Thursday, 31 October 2013

Real Estate Leads 101 - Back to the Basics Pt. 1

Sometimes even the best real estate agents and brokers need a reminder of the basics when turning real estate leads into clients. Though the basics seem like simple skills on the surface, they are the building blocks of a strong business.

Rory Wilfong, co-founder of GetMyHomesValue and real estate trainer often comes across agents who lack these simple building blocks. "I am often surprised how many agents don't have an effective plan for acquiring real estate leads, following up with their real estate leads and then nurturing their real estate leads to become future clients. Too many agents are simply stumbling over real estate leads and crossing their fingers in hopes that the lead will pick them for representation with their future real estate transactions."

With the dramatic increase of licensed real estate agents in the past few years, it is more important that ever that real estate agents are memorable to their real estate leads. According to the National Association of Realtors, their membership increased from 766,560 in 2000 to 1,265,367 last year. And that is just Realtors. You do not have to register with NAR in order to be a real estate agent, only to get the designation of Realtor. These numbers are enough to prove that if and agent wants to get anywhere with their real estate leads, they better stand out in the crowd. The best way to do this? Effective and creative follow-up! It goes back to learning applying the relatively simple skills involved in sales, marketing and customer service and adding your own creative flair to get your real estate leads to notice you.

Let's get back to the basics and thing about what really defines the term 'real estate leads.' According to Wilfong, the definition of a lead is a consumer that is interested in possibly using your services either now or in the future. It's as simple as that. There are different types of real estate leads of course, buyers, sellers, for sale by owners, refinancing, etc. Real estate leads can come from various sources, direct mailing, contact through your website, from an open house.

Another way to think of your real estate leads are as clients. Start your follow up with the mindset that the lead WILL be your client. Real estate leads are clients until they become contractually obligated to another agent or sales person providing the same service as you are.

Many agents rate their real estate leads as cold, warm or hot, depending how far into the real estate process they are. It is important to keep in mind that at one point, even a hot lead was kind of cold, even if you didn't know about it! Cold real estate leads lead to hot real estate leads. Of course, many agents cast off hundreds of real estate leads a year because they consider them "bogus." As Wilfong states, "Like many agents, in the past I encountered my fair share of Mickey Mouse leads and I often use this as an example of agents. What would you do if you received a lead from Mickey Mouse?"

In Wilfong's experience, many agents say they cast many real estate leads with odd names off as 'bogus.'. He believes that driving to a home to present your information to Mickey Mouse himself is a GREAT way to break the ice with the people actually living in the house. The lead will remember your humor, more than likely tell his friends about the incident, which of course leads to more real estate leads for an agent! Even a call to Mickey Mouse, if handled humorously, can get a positive response and build instant rapport.

If nothing else, real estate leads will almost always give a current address along with the fake name they may leave, simply because that is the property they need information on. You can't be afraid to do a little detective work and dig a little deeper if you want to be constantly converting your real estate leads into contracted clients.

Monday, 28 October 2013

The Mind of the Real Estate Investor

Myself and many others are living proof that by changing your mental and physical habits, you can build your wealth. This mini-course focuses on changing or fine-tuning your mental habits and attitudes toward real estate investment so that you can profit at will. It's about getting your mindset right.

By mindset, I mean your way of looking at, and approaching your real estate investment business. This includes the way you perceive your business. It also includes what you allow to impress and intimidate you, also what challenges and excites you.

Note: This article is the introductory session in a soon to be released mini-course entitled “The Mind of the Real Estate Investor” and the full course will soon be available to Rehab Real Estate Central (http://www.rehab-real-estate.com) newsletter subscribers. This course will be a free service of Rehab Real Estate Central.

Why bother with “mindset?”

Simple. Because the cost of NOT adjusting your mindset is outrageously expensive (in opportunity loss)! If your mind isn't conditioned to think like a wealth-building investor, you are like a sailor paddling around in a boat with holes in it. If you bail water quickly enough, you'll keep it afloat, but you will eventually tire…and sink!

ALL money-making endeavors begin with a thought. They are all ideas born in the mind of an investor. Some have more and better ideas than others. Why is that? Are some minds better conditioned than others? I say "yes!"

In our society there is often resistance to conditioning one's mind, but nobody thinks a thing about going for a jog, or hitting the gym to condition their body. Does that make sense? If you walk the entrepreneurial path, mental conditioning is central to your business.

The six concepts that I will unfold in this course are powerful weapons of the mind. If you condition your mind to these concepts will make you a lot of money, and you will KEEP making a lot of money.

Simply put, if you don't develop, and then fine tune your mindset you will either:

- Never quite get around to investing in real estate (if you have not yet begun) and forfeit the wealth you want to attain for you and your family.

- Never quite get where you want to go in your investing (if you are already investing), and forfeit the wealth you intended to attain for you and your family.

You see, a lot of people have enough knowledge to invest in real estate. Far fewer DO it. Why is that? Because far fewer have bothered to develop the mindset that conquers fear and other hurdles to investing in real estate. Frankly, it doesn't matter how much knowledge you possess about investing in real estate, you WON'T do it if you haven't conditioned yourself to think like and investor.

Usually I write and teach practical matters of rehab real estate investing, but for this course, I'm breaking from that in favor of talking about what you can do to adjust your thinking…change the way your mind works. Since the investing won't be successful without a properly conditioned mind, it can be considered the most important aspect of learning to be a real estate investor!

Mindset is the foundation of real estate investment. In other words, if it's not solid, you cannot invest successfully. I don't know how to put it any plain-er.

I've known scores of folks who have WANTED to invest in real estate. These are usually acquaintances who find out somehow that I invest in rehab real estate. Invariable I here, “I've thought about doing that.” Sometimes I hear “I looked into that.” Sometimes they proceed to ask questions, but I find that most of the time the next word after the previous phrase is “…but” and then I hear an excuse.

These excuses range from “I couldn't find any property” to “the numbers scared me” to “I couldn't get a mortgage.”

What I'm thinking to myself is “these excuses have solutions, but they don't yet have the mindset to overcome these relatively minor hurdles.” In fact, unless someone ASKS me for specific advice on overcoming these hurdles, I don't offer advice. That's not because I don't want them to succeed! It's because their mindset is not yet right.

Let me tell you where I'm coming from on this topic.

My mindset was screwed up for 10 years! I was a real estate guru junkie! For a decaded I consumed every book about real estate investing on the market, attended seminars, and bought courses. I had “book knowledge” running out of my ears with ZERO property.

Finally, one day I realized that I was about to “retire” from the Navy, I REALLY didn't want to get a job, and my family still liked to eat! I changed my mindset, and put thoughts into action. The rest is history. What changed? Not my knowledge! My way of thinking changed.

Facing the end of my Navy career was the catalyst that got me started. If you haven't started, there IS a catalyst in your life, you only need to find it and capitalize on it. Are you satisfied in your job? Want more time with family? Want more disposable income? Want to build your retirement savings? This list could get long!

This course is aimed at helping you capitalize on your action catalyst by developing your real estate investor mindset.

For those that are already investing, this course will serve to fine-tune your mindset to make you more profitable. The VERY SAME mindset ideas that make people launch successful real estate investment careers are the ones that keep investors successful over their real estate investing careers, be it 2 years or 20.

Let's get started!

Saturday, 26 October 2013

Be a Real Estate Investing Expert - In An Instant

Here's a simple method of getting to know your real estate investing market, which is VITALLY IMPORTANT before you can know if a property/price is worthy of calling a 'deal' or not...

This 'LAZY' method of market research reveals some amazing facts about the real estate investing market in your area and it works for any area there is....

Take a local newspaper (you can get many of them online, for free, nowadays) and simply count the number of 'For Sale' and 'For Rent' ads, keeping track of them for later reference.

Usually, Sunday and Wednesday papers are the 'biggest real estate investing days', so, for now, just watch these.

Keep track of the number of ads for a few weeks and watch what is happening to your market (hold on, now, we're coming to the part about you turning all this research into a really great real estate investment).

Keeping more detailed records (what price for a 3/2/2 in the SW part of town is being offered for sale and rent wise, etc.) will yield tremendous knowledge, but, for now, just to get started in your real estate investing, stick with the basic 'total ads' research.

After a few weeks, you'll start to see 'trends' in the real estate investing potential of your area - maybe the number of For Sale is going way up and the number of For Rent is going way down...

In such a market, what are you doing looking for 'flips' as real estate investments anyway?

Such a trend clearly shows that there are fewer people buying and a high demand for rentals (perhaps a good time for you to pick up some deals for your long-term real estate investments).

You see, the newspaper (and the active market) has shown you what you need to be looking for (or not), and this is certainly a good indication that there are few Buyers (whether for themselves or as real estate investments).

Maybe it is because of some local condition (like the closing of a major employer or something), or it could be more national (like the interest rates rising quickly, etc.) - i.e., it could be something you can control, but most likely it isn't.

However, it doesn't mean you can't make real estate investing money in such a market!

You can certainly make money in a real estate investing market where there are few 'For Rent' and lots of 'For Sale' properties (even if you have poor credit and no money...)

This is a perfect time to be doing Lease Purchase/Options! Yes, it is a great time to simply make CA$H in your real estate investing business.

And, if (and WHEN) the real estate investment market changes again, you will already be on top of it because you'll keep this simple method in mind - just watching the total number of ads in the paper - something anyone can do (but so few will...) and you'll know what the next real estate investing 'trend' will be - maybe back to 'flipping', or maybe something else...

