: $4,995 down ($4,000 option deposit + $995 for first month's rent), $100 per month rent credit, a sales price of $119,900 and a term of 1 year. I pre qualified her and she was an acceptable risk so we closed the deal.
Remember, when you are offering such a tremendous value, you are entitled to receive a premium price for what you are offering. Since my tenant/buyer was receiving a tremendous value (a fast rate of equity accumulation and a very small down payment to buy a home), she was more than happy to agree to my high sales price. Also remember that there are many different reasons that make potential buyers not qualify for a conventional mortgage which makes a lease purchase deal very appealing to them.
I closed on the purchase of the home and used the $4,995 my tenant/buyer gave me plus the $1,640 to help offset the down payment on the home. I then gave the keys to my new tenant/buyer - deal done.
Let's look at the numbers; I paid $83,360 ($85,000 - $1,640) for the home and my total monthly payments are $845. I am receiving $995/month in rent for a positive monthly cash flow of $150 and I have a written sales agreement to sell the house to my tenant/buyer for $119,900 in 1 year.
And that is how I added over $20,000 to my balance sheet quickly and easily.
UPDATE: My tenant buyer called me recently. She is approved for a mortgage and would now like to close on the purchase of the home - just two months into our agreement. Yes!!!
About The Author
Jeff Beaubien, www.Lease2Purchase.com is the President and founder of Beaubien Investment Company in Howell, Michigan. He specializes in creative real estate techniques, but focuses on the most powerful technique of them all; the lease purchase contract.
As a result of his success in real estate, Mr. Beaubien is the author of his real estate course, The Lease Purchase Handbook.
This is such a fast and easy way to add $20,000 to your balance sheet, I'm surprised it's not being done by every free person in this great country of ours. Since you're probably skeptical, I am going to use a real-world example of how I accomplished this recently.
Note: This technique requires that you be pre-qualified for a mortgage.
I received a phone call from one of my Realtors, Cindy. She told me that an agent in her office had listed a home that morning and that the sellers were about to be foreclosed upon. Within 30 minutes of her phone call, Cindy and I went out to see it.
It wasn't anything fancy, a 3-bedroom, 1-bath ranch with a 2 car attached garage. The sellers were asking $89,000 - about $5,000 less than what the home was actually worth.
I made an offer on the house that looked like this: $85,000 with $1,640 back at close for improvements (that I will actually use to help offset the down payment on the home). The sellers accepted my offer so we arranged for a closing date in three weeks.
While I waited for the closing date to arrive, I ran a classified ad in my local newspaper that read, "Don't Rent. Why Rent? Rent-to-Own! $4,995 down and $995 per month." When the ad came out I had over forty calls on the house.
I couldn't possibly find the time to show the home to all these people on such short notice so I let them drive by and peek in the windows. I got a phone call from a potential tenant/buyer who said that she wanted the house (without even seeing the inside). She agreed to my terms which looked like this: $4,995 down ($4,000 option deposit + $995 for first month's rent), $100 per month rent credit, a sales price of $119,900 and a term of 1 year. I pre qualified her and she was an acceptable risk so we closed the deal.
Remember, when you are offering such a tremendous value, you are entitled to receive a premium price for what you are offering. Since my tenant/buyer was receiving a tremendous value (a fast rate of equity accumulation and a very small down payment to buy a home), she was more than happy to agree to my high sales price. Also remember that there are many different reasons that make potential buyers not qualify for a conventional mortgage which makes a lease purchase deal very appealing to them.
I closed on the purchase of the home and used the $4,995 my tenant/buyer gave me plus the $1,640 to help offset the down payment on the home. I then gave the keys to my new tenant/buyer - deal done.
Let's look at the numbers; I paid $83,360 ($85,000 - $1,640) for the home and my total monthly payments are $845. I am receiving $995/month in rent for a positive monthly cash flow of $150 and I have a written sales agreement to sell the house to my tenant/buyer for $119,900 in 1 year.
And that is how I added over $20,000 to my balance sheet quickly and easily.
UPDATE: My tenant buyer called me recently. She is approved for a mortgage and would now like to close on the purchase of the home - just two months into our agreement. Yes!!!
About The Author
Jeff Beaubien, www.Lease2Purchase.com is the President and founder of Beaubien Investment Company in Howell, Michigan. He specializes in creative real estate techniques, but focuses on the most powerful technique of them all; the lease purchase contract.
As a result of his success in real estate, Mr. Beaubien is the author of his real estate course, The Lease Purchase Handbook.
Saturday, June 2, 2007
Flipping Houses the Sexy Way to Real Estate Riches
By - Wilbur Corncob
It seems to be everywhere, the hype makes you think that flipping houses for profit is as easy as flipping a pancake! At first I couldn't understand all the excitement. Maybe I am just old but it finally dawned on it. Flipping houses isn't new at all. It's just a new name for an old way of making a lot of money in real estate with a LOT of HARD work; fixer uppers.
That's right fixer uppers. Now, that does sound like a lot of work. Who would want to sell you an ebook explaining how to make a lot of money in real estate that involves a lot of hard work? It's better to call it something spiffy and new so the ebook and course profits are increased; without any hard work!
