Category Archives: Strategies

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!

5 Rock-Solid Real Estate Investment Strategies

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Updated December 12, 2005

Here is a great article by Peter Dobler on successful real estate investment strategies.

Investing in real estate is more complex than simply buying and selling homes. To help new real estate investors to decide which strategy might work for them I put together 5 rock-solid strategies. It is up to you which strategy you feel more comfortable with.

1. Buy and Hold

This real estate investment strategy is commonly known as rental properties. Becoming a landlord is easier than you think. You buy a property, you advertise it as “for rent” and you sign a contract with your new tenant. That’s where the love story ends. You need to know a lot about your duties and your rights as a landlord or you will find yourself in trouble.

Screening your prospect tenants is your first line of defense. Protecting your property from damage is your first duty. I might paint a little bit dark picture of being a landlord. But dealing with tenants can be the most frustrating job you ever had. Do yourself a favor and visit a bookstore or library and get as many books on landlording as you can get. Armed with this knowledge you will be able to create a positive cash flow and a long term relationship with your tenants every time you put the “For Rent” sign in the yard.

With the buy and hold strategy you basically have 3 income streams going at once.

Amortization; while paying your mortgage you also lower the amount you owe.

Appreciation; while owning the property it increases in value.

Tax incentive; as a landlord you will be able to deduct your investment cost over several years. (See you tax advisor for professional advice).

Based on this information you can easily see that even if the rent doesn’t cover 100 % of your mortgage payment you will still be able to create a positive cash flow.

2. Flipping

This is the art of “buying” and “selling” real estate investment without actually taking ownership. In a flip situation real estate contracts get assigned and the person who assigns the contract to someone else typically gets a commission for their services. That’s how you can make money with real estate without credit checks or no money down. Because you never take possession of the property, you don’t need to apply for a mortgage.

You only need 2 things to be able to flip a home. First, you need to find an attractive property that will sell very quickly. Second, you need to find a buyer within a very short period of time. Typically 2-3 weeks. Then you simply flip the contract to the new buyer and you will collect your commission at a so called “double closing”.

This sounds complicated at first, but with a little bit practice you will be able to create a nice income from this. By the way, this is the preferred concept of most real estate “gurus” who appear in late night infomercials.

3. Rehabs

Rehabs are the most risky form of real estate investments. You hunt for a cheap, run-down property and you hope that your preliminary remodel cost estimates will leave enough room for a nice profit. Well that’s the theory. Most real estate investors are failing with this type of strategy.

You either didn’t get the property cheap enough to make a profit or the damages are more extensive than estimated which will offset the cheap purchase price. To make matters worst. If during the rehab phase of typically 3-4 months the market is going south all bets are off. Trust me, I made my share of experiences with this and I told myself, never again.

4. Commercial Real Estate Investment

What comes to your mind first when you think of commercial real estate investment? Big factory complexes, shopping malls or maybe huge office buildings. Well, my answer is much simpler. Anything bigger than a 4 unit apartment building, some call it fourplex, is considered commercial. The great thing with commercial real estate is that the value of the property is determined by the rent income it generates and not by how crazy people are going with bidding on residential real estate.

Theoretically there’s no such thing as sellers or buyers market for commercial real estate. I wrote a complete article about the pros and cons of commercial real estate. So I keep this brief. Personally I love commercial real estate. Of course, commercial real estate is more or less off limits for beginners, because commercial real estate lenders want to see some form of prior experience in real estate investments. However, if you got some experience, go for it. As an added benefit; the competition is far less.

5. New Construction

This is the most affordable and easiest way of real estate investment. Getting into the earliest phase possible of a new development is a sure thing to make money. Keep an eye on the market and you will be able to sell your new home before construction is finished. The construction companies don’t like this, so they limit the number of homes an individual can buy. Even so, keep one or two homes constantly under construction and you will make some nice profits. Of course this works only in a sellers market. Stay away from this strategy in a buyers market or when you see big changes in the local real estate market.

Sincerely,
Peter Dobler
(c) 2005
EzineArticles Expert Author Peter Dobler

Peter Dobler is a 20+ year veteran in the IT business. He is an active Real Estate Investor and a successful Internet business owner. Learn more about real estate investments at http://www.doblerproperties.com or send a blank email to mailto:suncoastrenttoown@getresponse.com

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

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.