Just one of the major reasons that you need more than one 'tool' in your real estate investing toolbox.....

Here's to your successful (and LAZY) real estate investments...

Wednesday, 23 October 2013

Why You Need To Start Investing In Commercial Real Estate

People often ask me how I got started in commercial real estate, and I tell them that it was a conscious decision for me.

Most people who begin investing in real estate start off with single family residential properties because that is what they are most comfortable with. They tell themselves, "All I need to do is a couple of deals a month. I'll make myself five or ten thousand dollars, then at the end of a very few months most of my problems will be taken care of." They do not really understand everything that is involved in getting these properties going.

They think they are going to be making big money, but before long, oftentimes they end up with a lot of problems and a lot of headaches. They might have traded in their job for a perceived higher paying job, but find that it is really taking a toll on their lives.

If you belong to a real estate investment group, take a look around you. Look at the people who have done twenty-five to fifty houses or more. Are they living the life of their dreams? More importantly, are they living the life of your dreams? They may be better off than you are now, but is this really what you want to work towards? I know so many people who have a large portfolio of properties but really haven't achieved the type of freedom, success, and wealth that they truly desire. How can you change this? In my opinion, the answer is commercial real estate.

WHY COMMERCIAL REAL ESTATE?

When I decided to start investing in real estate, I stopped and took a look around. I realized that the people who were making the big money in real estate were the people who owned buildings not houses. People who owned the large apartment buildings, the large office buildings, the large warehouse and industrial space - those are the ones who really seemed to be living a lifestyle that I wanted.

They didn't have to be there tending to their properties; they had property managers who took care of that for them. Yet, they were the ones spending the checks, catching planes to exotic locations and destinations, and living the lifestyle that I desired so much.

After looking at this for quite a while, I decided that there must be a way of getting this done. They couldn't have been much smarter, have learned much more, or have had access to more resources then I could. Even though I didn't know how immediately, I knew I could figure out a way to do it.

I sat down and took the time to learn how to invest in commercial real estate, which is what I would recommend that you do. I studied and figured out exactly what it would take, and as I learned, commercial real estate became less and less of a mystery to me.

How can you start? First of all, let's talk about why you would want to do it.

MORE CASH FLOW

What are the benefits of commercial real estate? First of all, one of the biggest benefits is that commercial real estate is valued differently. By "valued differently", I mean the amount of income that a property produces is directly proportionate to its worth. So if a property produces more income, then it is worth more. It has very little to do with "market comps".

Second, along the way you are going to get a far greater cash flow. Imagine if you were to buy a $250,000 home. That $250,000 home may rent for somewhere in the neighborhood of $1,500 per month. The underlying mortgage on that home may be somewhere between $1,000 and $1,400 per month. So you end up struggling to gain between $100 and $500 per month in positive cash flow. That's not a very high number for the amount of work you have to put in, and it certainly is not going to get you on the jet set.

Now, let's take a look at a similar investment from a commercial standpoint. That same $250,000 investment may end up yielding you an 10-unit apartment complex, based on $25,000 per unit to acquire the property.

(Please note: Although these numbers work in MOST parts of the country, I realize there are certain high-priced areas, notably the west coast and parts of the northeast, where houses start in the $600,000+ range, and $60,000 and up per unit is much more common for apartments. Rest assured that these concepts still work 100% -- only the numbers, and the PROFITS, are larger.)

Let's say each of those units were two bedrooms, which could rent in most areas of the United States anywhere between $400 and $600 per month. For simplicity's sake, let's use an average of $500 per month. At $500 per month times ten units, you're bringing in $5,000 per month - more than double the rent that you could expect to get from that same $250,000 single family home. Your underlying mortgage payment would be very similar to what you would expect on a residential property; for this example, let's use $1,400 per month.

Your cash flow on this 10-unit apartment building will be $3,600 per month ($5,000 per month income, minus a $1,400 mortgage payment). Now that will make a difference in just about anyone's life.

LESS RISK

Third, and most essentially, you're now spreading out the risk over ten tenants, as opposed to one. If your single-family home goes vacant, you're on the hook for the entire mortgage. Every penny of that mortgage, all of the maintenance, and everything that goes along with it is now your responsibility. If the house is vacant for two months, you'd better be planning on spending a minimum of $2,800 to cover that mortgage plus miscellaneous expenses including maintenance, utilities, taxes, and insurance. Potentially, you're looking at a very heavy negative cash flow.

On the commercial property, however, if one of your ten units goes vacant at $500 per unit, you're still bringing in $4,500. So you get slightly less positive cash flow but you're certainly not experiencing negative cash flow. Say three units go vacant - you're still covering your mortgage and putting cash in your pockets! Do you see how there is actually LESS risk in commercial properties?

INCREASE VALUE AT WILL

The fourth reason you should be investing in commercial real estate is because of a concept called "forced appreciation". Forced appreciation means doing things with your property that will increase your income and decrease your expenses. Remember that the more income your commercial property brings in, the more it is worth.

As an example, let's go back to our 10-unit apartment building. Let's say we plan on improving the quality of each apartment unit by replacing the flooring, upgrading to nicer doorknobs and bathroom fixtures and lighting fixtures, perhaps even adding some ceiling fans - all relatively inexpensive fix-ups. As a result, we can now raise the rents by $50 per month per unit. That's $600 more in annual income per unit times 10 units, or $6,000 more per year total (which will also recapture all the costs of the fix-ups).

Next, let's decrease our expenses by $100 per month by passing on a portion of the utilities to the tenants, or by doing some competitive shopping for our lawn-care service and finding a company that does the same great job for less money per month. Times 12 months, we've just saved ourselves $1,200 per year.

Total increase in annual income is $7,200 ($6,000 plus $1,200). By increasing our income by $7,200 per year, we've increased the value of the property by $72,000 or more. That's the power of forced appreciation.

There are a lot of strategies that you can use to force appreciation and these are just some of the simplest. But needless to say when you're dealing with 10 units in one building, for instance in our small example, you've got an opportunity to improve many things that will help you justify the increased rents. Also, you'll be seeing yourself dealing with a better tenant mix. Higher quality properties tend to bring more stable tenants.

PASSIVE INCOME = FREEDOM

All of this leads us to the fifth reason why you should be investing in commercial real estate and that is the passive income. Passive income is the key to commercial real estate. The way that commercial properties are managed and the way they allow for a concentration of efforts lets you to put someone in place to manage those properties.

In the beginning, on the smaller 10-unit buildings, you'll probably need to manage them yourself. But as you climb your way up the ladder, and you start dealing with 20-units or above, you can then offer free rent on one of the units to someone in return for managing the rest of the units for you. As we discussed earlier, even with 10 units you can still make a monthly profit if a couple of the units are vacant, so giving away one unit is certainly a small price to pay in return for the freedom it gives you.

Now you've got an on-site building manager who handles all of the tenant problems, tenant issues, tenant improvements, cleaning, and trash removal - all in return for free rent in your two bedroom, $550-per-month unit. Usually these people have other jobs, so you're not their sole source of income. If your buildings are large enough to keep them busy full-time, however, you will probably have to pay them an hourly wage in addition to the free rent, but that will only be a small portion of your total monthly profits.

Meanwhile, all the checks come directly to you. You deposit them, you pay the bills, you keep the difference - and believe me, that difference can be substantial. Even on the small 10-unit buildings that we've talked about, it's easy to generate $2,000 to $3,000 dollars per month in positive cash flow, over and above your expenses. On larger, 20+ unit buildings, it's not difficult to create positive cash flows in excess of $5,000 to $10,000 per month if these properties are acquired properly. And since someone else is managing the properties for you, all this money flows to you passively, while you are spending time with your family, or traveling, or looking for exciting, new opportunities.

Obviously there are many more great reasons to invest in commercial real estate than these five that I've given you - in fact, I could easily list another thirty: cost recovery, how it's financed, management opportunities, scales of economy, and so on.

GETTING STARTED

So, how do you get started?

Just as you would get started investing in residential real estate by getting your education first (either "the easy way", through books and courses and investor group meetings, or "the hard way", through the school of hard knocks), the place to get started with commercial real estate is by getting your education and learning the terminology. It's not that different from residential real estate, and it's not that difficult to understand.

Next, look around - see what's going on in your market place. Find several small apartment, office, or retail buildings for sale, get the financial information on them, and learn how they work - what they rent for, how full they are, how the utilities are split up, what the expenses are, and so on. Start doing some "practice" deals - go through the motions of buying the property with as much diligence as you would if you were buying a single-family home. Once you understand what the income is and what the expenses are, you can start to figure out how you would acquire that property.

The sooner you get this process going, the sooner I guarantee that you will be a commercial property owner. Don't wait to get started - now is the time! This is the best commercial market in the last 50 years. Properties are available extremely inexpensively, and there are many distressed properties just waiting to be picked up with millions of dollars in equity in all of them. The bank rates right now for commercial property are extremely low. These factors combine to offer you an incredible opportunity. Do not let this market place pass you by, or you may very well regret it.

Can you imagine buying five 10-unit apartment buildings in the next 12 to 24 months? At the end of that time, you'd have 50 units, managed by someone else, and generating six figures of annual passive income. The exciting part is that apartment buildings are just the tip of the iceberg, and in my opinion, not even my favorite investments. I personally prefer office and retail space which have a much higher profit potential. Apartment buildings are nice but office space and retail space generate the really big money.

