Why Real Estate Investing Is For Skeptics

According to the American Heritage Dictionary, a skeptic can be defined as, ?one who instinctively or habitually doubts, questions, or disagrees with assertions or generally accepted conclusions.?

People generally use a derisive tone to call someone who questions things a skeptic, because it is easier for them to bully someone out of having a scientific approach to things, than to back up their own assertions. However, being a skeptic is not a bad thing, especially when it comes to money.

Skeptics make exceptionally good real estate investors. Why? Because skeptics like to investigate things. They don’t make assumptions, and they don’t let other people’s assumptions steer them. Real estate investing requires plenty of investigation.

For one thing, a skeptic doesn’t want to just nod and take everything his accountant or lawyer says, hands down. Therefore, he will learn a little bit about real estate law and about reading financial documents. A skeptic doesn’t like to be completely dependent on his team of experts, even though he knows it would be very difficult, if not impossible, to carry on without them. But his skepticism makes it easier for him to ask intelligent questions of his team, and they appreciate them for it if they are worth their salt.

The skeptic will do more than a cursory examination of a particular real estate market. He will begin with questions. He will find answers. Answers will lead to more questions, and so on, until he thinks he might have a pretty good idea of what a given area is like, real estate-wise.

The skeptic, however, doesn’t trust this idea he has developed. He wants to make sure. And so he will visit the city he is considering purchasing in. He will interview the local experts. He will interview local businessmen and politicians. He will, of course, have them back up their glowing reviews of their city. He takes nothing on face value. He digs.

When it is time to talk to actual property owners, he will use these same tactics to ferret out every possible scrap of information about a property that he can. He will annoy people who want him to simply believe what they have to say and go away. He will not believe, and he will not go away. In the end, he will have the information he came for, or he will walk away. Chances are, he will walk away anyway. A skeptic knows that most deals are not worth having.

Ken McElroy, author of ?The ABCs of Real Estate Investing,? applauds the skeptic. In fact, he approaches investing in just that manner, with levels upon levels of research, and by insisting that assertions are backed up. So far, it has worked for him.

About the Author:

Alex Anderson Represents Real Estate For Sale In Minnesota, and Minnesota Investment Property for Buying Investment Property.

Tip of the Day by Stephen Oommen

U.S 1% Rich 99% Poor
This is your choice.
Please take a moment to watch this ABC News report. This is something I have been saying for years that the gap between the rich and the poor is growing.

ABC News Report

But here is something to think about because there are a few points I want you realize. There are always two ways to look at the same thing. Regardless, this gap is going to continue to grow and we will all have made our choice.

One point is that the couple, the meteorologist and school volunteer, say that they are at no fault because they did everything they were supposed to. This is a common statement I hear in which people want to blame someone else. But really think about how that makes no sense. If someone did EVERYTHING they were supposed to, then obviously they wouldn’t be worried and they would be set for retirement. So they apparently didn’t educate themselves on the right way to handle their finances based on the way the economy was going.

Point two, the news consultant says that the people are upset because they feel the rich are playing by an entirely different set of rules. Well this is 100% true. What he didn’t say is that EVERYONE has the ability to play by these same rules. Unfortunately barely anyone takes the time to LEARN the rules.

This is the major reason I am in business today: to make sure EVERYONE has the opportunity to learn these rules.

Today to be part of the 1% club you actually only have to earn 180k a year. Not unrealistic for those thinking you have to be in the millions of dollars club.

I do not agree with how some of the rich have earned their money immorally, illegally and unethically. That is flat wrong and there are too many ways to do it the right way, to risk doing it the wrong way. The news likes the paint a one sided picture of the rich, but yet I haven’t found even one person that can say they wouldn’t be a happy with a little bit more financial security.

Everyone is allowed the freedom to choose. You can be part of the 1% or the 99%. If you do nothing, then you choose the 99%. But it is everyone’s free choice.

Which is your choice?

God Bless!

