Real Estate Investing By the Numbers:Part 2

As we now recover from the long holiday and consuming way too much turkey and stuffing, real estate investor minds come back to the plans that they will be making for 2007. Having talked to many investors during our recent appearance in NYC, I have discovered that many people have been in active in 2006 but are really planning on gearing up in 2007. Why? It seems to be a combination of a strong believe among experts and novices alike that 2008 will be the return of solid real estate market conditions and thus 2007 is a great year to pick up good values. Quite frankly, we concur.

In addition to the normal New Year’s resolutions that you make, I highly encourage you to add one more to your list that you will actually keep?.. LEARN TO BECOME A GOOD INVESTOR. During the time that our web site has been in existence, I have met many clients and investors who are all very bright and I know that they do some complicated things in their day job like surgery, education, law, etc., etc. What surprises me however is that many people feel that investing is rocket science. Having been a scientist and actually worked on a rocket, trust me when I tell you that investing is far, far from rocket science on the complexity scale. Most of real estate investing is just good old common sense that once you see it, you feel kind of silly for thinking that it was so complicated.

One of the common themes among many professional people I meet is that they are just too busy to learn what is needed. They go on to tell us that all they want to do is find somebody they trust and then take their advice?.. Kind of like I don’t want to learn medicine if I have a threatening ailment. While I agree with that for many things in life, for important issues like your health, your family’s financial future, your children’s education, etc., I believe a much healthier approach is to find a provider that you trust but learn enough to get comfortable with what they tell you. That way you have a much stronger conviction when you make a decision other than “gee, this doctor recommends this approach” or “wow, I will buy this property because Dr. Anderson sounded really excited”. ? I hate to be the bearer of bad news but for both those decisions, you will wake up one morning a few months down the road going “did I make the right choice?” If you understand why you made that choice, then that thought will rapidly disappear and not be a hurdle. On the other hand, if you don’t understand why you made that choice, you are in for some mental roller coasters.

As part of our push in 2007 to create a small, but extremely well educated investor community, let me now get off my soapbox and describe the next piece of investing by the numbers.

What You Need To Know

In our last article, we described the four key parameters that any real estate investor needs to know to evaluate a project. Just as a reminder, they are

1. Purchase Equity.

2. Annual Appreciation (%)

3. Annual Cashflow

4. Special Tax Situations

In our live workshop in NYC, we recently covered how you can sit at your desktop and get this information. For our projects, we provide this information to you but I believe it is really good to see one time how to actually do that and that it makes sense. Then, when you are looking at a property where information has been provided to you, then you can always go back and double check any piece that may not make sense. In late January early February, we will be conducting multi-city tours where you can come out and meet us live and we will teach this content. Please go to this page to tell us the large city that you live next to and give us a contact email if you would like to attend.

Calculating Cash On Cash Returns And Yearly Returns

One of the standard measures of many investments is what is called cash-on-cash returns. This is just a fancy word that says what % gain do I get for holding an investment. For example, let’s say that you plunk down $20,000 in down payment and closing costs on a real estate investment and let’s say in 2 years, you get back $65,000 after reselling with all expenses included; i.e., you have a $45,000 net profit.

The cash on cash return for this is simply:

COC(%) = 100%* 45000/20000 = 225%

One problem of this measure is that it does not take into account the time-value of money; that is, if I made that in 2 years versus 20 years, it makes a huge difference. So suppose in this example we plunked down $20K, got a simple interest return the first year, and then reinvested that gain with the same interest. Now what interest rate would accomplish this? A little more complicated to calculate but the annual rate of return to produce this is just a little of 80%. To see this, you can do the following:

Year 0: $20,000

Year 1: $20000*(1+80.2%) = $36,055

Year 2: $36055*(1+80.2%) = $65,000

If you are still in the mindset of 2004/2005 that you can plunk down $5,000 on something and make $75,000 in 6 months by flipping, then I wish you the best of luck. This is just not realistic except for a few needles in the haystack. On the other hand, if you are comfortable with making 30-40% per year on your money over a 2-5 year time frame, then that is very realistic and can be done with low risk.

So when we evaluate potential opportunities, one of the first parameters that we are looking at is this yearly return and we like to see 30%+. As we will discuss next week, this is not the only factor to consider but it is certainly one of the top 3.

