Can anyone steer me to a basic book (or source) for buying and selling real estate with an eye towards financing options (banks or govt. programs) and minimizing tax impact when it’s NOT your primary residence.
Thinking about flipping in my area, but while I have the trade skills, I have very little of the necassary buisness knowledge needed.
I’m in New York, on the south shore of nassau county, long island… thanks for any input… BUIC
Replies
Try this site http://www.creonline.com. Lots of info, BB etc. DanT
Just skimmed over the site and read a few things. Lots of info there, thanks for the link...BUIC
Edited 10/19/2005 3:50 pm ET by BUIC
Is that forum like a breaktime for us?
Tim
Yeah kinda. It has about the same mix. A few pros, a few that dabble and a lot of people who post and ask how to get started etc. never to be heard from again. Just like here I guess when I think about it.
It is educational to a degree and it certainly can give you some ideas but as you know there are many different strategies in RE that work and make money so you don't always see information that relates to your situation. And some of the novice questions get asked over and over and over again. Yeah, just like here lol. DanT
I'd also like to thank you for that link, I'd been looking for a good real estate form for awhile.
Hello:
Almost all books I find on RE investing are directed at "flipping," no money down, get rich quick BS. The problem I have with flipping is that you need to be disciplined enough to LIMIT the work to mowing the lawn, adding some flowers, and a paint job. The temptation for a tradesman (I know from personal experience) is to do too much. Unfortunately, selling houses is really selling baths and kitchens...the most expensive to upgrade. Too often all you get out of it considering the high transaction costs (7%)is payment for your time...then it's lucky you.
Here are some answers and an alternative strategy:
Where you live is has nothing to do with it.
Buy in areas with accelerating appreciation rates (I live in IN and just bought 5 in Boise ID).
Buy new(never occupied w/ warranty) or less than 5 yrs old. They have higher appreciation rates.
Investor loans and a "minimum payment" are the way to go, currently about 1.4%. Try Countrywide Bank.
If putting less than 20% dn., mortage ins. is required. A cheaper option is say 10% dn. and a second @ 10% purchase price. Rates are high, but still less than ins.
Don't plan on making money on the rental...just breakeven.
Breakeven can be pretax (best) or post-tax (you lose the ability to offfset other income due to depreciation).
Hold prop. until IRR (Internal Rate of Return)starts to decline. The higher the appreciation rate, the shorter the holding period. Essentially, as your equity grows due to appreciation, the rate of return declines...time to sell.
Taxes: NONE! The beauty of RE investing. Do a "1031" (search IRS website). A 1031 transaction is non-taxable if you reinvest all capital gains in other real estate. The downside is as you repeat this process, you have so much money you can never afford to pay the taxes, so you never get to spend the gains...it goes to your heirs. But, say after doing this 3-4 times, you could invest in an income producing property and live well.
Simplified exanple (exlusing transaction costs, 4 yr hold, 15% appreciation):
Step 1-
$100,000 @ 10% dn controls $1,000,000 in RE Value.
Gain: 150,000 yr x 4 yr = $600,000.(1031=no tax)
Step 2-
$600,000 @ 10% dn controls $6,000,000 value
Gain: $900K yr x 4 yr = $3.6 M
Step 3-n:
Do it again or buy income property if near retirement.
Live Happy!
Thanks for the reply and the tips, I'll look into the 1031.
One problem I see is that for several miles in any direction there are no really neglected homes. And because there's almost no buildable land, a new home in this county is a bit of a rarity.
At this point I'm just trying to educate myself and am starting to look around... BUIC
Ok, Ill get in this thing.
the specific of what you are asking is learned bird dog senses. You live it , you breath it , you eat it every day. You always have it on your mind and it consumes you maybe until death. Its a life that is lived not out of whim or inclination. It is you as one against the foes. You must be ready to go for the throat at any time when ever you see money. There is no weak heart or feelings. Like a thourougbred rounding the track and she sees an opening , shes gone. In an auction you simply have no misdecision for you are postive . You celebrate when you buy , not when you sell because you are postive. You cant steal second base with your foot on first.
Tim
Tim... stop... your scarin' me
BUIC
Its true.
You listen to trader shows on the radio. Pick up all the traders from the stands. You read the back of papers all the time for the legal adds and real estate. You dont drive any where with out looking at all the realstate as you drive . Hopefully you can get your wife to drive as its dangerous as heck.
After a while people will know you for the guy that buys houses and they will call you , stop you in a cafe and ask you. You stand a good chance at Walmart to buy or make a sale . Ive been thinking about moving my office there . <G> Church is a good place other than the obvious. When someone dies you read it in the paper or heard it on the radio because you were there to listen. Make a note to call in a couple of weeks . You also keep track of whose moved in your town and the utility company has that information. Give the records girl in water readings a gift. She knows all vaccants for obvious reasons but she also makes a list of properties that have no usage that are on for saftety reasons and they send out letters if they are not going to be there do these things.
When you see an empty house you whip in and ask her who owns it and the phone number attached .
You learn how to find real estate with and with out addresses. You own section maps and know how to use them. When papers start talking about the northewest corner of section 12 township so on you arent lost. You actually read them.
You get to know a banker in every bank.
You get to know them all and then all the REs . You make friends with people in those positions and call them by name and ask how Joni is doing in school, or bill , fred , what ever you know their spouses name and the kids. You say yes to all invitations and also offer to host.
When you enter a ball game you pick someone to sit by that you want to visit with. About real estate of course.
You "read " the phone books. You always have one .
Lets see , theres about 10,000 more .
Tim
If you want to be an investor you have to have the mindset for it.How do you feel about walking through a FSBO home and offering the owner 75% of his asking price? If you don't have the stomach to do this, you're not cut out for real estate investing.
How do you feel about walking through a FSBO home and offering the owner 75% of his asking price
Cash? I'd feel terrible. Thats much too high for me. 60% is wholesale. Maybe 70% if it's in a good/fast neighborhood. 75%? Not me.
Terms: that's a different story.
blue
Blue: What kind of reaction do you receive from the seller when you offer 60% of the asking price? Any pointers on how you can talk the seller into selling his home for 60% of the asking price? Just flat out make the cash offer and tell them "take it or leave it"?How do get them to take your offer?
Desperate people do desperate things. I knew a guy who bought a $175K house for $105K (in 1985). It was a beautiful home in a fancy neighborhood near Stone Mt., GA. He had initially negotiated a price of $100K, but the owner, a drug-addled addict, would've had to write a check for $15K at closing, and he didn't have the money. The guy "gave" him $5K back so the deal could close.Some people might view that as taking unfair advantage of another person's misery, but that's the kind of deals that are out there for people lucky and/or ruthless enough to make them.
"Blue: What kind of reaction do you receive from the seller when you offer 60% of the asking price?"
Obviously I am not Blue. However..........I often offer 50% for houses for sale. I personally don't try to "get" them to take it. I offer cash, ready to close now. Something few others will offer.
But besides that I believe it is a game of numbers. When I bought frequently I would look at 50 houses a year, offer on maybe 15-20 and buy one or two. But I always got my price on the ones I bought. And that is how to make money not just own property. DanT
DanT is doing it right. The offer of cash on the barrelhead, on a quick close, is simply one method of finding deals. Obviously, the acceptance ratios will be very, very low, but the idea is to buy wholesale. Most people are wanting retail and most can't sell wholesale unless they take money out of their pocket.
