What if the Bubble is Real

If the bubble is real and real estate values tumble across the country one thing is for sure, people will still need housing of some sort. So how do you as a real estate investor profit in this type of climate. I think it's more important than ever to be positioned in a hot market. Sure the overall US market will have an effect on a hot market like Provo Utah for example, but if the economy stays strong in Provo then we investors should still be able to make a profit there and in other hot markets. There are still several hot markets in the US to invest in.
You should also consider buying silver, gold, foreign currencies and other investments your financial adviser can help you with. To have part of your wealth in investments that protect you from our falling US dollar is just plain smart. It also allows you to convert back to cash when the bargains appear in the next year or two.
I also like foreign investing more than ever. My properties in Costa Rica and New Zealand are appreciating well and should continue to do so. At the very least I expect them to hold steady if the US market goes down further. I encourage real estate investors here in North America to investigate opportunities in South America, Central America, Australia, New Zealand and Europe to diversify their real estate portfolios. My favorite resources for researching foreign real estate are internationalliving.com and escapeartist.com. These sites report weekly covering several foreign countries on subjects such as, affordability, safety, health care, quality of life, real estate investing,and other criteria. Many North Americans have profited in foreign investing and will continue to do so. In the near future I will be organizing a buying tour of New Zealand. If you are interested in this tour please email me at Kurt@realestatesolutionevolution.com for more info.

Remember, in any market there is money to be made, you just have to figure out how the playing field has changed.

researching emerging markets

The telephone is a great tool for researching new markets to invest in. Here are some of the questions I ask realtors and economic developement staff.

Questions to Ask Realtors to determine if you have found an emerging market to invest in.

1. Is your market a buyers or sellers market? { if it’s a sellers market when did it change from a buyer’s market to a seller’s market}.


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2. Is your market appreciating? {if it’s appreciating how much and what’s the source of information}
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3. What is the inventory of unsold homes on your MLS now? What was it 6 months and 12 months ago?
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4. Where are the buyers coming from? {we want to know if the buyer’s are mostly from out of state coming for the new or expanding job opportunities.}
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5. What is the most sought after property, { you need to know what type of property is in demand to position yourself with the easiest to sell property}.
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6. When did your market start to change from a buyer’s market to a seller’s market, or visa versa? { you want to know how long the market has been in it’s current phase}.

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7. Which direction is the growth heading? {you want to determine where to purchase in the path of future growth}.
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8. Have you seen new employers come to town? Have you seen existing employers expand their operations in your town?
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Questions for Economic Development Agencies to determine if you have an emerging market to invest in.

1. How many jobs were created in your MSA,{metropolitan statistical area} in the last year?

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2. What type of jobs were created,{You need to know what type of jobs were created to determine the average income for the workers. This helps you know what price range of homes the new employees will be looking for}.
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3. Do local politics help or hinder growth in your MSA, {You want to know if there has been legislation passed to give tax breaks to new employers to entice them to relocate}.
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Mortgage Brokers

Be very careful chosing a mortgage broker as they are not all alike. They need to know how to communicate effectively with the underwriters and get the job done. When looking for a good mortgage broker make sure they have 10 years or more in the business and work extensively with investors. Also demand good customer service. If they are hard to get in touch with or don't return calls there is someone else out there that will. It's getting harder to borrow money thanks to all the foreclosures. Real estate investors need to be sharper than ever to get the job done.

Salt Lake City market continues upward

The Salt Lake City market continues to amaze me with it's appreciation gain. The four bedroom, two and a half bath two car garage pre-construction home I bought in September of 2006 has gone from $259,000 to $345,000 in nine months. St George Utah is even hotter. If you are considering buying in either of these markets be sure to do your research. Find out what areas and what type of properties are in demand in these hot markets. Use realtor.com to find listing agents and ask several of them what they think is the best property to buy and what are other investors buying. Be sure and start out the conversation with " I'm calling about your listing I saw on realtor.com, could you please tell me about it"? Then you can transition into market questions.
Good luck!

