August 2009

Commercial Real Estate

Increasing the Value of Multi-Families: Vending and Zone Coverage

by Kyle Koller | August 31, 2009

As investors, we’re always looking for ways to increase the value of our properties. Most of us are familiar with the more conventional ways of doing so: decreasing expenses and increasing income. What if I told you it was possible to increase income without raising rents or decreasing expenses? Let’s explore a few ways that is possible.

Increasing Value with Vending Machines

If you own a fairly large complex, it would make sense to install a vending machine. Assuming you’re an expert of your market, you could effectively target your tenants by placing products you know your tenants would want in the machine. The best place to put your vending machine is in an area that generates a solid flow of tenants; the laundry room or near the pool (if you have one and your property is located in warmer markets) are two good choices. Even modest vending revenues increase the property’s value significantly. Assuming the property is in a 6% Cap rate area with yearly vending revenues of $720, you would have increased the property value by $12,000! Not too shabby given our modest revenue assumptions.

Tapping rarer, but more lucrative, value potential

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Real Estate

First Time Home Buyer Tax Credit needs one of those Modifications

by Winston Westbrook | August 31, 2009

So the time has come to wave goodbye to the first time homebuyer credit. If you are working with first time home buyers and you haven’t locked down a property in escrow by the end of next month your clients might not be able to make the deadline of Dec 1, 2009 to get that rebate. Remember that escrow or the real estate transaction must be closed, finalized and done by Dec 1, 2009. Some people think that as long as the property is in the closing process by Dec 1 they would still get the credit but that is false. I’m sorry to inform you but it has to be completely closed.

An Extension to the First Time Home Buyer Credit?

With that said many people have been asking me if I knew if they were going to extend the first time home buyer credit. I had not heard of anything so I did a little research and low and behold there was a bill introduced back in June 10, 2009. This bill has not received too much attention because people were not worried about the tax credit expiring. Now that the clock is ticking I am sure the tax credit will be coming back into the lexicon a lot stronger in the next couple months

If you have never followed a bill in your life then you might want to take notice as an investor, real estate agent, loan officer etc. This one will affect you once it’s passed until it expires in 2011.

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Blogs

Has the Real Estate Supertanker Finally Turned?

by Richard Warren | August 31, 2009

For the past several years it seems that every time you ran into a real estate agent he would proclaim that the market was at the bottom and it was time to buy. Of course, that was nothing more than the agent’s vested interest speaking. The market continued to slide in just about every city. Some fared worse than others, but few areas of the country were spared.

Supertanker

Many inexperienced and even some veteran investors have an expectation that the real estate market can turn on a dime in the manner of a speedboat. Perhaps they think it’s more like the stock market, which can swing wildly from one trading session to the next. However, real estate is more like a supertanker in that it takes a long time to change course. The reason for that is simply the lack of instant liquidity and the time it takes to complete each transaction.

Recent Data

There is good news. The latest report from the Case-Shiller U.S National Home price Index shows that real estate prices have shown their first quarterly increase in three years. Does that mean that the bear market in real estate prices is over? Not by a long shot. There are many foreclosures on the horizon and the national economy is still hurting. However, it’s a start.

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BiggerPockets News

Real Estate Blogging Case Study: SEO Benefits of BiggerPockets Blogs

by Joshua Dorkin | August 30, 2009

Earlier today I was browsing through some of the blogs on our BiggerPockets Blog Network and saw a post that caught my attention. It didn’t grab me as much for the content, but because the author shared with everyone the fact that the post had first page rankings on Google, soon after going live.

The post, titled I Buy Houses in Joplin Missouri, written two days ago, is now the top result for “buy houses Joplin” and the second result for “buy houses Joplin Missouri” out of 107,000 and 110,000 total results in Google’s index.


seo benefits BiggerPockets blogs

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Commentary

My Entrepreneur’s Manifesto

by Justin Pierce | August 30, 2009

I am capable of limitless success. Success is within me. I will make no excuses nor accept them of myself. I am not at the mercy of other people. I am not at the will of random events. My only true impediment is that which exists at the end of my own resolve.

