?I?m sorry Mr. Investor, but your credit report indicates that you have too many mortgages in your name. We are unable to grant your loan request at this time.? Words no real estate investor ever wants to hear, especially when a really great deal is on the line. Another great reason to begin lining up sources of private money for real estate investing.
Maybe you aren?t at the point yet where you have been turned down for a loan because you have too many mortgages listed on your credit report, but invest in residential real estate for long and you may find yourself faced with that exact scenario. That, or your debt-to-income ratio will grow ?too high? in the minds of most lenders.
?Debt-to-income ratio?? you ask. ?What?s that??
Great question. Debt to income ratio is normally calculated as follows? add up your total monthly debt payments, including loans, credit cards, mortgages, etc. Don?t include things like utilities, groceries and the like? just debts that appear on your credit report.
Next, add up your total gross monthly income from all provable sources. Then, divide income by debts, and the result is your debt-to-income ratio. As an example, if your monthly debt obligations total $2,000 and your total monthly income is $6,000, your debt-to-income ratio is 33%. The lower the percentage, the better off you are from a lender?s perspective.
Which brings me to the point of this article. If you can borrow private money for real estate investing that doesn?t show up on your credit report, lenders won?t include the monthly payment in their calculation of your debt-to-income ratio. Therefore, your credit- and your ability to borrow- won?t be negatively impacted by the loan.
Also, you?ll never come up against the limit some lenders place on the number of mortgages one individual can have on their credit at any one time.
This should make you very happy, because it means you will have more options when it comes to using your credit for other things, and more money available for investing. More money equals more leverage, and more leverage equals more deals, and more deals equals? well heck just MORE!
It?s an amazing thing about private money for real estate investing. Everything gets easier, because the financing gets easier. Makes you want to go out and get some for yourself, doesn?t it?
For more on how private money for real estate investing preserves your credit, visit http://www.private-money-real-estate-investing.com/preserve-your-credit.html
Need a quick jumpstart for beginning real estate investing? Tom Dunn writes “DealFiles – Real Estate Investor Stories”… stories of real investors just like you and their real deals. Why not check it out right now? It’s FREE!
Copyright 2006 Tale Chaser Publishing, Inc.
Virtual real estate is becoming more and more lucrative as the “overnight successes” (spam sites) are disappearing due to search engines “sand boxing” all new sites and de-listing spammers.
Gone forever are the days where anyone with moderate experience could come into a market and dominate it within a month or two in the search engines. Since Google and other engines no longer reward new sites of any kind with immediate results, only the mature, savvy e-real estate investor will win the day in 2006.
Smart niche site network publishers have been gearing up for 2006 with solid, well-thought-out site designs, content strategies, and niche research to place content rich sites up with no other goal than to let them grow and season into very valuable properties in 6-8 months time.
Having a site entrenched in the search engines means you have been around for at least 3 months – and that is stretching it. Rewards are coming to those who wait patiently. And only to those content site publishers who build real sites, not the spammy sites we were all waiting anxiously to disappear from the engines last year.
Finally, content, which has been referred to as “King” for years, (but treated in reality like a cheap whore until recently) is truly the focus of smart investors looking to build a network of sites on special niches to attract lucrative advertising and product sales revenue.
Many virtual investors and developers who have built now popular sites are selling their networks for millions today.
And this is the real “out.” Smart virtual real estate investors not only build to profit in the short term, but are building popular sites and networks of sites with an eye to cash out big in the coming year.
All it really takes is good research, creativity in isolating a market, and most of all – patience. The longer you let your network grow and season and the more popular you make it with strong promotion tactics, the more it is worth to investors who are looking for any site network that moves traffic.
The second level of virtual real estate investing is buying up networks of content sites and focusing the traffic on profitable product lines, affiliate product sales, services of all kinds, and for advertising revenue.
Investors who sell traffic via banner advertising, pay per click, and any number of text linking schemes always seem to have a higher demand for ad space than traffic supply. This will continue to be the case in the coming years and smart niche site publishers are banking on the advertising industry’s insatiable appetite for good targeted traffic.
