If I Were to Start My Real Estate Investing Over Again Today

MemphisBuyandHold

If I were to start my real estate investing over again today, knowing what I know now, what I would do differently is: (in no particular order of importance)

    1. Accept how difficult it was going to be. I’d never owned a business before. We knew this venture would be tough because it was just us – no one else to be responsible for anything. No longer could we go home at night or on the weekends and just veg-out. This was like having a baby – 24 hours a day, 7 days a week of complete responsibility. And, like having a baby, unless you’ve experienced it, you don’t understand what it means. Mental understanding is nothing like real-life-experience understanding. I expected it to be difficult – I had no idea how far from accurate my expectations were.
    2. Know how rewarding it would become. We had goals and a business plan. We had a big “why” when we started out that we used regularly to keep ourselves from getting off track or giving up with what we were trying to accomplish. However, as big as we stretched our goals, as detailed as our business plan was, as important as our reasons to succeed truly were, I had no idea the size of the reward we would be reaping if we refused to be deterred. I cannot stress enough how large the obstacles are that get thrown in front of you over and over, and ever changing. The temptation to say, “this is too hard – I’ll try something else instead,” is HUGE. Every time you give up on your dream and start toward a new one, you are starting over. The challenges may be different, but they will still be there. To win big, you have to grow big. To grow big takes overcoming big challenges. We did, but they would have been far less daunting if I’d had any idea the enormity of the rewards waiting further down the line.
    3. Know that true wealth was going to take longer than all the gurus said it would. “Just buy my product / follow my system and you will see big results.” I have yet to personally meet anyone who is wealthy following the process laid out by a program they purchased. Everyone I know of true wealth followed the experience of a coach/mentor as they blazed their own trail. It looks easy on TV; it sounds easy at a seminar; it is hard work and it takes longer than you think it will. Know that starting out so you’re not disappointed or distracted.
    4. Know how hard working with my spouse would be. Who’s the boss? Yeah, right. And that’s only one problem. Who’s right? Who knows more? Who’s point of view is best? Who has the final decision? It’s one thing if you have a business partner who lives in a different house – way different. In very little time, the business is the only thing you talk about. After all, what else is there? Exactly…
    5. Pay less for private money. Starting out, we offered too much out of fear we wouldn’t get it. Turns out, people are happy to place their money safely in an investment that is collateralized by real estate. Years later, we took profits to pay off the original “expensive” money when we gained the knowledge and expertise necessary to offer less return. Most of those lenders were so happy with the regularity of their returns that they chose to stay with us even when offered lower interest rates. Take care of your private money lenders and they will stay with you forever. (And, they encourage their friends, family, and co-workers to invest, as well.)
    6. Sell more properties instead of holding everything (even though it did make us learn how to be lean and clean without waste). In the beginning, we had a long term picture that involved holding properties to get there. Naturally, the larger our portfolio, the sooner we could get to that end goal. Because of our tenacity, we refused to sell anything for about five years. During that time, we created quite a hefty portfolio. Looking back, holding everything was probably not necessary and having chunks of cash now and then would have allowed us to breathe better and make some different investing decisions.

If I were to start my real estate investing over again today, knowing what I know now, what I would do the same:

