There’s an old saying that if you love your job, you’ll never work a day in your life. I don’t think this is quite true to a certain extent. Most people work very hard even if they love their jobs. They must do things they don’t like to do.They must give effort above and beyond what’s comfortable.
It’s probably more accurate to say that if you’re doing something you believe in, that hard work you do will bring you great satisfaction. The work will almost always be fulfilling. It’s good to have an end to journey towards, but it is the journey that really matters in the end. I’ve met many people who had destination disease. They think that arriving at a certain place in life will bring them happiness. What a shame. Because the reality is that many times, when we arrive where we hope we would, we discover that it wasn’t what we expected. If you become fixated on a destination, even a dream destination, you can miss the joy of today. If you’re convinced that someday is going to be your best day, you won’t put enough into today—or get enough out of it. If you’re not doing something with your life in a productive manner, it doesn’t really matter how long it is. It’s not enough to just survive. You need to really live. When you can not only enjoy your position, but truly perform with a passion, you will have much higher success. Always believe in what you do and allow this to flourish onto your clients as well as onto other investors you may be working with. Posted by Tom Donnell Even though investing in investment real estate is becoming more and more commonplace, finding a project is like finding an honest politician. Plus, when you find a project that you think may be “the one” you’re still subject to those SURPRISES once you take ownership that can cost thousands and make that “great investment” a real loser.
You can prevent your next project from being a loser by avoiding the following mistakes: 1. Not Putting Yourself in the Buyers Shoes 5, 10, 20 years from when you buy the project . You almost want to buy the project over again in your mind 10 years down the road and ask yourself, “Based on the future of the location and condition of the property will a buyer find the project attractive?” If you hesitate in saying “yes” you must definitely do more analysis as to the saleability of the project and the area. 2. Not inspecting entire property prior to closing. Most Apartment you buy you will initially look at the building before you release all contingencies in the offer and then take over after 30 – 90 days. Be sure that prior to closing you go through the building AGAIN to make sure that you will not have any surprise repairs (that may have happened between the escrow period) once you take over. 3. Work only with an experienced Apartment property lender. Save yourself a ton of time and money by working with a banker that truly understands Apartment. This, almost more than anything can make or break a good deal for you. Work with a banker with no real experience at your own risk. 4. Do not buy on the assumptions you will raise rents – only under special circumstances. Do not buy on the word of a broker or owner that all you have to do is raise rents and it will work wonderfully. Make sure you do your homework as to the validity of this claim. Almost ALL owners say that their rents are too low. 5. Work with an experienced broker to find a property that will work and protect your interests at the same time. The best brokers specialize in Apartment and have a designation such as CCIM or SIOR. Do not work with a Realtor that has open houses on Sundays and expect them to know how to assist you in a profitable analysis of a project. Prior to working with them be sure to ask how many properties they have sold! 6. Not examining income and expenses CLOSELY. Before you say YES to the project ask to see the sellers last two years of “Schedule E” or partnership/corporation return for the property. This, more than anything will give an accurate reading to you on the performance of the property. Compare this to the figures the owner gave you. 7. Not factoring in enough vacancy and reserves. During your ownership you will manage the building, have empty space and a building (s) needing capital improvements and leasing. Factor these costs in to your operating statements to give you a TRUE idea of how the property will cash flow. The lenders and appraisers will do this – why shouldn’t you? Posted by Darin Garman It’s smart to start off as a small investor in real estate. One, it’s easier to get into the game and your options are greater in number, that’s for sure. And two, it’s safer with less risk involved. Lastly, I guess the strongest part of the equation is that income and value seem to be more consistent and stable.