–

Stephen Oommen
Real Estate Investor & CEO - Ovestments Inc.
www.OvestmentsInc.com

Understanding The Real Estate Investing: Hard Money Vs Conventional Investor

Real estate investing: hard money vs. conventional investor is not as difficult topic as it looks to be at first sight. People get confused because they cannot differentiate between the hard money loans or HML and conventional investor loans or conventional mortgages. They keep on asking questions regarding hard money loans. Here are answers to those frequently asked questions that will be of great help in understanding the real estate investing: hard money Vs conventional investor.

How to Obtain the Hard Money:

The first question is regarding the working methods of lenders of hard money loans. HML helps in real estate investing by making asset based capital available to investors. The biggest benefit is the fast pace at which these HML work. You may receive the amount in as little as three days after furnishing all required documents. You can get hard money as loans against collateral security, for both residential as well as commercial purposes. If we compare it with conventional mortgage then we will find that conventional mortgage takes about 4 to 6 weeks of time in processing.

Interest Rates:

The second but very important question is related with interest rates. In case of hard money, the interest varies with the lender. The average interest rate is between 14 % and 18 % per annum. Most of the lenders require monthly payments. For a conventional investor this rate of interest for obtaining hard money is a little bit on the higher side.

You may get hard money for real estate investing up to the 70 % of the value of the property. The amount of loan can be as little as $ 25,000 and as high as $ 1,000,000 depending upon the case. Duration of loan is from 6 months to 12 months varying with your requirements and the conditions of lender. Some people ask that is it possible to make the interest payment at the end of the loan term. Although, some lenders have this kind of provision, yet it makes your presentation week because they believe that if it is difficult for you to make the monthly interest payments then you are not eligible for getting the loan.

As we are discussing the real estate investing: hard money Vs conventional investor, it is relevant to compare the monthly payments also. For every 100,000 dollars borrowed you will have to make the monthly payment of $1166.66 in case you opt for the hard money. While for the conventional investor, it comes to $1098.00 per month. When we compare the prepayment, it is possible in both the cases. However, in case of hard money time period is a minimum of 3 months, while up to 24 months in case of conventional mortgage.

Why Real Estate Investing Is For Skeptics

According to the American Heritage Dictionary, a skeptic can be defined as, ?one who instinctively or habitually doubts, questions, or disagrees with assertions or generally accepted conclusions.?

People generally use a derisive tone to call someone who questions things a skeptic, because it is easier for them to bully someone out of having a scientific approach to things, than to back up their own assertions. However, being a skeptic is not a bad thing, especially when it comes to money.

Skeptics make exceptionally good real estate investors. Why? Because skeptics like to investigate things. They don’t make assumptions, and they don’t let other people’s assumptions steer them. Real estate investing requires plenty of investigation.

For one thing, a skeptic doesn’t want to just nod and take everything his accountant or lawyer says, hands down. Therefore, he will learn a little bit about real estate law and about reading financial documents. A skeptic doesn’t like to be completely dependent on his team of experts, even though he knows it would be very difficult, if not impossible, to carry on without them. But his skepticism makes it easier for him to ask intelligent questions of his team, and they appreciate them for it if they are worth their salt.

The skeptic will do more than a cursory examination of a particular real estate market. He will begin with questions. He will find answers. Answers will lead to more questions, and so on, until he thinks he might have a pretty good idea of what a given area is like, real estate-wise.

The skeptic, however, doesn’t trust this idea he has developed. He wants to make sure. And so he will visit the city he is considering purchasing in. He will interview the local experts. He will interview local businessmen and politicians. He will, of course, have them back up their glowing reviews of their city. He takes nothing on face value. He digs.

When it is time to talk to actual property owners, he will use these same tactics to ferret out every possible scrap of information about a property that he can. He will annoy people who want him to simply believe what they have to say and go away. He will not believe, and he will not go away. In the end, he will have the information he came for, or he will walk away. Chances are, he will walk away anyway. A skeptic knows that most deals are not worth having.

Ken McElroy, author of ?The ABCs of Real Estate Investing,? applauds the skeptic. In fact, he approaches investing in just that manner, with levels upon levels of research, and by insisting that assertions are backed up. So far, it has worked for him.

