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So you want to invest, and you are short on Cash or Credit NOT A PROBLEM…

Investing in PreConstruction Real Estate requires two main ingredients:

1. Ample Cash funds for reservation fees, down payments, closing costs and mortgage payments while marketing the property for the exit sale.

2. Ample Credit to qualify for a mortgage loan. (a minimum credit FICO score of 700 is required to participate)

Fortunately, one can still participate in PreConstruction Investment opportunities, even if they only possess Cash or Credit, but not both. No problem. One can partner-up to fulfill the missing piece of the success puzzle. Then once the profits are actually realized they are spilt up accordingly. This is a win-win proposition for both the novice and seasoned professional investor. This type of arrangement is quite logical for someone looking for above Read more…

I was just talking with a real estate professional in Northern California about how precarious the market for residential homes is becoming. My friend is an elderly real estate broker that started selling real estate in the 1970s and now has over three decades in the industry. She has seen the prices of houses appreciate radically as well as drop precipitously over prior decades.

We were chatting about the hard money lenders who are lending at 70% loan to value ratios instead of 50% and just how deadly this could be financially. I explained that the reason these younger real estate professionals are lending at unsafe ratios is due to a type of money thinking I call ?financial immortality.? This type if thinking is the tendency of human beings to extend what we know about the present into the future.

Think about it. When you get up in the morning you jump out of bed and walk a certain number of feet in certain directions and you get your usual food and sanitation needs taken care of. It?s probably pretty much the same (if you are at home and not on the road) every day. You probably drive the same way to work every morning. You do pretty much the same activities each day to pull the pay check in or keep the business running. You generally assume that tomorrow is going to be much like today.

Your routine daily experience has taught you that if you do just a few things well which means pretty much the same way in a certain way you will get your money at the end of each month. In other words your daily routine is pretty static (doesn?t change much) and to function in a static environment you need to have static thinking. Something that is static never changes and is immortal. The problem is that none and I mean NONE of our financial markets are static they are dynamic (change a lot). Worse yet when they change they often change a lot and really fast!

In order to survive as a real estate of stock investor you have to have dynamic thinking. Let me explain. I told you that there are hard money lenders in California that have been earning a good return. Hard money lenders start by either lending money to builders and rehabbers at the going rates for hard money funds which today are 15%. If they don?t have money they will have people invest through them. The hard money lender pays his or her lender at a lower rate like 13% and keeps the 2% spread for managing the money.

The safety in the deal is making sure that the property is worth a lot more than the hard money loan amount when the project is finished. Many of them start lending at 50% of the value of the project (loan to value ratio abbreviated LTV). Once they get confident (static) with what they have to do to make money many are now lending a 70% of the value of the project because they can place more money in the market.

The problem is that many of these ?financially immortal? thinkers don?t remember when property values plummeted up to over 50% in some areas in the 1980s in California when the Keating scandal allowed Savings and Loans to lend at high LTVs and the real estate market collapsed when interest Read more…

This is a very simple Real Estate Investment Plan that anyone can do. In fact, because it?s so simple most people won?t do it. There are only three simple steps.

>> STEP 1. Go out and borrow one million dollars.

>> STEP 2. Use the million dollars and buy one million dollars worth of well-selected real estate.

>> STEP 3. Get other people to agree to pay off the million dollar loan for you.

Sounds easy. Right? Well it is. Think about this.

In the next year, I want you to go into your real estate marketplace and see if you can find two single-family houses, townhouses or condos in a starter price range. The price range will vary depending on the area of the county that you are in. For my example, I’m going to use a range of $150,000 to $200,000 per property.

I want you to buy these two properties and you should be able to borrow most of the money needed (in some cases all the money needed) from banks, mortgage companies, sellers and other investors.

I want you to repeat the same process for a minimum of five years. At the end of the five year period you would know own ten properties worth one million or more dollars and you will owe one million or more dollars on those properties.

Now the only thing left is to find people willing to pay off your loans on those properties. Those people are all over the place and they are called RENTERS!

At the end of ten to twenty years, what will you have?

You Will Have More Than A Million Dollars Worth Of Real Estate That Somebody Else Bought You!

And not only will you have a million dollars worth of real estate you will have an income of $100,000 from renting them out because they are all paid for.. and your income will increase as your rents increase.

If you?re saying to yourself that a million dollars isn?t enough and 100, 000 of annual income isn?t enough, the solution is simple?. BUY MORE!