Some people have to start off small due to financial constraints or fear, perhaps both. While others start off small because they think it’s the wisest thing to do. Smart move. The Principle of Kaizen, a Japanese technique for achieving great and lasting success through small, steady steps has been around for years and phenomenally successful worldwide. It’s based on the concept of “how you eat an elephant” – and the answer is “one bite at a time”. To build a fortune in real estate requires years of being in the game, adding to your portfolio one property at a time, and taking territory inch-by-inch. It will pay-off hugely in the long-term and the short-term as well. Here are 3 keys to making money in real estate for small investors: #1 – Choose mastery. Focus on one property-type at a time. There’s power and riches in focusing. If you like apartments, then buy apartments. If your passion is in another type of property, then do that. Choose mastery. Studies tell us that we can only “master” one subject at a time. Two, if you’re exceptional. Choose to be an expert in apartment investing only rather than just an average investor of apartments and another property-type. Maybe choose to be the best in small retail strip centers. Or perhaps be supremely knowledgeable in mobile home parks. Whatever you do, choose mastery. #2 – Once you find your passion for a property-type, study it like a mad-man! Get your hands on books (or ebooks), go to seminars (or webinars), and hang out with people who are already doing what you want to do. But by far, the biggest bang for your buck is going to be hiring or interviewing experts in your field. This will fast-track your knowledge level. But here’s the key: when you are talking to these experts, look for their patterns of success and their best practices. And then, do what they do! The secret to making money as a small investor is duplication by replication! Duplicate the experts’ habits of success and best practices and replicate it exactly – that’s the key! Most of the how-to is there – you now must do the work. #3 – Start off with a small property and that’s close by. My first commercial apartment building was a quaint 7 unit building that was close by. It was very affordable and I got great seller-financing. A big plus was that it came with an established property management company at the helm. My first small residential apartments were duplexes and four-plexes that were a few minutes from my house. When you’re first starting out as an investor, there are lots to learn and there are lots of mistakes to be made. Small property mistakes usually equals small pains. That’s why it’s smart to start off with a small property. Posted by Peter Harris “Honesty Is The First Book In The Chapter Of Wisdom”
When all is said and done, the best way for you to get as much out of your daily apartment and commercial real estate investment business is to use as much leverage as you can to get everything out of each day as possible. You can look at it this way. You can be highly successful without using leverage, but more often than not you will be spending every waking hour working on your business. You know, 100 hours per week. I once read about a highly successful real estate investor in Chicago that put in over 100 hours per week. I don’t know about you but I do have other interests besides real estate. I have a family, friends, hobbies, etc. I choose not to work like a crazed man who will have a life expectancy of 45. So, if you want to go down that path that’s up to you. You may want to consider the path of having a career and a life outside of the career. If you do I have good news for you. I currently work on my business less than 40 hours per week and I’m on top of the market – mainly as a result of leverage. Here are some simple tips I would give you to leverage as much as possible: 1. Hire all of the minimum wage tasks done for you. Your time is worth a lot more than you think. Everything that is not commensurate with your value needs to be done by someone else. Even if you think that you cannot afford it, it probably isn’t true. You cannot afford to spend your time on minimum wage tasks and responsibilities. 2. Use technology as much a possible. Use computer and database programs, fax machines, emails, etc. as much as you can. Just be sure that you’re in control of the technology, and it’s not in control of you. 99% of leveraging your time is truly as simple as the two steps above. Remember, if you want to succeed as an apartment or commercial real estate investor, you must be vigilant about using leverage as much as possible in all areas of your business. You will be very pleased with the outcome of these two simple steps… Posted by Darin Garman Many of you, like me, are waiting patiently for February, 2010 to come when the final season of one of American TV’s best written and acted series begins – “Lost.” This column, while not about the adventures of fictional characters, is about real-life investors confused and looking for advice on how best to make up for lost time and the trillions of dollars in lost retirement savings.
“The reality is that, financially speaking, we are emerging from a ‘lost decade’,” said AARP Financial Inc. President Richard “Mac” Hisey. “It can be argued that it was a combination of Wall Street’s own risk-taking and extreme over-leveraging, individuals spending way beyond their means, using their homes as ATMs, and borrowing to consume, and the Federal Government keeping interest rates too low for too long, that contributed to a binge that ultimately led to a credit crisis and the worst recession since the Great Depression — and we’re all dealing with the hangover. Now that the economy and the markets are bouncing back, perhaps the rest of us can begin our own financial recovery process.” AARP Financial research found most respondents (55%) said it’s hard to find financial information and guidance that they can trust. Guidance you can trust? Here’s guidance you can trust: if you are blessed enough to have an IRA account, self-direct (some of) it and your IRA moneys into real estate. There are as many real estate investment possibilities as there are many different investors and portfolios. The idea is to find someone who has your best interests in mind and can trust. Research, due diligence and market timing can go a long way to finding the right professional to partner with – and t finding the best real estate opportunity for you and your portfolio as well. If interested, I can offer you an IRA Builder to get you started from two associates that I trust (and have become good friends of mine): Jeremy Hanks and Michael Madsen of Real Source Retirement Services. Invest well. Peace. Posted by Peter Mosca Here are some techniques that will promote a positive and “win-win” situation for all involved.