    1. Pay for good coaching. From the beginning. And your coaches change over time. There are lots of investors who know more than you do, especially when you’re first starting out. You want to constantly be following someone who is successfully doing way more than you are and who is actively doing it. The economics and legalities of what we do change at lightning speed and it’s important to be mentored by someone who is actively engaged in the business you want to be learning. Far better to walk through a mine field in the footsteps of someone who’s already crossed it successfully.
    2. Get involved in a mastermind group to share ideas of what works and what doesn’t. If two heads are better than one, how about six or seven? Not only can they help guide you and point out things you would never think of on your own, they also hold you accountable. When you meet monthly and say, “this is what I’m going to accomplish in the next thirty days,” within thirty days you’ll get it done. After all, you don’t want to go back and tell them you weren’t successful!
    3. Enter into this business with my spouse. As difficult a this was (can you say “counseling”), it turned out to be the best partner I could ask for. For a number of reasons including the fact that no one else cares nearly so much whether or not each deal makes a profit. No one will ever look out for your business more than the person who gets 100% of the profit or loss that you get. No one will ever care as much about how every decision affects you and your family for the long term as your spouse. Yes, it’s tough, but two eyes and two brains watching out for and learning about everything that needs to be done turns out to be a big advantage. Get outside help to guide you on how to make decisions together, divide the responsibilities, and keep your marriage as well as your business in tact. One thing a lot of our students say is, “you’re so lucky your spouse is in this with you to help you and understand all that’s involved.” I have to agree.
    4. Focus on the long term rather than short term results. Disappointments in the short term happen often and the results can trip up your enthusiasm and stamina. Always have those long term reasons and goals in front of you to keep you putting one foot in front of the other, especially when overcoming the big obstacles. We use lots of projection calculators to see where we’ll be in 5, 10, 20, 30 years. Today may be lean but, boy, retirement looks amazing!!
    5. Refuse to be stopped – no matter what the media says, the banks do, the legislators change, tenants throw your way, private money lenders require, attorneys ask for, on and on and on and on and on and on. Tackle bite sized pieces – one day at a time – one project at a time – one document at a time. Keep overcoming. That’s what this business requires.
    6. Hold as many properties as we could. It made life in the short term tough, but the long term rewards are worth it.
    7. Continue to do business plans as often as possible. These keep you on track. Business plans make you aware of where you’ve been and where you are. They’re the only way to plot progress or distractions and for years they’ve kept us on the One True North toward our goals.
    8. Build a team and staff. Real estate investing is not a solo business. Our first hire was a bookkeeper. Bookkeeping is essential but not something we wanted to spend our time on; it’s not something that generates income. Find out your pain points and hire others to do what you don’t want to do or can’t do. Your job is to generate income. One of the best ways to do that is sitting in front of sellers negotiating deals. Work that can be hired out and handled by others, hire out and let others handle.
    9. Surround ourselves with like-minded people. We all need peer groups. A group of other investors doing what you’re doing will help you make decisions, point out alternative solutions, keep you motivated, offer support when you struggle, and hold you accountable to your own goals and timeline.
    10. Keep both a real estate and business coach. For years we had real estate coaches. Once we had real estate investing somewhat mastered, our next struggle became owning and operating a business – another new frontier. So we found someone who was successful at doing exactly what we wanted to do. Our holding company was operating in the red at that time. We were confident it would turn around as the economy recovered and property values began to rise. Our business coach looked over our companies, made some tweaks to our operations, and within a matter of months that same company was six figures in the black. I can’t stress strongly enough that you don’t know what you don’t know. You can’t ask the right questions when you don’t know what they are. Find someone in every area of your business who has been there/done that and will point out what you don’t know today.
    11. Always stretch beyond what we believe possible. This business requires a lot of stretching. There are so many moving parts and a lot of them are frightening – dealing with mortgage companies, private lenders, hard money lenders, attorneys, title companies, insurance companies, local/state legislation and the IRS, just to name a few. You must be willing to function outside your comfort zone and go where you’ve never gone before. Those who constantly retreat back into the safety of what they already know are never truly successful.
    12. Have a clear vision of where we are headed and stick to it. That vision allowed us to sacrifice for the business even when it was painful. We always had our big picture plan emblazoned in front of us.
    13. Create goals. It’s so true that if you don’t know where you’re going, you don’t know how to get there or even if you arrive. But, it’s actually much more than that. The first time we wrote down goals, we wrote our one, three, five, ten, and fifteen year goals. Who knows what in the world will happen in fifteen years? I wrote “retired”. What was fascinating was that we accomplished our one, three, and five year goals all in the first six months! A couple of things about that: (1) we’d never written or tracked goals before so we had no idea how much we could accomplish in a specific time period (2) we were moving way too fast! The next year, we hit our one year goals in 8 months. The third year, we hit our one year goals in 10 months. We can now predict, with a fair amount of accuracy, just what we can accomplish in 12 months. Every year, our goals are much larger for the year ahead than they were the year before. And, every year our businesses have grown exponentially. Coincidence? I believe the amazing growth is because we pay attention to the details. The fun part is when you review those goals to see if/when you hit them, and the next fun part is being able to stretch them. Without goals, you have no frame of reference and no scorecard. Without a scorecard, you have no idea how you’re playing the game so you can’t correct and improve. And, by the way, you can’t celebrate unknown victories!
    14. ALWAYS have contracts with contractors including pay schedules and deadlines. There are not enough pages to write out the importance of this.
    15. Never depend on banks. Ever. We started our business in January 2005 and didn’t want to depend on banks. In 2008, we were glad we hadn’t. We have a neighbor who had all of his commercial loans with one lender. Unfortunately, his private residence was tied to them. Without warning, this lender decided to no longer offer commercial loans so they stopped renewing the ones on their books. Our neighbor was caught in this trap and unable to find alternate commercial financing quickly enough. He lost not only his commercial properties, but his personal residence, also. Banks can change/create the rules without your approval. And they do.
    16. Build good solid honest relationships. This takes time.
    17. Keep your word no matter what – even if you don’t eat.