Once people get over the Adsense boom and bust period of 2005, they will start to realize that Adsense is merely “funded research” and the big game is the virtual properties themselves.
Biggest mistake in 2006?
Spam sites! Once they are dropped out of the engines, and they all have been or will be soon, they are totally valueless. Complete and utter failures from the domain name to the time and money poured into them.
Yet publishers who go the extra mile and exercise a modicum of respect for their industry are still floating the wave of profits by creating real sites.
Think about it this way: A publisher who starts from nothing today and builds one rich content site per week in 2006 is going to have about 52 sites this time next year.
With a good marketing plan for each site which includes no SEO tricks and nothing even “grey hat” in the mix, she should have the ability to isolate 10 sites in her network worth spending more time on than the others. This is given that the revenue model for each of the 10 sites is producing at least $10 per day.
Turning those 10 sites into $30 a day earners can pluck up over $100,000.00 in revenue in a year’s time! With good research on profitable niches to provide with good content, and a simple but solid marketing plan for each site, anyone with the proper training and patience can get into the game.
Now the publisher in the above example is pulling in $300 per day with just 10 sites. Last year it took upwards of 100 or more spam sites to do the same thing with no hope it would continue from day to day depending on when the engines caught up with them and de-listed them.
The publisher in the above example can keep that money rolling in indefinitely without fear because her 10 sites are perfect content sites that search engines love. No tricks and no spam software involved.
A publisher can then go on to find the next 10 winners in their network or continue to focus on the current 10 with an eye on drastically improving one or all of the sites’ profit margins with ramped up marketing and content development.
Now comes the great part. A publisher who finds their 10 winners and develops them into sites that average 300-500 visitors per day each now has a network of sites pulling in 3000-5000 eyeballs each and every day.
Depending on the markets served with the 10 winners, a site network like this, which has proven revenue and traffic, can easily value from $150,000.00 and up these days.
Why? Because of the traffic, proven profits, and the quality of the sites themselves. This is something that was totally forgotten in the Adsense spam site days. The guys who built 5000 sites with no more value than a single, traffic-less affiliate casino site have lost everything they worked for. Once they were out of the engines, they were out of business.
And they have nothing to sell. No assets. No content means no value. No search engine rankings means no serious traffic and no revenue.
But the publisher who built just 10 content sites last year that are now doing at least $30 each per day is sitting on not only $109,500.00 gross yearly revenue, but also a network worth far more than that which they can sell to rabid investors looking for just such a deal to land in their lap each and every day.
Again, all it takes is knowing the niche publishing industry and the tactics for creating and marketing content rich niche sites and a little patience.
This is what the market wants. All you have to do is give it the elbow grease it deserves to reap massive profits down the relatively short road to success.
About the Author
Jack Humphrey is the managing partner of http://www.contentdesk.com and author of the renowned Power Linking series of internet marketing courses. More information on the niche publishing industry can be found at http://www.contentdesk.com/csb
For the uninitiated, investing in real estate can seem like a big, mysterious activity that you pretty much have to be born with a special gene to do. They don’t know that you can break it up into several smaller steps, and that it is only a matter of learning how to get through each one.
The following are seven steps you can follow in order to go from being an Average Joe or Josephine to being Joe Cool, real estate mogul. They will at least get you closer to the latter.
1. Realize that it is not outside of your grasp. As one step leads into another, you first have to begin thinking like a real estate investor. And real estate investors think about finding good deals. However, you may not know a good deal if it jumps up and bites you on the nose.
2. That’s why you have to learn some basic accounting. You don’t have to spend 10 years studying under ancient Chinese accounting master, but you should learn how to read financial statements. You should learn about cash flow. You should learn the difference between an asset and a liability, not just take your banker’s word for it.
3. Once you know how to read the language if investment, you will be in a position to learn how to recognize a good deal when you see one. This is a bit trickier. Although you should do plenty of reading on the subject, the best way to learn is through doing. Get out there and look for deals.
