There are several trends I’ve seen emerging. One has to do with cyber-shopping — online buying seems to be a trend that will only increase. Nothing is ever certain in our fast-changing world, but the convenience of cyber-shopping seems to have taken hold as consumers gradually get over the distrust of online buying and break their dependency of mall addiction.

From recent observation I’d say the mall addiction hasn’t been altered drastically, but common sense tells me more and more people will be shopping online. This doesn’t mean products will be magically transported from the screen to the consumer’s homes, it means there will be more and more need for storage — something physical an investor might take note of. It’s funny sometimes how the new technology continues to depend on the structure of the old, but land, space and buildings will always be needed no matter how technologically advanced the forms of buying and selling become. There may be less department stores and more office/warehouses, but there will something that exists that has to do with real estate.

Another trend that goes along with needed space for online businesses to store and ship their products is decentralization of industry. Many small companies, high-tech and low-tech, are spreading out all over the country. A wise investor might want to analyze these two trends in their area to determine if there is a shortage of flex space and a growing demand for such space.

Many small businesses will find certain areas around the country appealing when they begin comparing labor costs, leasing costs, cost of living, taxes and such. For the investor he/she might find flex space a good investment that requires less expensive construction costs than other investments (hi-tech or bio-tech would have construction needs that are a little more costly, of course) that require building anew — and if there is a shortage of flex space, the investor might be able to lease at a healthy rate still attractive to businesses relocating from areas where land cost, construction costs and other costs of doing business are higher.

A little snooping around the city development department could reveal an increase in interest from small businesseses with flex space needs. If the trends I indicated above are growing as I suspect they are, in many areas around the country there will be a demand looking for a supply. It would be good to start on the ground floor of such an opportunity than to be the last when your area is glutted like has happened to many investors in larger areas.

It seems to me the need for storage and shipping will grow tremendously if small companies increase and spread out as the result of online buying and decentralization. It’s certainly something to consider and investigate.

Happy investing!

If you're new here, you may want to subscribe to our RSS feed or sign up for our real estate social network. Thanks for visiting!

Tags: Commercial Real Estate, flex warehousing, online, real estate, real estate investment, shopping, warehouse

The other day I went to a listing appointment and gradually asked enough pointed questions and did enough research that I passed on listing the property. Upon first glance the lot seemed simple, but I noticed some odd layout to the side of it that made it unclear where the property lines ran. After doing research I found that the lines were absolutely crazy. This is an old section of town and the agreements through the years with neighbors left the property legally with no ownership to the side of the house and half the front yard.

It was the oddest example I’d seen. The property had all kinds of gentlemen agreements about who could use what piece, and the house is owned by someone who’s had it 25 years. I could see someone buying it and all the agreements not known, then the buyer having to face litigation problems in the future if anyone came to claim their piece of the property.

Perhaps the attorneys would discover it doing a title search, perhaps it could be missed because of all the convoluted arrangements. The point is that while doing inspections get a survey done so that you have all the information. Coordinate all inspections, physical inspection of a building’s systems and structure, with inspection of all leases, with title search, with special environment inspections for that area, with a survey. Then do a little snooping.

When problems, or red flags, occur, check them out thoroughly. I was once representing a buyer back when seller’s were responsible for termite inspections before closing. I convinced the buyer to have someone go by and inspect the home on the buyer’s dime to double check. I had received a clearance from the seller that no termite infestation was present and had a letter from the termite company. While the buyer’s inspector was not looking for termites, he did notice signs of infestation. I called the listing agent and the listing agent said that she trusted the termite company and that my guy was not experienced to determine infestation. On my dime, I had another pest control company go out with the buyer’s inspector, and they found infestation – I went over and saw the termites with my own eyes.

Stay alert and be thorough with all inspections and at any sign of trouble go into detective mode and bulldog the problem until you are satisfied you understand the full extent. Too many times people ignore red flags and pay dearly later. We’ve had flooding problems in Savannah, so I started the practice of going around asking neighbors whether water drains or stands in that area – I often get a different response from neighbors, especially if they are renting. Sellers will sometimes fudge and if water has never actually flooded the building they report no flooding problems. However, if you are going to start a restaurant and the parking lot holds water, even though it doesn’t come into the property, then you would probably want to find a higher, drier location.