Now comes the question.. what exactly is wrong with flipping houses or buying fixer uppers and fixing them up and selling them? The answer is of course absolutely nothing and it might be the best way to the best profits in real estate.
You need to know what you are getting into though. If you are already making mega bucks with fixer uppers, oops, I mean house flipping, you probably aren't searching the Internet for information. If you're looking to get started you probably ended up here and with a half dozen courses and ebooks purchased.
Now your at the difficult part. Actually doing it. If you were just investing in a simple rental property it would be easy. Buy the property, rent the property, possible resell the property. When you purchase the property you just have to decide on its value once, the rental price (possibly easy if its already rented), and determine if it is easily rented for your desired price.
For the flipper you'll need to decide on some prices. Actually "guess" might be a better word until you have some considerable experience. First you have to decide on the price you'll purchase the house it, then and more importantly you'll have to guess what price you'll be able to sell it at once fixed, and you'll have to guess at what the repairs will actually cost (and how long they will actually take). Guess wrong on any of these 3 prices (or what the repairs will actually involve) and your easy profits with no work may just be dreams digging a hole in your wallet.
Chances are you won't have the benefit of any cash flow from rental income until your fixer upper has been fixed up! If you misjudge the repairs or how long your contractor will take to finish the project you could be paying the mortgage out of your pocket.
Of course your always told to just go after the properties that need minimal work like one coat of paint and the lawn mowed. Good advice. You might ask why the person offering the property dosen't do that work. There are many possibilities and one might be that for some other reason the property is a dog.
Now, of course I've seen the formulas. For example you can purchase a beat up little house for $140,000 or us. It will cost you another $20,000 to have it fixed up to be the spiffiest little house on the block (OK, make that $40,000 cause your contractor forget a few details). Now the more important part of the formula is that this house is not ready to be sold for $349,000 or so. That means after a month of two of fighting with your contractor you can sell your $180,000 house for $349,000 and pocket a cool $169,000.
Who wouldn't be first in line for that? I suspect there are only two problems with this formula. Remember above I talked about guessing. Well, I guess that a house that needs $20,000 in work to be worth $349,000 will be offered on the market at something like, well, you guessed it $349,000 not $150,000.
The second problem is how we guessed this house should be worth $349,000 in good condition. In my neighborhood there are over 500 condos for sale. One web page lists 494 of them! Some of these are brand new and some are older buildings (some much older). Now this should present some excellent condo flipping opportunities. A little paint, new bathroom or kitchen fixtures and a cheap condo is ready for a millionaire!
The problem with the idea of flipping condos in my neighborhood is that a new building is going up on almost every street corner. Many of the old condos have asking prices as high or higher than a brand new condo. Now, I buy an old beat up one, fix it up, and when I'm ready to sell it I have to compete again brand new condos!
That is a sales job I don't want. Every purchaser will ask the same question, I can buy a new condo for the same price.. why do I want your old one (fixed up or not)?
For now, I think I'll stick to flipping hamburgers
About The Author
By Wilbur Corncob. For plenty of domestic and international real estate opportunities check out: realestate.classifieds1000.com. For the latest real estate news. Copyright (c) 2007 GLR Sales LLC. Permission is granted to reprint this article in whole or in part provided that links to realestate.classifieds1000.com are included as standard links.
It seems to be everywhere, the hype makes you think that flipping houses for profit is as easy as flipping a pancake! At first I couldn't understand all the excitement. Maybe I am just old but it finally dawned on it. Flipping houses isn't new at all. It's just a new name for an old way of making a lot of money in real estate with a LOT of HARD work; fixer uppers.
That's right fixer uppers. Now, that does sound like a lot of work. Who would want to sell you an ebook explaining how to make a lot of money in real estate that involves a lot of hard work? It's better to call it something spiffy and new so the ebook and course profits are increased; without any hard work!
Now comes the question.. what exactly is wrong with flipping houses or buying fixer uppers and fixing them up and selling them? The answer is of course absolutely nothing and it might be the best way to the best profits in real estate.
You need to know what you are getting into though. If you are already making mega bucks with fixer uppers, oops, I mean house flipping, you probably aren't searching the Internet for information. If you're looking to get started you probably ended up here and with a half dozen courses and ebooks purchased.
Now your at the difficult part. Actually doing it. If you were just investing in a simple rental property it would be easy. Buy the property, rent the property, possible resell the property. When you purchase the property you just have to decide on its value once, the rental price (possibly easy if its already rented), and determine if it is easily rented for your desired price.
For the flipper you'll need to decide on some prices. Actually "guess" might be a better word until you have some considerable experience. First you have to decide on the price you'll purchase the house it, then and more importantly you'll have to guess what price you'll be able to sell it at once fixed, and you'll have to guess at what the repairs will actually cost (and how long they will actually take). Guess wrong on any of these 3 prices (or what the repairs will actually involve) and your easy profits with no work may just be dreams digging a hole in your wallet.
