Archive for December, 2010
Let’s face it, the reason most investors don’t have any private lenders is fear. It’s as basic as that. It’s a fear of the unknown. How do I know that? I’ve been there too. I was comfortable doing things the way I had always done them. I went to the bank, I jumped through their hoops– proving I was qualified for their loan, they gave me the money, and I paid them back the way they said.
It was a familiar routine in my business of buying and selling homes. But when I became a full-time investor and wanted tons of quickly accessible cash, the bank’s painstakingly slow process was no longer acceptable. Even when I knew for certain what I wanted, I procrastinated. I was not able to do nearly as many deals as I wanted because I waited so long to take action.
The thing is, if there is something you are afraid to do, you can always find a reason to not do it. Sometimes we won’t even admit to ourselves that we are afraid. We just can’t get to it because we are too busy, too tired, or focused on other “more important” issues. So that didn’t solve the whole problem. I was still too shy to approach people whom I knew would benefit from my program. I remember sitting in my doctor’s office and being too uncertain of myself to tell him about my program. I didn’t have the nerve to ask for the money. That day, we both lost. I wanted money to run my business, and he missed out on earning a tremendous interest rate. Once I recognized what was holding me back, I became educated in learning how to get what I wanted and how to handle private funds once I got them. That gave me the foundation of knowledge. I am so grateful today that I got a solid real estate education, so I can now confidently let potential private lenders know that I have a great opportunity for both of us!
*Coming Soon: Alan is going to cover private lenders, how to find them, and how to work with them in an upcoming webinar for CRE Online Subscribers. He’ll share his powerful techniques, plus the best and least expensive ways to find private lenders to fund your real estate deals.
This article is reprinted here with permission from Creative Real Estate Online at http://www.creonline.com
About the author:
E. Alan Cowgill, Master Fundraiser, is a full-time real estate investor in single family and small multi-family properties in Springfield, Ohio. Since 1995, he has bought and sold hundreds of investment properties. Alan uses private lenders–not banks –to fund his real estate purchases. By doing this, he has created his own private bank of $2,000,000 in funds. In all deals, Alan looks for win-win solutions, where the seller, the lender, and the end buyer all benefit. He is an author, consultant, and national speaker, teaching both new and seasoned investors how to find private lenders for their own real estate business.
According to Jeffery E. Taylor, aka “Mr. Landlord,” there are 18 essential tips that all new landlords should know. They are:
1. Treat landlording as a business. Develop a system and a set of written procedures for all steps in your rental process.
2. Get a good state-specific lease and be sure your lease is clear regarding all expectations you have for your residents’ responsibilities. (Many leases make too many assumptions of what is to be expected.)
3. Believe in yourself, but do not believe anything put on the rental application. Verify it all.
4. Thoroughly screen your applicants. Along with running credit checks, be sure to check eviction records and possible criminal background on all applicants.
5. Get the cooperation of your residents and start advertising and showing rentals BEFORE the lease is up.
6. Fill vacancies faster by reaching out and serving a “niche” target market.
7. Keep your relationship between you and your residents in a business-like manner and treat all residents with respect.
8. Conduct regular inspections of your properties.
9. Enforce your rules consistently and immediately.
10. Keep good records and document everything.
11. Use Craigslist and postlets.com to advertise your rentals. They’re free.
12. Look for ways to reward your long-term residents even if in only small ways.
13. Join and participate in your local landlord association to get continued support, education, and encouragement from other landlords. Also seek out one or two mentors.
14. Become extremely familiar with the state landlord tenant laws where your own rental property.
15. Learn as much as you can about your local rental market and what other landlords and managers are charging, offering, and doing.
16. Always look to expand your business network with other landlords, contractors, suppliers, professionals, and community contacts. Network with individuals who are growing, progressive, and honest.
17. Seek further training and education.
18. Don’t give up! Don’t let the small percentage of rental challenges take your focus off your big goals.
Landlording is not a get rich quick scheme, but can generate long-term wealth when done correctly.
About the author:
Jeffrey E. Taylor, C.P.L. is CEO of Mr. Landlord, Inc., a national property management consulting firm—coaching over 50,000 landlords annually. He is the publisher of the Mr. Landlord Newsletter, the largest circulated real estate newsletter in the country, with over 10,000 monthly subscribers. Jeffrey Taylor has been interviewed on numerous radio talk shows and quoted in hundreds of publications, including The Wall Street Journal, Smart Money, and Personal Finance Magazine. Known to thousands as Mr. Landlord, Jeffrey Taylor is the author of a dozen publications, books, and reports on various aspects of rental property management.