You don't have to be ashamed to offer such low amounts. You have to remember, it's a business and you have to treat it like a business. Do you know of any other business that pays for their inventory at retail prices, then marks it up and trys to sell it for more?!!! Once you understand that real estate investing is a business, then, and only then will you begin to apply the basic business prinicples.
If you want to read up on some very clever, and sensible negotiating practices, there's a book by Conti that I highly, highly, highly recommend. Heres a link to the table of contents: http://www.amazon.com/gp/reader/0793154154/ref=sib_dp_bod_toc/002-1923384-5611203?%5Fencoding=UTF8&p=S00A#reader-link Conti offers a very logical and simple approach to making offers that might offend the seller. His "system" involves a very standard 5 step approach. By following the script/pattern, you will learn to build rapport, get a commitment to make a decision, build motivation to sell at a lower price, make the offer, and get a decision. You will be amazed at how simple making offers will become. It takes the emotions out of them and it places basic business principle at the forefront.
This author will help you save a lot of time. You might still have to make 50 offers, but you might get an extra offer accepted and you'll probably get better prices on every deal you do.
blue
Both Blue and DanT among others have constructive points of view. I do, however, have some reservations about the cash and offer percentage unless you can resell very quickly.
If the seller accepts 50%, is the property really worth the asking price? Why would a seller accept 50-60% unless property is in depressed area and/or has been on market for an extended period? My fear is that the answer to these questions may come back to haunt the investor at resale time.
If the buys are cash it seems that the leverage usually associated with RE investing is lost. Investments are measured in percentage not absolute monetary terms. For example, say we buy a 150K prop.(true value) for 105K (70% true value or 50% of orig. 210K ask). We have looked at 50 hses on average at 1 hr each, so we have 5K ($100/hr) in cost. Add to that 10K in improvement costs (counting our own time), so the toal cost is 105+5+10=120K. We sell w/o broker at 150K, giving a 30K or 25% profit or more if we spend less. Certainly much better than most alternative investments.
On the other hand, we go to a new subdivsion and pay full asking price of 210K, but do financing at 20% dn. Out of pocket is 42K (vs. 105K). We hold 3 yr. and let rent pay our costs. Say the market appreciation is 15% annually (excluding compounding), our gain is about 30K (.15x 200+-) annually. Since our equity is 42K, ROI = 30/42=72%, or 2.4x the cash deal. With 10% dn, profit would be 143%. Since IRR (Internal Rate of Return) values tend to increase and reach a maximun in 3-4 yr due to transaction costs, we have held for 3 yr. or a total 90K profit. If done right, this profit is tax-free.
Does this make sense to you from a business perspective?
My method is simple. I buy with cash and rehab. I then refi with a goal of 70% LTV. I almost never go over that and am usually under. When I refi I pay myself back so all I have in the property is my personal labor and no money of my own.
I buy with cash from distressed sales. I do it with cash because by offering cash people want to sell to me for less because I can close quickly. People who need or want to sell quickly for greed, need or they are just tired of screwing with the sale and never ending offers that don't go through for whatever reason. I also buy reposessed property from banks after they go through the forclosure route and they can't sell them on the open market.
The way to avoid being burned on the potential sale of a property is homework. Study the prices of a given area, surrounding areas and know them like the back of your hand before even making the offer. That is simply good business practice no matter what the field. Taking chances is a good way to go broke. And believeing that everyone else knows more than you is a good way to make nothing. If you prefer to follow the herd then RE investing is not for you.
I have bought, sold and rented property for 22 years now. I have never lost money on a piece of property. Some I didn't make what I wanted but never lost. I don't think it is a fool proof business but it is certainly a time proven one. And I have never put any of my own money in one including the houses my family have lived in.
I also buy and renovate the houses my family live in. And yes it is a wonderfull method of making money. And tax free at that. But frankly most rental income is tax free also so there are many methods.
I disagree with your thought that investments are measured only by percentages. Money in my hand is what matters to me. When I worked a job for living I often looked at 50 houses a year. You can say that it was worth $100 but it was only worth that if you had some other means to make that money otherwise. In my case as with many others looking at a house meant I missed the national news show. How much I make on houses is how I measure its worth. If it makes 60% but won't cover expenses it isn't worth a damn but if it makes $400 a month after payment, taxes and insurance and that equates to 5% I am thilled. But since I have no money in them percentages hardly matter. DanT
"How much I make on houses is how I measure its worth. If it makes 60% but won't cover expenses it isn't worth a damn but if it makes $400 a month after payment, taxes and insurance and that equates to 5% I am thilled. But since I have no money in them percentages hardly matter. "
I kinda feel that way bout a lot of things . Women come to mind , oh never mind.
Ive missed some opportunities not looking at the opportunities. Just looking dead on at the formula. Caught my self doing it . Then one day I was looking at another rental possible. Heck of a deal but would not multiply. Too much house as in wood floors , etc. Then I thought it needs to resell but it didnt need anything . But it still needs to be bought and resold. LOL. So I did . Banker looks over her readers and askes " You want to buy a property that needs nothing and you dont want it as a rental"? I know , it blew my mind too!! 30 days later I didnt have it anymore and didnt even owe a payment .
I think it pays to keep an open mind so we might think about what to do with some of the pink elephants.
Tim
Dan -
You say you don't use any of your own money to buy the properties.
Where are you getting your money? Investors, banks or private lenders? Or are you just working with house money now after 20 years?
I would consider your situation to be exceptional. It is almost impossible for the average person to pull something like that off today.
Don K.
EJG Homes Renovations - New Construction - Rentals
Don,
I use credit lines from the equity built on my older properties and some personal cash if needed.
I would consider your situation to be exceptional. It is almost impossible for the average person to pull something like that off today.
That is what I said 20 years ago. It isn't hard nor complicated. Just have to work at it. As long as you don't start small you won't start. I bought my first property through a bank repo that I convinced the bank to finance the repairs and give me the loan for all of it based on my work. I did that with virtually no equity of my own and no money in the bank. I am sure it can be done today. I was as average at the time as they come. DanT
I really appreciate this forum - There is a wealth of knowledge and experience.Blue: About a year ago I bought a fixer upper and I did the following repairs to it:complete bathroom
complete kitchen
new appliances (stove and refrig)
flooring
change breaker box from 60 A to 100 ####paint interior and exteriorThe house had never had central A/C and I had it installed.The house had never had a dishwasher and I installed a cheap one.My question is: Would you do all of the above repairs prior to closing and prior to owning the home?I would be nervous as a cat in a room full of rocking chairs if I did.
(I would be worried the deal would not go through at closing - something would go wrong and I would not be able to buy the house).If you were buying a home like you've described (90 day close) and the seller had a realtor - I think the realtor steer the seller away from this type of deal).Just an opinion.What is your experience? Have you had any problems?
Mr Fixit, I wouldn't put that much work into a house unless I had the deed.
If I was looking to do a quick flip I would do some minor cosmetic stuff: reside the exterior. Re-landscape. Just enough to make a good first impression.