Real Estate Bubble Bursting

Is the so called real estate bubble finally bursting. The press would have you think so with all of the articles lately on the subject. They have to have something to sell the newspapers and magazines with and real estate is a hot topic. I too read these articles with great interest about the glut of condos and single family homes on the market in Florida, Virginia, Arizona, Las Vegas and other hot markets of yesteryear. There are still a few very hot markets out there that don't seem to get mentioned in these articles and for the savy investor that's just fine for now. By the time the hoard of investors find these gem markets it will just about be time to sell and find the next emerging market that the press and hoard of investors will descend on about a year too late.

Salt Lake City is Hot

Way back in September of 2005 I invested in several pre-constuction homes near Draper Utah. The best of these I bought at $259,000 and is now worth $325,000. The Salt Lke City and Provo areas are on fire. With appreciation running around 2-5% per month it's a beautiful thing. To succeed in this market you have to do your due diligence on what the best zip code is and what type of home to buy. There is still room to profit in this market if you get in now. See my earlier post about investing in emerging markets and good luck to all.

Joint Venture Agreements

A great way to share the wealth is to bring others in on a real estate investment deal with you. Assuming your getting to the point where your track record is great and you only have so much cash to put down you now need to look at bringing in a joint venture partner. This helps in two ways. You can use their credit to obtain a mortgage and or use their money for the down payment and any expenses along the way are split 50/50. I split the expenses 50/50 with my partners but when we sell I get 60% and they get 40% of the profits. This is because we are using my knowledge of real estate investing and I do all the work. The only work my joint venture partner needs to do is go through the mortgage process if I'm using their credit. If I use them only for a credit partner I pay them $500 up front when the deal closes and $2,500 to $3,000 when I sell the property. For a good Joint Venture Agreement example check out Bill Bronchick's book Flipping Properties page 199.

Real Estate Investing Resource

It takes time effort and knowledge to find the most profitable emerging real estate markets in the U.S. but there are shorcuts available. I use Signil Wealth to help me locate emerging markets. They spend over $100,000 for data and then sift through it to find the best markets for their clients to invest in. Signil's process takes the guesswork out of the process of finding emerging markets for the average investor. They do charge a fee for their service but it is very reasonable considering what you get. The service includes their market selection of where to invest, plus they have already set up a team on the ground in that market to assist you in every phase of the process. To find out more on Signil Wealth go to signil.com and see for yourself what they can do for you.

Another Internet Tool For Real Estate Investing

Check out census.gov and go to the Business and Industry catagory. Click on local employment dynamics, on the next page click on local employment dynamics again and then click on State Partners. There you will find the blue coded states that submit emploment figures and articles about that particular states job market. This will help you determine the econmic health of a market. If the job market has been weak but getting stronger this could be a good place to invest. If the job market has been moderate to strong but a large employer is moving to town, pay attention to the neighborhoods that will supply housing for new employees. The more jobs the better chance for real estate profit.

Let Your Mortgage Make You Rich

For several methods of paying your mortgage off early I suggest emailing Lin Ennis at lin@linennis.com and there you will get info on how to shorten the life of a mortgage by as much as 20 years off a 30 year mortgage. I highly recommend her book Let Your Mortgage Make You Rich.

How to Pick a New Construction Home

First thing is to find a viable market to buy a new construction home. Do your research through ofheo.gov and by contacting realtors in that market. On ofheo look for the markets that are coming off previous low appreciation that are now appreciating at 8% or more. Then contact several realtors to find out what is happening in their market as far a growth in the job market or large influx of retirees. These are some of the key indicators of sustainable appreciation. Ask the realtors what is the most popular type of proerty. Is it a condo, or a single family home. Also ask how many days on the market before a property sells and the difference between sold price and list price. In a hot market you will see several sold prices higher than the list price.

Pre-Construction Homes

Some of the best deals can be found in the pre-construction arena. If you pick the right city and the right subdivision you can make huge bucks on a single family home. It's important to get in on the first phase or two of a subdivision. The power is in a small down payment to hold the home while waiting for ground to be broken and the house being built. It can take months for this process and if you pick right your house will appreciate tens of thousands more than your purchase price. It can also stay at the same price you bought it at if you pick the wrong city and subdivision. That's why is't so important to learn how to analyze markets.

