Real Estate Investing Is a Business You Must Take Seriously

By Freddie Taylor

The thing in common involving the majority of folks in real estate investing is that they regard it like it is a hobby. Something that is to be complete on the weekends or in their extra time, but they rarely utilize it earnestly. They don't work like they are initiating a brand new investing business. This is a crucial mistake and we don't want you to assemble this blooper.

Do Your Study / Consider / Exercise / Discover
As with any company, you have to do your part of studying and developing. This should not be an issue since it is tested the more you know and be familiar with this industry, the more expected your chances of great accomplishment. With this modest bit of knowledge, you would reflect that individuals would be gathering to the real estate investment training events and the like, but they are not doing it cause they don't use this business sincerely. You cannot afford to do this if you proposal on being victorious.

It's about time you realize what you know matters. You education is important as ever. In reality, you require to be enlightened as an investor.. You have to bear in mind that there are bad people in these waters that will take you for the whole lot you have if you are not attentive of the a range of laws and the strategies you have in place. We don't like to discuss bad intentioned people, but accept as true us, they are in this marketplace of real estate investing...and there are a lot of them. Protect yourself with education.

Write Your Business Plan
You must stay on task as an investor and having a investing business plan can help.. Plus, if you are going to be in this business, then treat it like a business. Nearly all successful establishment proprietors have a business plan and it is essential for you to have one as well. It does not matter if it is on notebook paper or in a file, just have one to keep you on mission.

To get a loan for your business or take on partners, you will need to have a business.. This is a technique of cutting out individuals that are not earnest to look after their time, but it also offers grand insight into the track a person or establishment is preparing to go in the future and if they are keen to loan or invest in that way.

Treat your Real Estate Investing like a Business
The bottom line is that you are a professional in a professional environment. It is time to act that way. Risk is a major element of being a real estate investor. How can you protect yourself from it Well, incorporation is one way to get this done.. Your risk exposure is locked into this business entity. Your personal possessions are protected from decisions you might make in the real estate business..

At the end of the day if you are going to be in business, then take the business seriously. Take care of your company by doing the things that victorious companies do on a recurrent basis. Take care of yourself and your real estate investing business.

Freddie E. Taylor, MBA is the managing editor of Invest With Passion, an online real estate investment magazine. Visit us at real estate investing as we discuss real estate investing business. Article Source: http://EzineArticles.com/?expert=Freddie_Taylor

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Article Submitted On: December 07, 2010

Why Invest in Apartments?

By Mary Thomsen

First, let's determine what is multifamily housing?

In the residential housing arena, single family homes are classified as having 1 to 4 units, meaning distinct living quarters for 1 to 5 families. The buyer obtains a residential mortgage for these, if financing is needed. Five units and up are considered multifamily, meaning there are 5 or more distinct units for families to live in. It does not matter how many families live in a unit, but the number of units in the property. All the units do not need to be in a single structure. Many larger complexes are composed of separate buildings on multiple lots.

Though trailer parks, and even RV parks may be found listed under the multifamily category, apartments are the obvious property type. Each type demands a very different management style, financing, and investment considerations. For now, the focus is on the apartments.

The advantages of apartments over single family:

Cash flow: Vacancies do not stop the income steam, but just reduce it. When one tenant moves out there are still others who pay rent to cover the expenses of running the property. Vacancies can even be a benefit, allowing for rent increases when new tenants move in. There is also an economy of size. Supplies may be purchased in bulk allowing for discounts. Laundry rooms, vending machines, and other amenities may add to income.

Leverage without personal liability: Investors know about OPM - other people's money. Using money from banks, other lenders, partners, etc., creates a larger rate of return, as less money has actually been paid for the property. Commercial loans are used to finance apartments. The profitability of the property is the major consideration of most commercial lenders. Loans may be non-recourse, meaning the people who sign for the loan are not personally responsible for the debt. Unlike residential mortgages, these mortgages do not show on personal credit reports.

Appreciation: Over time, all real estate generally increases in value, or appreciates. Of course, proper maintenance and care is part of the appreciation equation. The balance of the mortgage decreases with payments, but those payments are possible due to the rents collected. Unlike residential properties, it is the income that determines the value of apartments. Comparables are based on rents and other income, not solely on the condition, size, etc of the structures. Improving apartment values may be easier that improving the value of single family residences. By adding income sources other that rent such as laundry facilities, vending machines, storage facilities; the value goes up.

