Category Archives: Real Estate Investing

Feb 12

Things to Avoid When Flipping Real Estate

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Flipping property is rising in popularity as a form of real estate investing. The truth of the matter is that this is one of the more entertaining methods for many investors that are simply ‘itching’ to get their hands a little dirty. The sweat equity involved in these transactions, while attractive, can also be daunting when skills are inadequate and out and out dangerous in some situations.

If you are one of the many around the world who consider the appeal of flipping property with huge dollar signs in your eyes, you should take care to avoid the following things in order to minimize your risks while maximizing your potential for success.

1) Do not fail to have a qualified inspection of the property before any money changes hands. If you do not have any idea of the types of work that needs to be done then you cannot possibly make an educated estimate of the costs involved in rehabbing the property.
2) Do not underestimate the budget for repairs on the flip. This is one of the most common mistakes that even seasoned professionals make and it can mean the difference between a profit and a loss on the property if you aren’t careful and do not stick to the planned budget.
3) Do not overestimate your abilities. This is another common mistake. The fact that you’ve seen something done on television doesn’t mean that it is something you can do on your own. It costs more money and time to have someone come in and repair your mistakes than to have had a professional do the work from the beginning. This doesn’t mean that you can’t learn how to do some of the work or that doing so would be cost effective. The trick lies in determining where your skills and abilities can really take you rather than where you hope they will take you. Plumbing, electrical, and structural work are generally best left to the professionals unless you have specific experience or training in these fields.
4) Do not fail to hold yourself accountable to your timetable and your budget. Real estate investing puts you in the bosses seat and while that is often simple when it comes to driving others, we often have a bit of difficulty when it comes to holding ourselves accountable for time and money along the way. Unfortunately, failing to do so can be a very costly blunder.
5) Do not forget to keep up with receipts, bills, etc. and reconcile the facts and figures daily. It is far too simple to allow a couple of trips to the local home improvement center escape careful scrutiny. Add a couple of these trips per day and you could easily find thousands of dollars missing from your budget with no paper trail to explain the transactions. You could also find that some tools will not work or be needed for the project. Those items cannot typically be returned without the original receipts.
6) Avoid having too many chiefs on the project. If this is your ball game then you need to run with it rather than having 10 people giving contradictory orders. Schedule meetings regularly to discuss progress and any adjustments or changes that may need to be made.
7) Avoid poor planning. This is one step that is the difference for many would be house flippers between success and failure. Plan out every step of the project in an order that makes sense. You do not want to paint the ceilings or walls after you’ve installed new floors. Nor do you want to rip out walls in order to replace plumbing after you’ve painted them. Plan things out in the proper order and allow a day or two between subsequent projects in case extra time is needed. The last thing you want to do is pay a group of contractors to stand around waiting for the paint to dry so they can begin the next step in the process.

There are risks involved in any type of investment. While real estate is one of the greatest things in the world in which people can invest, there are still risks involved. Following the advice above however can significantly lower those risks and give investors the opportunity to have great expectations when all is said and done. Whether this will be your first flip or your fortieth flip there is much that can be reviewed in the steps above that will reaffirm many of the things you’ve learned along the way.

Feb 05

Real Estate Investors Offer Perks to Retain Tenants

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What tenant wouldn’t love the allure of high speed Internet and a computer of their very own? This is one of many incentives that investors and property owners are offering in order to retain or reward long term tenants. There are other rewards that are just as effective and cost property owners a little less in order to keep the tenants such as gift cards to restaurants after the renewal of a lease or gift cards at furniture stores for lengthening an existing lease. Savvy investors realize that an empty house, apartment, mobile home, etc. is money that is being lost each month that these sit empty.

The same savvy investors also realize that by keeping tenants longer they are often able to prolong the installation of new carpet, new paint, and other cosmetic repairs that are often required when a dwelling is turned over. In addition to the costs of these repairs there is also the time problems of these repairs as many of these cannot be completed in the course of a day or two and leave the apartment out of commission for at least a week if not longer. Bottom line is that the time the apartment sits empty is essential income that is lost.

