Real Estate (General): 2008

Tuesday, December 23, 2008

Common Mistakes Investors Make

05-27-08

The question will always be which came first the chicken or the egg. In real estate it may be the deal or the plan. Many people make the mistake of finding a great property and then do not know what they are supposed to do. This is where the trouble begins. They have worked themselves backwards into a corner. The idea is to formulate a plan and then find the house which will work with this plan.

We are a planning people. We plan for the future, the college education for the kids, and retirement. When it comes to real estate it only makes sense to plan for that too. Sometimes the novice investor gets ahead of themselves and forgets to draw up a plan. Deciding what you want to do in the real estate market will determine what houses you buy and how you sell them. It is best to always have a plan.

Mark E. Moebius
CEO of MILJONAIR Development
3451 St. Albans Road
St. Albans MO 63073

636-300-9000

http://miljonairdev.com
http://stalbansdevelopment.com
http://custom-home-builder.net
http://excaliburgolfresort.com
http://newfinehomestv.com
http://longsiding.com
http://awinghaven.com
http://relocate63366.com
http://realestate-marketingideas.com
http://realtormarketingideas.com
http://newtowninstcharles.com
http://relocatetoofallon.com

Planning to get rich quick is another common mistake. The big deals which will net you millions is usually only a dream. Investing in real estate is a slow and steady process. When you proceed at a steady pace, you will keep moving forward towards your goal. You can make money, but being a millionaire over night is stretching the limit.

On the average a good investor can make $60 to $100 thousand a year with proper real estate investments. This strategy allows for a steady forward progress and takes into consideration that not everything will go as planned. You must keep real estate investing just what it is REAL.

Do not think you can go it alone. There are many people who play a key role in making a real estate deal work. The smart investor has a team of specialists who assist him or her. Even they may not know they are part of a team, it is a team all the same.

You will need a good real estate agent you can trust to help you analyze the properties. You will want an appraiser and a contractor or inspector to make sure the house is worth the investment. You may even need a lender once in a while. The most important part of the team is the attorney who is going to make sure there are no hidden surprises which may crop up at any point in the deal. This is not a loner business.

This is not a business with a single strategy either. You must have a plan A, B, and C. On occasion it does not hurt to have a D in the mix. You may want to buy a home and resell it. The housing market changes quickly. If you can not get it ready for market in time to sell for a profit, you may consider renting. There are times when the rental market becomes void, or stalls. When this happens you could offer a land contract or lease option to get rid of the property. There may come a time when the only thing you can do is sell to another investor and cut your losses before you lose any more money. The wise investor also knows when to bail.

The common mistakes made by the inexperienced investor can be avoided with a little research and planning. When you decide to start investing in real estate, learn the business. There are many books available which can teach some of the strategies the pro's use. There are seminars, many of them free, which allows you to learn how to invest. Study up and make smart decisions when it comes to real estate investing. This way you can avoid common mistakes investors make.

Buying Off The Repo List

05-27-08

There are many systems which tell you to develop a marketing niche when investing in real estate. These programs give good advice when it comes to buying the property. The one thing many of them lack is which niche to get into. One of the most lucrative investments can come from buying off the repo list. This means finding a list of repossessed homes and finding one which will lead to a profit.

Two of the best lists to check are the Veteran's Administration (VA) repossessions and the Housing and Urban Development (HUD) list. These two lists are classified by state. You can go on line and pull up any one of these lists to determine the properties for sale in your area. Once you pull up the state you can narrow the search by county and or city.

You will find the information listed for each property. There will be an address, the number of bedrooms, and the square footage. You can also see when the property was put on the market. This is a key factor in buying off the repo list. You will want to look at properties which have been on the list for six months or more. These are the ones which are the easiest to obtain.

A property that is on the VA or HUD repo list must have the taxes and insurance paid. These are things which must be kept current by the agency. This is costing them money. These agencies are not in the business of buying and selling real estate. In today's economy it may seem like it, but this is far from the truth. The agencies do not want to hold these properties any longer than necessary.