Article Source: http://EzineArticles.com/9770940


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

 

Advertisements

Investing For Cash Flow and Financial Independence

Cashflow

Financial Planners will always tell you to diversify. That’s a good idea except that diversification is usually exercised by most people solely through the purchase of many different mutual funds. It is still investing in mutual funds or the stock market. There are ways to obtain wealth (and financial security) that you may not currently be exploring, ways that go beyond buying mutual funds.

Instead of planning for retirement, plan to reach Financial Independence instead. True Financial Independence is an easily measurable known target, and is a goal that can actually be reached within a short period of time. How? Through passive income. Generate positive cash flow from hard assets such as real estate income property. Rental income is passive income for the most part, especially if you have a solid property manager taking care of the details.

The principles of creating a long-term, on-going cash flow can be applied to most kinds of real estate investments. Mobile home lots, apartments, garage/storage units, and houses all make excellent income producing assets. Houses, in particular, low-end houses, make an excellent vehicle for creating long-term cash flow for a multitude of reasons.

While appreciation is often the most significant form of profit for real estate investors, investing for cash flow is easier to determine and with lower risk. So how do you achieve positive cash flow ethically in the real world? You need to buy in the rare market where high capitalization rates (15%+) are the norm. Such markets are usually depressed like Rochester or Memphis and have a large pool of renters. The reason tenants are willing to pay more to rent than they would have to pay to own in such markets is that they believe property values are falling or level in which case not owning is a good idea in spite of the high rent. Positive cash flow is so rare and so desirable that it eventually attracts out-of-town investors. Their coming into Rochester or Memphis or wherever causes property values to climb so that high cap rates are no longer available.

There are the three primary ways that an investor makes money in real estate: 1. from cash flow, 2. property appreciation and 3. paying down of the mortgage thereby increasing their cash flow and equity. Only if you buy on a bargain basis can you get positive cash flow from a rental property.

Why low-end houses make the ideal Cash-Flow vehicle

First, houses are abundant. Every city, town, and neighborhood has houses. Houses are probably the easiest to buy because they are the most common. Houses are also probably the easiest to buy at a discount, since there are so many sellers who own them in some sort of crisis ownership position: Vacancy, disrepairs, judgments/liens, back taxes, etc.

Houses are the easiest to manage, with the possible exception of storage/garage unit rentals, since these are occupied with stuff and not people, thereby making evictions easy. Well-maintained houses will often keep tenants for a 3-5 year cycle, sometimes longer. Most of the other vehicles have shorter-term occupancy.

Houses are by far the easiest to sell because of the naturally large demand for places for people to live. In most cases the property will sell without holding paper, but many smart investors will sell their houses on some sort of payment contract and be able to charge a 10-15% price premium to the buyer without using a Realtor.

