Craig Bartels it the broker/owner of Crager-Bartels Real Estate. Hundreds of free buyer and seller reports at MyIndianapolisHome.com CONTACT ME HERE!
Here is some pictures of a two bedroom 1 bath duplex we own that is behind our real estate office. Owned this for about 6 years, never been hard to rent. We just put new carpet, etc. in here. Nothing fancy here, but it does pay the bills.
Usually rents for between 545 and 575/month
Consider these parameters for a real estate deal:
Property Value: $250,000 Purchase Price: $160,000 Repairs: $2,500
If you analyze the numbers, you see that the equity available in this deal is $87,500 (Property Value minus Purchase Price minus Repairs).
So here’s a hypothetical question for you: Assuming that the information above is accurate, and the property is located in an area that you view as acceptable and/or favorable, then:
If I offered to give you this deal in exchange for $10,000 in cash, would you do it?
Remember - this is hypothetical. The real question here is this:
Would you exchange $10,000 in cash for $87,500 in equity?
For most smart investors, the answer is: Absolutely YES!
And this is called “Wholesale Real Estate Investing” - the process of buying a lot of equity at a very significant discount from another real estate investor who has already done the hard work of finding a deal and getting it under contract.
Just think about that - consider how easy real estate investing would be for you if you had a network of real estate investors in your area (and maybe all over the country) who, several times each month, offered you the opportunity to purchase significant amounts of equity for a severe discount…
…It would be quite easy to become wealthy, wouldn’t it?
The answer is: Yes, it will.
You’ve got to admit - it will be a pretty wonderful thing when you know how to find great real estate deals in which you can trade a small amount of cash for a large amount of equity without even having to find the deal yourself…
…and that’s exactly what wholesale real estate investing is all about.
Wholesale real estate investing is conceptually very simple. Here’s how it works:
First, “Investor A” finds a great real estate deal with a lot of equity. Typically, Investor A will have spent a significant amount of time, money and expertise to find the deal, negotiate the term and get the property under contract. By putting the property under contract, Investor A now has control of the property, and the equity in the property.
(For this example, imagine that Investor A has found a property worth $200,000 and has set a purchase price of $115,000 and he also knows that there are $15,000 in repairs, which leaves an equity position of $70,000).
Second, “Investor A” finds another party, “Investor B”. Investor B recognizes that the contract that Investor A has established is worth $70,000 in equity, and so he strikes a deal with Investor A to turn the deal over to Investor B in exchange for some amount of cash (we’ll use the value of $12,000 in this example).
So Investor A is giving up $70,000 in “potential” profit in exchange for $12,000 in current profit. And Investor A is paying $12,000 because he believes he can make more than that on the deal, since there’s a full $70,000 of equity.
This deal between Investor A and Investor B is called an “Assignment”, because Investor A is assigning the contract to Investor B.
Third, Investor B does his “due diligence” to confirm that the deal is as good as he thinks it is.
Finally, Investor B closes the purchase of the property, and Investor “A” receives the assignment fee from Investor B.
This is, obviously, a simplification of the process. But this is essentially how it works - not so difficult, is it?
About the Author
Free periodic notification of excellent “wholesale” real estate investing opportunities plus free online training that reveals how wholesale investing works and how you will make money from it including deal-finding strategies and creative investing tips. http://www.RealEstateInvestorsTraining.com robertlear@realestateinvestorstraining.com
Written by: Robert K. Lear
As the owner of over $5 million worth of quality real estate investments in the Indianapolis and the surrounding area, the Crager-Bartels Real Estate Team knows what it takes to own, rehab, purchase, and sell investment properties. Looking to invest in something other then the stock market? Let us sit down with you and discuss your real estate investing options. Check out pictures of some of the real estate we own at http://pictures.zionsvillehomesonline.com
Technorati Tags: real estate investing, real, estate, homes, buying, rehab, purchase price
As the owner of over $5 million worth of quality real estate investments in the Indianapolis and the surrounding area, the Crager-Bartels Real Estate Team knows what it takes to own, rehab, purchase, and sell investment properties. Looking to invest in something other then the stock market? Let us sit down with you and discuss your real estate investing options. Check out pictures of some of the real estate we own at http://pictures.zionsvillehomesonline.com
Would you like to buy investment real estate? What is stopping you? Is it the money to get started?
