Category Archives: Selling

Zero Down Real Estate Investing-Does It Make Sense?

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Updated December 12, 2005

We discover through trial and error. Often its as simple as attempting something we haven’t tried before and results begin to follow.

Real estate seems like a lofty proposition for many people but there is alot of noise coming from people that are involved in Real Estate and it attracts us. Zero down real estate investing is a simple concept. It means manufacturing deals that require that you need not put the large obligatory escrow deposit to get the right to control property.

The reason why you would want that is simple. Zero down is useless if your utility is to buy the house and live in it and own it. Thats not the point of Zero Down. If you want to buy the Real Estate for your own personal use, then Zero Down is not going to help you. However, if your utility is to make some nice money so you CAN eventually own your own home. Then Zero down is the perfect vehicle and the most direct way for you to accomplish that.

There are numerous ways to structure a deal legally and fairly while making the deal light on escrow deposit. But there’s something you need to know. Because learning how to do Zero Down is not the obstacle. That can easily be accomplish by buying a good book or online course on the topic. It is easily learned. The information is abundant.

No, thats not the issue, what you must understand again is your utility. You must realize if Zero Down Real Estate is what you want to get involved in, is that you are doing it to make money. Literally, largish sums of money. Your involvement with the property itself should have no emotional attachment at all. The lines should be drawn clear in the sand.’

To know this is to realize something. You must find a property that has excess intrinsic value in it so that it can be rapidly be re-sold for a fair profit. That is the entire point of Zero Down Real Estate.

When we say excess intrinsic value, property investors refer to a deal thats going cheap (for whatever reasons)

I know this sounds obvious, but theres more to it. Notice I didn’t just say find a cheap house? I wouldn’t use those words because its completely misleading. Intrinsic value desrcibes a price that is genuine. It has been researched and more then a few people with knowledge would agree is that this is the intrinsic value of the subject property.

Its the REAL price, the REAL value without any guessing or wishing or emotional component to it. Once you can establish the intrinsic value of properties, you can then compare the actual price thats being asked and decide if you would like to move on the deal. If it has “excess intrinsic value” then you would do just that.

Its this search for excess intrinsic value that is the main work for people who would like to do Zero Down deals. Because its that discovered excess intrinsic value that was worked for and found. Then you can use the Zero down technique of your choice to gain control of the deal and close.

To your health and rapid success.

Jack Reynolds is Operations manager for http://www.opportunity-investor.com Jack is a professional investor who trades in real estate, Art, Precious Stones and Sea going Vessels. He has followed Martin Thomas his mentor and CEO of the company for over 5 years and has managed to accumulate a large fortune during this time.

Article Source: http://EzineArticles.com/?expert=Jack_Reynolds

High Profit Real Estate Investing – Make a Good Deal Every Time!

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Knowing what a Good Deal is – Is the Key to Success in Real Estate.

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:

- Market value and purchase price

- Expenses, carrying costs, repairs

- Cashflow and profit

- Holding time

- Loan terms

- Risk factors

- And 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

1) Calculate the exact profit and cashflow for all kinds of deals.

2) Measure and Evaluate the financial risk in the deal

3) Use standard and safe criteria for what constitutes a good deal

4) Suggests 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.

Richard Odessey along with his wife Michelle have the premier site on the internet – http://www.InvestorWealth.com for training and teaching real estate investors to do high profit deals. They offer regular Free Teleseminars by the top real estate investors in the country, the best tools to enhance your real estate success like the Deal Evaluation tool. They also offer 4-8 hands-on training seminars with personal advice from experts that investors can take from the comfort of their home. Richard and Michelle have been investing for over 5 years and personally teach and mentor other investors.

Article Source: http://EzineArticles.com/?expert=Richard_Odessey

5 Ways To Advertise Your Real Estate Business

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Updated December 12, 2005

With the introduction of new products and people’s purchasing power continually escalating, it can be said that the advertising industry is fully energized. That’s why even with the dawn of the new technology, advertising still continues to dominate the business world. As most business people assert, business can never succeed without advertising.

And so, in the real estate business, advertising remains to proliferate with more ways that could increase productivity.

However, for those who still don’t know how to maximize the potential of advertising in increasing their real estate sales, here are some basic methods to think about:

1. Website listings

Real estate businesses may consider the benefits of advertising their products or services online. In this manner, they could even increase their market share by accessing those who cannot be reached by simple ways of promotions and advertising.

People behind the real estate business may choose from the different website listings available in the Internet today; or, simply choosing to have a website is a big step forward.

Look for local business directories or national real estate directories, along with general sites like the Open Directory Project, http://www.dmoz.org.

2. Search engine submission

Real estate businessmen may also opt for the search engines that are available on the Internet. With a reasonable amount, real estate businesses may promote their products online and get more exposure through search engines. Two of the biggest and most popular search engines are Google and Yahoo. So, if the business is listed at these sites, chances are they’ll reap more profits than they could imagine.

3. Banner and text ads

Banner ads are those ads that appear on top of a certain sponsoring website. It contains the business’ name and the hyperlink that connects the customer to the business’ site. A text ad is similar to a classified ad. Both banners and text ads come in various shapes and sizes depending on where you use them.

In this way, real estate entrepreneurs may take the chance of increasing their exposure online by letting people know that they exist. Check out Google Adwords and Yahoo Search Marketing for more information.