Making Money on Your Primary Residence

You can make money on the home you live in by buying low and selling high two years and one day or more later. The gain on this type of sale is tax free up to $250,000 for an individual or $500,000 for a married couple. This is a great way to get ahead if you get a good deal going into the home and can sell for a large profit when you exit.

Real Estate Guru Ranking

If you want to find out information on a famous real estate guru try johntreed.com for opinions of how several gurus performance is rated. This is not the only information you should obtain but should prove to be helpful.

Why Get a Home Warranty

I recommend getting a home warranty protection policy on homes older than 10 years. I always ask that the seller pay for this coverage. It usually costs around $350 depending on the company you buy it from and if you choose add ons like air conditioning or appliance coverage then it can cost up to $450. It covers your new house for one year.

Bandit Signs

Bandit signs are an effective and cheap way to advertise. A bandit sign is a sign that you don't pay someone for the privilege of displaying your message. I use fluorescent colored poster board and cut it into quarters to hang on telephone poles in the vicinity of my rent to own homes. I use the full sized poster board{22x28 inches} on the house itself. These bright colors are great attention getters. In most cities it is illegal to hang your bandit signs on public or private property however if you put them up on Friday afternoon and take them down on Monday morning you usually won't have a problem from the authorities.

Investing Outside of Your IRA

It is possible to invest in real estate using your IRA. This type of investing is known as outside of your IRA real estate investing. This method allows you to use IRA funds to invest in a vacation home that you can use. It also allows you to keep the cashflow from a rental purchased with IRA funds. To find out more go to urangafinancial.com

Magnetic Car Signs

A good way to advertise cheaply is to put " I Buy Houses" car signs on your car. The signs cost about $50-$60 and get a lot of exposure. Be sure and put your cell number or other telephone that you answer the most on the sign.

Realtor Interview Questions pt two

8. How many of your clients are investors?
9. Do you own investment properties? How many? What type of properties? How long? What is the net worth of your real estate portfolio?
10. How are you handling your investments.
11. If Not an Investor: How do you feel about R/E investing?
12. Do you attend R/E investment club/ Chamber of Commerce meetings?
13. What are your top three horror stories and how did you handle them?
14. How available are you.

Realtor Interview Questions pt one

1. Are you passionate about working as a real estate agent
2. What geographical areas are your areas of expertise
3. How long have you been in the area
4. What is you reputation
5. What do you consider to be your best assets
6. Are you a good listener
7. How would you describe your creativity

Using Online Rental Advertising

Advertising your rentals online can be a cost effective way to market your properties. There are many different websites for this out there. Some are just in one market and some cover the whole USA. Some like rentclicks.com even offer a 30 day money back guarantee. Check them out and see which one fits your needs.

Investing in With Your IRA

Many investors are unaware that they can use their IRA to invest in real estate. To find out more I suggest reading IRA Wealth by Patrick Rice.

Credit Reference

It is very helpful to have good credit as an investor. One of the best resources for credit info is a book called "From Credit Repair To Credit Millionaire". With this book you can stay on top your credit score or repair bad credit.

Real Estate Club Finder

To find a real estate club in your area go to creonline.com and click on the real estate club button on the left. There you will find out if there is a club in your area. It also tells you when and where they meet and who the contact person is.

Real Estate Investing Clubs

There are many reasons to join a real estate club. The networking potential is huge. As a beginner investor you can rub shoulders with more advanced investors that are usually happy to help you steer clear of the mistates they have made. If you find a good deal they might buy the property or the contract from you. This is very valuable to beginner investors that don't have a lot of cash to work with. Some real estate clubs have online chat rooms that offer plenty of up to date info on your local market. There might also be an online advertisement venue to find and sell properties. You might get a list of preferred professionals like mortgage brokers, property managers, home inspectors, etc. Most clubs have speakers address the meetings on important topics like rehabbing, joint ventures, investing in a self directed IRA, etc. For a reasonable price your dues paid to the club can be a wise investment.