Please understand that not everyone wants to rehab houses. I certainly don't. I would flip a deal like this to a guy like you. You are willing to go in and deal with the mess and remodel. I'm not. I'm a bulldoze it and build new kinda guy, but that usually doesn't work . Its cheaper to buy a lot.
That doesn't mean that I wouldn't be interestee in picking up a house at 60 or 70% of fixed up fair market value. If it needed anything more than cosmetic surgery, I'd flip it to you and let you do the work and make the big money. For my troubles I'd make a measly 5 or 10k.
blue
We had never talked about that . I just got done doing the very same thing on purpose this past summer. We were using three different banks . The accountant suggested consolidating to one . That was a hard call to make . Anyway the purpose was to set up a credit line to purchase property for cash or to write cash on offers. I no longer call the bank and ask. If I am at an auction which I attend several it allows me just to walk up to the sale and bid. No more meetings with bankers asking for money before the sale.
The negative to that is that always before I put the loan up for bids between the three banks, sort of. I called the president of all three banks for a quote . I guess time wil tell becuse I was getting money cheaper than most people. Insurance also went out for bids every year until I got a commercial plan with an umbrella liability. That saved a bunch of money. A local agent threw in the towel and said he was done trying for my business becuse it was too much trouble. I went on with out him not calling him for quotes. The strange part of the story was that I still needed quotes from his carriers so I called an agent 20 miles away that carried the same as him. I was up front and told him what I was doing . Hes the one that stopped it and got me the commercial plan. The local agent still has a bur in his saddle over it . Which brings up my comment for this thread;
If you keep asking you will most likely recieve . The ones that are responding are wondering why folks take low ball offers . I dont have all the reasons but dont feel I need them because it works. The answer to success to this question seems to be times at bat . Zig Ziglar said that he sold a vacumn cleaner every 5th sale or somthing like that . If he had responded off the rejection of the four presentations he would have been a failure. He took the only positive and directed his sales on the fact that it took 5 presentations to make a sale and realized that was successfull! So when he got rejected he would simply say to him self thats 4 and rejoice. Thats very close to what its like offering on distressed properties. The part that you advised is start trying or they will still just be thinking about it is dead on. Unless they ask they sure wont recieve. While they are out there [as in my last post] they may find other things they werent necesarily looking for to pay for their time . Ive made several deals on land splits when I was just looking for a rental . We both aquired shops off the same method I speak about . If they are out there looking they may uncover a treasure that otherwise may stay hidden.
Tim
I don't bid my insurance or banking. I work at building the relationship. That way when I call I have some clout as I am a valued customer. I usually check insurance rates if I have had a major increase but I have only changed twice in 20 years and only checked 4 times.
I use the same mortage broker for all my loans. He has all my files so I can do everything with a couple of phone calls. Then stop in to close and we are all done. Much better use of my time in my book.
I view these relationships as my "team" if you will. DanT
"I view these relationships as my "team" if you will. "
I guess in reality thats what Ive done but that wasnt the goal in mind . I did it for some different reasons . I had held a realtionship with one realator over 12 years and that held the benifits you speak of and the ones I listed with some reserves on my part. She was a very classy broker that owned the bigest company here. She knew what was shaking and helped me a lot . However she wasnt everything or as said , she wasnt all that . Her honesty was top notch but even that at times got in the way. As you know a realator has to operate inside a set of ethics she constantly maintained which I trusted. She however relinguished the job of explaining offers that were too low for our benifit. She held the standard that told the client the offer was too low but she did present all offers and represented her listed clients first as should be but it didnt leave me in a good position. She also sold mainly higher properties on the food chain and wasnt interrested in distressed sales. So , she wasnt in the know for me. When she left it ended the agreement and I was relieved. An investor isnt required to operate under such standards but is still required to operate legally. I surely dont represent listing clients. So the awsome team had its flaws.
Im new to the other two but time will tell if they should get greedy or fail to best represent me . In the mean time I will be watching them. Evidently Im not the trusting soul you seem to be because I still see plenty of room for error against me. We had a closing agent cause us some unncecesary trouble one time by requiring us to take a petition to a whole neiborhood to be signed before a closing which we did it and we were suicessfull. When we sold it to the man who developed it. He in turn sold the parcels with houses built on it and violated the very pettion we had to generate. The man that required the petition closed on invalid lots to the covenant with the developer. We never forgot it but never used the closing company again. Unbeknowing to us the reason but we figgure it was political or selfishness . I dont ever rule those reasons out in the future. You just never know untill its too late sometimes . I trust no one person to hold my cards. But hey, thats me.
Tim
I am more of a big picture thinker in the respect I don't care if my insurance costs are 3% higher than needed. As long as I get the service I need and don't have to spend much time on it.
Same with the mortage broker. He shops for the best interest rates for me and covers me in the closing arena. I pay him $900 a deal. I call, tell him where, what and when and he calls when he has enough info to make things happen. Mean while I am doing other items and not having to worry about it.
Do I check his work and make sure I am ok? You bet but I don't shop his price as long as he covers the bases for me. I, like you I am sure, have a lot of balls in the air constantly. These are just ways I have learned to spread myself out some in order to get more done. Does it cost me a few bucks? Sure, but in the end I think I make more by being able to do more. DanT
Pancovilla, your method of buying a new house makes sense if you can get enough rent to cover the costs. If you can make it cashflow, then it's good. In my neck of the woods, I wouldn't stand a chance at buying a new house and making it cashflow. Combine that with an anemic rate of appreciation and in three years, I'd be throwing in the towel.
Your numbers for the 150k property are skewed too, so that comparison needs to be revised. The problem with your numbers is that you suggested that someone pay 70% + 10k which is not what I suggested. I don't think DanT suggested that either.
If someone is willing to be in the rehabbing business, they need to make offers for cash that totals 60%-70% of the fixed up fair market value, less the repair costs. your example of a 150k house would look like this:
150k X .70 = 105k.
105k - 10k = 95k.
I'd offer 95k cash and try to get a 3 month closing date.
Since I have no intention of being a landlord, I'd be looking to flip this house. I would consider two strategies: 1) do the 10k fixup and then sell for full value 2) Offer this house as a investor or fixer property and let it go for 80% leaving 20% on the table for the buyer.
Do you think I could I could find a buyer for this property if I offered it at 120k?
Is it possible that I could have a buyer before I went to closing?
Would I even have to go to closing? Couldn't I just assign this contract and take a 25k profit for my troubles?
Would the buyer be happy getting a 150k house for 120k plus 10k fixup?
What would the IRR be if I took 25k profit on a 1k deposit that I held for a week or two?
Dan's buying them to rent them out. I don't want to be a landlord and I don't want to buy things at retail.
Your business model makes sense for you. Everyone has different wants and needs. The only landlording that would suit me would be a commercial triple net lease.
Or, consider this: Lets say the seller agrees to my 95k offer. I go to a lender, and ask them for a 80% loan on the fixed up appraised value. The lender approves it and gives me 120k at closing: 95 to the seller and 10 k for repairs and 15k for my pocket. I sell the house three months later.