What this means to you is they are willing to look at offers. There will be an asking price listed with the property. This is not carved in stone. This is the fair market value of the home in an area that is not distressed. There are going to be properties listed with the asking price of $75,000 and higher. There are many properties listed for quite a bit less. These are the ones an investor can build a portfolio with.

There are properties in certain areas being listed at present for as little as $1,950. Yes they can be lived in. These properties are all sold as is. The good thing is there is a little known trick to getting these properties for even less. When you find a property with an asking price of under $10,000 you should send in an opening bid. This must be done through a licensed real estate agent. The agent, by law, must submit any offer. The agent may balk at the low offers you make, but they must submit them.

The idea is to start low and work your way up. On a property which is listed for under $10,000 start with an opening offer of $2,500. This will most likely be rejected. When the denial comes back, offer $3,000. Most of the time, the agency will accept it. Should it be denied again, go up another $500. Do not offer more than $5,000 for the property.

There are many homes which have been sold for as little as $500 off of these lists. These properties took less than $1,000 to get ready for market. Some of them sold for more than $35,000. This is a profit of over $30,000. This is not a bad return on an investment.

You will have to do a little leg work to determine if the market will support a sale. You may even want to sell the property on land contract with the down payment being equal to what you paid. Either way, you will make a profit. Buying off the repo list has it's advantages. Take a look and see what deals you are missing.

Buyer Beware

05-27-08

Many people get excited when buying their first real estate investment. They get caught up in the idea of making millions or being a landlord. They fail to realize an important rule in real estate. This is actually the first rule any smart investor should learn. It is buyer beware.

Everything is not as it seems. When you find a good deal, determine just how good it is. One that seems like it is too good to be true may be just that. You must be extremely careful when investing in real estate. This holds true whether you are buying your own house or one as an investment.

The law anywhere states the real estate agent must reveal any known defects of the property. This means if it floods or the roof leaks, you must be told. If there has been major structural damage you must be told. Problems can arise because of this.

The first problem is the seller may not have been completely honest with the real estate agent. The agent may have told you about the roof and not mentioned the basement. This is most likely because he or she did not know about the basement. Not every seller is as honest as they should be. They want to sell their home and will withhold information they may feel is detrimental to the sale.

The other problem you may run into is if you are not dealing with an agent. The seller may tell you there are no problems at all with the property. They will forget to mention the fire that nearly devastated the entire house last year.

The best way to determine the true nature of the beast is with some investigating. First you can hire an inspector to check the stability of the house. He or she can find if there are any cosmetic repairs which have been done to cover major problems. The plumbing will be checked. The wiring will be examined. The foundation and the roof will also be under scrutiny. This is what you want before buying any property. Some repairs are simple. There are others which can cost almost what you could make on the deal.

Many local laws state that once the buyer takes possession there is only a certain amount of time they can make a claim against the seller for damages. This means that if you buy a house during the middle of the summer you may not find the basement leaks or the roof leaks until the middle of spring. The time limit ran out and you are stuck. Had you gotten the house inspected you could have been warned about the problems before buying the property.

The buyer beware rule should always be observed when investing in real estate. You can check out police reports for the address. This can tell you pertinent information the seller neglected to tell you. Information about fires or other damages may be able to be obtained from police files. Certain areas have the ability to search addresses to determine things which have happened. If you find the house has been broken into every six months for two years, you may not want to invest in it. The history of the home may come as a surprise to you. The old saying forewarned is forearmed is the best advice when it comes to the "buyer beware" rule.

Building A Real Estate Portfolio

12-22-08

You can build a real estate portfolio just like any other business. This is something which should be done to show the finance companies you are a good credit risk. You may need to generate a positive cash flow and sometimes the only way to do this is with a loan. Having a good business portfolio shows you are serious about your business.

You do not need much to start building a real estate portfolio. This can be done with simple land acquisitions. There may be many empty lots in an area where new developments are going up. This may only seem like a small investment. The day will come when someone wants that vacant lot and will offer to buy it. The land does have a value.

