6 Tips for Taking Your Real Estate Investing to the Next Level

Many real estate investors have come to me with the same concern… they know they need to take their investing to the next level so they can obtain that bigger cash flow they’ve been thinking and dreaming of… but they don’t have a clear plan on just how to do it.

If you have you been thinking about taking your investing to the next level, this article is for you.

Getting your real estate investing to that next level means venturing into new and possibly unfamiliar territory… But, in order to reap those rewards… it’s got to be done. Many investors stick with the same types of deals they did when they first started investing. There is nothing wrong with that… Unless you are looking for that something bigger.

The following is a list of 6 tips to help you take your real estate investing to the next level…

Tip #1: Go After Bigger Fish

Think back to why you first got into real estate investing. I started investing because I wanted to make some serious cash, and I was tired of struggling financially. I started like many investors do-dealing in single-family properties. Then I decided I wanted a better cash flow and I wanted it fast. I went after bigger fish.

Commercial property investment deals offer some of the greatest cash flow and returns for your investment dollar. The number of units, and the size of the properties can bring the largest returns for the amount of time and money you invest in any deal.

Tip #2: Continually Educate Yourself

To get to the next level in your real estate career, you must continually educate yourself. Education and information enables you to find solutions to any challenges that may come up as you’re doing deals. Education also helps to eliminate unnecessary risk. Unfortunately, many investors believe that their lack of knowledge prevents them from doing the tougher types of deals, like large multi-unit residential or commercial properties. It doesn’t take much to get yourself informed and educated. Read books; attend seminars; talk to experts; and never hesitate to ask questions.

Tip #3: Get a Mentor

A good mentor helps you gain practical experience much quicker and more easily then going it alone. Books and courses are important. But a mentor helps you navigate deals, and overcome any challenges you face along the way. Mentors can serve as your safety net for when you head into that real estate investing territory you are unfamiliar with. If you are serious about taking your real estate investing to the next level, a mentor is necessary. A mentor will get there quicker and with much less risk than going it alone.

Tip #4: Utilize a Team of Experts

There are many people who shun the idea of new investors taking on the risk of large, complicated projects like large apartment houses or commercial real estate investments. They are right. Very large investments are not for very inexperienced or novice investors. So why not let the experts be your experts. Your team of experts works to eliminate the risk associated with your inexperience and lack of knowledge. You can get to the next level in your real estate investment career when you put together a team of people with the expertise you lack, people who already know how to navigate their way through a big and very profitable deal.

Tip #5: Develop Marketing Skills

Marketing is necessary for any business. In fact, businesses lacking a marketing system fail. In order to successfully take your real estate investing business to the next level, you must develop your marketing skills and put them into action. A very good way to start marketing your real estate business is by using direct mail. Then, when you begin to receive responses to your direct mail efforts, get yourself networking at places like local investment clubs as well as with bankers and lenders. This is an easy way to get started-take one marketing strategy, learn and hon it. Then start working other forms of marketing (networking, for example).

Your business will get to the next level only when you start learning about and utilizing successful marketing strategies.

Tip #6: Have a Can-Do Attitude

Attitude makes all the difference… especially in real estate. A person who thinks s/he can’t do a deal because it’s bigger than he or she is used to, cannot and will not get his or her business to the next level. The wrong attitude can doom you before you even try. Conversely, a person who is hungry enough for success will attain it simply because he or she doesn’t given up.

No matter where you are with your investing, these tips can help you take your real estate investing (and cash flow!) the next level. Multi-unit residential and/or commercial real estate can definitely be the right vehicle(s) to provide some of the greatest cash flow in the industry.

When you combine education, expert assistance, marketing, and the right attitude, you have the makings for conquering bigger investments successfully, and therefore achieving bigger and better cash flow deals. Your next step is to take action.

Useful Real Estate Tips For Buyers

Useful Real Estate Tips

Before venturing out to purchase real estate, whether it is vacant land or existing homes, get pre-qualified by the lender of your choosing. Nothing pains me more than to watch perspective buyers find exactly what they want, only to find out that they are not qualified for the purchase. Not to mention that, in this day and age, many sellers are requiring that an Offer To Purchase is accompanied by a pre-qualification letter.

