Better Investing

Discussing Private Lending on the Real Estate Guy's Radio Show

Visiting Southern California is always an occasion to get excited about. This past week was especially exciting as we had the opportunity to be guest on the Real Estate Guys, Robert Helms and Russell Gray's Radio program. Robert and Russell's Radio program is the # 1 downloaded real estate radio show on itunes. The Real Estate Guy's show has featured many high profile guests on their show including- Robert Kiyosaki, Presidential Candidate Herman Cain, and Steve Forbes. We were very proud to be in the class of such great past guest and especially proud that our business has grown to the point that we are on a program of such stature within our industry.

We discussed with veteran Real Estate Entrepreneurs Robert and Russell the power of private financing and how it is a “game changer” in building your Real Estate empire. We also discussed how it is a true “win win” scenario in that the investor-buyer wins by acquiring a property with leverage and the private mortgage lender also wins by having their investment secured by a piece of property that they are a first lien mortgage holder of. The private lender gets steady rates of return, monthly, and has the opportunity to truly invest PASSIVELY in real estate without the challenges of being a landlord. Private mortgage lending is an opportunity for individuals with cash to invest who are seeking higher rates of return than traditional investment vehicles backed by something tangible.

Their show was a great opportunity to discuss some of the programs we have available at Memphis Turnkey Properties for investor-buyers seeking financing for their property acquisitions in Memphis, TN, along with the great cash flow opportunities for our clients.

We had an absolute BLAST with Robert and Russell and we wanna thank them for giving us the opportunity to be on their show. It was a great experience to be with experienced veteran Real Estate Entrepreneurs who have been in the business for years and have a lot of knowledge to share. We hope you find the podcast helpful.

Click HERE to Download the Podcast from iTunes

Thanks for listening!

Jeremy Veldman/Alex Craig

Owner Financing to Purchase Memphis, TN Investment Properties

FOR IMMEDIATE RELEASE
Contact: Alex Craig
901-848-9028
alex@lainerei.com

Laine Real Estate Investments Launches Owner Financing Program

MEMPHIS, Tenn. (Jan. 2, 2011) – Laine Real Estate Investments is happy to announce they now offer owner financing through Memphis REI Capital to purchase investment real estate properties in Memphis, TN. The program requires 40 – 50% down payment with the option of a 5 to 10 year amortization rate at an interest rate of 10% and a 5 year call of the loan. All loans will have a 5% origination and $250 processing fee.

“We are very pleased with the program our private lenders have agreed to launch. Even though these short term loans are designed for investors to leverage their cash to buy more properties and pay off their loans quickly, the option of a 10 year amortization schedule allows our borrowers to have larger cash flow to help reduce out of pocket cost to cover periods of vacancy and maintenance,” said Laine REI partner Alex Craig.

“We are seeing an increase demand on a nationwide scale by investors to have programs that allow purchase of real estate outside of traditional financing from lenders, especially on a worldwide front where in the past, the only method to purchase real estate by international investors was cash,” Craig continues. “Our program is very competitive to other organizations within our market and allows us to stay on the front of an increasing competitive and innovative industry.”

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About Laine REI
Laine Real Estate Investments is locally owned and operated by a group of investors in Memphis, TN. They offer all the services necessary to individuals looking to add Real Estate to their investment portfolio. The central theme within their organization is excellent customer service to create peace of mind with their investors.
More information can be found at www.lainerei.com.

Investing Wisely out of State

Today’s real estate market in Memphis, TN presents an outstanding opportunity to acquire investment properties in good areas, at a low price point with high rents.   While we had a great year in acquiring properties for ourselves and selling turnkey investment properties to investors nationwide; it should not be as difficult as it is sometimes. One of the challenges we face is selling a legitimate product and service, while opportunistic individuals run businesses selling worthless Memphis real estate to out of state investors who get “took” by a sales pitch of false facts and bad data. These types of businesses/individuals are usually out of state and do not care what happens after the sell.

Today I took the first of a few phone calls I will receive from out of state investors who push their “fantastic deals” to me. As always, I listened to the sales pitch, because you never know if today is the day that I actually hear a “cold call” for a property worth buying.   After the call, I took a look at the properties this investors sent me in a email and to no surprise……………………CRAP! I replied to him in my email that I would need a tank to collect rents in these areas and even at that, I would still not feel comfortable. There are areas that should be avoided at all cost, like the ones pitched to me today. These are the areas with an abundance of vacant boarded up homes, overgrown yards, high foot traffic during times when individuals should be at work and the overall bad feeling one would get when driving down the street. Individuals selling this type of Memphis real estate is what gives investors a negative conotation. Not today, tomorrow or several years from now will these properties pitched to me today be worth anything, unless maybe they find Jimmy Hoffa buried under one of these houses……99.999999% unlikely.