15 Things You Should Give Up To Be Happy

This is from purpose fairy: http://www.purposefairy.com/3308/15-things-you-should-give-up-in-order-to-be-happy/

Here is a list of 15 things which, if you give up on them, will make your life a lot easier and much, much happier. We hold on to so many things that cause us a great deal of pain, stress and suffering – and instead of letting them all go, instead of allowing ourselves to be stress free and happy – we cling on to them. Not anymore. Starting today we will give up on all those things that no longer serve us, and we will embrace change. Ready? Here we go:

1. Give up your need to always be right. There are so many of us who can’t stand the idea of being wrong – wanting to always be right – even at the risk of ending great relationships or causing a great deal of stress and pain, for us and for others. It’s just not worth it. Whenever you feel the ‘urgent’ need to jump into a fight over who is right and who is wrong, ask yourself this question: “Would I rather be right, or would I rather be kind?” Wayne Dyer. What difference will that make? Is your ego really that big?

2. Give up your need for control. Be willing to give up your need to always control everything that happens to you and around you – situations, events, people, etc. Whether they are loved ones, coworkers, or just strangers you meet on the street – just allow them to be. Allow everything and everyone to be just as they are and you will see how much better will that make you feel.

“By letting it go it all gets done. The world is won by those who let it go. But when you try and try. The world is beyond winning.” Lao Tzu

3. Give up on blame. Give up on your need to blame others for what you have or don’t have, for what you feel or don’t feel. Stop giving your powers away and start taking responsibility for your life.

4. Give up your self-defeating self-talk. Oh my. How many people are hurting themselves because of their negative, polluted and repetitive self-defeating mindset? Don’t believe everything that your mind is telling you – especially if it’s negative and self-defeating. You are better than that.

“The mind is a superb instrument if used rightly. Used wrongly, however, it becomes very destructive.” Eckhart Tolle

5. Give up your limiting beliefs about what you can or cannot do, about what is possible or impossible. From now on, you are no longer going to allow your limiting beliefs to keep you stuck in the wrong place. Spread your wings and fly!

“A belief is not an idea held by the mind, it is an idea that holds the mind” Elly Roselle

6. Give up complaining. Give up your constant need to complain about those many, many, maaany things – people, situations, events that make you unhappy, sad and depressed. Nobody can make you unhappy, no situation can make you sad or miserable unless you allow it to. It’s not the situation that triggers those feelings in you, but how you choose to look at it. Never underestimate the power of positive thinking.

7. Give up the luxury of criticism. Give up your need to criticize things, events or people that are different than you. We are all different, yet we are all the same. We all want to be happy, we all want to love and be loved and we all want to be understood. We all want something, and something is wished by us all.

8. Give up your need to impress others. Stop trying so hard to be something that you’re not just to make others like you. It doesn’t work this way. The moment you stop trying so hard to be something that you’re not, the moment you take of all your masks, the moment you accept and embrace the real you, you will find people will be drawn to you, effortlessly.

9. Give up your resistance to change. Change is good. Change will help you move from A to B. Change will help you make improvements in your life and also the lives of those around you. Follow your bliss, embrace change – don’t resist it.
“Follow your bliss and the universe will open doors for you where there were only walls” Joseph Campbell

10. Give up labels. Stop labeling those things, people or events that you don’t understand as being weird or different and try opening your mind, little by little. Minds only work when open. “The highest form of ignorance is when you reject something you don’t know anything about.” Wayne Dyer

11. Give up on your fears. Fear is just an illusion, it doesn’t exist – you created it. It’s all in your mind. Correct the inside and the outside will fall into place.
“The only thing we have to fear, is fear itself.” Franklin D. Roosevelt

12. Give up your excuses. Send them packing and tell them they’re fired. You no longer need them. A lot of times we limit ourselves because of the many excuses we use. Instead of growing and working on improving ourselves and our lives, we get stuck, lying to ourselves, using all kind of excuses – excuses that 99.9% of the time are not even real.

13. Give up the past. I know, I know. It’s hard. Especially when the past looks so much better than the present and the future looks so frightening, but you have to take into consideration the fact that the present moment is all you have and all you will ever have. The past you are now longing for – the past that you are now dreaming about – was ignored by you when it was present. Stop deluding yourself. Be present in everything you do and enjoy life. After all life is a journey not a destination. Have a clear vision for the future, prepare yourself, but always be present in the now.

14. Give up attachment. This is a concept that, for most of us is so hard to grasp and I have to tell you that it was for me too, (it still is) but it’s not something impossible. You get better and better at with time and practice. The moment you detach yourself from all things, (and that doesn’t mean you give up your love for them – because love and attachment have nothing to do with one another, attachment comes from a place of fear, while love… well, real love is pure, kind, and self less, where there is love there can’t be fear, and because of that, attachment and love cannot coexist) you become so peaceful, so tolerant, so kind, and so serene. You will get to a place where you will be able to understand all things without even trying. A state beyond words.