Investing With Partners

Investing with partners is a great way to own more properties. As an experianced investor I use partners to reduce the amount of loans in my name and be able to buy more properties. That helps keep my credit score high while owning several properties. After 10-12 loans in your name the banks don't want to lend to you as eagerly as they once did. Sometimes my partners have a higher credit score than I do and that gets me a better interest rate on the loan. I pay my credit partners differently than I would a money partner. The credit partner gets about $500 up front and around $2,500 when I sell the property. If a partner wants to put up both money and their credit then they would get a percentage of the deal at closing. Typically that would be the same percentage as the amount of money they put into the deal when we buy it. On a $200,000 dollar property that we put 10% down, $10,000 each, the partner would be a 50% partner. I would do a 60/40 or a maybe 55/45 split with them. Since I'm the one with the knowedge and the one making the deal happen I'll usually take 60% and give my partner 40% at closing. There are many arrangements for partnering and it's best to have it drawn up by an attorney to keep it clean from start to finish.

Real Estate Investing Isn't For Everyone

I love real estate investing. I'm sure I'll be participating in it the rest of my life. This is not true for many that are out there actively investing. Some get caught up in the recent craze of investing at a seminar and think they are now a real estate investor. One of the biggest attributes a real estate investor needs is the ability to keep emotions out of investing. Very few are truly able to do this. The problem is that when emotions go up intelligence goes down. This can result in bad buying or selling decisions. Real estate investing is a business that requires choosing agents, mortgage brokers and others carefully. I see some investors that use relitives for these specialties without interviewing for the job. I almost always interview two or more professionls for each new market I go into. Quite often when I see an investor that uses a relative for the job they end up paying too much or have problems with the deal using an inexperianced relative. One other attribute an experianced investor must have is being able to tame the fear that comes with buying property and pull the trigger on the deal. It's important to have the time to acquire the skills an investor needs throughout a carreer in investing. This does not mean 40 hours a week but you need the flexability to give a deal the time it needs to properly analyze it and to spend time and money on your education. Not every new investor is willing to do this when needed. If you don't really have these things needed to be a successful investor I suggest partnering with someone who does.

Living in Your Investment Property

One of the ways to get a jump start in real estate investing is to live in your property. There are several ways to do this to accellerate your wealth building. One way is to buy a single family home or condo and rent out the extra bedrooms in it. In most cases this will cover your mortgage payment so that you are living rent free. If you can stand roommates for a year or so this is a great way to own your first property. You will qualify for owner occupied mortgage interest rates that are around one interest point or more less than non-owner occupied rates. You could also buy a duplex, triplex or a fourplex. Live in one unit and rent out the others. In this situation you can also qualify for owner rates on the mortgage. You can then live in it for a year or so and buy another duplex, triplex or fourplex and repeat the process. If you pick well you could have a several hundred thousand dollar net worth in about five years. You can do this starting out with just a few thousand dollars for the down payment as owner occupied martgage programs need very little in the way of down payment.

Picking an agent to work with

When I interview a real estate agent to work with I look for many things. I like to work with agents that have invested in real estate. Most agents do not invest in real estate. If they do not invest in real estate themselves then it is important that they have worked with several investors. I look for agents with good computer/internet skills. I ask them if they love their job and how available are they to my phone calls and emails. I ask them if they are honest and ethical. I like newer agents that have been in the business for 1-2 years as they tend to be gogetters and work hard for me. I'm not interested in how big the company that they work for is, but want a company big enough that they have a receptionist answering phones. I like to know that they are open to my creative real estate strategies, and that they will present any offer I submit even though they think it won't work. Most of all I want them to know that our relationship might not work out and the only way to know for sure is to submit offers and work together awhile to see if we are compatible.