I can promise you that if you start following these simple strategies, you'll generate more than enough gold to fill up the pots for yourself as well as your family and loved ones. The sooner you get started, the sooner you'll see your first $1 Million profits!

Monday, 21 October 2013

Real Estate Investing Skill Acquisition

Real estate investing is not in any list of high school electives. You can't get an accredited degree in real estate investing. You won't find a high school or college guidance counselor who recommends a career in real estate investing (if the guidance counselor understood real estate investing, he or she probably wouldn't be a guidance counselor!)

The public school system and educational curriculum in the U.S. is only a feeble attempt to prepare students to just "get a job." Unfortunately there is no class in "Making Money 101." You don't have the opportunity to take a class in "How to Become Financially Independent." No teacher ever taught a class in "How to Succeed When Everyone Else is Failing." I never learned anything about succeeding as an entrepreneur or becoming wealthy during my 10 years in the university classroom. I only became a multi-millionaire when I learned the skills of real estate investing, and I paid the price out-of-pocket and out-of-the-classroom for that education. I learned these skills in the ole University of Hard Knocks through trial-and-error.

Never disparage the cost of education. There ain't no free lunch. You've gotta get this know-how outside of a classroom, and learning how to make money is gonna cost you. But if you think the cost of education is expensive, you should calculate the cost of ignorance!

However, learning real estate investing doesn't have to cost you an arm and a leg. Yes, I know, the real estate investing TV infomercials and the real estate investing seminars held around the country charge big bucks for those 3-day seminars and week-long Boot Camps. But that's pocket change compared to the fees they want to collect from you later. Catch this fact: all the real estate investing infomercials and seminars target you as a candidate for "real estate investing coaching." That's where they charge you up to $25,000 and over $50,000 per year for "coaching." And often you are assigned to some kid "still wet behind the ears" to call you each week or month to hold your hand and whisper in your ear what common sense and a persistent drive should already tell you! I'm not exaggerating the real estate investing educational system, because I know it inside and out. I personally know many of the so-called "gurus." I've been close to it for 25 years. My opinion is that the fees charged are exorbitant because the promoters have found deep pockets in the marketplace.

When I started my real estate investing career 25 years ago, real estate investing TV infomercials were unknown and real estate investing seminars were extremely rare. Back then, Mark Haroldsen followed an emerging trend started by Al Lowry and Nick Nickerson by holding occasional real estate investing seminars across the country. Later Robert Allen expanded the industry. Robert Allen promoted real estate investing conventions in the major cities across the U.S. He found a market for costly real estate investing packages of information with cassette tapes and note books. TV infomercials, expensive seminars, and outlandish coaching fees followed in subsequent years. Would-be real estate investing aspirants today who want more than an inadequate salary from a job in Dullsville often conclude that they have to "pay through the nose" for real estate investing know-how.

However, through diligent searching, these want to-bees often find that this education in real estate investing is more readily obtained from other sources than they previously imagined.

Real estate investing is probably one of the most easily learned skills never taught in school. Real estate investing is probably one of the most prolific careers available on Planet Earth. Because families now live in houses instead of caves, houses available for fix up are everywhere. And probably nothing contributes to upgrading the deplorable housing conditions across America comparable to real estate investing in fix up properties.

The entrepreneur-minded aspirant who discovers the real estate investing industry often catches a vision of life-beyond-a-job. Books and online courses offer an alternative to expensive seminars and coaching.

Friday, 18 October 2013

Commercial Real Estate Michigan

Commercial real estate listings in Michigan area are
available for your review and purchase. You can
purchase a commercial site that is already
established, or you can purchase a commercial lot that
is just waiting for you to build, develop and bring in
the people to make the sales. The average family
income in Michigan during the year 1999 was about
$42,000. For the business, this means there is money
available in the family units to support various types
of industry, such as pools, spas, camping, and many
other types of hobbies and sports as well.

Commercial real estate listings are those that will
include retail centers, doctor's offices, business
settings and similar retail situations. Commercial
listings are wide ranging, from the small lots, to the
huge office buildings where hundreds of employees
could be located. Commercial real estate in Michigan
is one that you should consider if you are thinking
about relocating your business, or if you are
contemplating starting a new business venture.
Mortgage rates are always changing, and for the prime
locations in Michigan you will find your real estate
investment is well worth the mortgage you will be
paying. If you have completed a business plan,
detailing your business ideas, your business traffic
needs, and the demographics of who your customer base
will be, you can find a real estate investment in
Michigan that will fit this requirement. Many
commercial real estate settings in Michigan will
service many functions in promoting your industry.

When you are looking for commercial real estate
listings in Michigan, there are many different ways to
go about it. You may have a pacific idea to where you
are looking for the commercial property. If you know
where you want to have your company that is a big
advantage because you will be able to narrow down your
search a little because of where you are looking.
Some of the listing areas are the Lakefront Real
Estate Michigan or Waterfront Real estate but there
are many more areas that you may be looking at for the
commercial real estate that you whish to have your
company at for business, some are considered prime
locations, while others are commercial settings thatdo not have the heavy traffic. One thing that you are
going to want to do is check out what area in Michigan
would be the best for your companies business and for
the consumers as well. If you need heavy traffic to
get the high numbers of customers, you should seek out
some of the prime locations, which can be a bit higher
in cost, but well worth the investment.

Once you have done some of the work on checking out of
the different locations, you will notice that there
are areas of the state that is going to be a great
location for your business of operation. Many
companies may choose to have their business location
near the lakes so that they have some easy access for
shipment and deliveries in many different ways beside
vehicle. If you are checking out the lakefront real
estate in Michigan, you may notice that you are going
to need to be ready to pay a little more for the
property because of its location but it could be a big
benefit in the long run when you think about the
different ways that you are going to be able to ship
and receive deliveries and even the possibility of how
many consumers that would be available if you are in
the business of sales because of the visitors that
could come to your shop some supplies or needs for
their vacation. That right there would be a great
advantage to acquiring some Michigan waterfront real
estate when you are going to start up a business of
sales that would be a benefit for the vacationers. If
you have, a product or service that would benefit the
many who love to vacation you should search commercial
real estate in the Waterfront Real Estate Michigan
listings.

Michigan waterfront real estate is a prime location
for many types of business, not only because of the
high number of tourist that come to this area, but
also because of the high number of traffic daily that
will see your business in this area. Grand Blanc
Michigan Real Estate is also a prime location for
commercial real estate, as this is an area that is
growing yearly, with new residential areas expanding
around the commercial area. About seventy percent of
the homes in Michigan are two and three bedroom homes,
housing families that are available to support the
commercial sales needs.

Tuesday, 15 October 2013

9 Mistakes Made by Novice Real Estate Investors

As a real estate investor and advisor, I often see novice investors make the same exact mistakes. As a result, I decided to create the following list to help novices understand what these common mistakes are and how to avoid them. The good news is that all of these mistakes can be easily corrected. The bad news is that any one of these mistakes will seriously limit your potential for success. In my experience, these are the 9 most common mistakes I see novice real estate investors make:

1) Not getting an education

Getting an education is a critical part of becoming a successful real estate investor. It's much easier and less costly to educate yourself than to make mistakes in the real world. We are lucky to live in a country full of educational opportunities for whichever endeavor we want to pursue. Surprisingly though, not everyone takes the initiative to learn before they take action. This exposes these people to costly (and sometimes career-ending) mistakes that could have easily been avoided. Some misguided people even complain that the books, courses, or seminars promoted by real estate experts are too expensive. I guess that depends on where you stand. To me, they seem cheap compared to what I know can be earned in this business. Perhaps to a novice though, they may seem expensive. But as the saying goes, "If you think education is expensive, try ignorance." Think about it. Is a $500 course worth it if what you learn only makes you $5,000 on a single wholesale deal? What if it could save you a mere $5,000 on a single rehab? Or what if it helped you create an extra $200 per month cash flow on a single property for just one year? Would it be worth it to you? The value of an education often doesn't reveal itself until you've stepped up to the plate and put yourself in the game.

2) Not getting an education from the right people

The internet is a great tool. But it's also saturated with too much information - good and bad. Oftentimes, from less than credible sources. So don't confuse the information you find on the internet as necessarily being quality information. For example, there are a number of real estate investing newsgroups and blogs that have proliferated the internet. Many so called experts on these sites are more than willing to share enough information to get you into trouble. Do you really want to get your information from "rei-man-TX" or "investor-guy75?" Carefully consider whether these are truly reputable sources to be obtaining information from. I can't believe some of the misinformation I've seen posted on these sites. Remember, anyone can post on a newsgroup and anyone can create a blog. But just because someone has a blog, doesn't mean they necessarily know what they're talking about. The misinformation you get may be costly...in either lost profits or reputation.

Novice investors may also get misinformation from friends or family members. Perhaps they dabbled in real estate at one point. Now they feel entitled to tell you what little they may know about real estate investing. Be extremely wary of people who have "dabbled" in anything. Dabblers are rarely experts in anything. As the saying goes, "Jack of all trades, master of nothing."