If you are like most people, you think that the way to get enough money to buy a property is to go to a bank and apply for a mortgage.
Do you know that the best solution for beginning investors who are short on cash and credit is a method that most people don’t even know exists? This method allows you to bypass banks and mortgage brokers.
In three short steps, you can find all of the money you need to fund any of your real estate deals, without ever having to apply to a bank for a mortgage.
The first step is to realize that the best solution is to use private money. Private money comes from an individual, rather than a bank. A private money investor could be anyone. When you open your eyes to the possibilities of using private money to fund your real estate investments, you realize that all the money you need is hidden in plain sight all around you.
The next step is to find a private money investor. Private money investors are everywhere, ranging from neighbors to professional investors. They can be people you already know or people you find through advertising or online. Let’s keep it simple and start with the people in your own immediate circle. Your relatives, your neighbors, your friends, your co-workers, your dentist, and your mechanic are all potential private money investors.
You might be wondering why anyone you know would be willing to loan you money to invest in real estate. The answer is that most people are not satisfied with the low rates of return they are getting in so-called safe investments in savings accounts, money market accounts, and CDs. And people have been badly burned by the stock markets. They’d like to make more money but they don’t know a better way.
You can find private money investors by asking the people you know if they are happy with the returns they are getting on their investments. Then you ask if they would be interested in earning higher rates of return through safe investments in real estate.
If you don’t know about private money for real estate investing, it’s highly likely your friends, relatives, and neighbors don’t know either. They simply don’t know that they can use the money that is sitting in low-interest savings accounts, money market accounts, and CDs to invest in real estate. They also could have substantial equity in their own homes or IRAs that return tiny yields on mutual funds.
You can explain to them that you are offering a higher rate of return than they could get through any of these other so-called safe investments. They could earn 8%, 10%, even 15% by funding a first mortgage on an investment property. One of the greatest benefits of using private money is that you can create flexible rates and terms. You are asking for them to invest in a property that will guarantee them a higher rate of return than anything they are doing now. And you are doing it by offering a first mortgage secured by real estate.
After you find a person who is interested, your third step is to find a title company to set up the paperwork for you. You are not simply asking to borrow money. You are asking your private money lender to fund a mortgage on your investment property.
At this point, the title company will treat the mortgage contract between you and your private money investor the same way they would treat a mortgage contract between you and any bank.
If you want to get started investing in real estate, realize that the money you need is as close as the people you know as you go about your daily life.
Using private money to fund your real estate investment has two great benefits. First, it allows you make money with someone else’s money. And second, you are helping your private lenders make more money by investing with you than they would by keeping their money in the bank. This is a true win-win situation for both of you.
So, if you would like to buy investment property but don’t have the money or the credit to qualify for a mortgage on your own, the easiest and best solution is to look for private money investors among the people you already know.