15. Give up living your life to other people’s expectations. Way too many people are living a life that is not theirs to live. They live their lives according to what others think is best for them, they live their lives according to what their parents think is best for them, to what their friends, their enemies and their teachers, their government and the media think is best for them. They ignore their inner voice, that inner calling. They are so busy with pleasing everybody, with living up to other people’s expectations, that they lose control over their lives. They forget what makes them happy, what they want, what they need….and eventually they forget about themselves. You have one life – this one right now – you must live it, own it, and especially don’t let other people’s opinions distract you from your path.

Real Estate Investing By the Numbers:Part 2

As we now recover from the long holiday and consuming way too much turkey and stuffing, real estate investor minds come back to the plans that they will be making for 2007. Having talked to many investors during our recent appearance in NYC, I have discovered that many people have been in active in 2006 but are really planning on gearing up in 2007. Why? It seems to be a combination of a strong believe among experts and novices alike that 2008 will be the return of solid real estate market conditions and thus 2007 is a great year to pick up good values. Quite frankly, we concur.

In addition to the normal New Year’s resolutions that you make, I highly encourage you to add one more to your list that you will actually keep?.. LEARN TO BECOME A GOOD INVESTOR. During the time that our web site has been in existence, I have met many clients and investors who are all very bright and I know that they do some complicated things in their day job like surgery, education, law, etc., etc. What surprises me however is that many people feel that investing is rocket science. Having been a scientist and actually worked on a rocket, trust me when I tell you that investing is far, far from rocket science on the complexity scale. Most of real estate investing is just good old common sense that once you see it, you feel kind of silly for thinking that it was so complicated.

One of the common themes among many professional people I meet is that they are just too busy to learn what is needed. They go on to tell us that all they want to do is find somebody they trust and then take their advice?.. Kind of like I don’t want to learn medicine if I have a threatening ailment. While I agree with that for many things in life, for important issues like your health, your family’s financial future, your children’s education, etc., I believe a much healthier approach is to find a provider that you trust but learn enough to get comfortable with what they tell you. That way you have a much stronger conviction when you make a decision other than “gee, this doctor recommends this approach” or “wow, I will buy this property because Dr. Anderson sounded really excited”. ? I hate to be the bearer of bad news but for both those decisions, you will wake up one morning a few months down the road going “did I make the right choice?” If you understand why you made that choice, then that thought will rapidly disappear and not be a hurdle. On the other hand, if you don’t understand why you made that choice, you are in for some mental roller coasters.

As part of our push in 2007 to create a small, but extremely well educated investor community, let me now get off my soapbox and describe the next piece of investing by the numbers.

What You Need To Know

In our last article, we described the four key parameters that any real estate investor needs to know to evaluate a project. Just as a reminder, they are

1. Purchase Equity.

2. Annual Appreciation (%)

3. Annual Cashflow

4. Special Tax Situations

In our live workshop in NYC, we recently covered how you can sit at your desktop and get this information. For our projects, we provide this information to you but I believe it is really good to see one time how to actually do that and that it makes sense. Then, when you are looking at a property where information has been provided to you, then you can always go back and double check any piece that may not make sense. In late January early February, we will be conducting multi-city tours where you can come out and meet us live and we will teach this content. Please go to this page to tell us the large city that you live next to and give us a contact email if you would like to attend.

Calculating Cash On Cash Returns And Yearly Returns

One of the standard measures of many investments is what is called cash-on-cash returns. This is just a fancy word that says what % gain do I get for holding an investment. For example, let’s say that you plunk down $20,000 in down payment and closing costs on a real estate investment and let’s say in 2 years, you get back $65,000 after reselling with all expenses included; i.e., you have a $45,000 net profit.

The cash on cash return for this is simply:

COC(%) = 100%* 45000/20000 = 225%

One problem of this measure is that it does not take into account the time-value of money; that is, if I made that in 2 years versus 20 years, it makes a huge difference. So suppose in this example we plunked down $20K, got a simple interest return the first year, and then reinvested that gain with the same interest. Now what interest rate would accomplish this? A little more complicated to calculate but the annual rate of return to produce this is just a little of 80%. To see this, you can do the following:

Year 0: $20,000

Year 1: $20000*(1+80.2%) = $36,055

Year 2: $36055*(1+80.2%) = $65,000

If you are still in the mindset of 2004/2005 that you can plunk down $5,000 on something and make $75,000 in 6 months by flipping, then I wish you the best of luck. This is just not realistic except for a few needles in the haystack. On the other hand, if you are comfortable with making 30-40% per year on your money over a 2-5 year time frame, then that is very realistic and can be done with low risk.