Management: For larger apartment complexes, there are professional management companies who really know how to make and keep properties profitable. These companies understand how to run the units, allowing the owner to pay less attention to the day to day operations than might be needed for residential rentals. This does not mean the owner should set everything on autopilot, but hiring a good management company can vastly improve the property value. Conversely, hiring a poor management company and be a disaster. Purchasers of apartments should do as much due diligence in finding management and in purchasing the property.

Tax benefits: As with most real estate investment, there are numerous deductions available to real estate investors. Depending on the status of the owner as to what deductions and how much may be claimed. Tax professionals should be consulted before purchasing any real estate investment to determine the benefits available.

Depreciation: One of the allowable tax deductions is depreciation, increasing the profitability of the property. IRS formulas allow for the loss of value of property, due to wear, consumption, and obsolescence. This calculated loss is deducted from the profits at tax time, but may be recaptured at the time of sale. 1031 exchanges may roll the depreciation into the next property purchased.

1031 Exchange: Another tax benefit, the 1031 exchange allows some tax benefits from a property being sold to be rolled over to another property being purchased. There are very specific rules that must be followed exactly, so it is imperative that a qualified exchanger be involved in the process.

Apartment ownership is a great way to move into the commercial arena for people who currently own single family properties.

Mary Thomsen residential and commercial web site http://YMHoldings.com commercial blog: http://nnnleaseopportunities.blogspot.com Owners of numerous rental properties around the United States, Mary and her husband have spent many hours helping others get started with buy and hold investing. With the change in the market, we are changing our strategies to maximize the advantages waiting for investors. Our exposure to various markets has led to a real estate marketing business. Now associated with Keller Williams Commercial, Irvine, CA. Article Source: http://EzineArticles.com/?expert=Mary_Thomsen

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Article Submitted On: November 24, 2010

What Are the Five Most Important Aspects for Borrowing Private Money?

By Dave Dinkel

Private money lenders are individuals who are looking for a better yield than Certificates of Deposit or what they can get in the stock market and its associated risks. Even if the private lenders don't' ask for these basic requirements to make their loans, the investor should supply them anyway to protect himself.

In the final analysis, private lenders base their decision on the credibility and trust they have in the investor asking for the money. The professionalism displayed by the investor asking for the funding goes a long way toward making the perspective private money lender agree to loan money.

In the vein of providing the private money lender with what he needs to be comfortable loaning the money, the investor should at least provide -

1. Promissory Note - this is the document that "proclaims" that the lender is due a certain amount of money and the terms at which the funds were loaned. These terms include the interest rate payable for the money, how often the interest is paid, any principal payments and how they are paid, when the note is due and payable in full (expiration date), terms for default, who is responsible for the note, the collateral that secures the note and other terms and conditions agreeable to by the Mortgagor (borrower) and the Mortgagee (the lender).

2. Mortgage - this is the document that is recorded in the public record that "proclaims" to the public or the next buyer that the property is encumbered by a Promissory Note. This document can be recorded in the public record with or without the Note attached but generally the Note is not recorded.
3. Property Appraisal - to avoid the accusation that the lender loaned too much money for a property, an appraisal by a licensed appraiser should always be secured. This does not mean the real estate market can't correct and the property's value becomes less than the amount borrowed, just that at the time of the loan, the market value was independently established.

4. Title Policy - whether this is a new purchase or a refinancing, the investor should get a title policy for the private lender. This is to insure that the title to the property is clear and marketable. A marketable title is very different from an insurable title and has no encumbrances or defects. An insurable title can be issued by excluding these defects from the coverage of the policy. The title is much more important than the condition of the property simply because construction can fix physical defects, while title defects may make the property unsalable.

5. Insurance - Once the money has been committed to purchase or refinance the property, it is immediately imperative that the property be insured by an insurance policy for hazard, fire, windstorm (where applicable), flood and liability. This coverage is extremely important to protect the lender's money in the event something damages or destroys the property or there is a liability law suit brought against the owner.

