Real Return Real Estate

Most people invest in the area they live in. Others do extensive research and target areas they feel they can thrive. Many factors go into selecting where to invest. There are some important items to consider when choosing a market.

1. Comfort – most people invest where they live because they are comfortable in their own backyard. You are sometimes limited in the amount and size of deals. Many savvy investors have more of an entrepreneurial approach and are open to deals anywhere and look for only slam dunk deals. They build systems, teams and knowledge in other areas.
2. Availability of great deals – This comes down to supply vs demand. There are many factors that affect supply and demand in real estate such as interest rates, foreclosures, the local economy, job market, affordability, etc. You can find deals in any market, the numbers just have to make sense. Some markets have a lot of competition for very few good deals, other markets have an oversupply of opportunity and you can cherry pick only the best deals.
3. Home value stability – During the real estate boom, the writing was on the wall. Affordability became so low in some of the hottest markets that there was just no way home values could stay so high. Be conscious of the trends and direction of the market, there could be a tremendous impact on the success of your deal. Some areas dropped over 40% in value in the last couple years crippling many investors who did not exit.
4. Ability to successfully duplicate deals – When you find a market, type of deal, system and team that works, duplicate. It is called cookie cutter deals. Improve your team and system each time and do the same thing over and over. Savvy investors take an entrepreneurial role and delegate the daily processes and management to their team. Then they can concentrate on growing the business and high level decisions, while on vacation.

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Most investors go to networking events, real estate clubs and seminars. I’m sure you have stumbled across some very successful investors at these events. You may even be able to point out a handful of extremely successful ones. Just think about how hard and how long these investors have worked. Wouldn’t it be great to know what they know? What is it that makes these investors so successful?

There are two things most extremely successful investors have in common. They work no where near as hard as most investors and a fraction of the time. Why? Because these investors are running a business, not working in a business. They have delegated the daily processes, even delegated the management. They have completely separated themselves from the grind from daily processes and they can spend months at a time on extravagant international vacation while their business runs on its own. They are entrepreneurs.

Most people are technicians and handle all of the daily processes themselves. They are do-it-yourselfers and can’t fathom the idea of delegating tasks. There is only so much time and they can only do so many deals which constrains profits. Conversely, entrepreneurs unleash their team and focus on high level decisions, growing the business and ideas to improve the business. Meanwhile the managers run the business and the technicians handle the daily processes. Sure they may only make 80% of the profit as a do-it-yourselfer. But they can do 5 time, 10 times, even 20+ times more deals. They are not restricted, they delegate, build effective systems and teams. If you want to become extremely successful, become an entrepreneur. The most influential book I have read is EMyth Revisited by Michael Gerber. I strongly suggest you read this book, it may completely change your approach to your real estate business.

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Savvy investors are getting creative and taking control over the success of their investments. Many are using Self Directed IRAs, some are even taking advantage of the oversupply of opportunity in real estate. They are borrowing against their portfolio and making more as a passive real estate investor or Private Investor. All of this is made possible using a HedgeLoan and becoming a Private Money Lender.

What is a HedgeLoan? In the simplest explanation, it is a loan against your securities. You can get a loan backed by your stocks, bonds, mutual funds, IRAs and other securities. No FICO scores, no lengthy approval process, loans close in as soon as 48 hours. Check out www.hedgelender.com for more information.

So how can a HedgeLoan increase your portfolio returns by 5-10%? Easy, you be the bank as a passive real estate investor sometimes called a private money lender. You charge a higher rate than you incur and can increase your return on your portfolio by 5-10%. You pay 4-7% and charge 8-15%. Check out the loan comparison guide www.hedgelender.com/ProductComparison.pdf.

So two things must be done, follow the steps here www.hedgelender.com/closing.htm to obtain a HedgeLoan and find a credible real estate investor with a successful track record. Make sure you fund deals at no higher than 70% LTV. The current economy and lending environment has resulted in an oversupply of tremendous opportunities for real estate investors and one of the best times ever to be a private money lender. For questions or guidance on this or more on Free articles, Guides and information visit us at www.realreturnrealestate.com.