Chances are you won't have the benefit of any cash flow from rental income until your fixer upper has been fixed up! If you misjudge the repairs or how long your contractor will take to finish the project you could be paying the mortgage out of your pocket.
Of course your always told to just go after the properties that need minimal work like one coat of paint and the lawn mowed. Good advice. You might ask why the person offering the property dosen't do that work. There are many possibilities and one might be that for some other reason the property is a dog.
Now, of course I've seen the formulas. For example you can purchase a beat up little house for $140,000 or us. It will cost you another $20,000 to have it fixed up to be the spiffiest little house on the block (OK, make that $40,000 cause your contractor forget a few details). Now the more important part of the formula is that this house is not ready to be sold for $349,000 or so. That means after a month of two of fighting with your contractor you can sell your $180,000 house for $349,000 and pocket a cool $169,000.
Who wouldn't be first in line for that? I suspect there are only two problems with this formula. Remember above I talked about guessing. Well, I guess that a house that needs $20,000 in work to be worth $349,000 will be offered on the market at something like, well, you guessed it $349,000 not $150,000.
The second problem is how we guessed this house should be worth $349,000 in good condition. In my neighborhood there are over 500 condos for sale. One web page lists 494 of them! Some of these are brand new and some are older buildings (some much older). Now this should present some excellent condo flipping opportunities. A little paint, new bathroom or kitchen fixtures and a cheap condo is ready for a millionaire!
The problem with the idea of flipping condos in my neighborhood is that a new building is going up on almost every street corner. Many of the old condos have asking prices as high or higher than a brand new condo. Now, I buy an old beat up one, fix it up, and when I'm ready to sell it I have to compete again brand new condos!
That is a sales job I don't want. Every purchaser will ask the same question, I can buy a new condo for the same price.. why do I want your old one (fixed up or not)?
For now, I think I'll stick to flipping hamburgers
About The Author
By Wilbur Corncob. For plenty of domestic and international real estate opportunities check out: realestate.classifieds1000.com. For the latest real estate news. Copyright (c) 2007 GLR Sales LLC. Permission is granted to reprint this article in whole or in part provided that links to realestate.classifieds1000.com are included as standard links.
Wednesday, May 30, 2007
Create Monthly Cash Flow Without any of Your Own Money or Credit
By - William Bronchick, Esq.
<)))
A profitable, yet easy-to-learn method of creating cash flow is to buy and re-sell properties in back-to-back closings. However, flipping properties in this manner requires you to KEEP WORKING. When you stop working, the cash flow stops coming in. Rather than flip properties for all cash, flip them for some cash and a promissory note that pays you monthly income with interest for years and years.
The "Wraparound" Transaction
Obviously, you need the cash to buy the property. Most people buy properties using a mortgage loan, which means you need enough cash flow from the sale of the property to pay off the loan you borrowed.
Enter the wraparound formula. A "wrap" is a transaction that involves leaving the first mortgage in place and creating a new loan to a buyer which is secondary to the first mortgage. The payments come in from the buyer, and you make the payments on the underlying loan still in place. There is a "spread" between the two payments which equals cash flow to you. Most agents equate a ?nothing down? offer with a buyer who is not serious.
Example: Buy a property worth $100,000 for a discounted price of $90,000. Put 20% down ($18,000) and finance the balance of $72,000 at 9% with a conventional loan. Your principal and interest ("P&I") payment is about $580.00 per month. Resell the property for $110,000, taking a down payment of $15,000 and a $95,000 note at 12% interest. You collect about $977 per month. Your cash flow is almost $400 per month ($4800/year), with just $10,000 invested (figuring $5000 in closing costs.) That's 48% annual interest on your money!.
This deal is definitely "cookie cutter" and easy to do, but I said "no money or credit." Here's the solution: find a partner to put up their money and credit.
Step 1: Locate an open-minded investor who has good credit and provable income.
Step 2: Form a limited liability company ("LLC") of which you are both the members, 50/50.
Step 3: Locate properties in nice middle class neighborhoods available for 10% or more below market.
Step 4: Execute a resolution from the LLC that your investor member will purchase a particular property in is name, for the benefit of the LLC. Have the investor purchase the property in his name, using his credit and down payment.
Step 5: Advertise the property for sale by owner "no credit required." Find a buyer willing to pay at least 10% more than the appraised value of the property with 10% or more as a down payment. The investor gets the cash to recoup his investment
Step 6: Execute a land contract to the new buyer.
Step 7: Collect monthly cash flow and split it with the investor.
In the above example, you so all the legwork and you split the cash flow with the investor. When the investor is unable to obtain any more loans, find another investor, rinse and repeat
Copyright 2000 All Rights Reserved. No part of this publication may be copied
or reprinted without the express written permission of the Author.
About The Author
William Bronchick, Esq.
Legalwiz Publications
==================================
E-mail bronchick@legalwiz.com
Website: www.legalwiz.com
<)))
A profitable, yet easy-to-learn method of creating cash flow is to buy and re-sell properties in back-to-back closings. However, flipping properties in this manner requires you to KEEP WORKING. When you stop working, the cash flow stops coming in. Rather than flip properties for all cash, flip them for some cash and a promissory note that pays you monthly income with interest for years and years.