The so-called low-end house can be very desirable from an investor’s standpoint. First, lower-end housing doesn’t mean becoming a slum lord. It means basic, starter homes that are located in good, but not necessarily great locations. These marginal areas typically are more of a buyer’s market, thereby, tilting the negotiation in favor of a hard-cash buyer or a buyer seeking owner financing. Actually, owner financing is easier, much easier in these slightly marginal areas.

Next, these lower level houses can frequently be purchased at various distress auction (tax, foreclosure, estate) sales. In many areas of the US, these houses are bought for prices anywhere from as low as $5,000 to $25,000, without a lot of difficulty (after you know the many inside strategies and secrets).

These homes can typically generate rents of $600 – $900 per month, which based on the low purchase price makes an outstanding return on investment. Returns of 25% – 35% per year are common. It’s not uncommon for smart investors to receive income for 20 years or better from their houses. After this period of ownership many owners will find a stable buyer and sell the house with a vendor take back mortgage (payment contract) and receive another 10 to 15 years of “mortgage” payments.

Here’s an example:

Purchase price: $ 20,000

Rehab: $ 15,000

Cash Investment: $ 35,000

Gross annual Income: $ 9,600 $800 month

Ordinary Expenses: $ 4,320 45%

Positive Cash Flow: $ 5,280 yr. $440 month

After Repaired Market Value: $50,000

Equity Created: $15,000 30%

Cash on Cash Gross Return: 26%

Cash on Cash Net Return: 15%

To put things into a little more perspective, if you were a risk averse investor, how much money would you need to invest in order to earn $5,280 per year in interest income, not accounting for taxes. Assuming the current 5 year GIC rate of 3.5%, you would have to invest $150,857. Based on the example above, you could buy 4 houses with that money and have an income of $21,120 a year. In addition, you would not have to worry about stock market fluctuations or running out of capital if you were withdrawing an income from your portfolio.

Finally, when investing in rental properties you need to keep your eye on the long-term goals rather than shortsighted goals. Property rental is a marathon rather than a sprint with the greatest profits coming at the end. You will want to pay the property off as quickly as possible in order to realize the maximum profit potential and acquire new properties. The real money when renting properties as a real estate investment isn’t in renting out one or two units but twenty or thirty. The more rental properties you own the more money you stand to make from owning them.

In summary, investing in real estate is always a good idea, no matter what the economic environment is. Investing in income producing property is even better as positive cash flow properties provides inflation protected real cash for your retirement.

Article Source: http://EzineArticles.com/4425895


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

Property Management Fees: A Necessary Investment To Cater Problems

Untitled-1-Recovered-Recovered

Giving house or a portion of the house on rent is one of the common practices followed by mankind from the years. It can also be said that giving property on rent is the source of earning extra income by sitting at home. Going through this practice lots of people either extend the portion of their existing house or construct extra houses forgiving on rent. All these activities in the beginning seem quite simple to them and they exhibit their properties proudly in front of their known ones, but their happiness is not less than a bubble that vanishes in the span of few seconds.

From vanishing I do not mean that their property vanishes or collapses, but I mean the problems which they face before and after giving property on rent smashes their dreams of earning substantial earnings from property within the short period. This is mainly because of complications related to the property giving on rent, because giving property on rent is not stagnated to allowing someone to stay in your house and pay you the asked rent to you. There are lots of formalities which being as a landlord is expected to be followed by you, with this you also have a plethora of responsibilities towards your tenants to which are expected to be accomplished by you on demand.

Anyhow, all these problems can be realized only by the person who has constructed additional property only for the purpose of giving it on rent, because generally if someone has given a portion of his house for rent he can easily look after the matters related to tenancy. But, if a person has developed some additional property, then there are chances that he will definitely realize that managing a property giving on rent is everybody’s cup of coffee.

So how to get rid of this problem is the matter of concern among such landlords or property owners. Interestingly, with an objective to provide remedy to such landlords for their problems today there are various property management firms which look after towards all the matters related to giving property on rent. These groups or firms are mainly constituted by the group of experts having knowledge in dealing with the issues related to the property given on rent.

