Rental Real Property

The two best times for investment property is when you buy a property and when you sell a property. The time in between is where the holding costs add up with time. In my market, investment properties are taking longer and longer to flip. The times on the market are increasing and the eventual contract price that you will get is also decreasing.

It is in this time that you must be fully aware of your holding costs and how time will affect your bottom line. I have seen many experienced investors ignore holding costs, or not understand all the costs associated with holding property. It usually works out for them because there was usually enough profit to cover these holding costs. Not to mention the fact that properties sold faster. Sometimes when a investor is initially estimates the rehab costs they focus on things like the roof, furnace, carpet, etc…

Holding costs are the expenses that are not associated with the expenses that are directly incurred in the rehab of a investment property. Holding costs are costs that are incurred even if the property just sat idle. Some examples of these costs are as follows.

Interest
Mortgage interest and credit card interest associated with the property. There may be times where you don’t have enough cash to cover all fix-up materials and you may have to finance them with a credit card.

Taxes
Property taxes broken down into a monthly amount to track the expenses.

Utilities
Gas and electric bill. In a colder climate the cost of utilities in the winter increase dramatically.

Maintenance Property
Landscaping and outdoor maintenance. Factors such as bed work and size of lawn etc… can increase costs dramatically.

Neighborhood fees or dues.
Some neighborhoods or condos have fees associated with the property.

You can imagine that there could be many other expenses associated with holding real estate that may be specific to your area and the list could go on and on. Knowing your holding costs are a great way to be profitable in this business. Especially in a time where it takes longer to sell a property than normal. A lot of times a contract on a property does not necessarily mean that you are going to be able to get your money in a reasonable amount of time. Without a good understanding of the costs behind the scenes you may never actually know how profitable a property is going to be. Knowing these costs may be the deciding factor on whether or not you are going to take a lower offer on the property because it may in fact be a better deal in the long run. Or it could be the difference between hiring a job done or taking longer to do the job your self.

The Real Secret to Making Money From Property
By James Woolley

Many people think the way to make money from property is to go to the eatate agents, find cheap properties, rent them out for a few years and then sell them on. This is a sound plan and will usually earn you some profits, but it is not the real secret to making huge life-changing amounts of money from property.

The real secret to making money from property is to make sellers come to you, rather than the other way round.

In particular you want distressed sellers who are desperate to sell their property as soon as possible, for whatever reason. It could be the result of a divorce or a move abroad, for example. The point is that they need to sell their house quickly and need to find a buyer, which is where you come in.

In return for you stepping in and offering to buy their property quickly, you are in the position to negotiate a substantial discount in most cases. So you could find yourself offering a price say 30% below the true market value and getting this price accepted. Therefore you’ve just bought a bargain property that you can immediately place on the market at it’s real market value, or you can hold on to it for a few years, rent it out, and make huge gains when you come to sell it.

So how do you put yourself in the position where distressed sellers come to you?

Well the best way is obviously to advertise your services. So you could do a leaflet drop in your area or advertise in your local press and on internet classified sites in your area. Your overall message and selling point would be that you buy property for cash and are specialists in arranging quick sales.

To run this type of business you obviously need to be cash rich, or at least have the ability to arrange quick mortgages, and you need to have your legal team in place to handle any quick transactions. If you can do this then you only need 1 or 2 transactions each year in order to make a very nice income for yourself.

Look at this way, let’s say you manage to get 2 people come to you in a year, each wanting a quick sale on their 1 bedroom flat. Let’s say they’re both valued at around £125,000 and you managed to negotiate them down to a price of £110,000. You close on each property in a week or two spending £220,000 altogether. You then put both flats back on the market for £125,000 through an estate agent and sell both making a total profit of £30,000 (minus expenses of course).

It sounds easy and it actually is surprisingly easy. In fact many property tycoons have built up their property empire this way. The only hard part of this business strategy is the advertising, but if you get it right and are able to encourage distressed sellers to come to you, then you can make substantial profits.

Click here to read James Woolley’s review of Money For Nothing And Your Property For Free by Andy Shaw.

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House Flipping - Getting Started With Referrals
By Todd A Smith

It seems that you everywhere you turn these days, there is so much hype and buzz about flipping houses. You can’t even flip through your TV channels without encountering a show telling you to “Flip This House”, or “Flip That House”.

To someone who is just learning about real estate investing, all of this can seem rather intimidating. So I’ll try to get you going with the absolute easiest way to get into flipping houses, and that is through referrals. This simply means that you will be referring deals to other investors and getting paid to do so.

To get started in referrals, you don’t even need money or skill. You only need a little knowledge, which is what I’m sharing with you in this article.