About the Author:

Alex Anderson Represents Real Estate For Sale In Minnesota, and Minnesota Investment Property for Buying Investment Property.

Start Your Real Estate Investing Career Off Right With Smart Marketing

Sure, it would be easy for you to step into your new real estate investing career with a pocket full of cash ready to plug every marketing avenue and make money hand over fist. However, it is not this easy for everybody involved, most of the people entering the real estate investing arena looking for the big bucks are forced to start by being frugal and intelligent. Don?t spend money in the areas where it is not going to come back to you in a big way, but how is this done? Read on and take a few tips back to the bank with you!

Use the charm and hard work approach by walking door-to-door in the neighborhoods that either resemble the houses you are trying to sell or are in the same area as the houses you are trying to sell. You don?t have to talk to someone or even introduce yourself to a single soul, just put flyers on doors with your message to get your name in the right place. Sure, this may take a little bit of work and you may get a little bit of exercise, but worse things have happened! You might just find some properties that make sense for you!

Take out page ads in every paper that is used in the area where you are trying to buy or sell in your real estate investing career. Don?t put something simple like your name and a brief message, but take a bold stand that will make people want to buy from or sell to you. Tell them that you buy houses with cash or you have something to offer that can make this process much easier for you. Continue to tweak your messages in each publication until you find something that works, but when it works ? stick with it! Don?t fix the unbroken tool!

These are two inexpensive, but effective ways to get your name out and in the area where you are hoping to begin your real estate investing venture. Neither will break the bank, but neither will get you the results you want if you don?t put the required work out front in the interim. Work hard with these two strategies and you can achieve everything you hope to in this lucrative real estate investing world!

Why Real Estate Investing Is For Skeptics

According to the American Heritage Dictionary, a skeptic can be defined as, ?one who instinctively or habitually doubts, questions, or disagrees with assertions or generally accepted conclusions.?

People generally use a derisive tone to call someone who questions things a skeptic, because it is easier for them to bully someone out of having a scientific approach to things, than to back up their own assertions. However, being a skeptic is not a bad thing, especially when it comes to money.

Skeptics make exceptionally good real estate investors. Why? Because skeptics like to investigate things. They don’t make assumptions, and they don’t let other people’s assumptions steer them. Real estate investing requires plenty of investigation.

For one thing, a skeptic doesn’t want to just nod and take everything his accountant or lawyer says, hands down. Therefore, he will learn a little bit about real estate law and about reading financial documents. A skeptic doesn’t like to be completely dependent on his team of experts, even though he knows it would be very difficult, if not impossible, to carry on without them. But his skepticism makes it easier for him to ask intelligent questions of his team, and they appreciate them for it if they are worth their salt.

The skeptic will do more than a cursory examination of a particular real estate market. He will begin with questions. He will find answers. Answers will lead to more questions, and so on, until he thinks he might have a pretty good idea of what a given area is like, real estate-wise.

The skeptic, however, doesn’t trust this idea he has developed. He wants to make sure. And so he will visit the city he is considering purchasing in. He will interview the local experts. He will interview local businessmen and politicians. He will, of course, have them back up their glowing reviews of their city. He takes nothing on face value. He digs.

When it is time to talk to actual property owners, he will use these same tactics to ferret out every possible scrap of information about a property that he can. He will annoy people who want him to simply believe what they have to say and go away. He will not believe, and he will not go away. In the end, he will have the information he came for, or he will walk away. Chances are, he will walk away anyway. A skeptic knows that most deals are not worth having.

Ken McElroy, author of ?The ABCs of Real Estate Investing,? applauds the skeptic. In fact, he approaches investing in just that manner, with levels upon levels of research, and by insisting that assertions are backed up. So far, it has worked for him.

About the Author:

Alex Anderson Represents Real Estate For Sale In Minnesota, and Minnesota Investment Property for Buying Investment Property.