When you make decisions, do you make good informed business decisions? Are you using accurate and justifiable data, facts and information? Do you use stories and information from the news to make your decision? If so, I would recommend checking up on the information to make sure it is useful. You see, the goal for the news is to get ratings. For whatever reason, people love fear and drama. That is what the news is selling.

I heard a funny story about the results of a study that ranked safety of cities. What they didn’t tell you is that there was only 2 cities in the study and they didn’t give a safety rating. The actual results were City2 was much safer than City1. Here is what was reported in news stories. In City1 they said that City1 is the 2nd safest and City2 is 2nd to last. In City2 they said that City2 is the safest and City1 is least safe. Both true, but a complete massaging of the truth. So how can you make an informed business decision when the News massages the truth to get ratings?

In regards to real estate the news talks about the entire market and are often very speculative. They talk about home values going up or going down in the entire market or large areas. Well an investment is dependent on that single property not the entire market or area. And even if the market is going down, if you purchase something at an extreme discount like at 50% LTV and it cash flows, then you can still make money even if the market goes down 40% like it did in some areas of the country. The news sells fear and drama to the masses. I strongly recommend justifying the facts to ensure accuracy. Use good information to make your business decisions.

The most successful investors do the exact opposite of the masses. When the news stories are optimistic about real estate, everyone runs to purchase. Smart investors are selling high during these times. Lately the news stories have been very negative regarding real estate making people fearful and run from real estate. Smart investors are buying low. My recommendation is to justify the source and information provided to make sure it is accurate and useful in making an informed business decision.

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I love my car. It is exactly what I need. However it is not what I want. When gas prices went up to over $4 a gallon, I decided to purchase a car with cash that was reliable and good on gas. I did not care what it looked like, it just had to last me 2 years, max $2K and around 30 miles per gallon. So I went on craigslist and began my search. I did the following as was amazed how similar it is to finding a motivated seller and purchase an investment property:  

1. Searched for the keywords ‘must sell’ and ‘motivated’
2. Sent out a lot of lowball offers, all cash and to purchase fast
3. Completed a diagnostic inspection that cost $75 and saved me a mistake on 2 cars
4. Talked him down more after the inspection even though the problems were not a concern
5. Lastly, I test drove it and talked him down more due to the cosmetic dents, scratches and uncleanliness.

The result was much better than expected. Instead of spending $2K and getting a car that will last me 2 years, I spent $1K and got a car that will last me 5 years. I talked the guy down from $2700 to $1800. Then to $1300 after the inspection, then to $1000 after the test drive. The seller was motivated and due to the cosmetic issues there was little demand. I did not insult him when asking for price reductions, I explained the inspection items and the dents were a turnoff, but would still be interested if it was reflected in the price. Once I got an OK for a price reduction, the negotiation began and the seller said Yes to every price reduction request. Even though my car does not impress people, it is exactly what I need. I love getting into that car everyday knowing that I got an incredible bargain, just like we do when purchasing investment properties. With 1K in body repairs the car would be worth 5K. With purchase of 1K, and if I chose to do 1K in cosmetic repairs, the car is at a 40% LTV. Not too shabby. I used the same strategy to purchase a laptop. I ended up getting a nice one for $50 and a second one for free along with a really nice laptop bag. It pays to build rapport and get people to like you. I strongly recommend all investors try purchasing an item off Craigslist at a bargain price. It is great practice for negotiating and learning how to find great deals. Once I have enough money to purchase my dream car with cash, I will do so. But for now, I love that I got a better deal then anyone on the road.

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When investing in rehab properties, you often run into homes that are in really bad condition. These are the homes I love that are in complete disrepair, ugly and unlivable. To many this is a turnoff and says headaches. To rehab investors it says profits and the evaluation process begins. When creating your rehab list and budget, it is crucial to focus on completing Value Added Repairs. Items that add value usually have to do with Kitchens, Bathrooms and Curb Appeal.

