Recent Posts

• Now Is The Best Time To Buy Real Estate

  In Real Estate, buying at the right time is always important.  Knowing when to buy can be difficult to determine, but if you time it right, you can do well in this  distressed market.  According to the U.S. Department of Commerce, home prices are at a 27 year low comparable to historic records and right now is the best time to buy real estate.

  As an investor, being able to get in the market when everyone else is getting out is crucial to making a profit.  Investing in properties that will turn a profit after calculating your expenses and debt service can be very profitable.  Low interest rates, discounted home prices, and a large selection of properties to choose from gives an investor opportunities that have not been seen since 2002.

  Although the foreclosure rate is at a near all-time high, so are the owners that are turning to renting due to being forced out of their homes because of foreclosure.  Also, with mortgage companies tightening up on their lending criteria, many would-be buyers are unable to get a loan - this leaves a large inventory for the investors to buy, rent, and sell.

  
  

• Landlord vs Slumlord

  What distinguishes a Landlord from that of the Slumlord can be as simple as a philosophy on how they manage their properties to the way they treat the tenants themselves.  Understanding the difference may allow you to decide if you are right for the job of owning rental properties or having the realization that your perceptions of a investment owner were wrong.

  You may have seen the move “The Super” which cast Joe Pesci as a wealthy slumlord that was sentenced to 6 months of living in the same building he failed to properly care for and manage.  He learned the hard way that the tenants in his building were being truly uncared for and his building itself was in ruins.  This realization brought him to understand the value of taking care of both.  A slumlord is typically an absentee landlord that is only looking to make profit and pays little care to the upkeep and maintenance of his properties.  His properties usually are located in deteriorating neighborhoods and warrant low rents and have high vacancies.

  Slumlords are so caught up in trying to make a profit, they sometimes forget about the greatest asset they have, which is the tenants they house.  By taking better care of their tenants and maintaining the properties better, they would be able to spend less on maintenance costs and have higher rents.  Most slumlords do not consider the consequence of improper care of their belongings, nor to the effects on those around them.

  In some cases, landlords can become a slumlord by becoming overwhelmed in the amount of properties they maintain, illness, or even financial situations which make it difficult to maintain properties to acceptable levels.  On the other hand, a slumlord may become a more involved owner and remove himself from the status of one that is considered a slumlord owner.  This is due to the slumlord actually being an uninformed or inexperienced owner that has developed and modified their management practices.

  There are many responsibilities that need to be adhered to when managing rental property, but involvement in the day to day operations is not only important but crucial in maintaining the value of the property and keeping a low vacancy rate which is the sign of happy tenants.  Doing these two things will help make you a better landlord and also a profitable one at that!

  
  

• Landlording Can Be Good For Your Soul

  I had a busy day today - 5 houses I had to go check on in a certain part of town and 1 to do a move-out walk-through.  A section 8 home I own happened to be my walk-through and boy was I sad to lose this tenant.  Not only did I not have to worry about the rent always coming in, but believe it or not, she was one of the best tenants I have.  Not everyone that is section 8 is bad, and in fact, I have as many bad high rent paying tenants as I do low rent ones!

  The carpets were not in the greatest shape, but I could not fault them because it was about time for a new carpeting anyways.  Then come the walls and fixtures, this is what I usually see the most problems with, aside from the carpets of course.  When I get to the home, the tenants are still busily running around getting the house ready - I knew it wasn’t quite done because of the moving truck still sitting in front of the house.  What to do, I thought.  Well, sometimes you just have to take the lemon and make lemonade, so I did just that.  I offered to give them the rest of this weekend to get the house ready, and they were very happy. 

  The reason I wanted to mention this story is because by me going into what appeared to be a bad situation, I was able to turn it around and make both parties happy.  I will be getting a home back that is in rent ready condition on Sunday and I gave my current tenants a opportunity to take their time on getting the house cleaned up.  Both of us were happy.