There are many ways to approach referrals for house flipping, but I’d like to outline a very simple plan for you to get started:

1. Identify properties that may have a motivated seller.
2. Obtain a minimal amount of qualifying information.
3. Pass this information on to an experienced investor that you trust.
4. Discuss compensation with the experienced investor that you’re working with.
5. Evaluate and make adjustments, based on each experienced investor you work with.

1. Identify Properties that May Have a Motivated Seller

Almost all real estate deals start out with someone who needs to sell, in which selling quickly is more important than profit motive. It doesn’t mean that they don’t have a profit motive, it just means that they would rather sell sooner, than wait until later to get top dollar.

Some examples of properties that may have a motivated seller are: fire damaged properties, houses that are vacant, houses that are in serious disrepair, neglected, have high grass, aren’t getting snow shoveled in the winter time, have mail stacking up, etc.

2. Obtain a Minimal Amount of Qualifying Information

This is where a lot of people get burned out before they ever get started. In the referral business, you are learning the basics of “how to flip a house”, you are not actually flipping houses. Therefore you should not be working as hard as someone who actually is flipping houses.

So let’s say you are driving around one day, looking for vacant house, that has been seriously neglected and is in desperate need of expensive exterior repairs (i.e. the house is “ugly”). In the house flipping business, this is a technique we call “driving for dollars”. It doesn’t take long before you find a vacant, ugly house.

So what information should you get? Obviously you will need the address. It would also be a great idea to use a digital camera or cell phone to take a picture of at least the front of the house, but preferably the front and back. Remember, I don’t want you to work too hard yet, so I don’t even want you to get out of your car to take these pictures if you don’t have to :-). You will email the photos when you contact the investor.

3. Pass This Information On To An Experienced Investor That You Trust

Now you should already have, or should immediately build a list of 10-20 investors you can call on the phone, or send an email to, or contact through their websites. You will put this list together from the following sources: Real Estate Investment Clubs, Newspaper Ads and street signs from people advertising “We Buy Houses”, and maybe even some “For Rent” signs from the same neighborhood that you found the vacant, ugly house.

Contact several of these investors and find at least one that you trust. Try them out on some of your referrals. If it doesn’t work out, move onto the next one on your list. Only work with one at a time, because you are not experienced or skilled enough to protect yourself with contracts yet, so working with too many people is just inviting someone to “steal your deal” without compensating you for it.

4. Discuss Compensation With the Investor that You’re Working With

Realize that you will only get paid if and when the investor you referred the deal to actually buys the property. Since you are just starting out, ask for and expect to receive, a fee between $100-$250 for the information and photos you are providing. Remember I told you that I didn’t want you to work that hard right? If you can get paid $100 for just making a phone call or sending an email, believe me, it’s worth it!

5. Evaluate And Make Adjustments, Based On Each Experienced Investor You Work With

As you refer each deal to one or more investors, you will get a feel for what they are looking for. If you start out working with one investor and he is only looking for 3-bedroom, brick houses on the north side of town, you can start also working with another investor who may be looking for 2-bedroom duplexes on the north side of town.

Conclusion

Many “would-be investors” get burned out before they ever get started in house flipping, because they try to figure out what all the investors in their city want before they go do anything. Then they try to provide too much information, and aren’t happy with their compensation. I want you to do minimal work at first, while making maximum dollar for the amount of time you have involved. Now try out what you’ve learned here, and let me know how it’s working!

Good luck and God bless!

YOU MAY USE THIS ARTICLE IN YOUR E-ZINE OR WEB SITE as long as you include this complete blurb with it: The author of this article, Todd Smith, started buying property as a broke college sophomore in 1988. He began his career as a full-time real estate investor in 1996. To get more FREE, no hype, money-making, real estate investing information, that you can use TODAY, visit Todd’s website at http://www.property-investing-made-simple.com

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The Profile Of A Good Real Estate Investor
By Rich Urban

In this article, I’m going to talk about the main qualities that make you a good Real Estate Investor. What I mean by a “Good Real Estate Investor”, is someone that is respected in their community for their profession. A good real estate investor is the one that is referred business by other colleagues because they know that this investor is someone that is up front.

Being really good at whatever you do is not a simple thing. When it comes to being a good, respected and trustworthy real estate investor, there are some crucial qualities one’s got to have. Whether you’re just thinking about investing in real estate, or you are currently involved in the real estate investing world, you’ll find these few tips helpful.