International Investing

There are several reasons to invest internationally. You can shelter the falling US dollar, you might have more favorable tax breaks, the cashflow might be better, the appreciation might be better, or it might be a place you love to go and want a second home there that you rent out when your not there. Many Americans have purchased property all over the world. Some of the most popular places are Europe, Mexico, Costa Rica, New Zealand etc. In this crazy new age of real estate investing there is plenty of information on the internet to help invest abroad. If you are thinking of investing abroad try to find someone who has done it succesfully and ask them how they did it. In some countries it is easier to go through the purchase process there than in the US. I like New Zealand for it's ease in the purchase process. As a foriegn national I am required to put down 20% of the purchase price. I'm not able to buy an island or very large sheep station. Other than that the market is wide open to us Americans. When I was down ther in 2003 I read an article in the newspaper about how over 50,000 Californians had bought beachfront property due to its affordability. There is only so much beachfront property in the world and in New Zealand its some of the nicest I've ever seen. If you were lucky enough to have bought in 2002 or 2003 most of the beachfront property appreciated at around 30% per year. Now days places like Costa Rica and Panama are seeing lots of Americans buy beachfront property for investment and second homes. There are even magazines about international living. So if you want a foreign investment property it's easier than ever to research and buy it. The book that got me started was Hide Your Assetts and Disappear. In that book it talked about where Americans like to move to abroad and why. When I asked tha author which location was his favorite he said New Zealand. Within one year I was down there and bought my first international investment property. So pick a location and give it a try. It's a very cool thing to be able to hop a plane to one of these places and stay in your own property or write off the trip to go check on your property.

Investing in Emerging Markets

First of all some of you might be asking what exactly is an emerging market. The three major phases a real estate market goes through are growth,decline and absorbtion. An emerging market is one that is coming out of absorbtion and is entering the growth phase. The trick is to pick a strong market with good fundementals that is in this stage. There are many things to look at in an emerging market such as job growth, people moving into the area, transportation etc. I like looking in the sunbelt where a combination of climate and economic statistics point to the market being one to buy in. A military base nearby is also a plus as it draws retiries to the area due to the services the base offers. The amount of available houses for sale and the number of days on the market is something I take a close look at. I also look at the sale price versus asking price to determine if prices are going up. the website OFHEO.gov helps in researching appreciating markets. The emerging markets offer one of the best opportunities to profit in real estate that I know of. If you get in at the right time you can profit handsomely. There are even some companies out there that pay big bucks for research and will provide services to point you in the right direction of these new emerging markets. This service is not free of course but can be well worth the expense if you double your money in 12-18 months. Whichever way you go, doing your own research or paying for someone else to do it, if you get into a hot emerging market with a long run up in appreciation you can make huge bucks.

Rent to Own part 2

To find out how much to charge for rent I call two or three property managers in the area and check the classified ads in the local newspaper. From these I get the average rent for a similar rental unit. Lets say I have a three bedroom two bath two car garage home that should rent for $1,200 per month. I would then rent my house as a rent to own for $1,300. I would credit my tenant buyer the extra $100 I'm charging above market rent when they buy the home. Say they have rented it for 12 months and then excercise the option and buy the home. They would receive $1,200 off the purchase price from their monthly rent paid on time payments. I stipulate in the option contract that only monthly rent paid on time will be credited towards the purchase price. This helps get it in their mind that they are going to own the home and motivates them to pay on time more often than a typical renter. They also take better care of the house than a typical renter would as they have pride of ownership.

Rent To Own Part 1

The rent to own exit strategy is one of my favorites. The key benefits are you have cashflow from the property while holding it for 1-2 years of additional appreciation. The tenant buyer takes care of all the minor maintenance thus relieving the owner of those headaches. When the tenant buyer purchases the home the profit on the backend is usually quite good. If the tenant buyer does not buy the home then you find a new tenant buyer and keep the option payment from the first one. The option payment is the down payment you collect when a tenant buyer signs a contract to move into the home. It's best to have them sign two contracts to move in. One is the option to buy contract that sets the price of the home and the length of time the tenant buyer has to exercise the option and buy the home. The other is the lease which sets the rules of occupancy, the monthly rent amount and when the rent is due. It also is where I state the tenant is responsible for all repairs under $200. That amount varies from house to house and the market it is in. It's not a bad idea to have a real estate attorney draw up both contracts. After that is done you have it on a computer disc and re-write it each time you have a new rent to own home. It makes it more affordable that way, as you wouldn't want to have the attorney draw up a new contract each time you get a new rent to own situation when all you need to change is the names, property address, the sales price and the amount of the option consideration.

