Real Estate Investing: Always Have a Back-up

Over the last two weeks, events have unfolded that have reminded me of an important truism in real estate investing.

“Always have a back-up!”

This was played out in dramatic form with a deal I’m closing tomorrow. A wholesaler friend of mine brought me this great little three bedroom one bath home tucked away on a dead end street where pride in ownership is alive and well. The electric and plumbing is already upgraded and this rehab is cosmetic with the exception of adding a bath.

I’m buying it for $52,500 and the as-repaired appraisal came in at $86,000. Not a bad spread. This is the kind of deal I like!

When I called my hard money broker, she was delighted and we moved quickly toward closing. I was only waiting on the closing time…

That’s when the wheels fell off.

It seems my broker’s money source decided he was only going to invest in property valued at $250,000 or more. Yikes!

So, I went to back-up hard money broker number 1.

The broker took his time…about 5 days…to finally tell me that he only wanted to loan about 60% of the as-repair value. No way. Not when I can do better (70%) with back-up hard money broker number 2.

Back-up broker number 2 is probably who I should have went with in the first place. I’ve borrowed from this source before. It took one phone call, and the money is there and I close in a couple of days. Wham-bam, the deal is arranged.

It looks like it’s time to shift around the players in my core team a bit. Back-up number 2 is now my starter. Back-up number 1 (foot-dragger, doesn’t-loan-the-70%-he-said-he-would) is benched.

I tell this story to illustrate that it’s absolutely CENTRAL to your business to have back-up plans in all aspects of the business.

I strongly recommend having two or three:

- Hard money brokers - Appraisers for quick value assessments - Rehab crew leaders - Plumbers - Electricians - Roofers - HVAC techs - Realtors

In fact, have two or three of any trade or profession lined up, ready to spring into action as a moment’s notice. Sure, I have my favorites in each of these areas, but I am striving to have 3-deep hot back-ups in each. Thing happen. Life happens! Be prepared for it.

Don’t stop there. Have back-ups when you rent or sell a property. A property isn’t rented until the rent and deposit (or lease/option fee) is paid and the keys are in the hands of the new tenant. So, encourage back-ups until the money is in your hands (in cash).

I’ve had appointments set up to sign leases, and the potential tenants never show up, no call, and they quit answering their phone. This is despite being hot for the house an hour earlier! If you are in this business long, you will learn that people will disappoint you and they will fool you. So, establish policies and make one of them “it ain’t rented until it’s paid for!”

Encourage back-up offers to purchase. Deals fall through all the time! Take as many back-up offers as you can.

Having back-ups is a mental frame of mind that fits within being a big-picture thinker portion of the Mind of the Real Estate Investor. In addition, rearranging your core team is thinking big and long term. It’s a constant process of improvement and adjustment. This approach is crucial to your business! Apply this principle and profit!

About the Author

———- Bruce W. Ford publishes the “Nothing Held Back” newsletter, a free service of Rehab Real Estate Central (http://www.Rehab-Real-Estate.com). Get a free copy of his mini-course entitled “The Mind of the Real Estate Investor by clicking here!.”

Real Estate Investing: Always Have a Back-up

Over the last two weeks, events have unfolded that have reminded me of an important truism in real estate investing.

“Always have a back-up!”

This was played out in dramatic form with a deal I’m closing tomorrow. A wholesaler friend of mine brought me this great little three bedroom one bath home tucked away on a dead end street where pride in ownership is alive and well. The electric and plumbing is already upgraded and this rehab is cosmetic with the exception of adding a bath.

I’m buying it for $52,500 and the as-repaired appraisal came in at $86,000. Not a bad spread. This is the kind of deal I like!

When I called my hard money broker, she was delighted and we moved quickly toward closing. I was only waiting on the closing time…

That’s when the wheels fell off.

It seems my broker’s money source decided he was only going to invest in property valued at $250,000 or more. Yikes!

So, I went to back-up hard money broker number 1.

The broker took his time…about 5 days…to finally tell me that he only wanted to loan about 60% of the as-repair value. No way. Not when I can do better (70%) with back-up hard money broker number 2.

Back-up broker number 2 is probably who I should have went with in the first place. I’ve borrowed from this source before. It took one phone call, and the money is there and I close in a couple of days. Wham-bam, the deal is arranged.

It looks like it’s time to shift around the players in my core team a bit. Back-up number 2 is now my starter. Back-up number 1 (foot-dragger, doesn’t-loan-the-70%-he-said-he-would) is benched.