What is the IRR on the 15k that I picked up at closing-remember, no money came out of pocket?
blue
the market appreciation is 15% annually
I believe that it is a huge mistake to count on appreciation, especially 15 % appreciation!
blue
DanT/Blue
I don't doubt your success and your methods seem well thought out and solid. A lot of any of this depends on the market you are in, so no single strategy is the answer. The area I live in has no shortage of for-sale signs, most topped with a "Reduced" sign. With constantly dropping prices, my fear is that a low purchase price today becomes a high price tomorrow.
I have no choice but to work locally and invest nationally. The 15% reference is reasonable...check http://www.realtor.org. My most recent buy was in Boise ID going at 15.8% and prices below the natioanl average.
And I agree this has been an interesting forum and wish everyone success. But I'm going to beg off for a while.
One of the reasons people sell their homes is they come to a point where "they've just had enough". This could be the home they live in or a rental property.If the homeowner has limited knowledge of home construction and repair procedures, they may have a perception that the home is going to turn into a money pit or it's just going to fall down someday.As an example, I know an elderly widow woman who calls me several times a year and needs some help with a leaky faucet or the roof gutter, or whatever. I fix things and don't charge her anything and we visit about houses, real estate, or whatever.I see these things as minor, but in her mind these are major problems. She sees her 60 year old home in the same way as someone might look at a car with 200,000 miles on it and that they "better sell it now" and before a lot of really major problems start occurring.They sell their house cheap and walk away thinking they're walking away from a lot of problems. Many people don't know the value of their home anyway (they think about home prices from 10 or 20 years ago and don't realize times have changed...but hey that's another topic).Just a few rambling observations.
Why would a seller accept 50-60% unless property is in depressed area
Dan touched on the answer. I'll elaborate a bit more.
Only motivated sellers will sell for 50-60%. The area may, of may not be depressed. Instead of looing for distressed properties, you would be better off looking for motivated sellers. These sellers might have two house payments, tired of landlording, behind on payments, getting divorced, etc.
When dealing with motivated sellers, the offer of a quick close is one carrot. Taking over their payments might be another carrot. Basically, you're trying to solve a problem-their problem.
For some, the offer of 60% cash is just the opening gambit. The real goal is in the next offer.
blue
"I'd offer 95k cash and try to get a 3 month closing date".Why postpone closing for 3 months down the road? Are you getting the house under contract and then going in and working on it before closing?I don't understand
Mr Fixitusa, the opening offer includes a 3 month closing date for two reasons: 1) I want time to find a buyer. 2)if the seller wants a quick close, then I'll look for another concession on his part.
And yes, I would attempt to get it in the agreement that I could work on the house before closing. Most motivated sellers would be thrilled to let you do something, unless it was inconveniencing them in some way.
If the agreement lets you re-side it and re-landscape it before the appraiser comes out, you could theoretically get as much as a 90% loan and walk away from the closing with some big cash.
blue
Blue -
Your system would be hard pressed here on LI, at least now.
As a lawyer for a seller, I wouldn't give 90 days for closing, and I typically do not allow any work to be done on the house until closing. That just opens the door to liens, arguments and lawsuits if anybody gets hurt.
There will be times when real estate prices settle down a bit, and there will be people that need the money, so your system can happen. It's not easy. You talked about negotiation, and you think outside the normal "rules". Most sellers and their lawyers want nothing to do with that, especially at a distress price.
Out of curiousity, what's your success rate on offers? In which states?
Don K.
EJG Homes Renovations - New Construction - Rentals
There will be times when real estate prices settle down a bit, and there will be people that need the money
There are 40,000 people in some form of delinquency or foreclosure in the Metro Detroit area. Every city in the county has some motivated sellers in it. Motivated sellers don't take their offers to lawyers. A lawyer will charge the homeowner $300 to look at the offer, and the motivated seller is already behind on every payment. They aren't going to find an extra $300 laying around for every offer that comes in on their property.
The ninety days is just a gambit. Yes I've had seller agree to ninety days and it surprised me. I wouldn't agree to a ninety day close unless I had some way to accept other offers and push the ninety days to a right of first refusal and then close in a week or something.
Non motivated seller won't consider 60% offers, or ninety day closes, or letting someone improve their house. They won't accept 99% of what investors offer. Investors don't buy houses from non motivated sellers, unless they luck into something.
blue
I guess this is what I don't get about all of you tossing around these 50%, 60%, 70% numbers. Where in the heck do you find these "motivated" sellers? I dipped my toe in the water for a few months in this market by sending out letters to people that were having various "challenges" in life, be it medical, financial or other. The few times I went out to talk to these folks they ALL told me something along the lines of "we've also called some ads in the paper of guys that buy houses for cash, so don't try to rip us off". And sure enough, I'd make an offer for maybe 80% - 85% of the fixed up value and they'd tell me to go pound sand because they had SEVERAL offers well above mine. Given that they never returned my calls I'm guessing they were telling the truth (and one guy was dying of brain cancer...you don't get much more motivated than that; and believe me they had NO money).
I don't claim to be an expert in this field. FAR FROM IT. I'm just always wondering where all these motivated sellers are located. Because it seems like every Tom, Dick and Harry has bought a Carlton Sheets midnight course and is advertising for these same motivated sellers like the rest of the Carlton Sheets crowd. Doesn't that level the playing field for everyone?
- Rob
The few times I went out to talk to these folks they ALL told me something along the lines of "we've also called some ads in the paper of guys that buy houses for cash, so don't try to rip us off".
Rob, if you're out there talking and making offers, you're way ahead of most of those Tom Dick and Harry's that are buying Carton Sheets stuff. 99.99% of the people who buy those tapes and attend seminars will never make an offer to anyone!
Incidently, I've had the pleasure of reading and listening to some of Carton Sheets stuff. There's nothing ground breaking in there, but it's fairly solid material. He covers all the bases. If someone doesn't have any clue about real estate, his stuff is probably the place to start.
Did you ever notice the ads in the papers that say "I buy houses" or "Cash for your house"? The reason those ads are ALWAYS in there is because they work! They get the motivated sellers to call. You even acknowledged that when you said:" The few times I went out to talk to these folks they ALL told me something along the lines of "we've also called some ads in the paper of guys that buy houses for cash, so don't try to rip us off" "
Now, lets look at your experience. You managed to contact motivated sellers, only they weren't the most motivated sellers: they were second or third tier motivated sellers. Thats good. You probably should have kept a file on them and called them back in several months. You also should have kept up your mailing campaign, especially to them.
But the big question remains: Why didn't the really, REALLY motivated seller call you? Here's the answer: Drum rolls please: Because they already called the guys with the ads and they gave their house to them!
It's probably important to understand that many of these investors aren't necessarily wanting, nor needing to buy the houses wholesale. When you were offering 85%, you weren't buying wholesale. That's okay. There are still many ways to make money even if you pay more than wholesale. When you are offering more than wholesale, then terms become important.
Lets say you find a nice house in a nice neighborhood and the seller is really needing to dump the house payment. Jut for giggles, lets assume they have already bought and closed on another house and now have two house payments. Lets also assume that one wage earner just got their overtime cut and the other wage earner is hearing rumors about some upcoming layoffs. These would be motivated sellers. They probably wouldn't sell their house for 105 k if they have a 125k morgage on it, would they? But, they might be open to some terms.