Types of Property Management Fees: Although property management fees refer to the amount charged for looking after the property given on rent, but depending upon their requirements the property management firms charge the fees in different formats. Some of them are referred below:

1. Monthly Management Fees: It is self understanding term and refers to the payment made to property management firm every month for the services rendered by it. This payment is made for the varied services offered by the group, including receiving rent from the tenants, regular inspection of property, property maintenance, attaining the complaints received from the tenants during odd hours, etc. The amount of this fee mainly varies from 7% to 10% of the monthly rent received from the tenants.

2. Leasing Fees: This fee refers to the investment made for advertising the property, showing the property to your prospective tenants, screening tenants and checking their previous credit score, getting all the legal documents prepared accordingly and various other tasks. This is generally one time fees and mainly varies from 75% to 100% of the rent for the first month.

3. Maintenance Fee: It mainly refers to investment made by the company for maintaining the condition of your property. As a general practice this type of fee is mainly charged on terms and conditions determined between the property management company and the landlord. If the landlord takes the responsibility of looking after the maintenance of property no fees is paid to the group, but in case if the responsibility is handed on the shoulders to the group. Then, depending upon the terms, conditions and maintenance fee is paid to the group.

4. Late Fee: If the tenant is not able to pay the rent on the determined date, in that scenario the management firm might opt for collecting the full portion of rent or certain percentage of rent depending upon the mutually agreed conditions.

5. Eviction Fee: There might be circumstances when the landlord might wish to get his house vacated before the end of the contract. In that scenario the management company can help him in getting the tenants evicted from the house either through mutual agreement or via court. Depending upon the efforts and time, the property management company can charge the necessary fees for the same.

In return for their service the payment which they charge in simple words is known as property management fees. By charging these fees these experts agree to take full care of your property on your behalf and look after all matters starting from searching of tenants for renewal of their rent contract to solving their complaints and getting the property vacated from them after accomplishment of the contract.

Article Source: http://EzineArticles.com/9759003


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 8 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

 

6 Golden Rules to Follow Before You Invest in Turnkey Real Estate

6-Golden-Rules-to-Follow-Before-You-Invest-in-Turnkey-Real-Estate

Real estate investing is not for everyone. It requires patience, consistency and persistence and it comes with its share of challenges that must be considered before making the leap.

A lot of new investors are interested in investing in turnkey real estate because they think that they won’t have to do any work. Yes, it’s true to a great extent but this doesn’t mean that you start investing without conducting any research.

With my experience and understanding, I came up with these 6 golden rules that you could follow before you invest in turnkey real estate:

1. Draw up a concrete Written Strategy – The rule here is if it is not written, it does not exist. Very few people stick to the plan that are not in writing. Writing a plan on paper not only ensures compliance but can serve as a motivator when things get tough. Some important questions that your plan should address are:

  • How much cash flow do you strive for?
  • How many turnkey investment properties you’ll have to buy to achieve this goal?
  • How long will it take to buy them on your current savings rate?

2. Research – Before you invest in turnkey real estate, it is important for you to explore different turnkey providers. But before that, you need to figure out where do you want to invest. A lot of investors wish to invest in out of state properties because of different factors including low price or high rental demands.

Therefore, while doing your research, you need to find turnkey providers in that particular state where you want to invest. You should schedule a meeting with the turnkey provider and check the property in person.

3. Stay Active – Investment properties require both a large up-front capital investment ($10,000 at minimum), to cover the down payment and closing costs. Even after the up-front purchase, repairs, vacancies and lawsuits can make large and immediate bills. Turnkey providers can help in minimizing those risks. Some of them like us, provide one year rental guarantee as well but as an investor, you need to stay active. Schedule biweekly or monthly calls with your turnkey provider to stay in the loop.

4. Proper Planning – Real estate investment is a non-liquid asset. Therefore, if you’ll plan to sell it, it may take longer i.e. anywhere from one month to one year. It is a long-term investment and cannot be disposed of easily.