I tell this story to illustrate that it’s absolutely CENTRAL to your business to have back-up plans in all aspects of the business.

I strongly recommend having two or three:

- Hard money brokers - Appraisers for quick value assessments - Rehab crew leaders - Plumbers - Electricians - Roofers - HVAC techs - Realtors

In fact, have two or three of any trade or profession lined up, ready to spring into action as a moment’s notice. Sure, I have my favorites in each of these areas, but I am striving to have 3-deep hot back-ups in each. Thing happen. Life happens! Be prepared for it.

Don’t stop there. Have back-ups when you rent or sell a property. A property isn’t rented until the rent and deposit (or lease/option fee) is paid and the keys are in the hands of the new tenant. So, encourage back-ups until the money is in your hands (in cash).

I’ve had appointments set up to sign leases, and the potential tenants never show up, no call, and they quit answering their phone. This is despite being hot for the house an hour earlier! If you are in this business long, you will learn that people will disappoint you and they will fool you. So, establish policies and make one of them “it ain’t rented until it’s paid for!”

Encourage back-up offers to purchase. Deals fall through all the time! Take as many back-up offers as you can.

Having back-ups is a mental frame of mind that fits within being a big-picture thinker portion of the Mind of the Real Estate Investor. In addition, rearranging your core team is thinking big and long term. It’s a constant process of improvement and adjustment. This approach is crucial to your business! Apply this principle and profit!

About the Author

———- Bruce W. Ford publishes the “Nothing Held Back” newsletter, a free service of Rehab Real Estate Central (http://www.Rehab-Real-Estate.com). Get a free copy of his mini-course entitled “The Mind of the Real Estate Investor by clicking here!.”

Real Estate Investing ? Not A Solo Sport

Real Estate Investing is not a solo sport, but a team effort. It is so important to select your teammates well and constantly evaluate each player?s performance against the overall goal you are working toward.

The scout is the person who helps you locate the deal. This person knows what you are looking for and brings you the deals for evaluation. A scout can be a real estate agent, another investor, a reputable wholesaler or even consistent advertising medium. You should be prepared to compensate your scout and provide incentives to bring you great deals. If they aren?t giving them to you, they are giving them to someone who will compensate them accordingly. Be generous so that you will always be top of mind.

The next team member is an accountant. Your accountant should be someone who specializes in real estate practices. Ideally, they should own real estate themselves. This person helps you take advantage of the tax savings that comes along with buying real estate. We suggest that you interview several. A good accountant will save you much more than their hourly rate, so don?t be intimidated by high fees. They are well worth it if they can do the job properly.

You will need a good real estate attorney. Most people have a closing attorney. Remember that the closing attorney in a transaction works for the mortgage company ? not you. You will want an attorney you can depend on to represent your interests. They should be able to advise you with any title issues, assist you with land trust formation, help you with entity selection and provide general council for real estate transactions.

Home inspectors are worth their weight in gold. A good home inspector can help prevent you from purchasing a poor investment, give you a realistic picture of the repairs and give you a general picture of the costs required, as well as alert you to safety concerns. Our home inspector has saved us thousands of dollars by helping us chose not to invest in properties that required more renovation than we had estimated in the deal.

Once you have found a property, financing your real estate investment is the key to a successful real estate career. Helping you determine the best way to finance an investment based on your overall strategy is very important. The majority of the benefit of real estate comes from using leverage. With all the various types of loans available now, you will want a mortgage partner who understands investing, can help you determine which loans are best for a particular piece of property and provides long term strategies that will enhance your credit standing ? not hurt it.

As with any team, it takes a while to work together to make sure that you have all the right players. At times, you will find that players need to be traded and sometimes it is good to have alternates.

I encourage all of my investors to interview their teammates in advance. Have a series of questions prepared in advance and determine who you feel most comfortable with. We have found that it takes a couple of plays sometimes before they really understand you and your goals, so be patient. If however, you don?t feel confident with their ability ? trade them. This is your future ? not theirs.

About the Author:

Anne Lackey is a real estate investor in Atlanta and works with The REI Team at Solid Source Realty, Inc. http://www.theREIteam.com. She frequently helps other investors in their pursuit of financial freedom. She is the President of Solid Source Property Management, Inc. http://www.solidsourcepm.com

Real Estate Investing: Always Have a Back-up

Over the last two weeks, events have unfolded that have reminded me of an important truism in real estate investing.

“Always have a back-up!”