-The approach: This actually starts at the beginning of your meeting with the clients, prospects when their sales resistance is at it’s highest. You offer a deal by saying “Mr prospect” , I won’t try to sell you on this property right now. But I ask that you look and listen to what I have to offer in terms of property, and my professional presents. Most people will naturally be curious and say “ok, why not?” At the end of your presentation, and them viewing the home(s) remind your prospects that they promised to tell you whether or not this would work for them. -The Demonstration Close: Another close you set up in the beginning of your meeting. You ask a hypothetical question, such as, “if I could provide you with a few incentives and perks that would increase your property value and/or save you some money, would it be worth a few minutes of your time? The question immediately changes the subject from whether he/she will even listen to your presentation, instead, to a question of what it would be worth to the prospect for you to make good on your claim. Because most successful salespeople, realtors, investors regards objections as just another form of selling opportunity, we want to focus on the critical role that dealing with objections plays in a achieving a successful close to your sale/deal. Every objection answered properly is a step closer to a buying/selling decision. There are many objections that one will encounter. The best and most succesful deals will come by way of “listening”. Listen to what your prospects have to say and do not interrupt. Always compliment the prospects for raising the objection and always be pleasant, agreeable, and receptive without argument. After your response, ask if you have answered their question(s). Remember, never close the door, even if this prospect does not pan out, because you never know where they may lead you or if you might ever cross paths again. -The invitation Close: Is one of the most effective closing techniques, and one of the simplest. As you get to the end of the presentation, without hesitation, issue the invitation; “Why don’t we submit your application and start the processing?” This straight forward approach works because it’s disarming, it’s received as if it were an invitation to a trial run rather than to a final decision. This close is based on the fundamental rule that you should never end a presentation without extending an invitation to make the buying decision at that moment. You can alter the invitation question some, such as; ” Where would you like to start?” Are`you ready to purchase now?” God Speed Everything always goes in cycles. In our real estate investing world we have experienced smooth sailing for many years but now we are facing challenging times that have forced everyone to regroup and invent their approach to the investing business and return back to the basics.
Just a few days ago I received a call from an investor friend. I had not talked with him in over a year. It was wonderful to catch up on all the events that had taken place as we both actively worked our investing business.. As with many investors, he had revised his business plan, downsized on some over leveraged properties and had readjusted to continue forward into the new year. As our conversation continued I found that he and I were both returning back to the basics…maybe even “real estate investing 101″…because this approach is what is working best in this economy. Let me share a few of our thoughts. 1. Focus on a simple basic approach to locating and purchasing properties through face to face contact. For years we have read books, attended seminars and followed many newly revised methods for locating, purchasing and financing properties. The Internet has opened many avenues for investors to easily search through mountains of properties without ever visiting the site or talking with a seller or agent. 2. Locate a geographical area you want to “farm ” and focus on locating properties within that area. Become an expert in that area so you are knowledgeable of property values, rental rates, schools and community amenities, the job market, etc. 3. Many people are now knocking on the doors of for sale by owner properties and making direct contact with the owner. Returning to the basics means building a relationship with the seller and working together as a team to create mutually agreeable terms to acquire the property. 4. Many older people may not be internet savvy. They may not advertise their properties on Craig’s List or other internet sites . Some of the best properties with high equity will have to be located the old fashioned way…farming neighborhoods in your area. 5. What is the seller’s motivation? For many FSBO’s , the seller may not be totally motivated by money. Once we understand the seller’s motivation and identify their needs, we can then know how we can assist the seller and how we can structure the offer. 6. People like to help people. It should be our main purpose to help the seller whether we are offering to purchase the property to rehab, wholesale, lease purchase , etc. Many times as we develop a good relationship with the seller, they are willing to help us purchase the property by being creative in the offer with owner financing and agreeable terms. 7. Sellers have also experienced many challenges this year. They have lost equity in properties because of declining values, , financing issues and having compete against a market flooded with homes for sale. Many sellers are more willing to consider mutually agreeable terms to sell their properties. Yes…there have been many challenges this year for investors, but as in so many other areas, usually the simple things work the best. We are reminded that what is important is helping people first . Returning to the basics of real estate investing will create continued success as we enter into the new year. Posted by Cherrathee Hager Whatever you do, don’t wait too long to evict a tenant. Remember, non-payment of rent is not a personal attack on you and you need to stay professional as a property manager. Having an attorney right from the start will enable you feel empowered knowing you have everything you need to evict, should the need arise to do so.