Why Use an Inspector

A good professional inspector will usually make up the fees they charge you in finding out problems with the property that you end up getting credit for. Their fees are typically around $250 for a single family home. They are usually not experts in plumbing, roofing systems, electrical etc, but they know enough to spot problems in those areas. They might advise you to seek an expert for those specialties if indicated. If you then bring in an electrician, roofer etc they also end up covering their fees in the credits you get from the seller due to repair/maintenance problems you have found. Sometimes the problems found in an inspection are so severe that the property should be dumped and you move on to the next one. More often though the problems that are found by these inspections are no big deal but if you can get $1,500 off the purchase price and the repair needed can be delayed it's a good deal for you the buyer. The third party nature and professional designation of the inspector gives you the buyer leverage to work on the seller to either fix or credit you at closing the repair cost of the discrepancies from the inspection. If you end up not buying the property because of too many problems then the inspector has saved you money by not puchasing a money pit.

Investing in Land

I've enjoyed looking at land for over 30 years. I look mostly at raw land in the Rocky Mountain area. The five parcels I have bought for investment purposes have usually doubled my money. When buying land as an investment one needs to understand an exit strategy that fits that particular property. It may be the best way to profit is to buy low and sell high. You may need to hold it a year or more to accomplish that. Or maybe the best profit is in building on the land by speculating that a new home on it would make for the biggest profit. You might be able to develope the land into a subdivision and make big money selling off the building lots. With any of these methods you must be aware that land has holding costs. You usually don't receive any income on raw land. You also don't have any renter headaches with raw land. Just be sure when buying land you can handle the holding costs like, taxes, mortgage payments and other fees that might be tied to that particular property. If you pick the right piece of land and do everything right you can make a huge profit with few headaches.

Condos versus Houses

New real estate investors often wonder whether it's best to buy single family houses or condos. There are many advantages to one or the other, sometimes depending on your local market. One thing is pretty much a given and that is with houses you have more maintenance. With condos much of the maintenance is handled by onsite management using their handyman. This expense is paid for by you the owner but the headaches of dealing with are quite often the responsibility of the onsite manager. Usually all outside repairs are handled without you having to be involved. This includes roof repairs, outside painting, landscaping and parking lot maintenance to name a few. With condos you pay a hoa fee[ home owners association] and that takes care of some of these outside repair expenses. With single family houses you pay for most maintenance and repairs depending on how you lease is written. You also have to contact the repair people and gather bids. This makes a condo a more hands off type of investment. Therefore it depends partly on your availability as to which type of property is more desirable.

Using Property Managers

Property managers are helpful in managing your rentals but they also help a great deal in local research. Before I buy in a new area I contact two or more property managers and ask what they know about growth in their region. I ask if houses or apartments rent best. I ask what features in a rental are most desirable. Like how many bedrooms, bathrooms and garage/parking spaces. Property managers help me narrow down the field to the rentals that are the easiest to rent and keep rented. They also give me an idea of the amount of rent to expect from any given rental I'm looking at which helps me know how much I can pay for that property based on income. The best part of this research is that it's free. And at the same time you are asking all these questions you are interviewing them for the job of managing your property. So be sure and ask questions like how long have you been in business and what do you charge. Also ask about who does the repair/maintenance on the properties they manage and the fees. These are just a few of the questions to ask but will get you started.

Commercial vs Residential Real Estate

When deciding which type of real estate to invest in, commercial or residential, one needs to have a clear picture of the particulars of each. Most beginners pick residential real estate as it's easy to buy and borrow money on. Here's a brief list of commercial vs residential.

Commercial
harder to borrow money
larger down payment
longer leases
harder to fill vacancies
tenants are responsible for minor repairs
lease is in years not months
tenants usually pay all utilities

Residential
shorter leases
easier to fill vacancies
easier to sell
small down payments
easier to borrow money
tenants can be a pain
landlord responsible for most repairs


These are just a few examples of the pros and cons of each. There are books that cover the subject well. I recommend Real Estate Riches by Dolf DeRoos to get a better understanding of commercial vs residential. Like any purchase do your due dilligence well and you have a good chance to profit.