3) Not taking action

If you've managed to get a good education from a good source, the next step is to take some action. Knowledge is only power once you begin to apply it properly. Merely buying a wide array of real estate investing products or attending bootcamps isn't going to make you any money. Some novices neglect to take action because they're still searching for that magical secret that is going to make it start raining deals. The real secret is hard work! Others are paralyzed by fear of what might happen if they get one of their offers accepted. Or, they may give up making offers if they don't experience instant success. Whatever the reason, not taking consistent action is a sure way to fail at anything. Personally, I believe that initial failure is the universe's way of forcing us to make sure we truly want what we're pursuing. In the end, persistence is what leads to success. And the more we persist, the closer we get to success.

Many novices regularly attend their local real estate clubs. Clubs and associations are excellent way to network with other like-mided people, learn techniques and strategies, and have fun. Unfortunately, I've met countless club goers who have never done a deal before. Instead of using the club as a spring board into taking action, they tend to use the club as a warm blanket because they fear being out on their own. When I meet these people, my advice to them is to stop sitting around with the other novices talking about all the deals they would like to be doing. My advice is simple, go out there and get some deals done. We all need a good education. But that is only one step in the process. There is no substitute for hard work.

4) Not having realistic expectations

Most novice real estate investors have unrealistic expectations. It may be about the amount of repairs a property needs, the time it takes to complete a project, or the profit they should get from a deal. They're expectations are either too high or too low. If they're wholesaling properties, they may get too greedy and try to charge the rehabber too much. If they're rehabbing properties, they may underestimate the repairs required. If they're landlording, they may underestimate the amount of maintenance a property will require or forget to factor in vacancies. While getting an education plays a large role in these mistakes, another reason is that they did not leave enough room for error. They assumed everything would go as planned. Real estate deals rarely go exactly as planned. Experienced investors understand the importance of planning for the unexpected. This way, when things don't go as planned it's not the end of the world.

5) Not treating real estate investing as a business

Contrary to popular belief, real estate investing is not like the stock market. It is not a passive investment. It is an active investment. Whether a novice investor's intentions are to flip or to own rentals, they sometimes think owning real estate is going to be a lot easier than it is. While the profit potential in real estate is usually much greater than owning a stock, it inherently requires more effort than most passive types of investments. Whether you're wholesaling, rehabbing, or landlording, real estate requires your time and constant attention. In this way, it's more like a business than an investment. For example, you must be disciplined about your business. You need to set a schedule for yourself and stick to it. You need to set policies and procedures and adhere to them. You need to set goals and do whatever you can to achieve them. Not everyone has that level of discipline without a boss telling them what to do. When you run your own business, you are the boss. You must be willing to make sacrifices to succeed. For you this might mean that you need to turn off the television and read your home-study courses. It might mean that instead of spending money on new clothes, you invest that money in your business. Or it might mean that instead of going to the park on Saturday you search the MLS, look at properties, and familiarize yourself with your target neighborhoods.

6) Not being patient

It can take awhile for novice investors to see positive results when starting out. You can't expect to immediately find deals and make money. It may take several months to get your first deal. As a comparison, new real estate agents are often told by their brokers that it may take up to six months to close their first transaction. Similarly, real estate investors should expect to wait a few months to close their first transaction. Furthermore, it can take years for your real estate investing business to become a thriving venture. There aren't too many businesses that become profitable immediately - no matter the type of business. It often takes several years for most businesses to get to a point where they make steady and reliable profits. Running your own business can be fun and extremely rewarding. But rest assured, the early years can be unpredictable. As a result, you need to have a lot of patience for things to take off.

7) Not concentrating on quality deals

This is one of the biggest mistakes I see novice investors make, especially after they have done a few deals. After they have some success, they begin to focus too much on quantity instead of doing quality deals. This mindset leads them to do less profitable deals. And once an investor begins to do thinner deals for the sake of doing more deals and outdoing their competition, they eventually find themselves in trouble. For example, I know many wholesalers and rehabbers who became too confident before the housing downturn of 2006 and loaded up on properties. When the market went south, these investors were left holding a lot of worthless inventory. Most of these investors went bankrupt and lost all of their properties. Unfortunately, this is a lesson that most investors learn the hard way. For some reason, avoiding the temptation to focus on quantity is a principle that most investors have a hard time accepting. Their natural inclination is to do more. They might feel the pressure to tell their friends what new project they're working on. They might feel bored unless they're working on something new. Or they might feel guilty about not "staying busy." Whatever the reason, novices must learn that investing is an activity in which "staying busy" is not always smart. Sometimes, the best deals are the ones you don't do. When an investor learns to concentrate on a small number of quality deals, they enjoy not only better profits, but also a better lifestyle since they're not running around managing a huge portfolio of properties. For most people, the whole point of getting into real estate investing in the first place is to live a better quality of life, not to work longer and harder.

8) Not moving on from bad deals fast enough

Since novice real investors usually don't have a steady stream of leads coming in and don't know what a truly profitable deal looks like, they tend to overanalyze bad deals far too long. They get anxious and want to get deals done. And even when they put the numbers of the deal into their spreadsheet and see the deal clearly doesn't work, they still find a reason to justify it. They logically know that a deal should be avoided, but they try to justify it anyway. While I believe everyone needs to start somewhere, the ideal place for a novice real estate investor to start is in a good deal not a bad one. What novices eventually learn is that not too long after taking on a marginal deal, a greatdeal is not far behind. But because they've tied up their resources with the marginal deal, they can't pursue the great deal.

9) Not writing down goals

Don't try to run your business without a clear plan. Clarify your goals by committing them to writing. Then, revisit them once a week until they become reality. Something magical happens when you write down your goals on paper. They begin to take root. When you focus on them repeatedly, you nurture them and they begin to grow. It's important to write down your purpose, strategies, and goals. Begin by asking yourself the following questions:

  • What strategy am I pursuing?
  • What will I do with the properties I will buy?
  • How many deals per year will I do?
  • How much profit will I earn per deal?
  • How many offers do I make to make this happen?
  • What kind of life do I want to live outside of the office?

When you're clear about your goals, you have a much easier time accomplishing them. And if your goals are unrealistic you should change them as necessary. Don't get stuck in an unrealistic set of goals that will only produce frustration. At the same time, you shouldn't change your goals too often either. It's hard to hit a moving target. You want to strike a good balance between having reasonable, achieveable goals and also setting goals that will force you to get outside your comfort zone.

Saturday, 12 October 2013

Real Estate is the Best Industry There is!

If you are looking for an industry that you can get involved in that will only take a short bit of education, and that will help you make a great deal of money, then the very best industry for you to consider is the real estate industry. While this is no get rich quick scheme, for those who are self motivated and ready to work hard, this industry has amazing money making potential. Whether you choose to become involved in residential real estate or you decide that commercial real estate is more your style, both are amazing opportunities for involvement.

First of all it is important that you understand the difference between commercial real estate and residential real estate. Commercial real estate is real estate that allows for the possibility to make income for the owner or to generate outside revenue, whether the potential is immediate or in the future. On the other hand, residential real estate includes up to four family properties and is either owner occupied, an investment property, or a second home to someone. While both types of real estate can be quite lucrative, one can usually make more money in the commercial real estate industry.

Excellent ROI
One reason that the real estate industry is one of the best is because to Rate of Return (ROI) that is possible within the industry. When you start working in the real estate industry, it is very easy to start making money due to the rate of return that is possible. Both residential and commercial real estate can provide you with an excellent rate of return, and there are very few investments that can come close to providing you with this kind of return on your investment.

Using the Money of Others
Another reason that real estate is such an excellent industry is that many times it will not cost you much to get started. While many people are afraid to get started in real estate because they think they need a great deal of money, you can actually get started by using the money of others. You can actually use other people's money to start investing in real estate. There are very few other ventures that will allow you to invest and reap returns with the money of other people.

An Everlasting Commodity
Real estate is a commodity that is never going to go away. As long as the earth exists there is going to be property that will be bought and sold. This is one thing that makes this such a great industry to be involved in. You never have to worry about there being a lack of real estate. While some commodities may run out, you will never have to worry about that happening in the realm of real estate, which makes it a very safe industry to start investing and working in.

A Job for Everyone
While the real estate industry is competitive, like all industries, there really is room for everyone within this industry. While some companies may start laying off workers because there are too many workers for the amount of work available, this will never happen in real estate. Real estate never stops because it is a cyclical industry that is never ending, which means that there is a place for everyone who wants to get involved. There is no need to worry about losing your job here, since you can guarantee that real estate will continue to be bought and sold.

Part-time or Full-time
While many jobs may require that you get involved in them full-time, the real estate industry allows you to be involved either part-time or full-time. This will no doubt depend on the amount of time you have and the needs you have as well. When you are first getting started, you may want to start out part-time to get the feel of the industry and on your feet, and later you may want to go full-time. Other people enjoy just keeping real estate as their part-time job and they use it almost as a hobby or second income. You can make this industry your full-time or part-time job, and either way you are sure to earn money.

Anyone Can Do It!
Although many people seem to have the idea that working in the real estate industry take a brain like a genius and a great deal of education, this is not true. The education required is actually minimal, and it is simple enough that anyone can get involved in this industry. There will be not complex math or financial skills involved, so there is not need to worry that it is too complicated for you. If you have the motivation and you want to make money, this is an industry that will allow you to do so.

You Don't Have to Do it All Yourself
There are many different processes that occur when you are working in real estate, and there are actually many different professionals involved, which may make you think that it is a complicated process. Actually, you can build a team of professionals to save yourself from having to do all of the work. Once you have a great team in place, you will be able to streamline the process until everything is a completely automated process that will run smoothly. With a great real estate team in place, you will be able to do more deals with less effort, which will help you to earn more money.