Learn how to get the money

The first step to get started is that you should learn the rules of the lenders and their programs that they have available for rental properties. To do this you should spend a few hours or more on the phone calling different lenders and asking them these questions:

What type of loan programs do they have available for rental properties? What are the down payment requirements? What is the least amount of down payment required? What does the person have to do to qualify? Do they have any creative financing options to help you buy? Do they have a maximum amount of loans that they will do with one investor? If their program doesn?t fit what your trying to do, do they know of any other lenders who have loan money on rental properties. What are their fees, interest rates, loan terms, closing costs and any other costs of the loan? Once you talk to several lenders you will develop other questions that you should ask and will get a good feel of what you need to do to get qualified to borrow the money. Don?t get frustrated! Many lenders will tell you that you can?t do it or you won?t qualify. Just keep calling more lenders and remember that lender are in the business to lend you money. If they don?t lend money they are out of business.

The other source and I believe the best source is Seller?s financing (In the form of a Contact for Deed, Installment Contract, Seller?s Mortgage). Why is this the best? Because you don?t have all the costs of a traditional lender. There are generally no loan origination fees, appraisal fees, etc. and the best part of seller financing is that everything is negotiable between you and the seller.

How do you get Read more…

Regardless of what type of commodity you invest in, you should always go into that investment with an exit strategy: that is, how and when you will sell your investment and take your profit. In this article, we’ll be looking at exit strategies as they relate to real estate investments.

As a real estate investor, you’ll constantly need to be aware of the economy in your area, the job situation, and interest rates, all of which can affect your ultimate profit when you go to sell your property. You’ll also need to be thinking ahead about whether you want to take your profits and use them to buy a new piece of property with even more investment potential. How much money are you ultimately hoping to make? When will you need it? What will you be using that money for? All of those questions should be considered on a regular basis, since a person’s needs and desires will change over time.

It’s also wise to give some thought to what you’ll do if real estate values begin to decline. If you can’t find a buyer for your property right away, or within a reasonable amount of time, what will you do then? Can you add a second mortgage to the property to help carry the investment? Cam you refinance the current mortgage, without a prepayment penalty, to lower the payments so they match rental income? Setting up your initial financing with the future in mind can be critical if you find yourself needing to hold a property longer than planned.

Choose your partners carefully in the beginning, as well, to protect yourself when it comes to selling the property. If one Read more…

It may not seem obvious to many people, but the strategies involved in real estate investing and stock market investing are different from each other. Many people, disenchanted with the lackluster performance of their stock portfolio, first become interested in real estate investing after someone they know makes a large sum of money in real estate in a relatively short time.

If that sounds like YOU, be warned: investing in real estate in the hopes that the market will increase rapidly and steadily is, and always has been, a risky strategy, and can cause severe difficulty if you guess wrong about a piece of property–or if the entire real estate market begins to collapse, as has happened many times in the past.

If you can afford to buy real estate and hold on to it for five to fifteen years, you will nearly always realize a substantial profit. If you are savvy enough to buy a significantly discounted piece of property and then sell it within a year, you’ll make money, too. But buying an investment property at its fair market value that only gives you a break-even cash flow (or worse yet, loses money every month) can sink you in a relatively short time if you don’t have the wherewithal to feed it until you CAN make money on it.

It’s like riding a horse. If you don’t know how to ride, you’d better take some lessons before you sign up for a rodeo! The results could be disastrous if you make a mistake. And if you haven’t done your homework, you WILL make a mistake. The wrong real estate investment could cause not just financial hardship, but also financial ruin.

So know your real estate market, inside and out. Know where it is in its overall cycle, because all markets, no matter how hot, have ups and downs within the overall trend. There are always bargains available, regardless of the market. Watch your local housing market so you know how much rental income to expect and if there is a vacancy glut on the market. Two years ago you could buy an apartment building in Las Vegas for zero down because investors couldn’t rent the apartments. Read more…

Do you take a person?s credentials for granted? Most people do! For instance they don?t think twice when they hear about Marxism. They take the concept seriously because they know that it was authored by Dr. Karl Marx. What they don?t know is that ?Dr.? Marx was a womanizer who was too lazy to work his way through the higher educational institutions to earn his Ph.D. the honest way. ?Dr.? Marx received his ?doctorate? by mail order! Unfortunately, for modern economics he had a gift for gab and was able to sell his ungrounded ramblings of economic reform that was nothing more than a confused projection of his inner rage at his own incompetence rather than ability as an economist.