The "Wraparound" Transaction
Obviously, you need the cash to buy the property. Most people buy properties using a mortgage loan, which means you need enough cash flow from the sale of the property to pay off the loan you borrowed.
Enter the wraparound formula. A "wrap" is a transaction that involves leaving the first mortgage in place and creating a new loan to a buyer which is secondary to the first mortgage. The payments come in from the buyer, and you make the payments on the underlying loan still in place. There is a "spread" between the two payments which equals cash flow to you. Most agents equate a ?nothing down? offer with a buyer who is not serious.
Example: Buy a property worth $100,000 for a discounted price of $90,000. Put 20% down ($18,000) and finance the balance of $72,000 at 9% with a conventional loan. Your principal and interest ("P&I") payment is about $580.00 per month. Resell the property for $110,000, taking a down payment of $15,000 and a $95,000 note at 12% interest. You collect about $977 per month. Your cash flow is almost $400 per month ($4800/year), with just $10,000 invested (figuring $5000 in closing costs.) That's 48% annual interest on your money!.
This deal is definitely "cookie cutter" and easy to do, but I said "no money or credit." Here's the solution: find a partner to put up their money and credit.
Step 1: Locate an open-minded investor who has good credit and provable income.
Step 2: Form a limited liability company ("LLC") of which you are both the members, 50/50.
Step 3: Locate properties in nice middle class neighborhoods available for 10% or more below market.
Step 4: Execute a resolution from the LLC that your investor member will purchase a particular property in is name, for the benefit of the LLC. Have the investor purchase the property in his name, using his credit and down payment.
Step 5: Advertise the property for sale by owner "no credit required." Find a buyer willing to pay at least 10% more than the appraised value of the property with 10% or more as a down payment. The investor gets the cash to recoup his investment
Step 6: Execute a land contract to the new buyer.
Step 7: Collect monthly cash flow and split it with the investor.
In the above example, you so all the legwork and you split the cash flow with the investor. When the investor is unable to obtain any more loans, find another investor, rinse and repeat
Copyright 2000 All Rights Reserved. No part of this publication may be copied
or reprinted without the express written permission of the Author.
About The Author
William Bronchick, Esq.
Legalwiz Publications
==================================
E-mail bronchick@legalwiz.com
Website: www.legalwiz.com
Thursday, May 24, 2007
How To Sell Lease Purchase Deals To Landlords & Sellers
By - James Gage
<)))
People sell their homes for various reasons. Some of which include, but are not limited to:
Job transfer.
Making two mortgage payments.
Trade up to a bigger home or better neighborhood.
Tired of managing properties.
Moving in with a significant other.
Divorce.
Lost job or income and can not make the payments.
Physical problems with the property that they do not have the ability or time to repair.
Etc...
MOTIVATION is the key when dealing with Landlords/Sellers. If you can find out what motivates people, you can strike a great deal with them. Your goal is to find out what needs they have and satisfy them.
If they are a landlord and are sick of renting out that house and fixing leaking toilets at two in the morning, you can offer them something that will fill their needs. You can offer them a friendly way of selling that property over time for a price they can live with and with none of the landlord hassles. I spent the last nine years as a landlord and to be honest, there were plenty of times that if one of you called me up and offered to take all of my properties off my hands I would have jumped at the chance.
Landlords are a key source of deals. Many landlords are not as sophisticated as you might think. Many of them inherited their properties or just have homes that they had trouble selling so they decided to rent them out. The key when dealing with landlords is to let them know from the beginning that you just want to help them solve their problems and make some money in the process. Make them understand that it is a one-sided partnership. You are agreeing to do their work and still give them the money that they want for the property. If it doesn't work out in a year or two, they can have their property back plus keep the option money. If they rent it out, they will still have to worry about replacing the carpeting and painting when it turns over. They really are in control of the process.
Let them know the advantages available to them. The reality is that what you are doing is limiting the landlord's risk and at the same time accomplishing what a real estate broker and property manager would. You are taking a small part of the monthly rent and making a small percentage of the total sales price at the end of the deal. If the house doesn't sell, they get to keep what you have into it.
No real estate broker in the country would do for them what you can.
I define selling as the art of fitting a persons needs to a product or service and educating them on its utility. I suggest that when you approach a Landlord/Seller that you project a sense of confidence that you know that this is what will work for both them and for you and that you explain the benefits. I find that in order to build trust between the person I am selling to and myself, I need to discuss the drawbacks. If you do not talk about the drawbacks, the Landlord/Seller will spend hours trying to find out how this deal might be bad for him.
You want him to know right up front what the drawbacks are and then you can discuss these issues together and work out solutions.