In today’s tough economic times, when foreclosures and evictions are at an all time high, landlords everywhere must take steps to ensure they are protected before a problem arises. The best way to do so is to hire an eviction attorney — before you need one. Taking this precautionary step will save you time and money should an eviction become eminent. Here are some tips to keep in mind when hiring an eviction attorney: Find a good attorney ahead of time: One of the most important rules of thumb to remember is that as a landlord, no matter what, always be prepared for people that may neglect to pay their rent. Hiring a good eviction attorney is part of this preparation process. Take your time and interview several attorneys to get a feel for how they work and whether or not the two of you can develop a sound professional relationship. You should be on the same page in terms of how soon to begin an eviction and how involved you need to be on the legal end of the process. Look for an attorney that has a good record of accomplishment in resolving eviction cases in favor of the landlord and make sure whomever you choose has a solid background in property management law. When you find an attorney, find out what you need to evict: Once you have determined to hire, you then need to go over everything you need to begin and process an eviction. Depending on where you live, local laws govern how tenants can be evicted; this is where an attorney can provide guidance. Gather all of your appropriate paperwork ahead of time and be prepared. You may not need the various forms right away, but eventually a problem will arise and when it does, you won’t have to waste time trying to get what you need to evict; you and your attorney will have all of the forms you need to begin an eviction. Formulate a schedule and stick with it: Put together a timeline on evicting and stick with it! If you have good communication with a tenant, it’s okay to be a little lenient. After all, bad things can happen to good people and as long as they continue to communicate with you, you can allow them some flexibility. However, if they won’t answer calls or letters, then zero tolerance is the answer and you must take immediate legal action. The way to form a schedule is to use a site that specializes in property management forms to use late notices to establish a pattern of communication on your end. For example, you would send a notice after the rent is three days late. Then, send another notice after the rent is one week late. Keep copies of each notice you send to your tenant. This information should be added to your eviction file and given to the courts, if necessary. Posted by Brian Davis In This Market? Are You Crazy?