This was played out in dramatic form with a deal I’m closing tomorrow. A wholesaler friend of mine brought me this great little three bedroom one bath home tucked away on a dead end street where pride in ownership is alive and well. The electric and plumbing is already upgraded and this rehab is cosmetic with the exception of adding a bath.

I’m buying it for $52,500 and the as-repaired appraisal came in at $86,000. Not a bad spread. This is the kind of deal I like!

When I called my hard money broker, she was delighted and we moved quickly toward closing. I was only waiting on the closing time…

That’s when the wheels fell off.

It seems my broker’s money source decided he was only going to invest in property valued at $250,000 or more. Yikes!

So, I went to back-up hard money broker number 1.

The broker took his time…about 5 days…to finally tell me that he only wanted to loan about 60% of the as-repair value. No way. Not when I can do better (70%) with back-up hard money broker number 2.

Back-up broker number 2 is probably who I should have went with in the first place. I’ve borrowed from this source before. It took one phone call, and the money is there and I close in a couple of days. Wham-bam, the deal is arranged.

It looks like it’s time to shift around the players in my core team a bit. Back-up number 2 is now my starter. Back-up number 1 (foot-dragger, doesn’t-loan-the-70%-he-said-he-would) is benched.

I tell this story to illustrate that it’s absolutely CENTRAL to your business to have back-up plans in all aspects of the business.

I strongly recommend having two or three:

- Hard money brokers - Appraisers for quick value assessments - Rehab crew leaders - Plumbers - Electricians - Roofers - HVAC techs - Realtors

In fact, have two or three of any trade or profession lined up, ready to spring into action as a moment’s notice. Sure, I have my favorites in each of these areas, but I am striving to have 3-deep hot back-ups in each. Thing happen. Life happens! Be prepared for it.

Don’t stop there. Have back-ups when you rent or sell a property. A property isn’t rented until the rent and deposit (or lease/option fee) is paid and the keys are in the hands of the new tenant. So, encourage back-ups until the money is in your hands (in cash).

I’ve had appointments set up to sign leases, and the potential tenants never show up, no call, and they quit answering their phone. This is despite being hot for the house an hour earlier! If you are in this business long, you will learn that people will disappoint you and they will fool you. So, establish policies and make one of them “it ain’t rented until it’s paid for!”

Encourage back-up offers to purchase. Deals fall through all the time! Take as many back-up offers as you can.

Having back-ups is a mental frame of mind that fits within being a big-picture thinker portion of the Mind of the Real Estate Investor. In addition, rearranging your core team is thinking big and long term. It’s a constant process of improvement and adjustment. This approach is crucial to your business! Apply this principle and profit!

About the Author

———- Bruce W. Ford publishes the “Nothing Held Back” newsletter, a free service of Rehab Real Estate Central (http://www.Rehab-Real-Estate.com). Get a free copy of his mini-course entitled “The Mind of the Real Estate Investor by clicking here!.”

Real Estate Investing Strategy: Make Money With Wholesaling

Your exit strategy is an extremely important part of your real estate investing business. In fact, it is one of the most important parts. Sometimes investors get excited because they learn how to buy properties, they find them and they get the money lined up to purchase them. But after the purchase, the excitement dies, as they have no idea what to do with their newly owned properties.

You must know your exit strategy when you buy. What do you plan to do with the property? Knowing this allows you to make all types of decisions, from how much to offer, to what kind of financing to use, and more. One strategy is to incorporate wholesaling into your real estate business plans.

What is Wholesaling?

It is simply finding a bargain property and passing it on to a bargain hunter. That bargain hunter will be an investor who will either purchase the property to resell it or purchase it to hold it for rental income. Your profit as a wholesaler should be between $5000 and $15,000 on each house. In some cases it will be higher than $15,000 and on some deals your profit may be a little lower than $5,000.

Why wholesale?

Real estate investors choose to wholesale properties for a few reasons. They could be:

1. Quick cash - it is possible to turn a property around anywhere from 7 to 45 days and get cash in your pocket. If you need to get your hands on some cash quickly, this would be a reason to wholesale. Or, you may not need the cash immediately. You might just want to build your cash reserves. Wholesaling is a good way to do this quickly.

2. Too many houses - maybe you’re good at finding houses, but you find more than you need or can use at any given time. If this is the case, wholesaling is a smart move for you. You can still profit from your locating skills, even if you aren’t going to keep the property for your own personal portfolio.

3. Flexibility - at any given time, you can determine whether you want to keep a property or sell it. This gives you flexibility as you locate and purchase properties.

An important fact to remember!