We are all in this business to make money, but you will find that if you come off as trying to make a buck, you will look like a swindler. I like to think of myself as a creative problem solver. I do take pride in helping other people solve complex problems and so far have been able to make some cash in the process. When people call me on ads or signs that I have out, I immediately go into a mode of discovery. What does this person need? What do they have? What is keeping them from getting what they need? What do I have that can help in this situation. Sometimes I talk to someone and find out that their best answer does not involve me. In those cases, I let them know what I would do if I were them. I know that I probably lose deals that way, but I know that I have built some good will and will get referrals down the line from some of these people.
You know what they say about integrity, once you loose it, you can never be whole.
About The Author
http://www.jgage.com
James Gage
Coach@jgage.com
<)))
People sell their homes for various reasons. Some of which include, but are not limited to:
Job transfer.
Making two mortgage payments.
Trade up to a bigger home or better neighborhood.
Tired of managing properties.
Moving in with a significant other.
Divorce.
Lost job or income and can not make the payments.
Physical problems with the property that they do not have the ability or time to repair.
Etc...
MOTIVATION is the key when dealing with Landlords/Sellers. If you can find out what motivates people, you can strike a great deal with them. Your goal is to find out what needs they have and satisfy them.
If they are a landlord and are sick of renting out that house and fixing leaking toilets at two in the morning, you can offer them something that will fill their needs. You can offer them a friendly way of selling that property over time for a price they can live with and with none of the landlord hassles. I spent the last nine years as a landlord and to be honest, there were plenty of times that if one of you called me up and offered to take all of my properties off my hands I would have jumped at the chance.
Landlords are a key source of deals. Many landlords are not as sophisticated as you might think. Many of them inherited their properties or just have homes that they had trouble selling so they decided to rent them out. The key when dealing with landlords is to let them know from the beginning that you just want to help them solve their problems and make some money in the process. Make them understand that it is a one-sided partnership. You are agreeing to do their work and still give them the money that they want for the property. If it doesn't work out in a year or two, they can have their property back plus keep the option money. If they rent it out, they will still have to worry about replacing the carpeting and painting when it turns over. They really are in control of the process.
Let them know the advantages available to them. The reality is that what you are doing is limiting the landlord's risk and at the same time accomplishing what a real estate broker and property manager would. You are taking a small part of the monthly rent and making a small percentage of the total sales price at the end of the deal. If the house doesn't sell, they get to keep what you have into it.
No real estate broker in the country would do for them what you can.
I define selling as the art of fitting a persons needs to a product or service and educating them on its utility. I suggest that when you approach a Landlord/Seller that you project a sense of confidence that you know that this is what will work for both them and for you and that you explain the benefits. I find that in order to build trust between the person I am selling to and myself, I need to discuss the drawbacks. If you do not talk about the drawbacks, the Landlord/Seller will spend hours trying to find out how this deal might be bad for him.
You want him to know right up front what the drawbacks are and then you can discuss these issues together and work out solutions.
We are all in this business to make money, but you will find that if you come off as trying to make a buck, you will look like a swindler. I like to think of myself as a creative problem solver. I do take pride in helping other people solve complex problems and so far have been able to make some cash in the process. When people call me on ads or signs that I have out, I immediately go into a mode of discovery. What does this person need? What do they have? What is keeping them from getting what they need? What do I have that can help in this situation. Sometimes I talk to someone and find out that their best answer does not involve me. In those cases, I let them know what I would do if I were them. I know that I probably lose deals that way, but I know that I have built some good will and will get referrals down the line from some of these people.
You know what they say about integrity, once you loose it, you can never be whole.
About The Author
http://www.jgage.com
James Gage
Coach@jgage.com
Want To Be Profitable In This Real Estate Bubble?
By - Chris Anderson
<)))
I’ll Show You How In Just Three Easy Steps.
This is a question I get almost everyday from either our web site www.GetPreconstructionProfit.com or from my individual investment activities. The question is “How Can I Be Profitable When We Are In A Real Estate Bubble”?
STEP#1. First you have to recognize that in order to make money in almost any market (i.e. stocks, commodities, real estate, etc.) you need to have the market in motion. In other words, the prices or value have to be changing substantially, either up or down, for you to make money. Did you know that many traders back in the NASDAQ bubble made millions by adopting a style that made perfect sense for the type of bubble market that was being experienced? Of course this was financially devastating to buy and hold investors who bought at the market top. So what is the difference? The answer is a difference in investing/trading style and risk management.
STEP #2. Now throw a little reality into the picture. Specifically, you need to realize that nobody can consistently predict the turning point of a rapidly moving market. People who pay attention to value (which is always a wise move) can tell you when things are out of whack with the market, but they cannot tell you if the market will turn in a week, a year, or a decade! Warren Buffet correctly predicted that the stock market was way over valued LONG before it actually corrected. Since Warren is a value-type investor, it made perfect sense to stay on the sidelines. In contrast, many active traders became multiple millionaires during that period and then rapidly adapted to the market downturn. Both were “correct” for the type of style that they employed.
STEP #3. You have to realize that there are many ways for an overvalued market to correct. For example, in the real estate markets, many people are claiming that the price-to-earnings (P/E) ratio is out-of-balance; that is the price you can collect for rents in a year relative to the purchase price. Typically this should be around a ratio of 100 to 150 for a good cashflow investment. In some areas of the country, this ratio is over 400.