Why Real Estate Investing Is For Skeptics

According to the American Heritage Dictionary, a skeptic can be defined as, ?one who instinctively or habitually doubts, questions, or disagrees with assertions or generally accepted conclusions.?

People generally use a derisive tone to call someone who questions things a skeptic, because it is easier for them to bully someone out of having a scientific approach to things, than to back up their own assertions. However, being a skeptic is not a bad thing, especially when it comes to money.

Skeptics make exceptionally good real estate investors. Why? Because skeptics like to investigate things. They don’t make assumptions, and they don’t let other people’s assumptions steer them. Real estate investing requires plenty of investigation.

For one thing, a skeptic doesn’t want to just nod and take everything his accountant or lawyer says, hands down. Therefore, he will learn a little bit about real estate law and about reading financial documents. A skeptic doesn’t like to be completely dependent on his team of experts, even though he knows it would be very difficult, if not impossible, to carry on without them. But his skepticism makes it easier for him to ask intelligent questions of his team, and they appreciate them for it if they are worth their salt.

The skeptic will do more than a cursory examination of a particular real estate market. He will begin with questions. He will find answers. Answers will lead to more questions, and so on, until he thinks he might have a pretty good idea of what a given area is like, real estate-wise.

The skeptic, however, doesn’t trust this idea he has developed. He wants to make sure. And so he will visit the city he is considering purchasing in. He will interview the local experts. He will interview local businessmen and politicians. He will, of course, have them back up their glowing reviews of their city. He takes nothing on face value. He digs.

When it is time to talk to actual property owners, he will use these same tactics to ferret out every possible scrap of information about a property that he can. He will annoy people who want him to simply believe what they have to say and go away. He will not believe, and he will not go away. In the end, he will have the information he came for, or he will walk away. Chances are, he will walk away anyway. A skeptic knows that most deals are not worth having.

Ken McElroy, author of ?The ABCs of Real Estate Investing,? applauds the skeptic. In fact, he approaches investing in just that manner, with levels upon levels of research, and by insisting that assertions are backed up. So far, it has worked for him.

About the Author:

Alex Anderson Represents Real Estate For Sale In Minnesota, and Minnesota Investment Property for Buying Investment Property.

The 2 Sides To Real Estate Investing…

There are two sides to every story and real estate investing is no different. It’s all about risk. Some say it’s risky; others say it isn’t. Just like everything else, it’s all in how you look at it.

Let’s look at the side who says it’s risky business.

Some people look at investment as a crap shoot. If they get into real estate, or any other kind of investing, they go about it as though they were trying to conjure up some sort of luck. They think that just by being in the game they’re doing everything that needs to be done.

Some of these people are lucky. But you have to remember, sometimes people who bet on the horses or the dogs are lucky. This type of investor looks at real estate investing in the same way?pick something at random and hope for the best.

If real estate investing were really done like that, there would be no such thing as a real estate mogul. You would see people who made a lot of money quickly from time to time, and those people would fade into the background like last week’s pop stars.

For people who approach real estate investment like that, it is very risky. In fact, they are almost guaranteed to lose a great deal of money.

There is another side to real estate investing. Robert Kiyosaki, author of the Rich Dad book series, and Ken McElroy, one of his Rich Dad advisers, both say that there is another way. In order to make real estate pay off for you, you have to approach it in a methodical manner.

Sure, these guys have lost money in the past, and probably will in the future. Everyone makes mistakes. But the money they have made on real estate deals far outshines the little bit they have lost in the course of learning the business. That is a far cry from stumbling down the path of financial ruin because you assume it’s a crap shoot.

They suggest that you learn as much as you reasonably can before you buy your first property. That means learning to read financial statements, learning the basics of real estate law, learning the markets and learning how to pick out properties. (Actually, McElroy outlines a wonderful method for picking out properties in ?The ABCs of Real Estate Investing.?)

What you can’t learn on your own, you get a team to help you with.