If you do have an empty apartment or house there are things you can do in order to entice renters to sign a lease. One thing that many potential tenants find appealing is offering to allow them to select the color scheme for the walls and flooring. Too many rental units permit only white walls to their tenants. Imagine the benefits of not only allowing them to have walls in designer colors but also doing the work for them. This is a great incentive to many renters who love the idea of the final look but not necessarily the expense or work involved in creating that look. The ability to have the colors of choice when moving in is a huge bonus to many renters that should not be neglected or overlooked.

Another thing that tenants find helpful and appreciate in a rental property are the little luxuries such as a dishwasher, garbage disposal, built in microwave, washing machine, or dryer. These things are luxuries that many find are well worth signing a longer lease and even paying a little extra for each month. Garages and carports are another great bonus to potential tenants if you have the facilities to provide this. There are other enhancements you can make to a property that makes it more appealing to long-term tenants. Some of these would include ceiling fans, a fenced in yard for children or pets, and free cable television. It is the little touches that often appeal to renters and you will be amazed at the difference they make.

By offering your tenants something that every other landlord in the area is failing to offer you are standing out from the rest. You are also creating a ‘spoiled’ tenant who isn’t going to be content with what the other landlords have to offer when the time to renew the lease comes around. For this reason he or she is likely to stick around for yet another six months or year until the new lease expires, at which time you, as the savvy investor you are, can convince them to once again name their price for staying and offer yet another beautiful incentive in order to keep your clients happy and in place.

Feb 02

Real Estate Forms

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Anytime you spend your hard earned money to buy something, you should always have it documented. When you purchase smaller items, such as items at a convenience store, you’ll normally be given a receipt. When you purchase larger items, such as televisions and furniture, it will involve a bit more documentation. In exchange for your money, the seller will give you a receipt and in most cases a warranty that will protect your investment.

As you may already know, buying a home involves a lot more paperwork than furniture or even an automobile. Whether you are buying or selling a house, you should always have each step of the process documented. If any revisions are made, they should be recorded as well. Although buyers and sellers can prepare the documentation themselves, most choose not to due to the number of revisions that a single document can have. To help prevent consumers from these types of headaches, ready made real estate forms were introduced.

You can get a ready made form from a real estate agent or download the forms right off the Internet through a real estate website. Ready made real estate forms are easy to use, as they cover virtually all transactions you may encounter – from buying homes to selling them. There are forms that cover just the basics, which are ideal for those with no experience. If you are looking for a more legally binding form, there are also those that cover legal requirements and those that cover disclosure laws as well.

You can choose to purchase these forms on an individual basis as you need them, or buy an entire set instead. Individual forms are ideal for anyone who is involved with short term leases, such as rental property or homes that have been leased out. If you are planning to sell a home or buy a home, you are better of purchasing the entire set of ready made forms. This way, you’ll have all of the documentation you need and you won’t have to worry about purchasing more.

Unlike other types of real estate forms, ready made forms are assured for their accuracy, legality, and even their contents. Manufacturers of these forms spend a lot of time and a lot of energy verifying their documents, and making sure that they are perfect. Although these forms are normally up to date, you should still check with your local law and real estate offices to see if there are any updates. Real estate laws and regulations aren’t revised that often, and normally tend to stay the same for a long period of time.

If you aren’t sure about what forms you need, you should always ask a real estate agent. Even though ready made real estate forms are easy to understand and use, there are a few types available. If you are selling a home, you certainly wouldn’t want to use the same form as someone else who is buying a home. There are also ready made rental forms as well, which are ideal for those who are renting out property or leasing.

With ready made real estate forms, the process of real estate transactions are easier than ever before. By using these forms, you can do everything yourself – without having to forego realtors. You’ll save a lot of money as well, simply because there is no realtor involved. The next time you are buying, selling, or leasing out your property, you should look into ready made real estate forms and see just how easy they make real estate transactions.