5. Location – The kind of profits you’ll make depends upon the location of your property. You need to ask all these questions before investing in a particular location:

  • How stable is the area?
  • Is there some alternate part of the town/country more qualified to turnkey investing?
  • How old is the property, and when was the last time it was renovated?
  • What kind of experience your turnkey provider have?

6. Plan B – Many people believe having a plan B means you plan to fail. But as far as real estate investment planning is concerned, having a plan B simply means diversifying your portfolio. So, if you have started with single family homes, after some years, you can start investing in multiplexes or even commercial properties depending upon your personal preferences and market conditions.

Article Source: http://EzineArticles.com/9287950


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 8 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

Real Estate Investments – How to Be Successful

Real-Estate-Investments---How-to-Be-Successful

Successful real estate Investors know they can create long term wealth through buying and holding real estate as rentals. Everyone wants to be successful, but everyone isn’t. Why? It may be because they don’t have a plan. There is an old saying, “people don’t plan to fail, they fail to plan”.

The first element of that plan has to be putting together a team of people to help you accomplish your goals. You have to remember that being a successful real estate Investor requires that you have a TEAM in place. Investing is not a solo sport.

Let’s take a look at who we will need on our TEAM. All of these people are extremely important and need to be in place before you buy your first property.

Coach/Mentor – Every successful entrepreneur needs a good coach or mentor. By training under the watchful eye of someone who is successful, you will gain valuable knowledge and reduce the risk of failure.

Realtor/Wholesaler – This is the person who will find the property for you. Some people chose to work with a Realtor and some a Wholesaler, but basically they do the same thing, they find great deals!!! If you are working with a Realtor, they should be experienced in dealing with foreclosures. Banks want to unload these properties, but you need a Realtor that has had experience in negotiating deals with the banks. If you are working with a Wholesaler, they either already own the property or at least control it. Both of these people can determine the value of the property after it has been repaired. Both can advise you on improvements that should be made to get the house rent ready as soon as possible.

Lenders – Before you even think about buying a piece of investment property, you need to know ahead of time what lender you are going to use. Being able to get refinanced is crucial to the process. You do not want to buy a piece of property and then find out you can not get it refinanced. This is one of the biggest mistakes Investors make. They buy a property with their own money or use a line of credit, and then they can’t refinance and get their money back. Basically, you want to buy the property with hard money, rehab it, and then refinance to your permanent loan. Financing for investment property is very challenging, which is why it is even more important than ever to have a lender on your TEAM. This person may change, but you will always need to have a relationship with someone that you know will refinance your deals, whether it is house number one or number fifty.

Closing Attorney – A good closing attorney is invaluable. Call around and see what they charge to close a deal for you. By using hard money to buy the property, rehabbing it, and then refinancing it, you will have two closings. The first when you initially buy the property and the second when you refinance. That being said, you want to develop a relationship with a closing attorney that understands real estate investing, provides their services at a reasonable rate, and can close quickly.

Insurance Agent – You will need to shop around for a good insurance agent. It may be the person that handles your existing insurance, but a lot of companies don’t cover rentals or have limited coverage if they do. When looking for an agent, ask if their company covers vacancies. You will have vacancies!!! Don’t buy a policy that doesn’t allow for that. You may want to get a minimum of $300,000 liability. Also, look for a policy that has loss of rent. What if there is storm damage and your tenant has to move out for 3 months for the damage to be repaired, you don’t want to lose that rent money. Make sure the agent understands that you want to insure rental property, not that you are renting. One is a renter’s policy and the other is called a fire/hazard policy. Once you have accumulated several properties, you might want to consider an umbrella policy that would cover all of your properties for say $1,000,000. This policy pays in addition to the insurance on the individual property and is very cheap. It’s kind of a safety net for that “what if” scenario.

Contractor – When shopping for a contractor, be sure you find someone that is licensed and insured. If you are working with a Realtor that specializes in foreclosures they will be able to recommend several. The same goes for a wholesaler. Interview them and find out how they get paid. Most reputable contractors have lines of credit, so they don’t require as much money upfront to get the job started. Ask to look at a job they are currently working on or have just completed. This will give you an idea of the quality of work they do. Have several contractors submit bids on the job before you make an offer on the property. You have to know how much the rehab is going to be before you can make a sound offer. Go through the property and make a detailed list of what needs to be done.