First of all, you have to believe in yourself, you must have a good dose of self confidence. You must be able to face risks; it would be better to actually like living on the edge. This will help a lot, because being a real estate investor is not easy at all. You don’t have any guarantee that you will ever make a penny out of it. So, if you’re not willing to take that risk, you should stay out of it. I’m not saying to foolishly gamble your life savings away…But there comes a time when you need to either “Crap or Get Off The Pot”..and in real estate, the “scaredy cat” that fails to react usually loses.

Another essential aspect is that you must be able to empathize with every seller. In other words, you’ve got to have some great communication skills. If you want to be a successful real estate investor, you must certainly know how to treat people: they are human beings, they think, they feel, they have problems, they’re just like you, and not some ‘things’ you build your business around. Real Estate is a “People Business”, and if you can’t deal with people, then you can’t deal with real estate. Become a handyman.

It’s very important for a newbie that’s starting out in Real Estate Investing to find equilibrium between practice and theory.

This is not an easy thing to do, because you are usually the person who knows everything in theory and, in fact, nothing when it comes to the business, but you need to appear to be the person that knows everything in practice and can handle a deal fluently. You’re just going to have to “Fake It ‘Til You Make It”.

Although, it’s very important to plan a bit ahead in life, you mustn’t let that stop you from making money. So many new investors get caught up analyzing a deal that the property is put under contract - flipped and rehabbed before they have even decided what to do with the deal. Don’t build yourself a great, general, plan from the beginning. The most important thing is that you keep things as simple as possible, and walk on your own way by taking small steps. And once you become an experienced real estate investor, you can think in general terms and develop some great plans, for, if you do so from the beginning, you will only restrain your imagination. And I must say that imagination is a very important ally that helps you find strong niches in your business, no matter what specific it has.

And last, but not the least, keep in mind that you must be available at any hour, you must be aware that, at the beginning, this whole thing about being a good real estate investor means you have to be prepared to talk to the potential sellers and, eventually, close a deal 24 hours a day. Having the calls go to voicemail or hiring an answering service, yeah sure, you’ll get some deals that way, but you’ll also have quite a few whoppers fall through the cracks. If you want to make some serious cash in real estate, then you need to be the one that answers that phone as soon as it rings.

Once you earn a certain reputation, thing will get easier, and you’ll have a more comfortable program.

Being a real estate investor and also being very good at what you do is not a part time job, but a full commitment, so, treat this job with all the respect, so that you would be able to learn, communicate, look, find and eventually close deals at the highest level.

You want know the REAL TRUTH about making money in Real Estate that everyone else is too scared to reveal you? Are you sick of all the B.S., hype, lies and scams out there?
Get a FREE course now — Make Sure That You Enter Your Name & Email at: http://www.youngrealestateinvesting.com/freecoaching

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This is a image of a natural gas leak at one of my investment properties. I am showing this so that hopefully you will be able to keep a eye out for this problem. As you can see the grass over the leak is starting to die in a somewhat circular pattern. I noticed a small dead patch a while ago but I did not pay attention to it at the time. I do not smell any gas when I am out there but the damage is there. This leak is about ten feet off the road right about where the main gas line becomes the responsibility of the property owner. In this case the leak is my responsibility to fix because it is on my property or at least that is what the contractor from the gas company told me. They said that they would have to run another line to the gas meter. Either by running a pipe inside the existing one or having to dig up the yard and replacing the whole thing. I believe that this line is the new plastic that is used now because it was built in 1986 and that was right about the time they were switching over to the new lines. And this kind of line does not usually leak and the connection would leak first. At least that is what I was told by a contractor I know that worked this area back then. I think I am going to have them prove that it is not just the connection that is leaking and it is in fact the whole pipe like they claim. I am upset because the gas company in my area offers insurance for a few dollars a month in case something like this happens but I did not bother to sign up for it. I am going to in the future sign up all my properties for this service just in case. It is definitely something that I look for when I am looking at a new investment property. I look for any signs of dead grass between the road and the meter.

As a real estate investor you soon realize that the more deals you can find equals better deals to choose. I am a firm believer in using every single avenue possible to find a investment property. Friends, family, acquaintances, realtors, and just about every one else that you can think of. One of the most commonly overlooked sources of real estate deals is your local attorneys office. This is a incredible resource to a real estate investor. Most lawyers are not in the business of selling real estate but it could be a very good side business for them and a great way to serve there clients in the process. I always offer a reward if someone finds a good investment property. I usually save much more than the reward if I can buy the property before the property it gets to the open market.

You may ask how a lawyer would be able to run across good real estate deals. Here are just a couple of ways that this can happen.

