by: Milt Tanzer
Mistake # 1. Spending thousands of dollars buying books, tapes and attending seminars and then putting all of that information on a bookshelf and never looking at (or using) it.
Comment: I’m continually amazed at the number of “would be” investors who have spent a bundle of money attending seminars, getting an education and then never using it to start
their investment program. Not only is it a waste of thousand of dollars but it could be the
biggest financial mistake you can make.
Mistake # 2. Failure to learn the basics of real estate investing.
Comment: The other extreme to Number 1 above, are potential investors who realize real estate is the best way to accumulate wealth and venture into the purchase of properties without knowing the basics of real estate investing. Those investors are almost certain to get into financial trouble.
Mistake # 3. Fear of making a huge financial mistake
Comment: We all fear making mistakes, especially a large financial one. If you follow the advice in Number 2 above, you won’t have to worry about making a financial mistake.
Mistake # 4. Not looking at enough properties
Comment: Don’t fall in love with the first property you look at. Too many investors buy properties because they “look nice” or they are just to lazy to see what else is currently on the market that may be better. Part of sound real estate investing is in giving yourself a choice so you can select the best one, financially.
Mistake # 5. “A better deal may be just around the corner” syndrome
Comment: This is the opposite mistake of Number 4. This investor never starts his or her real estate investment program because they always hope a better deal may be out there somewhere
if they just wait...and wait...and wait.
Mistake # 6. Thinking that real estate investing is strictly a complicated game that only the wealthy can play.
Comment: First of all real estate is NOT complicated if you learn how to do it first.
Did you know that even professional investors use a simple nine step process to analyze the financial feasibility of an investment property?
Here's a brief idea of the nine simple steps they use in analyzing any type or size investment property.
A Basic Financial Property Analysis
1. Scheduled Gross Income (Income if 100% leased) = $ 26,000
2. Less: Allowance for vacancies (5% of Gross Income) -1,300
3. Operating Income before expense & Mtg. Pmts. $ 24,700
4. Less Operating Expenses (Taxes, insurance, utilities,
repairs and maintenance etc.) 40% - 9,846
5. Equals: Operating Income (Income before Mtg. Pmts.) $ 14,854
6. Minus: Mortgage Payments: -12,863
7. Equals Cash Flow 1,991 = 6%
8. Plus: Mortgage Principle Payment +1,697
9. Total Return: $ 3,688 = 10%
There's a lot more to it than that, but you just read the basic nine step procedure most professional investors use when analyzing any income producing investment property.
Mistake # 7. Falling in love with a property
Comment: Once you get your feet wet and become a real estate investor, you’ll wonder why you waited so long to begin. Now you’ll face another problem. Many investors fall in love with their property. They have seen how well it is doing, cash flow has been going up each year, and they have fallen in love with their tenants (not literally). Two big mistakes are made here.
First, never fool yourself into thinking your property is doing too well to sell or trade up because your cash flow is considerably higher than when you purchased the property.
The second part of mistake number 7 is getting so friendly with your tenants that you fail to maintain rental standards based on what the market will bear. This greatly hinders your growth potential. .
Mistake # 8. Failure to plan your financial goals
Comment: Before you purchase that first property, which, of course, you financially analyzed, determine what you expect from your investments…your financial goals.
It's known as "The 'time vs. money’" concept. The more you have of one the less you need of the other in order to reach your financial goals.
Mistake # 9. Trying to purchase properties that the seller is not motivated to sell
Comment: I’ve seen potential buyers continually try to purchase investment properties that
are not really on the market. This includes property owners with the attitude that “Sure, it’s for sale… for a price”. Unfortunately the ‘for a price’ part usually means it will make no financial sense for a buyer.
Mistake # 10. Believing you can get rich quick overnight with no money invested of your own.
Comment:. Getting rich overnight will not happen . . . (regardless of what some of the so
called "experts" tell you). It takes some time, effort and knowledge of real estate investing to do
it with minimum financial risk.
The important thing to remember is that YOU can do it, too. You can join the millions of investors who create sizable incomes by investing in real estate.
Mistake # 11. No money down investing usually isn’t.
Comment: Somewhere, somehow there will be some money required to put a transaction together and make it profitable.
It may be closing costs, repairs or upgrading, whatever. But somewhere, some money will be needed. There are ways around this problem without getting into a high risk situation. You may be able to finance every dollar you need, but it can come back to haunt you in the form
of mortgage payments you cannot afford to make. Again, learn what you are doing first.
Mistake # 12. Not financially analyzing a potential investment property.
Comment: This is the most serious mistake an investor, or potential investor, can make. I've seen a few pros in the business rely on a "worthless and inaccurate" rule of thumb to make a huge financial decision to purchase, with total disregard for how well the property will perform.
Oh, yes, there is one more major mistake many investor make:
Mistake # 13. Thinking it's important to pay off your mortgage as soon as you can
because mortgages are a 'necessary evil'.
Comment: First of all as a real estate investor, mortgages are good and not a necessary evil. You must learn why this is true. You must learn how, in the right situation, a second or third mortgage can be a good thing.
Second: mortgages are one of the keys to creating wealth in real estate. You must learn how to use financing as one of the keys to creating your own financial estate, without concern for it being "risky".