How To “Realistically” Get Started As A Real Estate Investor

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Updated December 1, 2005

Here is a great article by Rik Foote about how to get started as a Real Estate Investor by becoming a ‘scout’. This is the best way to get started, particularly if you are young. There is little to no risk, you learn a great deal, expand your network, all great things. The key is to learn as much as you can and then see if you can leverage your learning with the network you now have to get yourself into a deal with little to no money down. Then build your real estate empire from there.

Here is the article…

When it comes to real estate investing, most beginners find themselves with plenty of desire, a little bit of knowledge (from books, seminars, online message boards or something like that) and in most cases they have little or no money to get started with. Does this sound like you? If so you are not alone. Not by a long shot.

If you’ve spent any time online researching this topic you will have undoubtedly found a countless number of articles, books, CD sets and boot camps out there that all promote some super duper “investing secret or technique” that will teach you everything you need to know to be successful.. even if you have no money or experience in the business. Call me a “kill joy”, but in my experience, these types of things are not very realistic.

I’m NOT saying that these super secret secrets can’t produce success. I’m saying for most normal and sincerely interested people (like my 65 year old single Mother), the sophisticated & sometimes pushy techniques that are often touted by the “gurus” are simply not a viable option for them.

The good news is that there are realistic and practical ways to get started as a real estate investor regardless of your experience level or the amount of cash you have on hand. In my humble opinion the best option is a process called “Scouting”. Scouting is probably one of the most realistic and practical ways to get started available for beginning investors.

What Is Real Estate Investment Scouting

In the medical profession every doctor must complete an internship or residency before they are permitted to become a licensed practicing physician. In some cases that internship can take many years to complete. Now, if you think about real estate investment as a business and not as a “hobby” or a little “side project” a smart question to ask is…”Does an internship for the real estate investment business make as much sense as it does in other fields?” I think the answer is yes, but take some time and think about it for yourself.

I believe that success in this business or any other business requires that you must first learn the basics and develop a firm knowledge of the rules of the game. There are plenty of methods you could use to learn the basics but I believe that the best way to acquire these much-needed essentials is out there in the real world, getting your hands dirty by actually studying the market and evaluating investment results first hand. And more importantly, doing so without risking your own money.

This can be accomplished by becoming a “Real Estate Investment Scout”. Scouting or “Bird Dogging” as some like to call it, is an activity that anyone can do regardless of their age, experience, income or credit history and without having to spend large sums of money. Scouting opportunities for other investors; is a safe way to gather the knowledge that will ensure your success. As well as limit the risk of exposing your own personal money while you’re still trying to get your bearings in this business.

A real estate investment “Scout” is much like a consultant or research analyst, you find potential investment opportunities, do the research and analysis of the deal and then sell the information to other more senior investors for a fee. The fee structure can take many forms. In some cases it can be a flat fee and in other cases it can be a percentage of the purchase price. There are plenty f benefits to scouting which include:

1. It’s completely risk free. Since you are not purchasing the property you have no need for financing or credit. Therefore you have no financial risk.

2. Requires no prior experience. You will undoubtedly find some stink bomb deals in the beginning that you’re going to think are the greatest thing since central air conditioning. Don’t worry about that. It’s part of the learning process. The professional investors will tell you why the opportunities are no good. (Hint: This is how you learn.)

3. As you learn, you will be able to transfer deals to other investors for cash. If you save the money you earn from scouting, you will eventually be able to finance your own deals.

4. As you go about your merry way as a scout, you will develop relationships with investors, brokers and other real estate professionals. This will help you in the long run when you become a full fledged investor yourself.

Whether your goal is to eventually renovate properties for profit or purchase rental properties for cash flow, getting started as a scout is in this guys’ opinion, the smartest, most realistic and lowest risk get started approach out there.

To your success!

Rik Foote

Rik Foote is the President & CEO of The Dorian Group, Inc. Dorian is a software company that develops affordable software applications designed to help beginners get off to a realistic and practical start as real estate investors. To learn more about Dorian’s products and services visit http://www.reiscouts.com

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

Rehab & Flip??

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Updated November 24, 2005

Many RE investors use a strategy of fixing up houses and then flipping them. I recently found a great article by Bruce Ford that explains the pros and cons of this strategy (as opposed to fixing up and holding). He uses straightforward examples to explain the situation effectively.