Feb 01

Mortgage Advice for Residential Real Estate

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When it comes to owning property many people around the world will tell you that this is a lifelong dream. While once an opportunity that seemed to be reserved for either the wealthiest or the most miserly among the general population home ownership is now something that is accessible to a larger segment of the population than ever before.

This is good news for many but for some can lead to confusing encounters with mortgage brokers and serious sharks along the way. The best advice that anyone can give someone attempting to embrace the dream of real estate ownership is to deal with a reputable company when it comes to obtaining a mortgage. Even when dealing with reputable lending companies you must watch out for those who do not have your best interest at heart.

If you would like some very practical advice when it comes to getting a mortgage, then you are at the right place. First of all, avoid lenders that are encouraging you to take a loan for more money than you are comfortable repaying. Foreclosures are at a record high when it comes to the mortgage industry at the moment because of predatory lending practice on behalf of some mortgage brokers. These practices include convincing people to borrow more money than they could realistically hope to pay over time and have any quality of life as well as convincing homebuyers to take out adjustable rate mortgages in the beginning in order to procure lower rates.

Shop around before you decide to buy when it comes to mortgages. This doesn’t mean to actually apply for mortgages all over town but do the research and compare rates before applying with any one company. Talk to several different brokers and find out what they have to offer you that the other company down the road cannot or will not offer. Keep in mind that mortgage companies will offer everything under the sun from free toasters to free vacations in order to get you to go with their company. The proof is in the terms however. It is simply not worth that free toaster if you are going to end up paying a 6.9% interest rate instead of a 5.9% rate. You will have paid for that toaster many times over in the process of paying the mortgage.

Even after you’ve applied for a mortgage, if the deal seems to be going south check out your other options. There are all kinds of problems that crop up along the way. You are not marrying the mortgage broker. Nine times out of ten you aren’t even making any sort of commitment at all to your mortgage broker. You will however be living in the house you select. If there is a problem with the mortgage company for the specific home you want do not hesitate to change in order to get the home you desire for your family rather than allowing the mortgage company to dictate what kind of home you can buy.

I mention this because we had a very similar problem when we purchased our turn of the century home. The mortgage company didn’t think the home was worth the risk because of its age. We saw the beauty and the potential in our home that is coming along quite nicely and managed to be approved and financed in short order with another mortgage company. If this was the case in our situation, chances are that it will work for others as well.

In all honesty, it is nearly impossible to buy a home in this day and age without taking out a mortgage. It is best however if you see the process as a learning experience rather than an abject lesson in intimidation. This is your home and your money that will be spent in order to purchase the home. You are asking them for a loan but quite frankly, they need your business. Do not hesitate to shop around for the best deal with a mortgage just as you did when finding your home.

Jan 27

Is an Inspection Really Necessary?

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One question that seems to be commonly asked among those who are interested in real estate investment, particularly in flipping properties, is whether or not a real estate inspection is really necessary. The long and short answer to that question is absolutely and I will do my best to explain exactly why this is so.

First of all, a real estate inspection is the act of having a qualified (and in many states, licensed) professional take a look around the property you are considering and informing you of obvious and potential damage or problems with the property. This is not something you want your uncle Bob doing, unless of course, good old uncle Bob has had the training and experience to know what to look for in an inspection and know what those things could mean.

Many who are planning to flip properties enter into the situation (particularly first time flippers) with the attitude that they know there are problems with the property and that is why they are purchasing the property. The problem is that the untrained eyes may miss some problems that should be addressed before moving along to other problems.

For instance, if there were obvious signs of plumbing problems that could result in a leak behind the wall, you wouldn’t want to paint that wall or replace the floors until you had the possible leak checked and either confirmed or denied and repaired if necessary. Otherwise you would likely need to undo the work (wasting both time and money) that had already been done by the time you found out about the leak that a competent inspector would have told you about before you even began working on the property.