About the author: WARNING: BEFORE YOU INVEST IN REAL ESTATE… FREE “No Money Limits Consumer Guide to Real Estate Investor Training.” http://www.nomoneylimits.com
Written by: Kalinda Rose Stevenson
As the owner of over $5 million worth of quality real estate investments in the Indianapolis and the surrounding area, the Crager-Bartels Real Estate Team knows what it takes to own, rehab, purchase, and sell investment properties. Looking to invest in something other then the stock market? Let us sit down with you and discuss your real estate investing options. Check out pictures of some of the real estate we own at http://pictures.zionsvillehomesonline.com
Technorati Tags: real estate investing, real, estate, homes, rehab
Knowing what a Good Deal is - Is the Key to Success in Real Estate. Richard Odessey
Dear Investor, Take this little survey: The most important key to Real Estate Success is: 1. Finding Motivated Sellers 2. Funding Your Deals 3. Negotiating 4. Knowing a Good Deal when you see one. Yes all of them are important. And if you answered #4 - you’re right on the money. Why, because if your deal is a not good one, all your other skills and marketing and power will not make you money, and may even lead to disaster. On the other hand, if you can unfailingly target good deals, you will always be successful and all the other skills and your marketing methods will serve to increase your success. What is a Good Deal? It’s a lot easier to state the question than give the answer. Why? Because it depends on many factors like: FMarket value and purchase price FExpenses, carrying costs, repairs FCashflow and profit FHolding time FLoan terms FRisk factors FAnd more . . . And most importantly, it depends on the type of deal you’re doing. For example, if you have a loan on a property that you intend to rent or sell on a lease option, the terms of the mortgage, future tax increases, and current area rents are critical to consider in insuring a positive cashflow. However, if you are planning to do a short rehab job, and sell or just flip to another investor, rental income is irrelevant as are future tax increases. It’s What You Don’t Think About that Can Get You The thing that trips up many investors, is that in our enthusiasm to do a deal that we’ve found, we don’t take into consideration “hidden” costs. For example, if you’re doing a renovation and you’ve done your due diligence on contractor costs, have you also considered your carrying costs such as mortgage payments, utilities, etc. not only during the renovation, but also the time it will take to sell and close with a new buyer? Or if you’re using a realtor to sell the property, have you calculated the effect of a 6-7% commission and the closing costs the seller will pay on your bottom line. A 10% profit margin can shrink pretty quickly to zero under those circumstances. Read Those Loan Terms Carefully Or have you taken into account, not just your loan to value ratio on the property, but your investment to value ratio (e.g., the total of all outstanding loan balances plus the additional funds you’ve put in from your own cash or borrowed from your home equity line or friends and family)? And on the income side, have you calculated how long you should hold the property to receive a significant profit from the pay down of the mortgage. With a new 30 yr loan, you may have to wait 5-10yrs to get the same pay down you’d get after a few years from a 30yr loan that’s been seasoned for 10 years. And did you carefully read the note contracts to take account of adjustable rates and pre-payment penalties? Checklists aren’t Enough A number of courses and real estate gurus will give you checklists. That’s helpful in not forgetting something, but it doesn’t help you with the laborious and complex task of putting all the numbers together. There’s just something about working with the actual real numbers, that brings the reality of the deal into actual focus. Our hopes and wishes dissolve before the actual profit and loss calculations. Moreover, the numbers can pinpoint the weaknesses in a deal, and point the way to a solution. No mere checklist can do that. What About Risk? I think you’ll also agree that a Good Deal, is not just High Profit, but also, most importantly Low Risk. Many a dream of a golden future has come crashing down because some little thing went wrong. Many a would-be mogul, is now working at a 9 to 5 because their killer deal was wrecked by an unforseen glitch. This is what we mean by high risk. The successful investors do deals with low risk. Deals that are so robust that even if almost everything went wrong they’d still come out with a profit. Build In A Safety Margin For example, suppose you have a rental with a positive cashflow. Is your cashflow high enough or your option payment big enough, that even if you had to evict your tenant for non-payment and it took you 2 months to fill it with another cash-paying customer, you’d still come out ahead? Or, is your investment to value so low that even if you had to offer your buyer a big discount for a quick sale, you’d still walk away from the closing table with a fat check? In real estate things can and usually do go wrong. It’s Normal. So, wouldn’t you like all your deals to have these kinds of safety margins? Fixing the Problems with Your Deal Now, if you knew in advance that your risk was too high, or your cashflow was too low, or your profit over the life of the deal wasn’t enough, you’d want to think of solutions. This is what is meant by being a “transaction engineer”. Find the solution, fix the problem, test it on the numbers, and then negotiate it into the deal. And if you can’t find a solution (but there always is