You could effectively just take over their mortgage either by assuming it, or doing a lease option, or buying on a some type of land contract. All of these options are part of the agressive "I buy houses" guy's package.
Basically, you're going in those houses offering cash and the other investors are going in looking for terms. Their wholesale offer is the opening gambit for their ulitimate goal: getting people to "give" them their houses for nothing or very little down.
Rob, it also sounds like you were making only one type of offer-a cash offer at a big discount. Of course your success rate will be low. It's a numbers game though. You only need one taker to make the last 50 rejections disappear from your memory.
Perhaps a better method would be to offer an "alternative closing". If you remember from our sales classes, an alternative closing offers someone choices. The all cash close is by far the lowest number. A lease option is in the middle. If you can assume the loan, you can offer the most because they'll still be on the note. Essentially, you're getting the use of their credit.
You should understand that you will have to make darned sure that you will never make a late payment on their loan however. If you treating people like you'd want to be treated, you'll be paying that note on time and helping them to rebuild their credit. That means when you sell that property, you will be giving a new mortgage to them. If they don't pay you, you still make the payment on the underlying loan while you start the foreclosure on the new buyers.
Incidently, if your from Texas, disregard the lease option suggestion. Texas made them illegal last year. That kinda peeved me off because I believe I'll be heading to Texas in the near future and picking up lease options was high on my to do list when I landed. In fact, I intended to buy my first residence there using a lease option while I built my new home. Oh well, I guess I'll have to take over someone's "problem".
blue
Thanks Blue. Don't you live in Michigan? I do. You make some good points. After trying this for several months I came to the conclusion that, even if I had found a deal or two, the time it took away from my job was way too high. Fortunately I love my job and am paid very well to do it so I decided to give up on the real estate deal thing. Sometimes I think about buying a piece of land or a condo in some "hot" market like Boise or Tucson or Albuquerque, but then I read some article saying the bubble is about to burst and I stick with my stocks.
Yes Rob, I do live in Michigan.
Youve found out what most investors already know: it's not an easy business! Finding deals takes time, but there out there.
You probably are a candidate to partner up with someone that has more time than money. Investors are always looking for guys like you with some ambition, cash and credit, but no time.
I can't remember, what part of Michigan are you in?
blue
Hmmmm, are you saying you need money? :-) Given your previous posts it doesn't sound like it. But yeah, that might be something I'd be interested in. But again, given the time constraints I'm under w/my job and family I'm not sure how I'd find such a person. Not to mention I own some stocks too. I have my fair share of them that have dropped a bit in the last year. But a couple of them have had tremendous gains so the real estate thing would have to provide ample return vs. stocks (very low effort!).
By the way I'm in the Ann Arbor area. Where a "starter" home is about $250,000.
I hear what you're saying about the Rich Dad, Poor Dad philosophy. But for that matter if Mr. Rogers told poor people to read the WSJ they'd be wise for listening. Or if the guy begging for money told people to buy low and sell high then it wouldn't matter that he was the guy on the corner begging for money. My problem with the Kyosaki (sp?) guy is that he's a fraud. Therefore one must view everything he says with a skeptical eye. Granted, if he says investing in your own business can be more secure than taking a job, that's not bad advice. But when he starts extolling the virtues of real estate development plays - as he did in one of his books I read (the last one too) - then I think that's fraudulent. If he came clean and said "folks, I've never really done any of this stuff, I make most of my money selling books to people like you, BUT I have advisors that told me a lot of really smart stuff and I want to share that with you", then I'd have a lot more respect for the guy.
- Rob
Rob, real estate investors are always tapped. They're cash is always into something. They always need alternate sources of funding. Currently I've got my stuff on the market. When it sells, I'll have more cash to invest. It doesn't always take cash to get a property, but sometimes the very best deals need all cash.
I walked away from an intriguing one last month because the guy wanted all cash fast, but the numbers didn't quite warrant the request. It was one of those deals where it could work out beautifully, but there was an element of risk due to my lack of knowledge in that particular area. Knowing your market is critical to decision making and I'm simply not going to risk big cash on a deal like that. I'd be more open to using their financing on a project like that. If it failed, I could always let it go back to them and only lose my deposit money.
At this very moment, I have an offer in an investors hands. I'm looking for him to fund a one shot deal. The returns won't be spectacular, but they are substantial. The risk is minimal. I've got several other properties that could bear some fruit in mind too.
blue
I always claim that I can buy a house that is in my financial framework in 90 days, anytime. And anytime I have been ready to buy that has happened. Good real estate times, bad real estate times, anytime!
But you have to look. And educate yourself where to look in your area. I have bought by simply getting up on Sunday morning and before the rest of the family got up I took a drive for an hour and looked for vacant property in areas I wanted to buy in. When I found one I would look up who owned it and send them a letter. Not a high percentage deal but it works and takes little time.
Another is to build a framework of what you are looking for and find a real estate agent that will keep an eye on it for you. Meet with them an hour a week and look at the most recent MLS book. Deals are often right there. Look for the ones that have been on the market for 6 months or more. Even if you make an offer they have heard before they will at times accept it as they are tired of it all.
I bought a house at an open house once. It fit my parameters as far as rental property goes but the price was 25% too high. I walked through it and asked the lonely agent (no one else came) about the house. She told me how it was an estate house that the out of town owner was trying to sell. She went on to say he had rented it and the tried land contracting it and all failed. Then winter set in and he found he hadn't turned the gas back on so he did and then had gas pipe leaks. All while living 4 hours away. Had to drive back and forth 3 times to get it all worked out. He was sick of it all she said.
He wanted 39k and I offered 25. He countered with 30 and I said I wouldn't go a dime above 28. He took it. Nice house. Took 7k to rehab it and it flows 200 a month positive cash flow above payment, taxes and insurance. I have owned it 7 years now and it has been vacant twice for a total of 2 months. This all took place in 1998 when real estate was selling fast in my area. You could sell a dog house. But I still found a motivated seller and a deal.
Not a case of obvious motivated seller. Just a case of asking and listening and making the move quickly. And it is just one example. They are out there. DanT
$39,000!?!?!?
There's a two unit piece of sh*t duplex for sale a couple miles from my house (in Ann Arbor metro area). No garage, dirt driveway, probably needs $30k - $50k of repairs just from looking at it from the outside. It rents for about $500 - $600/unit. They're asking $260,000 and my guess is someone will come along and pay them pretty close to that price.
If I could buy stuff for $39,000 I'd break open my piggy bank and become a tycoon tomorrow.
- Rob
Hope you didn't miss the point of the post. It wouldn't matter if the numbers were 39k or 390k. As long as the numbers work. DanT
Strokeoluck-
As you know well, the area you are in makes a big difference. I go from Long Island, where starters are 300+, down to a small town in southern Virginia, where my fiancee closed on a two bedroom last week for $20,000.
You need to get enough cash for a down payment (maybe equity on an existing house) and keep enough credit to fund the second mortgage. That's tough for most people. They stretch their credit to get the first mortgage and credit line, then can't go further to get the second one. That's where the deals like Blue come in handy.