4. Learn about the markets you want to play in. If you are thinking about buying a specific kind of property, learn about the markets in the area you are interested in. The market should actually determine where you make your purchase. Look for a community that is progressive, for one thing. A place with a good quality of life. A place with a good economy.
5. Set goals. Determine what you want to accomplish and when you want to accomplish it. Make sure it is within your reach and then take the steps to actually make it happen.
6. Develop your team. You will need to hire professionals to help you with things like accounting and legal issues. You will want people who know more than you do about how buildings are put together to appraise property for you. According to Ken McElroy, author of ?The ABCs of Investing,? the worst thing you could do is skimp on this step and try to be a ?real estate do-it-yourselfer.? That may appear to save you money in the beginning but you will pay dearly in the end.
7. Make your first purchase. When the numbers add up, McElroy says, then it is a good deal. Don’t leap without looking, but if you’ve looked and the numbers add up, then it’s time to jump.
Of course, this is a simplified version of the process, but it is a good way to get an overview. Each one of these steps could be further mapped out. The trick is to do your research and take it at your own pace. Don’t rush. Learn the process. The first purchase will be the most difficult. After that, the real learning starts.
One of the problems faced by many newbies (new investors) in the real estate business is lack of confidence. Confidence cannot be built without doing the activity that you are trying to build confidence in. This presents a problem with most people because real estate is not something that you can just practice, you cannot practice buying a house, or practice selling it. You could pretend to buy houses I guess, or pretend to sell houses, but pretending is for kids. This is where real estate bird-dogging comes into play. It gives you a reason to practice, you get paid. Now if money won’t make you practice then nothing will.
Instead of not getting paid for all those hours spent learning the market, you could be making thousands. I cannot think of a better way to learn real estate than getting out and looking for good deals, then finding good deals and showing them to buyers, who pay you for your services. Then after the buyers close you can follow the progress of the home and see if you made a good decision or not. The best part is that during your practice, even if you made a not so great decision you still get paid, and you do not lose a penny.
I started out my investment career as a Realtor. I built my confidence through selling investment properties to other people and watching them make money. After selling 9 homes to other investors and seeing them profit tremendously, I knew it was time for me to start making myself some money.
Eric Medemar is a realtor and real estate investor with 30+properties. He specializes in wholesaling, assigning, and flipping real estate. In 2007 He has already made close to $100,000 flipping properties. His goal is to help at least 170 people skyrocket their investment careers in 2007. http://www.BirdDogBiz.com http://www.TheMillionairesBlog.com
If you’re thinking about investing in real estate to make money, you need to first determine your financial goals. Do you need to make money quickly, invest for your children’s college fund, or build wealth for your retirement? Once you determine your financial goals, you need to decide which type of investing strategy works for you.
Make Money in Real Estate – Fast Cash Strategy
If you’re low on cash, get started by finding a bargain house and selling the contract to another real estate investor. Join a real estate investing club to find investors willing to pay you for finding good deals.
Make Money in Real Estate – Income Property Strategy
If you want to increase your monthly income, look for income property that returns a positive net income from month to month. Start with single family house. Look for a bargain below market value. Fix up the house to generate top rental income. Find houses that will rent for more than your mortgage payment. You may need to go out from your home area to a location that supports this type of return on your money. You can’t pay $300,000 for a home with a mortgage of $1,500 that only rents for $1,000. You might start with a home for around $300,000 that rents for $1,750. You will need good credit to get a loan with good interest rates. In a few years, your rental income should go up. Many real estate investors enjoy thousands of dollars each month generated by income property.
However, some investors don’t like dealing with tenants and prefer to make money in other real estate ventures.
Make Money in Real Estate – Investment Property Strategy
If you want to make money focusing on profits, investment property offers a different strategy. Instead of worrying about rental income, look for property that you can transform and sell or property that will appreciate significantly over time. Besides fixing a house up, you can transform a property by changing it. For instance, some investors buy apartment buildings and turn them into condominiums. Many investors speculate in land and make money by holding the land until new development in the area increases the value.