Probably the most important thing that you need to remember when you decide to wholesale is: your buyer should get the majority of the profit! This is important because your buyer will be the one to purchase and rehab the property. There has to be enough room in the deal for your buyer to do this and still retain a nice amount of money for cash out and/or equity.

This does not mean that you find properties and give them away for $1,000. Your profit will vary depending on the house, but the better you are at locating properties and putting together offers, the greater your profit will be - while still maintaining an excellent profit for your buyer.

Real Estate Investing Strategy: Make Money With Wholesaling

Your exit strategy is an extremely important part of your real estate investing business. In fact, it is one of the most important parts. Sometimes investors get excited because they learn how to buy properties, they find them and they get the money lined up to purchase them. But after the purchase, the excitement dies, as they have no idea what to do with their newly owned properties.

You must know your exit strategy when you buy. What do you plan to do with the property? Knowing this allows you to make all types of decisions, from how much to offer, to what kind of financing to use, and more. One strategy is to incorporate wholesaling into your real estate business plans.

What is Wholesaling?

It is simply finding a bargain property and passing it on to a bargain hunter. That bargain hunter will be an investor who will either purchase the property to resell it or purchase it to hold it for rental income. Your profit as a wholesaler should be between $5000 and $15,000 on each house. In some cases it will be higher than $15,000 and on some deals your profit may be a little lower than $5,000.

Why wholesale?

Real estate investors choose to wholesale properties for a few reasons. They could be:

1. Quick cash - it is possible to turn a property around anywhere from 7 to 45 days and get cash in your pocket. If you need to get your hands on some cash quickly, this would be a reason to wholesale. Or, you may not need the cash immediately. You might just want to build your cash reserves. Wholesaling is a good way to do this quickly.

2. Too many houses - maybe you’re good at finding houses, but you find more than you need or can use at any given time. If this is the case, wholesaling is a smart move for you. You can still profit from your locating skills, even if you aren’t going to keep the property for your own personal portfolio.

3. Flexibility - at any given time, you can determine whether you want to keep a property or sell it. This gives you flexibility as you locate and purchase properties.

An important fact to remember!

Probably the most important thing that you need to remember when you decide to wholesale is: your buyer should get the majority of the profit! This is important because your buyer will be the one to purchase and rehab the property. There has to be enough room in the deal for your buyer to do this and still retain a nice amount of money for cash out and/or equity.

This does not mean that you find properties and give them away for $1,000. Your profit will vary depending on the house, but the better you are at locating properties and putting together offers, the greater your profit will be - while still maintaining an excellent profit for your buyer.

How Does Real Estate Investing Work

A question often raised by brand new real estate investors, and those who would like to be, is ?How does real estate investing work?? I will attempt to provide you with a brief overview in this article, and hopefully you will have a better understanding of real estate investing and how you might become involved.

First of all, when answering the question, ?How does real estate investing work?? it?s important to begin by stating that there are almost as many different types of investing as there are investors.

You could become involved in commercial real estate investing. This would include many different kinds of property and types of investing, from strip malls to mobile home parks, from malls to apartment complexes. You could buy commercial property at bargain prices, and sell for immediate gain, or you could buy income property and hold for the long term. You could also combine the two, and realize income from both the increase in value and the month-to-month rent. Commercial property is an important consideration when answering the question, ?How does real estate investing work??

You could also get involved in any of a number of different strategies involving residential property, from single family homes, duplexes, small apartment houses, even mobile homes. When it comes to answering the question, ?How does real estate investing work?? the possibilities are limited only by your imagination.

If you?re the type of person who enjoys projects, you might enjoy buying ?fixer-uppers? and rehabbing them. You could become a wholesaler or a bird-dog and find deals for other, more experienced investors, some of whom have already worked out the answer to the question, ?How does real estate investing work??

Maybe you like helping people? If so, working with buyers and sellers to solve their credit or payment problems will provide you with ample opportunity to profit from their dilemmas. You could also negotiate directly with the mortgage lender to buy houses, either in foreclosure or ?short sale? investing. A little investigation of these terms will give you a clearer picture of the answer to the question, ?How does real estate investing work??

Alternatively, you may have money to invest, but little or no time. You may find that investing as part of a group, or ?trust? is a good fit for you. These trusts can be very lucrative, and a good option for the less hands-on investor. Even very busy professionals find REIT?s (Real Estate Investment Trusts) a good choice when deciding for themselves, ?How does real estate investing work??

Hopefully, you?re curiosity has been piqued by this brief introduction to the question, ?How does real estate investing work??

Now, go make more offers!

« Previous Page