It is key to get people to fall in love with your property and get emotionally attached. They must imagine themselves living in the home and it starts with the property being inviting when they first lay eyes on it. The first impression must be “WOW.” The home is inviting with nice landscape, fresh paint and some pop in the colors used. Sometimes it is as easy as adding a little paint and cleaning up the landscaping. Putting about 2K into Curb Appeal can often increase value significantly.

Then they enter and find warm neutral colors and new or at least nice flooring. But the Kitchen is usually the place they head. Women love kitchens and this will be a huge part in the purchase decision. Don’t overdo it though, putting in a 40K kitchen into a 100K home does not make sense. Spending 5K could with nice appliances can already get the buyers thinking about cooking and enjoying dinner with family and guests.

The 3rd part of the home where significant value can be added is the Bathrooms, especially the bath in the Master bedroom, the one the buyers will be using. They will instantly imagine using the bath and what it will be like to sleep, live and spend time in this Master bedroom and bathroom. Adding a bathroom or converting a half bath to a full bath can also add significant value to buyers with children.

Finally, the mechanics, plumbing, electrical, roof, foundation, etc must not create red flags during the inspection period. That can kill a deal really quick. It is important to not go overboard on items such as finishing a basement, materials that overshoot what is common and expected in the neighborhood and doing any upgrades that will not add value. If you ask yourself, will the $ I am spending on this repair add value to the sales price? If not, save the money. Focus on Value Added Repairs with Kitchens Bathrroms and Curb Appeal.

Rent and hold properties you really want to keep it cheap and simple. It has to be rentable so the answer has to be Yes if you ask yourself if repairs will increase rent and keep the tenants around.

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Locating flips with great profits is a much different animal than finding rentals. Rentals you can purchase in less desirable areas, find good tenants, good property management and profit. Flips need more than just demand from renters, there must be demand from home buyers. You can find good deals in any market and area, as long as the numbers make sense. If you wish to do a lot of deals, here is a list of characteristics that are common in areas that are abundant with good flips.

1. Pride of ownership – you can tell the difference between streets with renters and streets with home owners. Landscape and upkeep on the homes is much better in streets with mostly homeowners. There are better streets to find flips.
2. Not too many properties for sale – Few homes for sale in the area signals strong demand. In addition to checking active properties for sale, check the sold comps and pending. Make sure the average time on market is not too long.
3. 3+ bedroom 2+ bath – These houses are the most desirable.
4. Not too expensive and not too cheap, average area – Although there are good flips in really expensive or really cheap areas, they are not as common. Areas close to average home price usually have the most opportunities for good flips.

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1. Define your criteria – Concentrate on areas with strong demand from buyers and limited supply. Single family homes are usually better for flips.
2. Play the numbers game – You will not get every deal for the price you want. Figure out what the property is worth to you and do not go over.
3. Get as many properties into your pipeline as possible – The more properties you get into your pipeline that fit your criteria, the more and better deals you will have to cherry pick from.
4. Create efficient systems to filter out the duds – Avoid timely due diligence on properties that are duds. Quickly figure out what the property is worth to you and whether to proceed with an offer. Due diligence can wait for properties under contract.
5. Write lots of offers – Play the numbers, write a lot of offers.
6. Complete thorough due diligence on contracted properties – Once a property is under contract, you need to have an inspection, get rehab bids, confirm market value, confirm you have multiple exit strategies and make sure you have plenty of equity and cash flow in order to make mistakes and run into surprises and still profit.
7. Cherry pick only the best deals – With a lot of deals that fit your criteria coming into your pipeline, you have the advantage of picking only the best.

For more Free articles, Guides and information visit us at www.realreturnrealestate.com. Check out some of the example deals we have on Current and Past Deals.