Pre-foreclosures

There are lots of opportunities out there to buy homes before they go into foreclosure. Foreclosure is what happens when a homeowner can no longer pay the mortgage and after missing 2 or more payments depending on the state they are in, the foreclosure process starts. The secured creditor, most likely a bank, then will attempt to get their money. The bank will issue a demand for payment in full based on the note terms. Most homeowners can't come up with the money and at this point we investors can help them out of their situation in some cases. If the homeowner is willing to sell before the foreclosure process gets to the bank sale/auction point we can save their credit from having a foreclosure on it. If we are dealing with a $200,000 home that has a $190,000 mortgage on it there isn't much room to make a profit even if the sellers sells us the house at $190,000. To make it work we must get the bank to short the mortgage. We can write a letter on the sellers behalf about the conditions in the sellers life that caused them to be unable to make payments and then have the seller sign it. Usually it's a job loss or health issue that got them to this point. If the house is not in great condition we point out to the bank any damage that makes the house worth less than the bank thinks it's worth. Typically we would try and get the bank to take $140-150k on their note. This gives us room to make a profit and save the sellers credit report from having a foreclosure on it. Sellers in this situation are going through a broad range of emotions and are challenging to deal with. It takes a special investor who is not looking to take advantage of them do deal with this situation. If you are going to work pre-foreclosures please handle these deals honestly and ethically.











in full

Buying New Construction Homes

New construction homes are a great way to profit from a small down payment. Some builders in Florida and elsewhere require a modest $1,500 down with no payments until the home is finished. A clever investor will have the house sold at that time and will capture a sizeable gain without ever having to pay on the monthly mortgage payment. Rent to own is another great exit strategy for the new home. By getting a tenant buyer in the house you can ride out one to two years additional appreciation gain while having the tenant buyer pay some or all of your monthly mortgage payment. One of the great benefits to understand about new construction is that your risk is limited to your earnest money, otherwise known as your down payment. If the project tanks you can usually walk away losing only your earnest money. Be sure and do your research on the market you choose to get the right town for growth. Then be sure and pick the most popular type of home that the buying public demands. It might be a two bedroom one bath condo or a four bedroom three bath three car garage house. Calling realtors off of realtor.com and asking what's the most popular type of home for their area will help you pick a winner. As long as you complete a detailed analysis for the market your chances of making a good profit is likely.

Why Use a Mentor

Real estate investing has many pitfalls and using a mentor will help you stay clear of some costly ones. Most seasoned real estate investors are happy to share what they have learned with newbies. Try a local real estate club to find such a person. Chat boards can also be a source to find a mentor. There are several good mentoring programs offered from the guru's that can cost you anywhere from $2,000 to $10,000 and can be well worth the money. They will typically spend three days on the ground with you walking you through any and all investing methods and forms needed to get you where you need to be. The main thing is don't invest blindly like I did in the beginning.

Using Title Companies for Help

Title companies offer investors a variety of services. Chicago Title gives me access to their site where I can search property details. I can find out who the owner is and when they bought the property. I can also get the price paid for the property when the current owner bought it. Sometimes there are sales comparables for the property. It's best to call around to different title companies to see what services they offer. Most of these services are free and will help you become a better investor.

Searching Commercial Real Estate Online

Loopnet.com is a great free resource to search many types of commercial property for sale on the internet. This site features land, apartments, strip malls, dr offices and more. There are realtors and for sale by owners listing property on this site. When you bring up loopnet it will ask for your information to access the site and several times a pop up will solicit you to upgrade to premium membership. Most investors do not need this upgrade. This service reaches most major and minor markets. It's also a good way to find a realtor as you can see who has what type of listing and how many.