When I tell people I’m a real estate investor these days, they think I’m nuts. Based on what they’ve read and heard, they assume that all of real estate is in the toilet – and that my investments, and my life, are right there with it. “Isn’t it risky right now? Aren’t you worried?” they’ll ask. The short answer is, “No, I’m not the least bit worried.” That’s because smart real estate investing is one of the safest things you can do right now. (Relying on someone else for your paycheck, health insurance and retirement savings seems a lot riskier to me.) The reality is, this is one of the best markets I’ve seen in 30 years of real estate investing – if you know what you’re doing. Now, I’m not about to give a free real estate investing seminar to every person I meet at a cocktail party. But I’m sure you’ve had some of the same conversations, too. You may even have a few of those seeds of doubt yourself. I can’t blame you. You probably know some people who tried investing in the past and lost their shirts when the market tanked. Everyone around you is probably telling you you’re crazy for even thinking about investing in real estate right now. But I’m here to tell you – those people who lost their shirts didn’t follow my formula. And you’re crazy if you don’t think about investing now. The people who lost their shirts in the “bubble” gambled on quick turnarounds on single family properties in hot neighborhoods. They never had positive cash flow – it was all a bet on market appreciation. When the market cooled – and then froze over – they were sunk. If I were doing that kind of investing, I’d be worried and scared, too. But that’s not what I do. And that’s why I was able to become financially independent before I turned 30, and haven’t looked back since. You can do the same if you follow my lead. Here’s what I do: buy multiple unit buildings in low to moderate income that will generate positive cash flow from day one. It’s not rocket science – just figure out the monthly expenses for the property (the financing payment, the taxes and fees, the utilities and maintenance) and subtract it from the total rent you’ll collect each month. If your rental income is more than your expenses, you’ve got positive cash flow. If you lose one tenant, you’ve still got two or three or four others paying you. (Think about it – with a single family house or single unit rental, once you’ve lost your tenant you’ve lost 100% of your cash flow.) That’s something you can do in any market. But this market is particularly good for three very specific reasons. Distressed Sellers Reason #1: There are more distressed sellers and distressed properties now. What does that mean? Basically, a distressed seller is desperate to get rid of a property, for any number of reasons. Let’s face it, a lot of people are struggling right now. Targeting distressed sellers isn’t predatory – you’re actually helping them out. It just so happens you’re going to help yourself at the same time. A distressed property needs a little work to make it marketable. Noting major, just some cosmetic things like paint and landscaping to bring it up to par. Often, distressed sellers and distressed properties go together – even better for you. Distressed sellers and distressed properties both contribute to lower asking prices and greater availability of creative financing options. Which brings me to my second point… Alternative Financing Reason #2: Alternative financing is more available than ever. Many people think you can’t invest in real estate today because it is so difficult to get a loan. It’s true that banks are tight with lending right now. But there’s no reason why the seller couldn’t be the bank. It’s called seller financing. And just like it sounds the owner acts like the bank and provides the financing to you, the buyer. In many cases, it can be done for no money down. This is great for the beginning investor because your odds of getting a bank loan are even smaller than those of an experienced investor like me. Plus, the bureaucracy of bank lending eats up a lot of your time and energy – things that you’re better off putting in to finding more positive cash flow properties. I don’t have room here to get into the ins and outs of seller financing, but trust me, it’s a great option. Low Vacany Reason #3: The residential rental market is going strong. Ask your local real estate board about vacancy rates in your area – chances are, rates have held steady around 5% in low to moderate income neighborhoods for years. That’s where you want to buy, because a low vacancy rate means positive cash flow for you. Rents aren’t subject to market fluctuations. Most landlords have not lowered their rents over the last year because of the economy. Once leases are signed and your units are full, those rents aren’t going anywhere but up. And in this economy, the demand for affordable rentals is going to continue to climb. So don’t miss out on your chance for financial independence because uninformed people tell you it’s too risky. Let them talk. Let the skeptics think you’re nuts. That’s a risk I’m willing to take – it makes the reward all the more sweet. Posted by Russ Whitney Sometimes we hear “Real Estate Mentor” and think $$$ or a waste of $$$. NOT SO!!!
The Skinny on Real Estate Mentors Mentors are a fancy way to call people that are in the same profession as you, more experienced, at least modestly more successful, some one that you trust and willing to share your problems and issues with. THAT’S IT! Lawyers, Doctors, Policemen, Firemen, even Plumbers all have an apprentice/associate mentorship training and business model. And those profession are still rocking strong and have the longest career-life span. Real Estate Mentors should be part of every real estate investor team or tool kit. I’m not telling you the next big Real Estate Guru that offers a Platinum $20K coaching program you should jump all over it. But at least have a go-to person to help you navigate. Try this: Buddy up with a fellow local investor who is successful. Arrange to have coffee or grab a beer once a month and talk shop. A $4.50 long neck could end up netting you $20K in profits by using a new exit strategy or avoiding an expensive mistake. Traits of a Real Estate Mentor This is a portion of an email sent to me this morning by “The Carefree Entrepreneur“ that discusses the good qualities of a mentor – but I could not have said it better: “You want help with starting a real estate business and need entrepreneurship-oriented mentorship. You need a mentor who:
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