September 2009

Why You Need To Stop Acting Rich…

by Jason Hanson | September 30, 2009

Do you act rich? Do you flaunt your wealth, or pretend to be rich by driving a car you can’t afford?

Well, you need to stop. Thomas Stanley who’s the author of “The Millionaire Mind” (which was fantastic) has a new book out called “Stop Acting Rich and Start Living Like a Millionaire.” Now, I have not read this new book yet, but I do have some advice which could save you thousands of dollars in the long run.

Why Not To Buy A BMW

I started investing in real estate in college and was able to make some decent money in my early 20′s. Then again, any money in your early 20′s is decent. And I ended up wasting a lot of it by doing immature things. For example, I had a BMW. I only had it for a short time because I realized it wasn’t me and I felt stupid driving the car around. I’ve also wasted a good amount of money on going to Atlantic City and Las Vegas.

Yes, I certainly believe in having fun, but you need to be smart and save your money–at least 10 percent of it. However, I’m not writing to you to try to get you to save your money. That’s common sense. The reason I want you to stop acting rich is to protect your assets and keep yourself from being a target of fraudsters.

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Real Estate News

The Flood Gates Have To Open Soon…

by Peter Giardini | September 29, 2009

For many real estate investors, these past several months have brought a welcome sigh of relief as homeowners have come into the market in truly satisfying numbers. In many parts of the country the steady downward slide in prices has tapered off and we have been seeing what may be the bottom in terms of further price declines… or NOT!

Are Some Hyping Up the Real Estate Market Too Soon?

The numbers throughout the Summer have been promoted with great fanfare… the Schiller-Case Index and National Board of Realtors proclaiming that prices may have bottomed out and the worst is over. Great news if you can believe it!

While I am delighted that prices have stabilized and even increased in some markets and that home sales over these past several months have been solid and even matching sales volumes from 2005…I have been troubled and what I haven’t been able to put my finger on is this…

With all of the homes going into foreclosure, when will this inventory start to pull this “current” housing recovery down? This Bloomberg article is not good news… and suggests that we have a long way to go before all of the current and projected foreclosed inventory can be absorbed.

So the million dollar question is this… How long can lenders continue to hold their REO inventory?

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Landlord Tenant

A Day in the Life of a Mobile Home Park Owner

by Frank Rolfe | September 29, 2009

Many people ask me what it’s like to own a mobile home park. They expect stories of exciting shoot-outs, drugged-out topless dancers bashing in windows with baseball bats and Jeff Foxworthy humor. Unfortunately, that’s not the case.

I, myself, thought that would be the normal agenda when I bought my first park. The first thing I did during due diligence was to get a concealed handgun license. I was certain that my role would be that of Wyatt Earp in cleaning up trailer town. But again, a day in the gun class and the shooting test were all wasted. It’s just not like that.

“Well, then how is it?” you’re asking. The answer: boring. Really boring. Here’s why.

NOTHING EVER HAPPENS

In a typical mobile home park, the phone might ring once per month for a lot for rent (normally an RV) – that’s the whole sales side of the thing. The yellow page ad comes up once a year, so that kind of handles marketing. I show up in court to evict someone every once in a while. But that’s about as much action as I get.

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Real Estate Investing

5 Must Haves Before you Quit Your Day Job for Full-Time Real Estate Investing

by Ryan Moeller | September 29, 2009

Real estate can provide passive income, even allow you to quit your day job and become financially free. For many investors, this is the goal: to be their own boss and to be able to work when they want and where they want.

Here are 5 must-haves before you give up your day job.

30% more monthly cash flow then you need – Surprises happen. Vacancy, maintenance and other expenses arise and you are not guaranteed optimal cash flow on every property every month. Make sure you have 30% more than what you need as a buffer for surprises.

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Social Media

Why Real Estate Pros Don’t Need Facebook or Any Other Social Media

by Christian Russell | September 29, 2009

You’ve been told that as a real estate professional you have no business ignoring social media. It’s the wave of the future. You’ve been told it’s a great way to earn business and make money. You’ve even been told it’s mandatory. But I’m going to give it to you straight. You don’t need a Facebook profile. You really don’t. In fact, you don’t NEED to use social media at all.