If you have been considering the real estate industry, there is no need for you to hold back any longer. This is an industry that you can be successful in if you are motivated. No need for years of education, or even a great deal of money to get you started. With minimal education and money, you can get started in the real estate industry and be on your way to making money. Why not get started today and join the best industry that there is!

Wednesday, 9 October 2013

Real Estate Stories that Show You How!

Let's begin easing you out of the pits. I mean, comfort zone! I'm going to slowly and methodically give you as many little sparks and insights to the relatively simple ways that ordinary people use real estate to achieve extraordinary results.

Stories are the best spark plugs. They let you casually observe from a safe, secure and understandable view point. I will write to answer most of the questions that I feel I myself would ask if I was reading what you are about to read.

I want you to know something from the very start of this report and that something is this: I care about you and I sincerely mean that. I really do want you to move to a new comfort zone, one that is pleasurable and free from fear. A place where you realize you have the power to achieve greater things than you currently can imagine.

It's possible for you to start being a more powerfully directed purpose-driven individual who is well organized and on track to higher achievement. You will change and grow, slowly and steadily with every page you read. With every thought and insight you gain, your desire and courage will grow as well.

Napoleon Hill wrote one of the greatest books of all time. It's called "Think and Grow Rich." The essence of that book, the secret it reveals time and again is this: you must develop a burning desire.

Don't put this book down thinking the previous statement is cliché and that you already knew that! I am simply leading you to my next point, the next point being is - your desire needs a starting point. So to start developing desire, my secret is you must have a purpose. Why do you want to pursue real estate? I know what you're thinking: to make money, to have security, to feel useful and appear successful. Good points. I agree you can have all of that and more if that is what you desire.

Now here is something that comes before any of those things you desire. What is the purpose of all those things? Purpose, purpose, purpose...you need to first define purpose before you get the things. My purpose, or so I thought early in my career, was to move up to a nicer house and have my first house become my first rental property. When I moved up to the next one, I quickly learned as soon as I rented it out, I was in some way responsible for creating happiness and security in the life of another person that was of no relation to me.

It soon was evident to me how the choices I made in choosing that first property either would help me or hurt me in my quest to succeed in the real estate investment business.

All of it is cumulative, everything you do and how you do it adds up. It compounds itself and it either makes your life easier or more difficult. I am going to give you experiences that you can learn from that will make your life easier; I am going to show you how. That is my purpose.

The book that gave me the unknowing courage to take my first steps in real estate was a book called "How I Turned $1000 into $3 Million in real estate in my spare time" by William Nickerson. He was a master storyteller and by osmosis, after reading his book, I found myself gravitating towards the real estate classified section of my Sunday paper.

Eventually I leapt and my life had changed. It was an FHA foreclosure, a two-bedroom, one-bath home with a built-in, screened-in pool, with a Jacuzzi and a built-in sprinkler system. I bought it for $46,000 and used the HUD 203K rehab program to fix it up. I spent $16,000 to update and make repairs. They then gave me one loan for a total of $62,000. It took me three months to complete it and I was in; I had done it!

My life changed, I learned, I took the leap. From then on I had confidence. I had already had my first home but now I had two. Well, I was in the Coast Guard and wouldn't you know, three months later we moved. Uncle Sam took me out of St. Petersburg, Florida and dropped me in Kodiak, Alaska, for my next tour of duty.

Well guess what? I was armed with ambition, courage, confidence and just enough knowledge to be considered dangerous, so I bought a duplex as soon as I came ashore on Kodiak Island. Now I had three dwellings and my relationships and responsibilities were growing with my new tenants counting on me to provide a clean, functional and pleasing environment for them to exist in.

It looked like this: My mother rented my first house and an elderly couple rented the second one and my duplex came with an existing tenant who was a hospital administrator, so I was lucky. I was able to ease myself into the role of landlord without getting burned early in my career. I now had two houses and a duplex in the span of about one year. My brothers and some other family members took notice and were pretty well dumbfounded.

They couldn't figure out how I had, all of a sudden, become a real estate wizard.

It felt good to make that change in so short a time.

I got that from reading a book! And that my friend is how you are going to do the majority of everything you do in real estate, by reading and taking steps towards duplicating the success of others in a repeatable pattern. The key is to understand that you can do it if you read the right books and apply the very basic formulas that are handed to you.
There lies in: Magic Bullets in Real Estate

This is a common man or woman's real estate manual. William Nickerson never gave me anything so easy as "Magic Bullets!" So I learned trial by fire and it has been very gratifying. I've since went on to collect 17 properties, 23 tenants, 2 real estate licenses in Florida and Alaska, an assistant appraiser's certificate and over a hundred books on real estate. I just kept learning and growing and gaining momentum for the last 13 years. I am still in the Coast Guard, too, and I work at Alaska One Realty in my spare time. In two more years, I will be retired at the ripe old age of 42. Sounds like a sort of fairytale, doesn't it? Don't let me fool you. It's hard work and I'm still not a millionaire, but I want you to have the truth, so I will be honest with you every step of the way.

I know why I am not a millionaire and here is why. I would periodically sell property that was going up in value and paying for itself through the rent checks. But being in the Coast Guard would dislocate me every four years, so I found myself selling out in order to avoid being what is called "an absentee landlord."

This is an important lesson for you. It has prevented me from becoming a millionaire up to this point. The lesson is: find an area on this planet that you could and will live in, and stay close to it. Don't move more than 10 miles from your farm area. The farm area is where all your properties are located. Long distance "land lording" is tough! It can be done but you lose the ability to control the situation compared to if you were there. I've served my country and saved people's lives, so for me it has not been in vain. I have no regrets but if you don't have to leave your area of expertise, don't!

The networks you build and the contacts you build, in the process of "doing" real estate, are so valuable that when they are no longer at your disposal, it puts you at a serious disadvantage.

Not to mention when you move you have to acclimate yourself to an entirely different market, build new trust-based relationships and start all over again. It's like a treadmill you'll be running and running, however it gets you nowhere.

I've used it to my advantage. I have been forced to accelerate my abilities to rapidly duplicate my success whenever I am moved, but it is still an uphill battle. My point: Don't move too far from your farm or your network of bankers, appraisers, carpenters, tradesman, real estate, friends, tenants and so on. Once you have the skill you can duplicate your success anywhere you go but if you don't have to go...enough said on that!

I like to say, "Don't sell the goose to get the eggs." What that means is if you need money to buy more property, use equity lines from other property to do it. You will get the same amount of money or more by using an equity line as if you sold it. However, you get to keep the asset and the money! I go into this in "Magic Bullets," so I won't drone on here. Just know you don't have to sell your property to get the cash out of them.

So here we are. You know a little bit about me and you may have picked up a nugget or two. Let's find a few more.

There once was a man who wanted to buy some investment property, so what he did was look at growth patterns. You should do this too, by going to your city's planning and zoning department. You can see growth patterns and you definitely want to buy property that stands in the way of growth.

This is how he used what he learned. He saw that city planners had decided that a new artery (highway) would benefit their city by creating linkage to another city about 100 miles away, so being a smart investor he only went as far as a ten mile limit to be able to be close to his investment.

Now on average, new growth will radiate out from existing prosperous cities in the direction it is planned at a rate of about one mile per year. So our smart investor had a 10 - 12 year plan to cash out in about 10 - 12 years.

What he did was buy, I believe, 10 acres of commercially zoned property very cheaply because there was no demand at the time. He bought it, fenced it in, put up some lights and a gate, and held onto that little bugger. Now that new highway was coming his way and the good folks, through their taxes, were paying to have it built.

It didn't take long for the heavy equipment to start cutting a swath towards his fenced-in storage facility and when they got close enough to him, he started renting out a secure area for everything, from road cones to generators to backhoes. You name it - it was stored there. This more than paid his land off.

Now the men and their equipment eventually moved on further down the trail but they left a finished highway behind them. And guess what? Low and behold, people started driving on it, and then started buying property to build houses on to get away from the city. Since the new highway was a straight shot into town, ten miles out was breeze.

Well, of course, here comes the herd and everyone is just populating the whole darned area. And within ten years, residential housing surrounds Mr. Investor, and can you guess what he's got? Yep, a prime piece of commercial property, 10 acres large.

So in accordance with his 10-12 year plan, he sells his storage facility to make room for the new office/business park complex for over $2,000,000. That, my friend, is vision, and the sooner you get a clear picture of what it is that you want to specialize in, the sooner you can retire to the islands.

How hard was that? Don't tell me you can't do it, you can! I'm here to help you. I'm going to give you secrets no one else dares. Do you ever wonder why people won't tell you the secrets? Of course you already know this but I'll tell you anyway. It is because they are operating on a scarcity mentality, as though there won't be any left for them. Or if learn something and act on it, you will get ahead and have a great life. Well, misery loves company and silent oppression is the rule.

Here's a little story that poor quality real estate agents won't appreciate either but I'm going to tell it to you anyway. The reason I can tell it is because there are some great real estate agents out there who absolutely don't fear what I am about to tell you and would let you know it if they were in my position.

Here's the deal: Some agents want to be like the Wizard of Oz. They want to create the appearance of marketing and transacting real estate as being technical and very legal, a deep dark mystery. Well, it's not! The truth be told, you can write a contract on a napkin and it would stand up in court. I will emphasize here that you write on that napkin along with the terms of your agreement, "The terms set forth on this here napkin are subject to my attorney's approval."