In summary, if you are going to solicit to borrow money from friends, family members or anyone that will loan you private money, it is absolutely necessary to provide them with the five items above. The costs of these items (mortgage recording, closing costs, title insurance, prepaid insurance premiums, and appraisal) can be financed into the loan amount initially, however, the insurance must be paid when due to keep it in force. Providing these items will help cement the fact that you are a professional and looking to protect the lender's money.

By the way, if you want to learn more about taking advantage of the gold mine in REOs, check out this free 100 page e-book at: Secrets of the REO Market http://www.crushingthereomarket.com/ If you would like to have a huge buyers list to sell your properties to take a look at - Creating a Massive Buyers List in Days not Months http://www.makingabuyerslist.com/ Article Source: http://EzineArticles.com/?expert=Dave_Dinkel

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Article Submitted On: December 04, 2010

Packaging Your Project For Your Private Lender

By Jack Rogers

You have found a private Investor who has agreed to consider funding your first Real Estate project. The investor has informed you that he has to be very comfortable with the deal and is utmost concerned that his interest is well secured at all times.

So, let's say that you have located and negotiated a purchase price on a vacant Single Family Residence (SFR) that needs considerable fixing-up. Let's take a look at some of the details.

1. The house has 3 bedrooms, 2 baths and has approximately 1400 square feet of living area plus a 2 car garage.

2. You have done your homework and based on comparable sales the house, after it is put back in good shape, should sell for approximately $75.00 per square foot of living area which computes to $105,000.

3. You have negotiated a purchase price of $35,000. You have also received bids from three different contractors to complete all necessary repairs in order to make the house totally ready for the resale market. The average bid comes to $21,000 or $15.00 per square foot. The estimated time to complete the repairs is one month.

4. Because of current resale market conditions being slow, you are considering offering Owner Financing. Having met several Note Buyers at The Real Estate Investors Association Meetings, you determine that if you financed the sale yourself, you could expect 80% to 85% on the dollar of the face amount of the Note if you sold it for cash.

5. Financing details and costs- Your investor has agreed that if he/she finances the deal for you, he/she will give you a 6 month loan at 10% interest which can be paid along with the principle due in six months. If for any reason the investor extends the loan he/she will charge an additional 2% of the loan balance.

6. Let's summarize your anticipated costs to determine if this project would appear to be profitable:

Purchase Price......................................$35,000
Fix Up (Rehab) Costs...............................$21,000
Hazard (Fire) Insurance.............................$600
Title Insurance For Investor.......................$625
Appraisal Fee............................................$300
Other Purchase Closing Costs.....................$300
Interest Expense.....................................$3,000
Miscellaneous Expenses...........................$2,000
TOTAL...................................................$62,825

The investor will also require a minimum of 4 months interest, even if you sell the property earlier than that. This will reimburse him/her with cost & inconvenience of transferring funds from other sources.

7. Now, let's look at your anticipated proceeds from your resale. You may be able to sell the house to a buyer who can qualify for a bank loan: however, let's look at a worse case scenario and anticipate that you will finance for the buyer and sell the Note:

Sales Price...............................................$105,000
Down Payment.........................................$10,000
Note back from Buyer payable at...........$95,000

$697.08 per month including 8% interest amortized over 30 years

SUMMARY
Cash Down Payment................................$10,000
Sale of Note (80%).....................................$76,000
TOTAL CASH PROCEEDS...........................$86,000

Less
Closing cost to sell*....................................$9,000
Pay-off loan..............................................$60,000
6 months interest......................................$3,000

TOTAL.......................................................$72,000

*Closing costs include Real Estate Commission of 6% of Sales Price which you won't have if you sell the property yourself, which you should do.

NET PROFIT..............................................$14,000

Also other things to consider - If you sell in less than 6 months, which you should be able to do with Owner Financing, you will save interest costs. Also if your buyer has bank financing, you will save $9,000 in Note discount. From the information provided, I would say this is a "Go" deal. The better you perform, the more it will enhance your relationship with your investor.

These posts are the opinion of the author who is not engaged in rendering legal, accounting, or investment advice. If such advice is required or desired, the services of competent professional persons should be sought.