So when we evaluate potential opportunities, one of the first parameters that we are looking at is this yearly return and we like to see 30%+. As we will discuss next week, this is not the only factor to consider but it is certainly one of the top 3.

The ABCs Of Real Estate Investing

If you have been contemplating a career or side business as a real estate investor then there is no better time to start then the present. When you are first starting out there are many things to learn and it is important to remember that the learning curve can be steep. In order to guard yourself against huge losses it is often better to start off slow and with lower priced houses. As you can experience and knowledge in the field you can start close bigger and more profitable deals. For a first house you will typically want to find one that is undervalued and in need of basic repairs. Often a house that needs some simple repair work like painting, new carpet and other easy to do repairs can be purchased at a reduced rate. Then by putting in a little elbow grease and making the repairs and painting the house it can easily be flipped for a much higher price or even rented out for a better rate. This helps new investors get started by getting their feet wet.

If you think of yourself as a handyman and feel that you can do the repairs yourself, you can save a lot of money. On the other hand, if you need to hire someone, you should always make sure that the individual or company that you hire is qualified to do the repairs. If you aren?t comfortable with doing any of the repairs, you should inquire about a subcontractor or company that will do it for a reasonable price, or perhaps a share of the money once you have resold the house.

If the house you are thinking to purchase and resell has any type of structural problems, you should always get an estimate from a reliable contractor before you make the purchase. If you decide to stay in the business, you?ll learn a lot more over the years, although you should always hire a contractor when you first start out. Once you get all of the estimates together, you can make that final decision on how much of an offer you want to put down on the property.

After you have a team together and successfully renovated and resold several homes, you?ll begin to feel quite a bit more confident with buying homes that need repairs. All it takes is time and practice - and you?ll be buying homes that the average investor wouldn?t think twice about. This can be a huge advantage when you are looking for homes to buy and resell, as there will be less competition to worry about. You?ll also be able to get a lower price when buying the home, simply because you can use the cost of the repairs to your advantage.

Once you are able to do repairs on homes, including structural problems, you?ll have a huge advantage in the market. You?ll be able to buy virtually any home, including those that other investors choose to ignore. Doing so can be very profitable for you, especially if the house is in a well known and well desired neighborhood. After you have done the repairs, you can resell the home for a much higher price than you paid to acquire the home.

When you start looking for houses that you can repair and resell, you should always take your time and buy the right homes. You won?t have the money, time, experience, or support to buy the bigger houses at first, which means you won?t have any room for mistakes. Once you have purchased and resold a few smaller homes, you?ll eventually be able to work your way up to the bigger homes - which is where the big profits will come into play.

Keep in mind that when you are starting out in the field of real estate investing you will want to take things slow at first and build your own knowledge of the business. Don’t expect huge profits to come rolling in overnight, it takes time to build your knowledge and your team before the big deals and big profits come in. Once you have been at it for a few years it will become easy to spot the more profitable deals and you will know all of the terms and have your team ready to assist. The is a very exciting field to be working in and it can be a lot of fun when taking slowly and carefully.

Real Estate Investing-From Cash to Properties

You Only Need One Great Idea to Get Rich — And This Is It!

In case you missed this last time I wrote …

How’d you like to “dabble” in real estate with me? No kidding! I recently came across a brand-new opportunity that made me so excited, I broke out into a sweat.

The program is called “How To Beat The System in Real Estate” and it is absolutely amazing. A real estate guru by the name of Thomas Kish created a complete business system based upon his own experiences as a successful investor.

Basically what he’s done is taken his expertise and packaged it into a mini “franchise.” So now anyone can duplicate his system - yes, even you - even without experience. And here’s the best part:

You don’t even use your own cash to get started!

Among the many things you learn right away is how to set up a new business (it’s really simple) and then get a new business line of credit. (You use the bank’s money to invest.) This business credit line has nothing to do with your personal assets or personal credit score.

Look - I am sure that all this sounds to good to be true. But it’s not. You’ve got to check it out for yourself. I’ve pasted in a copy of a letter that I received from Thomas Kish. He tells about his program in detail, and more clearly than I ever could.