During the 2009 legislative session, the Legislature enacted Chapter 313, Laws of 2009, codified as RCW 19.27.530 which imposes new statewide requirements for carbon monoxide alarms on residential housing. While the new law took effect July 26, 2009 the actual impact of the law will not be felt until the State Building Codes Council adopts rules requiring that certain residential buildings be equipped with carbon monoxide alarms. This adoption is scheduled in the statute to occur no later than July 1, 2010. Single family owner occupied residences that were legally occupied before July 26, 2009 are statutorily exempt from the requirement to comply immediately with the new standards.
The State Building Codes Council is authorized to phase in the alarm requirements except that the new rules must require all newly constructed residential units to be equipped with alarms by January 1, 2011 and all other residential units must be equipped with such alarms by January 1, 2013. Single family owner occupied residences legally occupied before July 26, 2009 are exempt from these phased in rules.
The new law’s impact on existing owner occupied residences does not occur until the homes are sold. When such homes are sold, the purchasers may not legally occupy the homes until the sellers equip the homes with the carbon monoxide alarms.
The State Building Codes Council is authorized to exempt categories of buildings classified as residential occupancies if it determines that the requirement of carbon monoxide alarms is unnecessary to protect the health and welfare of the occupants. The Council must consider national standards in adopting its rules and must provide that where a tenancy exists, the tenants are responsible for alarm battery replacement.
The State Building Codes Council is prepared to issue its rules on schedule. The rules, which the Council has available in draft form, are quite stringent. Initial propos-als had been made in a legislative proposal during the 2010 session to exempt buildings that were heated only by electricity but because of testimony that many poisonings occur due to charcoal or petroleum fueled
devices being brought into and used inside the home, the exemption was not adopted by the Legislature or in the Council’s proposed rules. In fact the implementation date in the proposed rules for existing residential housing is far in advance of the beginning of 2013; all existing residential units including hotels, apartments and single family dwellings must have carbon monoxide alarms by July 1, 2011, except for owner occupied single family dwellings that are legally occupied by the current owners on July 1, 2010.
The proposed rules require carbon monoxide alarms outside each separate sleeping area in the immediate vicinity of the bedroom in sleeping units. The alarms are not required to be hard wired to the building’s electrical system.
About the author:
Doug Owens is a member of the REAPS legislation committee. Doug practices real estate law and general business law from his office in Seattle. He offers a 10% discount for REAPS members and he can be reached at 206-985-6679 or [email protected]
In real estate, there is a saying that you don’t make your money when you sell, you make your money when you buy. The name of the game is finding amazing deals and then either keeping them for the long term or turning around and flipping for a handsome profit. Of course, if great deals were that easy to find, everybody would be doing it. The forces of supply and demand would inflate the price of properties to the point that there would be no deals left! Naysayers claim that this is true of today’s housing market. But in reality, there are endless deals to be found almost anywhere at almost anytime.
Finding these deals takes experience and talent, but this is a head start for novice investors–or a refresher course for old pros. Distressed Owners For Distressed Properties… and vice versa. What is a great deal? Quite simply, it’s when you buy a property for well below its actual value and/or with favorable terms. The only way this can happen is for the seller to be ignorant of the market, completely uninterested in profit motives, or extremely motivated to sell.
Your chances of making a career out of finding homes owned by people who don’t know any better or who don’t care are slim, so it’s best to concentrate on identifying motivated or “distressed” sellers. After all, only someone who absolutely needs to sell is going to price his or her home well below market value and/or accept unusual financing arrangements. These are the ingredients of a great deal! So, what makes a person a motivated seller? Divorce, death of a relative, job transfer, and serious financial distress are the items that top the list. While you might feel guilty for “taking advantage” of people in such a situation, you shouldn’t. After all, they need to sell–you are helping them! You and the seller are finding a mutually agreeable price point and terms. You are getting a great deal, and they are unloading a headache. It’s a win-win situation.
The first place to look is the newspaper. Don’t bother searching through the fancy ads with pictures placed by real estate agents; go right to the Classifieds instead. Look for listings with “for sale by owner” in the text or that appear as though they are being sold without an agent. Technically, real estate agents must state that they are agents in all advertising materials, but the less scrupulous ones frequently disobey this rule.