Facebook is a Tool, Only a Tool

Good tools can make your work more effective and efficient. But they do not do the work for you. Facebook, Twitter, etc…these are merely tools. I do internet marketing consultation with many real estate professionals, and one popular concern that people have expressed to me is how to “get social media set up” or how to “get this social media thing knocked out”. I’ve been offered jobs to set up a bunch of social media profiles for brokers, because they don’t have the time to do it themselves.

The response I offer is “I appreciate the job, but if you’re too busy to even set up the profile, there’s probably not a lot of point in you having it!” Social media is not something to “set and forget”. You can’t “knock it out” or “get it taken care of”. A social media profile is only a tool. It’s an awesome tool, but it’s just a tool.

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Commercial Real Estate

If Your Building is 100% Occupied, Your Rents Are Too Low!!!

by Kyle Koller | September 28, 2009

Income properties are, to many, the ideal investment. Not only does one receive rental income on a monthly basis, but he also gets to enjoy capital appreciation—or at the very least, a solid hedge against inflation. With favorable tax treatment throughout and available 1031 tax deferred exchanges, one would be silly to not at least consider real estate investment.

And so he does. Hypothetical investor Bob purchases his first income property: an 8-unit multi-family in sunny San Diego, California. He loves the fact that it’s in a great location, has a favorable unit mix, and there has only been one vacancy in the last two years—and that vacancy didn’t last very long. As far as Bob is concerned, he has made the perfect investment. How could he do any better?

Raise the rents!

Typically, investment properties in low-vacancy, heavily renter-occupied housing areas that incur vacancies about as often as the Chicago Cubs win World Series have one problem: their rents are too low. If the rents weren’t below market, they would incur significantly more turnover.

That’s the key word: turnover

Turnover is a good thing; vacancies, themselves, are not. What’s the difference? A vacancy occurs when a unit has been turned (i.e. “rent ready”) and it does not have a tenant, or a prospective tenant. Turnover occurs when someone moves out of a unit and another moves in.

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Real Estate

Selecting a Realtor in a Small Town

by Richard Warren | September 28, 2009

Any real estate investor knows that having a strong real estate team is an essential part of the business. You need your attorney, accountant, title officer, lender and real estate agent. The last two are probably the most important. Today we’ll talk about selecting an agent.

Ely, Nevada In a city or a large town it’s fairly easy. You probably have hundreds of agents to choose from and you just keep going until you select one that meets your needs. Choosing someone to work with in a very small town is a horse of a different color. You may need to choose from a very small number and it’s possible that none of them will seem to fit the bill. I was recently faced with having to make that choice myself when it was time to list a property.

Defining the Parameters

Most of my properties are in the small mining town of Ely in northeastern Nevada. It is actually a very good real estate market with a strong demand for rentals. When I first started rehabbing there several years ago I had the opportunity to work with a truly outstanding agent. She knew the market and understood rehabbing and investment. Unfortunately after watching me make a lot more money than she did, she decided to go into rehabbing with her contractor husband and she left the business.

When she left I started working with the first agent’s associate. That worked out well until that agent left the area because of her husband’s job transfer. It was back to the drawing board for me. I defined what I was looking for in an agent and began my search.

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Real Estate Marketing

How to learn from Junk mail

by Winston Westbrook | September 28, 2009

I go to my post office box once a week. I insert my key and kaplow out comes a pile of junk mail. Sometimes I think I am just paying for my post office box just so companies can send me junk, lol. Just a few years ago I would’ve been ticked off to be getting so much junk mail but now I embrace junk mail. I love junk mail.

I get junk mail from banks, auto dealers, insurance companies, fast food chains, super markets, travel, get rich quick schemes and the list goes on and on.

Fortune 500 companies spend millions hiring the top advertising agencies of the world to create and come up with the best advertising. These advertising agencies take into account every little detail and every word that’s said.

I know we don’t have millions of dollars to spend on the best advertising money can buy so why don’t we learn from these advertisers and put together the best of best for FREE. Let’s learn from our competition and such.

