Archive for Investing
Investment Real Estate – A Golden Market For Buying Rental Property
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If I were to ask if you ever thought about investing in real estate, my guess is you would answer “yes.” Many have dreamed of purchasing investment property to supplement their income, build wealth for retirement, or fund their child’s college tuition but have sat on the sidelines watching their dreams turn to mere wishful thinking. Well, now more than ever is the time to get off the bench and onto the real estate investing playing field. We’re experiencing a rare golden market for acquiring cash flow real estate property that we may not see for many years to come (or ever see again)!
How is this so? It is so due to a combination of historically low interest rates, drastically fallen home values and stable rent prices. A few years ago when home prices were skyrocketing by the day it was nearly impossible to buy a home, rent it out and receive a positive cash flow. Yet the tide had turned, and now it’s very possible to do just that! In the summer of 2008 I helped an investor client of mine find and purchase a deeply discounted renovated bank-owned townhome in Prince William County, VA and a few weeks later secure a tenant for her which provided her a substantial positive rental cash flow. And the beauty of this transaction is that as the real estate market rebounds over the long-term she will enjoy the equity appreciation, tax benefits, and monthly supplemental income while her tenants are paying for her valuable asset.
I truly believe that real estate is the cornerstone for building generational wealth. I have enjoyed the benefits (although not void of challenges) of owning cash flow rental property for 11 years and have made it my professional mission to help renters become homeowners and homeowners become successful real estate investors. The current real estate market provides one of the greatest windows of opportunity to begin that journey towards long-term wealth accumulation. If you are ready to experience it for yourself, I recommend the following steps:
Schedule a consultation with an investor-friendly real estate agent knowledgeable and experienced in finding and structuring profitable cash flow real estate investing transactions. This initial consultation will provide you an opportunity to share your goals and get professional guidance on developing a plan of action to bring your vision to reality. Get pre-approved for investor financing. Your real estate agent should have a team of investor-friendly lenders experienced in financing investment property purchases and consulting buyers on the best loan options, down payment requirements and loan terms to achieve your goals. Lenders now have more stringent credit and down payment requirements, thus making this a critical step before hitting the pavement to see homes. Start looking for your first, or next cash flow property. This is the exciting part! Your real estate agent should be diligent in finding homes that will yield a positive rental cash flow within your loan approval amount. This home search process should include analyzing recent sales comparables to determine the current market value and appropriate offer price, and recent rent comparables to determine how much you can charge for rent. With this data you can perform a quick rental cash flow profit analysis by using this formula: Monthly Rent – Monthly Debt Payment (principle + interest + taxes + insurance + pmi) – HOA/Condo fees – Other Recurring Costs (property management fees, maintenance) = Monthly Rental Cash Flow Secure a tenant. Once you have purchased your investment property your real estate agent should help you secure a tenant, if needed, so you can start receiving your monthly rental cash flow. Plan to hold the property long-term. Wealth accumulation in real estate historically comes from significant equity appreciation that occurs over time.
Note: For tax and legal advice concerning real estate investing matters consult a tax professional and attorney respectively.
Selling A House?
Real Estate Investing – Is A Lease Option A Good Idea When You Really Want to Sell?
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Lease with option to buy: a lease option has a longer term than a straight option, usually running for as long as one year or longer. Some will even stretch to three years, depending on the whim of the seller. While your lease is ongoing, you can rent out the property and be in a positive cash flow. The second advantage is, the property is appreciating in value. If you have a long lease option, you can then sell the property for the highest price you can obtain.
One last strategy for hot picks: be on the alert for long leases. Long leases will ensure that a property will be rented or leased for long periods of time, not just a year. Some commercial leases for example go for as long as 5 or 10 years. One example is the government. Take post offices as the best illustration. The government will usually rent space for post offices on a long term basis. If the property you are eyeing has government outlets like the post office, the automobile insurance board or the government-sponsored health centres, these buildings qualify as hot property! LOCATION!
You’ve heard about the three principal parameters in real estate? One – location, two – location, and three – location. Take that with a capital “L”. One trick in looking for that pot of gold at the end of the rainbow is to buy the worst property in the best neighborhood, NOT the best property in the worst neighborhood. This is a cardinal rule that sophisticated inventors try never to break.
If you are thinking about offering a lease option, check out: Insider’s Guide to Selling Real Estate
Real Estate Investing In Belize
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Any trip to Belize starts fantasies of owning a beach villa, or a jungle resort. There are a lot of North Americans in this English speaking, former English colony.
Belize is known for its reef, the second largest in the world, and the fantastic diving that goes with it. Even beginner divers have heard of the Blue Hole, a famous diving spot. Ambergris Caye, “La Isla Bonita” in Madonna’s song, is the main tourist spot.