one) or the seller won’t accept it-NEXT! I can tell you from real experience, a bad or risky deal is NEVER WORTH DOING-no matter how enticing the vision. The personal stress, heartache, and loss of confidence can be even more harmless than the potential financial loss. In the words of an ex-president’s wife, if you are faced with doing a bad deal-Just say No! What’s the Answer? Some experienced investors have a feel for good deals, and can avoid trouble most of the time. Others only do a particular type of deal and use a rough “rule of thumb” to evaluate their risk and profit. However, what’s really needed is a “calculator” or computer program that will take in all the variables and ÜCalculate the exact profit and cashflow for all kinds of deals. ÜMeasure and Evaluate the financial risk in the deal ÜUse standard and safe criteria for what constitutes a good deal ÜSuggests alternatives to fix what is wrong The Deal Evaluation Tool We’ve taken tons of real estate courses and looked at all kinds of real estate software, and nothing has come close to what we as investors need. So we decided to create our own Deal Evaluation Tool . Well after several months of testing and improvement, we now use it for all our deals-short sales, subject to, lease option, rehab, wholesaling, and even some commercial. Since we can try out different “what-if” scenarios, it’s kept us away from some real pitfalls, and helped us negotiate better profit margins. We wouldn’t “leave home without it”. Constantly Meeting The Needs Of Investors Well, some other investors wanted to try it, so we put it on our website. Much to our delight we now have a community of users and a users group that shares their insights about doing deals and creative ways to use the Deal Evaluation Tool . Their suggestions, are leading to a rapid improvement of already incredibly useful tool. There is just nothing out there like it. We’ve also put a demo up for those investors who would like to get a feel for using it. And we hold classes for new users. Knowing all the numbers, and having evaluated our risks with the Deal Evaluation Tool gives us more confidence in negotiating deals with sellers and more consistent high profit real estate deals. And that’s what we all want, isn’t it. Best of Success, Michelle & Richard Odesey modessey@InvestorWealth.com 770-338-2797 P.S. You can take a FREE test drive of the Deal Evaluation Tool by using the link below and clicking on the Deal Evaluation Tool icon with Richard’s picture: www.InvestorWealth.com
About the Author
Go to www.InvestorWealth.com for these Real Estate Profit Secrets: * Super Success Short Sale Secrets (*Best Course)
* Deal Evaluation Tool
* Free Teleseminars on the latest and most effective real estate profit techniques
Written by: Richard Odessey
As the owner of over $5 million worth of quality real estate investments in the Indianapolis and the surrounding area, the Crager-Bartels Real Estate Team knows what it takes to own, rehab, purchase, and sell investment properties. Looking to invest in something other then the stock market? Let us sit down with you and discuss your real estate investing options. Check out pictures of some of the real estate we own at http://pictures.zionsvillehomesonline.com
Technorati Tags: real estate investing, real, estate, homes, commercial, rehab, purchase price
Why Have A Team?
It can be quite a daunting task, when you’re starting out, to consider hiring accountants, lawyers and other professionals. Not only is the expense a concern but knowing who to consider and how to make a decision about who to utilize puts many people off. And it is for these reasons that many would-be investors try to do it all themselves.
However, you will find that the short term benefits of doing it all yourself will very quickly be dwarfed by the cost of lost opportunities, bad deals, and a simple lack of manpower turning just a few deals into a full-time job. So instead, let’s discuss some effective selection techniques and ways to minimize costs in the early days.
At this stage, don’t worry too much about how you will afford to have these professionals “on your team”. There are definitely going to be some costs in getting started but initially you will be calling on these people far less frequently than the phrase “on your team” might suggest.
Who To Include On Your Team
Business Team
If you look at the general process for successful real estate investing you will see some important early steps involve legal and accounting advice so it follows that a lawyer and accountant are key members of your team. Your lawyer and accountant should jointly help you with structuring your business for optimal legal protection and tax purposes. Your lawyer will also need to help in creating appropriate contracts for the deals that you do. And similarly, your accountant should give case-by-case tax advice.
Your primary selection criteria for these professionals should be that they are real estate investors themselves. “How do I find that out?”, you may wonder. Just ask them. But be warned; they will know why you are asking so they may give you a positive reply on the basis that they own their own home and maybe a vacation property or two. So, you may want to ask if they generate a substantial income from investment real estate.
The reason this is your greatest concern with accountants and lawyers is that if they are investors themselves they will have much more of a “can-do” attitude rather than constantly putting a negative spin on things. They will understand where you are coming from and have a keen interest in finding answers to your questions. If you get active investors on your team it will make life so much easier.