The next time you pull out a pile of junk mail and instead of just tossing it into the trash stop and look it over for a second. Separate the mail that catches your attention from the mail that is flat out junk mail and uninteresting. Take the mail that seems interesting and look for the following:

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Real Estate Marketing

How to Increase Traffic to Your Real Estate Website with Backlinks

by Peter Kolat | September 27, 2009

You’ve probably heard about how having lots of backlinks can give you a huge advantage over your competition on the internet, right? You’ve probably heard that commenting on blogs, forums and social media sites can give you some really good “Google link juice.”

But do you know how to utilize this strategy effectively? If not, then you are in for a treat.

In today’s post, I am going to talk about SEO. Now, I realize that search engine optimization is not for everyone and can be a long, enduring, tedious and hard work. Yes, I said work. SEO constantly changes, especially because of our friends over at Google. They like to keep us on our toes. Every once in a while, they’ll change their algorithm and if you are not playing the SEO game the right way and doing some blackhat stuff, your site will most likely drop in the rankings.

But that’s a whole other discussion. Today I want to tell you about a strategy that will help you rank high in Google. Now, since you are already using the internet, and going to different blogs, forums and social media sites, you should utilize this strategy for your business. Newbies to blogging can learn from these 77 mistakes new bloggers make.

In this post, I am going to focus on blog commenting. Let’s get right into it. First, you need to follow couple of common sense rules.

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Commentary

Drop that Extra Burden On Your Path to Success

by Justin Pierce | September 27, 2009

The Burden
There is a widely accepted but rarely named enemy that pervades our culture and handicaps our people. I hereby resolve to name it and identify it in defense of those with the capabilities which this enemy stifles. I want to give cover to all of you who have thought it but were afraid to speak it; to those who have muttered it but where silenced by the shrill cries of indignation. I will scream it in proud defiance atop the rock of natural law. Simple common sense and cause and effect will be my shield and my sword though I know they have proven useless against the squishy formless subversive weapons of the warriors of the enemy. I will be called greedy, heartless, and hateful by the merciless minions of the enemy but I will bare it as a patriot to the cause of productivity.

This enemy is guilt. Its weapon of choice: charity. Its result is the abdication of our free will to think, to speak, and to act in our own best interest. Guilt is the weapon that turns our strength against us. The more successful you are the more reward that natural law endows upon you and thus the more guilt you are expected to feel. In the end the most successful among us are left questioning their own rewards and sabotaging their own business by questioning whether they deserve to make so much money.

In turn the enemy is shameless. He comes with indignant scowl on his face with hand extended demanding his share of any profit. He grins and turns his back when a deal loses money as if saying, “That’s what you get.” Never would the enemy consider giving back a portion of what he took from the last deal. His interest seems to lie in taking from those who are successful and keeping down those who are in need.

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Real Estate Market

How is the Washington, DC Real Estate Market?

by Brendan O'Brien | September 26, 2009

Washington DC real estate market Note to readers: I’ve been criticized for some blunt statements about real estate markets in the past. You can disagree with me, but I ask that you not doubt my integrity. I have no real estate interests outside New Hampshire and am not representing anyone.

When I started researching the Washington, DC real estate market, I was impressed by the stability of institutional markets in general and astonished by the growing disparity between federal government and private industry employment. Put bluntly, the federal government has become the best employer in America. It is the most stable, with a headcount that grows annually and essentially guaranteed salary increases. It also offers the best benefits and salaries, except for the very top (the government’s CEO, President Barack Obama, makes $400,000 per year – a nice paycheck, but lower than that for almost any CEO in the Fortune 500).

As you might imagine, having the biggest employer in the country in your back yard is a good thing. When that employer can always be counted on for a raise, that helps. Partly as a result of that, the DC real estate market is looking pretty darned good.

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Real Estate Deals

How To Make More Money, Even After Closing Your Deals

by J. Lamar Ferren | September 26, 2009

Cash after closing When you close a deal and make a profit, are you able to make even more money afterwards . . . from the same deal?

First off, let me make it very clear that this is not about raising the rent or increasing the value of your home – or anything like that.