Inspections are great before placing the bid on a house because they actually give investors a bargaining chip. For the true (at heart) investor this is a fact that simply cannot be ignored as it directly affects the bottom line price. If the roof needs to be replace you are justified in offering a lower amount. If the electrical system needs to be updated, this is something that should be adjusted or amended in the final offer. These are also things that are easily identified by a qualified and competent property inspector. Any thing that can save time and money is great when investing in property and an inspection can do both.

Another great thing about a good property inspection is that it often sheds light on the amount of money that will be needed in order to get the house in good working (or flappable order). Knowledge is very important in this line of work and can mean the difference between taking on a project (if the repair budget won’t exceed the eventual value of the property) or walking away if the expenses would be too great to turn a decent profit. As an investor you should never take on a property that is pretty much guaranteed to be a failure, it is simply not a wise financial move to make. It doesn’t matter how much the property calls to you on a personal level in the business of investing the bottom line is the only call you should be taking.

More importantly however than any of the things mentioned above, a proper home inspection can inform you of potentially hazardous conditions within the home that the untrained eyes may not take notice of. Some of these things include toxic mold, which can be financially disastrous as well as hazardous to your health; foundation issues, and structural damage that is threatening the integrity of the property. An inspector should also notice the structural integrity of homes that could affect your home if they are weakened or fail all together. While these things seem so simple, it is often the simple things that lead to the greatest disasters. Whether or not you realize it, a good home inspector is one of the best tools you can have in your arsenal when it comes to flipping real estate as an investment venture.

Jan 23

Has Television Changed the Face of Real Estate Investing?

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If you take a look through the television stations on almost any given day there is a television show somewhere that features home improvement, real estate investing, or some sort of combination of the two. From shows that teach people how to sell homes that have lack luster reviews to shows that teach viewers that it is possible to purchase, repair, and re-sell a home in a matter of weeks for astronomical profits, there are shows that appeal to the entrepreneurial wannabes in audiences around the globe.

These shows have made and lost fortunes a few times over by convincing viewers that they too can do the wondrous things seen on television. The truth is that many viewers are capable of doing these things but television never really shows how hard the work actually may be. The television cameras do not always show the blood, sweat, and tears that go into making these projects successful and rarely mention the countless complete and total failures that occur along the way.

The cameras are also not to keen for showing up at 4 am and rolling well after midnight when the work for the day is finished. It doesn’t catch the heart attacks and nightmares as credit cards are going dangerously close to being completely maxxed out while dreams of quick riches fade right in front of investor’s eyes.

This does not mean that every project is doomed to failure only that things are not always as rosey as they may appear to be on the television shows. Flipping houses may seem to be a bit glamorous and a lot hands on. The problem with that is that too few people really realize how much work goes into the hands on part of the program. This is not easy money no matter how much the television cameras would like to convince you otherwise.

It is very possible to turn a substantial profit in a relatively short amount of time if you keep your cool, use your head, and buy and sell in the right conditions. The problem is that so many people do not consider the big picture and find themselves in over their heads and out of money before the project is anywhere near completion.

One thing that television has definitely done for this line of work is make competition for the flappable houses a little fiercer. The early bird in this business gets the worm and while the cheapest house isn’t always the best candidate the less competition you have driving the prices up, the better in this situation. The goal is to buy low and sell high. Most people do not have a terrible amount of competition, as of yet, on the selling high portion of the program. The real trouble at this point in time lies in the buying low portion as there are many more would be real estate investors that are interested in buying the inexpensive properties than there are that will actually see the projects through from beginning to end.

So yes, television has greatly changed the way people invest in real estate. Whether this is truly good or bad for the overall real estate market remains to be seen. In light of the recent down turns in real estate it is to be expected that some of the popularity may diminish. The sad thing is that this is still one of, if not the best ways to make a large sum of money fairly quickly that is legal in the world today. Fortunes can be made and lost in real estate; the trick is always in placing your bets on the right property at the right time. For those who are willing to take the risks associated with this type of investment in today’s market and those that are willing to wait for a slight upturn in the market the profit potential is phenomenal.