Property Acquisition Team
In addition to these professionals, some other key people to include in your team are: a real estate agent or broker, a property manager, and a lender or mortgage broker.
When selecting these members of your team it’s not so important that they are investors themselves but you really want to narrow your search to people that work with investors on a daily basis. You will find that in each of these professions there are specialists who focus on investors and these are the people you want to work with.
For example, to find a good real estate broker you could walk in or phone and simply ask who their best investment broker is. If they really have to think about who that is, they may not really be an investment specialist so you might want to try a different firm. But if you get a confident reply that “Bob looks after most of the investors!” then you can ask Bob a couple of questions to make sure he knows what he’s talking about.
Two key questions to ask the nominated investment broker are:
+ What are the top couple of investment properties on your books right now?; and
+ Why are they your best? What makes them good?
Obviously, if this person doesn’t have an opinion about the best deals on his books he will struggle to help you out. And hopefully, their answer to the second question will agree with your concept of what a good investment property is. If you’re unsure at this stage, they should generally be talking about the returns and the upside of the location first and particulars about the property second. Unlike a home buyer, you aren’t so interested in the lovely drapes, the white picket fence, or whether you like the color of the bathroom. The property numbers are the most important thing along with the factors that make those numbers attractive.
With regards to selecting a property manager it is best in most cases if you manage a property or two on your own when you are starting out. That way you will understand many of the issues that must be dealt with and will be in a far stronger position to quiz prospective managers. Some issues to consider are collections, late payments, inspections, maintenance, marketing, minimizing vacancies, etc.
In your search you obviously need to find out how your property would be managed: if keys are handed out, how enquiries are handled, if you receive reports after routine inspections. Do not go on management and letting fees alone. It is important that the people managing your property look after you, your tenant and your property. A wise thing to do would be to contact a few customers and see what they have to say; ask the company for testimonials.
Other Team Members
Here are some other people that you could well need along the way:
+ Bookkeeper - you should consider a bookkeeper an essential team member as they can help keep your finances in order for a fraction of the price of an accountant. Involve your accountant in strategic decisions but find a good bookkeeper for day-to-day operations.
+ Appraiser - many people try to save maybe $700 and it ends up costing them a whole lot more than that because they don’t know the true value of a property.
+ Bird dogs - why not offer a reward to people who can bring you a motivated seller. People who know an area such as delivery people, house-sitters, or movers can be a great source of wholesale property. If you offer $500-$1,000 for each property you complete on then it doesn’t cost you anything (just a very small percentage of your profits).
+ Insurance agent - you simply must insure your properties so make sure you get the right cover at a good price.
+ General contractor - some of the properties you find will need some work done to them and if you have a guy who you give regular work to he may come and look at properties for you before you buy.
+ Building and pest inspectors - it just makes sense to have a good relationship with someone so you get great service and good prices.
Win-Win Partnerships
I mentioned earlier that there are ways you can minimize costs when dealing with your team members. The best method I have found is very well known but not very well practiced. Establishing win-win partnerships does a lot more for you than minimize your costs; it strengthens your business relationships and multiplies your business because you are helping other people rather than just thinking about how you can get something out of someone else.
An example of this would be to bring business to your real estate broker. If you come across properties that are not listed and do not suit your investing strategies it is a great idea to forward the details to your broker. If you can help your broker get a couple of listings each month he will very much appreciate it. It should then come as no surprise if that broker starts to come to you with properties before he tells anyone else about them. He will suddenly become more interested in your business and go out of his way to help. He may even spend time doing MLS searches for you on properties that he doesn’t even have on his books.
There are many clichés for this principle of reciprocity because it is timeless and it works.
This same principle can be applied to just about any business relationship. Just start to think about it from the other person’s perspective - what’s in it for them?
Just before we wrap it up, here’s another great example of how to use this approach when Talking To Your Lawyer.