It's not easy, and for some people, it's not worth the effort. You mentioned stocks. A couple years ago, I tried to get into buying and selling individual stocks, listening and subscribing to Jim Cramer. I was constantly looking at this and that, and I played the game about a year. I lost a few bucks, but more importantly, I decided that I really did not like to sit there and read balance sheets and listen to him and do all this "homework". So, I stopped. Now, give me a house to play in - redesign, rip out walls, replace the kitchen, etc. There, I am happy. You need to find out what works for you. It kind of sounds like you already did. (But don't stop looking. You never know.)
Don K.
EJG Homes Renovations - New Construction - Rentals
I reside in wichita kansas and the average home sells for $100,000.I have had a real estate license for three years. I've been flipping houses for 10 years. Flipping is buying it, fixing it up, and selling it as quickly as possible. I make additional money from the commission when I buy or sell. I think I have a good eye for "deals". I can pick houses that are desirable. My area of expertise is low end, older, starter homes that sell for about 40 K. These are two bedroom, one bath, one car in a decent area. My goal is to buy these for $30, fix them up as minimally as possible and sell for $60. I like the 1950's ranch style homes and we have 100's of these in my community.As a realtor I can look up solds in the MLS system and one weekend I ran a computer search and found homes that had been flipped in the $30,000 to $60,000 price range in an area I'm interested in, in the past 12 months. I looked at pictures of each home, the pertinent info, etc. I found 15 homes that had been flipped.To my surprise, I would not have made offers on any of the 15 homes which had been successfully flipped. They were UGLY 1920's and 1930's bungalows or cottages with poor floor plans (as in no access to the bathroom unless you walk through a bedroom). Some of the homes were on busy streets and this is something I have avoided. Couples with young children do not want a home on a busy street, even if the home is fixed up nice and at a reasonable price. That's my experience.The point I'm trying to make is the unpredictable nature of this business. I've been conservative and have not lost any money on what I've bought, but I have missed out from being too picky and turning away from the numerous unattractive, poor floor plan homes we have around here.Just another opinion and I hope my experience can help others.
spent the morning in a "Lead Hazard Awareness Seminar" which is mandated by a new law going into effect 1 November here in RI...
very good speaker, who knew his subject.. what was surprising to me is the list of laws that have been on the books for more than 10 years concerning lead hazard and construction..
any house built before 1978, has a whole bunch of liability built into it that most are not aware of.. make sure your closings and leasings include full disclosure and also make sure you are conveying the EPA booklet "Protect Your Family from Lead in Your Home"
as contractors, we are also letting it all hang out.. and this is not just RI, at least 37 states have complied with the Federal Laws adn adopted much the same regs and laws..
after 1 November, landlords and sellers, and contractors , of homes built before 1978 will be wholly liable for any lead poisoning...
watch out and make sure you know what is in that basket of goodies you are buying wholesale and selling at retail
Mike Smith Rhode Island : Design / Build / Repair / Restore
Arkansas has been complying with those laws for quite some time . I how ever did not know as a lanlord I will be reasponsible for disclosure to renters . Thanks for the heads up.
Tim
tim.... here's a link to a website that you can download and print the RPA bookelt from... click on EPA Lead Pamphlet & Lessor Disclosure form
i printed them both out
http://www.leadsaferi.com/Resources.htm
these are the EPA booklets.... but most state laws just adopted the Federal lawsMike Smith Rhode Island : Design / Build / Repair / Restore
For a couple of years we have been obligated to go to the class and give tennants a copy of a lead based paphlet and have them sign for it in Ohio. DanT
Mike, would you care to elaborate on the term "wholly liable".
Won't disclosures put the onus on the buyer?
blue
Man blue, you are really getting rude. Who in their right mind would put that on the buyer? Certainly not Mike!! I mean he is much more of gentleman than that. I met him personally, well for that matter so have you and you certainly have read his posts so to claim he thinks they should put anus on the buyer.......oh.......um.......wait.....um.......that was onus. Sorry. DanT
exactly... you have to give them the booklet, and have them sign the form saying they received the booklet...
it is assumed that there is lead in the house
you can get it certified "lead safe"... difficult, but do-able
or you can get it certified "lead free"....basically a total gut
selling it WITHOUT conveying the booklet ,and getting it signed for as part of the disclosure , makes the seller liable for subsequent lead poisoning..
going thru the total process transfers the liability to the buyer
same thing with lessor / lessee
anyways... an eye opening 3-hour seminar
that link has lot's of good info for landlords ( the owners of that lead-abatement company own lots of inner-city property )Mike Smith Rhode Island : Design / Build / Repair / Restore
As a realtor we are required to provide buyers with the lead paint booklet on homes built prior to 1978, They used to joke and simply tell people "don't eat paint chips and you'll have no problems".There can be other issues. For example when a window is opened and closed, lead paint dust forms from the painted window rubbing against the opposite surface. The Dust gets in the air or falls into a pile on the window sill and apparently this can cause problems.
yes, he said the primary problem is lead dust from friction ( windows, doors, tread scuffing )Mike Smith Rhode Island : Design / Build / Repair / Restore
You speak of being picky.
Why is it that some people will buy homes needing so much work and pay full price over and over ? Those are thr ones that bother me . Im sure some of the homes Ive bought could have been flipped as is in less than fair condition, but If "I" had chosen it my luck would have prevailed. <G>
Tim
Tim
I forgot to make another point in my last reply to you and DanT. As indicated at 20% dn your capital required is 42K...but you have 105K available. So say you go 18% dn and buy 3 hses @ 200K. The annual gain is now 90K, same percentage but 3x the money.
Cont.
I talked about being positve in the post that scared you.
Its an information business . You must see the property often times breaking into it . Sometimes what separates you getting the property is that you broke into to see it and no one else did . You have more information.
It takes all your skills and some more to learn.
You have to know how much it will be worth fixed. You have to know how much it will cost to repair it and how long it will take. You have to know where the money is comming from and that a banker will back you if thats the case plus how much he will suchg as 80 oercent . You never want to have over 70 percent loan to value ratio in it after its ready to go and thats why you have to do alll the looking . So if you go to all that ropuble to find little mr right house , you must be prepared to buy it one way or the other. Plus be insulting if necesary. You cant feel sorry for anyone while you are going for the throat. Remember you may need to call a widow two weeks after her husbands death.
You cant make a mistake .Thats why you celebrate when you buy. If it wont make money treat it like the plauqe and leave it the h6ll alone. If you see money you have to know you are prepared to go for the throat. If you cant do it you wont need to be a landlord either.
Tim
Tim - My reply to your first reply was a joke aimed at your "one against the foes" and "go for the throat". Judging by your second reply I guess I missed.<lol>
I do understand your point about information being valuable. In my original post thats what I asked for. If after doing my homework I think I'm up for this, I may start with one house in late spring 06' to buy, rehab, and resell. I am in the fortunate position of not needing to do this, it's just an avenue I want to look down....thanks, Pete
Good reply, and a very honest answer given how challenging it can be to "flip" properties. I'm curious about your reply on a few fronts:
1) How do you find the properties in locations that are several states away from you? Does someone scout them out for you? If so, what criteria do you use (to choose them? Do you physically show up to check them out? I've considered remote properties but it seems very cumbersome and, using a property manager, expensive.