You need to realize that this imbalance can be corrected by the price dropping (as many claim), rents escalating, or combinations of both. In addition, it may not correct as demonstrated in many markets for over 20 years! So your choice becomes “do I sit on the sidelines” or “do I learn how to invest safely in this fast moving market.” This is a personal choice that you have to make in regards to your own personal style.
Want to know an additional little secret? Like in stock trading, the secret to any successful investing is learning how to control your risk relative to your potential gain. It’s that simple! As an example, there are preconstruction real estate deals out there where an investor can risk less than $2,000 and can still make a potential reward of $50,000 or more. If the investment does not work out, then all that investor is out is the $2,000 initial risk. Knowing that little piece of information can potentially save you hundreds of thousands of dollars! For investors that participate in real estate investments on a continuous basis, they always try to educate themselves on the risk potential first followed by the potential for gain.
The bottom line is that if you follow these simple steps, you can also learn how to invest in markets that other people perceive as dangerous bubbles!
About the Author
Chris Anderson is a leading authority on preconstruction real estate investing. Get his 4 day e-mail course and a 33 minute video free today! Visit http://www.GetPreconstructionProfits.com
Chris Anderson, PhD
<)))
I’ll Show You How In Just Three Easy Steps.
This is a question I get almost everyday from either our web site www.GetPreconstructionProfit.com or from my individual investment activities. The question is “How Can I Be Profitable When We Are In A Real Estate Bubble”?
STEP#1. First you have to recognize that in order to make money in almost any market (i.e. stocks, commodities, real estate, etc.) you need to have the market in motion. In other words, the prices or value have to be changing substantially, either up or down, for you to make money. Did you know that many traders back in the NASDAQ bubble made millions by adopting a style that made perfect sense for the type of bubble market that was being experienced? Of course this was financially devastating to buy and hold investors who bought at the market top. So what is the difference? The answer is a difference in investing/trading style and risk management.
STEP #2. Now throw a little reality into the picture. Specifically, you need to realize that nobody can consistently predict the turning point of a rapidly moving market. People who pay attention to value (which is always a wise move) can tell you when things are out of whack with the market, but they cannot tell you if the market will turn in a week, a year, or a decade! Warren Buffet correctly predicted that the stock market was way over valued LONG before it actually corrected. Since Warren is a value-type investor, it made perfect sense to stay on the sidelines. In contrast, many active traders became multiple millionaires during that period and then rapidly adapted to the market downturn. Both were “correct” for the type of style that they employed.
STEP #3. You have to realize that there are many ways for an overvalued market to correct. For example, in the real estate markets, many people are claiming that the price-to-earnings (P/E) ratio is out-of-balance; that is the price you can collect for rents in a year relative to the purchase price. Typically this should be around a ratio of 100 to 150 for a good cashflow investment. In some areas of the country, this ratio is over 400.
You need to realize that this imbalance can be corrected by the price dropping (as many claim), rents escalating, or combinations of both. In addition, it may not correct as demonstrated in many markets for over 20 years! So your choice becomes “do I sit on the sidelines” or “do I learn how to invest safely in this fast moving market.” This is a personal choice that you have to make in regards to your own personal style.
Want to know an additional little secret? Like in stock trading, the secret to any successful investing is learning how to control your risk relative to your potential gain. It’s that simple! As an example, there are preconstruction real estate deals out there where an investor can risk less than $2,000 and can still make a potential reward of $50,000 or more. If the investment does not work out, then all that investor is out is the $2,000 initial risk. Knowing that little piece of information can potentially save you hundreds of thousands of dollars! For investors that participate in real estate investments on a continuous basis, they always try to educate themselves on the risk potential first followed by the potential for gain.
The bottom line is that if you follow these simple steps, you can also learn how to invest in markets that other people perceive as dangerous bubbles!
About the Author
Chris Anderson is a leading authority on preconstruction real estate investing. Get his 4 day e-mail course and a 33 minute video free today! Visit http://www.GetPreconstructionProfits.com
Chris Anderson, PhD
Sunday, May 20, 2007
Ten Tips for buying Rental Properties
By - Brian Ankner
<)))
Buying rental properties is a good way to increase your assets. However, choosing the right rental property will be challenging. Here are a few things to check for prior to buying rental property.
1. Location - Most people don't want to live in the boon docks. The location of your rental property will determine how easy it will be to rent. If you have a lot of vehicle traffic, you may receive a greater response from a sign at the location than you will from a newspaper add.
Tenants want to live in nice neighborhoods close to all the amenities. They want to be close to the schools, stores, recreational locations, hospitals, and work.
I haven't met anyone who wants to live in an undesirable neighborhood or drive 15 minutes for a gallon of milk.
2. Numbers - When buying rental property you want to check the numbers. Make sure you have all the expenses associated with that property and make sure it still has a positive cash flow.
Take into consideration the maintenance issues, any utilities not covered by tenant and amortize the cost of the big projects like furnace replacement, new roofing, siding or landscaping.