Divorce:
Some times in a divorce the couple can no longer keep there main house without two incomes and the need to sell quickly may become a necessity. The lawyer can help out his client by introducing you to them and facilitate that fast sale that they need. Sometimes a couple may not even care what they get out of the property they just want out. That is a great combination for the real estate investor.

Will:
Upon the death of a parent or grandparent the estate will sometimes have a property to sell. The heirs may not want to do anything on the property and may in fact just want to get rid of the property as fast as possible. The best situation to get into is the one where there are multiple heirs and any reduction in your offer will be divided many ways and will not be a big deal to each individual involved.

Lawsuit.

Parties of the lawsuit may need cash and they may need it fast. That is a great situation for you as a investor.

There many other situations that may come up but you can get the idea that a lawyer may be a great source for deals.

There are many different types of landlords out there and this article deals with what I like to call a professional landlord. This type of land lord is very business like about the way he goes about renting houses. In fact he is like this out of necessity. Most professional landlords have a lot of houses for rent, and they are trying to minimize there potential problems before they even
come up. The professional landlord looks for houses that will present them with the fewest problems. Like I said in the earlier article about a ranch house. The low roof and one story makes maintenance easier and most importantly quicker so that he can get on to the next house.

A professional landlord will take a house that they buy and bring every system in the house up to perfect working order before they ever let a tenant move into their house. They identify what things can go wrong with the house and repair or replace that item before it can break. Most of the time this will result in a new kitchen and bath being put in the house along with plumbing and bringing the electrical up to date. This way stopped drains and leaky pipes will be brought down to a absolute minimum. This type of renting requires the biggest out of pocket cash outlay. After financing the house you will need more cash to make all the repairs and updates that are needed to get the house up to par.

Strengths of the Professional landlord.

Very minimal problems.

The very fact that you fixed most working systems in the house means that the
occurrence of breakage is going to be minimal.

Usually better tenants.

As you can imagine the fact that you are renting a up to date house usually brings you a
far greater amount of tenants to choose from. I did a house and had ten quality tenants
knock on the door while I was working on the house because the neighbors told them that
someone was remodeling the house.

Longer term tenants.

The fact that the house is nice and more like a home people have a tendency to stay
longer in these houses because they feel they are more like a home to them. Which in
turn makes it easier to get your rent money.

Can maintain more houses easily.

Aside from the time it takes to get the house up to par your day to day problems
decrease which frees up more time to take on other rental projects.

Weaknesses of the professional landlord.

More out of pocket up front.

When you first fix up the property you will have to come up with the cash to bring the property up to date.

The best place to start when you are investing in real estate is to learn and learn then learn some more. Learning everything you can about investing can help avoid problems down the road. Buying real estate is a major decision and it would stand to reason that it should be a well researched decision. I have seen investors that wanted to get into the business quickly make terrible decisions. Most of the time they over pay because they want to get into the game right away. I understand the feeling that if you do not get a property quickly you are losing money. Let me say that there are many deals out there and there is always a new deal right around the corner.

The first thing I would learn about if I were starting over today would be everything that I could by reading everything that I could find. Rss feeds are a great way to get new thought provoking topics and articles that you could research further or just gain the knowledge from the article. The great thing about subscribing to a Rss feed for real estate is that you can be exposed to so many things that you may not have ever thought of on your own. I still subscribe to many feeds on real estate after 18 years investing. Sometimes I read something new and other times a article may just get me thinking about something. Either way it is a win for me as a real estate investor.

After reading feeds and other sources of information it will be time to apply your new knowledge and go out on the open market. The biggest tip that I can pass on to you is that there is a limited amount of time in the day and you can’t learn every market in your area. It is better to become a expert in one area than knowing a little in a lot of areas. Most counties have public records on the Internet with sales prices of properties in a area. I used to take a Sunday drive with a list of home sales. There is no substitute for a good drive by to really get the feel for a neighborhood. As a investor any time is a good time to learn. Anything that you learn may end up making you a lot of money in the future.

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Here are some details of my latest investment property. I did a walk through of the property to give you a idea of what a investment property is like in my state of Ohio.

Purchase price 32,000
Repairs 14,000

Total 46,000

The property is a four bedroom, living room, dining room, 1 bath, kitchen, and full basement.

Rent will be around 700 to 800 a month.

Notes:
The property came with a new furnace central, central air, water tank, and siding. I am putting in new carpet, kitchen and bath. Along with painting the whole house. Also I am able to do most of the work myself with a employee. This was a great price for this property I would have never been able to get this property for 32,000 it would have taken at least 40,000 on the low end before the property prices started dropping about six months ago. In fact the property had a contract on it for 43,000 last fall that fell through. The rent would still have remained the same however.