An attorney will cover you completely for around $750.00. Prices may vary, however that is an average home transaction. There is a lot I am leaving out here but my point is this: If you own property, you can sell it anyway you want. "Magic Bullets" will teach you. Let's move on.

Exposure is the key to finding buyers and sellers in real estate. If a property is priced fairly and everyone who is looking for that type of property knows that it is in the availability pool, it will be found and the transaction will proceed as advertised. Price it right, advertise it properly and let the lawyer take care of the details. No commission, just a flat fee. Period.

Now that I have that off my chest, I will tell you a story about Dan, a 21-year old friend of mine, and his wife and their new baby. He's a hardworking guy who does his work without complaint and all the other "workers" pick on him for working so hard. Can you believe it? The other guys are so insecure and lazy that they make fun of a guy who is doing the work of three men, mainly of the three who are ridiculing him. Well, believe me, this doesn't go unnoticed by me and I take him under my wing. Dan wants to buy a house, so I begin the process of saving him years of trial by fire and save him $25,000 at no charge. That is because he deserved my help.

Anyway, here is the story: I began with him by asking him what type of home he thought he would be comfortable with and a price range. He indicated a 3-bedroom for around $100,000.

Knowing what he wanted and knowing the area, I was able to take him shopping for the house he was looking for. Now I always go after the "For Sale by Owner" homes first because I know they won't be adding any commission figure into their price, because they won't be paying one. So at 6% of $100,000 he will get $6,000 more "house" for his precious dollar.

I also told him besides the "For Sale by Owner" homes, we would be looking at oddball discount companies that help distressed sellers further part with their money and property. The mentality of a seller who uses cheesy companies to help them sell their property is pennywise and pound-foolish. If you're going to use professionals, then get a professional.

So off we go. After a day or so, we have found our house. Sure enough, El Cheeso Inc. has a sign on it. The screen doors are flapping in the breeze, the weeds are dancing on the lawn, but this house is indeed a 3-bedroom, 2-bath, 1-car garage with a fenced yard and it's selling for $110,000. Well, due to the fact that there is a divorce in progress, and a new girlfriend who doesn't like the place, and El Cheeso Inc. giving no representation, I negotiate for Dan and he gets it for $99,000. What's so great about this deal is this exact same floor plan in another house was for sale down the street, on the same street, for $25,000 more.

The moral of the story is good things come to those who deserve it, and that is another key to real estate. You must work hard so others will take notice of you and help you succeed.

Here's a beauty for you. This is about being in real estate circles and keeping your eyes and ears open and often times your "yapper" closed. This is the story of Brian and Julie. Here we have two hardworking souls. They have been married for 20 years and they have weathered the storms of matrimony. Julie works at a real estate office as an office manager. No real estate license, but she works at an office that sells a lot of waterfront property. So we are talking about location and being in the right place at the right time, and here comes a seller in the door of the office stating she is going to sell her older waterfront home. She is willing to take $180,000.

Julie tells Brian, they look at it and sure enough, this pearl is right on the water. She's a gem waiting to be polished up, so Brian and Julie sell their condominium and move in. Well, they aren't making any more waterfront property, so Brian goes to work polishing this jewel up.

Now, they have bought this house under market value in an appreciating market. So about one and a half years later, this property is worth over $350,000 and still climbing. Well, Brian is no dummy, so he gets to know his neighborhood. He strolls, takes walks and notices, you guessed it, a vacant, neglected jewel on an inside double lot. He tracks down the elderly lady, who is living with her sister, through the county records office and buys the house, including the extra lot, for a total of $120,000. Now Brian can walk to his new "jewel" and he starts polishing it. The neighbors start noticing and are amazed at his deal. He has offers of $180,000, $200,000 and $60,000 for just the lot. You name it. Now that the exposure is there, everyone wants a piece of it.

Well, this is what Brian did. He rented his first house out, moved into the second one and used plans that I gave to him to build a third house on the vacant lot, using the equity he accumulated from the first house that went up so much. And here's how this thing shakes out: $180,000 for his first house and it's value goes up to $365,000; he picked up the next jewel for $120,000 and he paid cash using the equity from the first house. Now he takes out a new mortgage on his second house for $120,000 and builds a third. The value at last count was $815,000 and he owed a grand total $300,000. That's a half million-dollar profit in 5 years!

Now what does this story tell us? #1 - it says, "work hard"; #2 - keep your eyes open; #3 - use equity lines; #4 - don't sell; #5 - learn how to be a landlord; #6 - be in locations that appreciate; #7 - buy things that are limited in availability; #8 - know how to research owners and repair property; #9 - get your partner's help (spouse); #10 - use knowledgeable friends to help you see potential (I gave him the plans and advised him not to sell anything!).

Can you get any more lessons out of this story? I'm sure you can. Just read it again and think on it. Jot down your ideas and put them to work. Real estate is not that hard, folks! You can do it. With a few magic bullets, some spark plugs and a good mentor to show you how, you can do it too!

Let's you and me talk for just a minute here, OK! Have you ever been really good at something and been able to step back and see the whole thing for what it is was? You just know exactly how to do it and you can see the end result clearly in your mind before you start. It's predictable to you. It's almost second nature, so you are comfortable doing it. It's almost become boring to you; your comfort zone is such that you can do it in your sleep.

I've gotten that way with certain types of real estate and I see people everyday that are so afraid of taking the first step that they are literally paralyzed. They make excuses and put it off, and rationalize and live a quiet life of desperation. They don't trust themselves and as a result of the unknown they can't trust anyone else either. This is a vicious cycle because the longer they wait the more it reinforces their beliefs.

I just want to grab them by the collar, take them to the bank and make them tell the banker, "Pre-qualify me!" Then walk them out the door and show them how to do something that will change their life forever, and that is to buy the first property, and then a second. Then their fear is gone and they grow to be of service to everyone who is ready for their assistance.

Let me tell you this: After you finish reading the rest of this report and you read the "Magic Bullets" book, your fears will be subdued and you will do something and your life will change. If you cannot succeed with what I am intent on showing you, then something is not right. I believe your desire would be your major obstacle, so if that's the case, read "Think and Grow Rich" by Napoleon Hill and come back to me then.

Let's get back to real estate education, shall we? Do you know who the largest commercial real estate owner in the U.S. is? It's McDonalds Corporation. Yep, and on top of that, they also have the most valuable locations for their type of business. The research they do on demographics and traffic counts is unparalleled!

If you were ever going to open a fast food restaurant, just put it near a McDonalds. You would survive just on the volume of people who flock or pass by the location that McDonalds has already decided meets all the critical data to support their restaurant business. Your restaurant, if you had good food and service, would flourish. Just sell something a little different than McDonalds. That's leveraging someone else's expertise in evaluating a location for a certain type of real estate.

Now that is a principle and principles are like natural laws. A natural law always works in every situation in its own way. It's like gravity - it always works! Here on earth, anyway.

So in real estate it doesn't matter what type it is, whether it's commercial, residential, industrial or recreational. Look for signs that serious market studies have been undertaken by major operators and buy things that can flourish in the presence of those concerns.

For instance, let's use Home Depot as an example. If Home Depot decides to build on a site, every residential lot within a mile of that new center will be bought up as soon as the Home Depot commits to build! Why?

Because smart investors know that Home Depot has done the market study and the area will be a prosperous one.

On top of that, it will provide jobs, it will pay taxes, it will provide materials to actually build the neighborhoods with, and people will shop there once their houses are built. The same goes for Wal-Mart, Lowe's and other smart business concerns.

You may or may not have noticed this but take a look the next time you are driving around. Here is what you should see. As you drive into cities from the suburbs, you'll notice donut shops, gas stations with convenience coffee centers, bagel shops, and etcetera, on the side of the road that people travel to on their way into the city to go to work. These are morning activity business centers.
Now on your way home, out of the city, you will see restaurants that cater to the evening meal crowd: KFC, Taco Bell, Subway and Pizza Hut. That's because people don't go there for breakfast. They get it on their way home, outbound from the city at night. If you put your restaurant on the wrong side of the road, you could be making a huge strategical error. Think!

Location, location, location as they say, are the 3 most important things in real estate. That is a very true statement. With residential property, that boils down to safety, security and convenience. So buy homes in good neighborhoods, cul-de-sacs preferably. No noise or through traffic, no escape routes for thieves, and a private setting, where kids play in the street without getting run down.

Security = close to hospitals, police and fire protection for obvious reasons.

Convenience = stores, gas stations, restaurants, small businesses, parks and recreation and access to major highways to circulate or evacuate if necessary.

You might get a great deal on a piece of properly but if it takes you a half hour to get a loaf of bread. What kind of resale will that great deal offer? Another great deal may back up to or face a busy street. That's often a poor choice as well...noise, pollution, the loss of privacy and curb appeal are all factors here.

The two best types of property to buy are:

1. Property that no one else knows is for sale! Why? Because you have no
competition.

2. Property no one wants! You just have to figure out why people don't want it.

If you can turn that lemon into lemonade through some problem solving, that

jewel may just shine because you used the right magic polish.

In real estate, you get paid when you solve problems. That is a fact!