Even back at the turn of the last century there were unscrupulous universities that accept nearly anybody who applies. These bottom rate ?universities? became known as diploma mills. Many people don?t know that these diploma mills exist to this very day. Many individuals are seeking a doctorate in business administration because of the high pay levels for business professors. Schools like the University of Sarasota, Nova Southeastern University, and California Coastal University are examples of supposedly higher learning institutions that offer ?distance learning doctoral programs? in business administration but have low acceptance standards and high graduation rates.

For this reason these schools are known as ?mail order diploma mills? and fail to meet the accreditation requirements of the American Assembly of Collegiate Schools of Business (AACSB). It is impossible to have the daily apprenticeship of full immersion indoctrination that a doctoral candidate in business administration receives from a quality research institution. The University of South Carolina where I received my Ph.D. in finance, for instance, only accepts two candidates every two years. Each candidate receives constant focused daily instruction in the field that is both grueling and necessary for development of quality finance researchers and professors. Non-accredited distance learning doctoral programs are a goldmine for the owners but undermine the quality of higher learning in the United States today.

I warn investors that it is critically important that they carefully review the credentials of the mentor they select to learn how to invest in the stock market. Fraudsters don?t think twice before developing stock investing, commodity or option trading courses to make a little extra money for themselves regardless of whether or not what they teach helps their students.

I actually know of an investment guru who has never traded futures who figured out what people wanted to know about investing online and then simply tailored a course to their needs. This scary choice of Read more…

Bank Foreclosure Investing

Several people, especially those new to real estate investing, will prefer bank foreclosure to any other form of property buying because they think that they are safe properties to buy. Their understanding is that the bank owns the property and therefore they are free from all liabilities and other negative encumbrances. Though a bank foreclosure can be safe, the bank never owns the property. The property has only been pledged as collateral, meaning in the event of default of loan payment, the property should be disposed to redeem the loan.

Bank foreclosure property many not be cheap

Many people also believe that bank foreclosure is cheap, no matter what. It is held that the bank must sell the property the same amount it cost so such prices are not highly marked. Many people who hold this idea may be in for disappointment because if the lender becomes the successful bidder at this auction, then the propeerty can be sold at any price. The bank also wants profit; it needs to stay in business by operating at great profits.

Nevertheless, buying bank foreclosure still remains the popular way method of buying property. The process is fairly easy and a lot of risks associated with other forms of purchase are either eliminated or reduced in the bank foreclosure.

How to assess properties for sale

To buy bank foreclosure, scout Read more…

No Money Down and other ‘Creative’ Real Estate
Investment Methods

For many years, investors have seen the traditional
real estate investment methods described in Part 1
of this article as a lot less than desirable!

They began looking at the prices of houses and
finding methods of bringing the price more in line
with making more money in a faster way.

These savvy investors developed ways to get loans
on properties that allowed them to pull money out
whenever they buy a real estate investment (cash
back at closing) and lower their payments to build up
their cash flow (‘creative’ investing).

They even developed methods of determining a
Sellers motivation for selling – and bought the
property at a discount price.

These creative investors also saw that some Sellers
were not able (for whatever reason) to sell the
property at a discount price, however, they still
needed to get rid of the property, as they didnt
know how to manage it as a landlord, or make
money from it – not that it couldnt be done, they
simply lacked the knowledge of how to do it.

The Seller just never learned how to profit from a
real estate investment.

These investors understood how to make money
from such properties, and did.

They bought the property on discount terms, and
made money from the spread by selling it at retail
price and/or terms (certainly one of my favorite
methods of real estate investing).

Buy Every Real Estate Investment via Discount Price
or Discount Terms.

Several years ago (actually, it really took off in the
1980s), Real Estate Investment Experts began
seeing the potential for making money in bringing
this treasured knowledge to the public in the form of
home-study courses, seminars and Boot Camps.

They found that it wouldn’t create competition for
themselves, as many people, even though they
purchase real estate courses and attend seminars
and Boot Camps, will not actually take the
information and utilize it to make the hundreds and
even thousands of dollars possible for anyone
serious about Real Estate Investing.

These Real Estate Investment Experts (being
dubbed ‘guru’) found that this side of the business
was lucrative often making more income from
teaching about real estate investing than the actual
real estate investments themselves.

It is important to understand that these real estate
investment gurus learned early that they can only
teach others what to do, not be responsible for the
other persons success.

Providing the information to those that choose not
to use it is very similar to the old adage “You can
lead a horse to water, but you cant make it drink”.