Along with tourist shops and T-shirt shops, there are real estate shops on the dusty roads of San Pedro on Ambergris Caye. Belize prices can range from as low as $5-10,000 for a beach lot in Corozal Town, a sleepy border town, to much higher prices for properties on Ambergris Caye. The southern resorts like Placencia are somewhere in between, price-wise.
There is lots of online assistance available. Gringos resell their properties, and locals sell to gringos, often through real estate agencies. You can contact a local real estate agency when you are in Belize, or simply scour the listings online.
If you keep in mind the old “buying swampland in Florida” tale, you’ll realize that you simply MUST visit and see for yourself ANY property you buy. You’d take a $2,000 car for a test drive and kick the tires, wouldn’t you? Then why would you make a $100,000 purchase, sight unseen?
Oftentimes the most important part of a purchase like this is YOUR enjoyment – you can buy purely for investment purposes, but will get an additional bonus of sunshine and relaxation if you LIKE the area, WANT to travel there, and VISIT your property to keep an eye on it or stay in it.
As more and more North Americans travel, and with the ease of getting to Belize, and its English speaking, safer roots – there will be more people looking to retire and visit Belize. This should be a continuously appreciating investment with good rental prospects, if you do your home work!
Real Estate Investing Seminars
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When you look around, it’s amazing how many people are putting some of their extra cash into a real estate investment. Is it just that as the baby boomers get older, more of them are panicking about having enough money for retirement? Or is it just that all the reality shows on television about remodeling rooms and homes has given people the urge to remodel something?
Either way, there’s no doubt that plenty of people make good money from real estate, and so can you. But although you may have heard some of the stories about Joe Bloggs who bought a house without having a clue what he was doing, only to sell it and make a fortune down the road, chances are that won’t happen to you. As more people get into real estate investing, the harder it’s going to be to make money just through pure luck. You need to know what you’re doing to get the best results.
That’s where a real estate investing seminar can be useful. I’m sure you’ve heard the concept of modeling yourself on someone successful if you want to be successful too, and real estate investing is the same. If you can find someone who’s made a lot of money investing in real estate, learn their methods and then copy them, chances are you’ll be very successful too. Unfortunately, most people making lots of money from real estate aren’t interested in sharing their strategies with anyone. If you can find someone and get them to be your personal mentor, great.
But if you can’t find a personal mentor, then look around and find a real estate investing seminar run by someone who’s made a success of real estate investing. There are plenty of companies that run real estate investing seminars, usually because they’re trying to flog their latest development, and it’s probably a good idea to steer clear of those. Ask around, particularly if you have friends or family who invest in real estate, to see if they can recommend a seminar they’ve been to.
Do some searching on the Internet, and you’ll soon come across a number of real estate investing seminars. You can also search based on a presenter’s name, to see what other people have to say about the presenter’s background and the success of his or her techniques. Most importantly, leave your credit cards at home, so that if the seminar is mostly about selling you lots of expensive resources, you can go home and sleep on it before blowing a stack of money. After all, you want to use most of your money for investing in real estate.
Wholesale Real Estate Investing
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Wholesale real estate investing is where you find a property that is below market value and needing repairs, then you resell the property to a real estate investor without you actually having to buy the property.
You would make an offer on the property and once it is accepted you would then sell it ‘as is’ to an investor. The investor will get the financing, buy the property, and make all of the repairs.
One thing you need to do in the contract is place an addendum giving you the right to assign the contract to someone else. This way you don’t have to apply for a mortgage, have good credit, have a lot of cash (usually $10.00 to $100.00 for a deposit) or make make repairs.
These types of deals can be made over and over in a short period of time. It is not hard to find investors that want this kind of property. They are always on the lookout for them and it is worth a fee (anywhere from $1,000.00 to $10,000.00) to them if the property will be making a profit for the investor. Sometimes the fee will depend upon how good a deal you find. The investor will look at the after repair value to determine the value of the deal.
You can find these types of investors in the newspapers all of the time or you can place your own ad. Real estate investments clubs are also a good place to find these investors. The club’s members consist of investors, hard money lenders, wholesalers, mortgage companies, and real estate companies, etc.
Although you won’t be making the kind of money you could make from flipping the property yourself, you can have fast deals with little money or work. You could build up a little nest egg pretty quickly.
Wholesaling properties isn’t for everyone but it is a good way for a beginner to get started without taking a lot of chances. You will be learning how the real estate investor is figuring the profit potential of a property and that alone is good experience to get before you start buying properties for yourself.