Jan 21

Home Loans

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Home loans make the process of buying a new home more affordable than ever. As you may already know, these types of loans give you many opportunities that wouldn’t be possible without them. When you buy a home, you should understand as much as you can about the process, as well as the questions you will be answering. This way, you’ll be familiar with how things work and you’ll find the entire process to go much smoother.

When you look towards a home purchase loan, you’ll need to fully understand the interest rates. They are never the same and will vary among the different financial institutions, as well as from time to time. In many cases, home loans can change on a frequent basis, with little to no notice. When you buy a home, it is very important that you keep up with the economy. Any change in interest rates for a home loan can either increase or decrease the amount you pay back.

When getting a home loan, you’ll also need to understand the terms and the length of the loan. Almost all financial institutions and lenders have a variety of different plans or periods for you to choose from. If you choose a longer period, in most cases your interest rate will drop. You can find this out yourself by using a mortgage calculator. This way, you’ll know how much your mortgage payment will be before you decide to further pursue the loan.

As you probably already know, your ability to pay the loan back is very important. Some lenders require that you keep your loan full term, while others may provide you with the option to pay it off any time you wish. Home loans that give you the option to pay it off early will normally save you quite a bit of money in the end. If you are able to pay your loan off several years early, you’ll save a lot of money in the long run.

Even though the early payoff option is great to have, it can also come back to haunt you if you end up defaulting on the home loan. Or, if you decide to sell your home in the future, the early payoff can haunt you as well. For those very reasons you should always consult with a specialist before you commit to any type of home loan.

For the potential home buyer, home loans offer several different opportunities. Before you rush out and get a home loan, you should always know what you are agreeing to. You should also look into the company you are thinking of getting the loan from as well, so that you can better prepare yourself when you go through their process of getting your loan.

Jan 20

Flipping A House For Cash

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A lot of people these days are preaching about the buying and holding method of gaining wealth with real estate. There indeed may come a time in your life or business when you’ll want to hang onto a piece of property, although you’ll only be interested in keeping certain types of property. If you’re just starting out, flipping a house may be an ideal way to get started.

Basically, there are three ways that you can flip a house, although each one has its own terms, motivation, and type of property. The first method is known as retailing. What this means, is that you buy a house in bad shape, do the repairs to fix it up, then turn around and sell it. There are a variety of houses in need of repairs out there, and several ways that you can quickly flip a house to net profit. All you need to know are the techniques that will get you the most money in the least amount of time.

The second way you can flip a house is though wholesaling. Wholesaling involves finding a home for sale then flipping it to an investor for a fast, yet small profit. To do this, you’ll need to know the real estate investors in your area, the types of homes that flip the best, and how to fund your property so you can flip it to them. If you live in a big area or a city, you’ll find that using the wholesaling method of flipping houses is actually easier to accomplish.

The third way to flip a house is by assigning the purchase. Using this method, you’ll commit to buy the house. Instead of closing the deal yourself, you’ll assign it to a real estate investor – of course for a small fee. The investor will take the contract over and close the purchase themselves – flipping the house. This can be very profitable, especially if you invest in the right home. You don’t need to have your contract worded any special way to be legal, although you will need to determine the assignment fee.

If you’re looking to break into the real estate market and make big bucks, you’ll need to learn all about flipping houses. Flipping houses is very profitable, especially once you have learned the basics. The first and third methods are the best, although they will both take quite a bit of work on your part. Restoring homes isn’t easy, and you’ll need to have a team qualified to handle any repairs. Assigning the purchase may be difficult when you first start out, although it will get easier with time. If you stay at it and do your best to make a profit – you’ll be an expert at flipping homes in no time at all.