Talk to a Mortgage Specialist

DO NOT GO IT ALONE, sit down and talk to a loan officer, whether it is at the bank where you do business already or with a company that specializes in home mortgage lending. When you have this sit down, be frank and honest, do not embellish on any of your financial details. The loan officer can only help you if they have the correct information. When you leave this meeting, you should be armed with the knowledge of knowing exactly where you stand. If you are capable of purchasing, you will have the number that you can spend, and if you are not capable of purchasing at the moment you should have the information and a step-by-step approach to get yourself to where you can buy. Keep in mind that during this initial conversation it is not necessary, nor should you give permission, for your credit history and other vital stats to be verified. Most loan officers will give the information you need to begin your search without verifying those details. If the mortgage broker or loan officer will not do this for you, find a different mortgage broker or loan officer.

Find a Buyer’s Agent

Your second hurdle to cross, is to find an experienced real estate agent, knowledgeable in the selected area’s real estate market, to represent you and help in your search. Speaking of search, your buyers agent must also be a member of the National Association of Realtors in order to have access to the MLS system. DO NOT GO IT ALONE! In this day and age of the internet, many buyers take it upon themselves to do all their own searching and investigating of the real estate market in an area. If you are just looking around a city or area to see what it has to offer, that’s great. If you are serious about buying a home, find a Realtor in that market and put them to work. Having a buyer’s agent in most scenarios costs you the buyer absolutely nothing and the seller of a listed property has their agent aggressively representing them. Remember that all listings in the Multiple Listing Service already have an agreed upon commission split between the Realtors involved in the transaction that is paid by the seller.

How Real Estate Agency Works

Here is how real estate agency works. A listed property that you have found on an area MLS search or through some other form of advertising has the commissions the real estate agents are to be paid already built into it. When that property is sold the listing agent and the buyer’s agent split this commission, which is paid by the seller of the property. The fee is already included and being paid out whether you have an agent representing you or not. Sometimes you and your agent look through what is currently listed without finding a suitable property. However, we still have the For Sale By Owners (FSBO’s) to go. In the event, you look at FSBO’s, having a buyer’s agent becomes even more beneficial because the seller is not under any obligation to disclose facts to you. While you may end up having to pay your real estate agents commission, he/she will earn every penny of it by making sure the price you pay is relative to the fair market pricing. They will assist in drafting the Offer To Purchase and Contract that protects you in the transaction, make sure all the appropriate home inspections are completed on time, help you hire an attorney to close the transaction and help you avoid all the stress.

Hiring a Real Estate Agent

• What should you look for in choosing a Realtor? That’s a legitimate question, and there are numerous answers that apply. First and foremost, make sure your real estate agent is a Realtor, because Realtors are held to a higher standard and a strict code of ethics and are the only real estate agents with access to the MLS.

• Secondly, find an agent that you communicate well with and that listens to what you are saying. You’ve all seen the commercial where the real estate agent keeps taking the clients to the same type of homes even though they have already expressed their desire to see something else. We all chuckle, but this happens. If the agent you are currently working with is not listening to you, find another agent. There are a lot of real estate agents in any market.

• Thirdly, and in a tie with second, find an honest agent. Does your agent tell you what they honestly think about a property? Both the good and the bad. Does your agent play devil’s advocate, or just sit there and try to talk you into a house you know is not right? While it may sometimes cost your agent the sale, they are working for you and are helping you find what you want. If they cannot objectively play this role, find another agent. This brings me to a extremely crucial point. DO NOT sign a Buyers Agency Agreement until you have spent a little bit of time with that real estate agent. They might tell you it is company policy or that they have to, but they do not and neither should you.

• Find an agent that brings more to the table than the ability to fill out a form. You will find that many real estate agents have extensive backgrounds in home construction, home inspections, home design, etc. These professionals are not only trained as real estate agents and can bring a wealth of knowledge to the table when considering your next home. There are many other answers to the question, but these I have mentioned are the most important.

These tips outlined above are just some of the basic tips to follow to help your purchase of real estate be a good experience. As I always tell my client, “buyer’s remorse on a car is bad, buyer’s remorse on six figures is the worst.”