2) What made you choose Boise, ID? What sort of overall annual return/appreciation do you expect in that market?
3) What other hot spots do you see across the country?
Thanks, Rob
Some good questions. Basically I have have described a wealth building strategy not an immediate income approach, so you have the opportunity to go national rather than local.
The issues are:
Appreciation: High and preferably accelerating.
Prices: Should be at or slightly below national average. You can't rent a high priced property and breakeven.
Geographic: Current and future land availability.
Economic: Is the area business friendly (taxes, reasonable cost of living for empl0yees=lower labor rates, etc.)?
Climate: A nice place to live?Appreciation/Prices:
My starting points are the data at National Association of Realtors (NAR) Realtor.org>Research>Metro Area and OFHEO.gov. This info provides appreciation rates and prices by MSA (Metro Statistical area). The OFHEO is the Fannie Mae/Fannie MAC oversight agency. The OFHEO data (excel format)is large so you need to import the excel file and write some excel code that extracts the data to a more useable form. First note the regional data...the Western region is the most promising now. Given this starting point, WHY is any given region/MSA is doing well?
Geographic:
I can best explain this by asking you to look at a map of Indianaoplis IN and Boise ID. These are online at terraserver.microsoft.com. Indianapolis had a -1% appreciation rate, Boise +15.8%, yet Indy includes Fortville, one of the fastest growing communities in the country. Spec Builders love flat land. In all directions around Indy is flat farmland for a 100 miles...no end in site (pun intended). Compare to Boise, surrounded by mountains and better yet National Forest. The only land is in the valley extending west into places like Eagle and Star. As the old expression goes, they ain't amaking any more land.
Economic:
Ck forbes.com and click to lists to find best places for business list. Boise is #1. Raleigh NC #2, Albuquerque #3. This are places to consider investing. Note the large number in the western region. Click to pge 6...yes CA cities. The high cost of doing business in CA is driving Companies to bordering states! For example, Reno is is growing because it is becoming a major center for distribution co's...on I-80 and NV has no inventory tax, unlike CA. Added research includes looking at state tax rate sites. Ther questions: Educational level of the work force, is there a University in the city, is the cost of living (mainly hse prices)such that companies can attract qualified workers?
Climate:
This factor, including recreation, is driving the southwest and Florida. Cking that map may suggest Boise is always under 20' of snow, but it is in fact high desert w/ a year round mild climate, resonable hse prices, major university, beautiful downtown, state capital, excellent schools, nice zoo and art museum, active night life...ie culturally attractive
All this should give you the general idea.
Great info Pancho, thank you. I'm going to check out those sites (can't quite immediately figure out the terra site). A few follow up questions if you don't mind:
- What sort of properties do you buy?
- Assuming you rent them out, who manages them for you if you're not in the market?
- Isn't the pure "headache factor" (broken toilets, slow-paying tenants, property damage, etc.) enough pain to make you stay away from remote rentals?
Thanks, Rob
Hello again:
Thanks for the interest.
I buy new (never occupied). I try to get in late winter/early spring if winter is a construction issue and buy before ground is broken. This sets me up for late spring/early summer rental since renters are young families w/ children they want to be in before school start. Given 3-4 mo. construction period, I get 1/4 annual appreciation at no cost. Also have 1 yr warranty to take care of defects.
I hire a professional propery manager and build fee into pro-forma. Fee is 10% of rental, but can be negotiated to 8% if more than single prop. or argument is made you will be a long term client buying additional prop. in future. PM takes care of advertising, tenant screening, repairs, mediates conflicts betwn neighbors and tenant and/or homeowners assoc., etc. Virtually hands off for investor. You pay for the service, but a good PM is worth the money.
This is essentially the "boots on the ground" stage. You need good network people you can trust including:
Realtor, PM, Finance Broker.
I get a prospective list from online yellow pages, call each, get investor references, then make short list. I then spend week in the area interviewing short list of people face-to-face and verifying info from Internet research. Once the "boots" are in place, you can start buying, although this may sometimes mean sight unseen based on recommendations from the boots. You can't do it all yourself. You need people who know the local markets and neighborhoods. You can only make your best judgements in putting together the boots, although I admit you may have to make some adjustments if they don't perform. The PM seems, to date, to be the weak link in the chain.
The terraforma site includes top maps, but a road atlas can be very valuable.
I'm on the north shore. Wifes been selling RE full time over 15 years.
Go to the show theyre giving at the Jacob Javitts Center i think it is real soon w/ Donald Trump and a buncha other real estate moguls. They'll be talking all about it and recommending tons of literature. I think it costs $100 for the day.
Be well
andy
The secret of Zen in two words is, "Not always so"!
When we meet, we say, Namaste'..it means..
Andy - heard about that show, was actually more interested in what Robert Kirasowa? (spelling?) might have to say. I've seen him on PBS and I like his take on handling/investing money.
I've been on the south shore all of my 51 years, so i'm kinda partial to this side of the island. My wife and I used to go to the crafts fair in cold spring harbor (25 years ago) they still have one up there? BUIC
They still have the fair,,,yep. All kinda fairs here always going on.
Huntington probably has more stuff going on than anywhere in the country.
the other thing I love too is that its a "real" town not strip mall city like what most towns have become.
Stop by when you fly north next time. I'm just about always here working on this landmark.
Be well
andyThe secret of Zen in two words is, "Not always so"!
When we meet, we say, Namaste'..it means..
I honor the place in you where the entire universe resides,
I honor the place in you of love, of light, of truth, of peace.
I honor the place within you where if you are in that place in you
and I am in that place in me, there is only one of us.
buic... Robert Kirasowa ( Rich Dad, Poor Dad ) is very inspiring, but he's a fraud..
most of his bio is made up
almost none of his success came in doing deals...it all came from selling books and giving seminars..
but he has inspired a lot of peopleMike Smith Rhode Island : Design / Build / Repair / Restore
Mike - thanks for the reply, I'll keep that in mind about kirasowa, I hadn't heard that before. Buic
buic... i found that out after buying and reading both of kiyosaki's books ..
i was pretty impressed.. someone here posted a link to john reed's site which is VERY interesting..
he rates the real estate guru's here .......
http://johntreed.com/Reedgururating.html
click on Robert Kiyosaki ... then follow that to John Reed's reviewMike Smith Rhode Island : Design / Build / Repair / Restore
Mike - thanks for the reed link, tremendous volume of info. The guy really gets into it. Buic
Yeah, Fortune magazine - or something like that - did a big story on what a fraud he was. It's a shame really. He's created a cult-like following and it seems that 95% of them don't know the real story behind his "success". But it does go to show that W.C. Fields was right, and it never seems to change.
- Rob
It's a shame really. He's created a cult-like following and it seems that 95% of them don't know the real story behind his "success
Rob, I don't know how much you've read about Kyosaki, but it really doesn't matter if he is a fraud. His book and philosophy is a great read and the principles that he espouses make sense.
For many people, he offers hope to escape the dreaded world of blue collar, low income, forever in debt relief.