Another Tool For Real Estate Investing

If you have not heard of realtor.com it's a great tool for determing value in a new market. I use it by narrowing the search to the type of homes I'm looking for and calling the agent who has the listing. From the agent I ask several questions such as, how many days has it been on the market, what's your market's sale price average versus list price, what's the average days on the market for this type of property. I also ask what has the trend been in your market the last year. Quite often the listing agent is full of good information and willing to give it for free. They might tell of job growth or other factors that make their area a good one to consider investing in. Some investors will find a home on realtor.com and by it without even going there to see the property. This can work if you have a management company in that area give their opinion of it's viability as a rental and then have it professionally inspected.I've never done this but many investors do it all the time successfully. Realtor.com can be used for searching multiunit properties and land but it's strongest use is in single family homes. In the bigger markets there are lots of homes listed which makes it easier to determine value.
Next time I will share a resource for searching commercial properties on the internet

Where There's Job Growth There's Appreciation

In this new age of real estate investing one of the keys I look for in a new market is job growth. How many of you have seen the headlines in the newspapers about job losses? Like Ford Motor Company and GM laying off 30,000 plus workers. The ripple effect of these layoffs is huge in each market where they occur. If the jobs are not replaced the service sector loses 2-3 jobs per professional jobs lost over a 2-3 year span. Conversley when a market has professional job gains then 2-3 service sector jobs are created over the next 2-3 years. When you have these new jobs in large numbers it drives a real estate market up. You have large numbers of people moving to that market and supply and demand take over. Looking back to 1995 the huge job growth in Denver in the tech sector made for a 5 year run of mostly double digit appreciation.
One of the tools I use to find these hot new markets is ecodevdirectory.com which stands for economic developement directory. Each major and most minor markets have a economic developement agency that promotes the area to businesses looking to relocate. You can search every state in the US or even outside of the US for info on where the jobs are. Some of these agencies post which companies they have brought to their market and the ones that are in the process of relocating. Or you can call them up and ask what is going on in their market. Pay close attention to the type of companies and how many employees they will have. The auto companies have a bigger impact on a local economy then most others because when they relocate the parts manufacturers tend to relocate too. That adds more like 3-4 service sector jobs to the area in the next 2-3 years. Just look what's going on in San Antonio right now with Toyota moving in. That market is going nuts. I suggest spending time cruising ecodevdirectory.com and see if you can find the next hot market.
Until my next post happy investing to all.

Investing in Markets Out of Your Area

One of the ways I invest in real estate is to look to markets all over the US. I use the website ofheo.gov as one of the tools for my research. OFHEO stands for Office of Federal Housing Enterprise Oversight. When you go to their website click on House Price Index, then click on House Price Index for the 3rd Quarter,{or whatever the most recent quarter is} and then scroll down to page 15 and 16 for appreciation by state. There you will see how each state compares in appreciation. Go to page 26 for the top MSA's, {Metropolitan Statistical Areas} to see which has the highest appreciation. Some investors target the top appreciation MSA's for investing. This can work well as long as you get in before things start leveling off. Just ask an investor who got in too late in Las Vegas for the huge run up in appreciation in 2003/2004. I know of several investors who are dontwanters there because they got in too late. That's not to say there aren't any good deals left in Vegas, it's just that before 2004 it was pretty much a slam dunk if you bought there.
The other way to use the ofheo website is to go to page 27 for the bottom appreciating MSA's. Some investors watch these types of markets very closely for signs of a turn around. These are markets that offer huge upside potential. Investors who got into the Denver market in 1995 reaped huge gains from this strategy. I suggest looking at both ways and decide which way you feel more comfortable using in yur real estate investing strategy and read other parts from the website to find other information that is useful.
Next time we will look at another internet tool for real estate research in markets outside of your geographical area.

What's an Investor to Do?

When CNNMoney.com posts an article about the King of Real Estate cashing out of his US holdings it's hard not to pay attention. Real Estate investing used to be easier in the US that's for sure. It used to be a new investor with some guts,education and motivation could make a killing in real estate investing. But things have changed rapidly over the last two years.The biggest change in the arena of investing has got to be the amount of investors out there chasing the deals. As Tom Barrack says in his CNN article "there's too much money chasing too few deals, with too much debt and too few brains". The internet has changed things in a big way also. With those two big changes an investor has to have a bigger better tool box to succeed in this era of incresed competition. Over the course of the next two weeks I'll be sharing some of the tools I use to find the deals. So come along for the ride and see if you can grab some new tools for the investor toolbox.

RWREI