Note that the system is a proven, money-maker and backed by a rock-solid guarantee. The only way you can lose is by not giving it a shot. C’mon - read this now …

From the desk of Thomas Kish at http://www.cashflowexperts.biz/cmd.asp?af=344232

Here is the lesson that will put you ahead of 99% of all real estate investors …

USE AS LITTLE CASH AS POSSIBLE! Yes, you read that right! The days of mortgage burning parties are long over. But you will still meet people who believe that it is a good idea to pay off the mortgage on a property so that they can have big cash flow. Why do people want to own real estate free and clear? Because they believe it’s the way to make more money. But let’s do a little number crunching: THE OLD WAY Use $40,000 of your personal savings to buy a house with 20% down and get a loan for the rest. You may cash flow $400 per month. And on this one house you will also be getting … A. Equity build up like a personal saving account. B. Good appreciation as the house goes up in value. C. Great tax deductions that will lower your tax bill. THE NEW, SMARTER WAY Use an $80,000 new business line of credit instead of your own CASH and buy 2 houses. You may cash flow $200 per house per month for a total cash flow of $400 a month. And you are making money on TWO pieces of investment real estate instead of one. You’re also getting … A. DOUBLE the equity build up. B. DOUBLE the appreciation. C. DOUBLE the tax deductions. AND YOU NEVER USED A DOLLAR OF YOUR OWN CASH. The entire down payment came from a new business line of credit! ———————————————— Do you want to see the step by step system on how to do this? http://www.cashflowexperts.biz/cmd.asp?af=344232 GO THERE NOW! Pssssssst … Want to hear a bit more? Looks like I’m giving away the farm today! But, it’s worth it if it helps you understand the incredible power of the system you’ll be getting. Okay, here goes … There are other simple ways to do this no money down stuff and get FOUR houses instead of just two. For example, the simplest way to do no money down real estate deals is by getting your credit score to stay above 680. Then you find a good mortgage broker that offers 100% LTV* real estate financing to the clients that they work with. *LTV = loan-to-value; the percentage relationship between the amount of the loan and the appraised value or sales price (whichever is lower). IMPORTANT: Make sure that your mortgage broker has closed this kind of loan recently with a REAL client. You want to know that they have experience closing these kinds of loans. Forget about your bank. Find a mortgage broker that has already done 100% LTV loans. Don’t let them tell you that they can do it. Make sure you verify that they have already done it many times. Next, write your purchase agreements with wording on the addendum that states the deal is … SUBJECT TO SELLER PAYING $4000 OF BUYER’S CLOSING COSTS. Now you have reduced your cash needed to close by $4000, if the seller accepts. And if the seller says “No” … Just tell them you will raise your offer by $4000 so they can pay your closing costs. NOTE: If you are making offers on real estate that has rent paying tenants, the seller will be giving you the rents and damage deposits when you close the deal. When they turn this CASH over, you can use it to pay for the property in most cases. —————————————————- Is there a better way? Of course! The best way to buy real estate is with a system that gets you cash advances from new business lines of credit. So check out the ULTIMATE NO MONEY DOWN real estate system and learn how to … 1. Get a new business line of credit. 2. Find foreclosure deals. 3. Set up partnerships. 4. Calculate the profit in a deal. 5. Improve your credit score. Go see what my clients have to say about this system at, http://www.cashflowexperts.biz/cmd.asp?af=344232 Remember that the only things that can stop your financial success is: Lack of knowledge. Lack of capital. Lack of a mentor. And Lack of action! YOU ONLY NEED ONE GOOD IDEA TO GET RICH. And you just found it. All you have to do now is act on it! http://www.cashflowexperts.biz/cmd.asp?af=344232 You know that real estate has proven to be the safest investment in any market. That’s why you make money in real estate no matter where you live, and no matter what kind of interest rates prevail. As the saying goes in the real estate business: Good times are good for investors. Bad times are good for investors. Go see how easy it is to get started at: http://www.cashflowexperts.biz/cmd.asp?af=344232

DO IT NOW! Sincerely, Thomas Kish. President of CashFlowExperts.Biz GO FOR IT: http://www.cashflowexperts.biz/cmd.asp?af=344232

About Tom Kish … Now a full time real estate investor, Tom has bought and sold over 5 Million Dollars worth of real estate in less than 2 years. Tom is a bona fide expert in using new business lines of credit instead of cash to buy real estate. There is no one else teaching anything like this SYSTEM! Note: For general CashFlowExperts questions, please call David Hult, Operations Manager at 612-702-2747

Thomas Kish

Contact@CashFlowSupport.Biz http://www.CashFlowSupport.Biz

CashFlowExperts.Biz Inc. Care of - XLR8 Media Inc. 2658 Griffith Park Rd. #326 Los Angeles, CA 90039 612-251-9830

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