Yes, these real estate investment gurus got wealthy
from selling this information, but their theories,
principles and techniques taught thousands of
others (those that take action on what they learn)
how to realize their dreams utilizing their tried and
true methods of real estate investing.

From home-study courses and seminars, to boot
camps and one-on-one training, these methods
have been proven to be not only interesting to
millions of people, but capable of bringing massive
wealth to those that take action on what is taught –
those that go on and actually make real estate
investments themselves.

Knowledge changes things…

This knowledge of no money down real estate
investing techniques being known by thousands of
Sellers has made changes in the industry.

By bringing the Seller into the knowledgeable realm
of Real Estate investing, Sellers now know many of
the methods that the gurus teach.

This is both a blessing and a curse.

To the talented investor, these knowledgeable
people are more likely to work to create a WIN-WIN
situation.

Investors that avoid the tricks and stick to the basic
real estate investment techniques and terms that
have been proven to work over and over again,
have proven these powerful real estate investment
strategies work even with these informed Sellers.

Oh, yes, many of these real estate investment
techniques work Read more…

Statistics show that nearly 95% of our fellow citizens
will retire at or below the poverty line by the age of 65.
These people will be dependant on friends, family and the
Federal Government for financial support.

If ours is the land of opportunity, why does this
startling reality exist? The answer can be traced back to
our upbringing.

From our early years we are taught that the correct path
in life is to go to school, get good grades, and get a
“secure” j.o.b (Just Over Broke) with benefits. Sound
familiar?

And let’s face it folks, you won’t ever get rich working
for someone else! With “Job Security” a thing of the past,
thousands of people are looking for alternative ways to
make money.

Real estate investment continues to be one of the largest
wealth creation tools in America. It remains one of the
fastest and proven ways to amass a fortune, and more
importantly, once you understand the basics, almost anyone
can do it.

Incredible profits can and are being made by purchasing
run down homes and improving their value with a quick
makeover. The strategy is quite simple: Buy a run down
home below market value (wholesale), fix it up, and sell it
for full retail price.

Newcomers to this field are advised to devote considerable
time to research and study. Before you test the waters,
there are four factors that you should consider:

1. You must know something about remodelling and get an
idea of how much it will cost to get the house back into
shape. Consider what you will be able to do yourself and
what it will cost if you have to have it done.

2. The location and design of the home are two of the most
important factors to consider. Study the neighborhood,
shopping and transportation facilities.

3. You make your profit when you buy. Therefore, you must
learn how to calculate your ideal purchase price.

4. You should always finance the project in the most
inexpensive way and use very little if any of your own
money.

Why is it a smarter way to invest? Traditional buy and
hold is too slow for my liking. Buying a home and relying
on the market to go up is one of the riskiest ways of
investing that I know of. I call it the buy and hope
strategy!

I prefer a method that will give me my profits up front,
and any increase in value from market forces should be seen
as a bonus.

Still not convinced? Well, here are another four powerful
reasons why:

1. Fast track your capital growth: The biggest advantage
of the buy, fix-up and hold strategy is that you can make
instant capital gains Read more…

You have probably been hearing, seeing and reading that real estate investing is the best thing since sliced bread. There are many late night cable television infomercials spewing out sales pitches for courses that teach you how to buy residential real estate no money down or for next to nothing. Furthermore, polished pitch men on the advertisement emphasize that it is so easy that anybody can do it. They smugly show you that it is simple as they pencil out on the back of a napkin how you will supposedly make a fortune in real estate. Then these real estate investment course promoters show ?actual? interviews of people who have reportedly made gobs of money with the course system.

Although it is true that fortunes can be made in real estate it is actually more likely that it will be the guru owner of the real estate course than you! The reason is that real estate investing is a lot harder than most people realize. When you buy, rent, and sell real estate as opposed to stocks you are dealing directly with people and there is not organized exchange to keep things standardized. Don?t forget that courts see it as their duty to protect the shelter of families even if they are non paying renters who are total deadbeats. Another problem is that many contractors who do odd fix up jobs for real estate rehabbers are drifters with as many personal and financial problems as bad tenants. They damage houses and are down the street as soon as they get a little cash out of the hapless real estate investor.

It also takes many years to learn how to properly assess value in a town or neighborhood and get the required experience in real estate closings to not have the big profits you initially think you see in a deal leak out. The key point of this edition of the ?Wallet Doctor? is that real estate investing is a business. Like any other business it requires constant dedication and education. If you work full time it means losing your free time to your rentals and rehabs. If a property doesn?t sell or if the tenant doesn?t Read more…