You have to approach this in a step-by-step manner and not give in to the temptation to leap before you look. You know the saying: ?Fools rush in where angels fear to tread.? Don’t rush in to the exciting world of real estate investing, but don’t be afraid of it either. Simply learn the terrain as you would if you were going to go walk a foreign countryside for the first time. Learn what is poisonous and avoid it. With that kind of knowledge, you can do anything safely, including invest.

About the Author:

Alex Anderson is a Minneapolis Realtor Specializing In Minnesota Investment Property and Florida Investment Property.

Why Real Estate Investing Is For Skeptics

According to the American Heritage Dictionary, a skeptic can be defined as, ?one who instinctively or habitually doubts, questions, or disagrees with assertions or generally accepted conclusions.?

People generally use a derisive tone to call someone who questions things a skeptic, because it is easier for them to bully someone out of having a scientific approach to things, than to back up their own assertions. However, being a skeptic is not a bad thing, especially when it comes to money.

Skeptics make exceptionally good real estate investors. Why? Because skeptics like to investigate things. They don’t make assumptions, and they don’t let other people’s assumptions steer them. Real estate investing requires plenty of investigation.

For one thing, a skeptic doesn’t want to just nod and take everything his accountant or lawyer says, hands down. Therefore, he will learn a little bit about real estate law and about reading financial documents. A skeptic doesn’t like to be completely dependent on his team of experts, even though he knows it would be very difficult, if not impossible, to carry on without them. But his skepticism makes it easier for him to ask intelligent questions of his team, and they appreciate them for it if they are worth their salt.

The skeptic will do more than a cursory examination of a particular real estate market. He will begin with questions. He will find answers. Answers will lead to more questions, and so on, until he thinks he might have a pretty good idea of what a given area is like, real estate-wise.

The skeptic, however, doesn’t trust this idea he has developed. He wants to make sure. And so he will visit the city he is considering purchasing in. He will interview the local experts. He will interview local businessmen and politicians. He will, of course, have them back up their glowing reviews of their city. He takes nothing on face value. He digs.

When it is time to talk to actual property owners, he will use these same tactics to ferret out every possible scrap of information about a property that he can. He will annoy people who want him to simply believe what they have to say and go away. He will not believe, and he will not go away. In the end, he will have the information he came for, or he will walk away. Chances are, he will walk away anyway. A skeptic knows that most deals are not worth having.

Ken McElroy, author of ?The ABCs of Real Estate Investing,? applauds the skeptic. In fact, he approaches investing in just that manner, with levels upon levels of research, and by insisting that assertions are backed up. So far, it has worked for him.

About the Author:

Alex Anderson Represents Real Estate For Sale In Minnesota, and Minnesota Investment Property for Buying Investment Property.

Real Estate Investing - Become The Market Value Expert

In the world of buying and selling residential properties for profit, all investors make mistakes. Some mistakes are more easily overcome than others. A few are potentially devastating. One of the most common investor mistakes, and one that can be devastating, is failing to know and understand property values in your target neighborhood.

Fortunately, with just a little bit of effort, you can become THE local expert on neighborhood property values in no time. Here’s how.

Get To Know The Neighborhood

First, there is no substitute for looking at lots and lots of property. Start with your local newspaper. The real estate section is a treasure trove of free information and market research. Each week, every decent local paper has a special insert or pull-out section with local real estate listings, recent sales by neighborhood, for sale by owner (FSBO) listings, and much more. If you’re not reading this section each week, you probably aren’t serious about real estate investing.

Look especially for those houses that have sold recently in your target neighborhoods. Write down the sale price, sale date, and address. Then go look at the houses and make notes about what you see. Keep a "neighborhood notebook" for each of your target neighborhoods. In it, record the list prices, selling prices, and your observations about the condition of the properties, how long they took to sell, and any improvements that helped them sell more quickly.

Watch for "For Sale" signs and open houses. If you truly want to become the market value expert, you won’t miss going through every house that comes on the market in that neighborhood. Again, record all the details in your notebook.