Real Estate Consultant and Coach. 40 years in Real Estate, and 15 years member of the "Society of Exchange Counselors". Land Developer, Home Builder & Rehabber, Mobile Home Dealer & Rehabber. Owned Apartments, Office Buildings, Strip Center, Ranches, and Land. Also owned many Seller-Financed homes, as well as bought and sold $200 million + of Seller-Financed paper. Visit my website http://RealEstateJack.net/ Article Source: http://EzineArticles.com/?expert=Jack_Rogers

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Article Submitted On: December 01, 2010

Powerful Uses of Option Contracts in Real Estate Investing

By Dave Dinkel

Option contracts are legal and binding agreements between a buyer and a seller of residential or commercial property. Their power lies in the ability of the buyer (Optionee) to control a property for a small amount of money and for a limited time instead of an outright purchase with its associated market risk. But the agreements between the seller (Optionor) and the Optionee also have benefits to both parties.

The advantage of an option contract to a seller is that he will receive some income while his property otherwise would not produce this income. The amount of the option consideration may be small compared to the value of the property, but it also gives the Optionor the ability to have his property on the market usually at a non-distressed price. If the Optionee does not exercise the option contract, the Optionee will forfeit his option consideration or deposit to the Optionor.

The Optionee had huge leverage with a relatively small amount of cash to control the Optionor's property for a fixed time period, possibly with extensions if originally negotiated into the contract. While these option considerations can be in the millions of dollars for commercial properties, the average investor will be dealing with deposits in the area of $100 to control single family homes (SFH) or smaller non-commercial multi-family units (less than 5 units).

For real estate investors the option contract has a primary use of controlling a seller's property until the investor can find a buyer at a higher price than his strike or exercise price. The amount of time to do this varies by negotiation with the Optionor but is usually one year or multiples thereof. When an end-buyer is found and a closing date set, the investor will arrange to exercise his option and possibly do a double closing if the profit is over $20,000.

If the profit is less than $20,000 or the option is part of a short sale, the investor can file a Notice or Memorandum of Option Contract (NOC) in the public record. This document is essentially a lien against the property that will be extinguished at closing. The closing agent will handle the NOC as a lien against the property, have the investor sign a Release of Lien, and pay the investor the amount of money agreed to by the investor - his profit on the transaction.

Another use of these option contracts is where an investor is in competition with other investors for a property. The other investors are bidding on the property with a cash closing in mind and keeping as much of the profit spreads as possible. An investor who is option contract savvy can bid far more for the property because his investment in the property is his minuscule option consideration.

Option contracts work well where the seller is not truly motivated to sell and is looking for the maximum possible sales price especially for higher priced homes. The investor can always allow the seller to take a higher price than his option's strike price. This allows the seller less risk of getting stuck in a controlling option for an extended time. If the seller is motivated, meaning they want a solution to their problem of selling the property rather than the highest price, the investor can offer a shorter term for the option - as little as a few weeks to a few months.

In summary, option contracts are as powerful as deeds to a property. When used with a strong marketing program to sell the property, they allow an investor to control a substantial asset to closing with a minimal option consideration. Transactional funding may be necessary if there is a double closing involved, but the lien release method allows for collecting a profit; a seller can transfer his property directly to an end buyer without the seasoning issue that can kill so many deals.

About Author: Dave Dinkel has over 35 years experience in real estate investing which has given him a unique perspective into the real estate market. In case you haven't seen it yet, take a minute to see 15Ways to Make Money in Real Estate investing with No Money http://www.15wayswithnomoney.com. If you need to sell your home quickly, even if it is upside down, here is an answer - Sell Your Home in Days at Full Market Value http://www.fsbopowersellingsystem.com. Article Source: http://EzineArticles.com/?expert=Dave_Dinkel

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Article Submitted On: November 23, 2010

Tips on Real Estate Investing

By Bruce Swedal

Normally a down real estate market is a heaven for investors. There is a variety of properties available for sale and many homeowners are desperate to sell and negotiate a price that will get them out of high waters. In such market, there is also a good amount of foreclosures and pre-foreclosures available and investors can play their game with the scale tipping to their side. The present economy is a good testament of those conditions. However, despite the large amount of properties in the market, competition between investors is always there - every perceptive investor wants to snatch the best deals.

Sometimes, those deals may be easy to spot, and sometimes it will take more digging and market research. However, an investor must be ready to act and have the necessary capital or systems available to grab such opportunities if he/she wants to be successful in real estate investing.