Real Estate Investor Question: Rehab and Sell, or Rehab and Keep?
by: Bruce W. Ford

Here’s another awesome question I received from my discussion board. The question; Why bother keeping property after it’s rehabbed? Why not sell it after the rehab and GET PAID!

Of course, the first questions that you must answer is how emergent is your need for quick cash? You can likely generate the most SHORT TERM cash by selling a freshly rehabbed house. But, you will give much of it away in taxes come next April.

If you keep it, you stand to make more! You will also enjoy some great benefits while you own it such as cash flow, a tax break, and MORE cash with the future appreciation. You can still pull some nice cash a few months after buying it when you refinance (post rehab) the property from your hard money (at 70% loan to value) to long term financing (at 85% or 90% loan to value).

The short answer is an investor is going to make considerably more money by hanging onto a property after it’s rehabbed. There is a downside to it. You have to be a landlord, and you have to decide if you want to do that. I don’t think it’s too bad as long the landlording is done correctly.

Let me illustrate the difference in overall money between rehab and sell, and rehab and rent investing with this example;

Let’s say appreciation rates are 5% in your town and the average price of a freshly rehabbed property in the neighborhoods investors buy in is $100,000. Let’s also say there is Bill and Fred.

Bill sells his properties after rehabbing and makes $15-18,000 per house. Good boy Bill!

Fred keeps his rehab projects and cash-out refinances, pulling out around $10,000 per house within 3-6 months of ownership. (Fred trades his 70% loan-to-value (LTV) ratio hard money for long term, 30-year mortgages at a lower interest rate with an 85-90% loan to value ratio. He pockets the difference between what it costs to pay off the hard money and the new mortgage less closing costs. This works out to about $10,000 per property.)

Bill (rehab and sell) makes a great living. Ten houses per year is $150,000-$180,000 per year…nice jingle! The downside is that Bill has to keep rehabbing to keep making that living year-after-year and pays taxes on all that money as regular income (ouch!). So his $150,000 per year is in reality somewhat less.

Fred (the rehabber) also makes a great living. Ten houses per year makes him $100,000 or so in tax free, spendable cash. But, Fred controls a million dollars in real estate and it’s going up in value year after year. Also, Fred pays no taxes on that money he gets from the cash-out refinances. It’s part of a mortgage, so must be paid back, therefore is not income! I love that part!

Let’s look at what Fred’s doing more closely.

Let’s say Fred bought 10 houses valued at $100,000 each, owes $90,000 on each one (after the 90% cash out refinance), so he controls $1,000,000 in property. If he keeps them 5 years (assuming a low appreciation rate…which is pretty conservative):

Purchase year – 10 houses x $100,000 = $1,000,000
Year 1 – Same 10 houses X $105,000 = $1,050,000
Year 2 – Same 10 houses X $110,250 = $1,102,500
Year 3 – Same 10 houses X $115,762 = $1,157,620
Year 4 – Same 10 houses X $121,550 = $1,215,500
Year 5 – Same 10 houses X $127,627 = $1,276,270

Essentially, Fred makes an extra $50,000 per year for keeping 10 properties. After owning them 5 years, if he sells, he puts $276,000 in his pocket.

Remember

- Some parts of the country will appreciate much faster than 5%. Heck some places properties will double in value in 5 years.

- No tax benefits of keeping the property is included here. That equates to thousands of dollars in real income.

- This is ONE ten-house year. Let’s say you want to “top out” at owning 30 houses. Well, in just a couple of years your buying will slow down to a trickle and you’ll start selling and cashing out of properties. I mean, how many ten-house years to you need to string together before you are set for life?

- What if you hold these houses 10 years? The numbers get pretty exciting.

If you’re like me and you don’t want to do this for too many years, then holding properties for a few years makes a lot of sense, especially if you don’t have much personal money invested in them.

So what of poor old Bill? Chances are, Bill will satisfy his need for short term cash, then start holding property. What do you think?

About The Author

Bruce W. Ford is the editor of Rehab-Real-Estate.com. Get his important Special Report entitled “12 Things Real Estate Investment Gurus Won’t Tell You” at http://www.Rehab-Real-Estate.com.