Conclusion
I know this topic can be a stressful one when starting out so I hope this alleviates some of the pain and encourages you to go out there and do it. It is a critical step in building a sustainable real estate investing business so do not let any remaining discomfort dissuade you from taking action.
To your success,
Scott Roemermann About the Author
Scott Roemermann is the creator of Investing-Secrets.com; a website dedicated to helping consumers in their search for sound investing advice from honest and experienced professionals rather than self-proclaimed ‘real estate gurus’. Scott does not claim to be a guru or advisor himself, he says he’s ‘just an average guy’ who has also experienced the bewilderment and uncertainty of trying to get a good real estate investing education when starting
Written by: Scott Roemermann
As the owner of over $5 million worth of quality real estate investments in the Indianapolis and the surrounding area, the Crager-Bartels Real Estate Team knows what it takes to own, rehab, purchase, and sell investment properties. Looking to invest in something other then the stock market? Let us sit down with you and discuss your real estate investing options. Check out pictures of some of the real estate we own at http://pictures.zionsvillehomesonline.com
Technorati Tags: real estate investing, listings, real, estate, homes, agent, rehab
With all the stories of people making tremendous amounts of money in real estate it’s no wonder why so many are looking at real estate as an investment vehicle. It offers more security than the stock market, provides great potential returns, offers tax benefits and let’s not forget; it sounds cool to be ‘in real estate’. Everybody can buy and sell stocks from their phone or computer these days. But real estate, now that’s something else.
One of the challenges that many are faced with is putting up the money to acquire a piece of property. Although in reality this is usually not the biggest obstacle. You might say “Hey, what do you mean, not an obstacle. I would love to invest in real estate, but I just can’t afford to!” The point is that hardly anyone who buys a piece of real estate has enough money in their account to pay for it. That’s where your banker comes in. Let’s face it. Do you know anyone that owns their own home? I mean truly own it? Probably not. Sure, you know a lot of people that have a house to their name, but wait until they get behind on their monthly mortgage payments and you will soon find out who really owns their house. That’s right, the bank. So if these people can use the bank’s money to buy a house, why can’t you?
Now ‘owning’ your own home may sound like a somewhat obvious way to get started in real estate, but it is also a very good way to do so. You might say “Duh…” But apparently this little step is overlooked by a lot of people. Just take a look at how many people are still renting a property instead of buying one. Now of course the relation between rent and housing prices varies from country to country and even from area to area. But wherever you go you will still find people renting, because in their mind “they don’t have enough money to buy a house.” In reality it would be much cheaper for them to buy!
When you rent, you are pretty much flushing your money down the toilet. Of course you are getting the pleasure of living, but the point is you’re not building anything long term. Every dollar you spend on rent is a dollar you will never see again. Whereas if you own your own home, instead of paying rent you would be paying for your mortgage. Even though there is a lot of variety in mortgages these days, the basics of practically all mortgages are more or less the same. Every month you make a payment which consists of two parts: interest and principle. The interest part can be compared to rent. Those dollars are gone with the wind and you will never hear from them again. However, the part of the payment that goes to the principle is money you keep. Every dollar that is used to pay off the principal is a dollar you put in your own pocket.
So if you’re thinking about getting started in real estate and you don’t ‘own’ your own house yet… Change it, and get some experience. It’s a great first step towards building your capital and in many cases, it just makes more sense financially. It can also supply a range of opportunities for accelerating the process of building your net worth. When real estate prices go up, so does the value of your property. Whereas the money you owe the bank, your mortgage, remains the same. In other words this helps you build your net worth. Compare this to people that are paying rent… Their net worth does nothing. However their landlord’s net worth is doing very nicely in this scenario and he or she will probably love you for it. So if you get a warm fuzzy feeling about making somebody else rich at your own expense… Keep renting. If you would rather build your own capital instead… Buy your own house!
Many home owners have accumulated more money through appreciation of their property than by working a full time job for many years. Now before you go out and buy the first property you lay eyes on, don’t forget that some security measures are in order here. As you may or may not know, real estate prices do not always go up, and certainly not in a straight line. Yep, this can be shocker to some people, as well as an ugly reminder for those who overlooked this minor detail in the past. If for some reason you would have to sell your home in a down market, it can be a costly adventure. You wouldn’t be the first to end up with a house worth considerably less than the mortgage resting on it. So make sure to keep some slack. In the long run real estate prices have always been on the rise, but in any cycle there are down periods. By keeping some slack and being patient you will be able to sit through these times and profit from the long term up-trend.