These projects only happen once every 15-20 years but you may be coming in to this in the 10th year of that cycle. Remember to calculate your expenses high and your income low. This can save you some surprises down the road.
Expect the unit to be empty at least one month per year due to turn over. You will have to repaint and clean the carpets the first 2 weeks, then advertise and show the next 2 weeks. You should only count on 11 months of rent per year.
3. Lower Maintenance Buildings - You want to avoid homes that will require expensive routine maintenance. Some examples would be homes that have cedar-shake shingles or siding, wood sided buildings, wood frame windows, brick driveways, cedar decks, etc.
Try to look down the road and determine the future maintenance needs. Remember the lower the maintenance the less headaches and larger profits.
4. Higher Home Prices - Check in towns with higher home prices, because this increases the demand for rental property. Look for the ugly house on the block that has a lower price, enabling you to purchase within the margins.
After some interior and exterior paint, a little light landscaping and new curtains, viola', a house that will get premium rent because of the class of neighborhood.
If people can not afford to buy a home in this class they will have to rent. This will create a demand for rental property.
5. Below Market Rent prices - When buying rental property, look for rental property which has rent prices that are below current market rents. This will allow you to raise the rent and increase the value of the property. As per above, this may just need a little fluff to enable raising the rental price.
Rental property market value is determined by the amount of income received by the rental property. However keep in mind, if the rental property has renters when you purchase it, they may not like it when you raise the rent. Also check to see what type of lease is in place. The lease goes with the sale.
If the current renter is paying a substandard price and has 1 1/2 years left on the lease it could turn out to be a losing proposition.
There is only one way to cut a lease short as a new owner. You must remodel the place. Check with the local housing commission to see what the minimum cost requirements of remodeling are for immediate eviction of current lease holders. It is usually as little as $10,000.00 in remodeling cost to get a remodeling eviction. By the way, you didn't hear this from me!
6. Good Rental History - Whenever buying rental properties, you must check the rental history. Check to see on average how long tenants are staying and do they pay their rent on time. Some areas of town are naturally quick turnover times. Near airports, loud bars or nightclubs, near military bases, etc.
7. Complies with Zoning and Fire Codes - Make sure you check to see if there are inspections required by local officials for rental properties and does this property pass those inspections. You never know the real reason the current owner is selling the property.
It may need extensive repairs to pass the inspections. A quick red flag would be if the electricity has been turned off for over 90 days. They will usually require an inspection before restoring power, especially if it is a known rental.
8. Less Than Twenty Years Old - This is self explanatory, if you restrict your selection to buildings that are less than twenty years old, you will limit the chances that the building will have any building code or maintenance problems.
The building could be near the maintenance cycle for roof, paint and possibly furnace but the structure will be sound and not needing upgraded windows, siding or cement repair.
9. Out of State Owners or Managers - When buying rental property, look for properties that are owned by out of state owners. It is hard to manage rental property from out of state and when these come up for sale, the owners are usually more concerned with selling quickly than getting top dollar.
In order to rent a place quickly you must live near by so you can show it at the caller's request. Often times they will ask to see it in the next 20 minutes or so. Cater to their requests and show it quick. Most renters need a place within the next week or so and will not wait to see your place until next week because you are busy.
Most times they will make a decision before tomarrow when it would be more convenient for you to show it. This has happen to us to many times.
Never give out the address for drive bys. Prospective renters will ask for the address to do a drive by and just look at the place. Don't waste your time with these folks. Insist on showing it in the next 30 minutes or you will not give out the address as a courtesy to the neighbors.
10. Neighborhood is stable or improving - obviously avoid neighborhoods that are declining, look at the writing on the walls and stay out. Although these may look good due to the low purchase price, they are very difficult to collect the rents.
By finding neighborhoods that are stable or improving, it will be easier to rent the property and you will be able to increase the rent. The general consensus is, the better the neighborhood the higher the purchase price and the higher the rent prices, therefore the margin for profit is greater. The poorer the neighborhood the lower the purchase price and lower the rent prices reducing the profit margins.
Do not be afraid to buy nicer places for rental properties. The people that can afford $1000.00 a month are more likely to be able to come up with the rent on time versus someone that can only afford $350.00 a month. One little upset in the latter case and you will not get your rent on time, if at all. There is far greater stability in renting high end places versus being a slumlord!
Copyright (c) 2007 Brian Ankner All Rights Reserved
About the Author
Click the link below and sign up for a FREE 11 part Ecourse jam-packed with information on buying rental properties, getting home equity loans, mortgages and the tricks lenders use against you! The info you need to succeed! http://www.loan-tricks.com/home-equity-free-guide.html
<)))
Buying rental properties is a good way to increase your assets. However, choosing the right rental property will be challenging. Here are a few things to check for prior to buying rental property.
1. Location - Most people don't want to live in the boon docks. The location of your rental property will determine how easy it will be to rent. If you have a lot of vehicle traffic, you may receive a greater response from a sign at the location than you will from a newspaper add.
Tenants want to live in nice neighborhoods close to all the amenities. They want to be close to the schools, stores, recreational locations, hospitals, and work.