Remember, you are not moving into this house, this is going to be a rental. Once the property is yours, go back and get a firm bid on completing the repairs including the time frame to get the job done. Time is of the essence. A vacant house produces no cash flow!!! If one contractor gives you a better price, but can’t start for several weeks, it may be better to pay a little more to get the job done quickly. You should have in writing exactly what will be done and the total price. Of course, there is always the unexpected, but if the rehab goes according to plan, there is no reason for there to be a change in price. You may want to negotiate to pay them one-third upfront, one-third when the job is 75% complete and the last third when the job is complete and has been inspected. This way if there are any problems or things weren’t done that were on the list, the contractor has to take care of it before receiving final payment.

Property Management Company – I wouldn’t even consider owning rental property without a property management company. Do you want the headache of dealing with tenants? I don’t!!! It is well worth the money to let someone else handle everything that goes into having tenants. Most property management companies charge 10-12% per month to manage the property for you. They collect the rent from the tenant, handle any maintenance issues, deduct their fee, and send you a check.. You don’t have to do anything, but go to the mailbox and cash the check!!!

Eviction Attorney – I know, no one wants to think about this, but if you have rental properties, sooner or later you probably will have to evict someone. It would be better to already have an attorney on your TEAM that does this than to have to start looking for someone after your tenant is behind on their rent. Also, you need for them to look over your lease to make sure it complies with state laws governing landlords and tenants. You want your lease to be landlord friendly, not tenant friendly. You need to know the time frame for an eviction as this varies widely by state.

Appraiser – You need to know before you buy a property what it is going to appraise for when the rehab is completed. The Realtor/Wholesaler will have a good idea, but you need to be as accurate as possible. Remember, the goal is to not be out of pocket any money. If when you go to refinance and you thought the property was worth $100,000, but the appraisal comes in at $90,000, you probably will have to go to closing with money. It’s a good idea, to get a verbal appraisal before you buy. Also, since you already have a lender on your TEAM, find out which appraiser they use. You can then contact them and ask if they will do a verbal appraisal on a property you are considering. If you tell them that you will ask the lender to use them for the appraisal, they usually will do a verbal for free. Even if you have to pay them something, it’s better to know the value on the front end, not after you have bought it. I do want to mention that even if you get a verbal appraisal, if it takes you 3 months or longer to get your property rehabbed and refinanced, then the appraisal may be off. Appraisers are limited as to the age of the comparables they use. So if it takes a long time to get the rehab completed and then you have to start shopping for a lender, instead of already working with someone, then the comps the appraiser used in the verbal appraisal may no longer be any good.

Accountant – Preferably, your accountant will be a CPA who has experience with real estate investments. Not only will they benefit you at tax time when it comes to write-offs, but also throughout the year in setting up your business correctly and reducing your capital gains tax if you sell a property.

These are your core TEAM members. Remember, to become a successful Real Estate Investor, you have to build a TEAM!!!

Article Source: http://EzineArticles.com/3627188


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 8 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com

 

Finding the Good Real Estate Deals

Finding-the-Good-Real-Estate-Deals

There are many ways to find good deals. Some of the best ways are quite simple. Remember, though, that the key to success in anything is persistence, and perseverance. The best way to start looking for good deals is right in your local newspaper. Look for properties that are for sale in the area that you have chosen to work in. Also look in the price range that is ideal for an investment. The best market is usually middle class, or slightly lower, or slightly higher. If you work in the high end market, those types of houses do not usually make good rentals. And if you work in the lower end, those properties may be difficult to sell, and are not the best neighborhoods to work in.

You can find out a lot about a property or an area just by reading the newspaper. The next step of course is to call and ask about the property. Always be prepared with a pen and paper. Some questions to ask would be:

  1. Where is the property located?
  2. What type of construction is the building?
  3. What is the area zoned for?
  4. How many bedrooms and baths are there?
  5. Is there a basement or attic?
  6. Is there a garage or a shed?
  7. How many units does the building consist of?
  8. If it is more than one unit, are the utilities separate, and who pays, the landlord or the tenant?
  9. What type of flooring is inside?
  10. How old is the roof?
  11. What is the property size?
  12. What is the square footage of the house?
  13. What are the annual property taxes?
  14. What condition is the house in?