Examine your financial situation along with your long term goals. You can get started by flipping properties, move onto income properties, and then make larger profits with investment properties. You might end up using a combination of all three strategies to make money investing in real estate.
Copyright ? Jeanette J. Fisher
About the Author: Jeanette Fisher teaches how to find, finance, fix and sell. Free ebooks “Credit Tips” http://worryfreecredit.com “Flipping Houses” at http://doghousetodollhousefordollars.com
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.
Dr. Chris Anderson is the founder of one of the largest preconstruction groups on the internet today and is referenced in many venues including the New York Times and USA Today. Get access to wholesale property investments today
Let’s talk about relationships and how they affect your bottom line as a real estate investor.
You’ve heard it time and time again: build relationships. Well I hate to sound like a broken record, but I’m going tell you again – Relationships is a key component to your bottom line as an investor.
Let me tell you a story about a deal I did a couple of years ago to help emphasize my point.
There was this gorgeous property located in a fairly elaborate subdivision called Heathrow. Most of the homes are pretty new and are all brick with very nice amenities. The property was a large 3-bedroom brick 2-1/2 bath.
I saw the foreclosure notice in the newspaper, so I immediately start calling some of the family to make a deal on this property. I get in touch with a lady lets call Susan for the sake of privacy. Susan and her husband had built the home around five years earlier. The house was vacant and had been vacant for months. I discovered after talking with her, that Susan and her husband had a very rocky marriage and were now divorced. She was doing all she could as a single Mom to make ends meet. Her ex-husband had a medical discharge from the military from a rare disease that left him paralyzed. Susan was ready to move forward. She’d been through an ugly divorce, a bankruptcy, and now was going through a foreclosure. It was really tough on her. Now, her ex-husband had already moved to Washington and was re-married.
Here are the numbers on the deal:
Value: $165K Owed amount on mortgage: $100K Behind: $10K
I dealt with what seemed like every family member that could have had any possible interest in this deal and tried to get this deal sealed up, but to no avail. Susan, the ex-wife had already signed her interest over to me. However, the ex-husband that lived in Washington kept stonewalling my efforts and wasn’t willing to deal. Then, I get this phone call two days before the auction. No kidding, it was 2 days away, and now all of a sudden the husband wants to deal. With only two days before the foreclosure auction, I can get a deal done if the people are in my area so that I can meet with them. I’ve done it numerous times before. But when you add the fact that this guy was on the other side of the country, it makes it almost impossible. That is, unless I happen to know someone in Washington….
See, I happened to meet a guy named John at a seminar several months beforehand and we became friends. We emailed and talked on a regular basis about how to improve our businesses. So, I called him and asked him for a favor and told him I’d make it worth his while. And so, John agrees and gets the deed signed later that night and sends the docs overnight via FedEx to me. I reinstate their loan 1 hour before the foreclosure sale and the deal is complete. Whew…. Take a Deep Breath – right?
Now, after the deal closed I sent John $2K for his troubles. Anyway, my point is this deal would’ve never happened if I’d not built a friendship with John. And notice that I just didn’t call him out of the blue asking for this favor. We were already friends and had already established this friendship months before. The moral to the story is to use the Golden Rule in all circumstances. I’d never thought in my wildest dreams that John could’ve helped me in Alabama. And the truth is that there’ve been more people to help me because I go out of my way to build relationships with others.
The simplest way to accomplish this is to treat everyone with the utmost respect even if there’s no financial gain for you. Work to build win-win relationships with everyone you touch – the local locksmith, the banker, the moving company, the loss mitigation rep you called to get a short sale approved, and the local real estate agents. You never know when some of these professionals have the ability to direct you to the next hot deal for you to acquire.
About the Author
Derek Pierce, full time Real Estate Investor, shows
you the exact strategies to his success in his Free Book: “How I
Went From Corporate Guinea Pig To Real Estate Success”. Get
your copy and Real Estate Investing Tips by going to http://www.thereisecrets.com
Next Page »