While doing things like that can increase your income, what I want to talk to you about today deals with marketing. When you close on a deal, your relationship with the buyer/seller/investor doesn’t have to stop there.

And the best part is, as you close more deals and do what I’m about to suggest to you, you’ll see growth in your business.

Let’s get started…

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Commercial Real Estate

What’s the difference between you and Sam Zell?

by Craig Grella | September 25, 2009

It’s no secret that the real estate market is at its worst since the great depression. It doesn’t help that most of the media seems to set their sights on publishing only articles that highlight the latest crash or the biggest loan scandal. Defaults are rising, foreclosures are at an all time high and Realtors are leaving their jobs to pursue careers in acting.

It’s not really as bad as it seems though. At least, not in the long run. Boom and bust cycles are nothing new, and thankfully there has always been a boom that followed a bust. In part due to the investors who sweep with the time tested strategy of “buy low…sell high.” The time has come to prepare for the next boom cycle, and those who can invest now will find great wealth in the near future.

You may be saying, “Thanks for the tip, Craig. Tell us something we don’t know. Problem is, we don’t have any money to invest. How do we do it.” Great question. Let’s start by discussing how not to do it.

How Not to Get Money to Invest

A simple search on BiggerPockets for the term “bulk reo” yields over 400 forum posts and articles about buying or flipping bulk reo portfolios. Go out further by searching “bulk reo” on Google and you’ll find just under a half million results. Take a moment and read a few of them and you’ll notice many newbie investors stating their plan is to go out and search for the mother lode of REO portfolios, buy them at four cents on the dollar and then wholesale them at twenty five cents on the dollar. They all plead for other people to invest with them stating if they could just pool some money they could go out and take over Citibank’s entire portfolio. Mostly, those posts go unanswered or just get ignored, the would-be investor tucks his tail and moves onto the next brilliant money making scheme. That’s a great example of how not to do it.

I don’t mean to pick entirely on newbie investors because there are many seasoned investors out there using the same strategy. We all understand the math of “buy low and sell high” but it begs the question:

How is it that Sam Zell, even during bankruptcy, can raise $600 million to buy property in this market when you can’t raise a dime? The answer: he’s got a plan and you don’t.

That is… until now!

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Real Estate Marketing

4 Steps to Real Estate Newsletters that Work

by Molly Castelazo | September 25, 2009

Is direct mail a part of your marketing strategy?

It should be. More specifically, hard copy, good ‘ol fashioned snail mail newsletters should be part of your marketing strategy. Here’s why:

Other real estate agents and investors have stopped sending them. So you have a great opportunity to stand out from the crowd.

People still like the feel of a piece of paper in their hands. Studies prove it’s true!

When people are making a decision to buy or sell a home – one of the biggest financial decisions of most people’s lives – they want to be informed. And they want to work with an expert. A newsletter is a great way to position yourself as that expert.

How to craft newsletters that work

If I’ve convinced you that you should be mailing newsletters, here’s how to do it:

Step 1: Get a good list. It’s an old adage in direct marketing that 40% of a mailer’s success (or failure) is due to the quality of the mailing list.

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Commentary

The New Real Estate Niche

by Tom Koziol | September 25, 2009

: Image by Thomas Hawk via Flickr

After you read this post you will realize the “new” is really the “old” but, in the end, who cares. At least according to me.

We’ve all seen headlines that read: Existing home sales dip in August or words to that effect. Truth is, those headlines aren’t news anymore. They used to be but used to be has become the norm or maybe I should say the numb.

To add more numb to this post, we all have read articles telling us real estate practitioners and investors are expressing frustration with what they consider slow action from banks. That is, banks aren’t releasing inventory fast to satisfy the demand.

My question boils down to what do they really expect from institutions that have moved, on a historical basis, extremely slow. It is merely business as usual.

On the other hand, given a red-hot market has poked its head out of the ground we should expect business not to be usual. We should demand those institutions with a home inventory to get off their duffs and start moving the product. A home is no different than any other retail product, other than the sales price. When demand flares up, release the inventory and satisfy the demand.

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