The Benefit of Real Estate Analysis Software

Crunching rental property cash flows, rates of return and profitability numbers adequately enough for investors to make prudent real estate investment decisions can be quite labor-intensive. In fact, prior to the advent of computer technology it was very time consuming because it required the analyst to manually compute and format the results manually.

Now with the advance of third-party software solutions, however, it has become common practice for investors and analysts to rely on software to do the number crunching for them. The benefit derived, of course, goes without saying: The time and effort they save by eliminating as many manual tasks as possible frees up time for them to pursue their real estate investing objective. Namely, to locate rental properties they might be able to acquire for profit.

Nonetheless, this benefit is not understood by everyone who works with rental income property and conducts a real estate analysis. Strangely, it’s not uncommon to find, despite this age of technology, investors and agents who still compute and format the results manually.

So it seemed needful to address the issue and to make a case about the benefits of using software to those of you that remain uncommitted.

Rest assured, however, that my purpose is not intended to highlight any one particular software product, but rather to get you thinking about the “concept” overall. In other words, hopefully once you consider how we conducted a real estate analysis in the “old days” you will come to more fully appreciate why software evolved, the issues it solves, and how you can benefit as a result.

Origin

The challenge to create a cash flow and rate of return analysis has been around as long as real estate investing. It’s difficult to imagine, in fact, that any investor throughout any time in history didn’t use some method to determine whether or not a property would result in a profit.

Prior to the advent of computers, of course, that process had to always be performed manually. Even as recently as the early 1990′s, for example, I was conducting a real estate analysis with a calculator in one hand and pencil and paper in the other.

Some of you remember the hardships and difficulties those of us working with income property had to resolve manually in those “early days”.

The Data

The data associated with investment real estate is the heart and soul of any real estate analysis. This goes without saying. The real estate investor must understand the financial performance of a property in order to discern its particular value.

Before computer programs, however, this presented several problems.

Foremost, especially for novices, knowing what data was required for a meaningful bottom-line was not always understood. What constitutes a rental property’s operating expenses, for instance? Or what data is needed to arrive at a property’s net operating income, cash flow, or rate of return? What must be included to make revenue projections? And so it was.

Then, of course, there was the issue of the math. Because by the same token the correct data is required, computing the numbers correctly is paramount. As a result, there was always the laborious task of checking and re-checking the numbers to ensure accuracy.

Up until computers and third-party software programs came along that process always took plenty of time and involved a lot of second-guessing.

The Formulas

There are a host of returns real estate investors rely upon to measure the worth of an income-producing property in order for the investor to determine how it compares to their individual investment objectives, and/or how its value stacks up to the values of similar types of property in the local market area.

As a result, investors look at returns such as cap rate, gross rent multiplier, cash-on-cash, internal rate of return, and numerous others. Some of these returns require just simple math that can almost be computed in one’s head. But there are also many returns far more complex. For instance, rates of return associated with the elements of tax shelter and time value of money are certainly going to require nothing less than a financial calculator.

The point is that each return constitutes a formula, and up until the availability of software solutions, those formulas needed to be learned.

The Presentations

Another (more subtle) issue facing anyone conducting a rental property analysis concerns the presentation. For in addition to ensuring complete and accurate data, at the same time it must be displayed well. That is, the reports must be constructed so the facts and figures are easy-to-read and easy-to-understand.

Over the years I’m sure there have been real estate deals transacted with numbers presented on a napkin. But that’s far from the norm, and would certainly not fair well for presentations made to investors, colleagues, partners or lenders.

Thanks to computers and software, all the efforts we once made to create professional-quality reports are a thing of the past. In today’s world, reports are created automatically and look better than ever.

Conclusion

A computer or third-party software program cannot guarantee your real estate investing success. Whether you own the most advanced PC, most recent MS Excel version, or maybe even more than one real estate analysis software solution, you’re not off the hook. You still have to do your research and homework.

Nonetheless, there is a benefit to this technology if you wish to employ it. Hopefully this article has shed some light on the advantages. Here’s to your success.