As stated in a previous post the contract should allow you to easily walk away if the problems mount and the seller is uncooperative, or seems to be hiding information. Be a detective, follow leads thoroughly – hear loud warning sirens at every sign of a problem.

I would also ask that you consider something that seems out of place here, but I feel is very important, the psychological factor. Sometimes we get bogged down in nuts and bolts and miss some obvious parts of every process. One of my first posts here talked about the excitement of investment and how the excitement can cloud judgment. What happens in the inspection process is minimization of problems due to the excitement of finding a “good deal”. You might say – “oh, I can fix that” – or, “that won’t cost much to remedy.” As someone who’s underestimated repairs before, I urge you to overestimate repairs, especially on older properties, because what seems like an easy fix can turn out to be more complicated and costly once you’ve gotten into it. What you thought you could do yourself winds up something that requires an expert’s knowledge and skill, then you wind up spending in the thousands when you estimated in the hundreds. Don’t underestimate the repairs and don’t overestimate your ability to fix them.

It would pay to have an experienced, objective tradesman give you a good estimate, then if you can save money doing some of the repairs yourself, fine, but at least you will have the correct estimate with which to negotiate.

Tags: buyer, Buying real estate, flooding, inspections, inspector, real estate, real estate inspections, real estate investment, seller

• We can assume that a great place to cultivate a farm area is where we are getting the most responses from current marketing pieces. This requires a bit of performance tracking but I will save that for another post. If sellers in a specific area seem to be more receptive to the ad campaigns you are using than sellers in other areas; go for broke. There is no need to spend money and time on dreams when you have deals staring you in the face.
• Go to a great online source and purchase a state-wide foreclosure list. Look for the area with the highest concentration and target that part of town. This is a neat trick I learned when I first got started in the business.
• You can decide to target new subdivisions or new construction areas because you seek to provide sellers with instant debt relief. Warning: Buying in these areas requires a certain savvy on negotiating terms.
• Military Bases or neighboring developments to military bases are strong target areas for real estate investors. It isn’t a secret that America’s finest do quite a bit of moving and most of the time their mortgage products are in the form of VA loans. These types of properties are right on time for investors that are hip to buying with no equity or negotiating short sales.

One may ask, “Why a small target area?” My answer is, “why a large target area?”

For the sake of this write-up, I will use my favorite neighborhood in Washington, DC: Deanwood NE. Deanwood is full of 4 bedroom 2 bath raised ramblers with basements ranging in value from $279,000 to $324,000. I would consider myself an expert on Deanwood real estate. You could be an expert on properties in Deanwood as well if you pulled comps for the subdivision on a daily basis. This supports what I would consider to be the greatest benefit to a small farm area – being an area expert.

If you invest in a small area; by default, you become the go to guy or gal when it comes to investing in that particular subdivision. It is much easier to reach 1000 homes 5-7 times than to reach 5000 homes 1 time. Sellers will see you as the ONLY choice for their real estate needs and that is the notoriety that an expert should expect. When targeting a smaller area, you can easily oversee projects, manage properties, time-block efficiently, avoid new relationships, keep tabs on competition, and literally specialize in that area. Believe me, if you want to take over, this is how it’s done.

Blessings to Your Real Estate Investing Business,
Milton B. Yates

Tags: learn real estate investing, marketing tips, real estate farm, real estate investment, Real Estate Market, real estate marketing, real-estate-deals, short sale

Danger Will Robinson!

The mister and I married in 1980. We were 19, freshly spit-out by the public school system and totally clueless about the real-life world of household finance. Our parents were lower middle class, Depression-era survivors with a ton of fear about anything deemed risky…and pretty much everything was considered risky.

For the first twenty years of our marriage we lived by the mantra:

• Get educated
• Get a job (preferably with a big corporation)
• Work hard for someone else so you’ll get promoted
• Live within your means
• Buy a house, pay it off and stay put
• Save for retirement.
• And pray Social Security doesn’t fail before you do.

Not So Risky Business: 3/2/1 with garage apartment in a historic district bought with 80/20 financing. Fix-up involved paint, removing old carpet, refinishing the oak floors underneath and installing a new kitchen floor. Total cash out of pocket– 7K (repairs + closing costs). Positive cashflow from Day 1 of $400/month.

True Risk

Starting a business was considered risky. Investing was considered risky. The stock market was gambling and don’t even get me started on real estate investment.