Of course, only 2% of the people that read him actually take any steps to improve themselves. For instance, Kyosaki offers many bits of advice like "if you want to know how the wealthy get their wealth, you need to be financially literate". This simple bit of advice makes total sense, even if Robert never bought a building! Think about all the low income people that you know. Are they reading financial magazines? Are they going to the library and reading about business and finance? Or perhaps they are watching sitcoms and drinking beer.
I'm not indicting those that watch sitcoms and drink beer, but who do you think is more likely to escape the low income economic status: the folks that are educating themselves in financial matters, or those that are experts on "I Love Lucy"?
Fraud or not, I highly recommend reading the Rich Dad Series.
blue
blue... as for kyosaki..... yes , great read.. very inspirational.... i thouroughly enjoyed reading Rich Dad.... and it becomes all the more interesting in that he invented himself..
just goes to show the power of salesmanship
BTW that John Reed site is very interesting showing the gamut of gurus out thereMike Smith Rhode Island : Design / Build / Repair / Restore
Mike I have checked out that John Reed site. He seems too bitter to me. I think his bitterness would cause him to be slanted.
blue
hey there,I am planning on going to the north shore and would really be interested in thisconference. can you tell me any more about this ?
Thanks,
T
It was this "past" weekendThe secret of Zen in two words is, "Not always so"!
When we meet, we say, Namaste'..it means..
I honor the place in you where the entire universe resides,
I honor the place in you of love, of light, of truth, of peace.
I honor the place within you where if you are in that place in you
and I am in that place in me, there is only one of us.
Buic, there is a ton of stuff out there. A lot of it is good, some of it dated, but all of it is useful, when you don't really know enough about it.
One author that comes to mind is William Bronchick. Check out one of his book's entiteld "Financing Secrets of a Millionaire Real Estate Investor". Heres a link to the table of contents: (http://www.amazon.com/gp/reader/0793168201/ref=sib_dp_bod_toc/002-1923384-5611203?%5Fencoding=UTF8&p=S006#reader-link)
Bronchick is a lawyer who specializes in trusts, but don't get too caught up in all of that just yet. He's one of the featured principles that dwells at creonline, which is a great site. I've been reading in there for several years now.
Another site that I used to visit was dealmaker's cafe.
I looked through my library to find a book that would be perfect for you, but unfortunatly it's out on loan and I can't remember the author. It dealt quite extensively with govt program financing.
I'd also like to suggest getting in touch with a local REIA club. Google REia and the homesite will link you up to a local club.
I'd also suggest going out and purchasing a dozen real estate books. After that dozen, do it again. By the time you finish the two dozen, you'll be able to intelligently talk to any banker about whatever project you decide upon. You'll hear some people criticize this idea and suggest action before study, but if you do it my way, you won't be asking anyone to sign a "quick claim" deed! You also might avoid some very costly mistakes. When it's all said and done, you'll be hoping to come up with one good tidbit of information from every book or seminar that you do. Of course you could just jump in blind and learn from your experience too. Doctors don't do that and I don't think investors should either.
Finally, you are wise to want to understand how to minimize the tax. The laws are very complicated regarding passive and earned income. Sometimes it only takes a very small step to save huge amounts of taxes.
blue
Thanks for the book reference and the general advice. Specific titles that others have found helpful/informative is what I was hoping for so that I'll get the most out of my two dozen reads. I don't plan on buying anything until I know alot more then I do now. It's just that I do see possibilities.
If at some future point I see something, I'd like to be prepared to act on it with some degree of confidence... BUIC
Just be very careful, know your market, do your own reserch and remember that if the market is going up it covers a lot of mistakes, just like the stock market. In the late 90s everybody was a genius when it came to buying stocks but not anymore. If the Realestate market levels off or goes south you can loose your shorts. Remember to include all your transaction costs such as Realestate commisions (I am a REALTOR I just ruin things at my own house) and sales expenses such as transfer taxes and local point of sale ordanaces.
Good luck
Troy
Troy - the first line of your reply is good advice and is exactly where I'm at right now, trying to get up to speed.
If I do get into this, it won't be as a "day trader" trying to time the market, more like what I'll be doing for the next 6-8 years of my working life until I retire... thanks for the reply... BUIC
Read a book long ago by a businessman who got out of the stock market just before the great depression. He was worth a lot of money and everyone was saying he would be worth much more if he stayed in stocks. He sold virtually everything he held and a couple of days later the market tanked.Someone asked him how did he time his exit from the stock market. He related a story about how he was eating lunch at a diner, remember diners in their stainless, working man's beauty, and half the conversations were about buying stocks. He figured if the working stiffs were getting into the stock market it was time to get out. So he did. Saved his fortune.Reading all the threads with questions and the suggestions on how to make money in RE and flipping homes and speculative building kind of reminded me of the story. Same thing with the late night RE mavens with their 'send me $300 and I'll send you my secret plan for making a million'. Recently I walked into a bunch of RE people and they were all jabbering away about how much they were making and how they have the market beat. A regular pissing match I tell you. Each shooting for the higher mark. Who knew the ladies could hike up their skirts and squirt with the best of them. You go girl.I know some that are, in my estimation, putting on a bit of a front. They make money but not so much as they claim. A lot of their toys, SUVs, jetski, ATV, etc are on payments. A whole lot of folks who look like they are doing well are just a missed payment or two away from losing their shorts. The difference between doing well on paper and translating that into dead presidents can be quite a distance. As long as things keep going up they can skate fast enough to stay ahead of the cracks. And the payments.Walking into this crowd it occurred to me that getting into RE for the first time is a lot sitting down at a poker game. The warning being that if you sit down to a poker game and you can't spot the 'pigeon' ... your it.
Without business knowledge you will be eaten alive.
Thanks , that made me remember an item I meant to include .
Real estate law . Buy the testing book .
A knowledge of business in banking priciples and some business law .
Then be a full fledged remodeler .
Good or great credit.
Bring money too. <G>
Tim
Edited 10/20/2005 2:08 pm by Mooney
Trying to not get bit, thats why I'll be buying books and not property for awhile...BUIC
See this link for OFHEO housing report this past qtr:
http://www.ofheo.gov/media/pdf/2q05hpi.pdf
Buic,
Depending on how long you are planning on holding on and how much income or expense coverage you need during that time, you might want to consider raw land.
I know that there isn't much out there on Long Island right now but there are other areas withing driving distance.
I look right outside the current development envelope. just a little farther than most builders are looking right now. The land usually goes a little cheaper because it's not yet in one of the Bedroom Communities of NYC. But with current trends and the prospect of bus and train service places like Allentown P.A. suddenly become a bedroom community of NYC.
With raw land you are often able to pay cash and little carrying costs other than taxes.
My last piece was a 200% net profit over six years.
I have several friends who currently purchase and flip. One is doing rather well. The others are one month away from losing it all. It's all about the timing and location. Most areas are all played out right now. More so in your area.
Thanks for your thoughts. Land is so sought after in my immediate area that houses are bought and leveled just to get two building lots that just meet the minimum lot size. Then they'll throw up two plain/ugly high ranches and get $599,000 for each.
Eastern long island has some land (as long as you don't go to far east, the hamptons) and thats a thought about buying some now for future use, while I'm doing other things.
For now I'm hoping to do one house before the end of 2006...BUIC
Edited 10/27/2005 12:49 pm ET by BUIC