My resolve is determined by my enthusiasm and faith in a worthy pursuit. I will tap the unlimited well of passion and enthusiasm within myself through constant self education, and action which will lead to progressively larger victories thereby stoking my inner fire and fueling my progress. My self education will lead me first to my passion, then to my mission, and finally to a plan for success. My plan for success will illuminate my vision and measure my progress. I will be assured in my cause but I will always keep my eyes and mind open for new realities and different possibilities.

I know that the world is full of uninspired people and critics. I know there will be many people who will actively seek my failure and many more who will wish for it. I will strike down those miserable beings who seek to obstruct me out of pure jealousy and I will be indifferent to those less treacherous but like minded people who placidly watch me pass. I will be humble for I know I will take many lumps. I will not be discouraged by the lack of justice but I will be just. That is what will make me stand apart from the mob to be noticed by other proactive and honorable people.

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Real Estate Marketing

How to Generate Quality Real Estate Leads

by Glenn Plantone | August 30, 2009

In this, the fourth installment of my “Investors’ Realtor” series I would like to dive into how to market yourself and create quality leads. In my mind, quality leads are real, qualified prospects that are ready, willing, and able to buy real estate from you.

My BiggerPockets blog post from last week detailed how I use a local real estate club to generate leads. I realize, however, that starting a real estate club isn’t for everyone; this kind of marketing can be costly and very time consuming.

Press Releases for Lead Generation

The second tool that I use for lead generation requires less initial outlay of time and money. About two years ago, one of my local friends, Robin Jay (author of “The Art of the Business Lunch” and an accomplished public speaker) told me about one of many internet press release websites that allow you to write articles and press releases about any topic you like, and post them electronically on the site. They then distribute these articles to various internet ezines, blogs, websites and other publications.

I have used these services extremely effectively over the past couple of years to promote myself as the “Foreclosure Expert” in the Las Vegas real estate market. As I noted in my previous blog entries, in order to succeed in real estate it is important to pick a niche in which to focus your energies and efforts. Once you decide on your niche, you need to become an expert in that field through reading and doing. Once you are an expert, it is not that hard to sit down, write an outline on a subject that you know a lot about, and create an article that will be valuable for someone who is looking for information on that subject.

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Real Estate Marketing

Can Split Testing Improve Your Real Estate Ad Response Rates?

by J. Lamar Ferren | August 29, 2009

I remember how frustrated I used to get whenever I would go to Craigslist.com or Backpage.com and post multiple ads for buyers, investors, sellers, or even my deals; I’d get responses here and there. I’d just keep re-posting the ads that wouldn’t get any responses, hoping they would eventually get me a lead.

Foolishly, I never saved all the ads that worked and I kept concentrating on the ads that had low responses. I kept re-posting to various sites because I thought they were awesome ads and I didn’t understand why nobody would respond…

BTW – If you have also been getting little to no response with your advertising, then keep reading!

I then came across and interesting concept… Split Testing.
 

Split Testing Can Improve Your Marketing!

split testingI can’t tell you how crucial Split Testing is to your business. Split Testing will usually tell you if you have a good ad or not.

What is Split Testing? Split testing is an extremely powerful strategy for increasing the effectiveness of your marketing. You can use it for almost anything. It is a way of testing two or more marketing campaigns and identifying which one is more effective.

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Learn Real Estate

Save Your Sanity, Learn Your Building

by Brendan O'Brien | August 29, 2009

A while back, I mentioned my project installing a bathroom ceiling fan as an example of something automated systems wouldn’t help with – a dirty, uncomfortable job I had to do myself.

That doesn’t mean the job had to be nearly as difficult as it was.  I could have saved a huge amount of time if I had taken some steps to learn the building beforehand.

A Hugely Annoying Day

Like most bathroom ceiling fans, the Broan 678 actually attaches to ceiling joists.  This means that to install it, you really want to work from above.  It’s pretty darned difficult in a building like mine because there is no easy access to the attic.  I knew of three possibilities:

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Real Estate Marketing

Real Estate Marketing Strategy 101: Think Before You Act Part 1

by Molly Castelazo | August 28, 2009

Real Estate Marketing Strategy 101I can recall vividly my momma yelling at me, “Think before you act, child!” As adults, we too often forget momma’s sage advice. As business people, we are often even worse.

