Real Estate Investing Business Blog

 Welcome to another edition of the carnival of Real Estate Investments. I encourage everyone to take the time to visit these sites so that you can learn and grow in your business. Here are the articles for this weeks edition.

admin presents Stupid PMI Tricks, Part 1 posted at Short Sales Riches.

Erica O’Leary presents Combine Sections 121 & 1031 for Maximum Tax Benefit posted at Bankers Exchange Services.

Don presents Pre Construction Investing posted at Tony Travis.

R.Pettinger presents Tips for A Quick House Sale posted at Housing Market.

Joe Manausa presents Property Flipping Re-Energized? posted at Tallahassee Real Estate Blog.

Everything Finance presents Simple Foreclosure Solutions posted at Everything Finance.

Don Conrad presents How to create the kind of curb appeal which attracts good tenants posted at Find That Quality Tenant.

Joshua Dorkin presents You Know That You’re a Real Estate Investor When . . . posted at Real Estate Investing For Real | A BiggerPockets Blog.

Thats it for this week. I’ll post more next monday! Enjoy!

I always want to be upfront when it comes to my real estate investing and I have to admit to taking my first loss on a property this past week. Here is the story with 132 Round Tree.

Last year when the market was selling reasonably well one of my partners found this property. It was a foreclosure. It was listed at $149,900. The tax card had it listed at $152,000 and our comps placed the property in this range as well. With our partnership if he finds a deal and I agree to it then I place offers on the property. After a few offers we had a contract for $120,000.

It took 3 months to close because of title issues so we closed on it in late July 2007. As you well know the market came to a dead halt around this time frame. However, with this particular partnership we only sell the properties. They do not wish to hold them long term.

We actually found a buyer in December. We knew that with the market like it was our main agenda was to sell the property and break even. Their credit was borderline around 580. They moved in and paid us $1100 a month in rent which actually kept the property from losing more money then it did. 7 months later we finally closed the deal. We ended up losing about $6,000.

So why did we take loss. It comes down to my partners. As you know I am only advising a rent to own strategy in this market. They were not interested in that startegy. I decided that it is much better to keep good relations and a good partnership in tact then to argue and try to steer them into a situation that they did not want to be in. Plus, for other reasons one of the partners had to remove as much debt as possible from their balance sheet for other business reasons.

So you win some and you lose some but there is always something to learn. In this case I probably will not be using these partners again until the market turns around. The good news is because of preserving the partnership and not getting hung up on the money I know that when I need them that they will be there. There is plenty of money to be made in this business but its the relationships you build that help you get there.

If you want to make  money in real estate investing in 2008 then its going to take a different approach then when the market was running steadily along. In my DVD REI BASICS 101 basically take the approach of doing rehabs to pay down your debt and to build your cash reserves and then focus on buying rentals and using flips to pay them off.

Unfortunately, I would not recommend flipping to anyone due to all the hassles involved now. Finding a buyer is difficult and when you do find a buyer your only option left to sell on 100% financing is FHA which in combination with lenders being so tight right now its tough to get a home sold. So if you want to invest in real estate how would I recommend you get started now?

I believe as a brand new investor you need to focus on buying 1-2 properties this year and holding them as rentals or rent to owns to eventually resell when the market changes again. Here is the step by step break down on how I would do it as a brand new investor.

1) Talk to your commercial banker. Get prequalified for an 80% loan.

2) Find your source of funds for the 20% down. I recommend an equity line or a private lender.

3) Find your deal

4) Buy your deal and place your tenant in it

5) After 6 months go to another local commercial banker and refinance for what you owe and place a line of credit on your equity. Do not pull out all of your equity. You may want to pull some out for profit but do not pull it all out.

6) In a few years when the market changes sell the homes and take home a substantial profit due to the low prices that are out there right now.

This is how I recommend a new investor who has a stable income and a credit score over 620 to get started. Once the market picks up again then you can revert to my plan in my DVD but for right now be conservative, buy what you can comfortably handle, and understand that any profit you make will come off of credit lines and refinances in these houses.

Now, what if you have no credit and no cash and you want to get started in real estate investing? First, I recommend picking up my No Cash No Credit DVD. This will go into detail about how to wholesale and assign contracts. Here is your guide.

1) Network and get to know every investor in town. Find out what they buy and ask if they would pay you to find a good deal

2) Find out which attorney in town understands investors and how they work.

3) Find a deal and put an escape clause in it.

4) Sell the deal to one of your investors.

5) Build cash and fix your credit with the profits until you can eventually buy a home.

This is how I recommend a new investor get started in 2008. The game has changed but there is always a way to make money if your willing to believe that you can make money, and you supply the action necessary to make it happen.

Here is my first YouTube video post.

Enjoy!

So its been awhile since I’ve been posting regularly so its time to update you on the daily happenings of my real estate business. Currently I am getting ready to buy again. Over the past 2 months I have been building cash, getting my taxes finalized, and working on obtaining credit lines based of the equity in the properties I acquired.