About the Author
This article provided courtesy of http://www.arizona-real-estate-shopper.com” target=”_blank”>http://www.arizona-real-estate-shopper.com>http://www.arizona-real-estate-shopper.com
Written by: John Sanderson
I love those TV rehabbing shows like Flip That House. On the show people buy a house needing to be seriously updated and repaired. Usually the kitchen is heavily upgraded with new cabinets, cutting edge appliances, new countertops and more. The bathrooms are completely redone with new tile, tubs, showers, sinks and more. The living rooms and other areas usually have walls taken out to open up the floor plan and usually carpet is replaced with some type of hardwood flooring. It’s realistic to do what they show in a high dollar housing market like California to make the huge profits they usually get on that show. In a lower priced market like Memphis, TN rehabbers are looking to make $20-30,000 per house minimum. In California and on that show they are looking for $50,000-150,000 per house. That’s because homes are so much more expensive in California where the show is produced. In a market like Memphis many of the same upgrades are done but maybe skipping the granite countertops and some other high end upgrades. In any market you are going to repaint and redo the floors. The areas to spend the most money to upgrade are the kitchen and the bathrooms. A great value add that sometimes adds tremendously to the value of the home is if you can add a 2nd bathroom to a home with only one bathroom. While this will probably cost in the $10,000 range to do, it could increase the value of the home by $20,000-40,000 and significantly add to your profit potential.
To do deals like this you need to go through several steps. First of all you have to get set up with a hard money lender as you cannot get a normal mortgage on a house in disrepair. You need to see what homes are listed for in your area and figure that when you fix it up you want it to be nicer and cheaper than all other equivalent homes on the market for that neighborhood. Working backwards from the price you could sell at to undercut the market, take out the repair costs and pad it by at least 50% for unforeseen costs(always there) and then subtract your expected profit and holding costs(interest), realtor fees(if you use), advertising and more. If you can still make at least $20k it should be worth doing.
Managing your contractors is a very important part of this whole process. Ask other investors who they know and trust to come in and do your work. Require the work to be done on time and put penalties in the contract for late completion. Don’t pay for the work up front, but agree to pay them a part like 25% as each 25% of the work is completed.
One thing important to understand about these types of deals is that they aren’t super quick money. Typically the work will take a couple of months and then it will usually take a month or two to find a buyer. Hard money lenders typically loan money for 6 months as this time frame usually is sufficient to sell the fixed up home.
Homes like these may be homes the sellers can’t afford to fix up or simply don’t want to fix. In real estate listings these may say things like handyman special. Foreclosure homes and bank real estate owned(REO) listings are generally good candidates. Mailing to out of state landlords can produce some homes that are good as rental homes typically need updating as they aren’t set up to sell retail.
About the author:
David Neese is a real estate investing author who offers a free course for real estate investors delivered by email, audio and teleseminar which you can get for free at: http://www.FreeRealEstateInvestingCourses.com You can find more information about David at http://www.DigitalSuccessCoach.com
Written by: David Neese
Technorati Tags: real estate investing, listings, real, estate, homes, rehab, rehabbing
With so many people making tremendous amounts of money in property or real estate it’s no wonder so many are looking at real estate as an investment. It offers more security than the stock market, provides great potential returns, offers tax benefits and it sounds cool to be ‘in real estate’.
One challenge many are faced with is the money to acquire a piece of property. You’ve heard, “I would love to invest in real estate, but I just can’t afford to!” Hardly anyone who buys a piece of real estate has enough money to pay for it. That’s where your banker comes in.
Owning your own home may sound like a somewhat obvious way to get started in real estate, but it is also a very good way to do so. This step is overlooked by a lot of people. Just take a look at how many people are still renting a property instead of buying one. People rent because in their mind, “they don’t have enough money to buy a house.” In reality it would be much cheaper for them to buy!