Get To Know The Experts

Second, talk to local Realtors. You’ll meet them as you are out and about looking at properties, attending open houses, and calling on listings. Ask them what market values are doing, what types of houses people are looking for, which features sell and which don’t, any question you can think of that will improve your MVIQ (Market Value Intelligence Quotient). Be sure you write down what you learn in your neighborhood notebook.

Build a relationship with one Realtor whom you trust, and who is willing and experienced enough to help you. Let them know that you plan to be an active investor, and that you won’t waste their time. You won’t need them to take you around by the hand to every listing, but you will ask them to provide you with the listings so you can go yourself. You are looking for a Realtor who understands how to work with investors, and who is willing be a little flexible with you regarding getting you access to properties on your own. Most of the houses you’ll be looking at will be vacant anyway, so keep looking until you find a Realtor who will work with you.

Building a team, including finding a Realtor who will work with you, is the subject of another article I have written. Look for it here: Find The Right Realtor. Get To Know The Values

Third, when you’ve found specific properties you are interested in, ask the Realtor to provide you with suitable "comps". These are listings of properties that are "comparable" to your target property. In other words, houses that have sold recently in the same neighborhood as your target property, along with how much they sold for. These will tell you more about value than any other single source. Once you have a list of comps, don’t just take the Realtor’s word that they are truly comparable. Drive around to each one yourself and verify that the size, style, and condition are at least close to the property you are considering. Throw out any that don’t fit.

Once you have a minimum of three that are indeed comparable, using a little common sense, you should be able to assign an ARMV (After Repair Market Value) to your subject property. This represents your estimate of what the property should sell for after any needed repairs and upgrades. Be somewhat conservative. Rehabs and flips often sell for 3-5 % less than comparable open market homes, so subtract at least that much from your estimate.

Here’s an example, using a 4 bedroom, 2 bath raised ranch built in 1962, 1910 square feet, asking price $138,000.

Comparable A is a 5 bedroom, 2 bath colonial, built in 1902, 2380 square feet, selling price $249,500 in April of 2005.

Comparable B is a 4 bedroom, 1.5 bath raised ranch built in 1960, 1850 square feet selling price $168,700 in January of 2006.

Comparable C is a 4 bedroom, 2 bath, cape cod built in 1968, 1870 square feet, selling price $152,100 in May of 2006.

Comparable D is a 3 bedroom, 2 bath ranch built in 1965, 1900 square feet, selling price $172,900 in December of 2005.

Of these four comps, which is not really comparable? If you answered A, you’re right. This property is not even close to our target property, is it? Even if this house is right next door, it is too different in age, style and size to have any value as a comp. Throw it out.

Now, after visiting the other three and looking at them from the street, suppose we judge that properties B and D are closest to our target property in condition and character. Assume that property C is still close, but due to condition, problems with neighboring properties, or some other factors B and D are just a little more like the house we’re considering.

What conclusions can we draw? Well, if we’ve used good judgment in choosing our comps, and gotten some input from experienced Realtors in the area, we can use an average of the closest comps and arrive at an estimated ARMV of $170,000. Using our "3% rule" would leave us with a conservative ARMV of about $165,000. As you can see a little rounding is fine, but don’t go overboard.

If I were just starting out, or if I didn’t have a lot of experience in the neighborhood, I would ask a few other realtors to confirm my findings.

Get To Know Yourself

Finally, to test your market knowledge and build your confidence, choose three properties that you would be interested in investing in. Using the methods outlined above, estimate an After Repair Market Value for each of them. When you are finished, wait until they sell and see how close you came. If you have been diligent in applying these principles, I’ll bet you came very close indeed. If not, try to determine why.

Maybe your "comps" weren’t really comparable. Perhaps there was something about the property you couldn’t see or didn’t know. Ask the selling Realtor why they think the house sold for the price it did. Be sure to write everything down in your neighborhood notebook. It will soon become an extremely valuable resource- keep it safe!.

Learn to apply the above principles, and within two to six months (depending on how much time you can devote) you’ll know more about market values in your target neighborhood than anyone else in town. That knowledge means confidence, and that confidence translates into investing POWER!

Now, go make more offers!

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