Look for key phrases such as “must sell,” “fix-up,” “needs work,” “vacant,” and of course, “motivated sellers.” (Although, agents often advertise “motivated seller” when in fact their client isn’t all that motivated!.) Be prepared to make a lot of calls and not to spend much time with each seller. Finding deals is a numbers game, and you have to make a lot of calls to find that one special deal. But you shouldn’t limit yourself to FSBOs (homes that are “for sale by owner”).
An Army Of Agents For You
Instead, draft a letter on professional letterhead and fax it to all of the real estate offices in your area. Explain that you are a real estate investor looking for distressed properties and that you can close quickly if the price is right. This way, you can have an entire army of real estate agents working for you, free of charge. If one of them finds a property for you, the seller of the home will pay the agent’s commission. You owe them nothing; it comes off the seller’s side.
Target The Reluctant Landlords
Another idea is to call the owners of rental properties and offer to buy. Many income property owners are reluctant landlords and will certainly entertain the offer. If they say no, leave them your name and phone number and tell them to call you if they’re ever interested in selling.
Advertise To Get The Phone Ringing
Finally, you can place your own classified ad. A simple headline like “We Buy Houses for Cash” works best. Don’t worry that other investors use the same ads; it’s a numbers game. Sometimes people will sell to you because they like the way you sound or they trust you over your competitor. How many advertisements do you see in the paper for mortgage companies, car dealers, and retail stores selling the same product? There’s enough business to go around, and as long as you get the phone ringing, you’ll learn to get good at converting them into deals. By knowing what you’re looking for (distressed owners) and following these strategies, you will already be way ahead of most beginning real estate investors. It takes work, and lots of it, but the rewards are worth it.
About the author:
William Bronchick, J.D. is an author and attorney who regularly presents workshops and do-it-yourself seminars at real estate and landlord associations around the coun-try. He is the president and co-founder of the Colorado Association of Real Estate Investors. Bill specializes in all forms of asset protection and is the author of several great home study courses.
Over the past 12 years, Sean Carpenter, the “Half a Billion Dollar Man”, has done over $500,000,000 in real estate transactions using government programs to put tenants in his properties, cover down payments, fund entire rehabs, pay out six to seven figure developer fees and millions in tax-credits. Sean has been teaching real estate investors and developers how they can claim their share of the bail-out billions set aside from the government specifically for us investors. You’ll discover:
- How to look beyond simple “grant” programs and cash in on the BIG money for investors.
- How you can use government programs to get 40 year, 0% interest, 0 payment loans.
- The 3 simple steps to getting funding for YOUR deals courtesy of Uncle Sam.
- The single biggest mistake that could put your out of business – and how to avoid it.
- How investors like YOU are finding, applying for and getting funds for THEIR deals – especially in today’s market – and how you can, too.
Sean Carpenter began his career in real estate as an Acquisitions Officer for a national Low Income Housing Tax Credit syndicator, working on LIHTC transactions in the Southeastern and Northeastern regions of the United States. Additionally, he was an Asset Manager at Massachusetts Housing Finance Agency where he maintained a portfolio of federally subsidized properties by conducting annual inspections, regular financial and rent increase analyses, and participated in workout and recapitalization strategies. Most recently, Sean has served as a Project Manager with a national development company focusing on the preservation of expiring use affordable housing. Mr. Carpenter was also on the staff of Senator Mark Montigny (D-New Bedford, MA) working with constituents on a wide variety of public policy issues. Sean is a graduate of the University of Massachusetts at Dartmouth where he holds a Bachelor of Arts Degree in Political Science. Additionally, he holds a Certificate of Real Estate Finance from Boston University. He has previously served on the University Of Massachusetts Board Of Trustees, Southeastern Massachusetts University Building Authority. His community involvement includes serving as a Representative Town Meeting member and a call/ volunteer firefighter, and various community boards in the Town of Auburn, MA. Mr. Carpenter is also a member of the Sigma Tau Gamma Fraternity. He currently resides in Quincy, MA. Over the past 12 years, Sean has put together over a half -a -BILLION dollars ($500,000,000.00) in deals using Government Programs and works with clients and students around the country to get tenants for their properties, six-seven figure developer fees, millions in tax credits and funding to cover rehabs, down payments and more.