The bottom line is now is a good time to consider purchasing properties in Memphis. I advise to do business with individuals who:

·         Personally own properties in Memphis, TN (The most important to me)

·         Business is owned and operated in Memphis, TN with individuals calling you from a 901 area code

·         Offer Property Management through a reputable organization

·         Provide references from past clients who own properties in Memphis, TN and can be verified on the Shelby County Assessor webpage

·         Provide references from 1 or more of the following institutions: local Memphis banks, local or nationwide lender, appraisers, local REALTOR or attorney/title company. Basically someone should have heard of the individual you are conducting business with

Do your homework on the house and individual selling you the house; follow my advice on with who to conduct business with and make sure the house fits your goals.   This is the bare minimum needed to start your successful investment home portfolio.

Investor Success through Aggressive Property Management

The saying “you’re only as strong as your weakest link” can be rewritten in the world of investment rental properties as, “your investment property portfolio is only as strong as your Property Management Company.” Ineffective property management is a very quick way to turn a great investment opportunity into losses that take years to recoup. I can confidently say this because it was a tough lesson learned on my first two properties. After a series of consecutive months of owing more then I collected, delinquent rent collections and minor repairs, I decided to fire my property manager and take matter in my own hands. In the 3 years I have been managing not only my own properties, but also my clients; I have developed my own style that I have found to be extremely successful. I call this style, “aggressive, firm, yet respectful approach.” To implement this approach, the following 5 concepts must be used consistently:

1. Your tenant is not your friend: A tenant is someone living in your property that owes you a monthly rent—that is it. I found that once a personal relationship is developed, not only does it give your tenant the perception that you will be ok if they are short on rent, but also makes it more difficult to evict if it comes to that. This is a very important concept because you can do everything right; maintain the property, answer maintenance calls efficiently, work with your tenant when they are late, and they still walk over you.

2. Let the tenant know your style up front and that you are in charge: When a potential tenant is considering a property of ours to call home, I let them know up front how we operate. The main concept I lay out is, if you are not 100% sure you can afford this, then do not move in because we will evict quickly. Our standard policy is after the 5^th, if you have not contacted us as to the status of your rent payment, we start the eviction process. In today’s era of email, cell phones, blackberries, etc. there are no excuses for non-communication. Family member is sick in the hospital…sorry, rent is due. Someone stole your car…sorry, rent is due. I understand that life issues develop beyond one’s control and that is why I will work with a tenant if they have a plan to pay rent within a reasonable time schedule (before the 15^th). However, if they do not hold up to their end of the bargain, then eviction is a must. I look at it this way, if I call the Mortgage Company and explain my tenant’s family member is sick and can’t pay, 100% of the time they will not care. This is why point #1 is so important. It is the tenant’s responsibility before they move into a property to budget for situations where cash flow may be a problem one particular month.

3. A letter in the mail and a phone call is not enough if rent is not collected: I once had my Property Manager tell me that he sent a letter and left a message to my tenant that rent is late and needs to be paid. That is about as effective as cutting down a tree with a butter knife. Sure, we mail the letter, leave a message, but if we have not heard from a tenant by the 6^th, it is time for a knock on the door. If the tenant chooses not to answer the door, it is time to put bright orange flyers posted all over the house, cars, mailbox, trees, fence, windows, doors indicating, “RENT IS LATE—EVICTION IMMINENT!!!! Image is everything, especially to Americans. Tenants will not want their neighbors to know just how financially irresponsible they are. We let the tenants know upfront we perform this action if they decide to not communicate their plan of action to pay.

4. No Rent, No A/C: Most areas are consistent that A/C is a luxury. Our most successful task we do to immediately collect rent is to disable the A/C. Surprising how quick tenants come up with rent when it is 95 degrees outside and they do not have air. This must be done very carefully--this is walking a very thin line of what is allowed.

5. Offer Deposit to Vacate Property: While this is painful to do, if a tenant knows they will not be able to pay rent, often times they will take the incentive of redeeming their cash deposit to move out. More often than not, paying the deposit back and immediately marketing the property “For Rent” is quicker and more cost effective then going through the eviction process.

All of these 5 points, although must be firmly implemented, a respectful persona must be shown towards the tenant. Implementing these aggressive approaches and being a jerk at the same time is a quick way for a tenant to simply ignore you out of defiance. I understand these actions sound harsh, cold and extreme, but I have seen tenants not pay rent, yet somehow afford luxury cars, 50” LCD T.V.’s, nice furniture and expensive clothes, yet the rent is hard to pay. The roof of their head should be # 1 priority, unfortunately it is not always, and that is why it is my job to remind them who gets paid first.

These 5 points are just the philosophy I use towards Property Management. Much more goes into being successful in this business; such as innovative software and phone system, creative marketing to get properties rented, organization, relationships with vendors to do work at reasonable rates, just to name a few. However, the success of your investment depends on receiving the rent that is owed; failure to succeed at that task makes everything else irrelevant.