You can raise the property value of vacant city lots just by having it re-zoned. A residential lot for single family homes can be worth quite a bit. Getting an over sized lot zoned for multi-family housing can increase the property value, especially if the area is growing. When a property can be zoned with a dual purpose it makes it more attractive to developers.

Using the vacant land in your real estate portfolio for collateral on a loan will allow you to further your real estate investments. You may not think these little pieces of land can amount to much. The lender can assess the properties to determine the value. You may be surprised to find that as few as 5 vacant lots in the right district can generate a portfolio worth $50,000. That is a substantial amount of money when trying to get a loan.

As you get to know the real estate market you are dealing with, you will want to check with the regional planning board for the area. You may come across plans for a development to be implemented in 5 or even 10 years. This is the area you will want to purchase any vacant lots available. There will come a time when these lots can more than double in value because a developer needs them to start or even finish a project. Building a real estate portfolio is easier than you think just by using vacant land.

Rental properties have value also. There are many distressed homes on the market that an investor can pick up for pennies on the dollar. Fixing them up and renting them out can generate a positive cash flow almost immediately. This looks good in any real estate portfolio. You may even consider getting the rental unit approved for HUD housing. The income is guaranteed. When you have a guaranteed income, the lenders tend to favor you more.

Choosing An Investment

05-27-08

The real estate market is versatile. There are single family homes, duplexes, apartment buildings, and so many other properties. Choosing an investment can be hard if you do not know what you are looking for. The first thing you must decide is what kind of investor do you want to be.

There are some people who are very good at being a landlord. They do not mind taking care of the problems which can crop up at any time of the day or night. These people like the extra income every month. They have a budget worked out so they know what expenditures to expect and how to cover them.

Other people just want to buy and sell. They find a property, fix it up, and sell it for a profit. They know how much money they can put into the house and still make a profit. They know what repairs to make that will increase the value. They researched and found out about the market for that area.

There is one more kind of investor. This is the one who sells the homes, but on land contract. They are gaining an extra income every month. They are not responsible for any repairs. They do not pay the taxes or insurance. They are offering a way for people to become home owners who may not have any other way to go. This type of investor knows the market and knows the law. They will know how to cover themselves should a buyer not be able to make the payments. These people know contracts.

Once you decide what type of investor you want to be then you need to start choosing an investment. There are some things to look at when examining the market. If you are going to be a landlord, you will want to screen the neighborhood. You do not want to buy in a noisy area when you want quiet tenants. On the other hand, you can not have loud tenants in a quiet area. If you are interested in renting to seniors, then do not buy in the middle of family central.

You will want to check out the schools and shopping areas. This can be a good indication of what the area is doing growth wise. This is good practice whether you are going to rent, flip, or land contract. Choosing an investment means getting to know the market and the area. You do not want to be taken by surprise when the city comes in and re-zones your property. This can happen when there is a large volume of growth in an area. You may find your investment no longer qualifies for what it was intended. And easy way to check this is talk with the planning and zoning departments for the area you are researching.

There are times you may run across a deal which is too good to be true. This is usually because it is. A warehouse might be offered at thousands of dollars less than market value. You need to find out why before running down to the finance company to take out a loan. If you find the company selling it is in financial trouble then it may be fine. It may also be there are twenty five more just like it that are empty because everyone moved to another location. You could find yourself with an empty building which is going to stay that way for a long, long time.

Carefully research every market before choosing an investment. Know the area and what is selling. Find out the selling price and how long it took to sell. Check zoning regulations and the planning department for the area. Always buy below market value. Buy only what you need, not what looks good. Choosing an investment is not hard with a little leg work and research.

Mark E. Moebius
CEO of MILJONAIR Development
3451 St. Albans Road
St. Albans MO 63073

636-300-9000

http://miljonairdev.com
http://stalbansdevelopment.com
http://custom-home-builder.net
http://excaliburgolfresort.com
http://newfinehomestv.com
http://longsiding.com
http://awinghaven.com
http://relocate63366.com
http://realestate-marketingideas.com
http://realtormarketingideas.com
http://newtowninstcharles.com
http://relocatetoofallon.com