I haven't met anyone who wants to live in an undesirable neighborhood or drive 15 minutes for a gallon of milk.
2. Numbers - When buying rental property you want to check the numbers. Make sure you have all the expenses associated with that property and make sure it still has a positive cash flow.
Take into consideration the maintenance issues, any utilities not covered by tenant and amortize the cost of the big projects like furnace replacement, new roofing, siding or landscaping.
These projects only happen once every 15-20 years but you may be coming in to this in the 10th year of that cycle. Remember to calculate your expenses high and your income low. This can save you some surprises down the road.
Expect the unit to be empty at least one month per year due to turn over. You will have to repaint and clean the carpets the first 2 weeks, then advertise and show the next 2 weeks. You should only count on 11 months of rent per year.
3. Lower Maintenance Buildings - You want to avoid homes that will require expensive routine maintenance. Some examples would be homes that have cedar-shake shingles or siding, wood sided buildings, wood frame windows, brick driveways, cedar decks, etc.
Try to look down the road and determine the future maintenance needs. Remember the lower the maintenance the less headaches and larger profits.
4. Higher Home Prices - Check in towns with higher home prices, because this increases the demand for rental property. Look for the ugly house on the block that has a lower price, enabling you to purchase within the margins.
After some interior and exterior paint, a little light landscaping and new curtains, viola', a house that will get premium rent because of the class of neighborhood.
If people can not afford to buy a home in this class they will have to rent. This will create a demand for rental property.
5. Below Market Rent prices - When buying rental property, look for rental property which has rent prices that are below current market rents. This will allow you to raise the rent and increase the value of the property. As per above, this may just need a little fluff to enable raising the rental price.
Rental property market value is determined by the amount of income received by the rental property. However keep in mind, if the rental property has renters when you purchase it, they may not like it when you raise the rent. Also check to see what type of lease is in place. The lease goes with the sale.
If the current renter is paying a substandard price and has 1 1/2 years left on the lease it could turn out to be a losing proposition.
There is only one way to cut a lease short as a new owner. You must remodel the place. Check with the local housing commission to see what the minimum cost requirements of remodeling are for immediate eviction of current lease holders. It is usually as little as $10,000.00 in remodeling cost to get a remodeling eviction. By the way, you didn't hear this from me!
6. Good Rental History - Whenever buying rental properties, you must check the rental history. Check to see on average how long tenants are staying and do they pay their rent on time. Some areas of town are naturally quick turnover times. Near airports, loud bars or nightclubs, near military bases, etc.
7. Complies with Zoning and Fire Codes - Make sure you check to see if there are inspections required by local officials for rental properties and does this property pass those inspections. You never know the real reason the current owner is selling the property.
It may need extensive repairs to pass the inspections. A quick red flag would be if the electricity has been turned off for over 90 days. They will usually require an inspection before restoring power, especially if it is a known rental.
8. Less Than Twenty Years Old - This is self explanatory, if you restrict your selection to buildings that are less than twenty years old, you will limit the chances that the building will have any building code or maintenance problems.
The building could be near the maintenance cycle for roof, paint and possibly furnace but the structure will be sound and not needing upgraded windows, siding or cement repair.
9. Out of State Owners or Managers - When buying rental property, look for properties that are owned by out of state owners. It is hard to manage rental property from out of state and when these come up for sale, the owners are usually more concerned with selling quickly than getting top dollar.
In order to rent a place quickly you must live near by so you can show it at the caller's request. Often times they will ask to see it in the next 20 minutes or so. Cater to their requests and show it quick. Most renters need a place within the next week or so and will not wait to see your place until next week because you are busy.
Most times they will make a decision before tomarrow when it would be more convenient for you to show it. This has happen to us to many times.
Never give out the address for drive bys. Prospective renters will ask for the address to do a drive by and just look at the place. Don't waste your time with these folks. Insist on showing it in the next 30 minutes or you will not give out the address as a courtesy to the neighbors.
10. Neighborhood is stable or improving - obviously avoid neighborhoods that are declining, look at the writing on the walls and stay out. Although these may look good due to the low purchase price, they are very difficult to collect the rents.
By finding neighborhoods that are stable or improving, it will be easier to rent the property and you will be able to increase the rent. The general consensus is, the better the neighborhood the higher the purchase price and the higher the rent prices, therefore the margin for profit is greater. The poorer the neighborhood the lower the purchase price and lower the rent prices reducing the profit margins.
Do not be afraid to buy nicer places for rental properties. The people that can afford $1000.00 a month are more likely to be able to come up with the rent on time versus someone that can only afford $350.00 a month. One little upset in the latter case and you will not get your rent on time, if at all. There is far greater stability in renting high end places versus being a slumlord!
Copyright (c) 2007 Brian Ankner All Rights Reserved
About the Author
Click the link below and sign up for a FREE 11 part Ecourse jam-packed with information on buying rental properties, getting home equity loans, mortgages and the tricks lenders use against you! The info you need to succeed! http://www.loan-tricks.com/home-equity-free-guide.html
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