Here is a golden nugget for you. If you do this, it will catapult your real estate investment career. I guarantee you will gain more insight to real estate by doing this one thing than just about anything else you could possibly do. The golden nugget is this: Take a real estate appraisal course. It will fly by, a few weekends and it's over, but the perspective and the information you gain from the class is priceless. It gives you vision, ideas and understanding. You will have an edge over every other investor who has not done it.

I had an instructor, who by some stroke of luck, I was privileged to be taught by. His name is Steven V. and he is truly a genius. This guy could make millions if he applied himself to real estate investment but he chooses to teach and give back to others in that way. He is very comfortable in life and money is a by-product for Steven. When I finished the class, I had appraisers wanting to hire me to go to work. Now I don't want to work as an appraiser. I just want to think like one and that is why I took that four-weekend course. That class taught me more than both of my real estate licensing courses combined. The reason for that is real estate classes deal with state laws, contracts, regulations and ethics. Appraisal focuses on evaluating real estate and that is what you want to learn as an investor.

A real estate license can actually hold you back from being a savvy investor and here's why: #1 - You have to announce to every seller that you are an agent. It's an ethics rule and a disclosure law. Well, now the seller is on guard for all kinds of reasons and you waste precious time overcoming negative reactions. #2 - When you go to sell your real estate, the same things apply but add to that scenario the fact that if you make large profits on property that you sell, people can come after you, saying you took advantage of them because of your expertise. And they win!

So you don't need to go to college for 4 years and you don't need a real estate license. What you do need is a guy like me to convince you to go to appraisal school and read books like the one you have now.

Then go out and do it, using a lawyer to protect you every step of the way. Again, here is a good point to make. Simply weave into every agreement or offer you make the following statement: This entire agreement is subject to my attorney's approval. I can't stress that enough. That's one line of text. That covers it all. It gives you time to investigate deals. It protects your interests and keeps you from getting burned in this business.

Here are a couple more beauties that I use to protect myself and you should too.
These are used with initial purchase offers:

1. Willing to pay X amount of dollars or appraised value, whichever is less.
(That says, "I'm only going to pay so much but if the appraisal is lower than

what I offered, than I am going to get it for the lower price. I don't get

burned!)
2. Subject to my partner's approval. (My partner was always my wife, and if she

didn't like it, the deal was null and void, cancelled, over, kaput, finito.)

Now nothing says my partner wasn't my dog, so if there's no fire hydrant, well the deal could be off.

Those are examples of escape clauses that could be abused to the point of being called "weasel clauses." Don't be a weasel! They give you a short period of time to have the option to buy something first with the right to cancel the deal, contingent upon something or someone else's decision.

I use them to protect myself and to get a little time to do my research on the property. Don't use them to unfairly tie a seller's hands. Be fair and try to move quickly when you do employ them.
What you are doing is creating a short time, zero-cost option to buy real estate. Here is a little trick and I don't use it very often but it can be used in a fair manner so I will give you the nugget. When you write an offer to purchase property, on the top line of the contract is a line that indicates who the buyer is. On that line in certain cases, I will write my name plus the words or assigns, like this:
Buyers: Dan Auito or assigns

What that word "assigns" does is this: it allows me to sell by assigning my right to buy the property to someone else. Dirty dealers will take advantage of people with that word if they can get away with it.

Here's where I would use it. In real estate, a lot of bargain hunters look for distressed property. You know, the fixer-uppers, the abandoned, condemned, fire-damaged stuff. I go a step further and look for distressed sellers such as death, divorce, relocation, but a lot of times I don't specialize in that type of property.

That's OK because if it's a steal and I get it for 40 - 50% off, I will assign it to someone who does deal in that type of property and make a profit by assigning it.

I'll always ask the distressed seller if that is a problem and if it is, I will buy it outright, then flip it but it costs more to do that. So I'll explain this to the seller and get their permission to use it. I don't slip it in on them. You will have a miserable existence if you practice real estate by deceit. Natural law will crush you; play fair! Purpose, passion and desire cannot be achieved or acquired by deceit. That's a quotable quote. I hope you remember it.

Let's get on with another story. This illustrates another fine example for you. This story is about a family who had business interests outside of real estate investing and as a result of the successes of their other businesses they had fairly large sums of money to play real estate like a monopoly game. Power can be dangerous in the wrong hands!

So here we go. This flush with cash family sees an opportunity to take advantage of an overlooked or left alone market. That market is the old-fashioned trailer park, or shall we say Mobile Home Park.

Anyway, the way most mobile home parks came into existence was this: Usually a man of integrity and strong work ethic coupled with a love for his fellow man would buy a piece of land suitable to the placement of mobile homes. As people moved in, he and his wife would welcome them and the neighbors would greet them and the community would become established.

The private owner would dig his own sewer lines and cut his own roads and landscape the park. Maybe put in the clubhouse complete with a swimming pool, shuffleboard, pool table and meeting hall. As time marched on, the residents bonded with each other and a family-friendly community took root. Well this man of integrity had a problem. Since all of his tenants are his friends, he is pressured not to raise the lot rents with inflation.

So the rents over the years are kept very low in the park and now this man and his wife are getting old. Perfect timing for our investors to come knocking and offer our private aging park owner a 2 million dollar price for his 10 acres of mobile home lots. This is a once in a lifetime offer and many park owners cashed out.

What people didn't see was these investors were systematically and methodically doing this all over the place and once they cashed out as many mom and pops as they could, they lowered the boom.

Now they the investors had control of many parks in the same areas and they started raising the lot rents. You see, they didn't have any emotional ties to the residents and they didn't live there, so it was a straightforward business deal: either pay the new higher rent or move.

The residents said, "To hell with you new owner, we are moving." "Well, fine, go ahead," they said. Now the residents started calling around to find another park with low rents but guess who owned those? Yep, our investors did, and those lot rents were going up too. So the mom and pops who didn't sell were full and it would cost on average of about $7,000 to relocate to another park even if they could find a vacancy.

The old folks who had it so good for so long were faced with a new reality and that was that they had no choice but to pay up or move, and moving, in many cases, wasn't an option. These investors exploited a complete segment of the market and made millions and millions in profit and continue to do so today.

It wasn't long after this happened that you started seeing signs saying, "This is a resident owned community." People eventually got smart and started buying that little lot that their trailer was sitting on and they began paying association dues for the clubhouse and security and grounds, maintenance and road repair. The good ole days are nothing but a fond memory.

Life goes on but America did not change for the better as a result of these types of people. Their only purpose was to make money; I believe they will die alone and in misery as a result of their way of life.

So I ask you again, can you be passionate and put your heart into investing in real estate by investing the way our corporate investors did? I think not. Money is no good when you get it by deceitful ways. I encourage you to work at balancing your objectives. Lease optioning, flippers...you are walking a fine line.

Here's a flip side to communal living. This story is a happier scenario, so let's have a little joy here. I once lived in Key West and I lived off base. Well, I thought I lived next door to Noah, and it sounded as though he was building another ark. All summer long, hammers and saws seemed to be making some type of racket, so naturally being the neighbor I was, I got to know the man next door. He never went to work and I asked him one day, "Don't you have a job and he kind of grinned and put his hammer down and this is Mark's story.

Mark and his brother were from the Northeast and they had a 30-room boarding house for college kids there, at something like $300.00 a month. That was about $9,000 a month and they made the parents responsible for the rent payments. Mark would spend his time with his family in the Keys for the nine months that school was in session. His brother was a local up North and he took care of the toilets, faucets, doors and windows. Yes, they had their very own animal house going on there, but Mark factored in the abuse and would spend 2 - 3 months a year, putting the animal house back together while the animals went home for summer break.

Mark only worked three months a year and the house (ark) that he built next to us was a masterpiece; it was beautiful. He was a master craftsman and he loved his work and spent a lot of his time with his family in a wonderful climate. Makes you kind of jealous, doesn't it? Well, don't let it because you can do it, too, but you must get started. Mark was 45 when I met him. I believe he was 25 when he got started, so my advice to you is to get started now!

Sunday, 6 October 2013

Buying Costa Rica Real Estate

Buying Costa Rica real estate is always a good option because of many reasons such as high interest investments, low cost of living and property taxes, and tax savings for foreign residents. The charming beaches lined with lanky coconut palms, inexpensive housing, and up-to-date medical system all make Costa Rica an excellent tourist destination. Moreover, the ownership of Costa Rica real estate is fully guaranteed by the constitution to all, even to the foreigners.

Costa Rica real estate includes properties such as coastal estates, lots, mansions, castles, luxury homes, houses, condos, resorts, hotels, farms, and vacation rentals. These properties can be acquired by a public deed. A recent survey by the Miami Herald has proved that Costa Rica stands at the position of the 27th safest country for investment, out of the 140 countries.

Some of the tips for buying Costa Rica real estate are as follows. You should define all your needs according to your budget when consulting your real estate agent. You should be aware about the basic Costa Rican real estate laws. You can be enlightened on this subject through your agent. Check the properties in detail to familiarize yourself with the local market conditions. Make some comparisons with the products and prices offered by various real estate agents. Once you are sure about the property that is to be purchased, consult a reputable real estate attorney. Complete your dealing with the help of your agent and your attorney. Don't forget to make all the documents in writing and register the transfer deeds.

There are many expert real estate companies located in Costa Rica serving real estate investors. Most of them have their own websites showing pictures and a short description about the properties. They provide facilities for you to enquire more about the properties by offering an online question and answer forums. The websites also give you a clear insight into investment and purchase real estate in Costa Rica.