  I typically do not do my own walk-through, but I am actually glad that I did on this one.  Sometimes and often so, we become hardened by the day to day operations of landlording, but once in a while we need to step back and put ourselves in the shoes of our tenants - we may learn something valuable about ourselves.

  Happy Landlording!

  
  

• Real Estate Investing Is For the POOR!

  There are literally millions of people that have became millionaires by investing in real estate and a large amount were in the poor house before starting.  Real estate is kind to people without large chunks of capital to invest and even caters to them.  What other avenue of investing can say that?  Whether it be stocks, bonds,antiquities, or even precious metals - there is nothing comparable to the rate of return that real estate can provide.

  Interestingly enough, there are people out there that are begging you to take their money and invest it - ever heard of a mortgage company?  By owning a home, you are getting a return on the money that you pay to the mortgage company, this is the appreciation of the property, which is about 6% nationally and also the equity that you build up by paying down your loan. 

  If you were living in a $300,000 dollar house and the guy next door went to the bank and invested $300,000 dollars of his own cash in a money market account getting 5% interest for 5 years - in that 5 years, you would have made more money off your house than he did on his investment.  The reason you made more is because you might have invested $10-20,000 to buy the house, but with that money you were controlling $300,000 worth of of real estate.  The other guy had to use his whole $300,000 to get the same rate of return as you did.  The real difference is that he had to use his own money and you used someone else’s, your mortgage company!

  Even though most people don’t have thousands of dollars lying around, when buying real estate you are essentially getting between a 3-5% rate of return on whatever your house is worth.  So, next time you think that you need to have money to make money, think again!

  
  

• No Money Down?

  Carleton Sheets, Robert Kiyosaki, Bob Bruss - these guys have one thing in common, they teach about no money down deals in real estate.  Is this possible and are people doing it?  Yes it is possible but not completely likely.  The typical new investor will study a guru course and think that all there is to buying investment properties is to get a discount and they will be able to make a profit.  This is not only not true, but often what gets new investors in the most trouble. 

  No money down deals are done by using creative financing and terms to purchase a property with no money out of pocket.  I have had experience in the past with this and know it can be done, however, the stars usually have to line up perfect for this to happen and it certainly does not work on every purchase.  If a investor is hoping to buy properties with no money down every time they get a house under contract, they will be either extremely lucky or about to learn failure first hand.

  Typically, if a property is for sale in a slow or distressed market, it is more likely that you may be able to purchase the home with no money down, but in a strong market with a lot of buyers bidding for the property, it is less likely.  The reason is this - sellers are more apt to allow a buyer to roll the closing costs and maybe even their down payment right into the loan.  For example:  Seller A has a house for sale at a list price of $100,000 and Buyer A offers the seller $90,000 for the home and asks the seller to roll the closing costs of $5,000 and give the Buyer A $5,000 toward the down payment as cash at closing - the buyer can essentially go to closing with no out of pocket expenses. 

  This could be an example in a distressed market where the home may have been sitting on the market for a few months, which might entice the seller to allow these concessions.  But with this in mind, being able to get a seller to agree to these terms is not usually going to happen in a good market.

  Another example is a deal I did many years ago where I found a HUD home that was in pretty good shape and was able to allow me positive cash flow after closing and getting the house rented.  I found a little 3 bedroom, 2 bath house that needed a bit of work, but was great as a rental for the area.  The home was worth about $85,000 and I won the bid for $70,000.  I was working with a realtor at the time that paid back 1% to the buyer at closing, so I negotiated for HUD to pay all my closing costs and I got a 80/20 loan between 2 mortgage companies.

  I went to closing with $300.00 out of pocket, but here is the good part - after we closed on the house, my realtor cut a check to me for $700.00, which was the 1% I got back at closing.  I used this to buy the refrigerator, clean up the yard, and pay for advertising.  I was able to get a renter in the home in less than a month.

  Not all deals are done this way, but this is just a example of how you can do no money down deals.  Just keep in mind that although many people may teach you that it is common place, this is not the case and is actually an exception.  Happy Hunting!