Some ads in the paper or on the internet will be houses that are listed with a real estate agent. These are good ads to call on because you can learn a lot from a real estate agent, and they will have other houses to show you. That is the next best place to find good deals, through a good real estate agent. Try to find an agent who is familiar with investment property. If you find a good real estate agent who understands what you are looking for, it can be very profitable. There are a number of good reasons why you want to have a real estate agent as part of your success team. Experienced real estate agents generally have a lot of education and experience. One of the keys to success is to use other people’s experience, and other people’s education.

Agents are also good at negotiating. They are good to have as a buffer between you and the seller. They are knowledgeable about the neighborhood, and can help guide you with regards to pricing whether it be when submitting an offer or listing a property. They are usually on the cutting edge when it comes to market information. They can help you obtain valuable information you need when it comes to active, pending, and closed sales. They can give you valuable information such as how many days a property has been on the market, or how many bedrooms or bathrooms may be in a particular house. Agents are always networking, and sometimes an agent may find out about a house before it hits the general market. Real estate agents have access to the multiple listing service (MLS). This service has a world of information on properties that are currently active on the market, pending, or sold. This is all valuable information you will come to appreciate. A good real estate agent has capable negotiating skills, which will come in handy when submitting your offer.

Article Source: http://EzineArticles.com/9208794

How To Fix Up A House For A Profit

assetcolumn_pict_2828175195_thumb

New Flooring and A Coat of Paint Can Do Wonders 
The whole look and feel of a room can be altered with new carpet and a fresh coat of paint. Let’s say you have hardwood floors throughout, but carpeting in the bedrooms. You might be able to find scrap carpet that will completely fill the room! Add a fresh coat of paint to the walls, and you will have a whole new space, at a relatively manageable cost. Consider a bold accent color if you are fixing the home up for yourself. However, if you are looking to sell, you might want to keep a more neutral palette.

On the same page, replacing the tile in the kitchens and bathrooms will immediately provide a facelift to the home. By focusing on a small area, as opposed to the whole house, you will be able to make some very noticeable changes without paying a fortune.

Don’t Underestimate Small Fixes With Big Impact 
New hardware and fixtures go a long way. Replacing leaky faucets, rusted drains, door knobs, drawer pulls and ceiling fans will immediately improve a room’s aesthetic. If you think about a luxury hotel room, it’s typically the small features that put it over the top. Cool handles on the cupboards, a fancy soap dish, the slick way the drawers close on their own… these small touches are what people love about these rooms! (And the amazing food and great service, but you get the idea.)

If you want to stand out to buyers that have seen a million homes, add some new hardware and features that they will take notice of. And if you are looking to freshen up a home for yourself, the same strategies apply! You might just want to increase your budget a little.

Capitalize on Your Curb Appeal
First impressions matter. And people who come into your home, whether to buy or just visit, will immediately form an impression of your home based on what the outside looks like. Make sure the yard isn’t overgrown and that all the weeds are pulled. Plant some flowers along the walkway and put a new coat of paint on the mailbox. These things can all be done over the course of a day and can make a huge impact on the way your home appears.

They say buyers subconsciously decide to buy or not within the first few seconds. Having a beautiful, inviting yard will bring people in and help them to feel at home.

Breathe New Life Into Your Furniture
If you are up for a little DIY, take a look at a few of your pieces and see what you can do to give them an upgrade. A quick flip through Pinterest will give you some great ideas and inspiration. Sand and paint an old dresser, or add a new slip cover to your couch.

By giving your furniture a facelift, you can change the whole look of a room. This is great if you are looking to sell a home or if you just want to feel like you live somewhere new.

Article Source: http://EzineArticles.com/9744690


Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 8 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More…… www.memphisbuyandhold.com