Thursday, 3 October 2013

Top 7 Mistakes Rookie Real Estate Agents Make

Every time I talk to someone about my business and career, it always comes up that "they've thought about getting into real estate" or know someone who has. With so many people thinking about getting into real estate, and getting into real estate - why aren't there more successful Realtors in the world? Well, there's only so much business to go around, so there can only be so many Real Estate Agents in the world. I feel, however, that the inherent nature of the business, and how different it is from traditional careers, makes it difficult for the average person to successfully make the transition into the Real Estate Business. As a Broker, I see many new agents make their way into my office - for an interview, and sometimes to begin their careers. New Real Estate Agents bring a lot of great qualities to the table - lots of energy and ambition - but they also make a lot of common mistakes. Here are the 7 top mistakes rookie Real Estate Agents Make.

1) No Business Plan or Business Strategy

So many new agents put all their emphasis on which Real Estate Brokerage they will join when their shiny new license comes in the mail. Why? Because most new Real Estate Agents have never been in business for themselves - they've only worked as employees. They, mistakenly, believe that getting into the Real Estate business is "getting a new job." What they're missing is that they're about to go into business for themselves. If you've ever opened the doors to ANY business, you know that one of the key ingredients is your business plan. Your business plan helps you define where you're going, how you're getting there, and what it's going to take for you to make your real estate business a success. Here are the essentials of any good business plan:

A) Goals - What do you want? Make them clear, concise, measurable, and achievable.

B) Services You Provide - you don't want to be the "jack of all trades & master of none" - choose residential or commercial, buyers/sellers/renters, and what area(s) you want to specialize in. New residential real estate agents tend to have the most success with buyers/renters and then move on to listing homes after they've completed a few transactions.

C) Market - who are you marketing yourself to?

D) Budget - consider yourself "new real estate agent, inc." and write down EVERY expense that you have - gas, groceries, cell phone, etc... Then write down the new expenses you're taking on - board dues, increased gas, increased cell usage, marketing (very important), etc...

E) Funding - how are you going to pay for your budget w/ no income for the first (at least) 60 days? With the goals you've set for yourself, when will you break even?

F) Marketing Plan - how are you going to get the word out about your services? The MOST effective way to market yourself is to your own sphere of influence (people you know). Make sure you do so effectively and systematically.

2) Not Using the Best Possible Closing Team

They say the greatest businesspeople surround themselves with people that are smarter than themselves. It takes a pretty big team to close a transaction - Buyer's Agent, Listing Agent, Lender, Insurance Agent, Title Officer, Inspector, Appraiser, and sometimes more! As a Real Estate Agent, you are in the position to refer your client to whoever you choose, and you should make sure that anyone you refer in will be an asset to the transaction, not someone who will bring you more headache. And the closing team you refer in, or "put your name to," are there to make you shine! When they perform well, you get to take part of the credit because you referred them into the transaction.

The deadliest duo out there is the New Real Estate Agent & New Mortgage Broker. They get together and decide that, through their combined marketing efforts, they can take over the world! They're both focusing on the right part of their business - marketing - but they're doing each other no favors by choosing to give each other business. If you refer in a bad insurance agent, it might cause a minor hiccup in the transaction - you make a simple phone call and a new agent can bind the property in less than an hour. However, because it typically takes at least two weeks to close a loan, if you use an inexperienced lender, the result can be disastrous! You may find yourself in a position of "begging for a contract extension," or worse, being denied a contract extension.

A good closing team will typically know more than their role in the transaction. Due to this, you can turn to them with questions, and they will step in (quietly) when they see a potential mistake - because they want to help you, and in return receive more of your business. Using good, experienced players for your closing team will help you infinitely in conducting business worthy of MORE business...and best of all, it's free!

3) Not Arming Themselves with the Necessary Tools

Getting started as a Real Estate Agent is expensive. In Texas, the license alone is an investment that will cost between $700 and $900 (not taking into account the amount of time you'll invest.) However, you'll run into even more expenses when you go to arm yourself with the necessary tools of the trade. And don't fool yourself - they are necessary - because your competitors are definitely using every tool to help THEM.

A) MLS Access is probably the most expensive necessity you're going to run into. Joining your local (and state & national, by default) Board of Realtors will allow you to pay for MLS access, and in Austin, Texas, will run around $1000. However, don't skimp in this area. Getting MLS access is one of the most important things you can do. It's what differentiates us from your average salesman - we don't sell homes, we present any of the homes that we have available. With MLS Access, you will have 99% of the homes for sale in your area available to present to your clients.

B) Mobile Phone w/ a Beefy Plan - These days, everyone has a cell phone. But not everyone has a plan that will facilitate the level of use that Real Estate Agents need. Plan on getting at least 2000 minutes per month. You want, and need, to be available to your clients 24/7 - not just nights and weekends.

C) Computer (Preferably a Laptop) - There's no way around it, you have to have a computer & be savvy enough to use email. You would be wise to invest in some business management software, as well. If you'd like to save some money (and who wouldn't) then you can get the client & email management software Thunderbird from http://www.mozilla.com and you can get a free office suite from http://www.openoffice.org The only downside to these programs is that they do not sync with your PDA or Smart Phone. A Laptop is a BIG plus because you'll be able to work from home or on the go. New Real Estate Agents are often surprised by just how much time they spend AWAY from the office, and a laptop helps you stay on top of your work while on the go.

D) Real Estate Friendly Car - You don't have to have a Lexus, but your Miata won't do the trick. Make sure that you have a 4 door car or SUV that is comfortable and presentable. Keep it clean, and for God's sake, don't smoke in it! You're going to spend a LOT of time in your car, and put a lot of miles on it, so if it's fuel efficient, it's a BIG plus. If you're driving a sporty convertible, or still have your KILLER Jeep from college, it's time to trade it in.

4) Lack of Proper Funding

If you've taken the time to create your business plan, than you should definitely have your budget, but I can't stress enough the importance of having and following your budget. However, the budget alone doesn't address the important aspect of funding. 90% of all small businesses fail due to lack of funding. Typically, new agents will want to have 3 months of reserves in savings before taking the leap into full time agency. However, money in the bank isn't the only way to answer the question of funding. Maybe your partner can support you for a certain period of time. You can keep a part-time job that won't interfere with your business as a Real Estate Agent. Many successful waiters make the transition to successful real estate agents with no money in the bank. When you start your new business, don't expect to earn any income for, at the least, 60 days.

5) Refusing to Spend Money on Marketing

Most new Real Estate Agents don't realize that the hardest part of the business is finding the business. Furthermore, they've just shelled out around $2000 for their license and board dues, so the LAST thing they want to do is to spend more money! Again, the problem lies in the lack of understanding that you've just jumped into the Real Estate Business, you haven't taken a new job. And any good businessperson will tell you that how much business you GET is directly correlative to how much you SPEND on marketing. If you choose the right brokerage, then you will get some good inbound leads. However, don't neglect a good, personal marketing campaign from the beginning to get your own name out as the Real Estate Agent to go to.

6) Not Focusing Their Marketing Efforts in the Most Effective Areas

One reason why many new Real Estate Agents who do begin spending money on personal marketing stop is because they spend it in the wrong place. The easiest place, and where conventional Real Estate tells you to spend your money, is in conventional print marketing - the newspaper, real estate magazines, etc... This is the most visible place to see real estate advertising, it's where large offices spend a good part of their money, and so many new agents mistakenly spend their money here. This becomes very frustrating to new agents because of its low return. Large brokerages can afford to spend their money here because they're filling two needs - they're marketing their own properties for sale while creating new buyer traffic for their buyer's agents. New Real Estate Agents should look to their own sphere of influence and referral marketing to see the most effective return on their investment. An agent can spend as little as $100/month marketing to their family, friends, and colleagues and see an incredible return. There are many great referral systems around that all focus on the same premise - that if you consistently market yourself to your sphere of influence as the Real Estate Agent to go to - then you will get more business. The key is to pick a system and to follow that system. You will see results.

7) Choosing the Wrong Brokerage for the Wrong Reasons

New Real Estate Agents choose their new broker for a variety of reasons - they have a good reputation, they offer the most competitive split, the office is close to their house, etc... While these alone aren't bad reasons to choose a broker, they aren't going to do a lot to help you in your success. The #1 reason to choose a broker, and the question to ask is, "What do you offer your new agents." If the answer is, "The most competitive split in town" you should definitely keep looking. Remember, 100% of $0 is still $0. If you're leaning towards the largest broker in town, who has a great reputation, remember this: You're starting a BUSINESS not a JOB. While it might be fantastic to brag to your friends about landing a job at a prestigious company, it's no accomplishment to hang your license on the same wall in the same office as other successful agents.

Your #1 concern when interviewing new Brokers is what they offer you as a new agent. Do they have incoming leads? What does their training program consist of? What's their retention level? What's their average sales price? Do they encourage their agents to promote themselves? A Broker's purpose is to help new agents start successful careers and to help established Agents progress their careers to the next level. As a new agent, concern yourself less with commission split or agency name and more with specific programs and agency standards.

A new career in Real Estate is very exciting. Starting a Real Estate business provides the new Agent with opportunities for limitless potential and freedom. New Agents have a notoriously high failure rate, however, so a new Real Estate career can also be a very scary prospect. However, if you avoid the 7 Top Mistakes Rookie Real Estate Agents Make, then you'll be far ahead of the competition!