8 Reasons Why a Rushed Real Estate Deal Still Requires Disclosures

With the recent spike in home sales, buyers and sellers alike are feeling the pressure to quickly close on their purchase transaction before mortgage rates go up and demand for new homes slip. But before rushing to “ink the deal,” understand that real estate professionals are required to provide written disclosures to their clients on a variety of important items necessary to the transaction, as they directly affect the buying or selling decision. Here are 8 areas where written disclosure should be or are required:

1. Affiliate Disclosures. These days, it’s common for a mortgage company to have a business interest in a title company or a real estate brokerage to also own a mortgage company. These are called “affiliate” relationships, and the relationship must be disclosed to the potential end users of these services. For instance, a mortgage company must disclosure in writing to its loan applicants that is also owns a title company that will close on the mortgage and purchase transaction. A loan applicant is not required to use the “affiliate” title company and can use another suitable title provider instead. Most importantly, a home seller or buyer cannot be pressured to use an affiliate service or be prevented from seeking a loan or making an offer on a home, just because one chooses to do business with an “unaffiliated” business.

2. Third- party services. Similar to the above paragraph, a home seller and real estate agent cannot require someone to use a third party service in order to purchase a home. A third- party could mean a lender, a title co, an appraiser or inspector. However, one can give better pricing to a buyer who uses their services. For example, a lender can waive fees if the buyer uses one of their “affiliates,” however, they cannot prevent you from making a loan application or denying a loan for refusing to use their business affiliates.

3. Real estate agent disclosure. If a real estate agent is selling a home that they own, they must disclose that they are a licensed real estate agent. Some states limit this disclosure to only an agent’s primary residence. Other states require the disclosure for any properties that the agent owns.

4. Dual agency. A seller’s agent or “listing agent” represents the seller. The seller’s agent does not have any professional duty to a buyer who is not represented by their own agent. The buyer should hire their own agent. A dual agent is an agent or real estate broker that represents both parties in the transaction. Agents must provide written disclosures to both a parties when they act as dual agents. In theory this disclosure is supposed to make a dual agent in a transaction neutral. However, a real estate deal is never without some controversy and give and take, and therefore this writer suggests that a prospective purchaser hire their own “buyer’s” agent.

5. Title agency. A title company’s function is to insure that the ownership to a specific property is valid according to public property records so that a lending institution can provide a mortgage on the property or a purchaser can take proper title from the rightful owner. Title agents represent the insurance companies that provides this coverage. They do not dispense legal advice to buyers or sellers. They do not represent lenders or real estate brokers. Title companies must disclose when they have an affiliate relationship with a property service provider, meaning that they are owned by the lender or real estate brokerage, or even an appraiser.

6. Provide all offers. A real estate agent is required to provide its sellers with all offers. Unless a seller specifically instructs an agent not to bring certain offers, say one below a certain price or time frame, the agent must present the offer. Therefore, if a buyer feels that an offer was not presented, they should contact the agent’s broker. In some states, it’s customary for a buyer or their agent to present the offer directly to the seller. But nothing prevents an enthusiastic buyer from directly speaking with a seller, it’s just not commonplace.

7. Terminating a real estate agent. It is a common misconception among sellers that they cannot fire or terminate their listing agent. They can. However, the best way to still market one’s property without bad feelings is to approach the agent’s broker and have the broker assign a new agent to the listing. Understand that the agent and broker still have a “protection period” that protects them against the seller closing a transaction with a buyer that the agent, through their business efforts, had previously procured. The period is usually for 180 days, but at time of listing a property this period can be negotiated down to 90 or even 60 days. Regardless of the time limits, it is wrong for a seller to take advantage of the agent’s efforts and is grounds for legal action.

8. Attorneys. Like a property agent, an attorney cannot represent a buyer and a seller in a transaction unless the attorney discloses the conflict in writing and both parties sign the disclosure. If two parties to a transaction have completely different versions of a transaction, then it’s time that one party hires their own attorney.

In a residential real estate transaction written disclosures comprise most of the real estate package. For those new to real estate, hire the right adviser to guide one through a successful transaction. But make sure to read and understand the disclosures and how they apply to one’s deal, as they are there for the buyer or seller’s benefit.