I certainly understand the tendency to act on the first impulse, to do the first thing that will grow the business, put cash in the bank, create a new partnership,whatever. But sometimes, we act too quickly, making rash decisions that hinder us down the road.

Your marketing “bible”

To avoid making quick-but-detrimental decisions in your marketing, you need a plan. A good marketing plan is your “bible” – the document that guides you, keeping your decisions on track with your larger strategic goals. It’s the document that will make it easy to project a consistent brand in every media. It will make integrating your strategy online and offline a smooth, effective process.

But how to create said marketing plan? I’m glad you asked. . .

Step 1: Know your customers

Your first step to developing an effective marketing plan is to “get to know” your customers. Ask, and answer, these questions:

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Foreclosures

Foreclosure Mediation

by Joshua Dorkin | August 28, 2009

Several months ago I mentioned Nevada was finally joining the 21st century in regards to foreclosure mediation. The first two sessions – Nevada doesn’t jump into these things – will happen on Sept 14th with two properties in Las Vegas as the “test” properties.

I know other states have already set up their mediation programs and have been up and running with what some say is a great success rate, i.e. the homeowners got to stay in their homes. In fact, Marquette University Law School on their website makes this comment: “…jurisdictions that have used mediation in foreclosure cases report a high success rate, and more and more jurisdictions are turning to mediation as a solution for this crisis.”

Because Nevada is the turtle in this race only 97 mediators have completed training and were appointed last week (Aug 17-21). The State expects to phase in more mediators over the next few months. They better if they are to be in compliance with state law and put out a program designed to help distressed property owners.

Mediations Per Month

I didn’t do any research to determine how many mediations Ohio or New Jersey, or any other state for that matter, are doing per month but Nevada expects to do more than 1,000 mediations per month once the program is operating at full capacity. This seems like a reasonable figure given to date the program manager has received more than 650 requests. Plus, with Nevada’s high foreclosure rate, mediation only makes sense for anyone wanting at least a chance to stay in their home.

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Commercial Real Estate

Multi-Family Properties: Unconventional Ways to Increase Value

by Kyle Koller | August 27, 2009

As real estate investors, we know that the value of commercial buildings is determined by dividing its Net Operating Income (NOI) by its Capitalization Rate (Cap Rate). By definition, Value = NOI / Cap Rate. In other words, the property’s value is greatly magnified by relatively small increases in Net Operating Income. To illustrate, for a given Cap Rate (say 6%), every extra dollar in NOI increases the property’s value by $16.67 (=$1.00/0.006). In low Cap Rate areas like San Diego, that means there’s a huge opportunity to increase your building’s value dramatically!

Factors Affecting NOI

There are a number of obvious things one may do to positively affect the NOI of a property: raise rents, cure vacancy, decrease expenses. Well, what do you do if your building is 100% occupied at above market rents, and the property is so efficiently managed that you can’t think of a way to decrease expenses? Should you accept the status quo and simply keep up the good work? You could, but where’s the fun in that? You would be overlooking the unlimited number of ways to optimize not only your property’s NOI, but your returns as well.

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Real Estate Wholesaling

Property Wholesalers – Know Thy Market!

by Stephani Davis | August 27, 2009

One of the questions that I get asked most frequently from aspiring wholesalers is, “How do I know how much to offer on a property?”

Just use the magic Wholesaler Formula, right?

Most people are looking for a magic formula that you can just plug a few numbers into, and out will pop the correct answer..

While there are formulas that you can use as a guide to arrive at your offer amount, there is no cookie-cutter formula that will apply to all markets and all neighborhoods across the board.  In some areas you might be able to get away with contracting deals at 65-70% of market value  and wholesaling them for a profit, but in markets like mine (Tampa), you are going to need to be much lower.

Great Deals Differ from Market to Market

If you want to be a successful wholesaler, you need to hit the streets and find out what constitutes a good deal in YOUR market.  This takes quite a bit of time and effort, but it is something that you need to do if you want to start contracting deals and getting them to the closing table.