4. Email

Real estate businesses may also resort to this kind of advertising. Though, special considerations should be made when constructing emails so that it will not be categorized as spam.

Also, to maximize the use of this advertising technique, the real estate business must also have an email list of their potential buyers. Whatever you do, DO NOT send any e-mail to anyone who has not requested it!

5. The basics

It still pays to be traditional. In fact, one of the best ways to advertise a product is to use the traditional method of advertising – print and broadcast advertisements. There are people who would rather see the ads on television or in newspapers than online.

But whatever type of advertising a real estate business use, one thing is bound to help them boost their sales and profit. Be sure to keep track of which method is the most profitable and devote your resources to that method!

The Pros and Cons of the Real Estate Business

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The real estate business has been around for a good number of years. More and more people are drawn to it because of the steady influx of money, but there are things you have to consider before entering a real estate business.

First you have to decide whether it would be as a sole proprietor or through a corporation, partnership, or trust. Each has its own pros and cons. Let’s take a look at them.

In a sole proprietorship, everything is “sole” as in managed by a single entity. In terms of splitting the income, it could be divided among family members that have a lower income bracket. A lawsuit that may arise in the future regarding the properties is held personally.

A corporation is a structured legal entity that consists of a group of persons known as shareholders. Investments are high in this type because investors are attracted to the built-in stock structure. This type stays on the market for years until the stockholders decide to split up or merge with other corporations. However, starting a corporation requires a lot of money. Proper corporate formalities should also be followed in order for it to be recognized as a corporation. A huge amount of paperwork is also expected in this type, in the start-up phase and every year of business. This includes reports, bank accounts, financial statements, and records that should be updated from time to time.

In a partnership, partners are generally liable for one another. Though with taxes, an individual may be taxed in terms of his individual level. Administrative and compliance costs incurred through partnership include legal, partnership agreements, accounting, and tax.

Trusts in some cases may be similar to a corporation; however, unlike a corporation, trusts are not held liable to capital taxes. And in case of losses, it remains within the trust and can not be flowed out to the beneficiaries.

When you know what type of management to consider, set your priorities on whether it will be land, apartment buildings, or rental apartments.

Buying a plot of land, like a broker, would be a good investment but one has to wait a long time for the value of the property to go up. However, you could get it for a lower cost to start.

For rental apartments, it would be a fairly easy start and provide a long term return on investment, but would require waiting for the pay-offs.

Apartment buildings mean triple-net income. It is because the tenants are usually tied in a three-year contract. A drawback on this is a vacant space for a long period of time. For every year that it is not leased, it would mean a loss of income.

Real estate business is a vast and varied opportunity. There are many things to consider before playing the game. Take time analyzing terms and conditions that go with it. In the long run, wise decisions could bring in a lot of money and lesser problems.

Interesting Article in Boston Globe

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Realtors Get Their Hands on Technology

This article discusses how real estate agents are leveraging technology to make their job easier. One example is Pathfinder from InternetMLS which integrates MLS listings wirelessly with GPS. A quick search for ‘real estate software’ on Google returns a variety of potentially useful programs for the RE investor and broker a like.

Services like Google Maps and Yahoo! Local allow you to also see what amenities (restaurants, coffee shops, schools, etc.) are near properties. A quick search for “[town name] + census” will generally return the newest census data on that town. Virtual 360 degree tours of houses is also a new but increasingly popular feature requested by potential buyers. The more information and interactivity you can provide over the web, the better. Real Estate is still somewhat of a conservative industry so you can get ahead by leveraging new technologies.

The Multiple Listing Service (MLS) and the Realtor

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The MLS is a database – an extremely convenient way to know what properties are for sale at any given moment. This makes it very useful to real estate agents and brokers (or basically anyone looking to buy or sell a house.)

Basically, the MLS is like a huge property warehouse. When a property is available for sale, it enters the warehouse. When it is sold, it leaves the warehouse.

The MLS only contains information since real estate cannot actually be stored in a warehouse. This information comes from the various brokers that exist in the scope of the MLS.

Why the MLS works for home buyers

First of all, MLS is very convenient. Buyers can browse through the available properties listed on an MLS.

Using the MLS also does not cost anything. It is a free service that is sponsored by the realtors advertising their available properties.

Options Galore

On the MLS, a buyer is not limited to choosing among a few available properties. Usually, the MLS makes available many properties that are for sale.

In the olden days, when information was limited, a buyer would only be able to visit a few homes per day. He or she would also need to communicate with the agent for details and such.

With MLS, the buyer can start browsing from the comfort of his or her home. Details regarding the property are also listed there.

Aside from the written details, MLS usually provides pictures of the property. Other advanced MLS implementations even have other surveying tools that help buyers come to decisions regarding their desired property.

Fitting the Bill

MLS also helps the buyer by narrowing down choices to those that fit the buyer’s desires. The buyer supplies information on his or her desired property to the MLS site. This information includes desired area, size of property, age, location, and other specifics. The buyer is then given a set of houses that fit that description.

Communication

MLS also makes it easier for the buyer to contact the realtor. Details about the realtor are listed along with the property to allow straightforward communication between buyer and realtor.

Conclusion

It may be hard to believe but the real estate industry has benefited a lot from MLS. MLS is the next step in real estate evolution. It is relatively safe and is very convenient. As the MLS grows in popularity, more and more realtors avail of its listings. For the buyer, this can only mean good things – more choices, better decisions.