When you rent,you’re not building anything long term. Every dollar you spend on rent is a dollar you will never see again. If you own your own home, you would be paying your mortgage. The basics of practically all mortgages are more or less the same. Every month you make a payment which consists of two parts: interest and principle. Interest can be compared to rent. Those dollars are gone and you will never hear from them again. The part of the payment that goes to the principle is money you keep. Every dollar used to pay off the principal is a dollar you put in your own pocket.
So if you’re thinking about getting started in real estate and you don’t ‘own’ your own house yet… Change it, and get some experience. It’s a great first step towards building your capital and it makes more sense financially. There are opportunities for accelerating the process of building your net worth. When real estate prices go up, so does the value of your property. The money you owe the bank, your mortgage, remains the same. In other words this helps you build your net worth. People that pay rent… Their net worth does nothing. Their landlord’s net worth is doing very nicely in this scenario and he or she will probably love you for it. So if you get a warm feeling about making somebody else rich at your own expense… keep renting. To build your own capital … Buy your own house!
Many home owners have accumulated more money through appreciation of their property than by working a full time job for years. Before you go out and buy the first property you see, don’t forget some security measures are in order. As you may or may not know, real estate prices do not always go up. This can be shocker to some people, as well as an ugly reminder for those who overlooked this minor detail. If for some reason you would have to sell your home in a down market, it can be a costly adventure. You wouldn’t be the first to end up with a house worth considerably less than the mortgage. Make sure to keep some slack. Overall, real estate prices have always been on the rise, but in any cycle there are down periods. By keeping some slack and being patient you will be able to sit through these times and profit from the long term up-trend.
About the author:
With many years in the industry of property or real estate, host, Sintilia Miecevole’s site http://www.miraproperty.com will help you with searches from taxes, listings including residential, commercial and land to unclaimed property, vacation, waterfront and much more. Be sure to visit http://www.miraproperty.com for further information.
Written by: Sintilia Miecevole
As the owner of over $5 million worth of quality real estate investments in the Indianapolis and the surrounding area, the Crager-Bartels Real Estate Team knows what it takes to own, rehab, purchase, and sell investment properties. Looking to invest in something other then the stock market? Let us sit down with you and discuss your real estate investing options. Check out pictures of some of the real estate we own at http://pictures.zionsvillehomesonline.com
Technorati Tags: real estate investing, listings, real, estate, homes, residential, buying, commercial, rehab
( February 14, 2006) — With some 22,000 reports of suspicious transactions in 2005, the FBI has identified mortgage and foreclosure fraud as a growing epidemic and “one of the fastest-growing white-collar crimes in the United States.”
Reports of suspicious transactions jumped 28 percent last year over 2004. In a typical fraud scenario, distressed homeowners are persuaded to sign over their property via quitclaim or warranty deed, often with the promise that they will receive help to avoid foreclosure.
In some instances, deeds are simply forged, then stamped by a notary public who is either lax or involved in the fraud.
Officials in Florida, one of 10 states on the FBI’s list of mortgage fraud hot spots, warn homeowners to be alert.
Sue Baldwin, director of records for Broward County in Florida — one of 10 states on the FBI’s list of mortgage fraud hot spots — has proposed state legislation that would require quitclaim deeds to be prepared by a lawyer. So far, no legislative action has been taken.
Baldwin says that homeowners in financial trouble should get qualified legal help and refuse to sign anything they don’t understand.
Source: South Florida Sun-Sentinel, Ian Katz (02/12/06)
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Been kind of slow the past few days. I am in the process of restructuring some of my debt(I guess that’s what it’s called if it’s commercial property. Crager-Bartels has three commercial properties we are putting under new financing and pulling some cash out to do some more rehab projects. Things are moving along nicely.
We have more of our rentals rented, down to just 3 empties right now(excluding the Vine St rehab). One of the 3 is almost ready to rent, so things are moving along nicely. The winter was one of the hardest with regards to empties I have had in 8 years or so.
Technorati Tags: commercial, rehab