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Commentary

How to Protect Yourself for the End of the World

by Jason Hanson | August 26, 2009

www.cachecoin.org/krugerrand.From many of the headlines and articles I’ve been reading lately, you really would think the end of the world is near. Now, I’m not that paranoid but there are certain things you need to do to protect yourself, specifically from the coming wave of inflation, thanks to the governments spending spree of trillions of dollars. If you don’t take the steps I’m about to share with you… you might find yourself with a lot less money.

First of course, is to continue to invest in real estate. Buy as many houses as you can while we still have these rock bottom prices. Most likely we won’t see these large of discounts for another 20 to 30 years. And when inflation finally kicks in, real estate is one of the best assets to own. There will be a run-up in prices in the next few years and the more houses you own, obviously the more money you will make.

Gold?

Second, buy some gold. Yes, I’m serious about this. Gold is another great hedge against inflation. As the value of the dollar erodes thanks to Uncle Sam’s spending, gold prices will have a huge increase. So where do you buy gold and what type? Personally, I like the South African Krugerrand. It’s one of the world’s most well-known gold coins, and each coin weighs one ounce of gold. So as I write this, gold is worth $954.10 per ounce. Which means each Krugerrand is worth $954.10. The best site I’ve found is kitco.com to buy these coins (no I do not have any affiliation with this site; it’s just based on a lot of research I have done).

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Commentary

Who Can Turn The World On With Her Smile? Would You Believe, A Real Estate Agent?

by Charles Feldman | August 26, 2009

She’s smiling again.

Now, grant it, this might not seem like much to you, but, trust me, this could be the biggest sign to date that the real estate market is finally starting to turn around…if only a bit.

She, is a real estate agent who has been selling units in my Los Angeles building for maybe five or more years now.

In recent years, since the recession set in, her visits, with possible buyers in tow, became fewer and farther between.

And, when she did show up, the expression on her face made her look as if she had just drank a powerful laxative for breakfast. Yeah, that bad.

She apparently wasn’t selling….but neither was anyone else. How she managed to even go to work in the morning is beyond me?

And then things began to change . . .

In recent weeks, though, I could not help but notice that she suddenly seemed to have a fresh glow about her. Her smile was there again and it looked like she may have even had a coating of sparkle surgically applied to her perfect teeth.

If she weren’t a real estate agent, I would have thought her glow suggestive of….well…..you know….we’re all adults!

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Real Estate Websites

How to Create a Professional and Dynamic Real Estate Website

by Ryan Moeller | August 25, 2009

What is the importance of a professional website presence for your business?  That’s think for a minute.  How many times have you come across an opportunity and one of the first things you do is search the company, view their website and determine if they are credible?  Let’s face it, in today’s day and age a professional website can make a huge difference for your business.

In this article I will go over what, who, content, even some don’ts on how to best set up a professional and dynamic website presence for your business.

What kind of site do I need?

My career did not start as a real estate investor.  Both of my degrees are in business, but I actually started in IT and have 10 years of experience with web development and ecommerce.  I know my web technologies and there are endless technologies available, but one that stands out the most Joomla.  This is an open source, content management system where you can add already programmed plug-ins and have tremendous functionality, content and professional look and feel to your site.  It hits on all criteria when I searched for the best technology including ease of use, flexibility, scalability, performance and especially cost.

From Joomla’s site

Joomla is an award-winning content management system (CMS), which enables you to build Web sites and powerful online applications. Many aspects, including its ease-of-use and extensibility, have made Joomla the most popular Web site software available. Best of all, Joomla is an open source solution that is freely available to everyone.

Who can help set up my real estate site?

Not all people have the time or ability to set up their site, create a professional look and feel, write the content, populate the content, go live and maintain the site.  I for one, have so much going on with my real estate business that I searched for an expert consultant and that is exactly what I found.  Joomla has a resource center with expert consultants that can help. 

What content do I need?

First off, if is important to have a nice professional look and feel with a logo or company name and easy to use navigation.  Here is a list of items that are very important for the content of your real estate website.

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