But here’s what I’ve come to understand:

• Education is good, but things change. You can go back to school a dozen times during your working years and never keep up.
• It’s extremely risky to rely on only one source of income, and for that source to be completely outside of your control. Working for someone else means you have no say in your salary, work schedule or rate of increase. If you need more income, you can work more hours, get a second job or hope for a promotion. Of course, that only works as long as your boss doesn’t decide you’re a numbskull that’ll never get a promotion no matter what. Or decides to cut expenses by outsourceing your entire department.
• It’s risky to save for retirement and watch inflation eat up the increase. It’s risky to count on a retirement savings plan you don’t understand in the first place and turn over to someone you’ll never meet, assuming they have your best interests in mind.
• Living within your means is a beautiful concept and highly recommended, but if you never step outside your comfort zone, you’ll never know what your means might become.
• And don’t get me started on Social Security.

Compound Interest

When we finally comprehended the power of compound interest, our way of life changed forever. Over time, I’ve come to understand that compound interest either enslaves people or sets them free. Living on the negative side of the equation makes someone else wealthy. Moving to the positive side builds family wealth and financial freedom. Simple as that.

So why, why, why is this concept so hard to internalize? Probably because most of us were indoctrinated with the dogma that any move from the negative side of the consumer-debt/savings equation to the positive business owner/investor side was just too risky.

How Hard Can it Be?

But how tough is it to save enough every few years for the down payment on a single family home in a nice neighborhood? Income tax refunds, bonuses, automatic savings accounts tend to add up over time with a little effort. And how difficult is it to find a nice person to make those mortgage payments for you? And how hard is it to pocket the majority of that rent once the mortgage is paid off?

And just how many homes could you buy and pay off by retirement-no fancy footwork, no learning tricksy real estate investment schemes–Five? Ten? Fifteen?

If you acquire one rent house every other year between the ages of 25-45, you’ll have 10 houses with 20 years left before retiring to pay off that last mortgage. And if, after expenses, you clear $700 per month per house-how does an extra $7000 a month during retirement sound?

Now that, my friends, is a backup plan. And I can guarantee that during your investment years, with a minimum of effort you can and will learn a few simple ways to make the process faster and easier with less of your own money involved to maximize returns.

And that doesn’t sound the least bit risky to me.

Tags: landlord, Landlord Tenant, Real Estate Investing, real estate investment, rent houses

An investor on our forums recently posed a great question that others out there can learn from. I thought it would be a great idea to share with the rest of you.

“Theres been a property at the end of my street that has been abandon for close to a year+ now. At no point did a for sale sign go up but I haven’t seen anyone living in it at all. The family just kind of picked up and left . . . I guess in short my question would be where do I go to find out more about the house?”

Abandoned properties provide a great source of leads for investors. There are many reasons why someone might abandon a property, but with the right info, savy investors can easily locate the owners of these homes and possibly even get a great deal on them!

One of our members, Wheatie, suggested the following:

You can start with the county recorded for the county where its located. They will have someone down as the owner. May not be correct, address may not be correct, but its a place to start. You can try just sending it a letter with forwarding requested and see if it goes anywhere.

This is great advice! We’ve even made it easy for investors to find their local recorder/assessor’s office online with our free directory of county records’ offices.

Another member, Brandon Schlichter, suggested another path for investors to take:

You can always trace back the history and maybe find a prior owner. Asking neighbors is always a good thing to do (You can get deals from them too!).

Prior owners and neighbors are fantastic resources. I’ve used neighbors to find information on properties in the past and they love to share what they know! Neighbors are a treasure trove of information on any home or other property. I always like to chat with them before making an investment.

A final suggestion that should surely prove to be helpful comes from another member, username REI.

The technical term that some will use is skip tracing. If you search on the term then you will find leads to services or individuals that can do the work for you. Some are rather modest in their costs. Some investors use the net plus pay for a skip tracer as some have access to professional databases that are closed to the public. Some databases are too expensive for a 1 off use.

If you’re willing to pay, then skiptracing services are absolutely worth it. They can simplify and speed up the entire process for you.

All in all, if you try all three of these suggestions and still can’t find the owner of the property, you might be striking out. Maybe a detective would prove to be helpful, but the question that arises is “is it worth it?”.

Tags: abandon, abandoned, abandoned home, assessor, find property, home, house, invest, public record, real estate, real estate investment, recorder, skip trace, skiptracing