Lets talk about credit lines. The whole concept of credit lines is easy to understand its just trying to figure out how to obtain them that had me puzzled for quite awhile. Here is how I am currently approaching it. I am taking my properties and refinancing the mortgages into one payment. The equity left over after 80% of appraised value is the credit line.

Originally I intended to pay off the properties one by one and then place a line of credit on the free and clear property. The reason I did not pursue this plan was because of the time factor. Using all of my equity and cash to go one property at a time would significantly slow me down. After talking to one of my bankers I decided that refinancing my current mortgages into one and then putting a line of credit as a second would be the best approach for me. So that’s what I did and thats where I am at.

 I currently have two properties under contract. A 6 BR / 2 BA for $33,000. I estimate ARV is around $115,000. It will need about $25,000 to $30,000 in repairs. I also have a 3 BR / 2 BA under contract for $39,000. Its ARV should be around $95,000 to $100,000 with about $10,000 in repairs.

The deals are out there and its a feast for those of us who can buy. If you can start and hold the properties now is the time to buy. The banks are finally pricing them right and there are plenty of them to go around. So get in now or in 1 to 2 years you’ll be regretting not doing so.

If you’ve ever been on You Tube and looked up the search phrase real estate investor and investing it seems that all that is out there is tons of 10 minute infomercials. I’ve decided to take the next step of plastering my face on YouTube and giving some actual enlightening and helpful information on a week by week basis about me and my business.

I will post the video’s on this blog as well. Stay tuned……

I wanted to provide an update to whats going on in my business. Its been 2 months since I’ve made a post on here and I apologize for the delay. Unfortunately, this site is not the #1 priority of my business and because of this it falls behind in importance.

I am however going to try and continue to provide relevant and useful information to help those of you interested in real estate investing.

So where am I now? I am restructuring my current assets. I am going through my properties and moving them from commercial loans to commercial lines of credit. So far I am in the exploration stage of this. I’ve talked to a few of my banks and I’ve gotten different answers from each of them.

From First Georgia Banking Company I was told that its better to have the properties paid off and I can put a business line of credit on them after that. From Covenant Bank and Trust I was told I can take my current properties and combine them into a credit line using the equity in the properties. Omni National Bank told me that they do not offer credit lines.

So that’s where it stands. What I am actually doing is going to BB&T in my area and putting a business line of credit on a home that is unencumbered by any mortgages. After I have done this I plan on paying off each property one at a time and combining everything into credit lines.

Why am I working on credit lines? I’ve talked to several other experienced investors and this seems to be the route to take. There are less rules and restrictions on the credit lines as apposed to the numerous rules on the commercial loans that have been coming up over the past year.

One of my banks, First Georgia Banking Company currently has it where if you refinance a property with them you can not removed your original 20% and you only get 80% back in repairs. With credit lines none of these rules exist. Its 80% of appraised value.

So thats where I’m at. I’m also considering opening up my own You Tube page. I’ve looked and haven’t seen a video diary of someone trying to become a millionaire through real estate basically documenting their trip. All the videos seem to be geared toward selling tapes and seminars. While I do sell my DVD’s, that would not my main focus. I think it would be enlightening to make a video diary of my journey. If I decide to do so I will let everyone know.

We’re in a tough time to sell homes because all the buyers have been scared away. So its even more important then ever to properly market your homes. When it comes to trying to sell your home you have to first know that what you price your home is the most important factor in determining when it will sell.

If you price it to high then you can expect that it will take far longer to sell and may perhaps not sell. This certainly holds true in our current market. There are just more homes that are for sale then there are buyers so in order to quickly move my houses I’ve had to price them below value. Here’s some examples.

Last year I had a home at 111 Mohawk Trl that appraised out for $133,000. I had to sell it for $108,000. Even with the tremendous price cut I was able to make $15,000. Its all about making your profit goals. If I had wanted the full $133,000 I would probably still be waiting to sell that home.

I had another home appraised at $113,000. I sold it for $103,000. I had another that in my estimation was valued around $115,000. Its under contract right now for $108,000. So the most important point you need to take is that price controls everything. In a Sellers market you can get away with selling your home for what its worth. In a buyers market you may sell it for what its worth but it will take a lot longer. I aim to have all my houses under contract within 2 months of starting my marketing process.

So what marketing do I put into place?

• I have professionally made signs.
•  I have a full time ad that runs in the paper.
• I also run my add in the free classifieds and the local little classifieds you can buy at gas stations. Here they are called the North Georgia Classifieds and the North West Georgia Trader.
• I have a website that shows all my homes. I also have a place to collect their name and email so I can add them to a list so in the future when I obtain new homes I can market to the people on that list.

When I have at least 2-3 homes I’m selling I spend about $1,000 a month in marketing. It may seem like a lot but from that I generate 5 to 10 phone calls a day. Just as it is with finding a deal where you can make $30,000 its a numbers game finding the right person who wants to buy your home.

So remember the price is the most important item to consider. My ways of marketing are pretty standard its pricing the home right that counts.