One important issue is to know the area of your specialization as an investor because different types of properties require different capital and different management requirements. Are you specializing in single-family homes, condominiums, multi-family dwellings, raw land, apartments (1-4 families), farms, special building types such as abandoned churches or commercial buildings? Having this issue clear is the first step before looking into properties. It will help the investor focus on the type of property they want to invest in and not waste valuable time in properties that do not match their investment goals and budget, as well as their investment plan.

Investor can find properties in many ways. They can do drive by's in neighborhoods where there are plenty of homes for sales and interview with neighbors, even those that do not have a for sale sign, but may be thinking to sell in the future. Research the neighborhood well before committing to any deals.

Other ways are to advertise yourself as an investor willing to buy properties. This will give homeowners the chance of calling you first before they put a for sale sign and pay a commission to a real estate agent. This will cut out the competition as well.

Look for properties in newspaper, publications, and local flyers. For sale by owners are a possibility, especially to negotiate price in a desperate market. Sometimes, homeowners are willing to walk away from a property without making any money as long as they can satisfy their bank loan.

Do not discount people who are having large garage sales, most likely they are thinking of moving in the near future. Real estate investing requires considering all possibilities.

Scout the obituaries for properties that will soon be on for sale, beat the agent to it. Also, scout the legal pages of the newspaper.

Consider run down properties or abandoned properties. Search for the current owner in the public records.

Make friends with bank and utilities personnel. They can be a good source of information on foreclosures and when utilities are being shut down - a sign of someone that may soon be moving.

There are tons of ways to approach real estate investing, as many as your imagination and creativity can think of.

Denver Real Estate
Centennial Real Estate

Article Source: http://EzineArticles.com/?expert=Bruce_Swedal

Invest in the Philippines Real Estate Property Sector? That's a Great Decision

By Patricia F White


In case you are planning to invest in the Philippines, your most secure option is to purchase a Makati condo or a residence that you can either rent or lease to men and women or company owners. You'll find lots of smaller to medium-sized firms within the Philippines, and many of them desire to begin with a smaller work place that can allow for the number of employees they first have. Utilizing this market place as an individual who possesses enough space to rent out will offer you a faster return on your expense.

You possibly can obtain a Makati condo, in parts in close proximity to the CBD. Doing so will make it possible for you to choose what kind of renters you prefer to get---family members or small establishments. You can find numerous small families as well as young couples looking for the place to lease in close proximity to fashionable and fun locations just like shopping centers and Saturday marketplaces. Condos in Legaspi Village, for instance, are sought after as a consequence of their distance to stores and shopping centers, in addition to gyms and health spas.

Entrepreneurs of smaller to medium-sized firms additionally hunt for a Makati condo or small workplaces to lease in the CBD as a consequence of the accessibility of the area. It is simpler to find a Makati location than, for instance, a avenue in Quezon City. Business people in addition really like the truth that locations such as banks and federal organizations they must obtain licences and paperwork from are all under half an hour out.

You might in addition decide to buy a house in Makati as an alternative to a Makati condo. That is obviously more expensive than getting a condo, but the possibility to earn cash off a property is better than that of a condo. If you have got the capability to do so, you can find several properties in the non commercial and industry parts in Makati which will match your requirements. You can transform these residences into quaint boutique lodges and traveler's motels. You can furthermore rent it out as business space. Dining places and other organizations are currently considering locations which have a more comfortable experience because it draws in a lot more consumers. Recognize that out of the way restaurants and specialty outlets are the most preferred areas these days. You possibly can benefit from this craze by remodeling a home in Makati straight into a business space.

With careful analysis and strategy, there is no reason that you should not invest in the Philippines housing business. You can find numerous options in the Philippines for traders just like you. Philippine real estate investment regulations are incredibly realistic, and it will not be tough to obtain a license to lease or rent out a location that you own. Whether you buy a house in Makati or a Makati condo, the return on your investment decision will probably be rapid and well worth it. Makati is a place where real estate is an excellent expense. Folks prefer to reside or work in a place that allows easy entry to the establishments that they need, whether it is a good day care facility or the bank they do business with.

Manila properties might be the finest investment decision you will ever try to make. In reality, you are able to discover a number of housing choices on the internet. Pay a visit to RentInMakati.com Philippines Real Estate today.

Article Source: http://EzineArticles.com/?expert=Patricia_F_White