About The Author
Milt Tanzer has been a Commercial/Investment real estate broker and investor for over 25 years. Author of 7 books on real estate investing. Gave seminars to both the general public plus Realtor Association meetings for several years. Published by Prentice Hall division of Penguin Putnam.
Websites:
http://www.investmentre.com
http://www.realestate-supermarket.com
Thursday, February 22, 2007
Thursday, February 15, 2007
A Simple Real Estate Investment Plan To Make A Million Dollars or More!
by: David Schneider
This is a very simple Real Estate Investment Plan that anyone can do. In fact, because it’s so simple most people won’t do it. There are only three simple steps.
>> STEP 1. Go out and borrow one million dollars.
>> STEP 2. Use the million dollars and buy one million dollars worth of well-selected real estate.
>> STEP 3. Get other people to agree to pay off the million dollar loan for you.
Sounds easy. Right? Well it is. Think about this.
In the next year, I want you to go into your real estate marketplace and see if you can find two single-family houses, townhouses or condos in a starter price range. The price range will vary depending on the area of the county that you are in. For my example, I'm going to use a range of $150,000 to $200,000 per property.
I want you to buy these two properties and you should be able to borrow most of the money needed (in some cases all the money needed) from banks, mortgage companies, sellers and other investors.
I want you to repeat the same process for a minimum of five years. At the end of the five year period you would know own ten properties worth one million or more dollars and you will owe one million or more dollars on those properties.
Now the only thing left is to find people willing to pay off your loans on those properties. Those people are all over the place and they are called RENTERS!
At the end of ten to twenty years, what will you have?
You Will Have More Than A Million Dollars Worth Of Real Estate That Somebody Else Bought You!
And not only will you have a million dollars worth of real estate you will have an income of $100,000 + from renting them out because they are all paid for.. and your income will increase as your rents increase.
If you’re saying to yourself that a million dollars isn’t enough and 100, 000 + of annual income isn’t enough, the solution is simple…. BUY MORE!
Learn how to get the money
The first step to get started is that you should learn the rules of the lenders and their programs that they have available for rental properties. To do this you should spend a few hours or more on the phone calling different lenders and asking them these questions:
What type of loan programs do they have available for rental properties? What are the down payment requirements? What is the least amount of down payment required? What does the person have to do to qualify? Do they have any creative financing options to help you buy? Do they have a maximum amount of loans that they will do with one investor? If their program doesn’t fit what your trying to do, do they know of any other lenders who have loan money on rental properties. What are their fees, interest rates, loan terms, closing costs and any other costs of the loan? Once you talk to several lenders you will develop other questions that you should ask and will get a good feel of what you need to do to get qualified to borrow the money. Don’t get frustrated! Many lenders will tell you that you can’t do it or you won’t qualify. Just keep calling more lenders and remember that lender are in the business to lend you money. If they don’t lend money they are out of business.
The other source and I believe the best source is Seller’s financing (In the form of a Contact for Deed, Installment Contract, Seller’s Mortgage). Why is this the best? Because you don’t have all the costs of a traditional lender. There are generally no loan origination fees, appraisal fees, etc. and the best part of seller financing is that everything is negotiable between you and the seller.
How do you get seller financing?… You ask the seller if they are open to it?… You ask the seller if they would like to earn more on their money than if they put it in the bank?
Learn to find the properties
Now that we have an idea about financing we have to start looking for the right properties and analyze the numbers. You want to start by trying to find smaller starter home that a young family or couple would like to live in. Here are some ideas where to look and how to find properties.
Newspaper ads Real Estate MLS system Driving through neighborhoods Advertise yourself Tell people that you are looking to buy houses.. get the word out Get business cards that tell people that you are interest in buying real estate Ask real estate agents to look for you (if you are an agent, ask other real estate agent to let you know if they know of any properties) This is a short list, but you only need to find a couple of properties a year to make this plan work and this short list will do the job. If you want to find more than a few properties a year you should expand your marketing efforts.
Ok, You have now found a property. You have ran the numbers. (Use an Investment Property Worksheet or Real Estate Analyzer Software) and it all make sense. Now is the time to make an offer to buy.
Once the offer is accepted you now want to start the third step… Find a renter who will rent out the property.
Learn to get good renters
Get permission from the seller to allow you to show the property to prospective renters before the day of closing. You should start by advertising in you local paper and contact real estate offices to let them know you have a property available for rent.
Select the best renter based on the criteria that you set up and learn to manage the property.
Repeat the process to buy more and more houses until you reach your goal.
The fastest way to learn is by doing it. This report is short and to the point and doesn’t have every single detail in it. The details you will learn as you go…The key to this is to GO and get started.
About The Author
Dave Schneider has been investing in real estate for over 25 years and is devoting to helping landlords make more money!. For free audio seminars, tools and information on real estate investing and being a landlord, visit this site now: http://landlordtools.com.
This is a very simple Real Estate Investment Plan that anyone can do. In fact, because it’s so simple most people won’t do it. There are only three simple steps.
>> STEP 1. Go out and borrow one million dollars.
>> STEP 2. Use the million dollars and buy one million dollars worth of well-selected real estate.
>> STEP 3. Get other people to agree to pay off the million dollar loan for you.
Sounds easy. Right? Well it is. Think about this.
In the next year, I want you to go into your real estate marketplace and see if you can find two single-family houses, townhouses or condos in a starter price range. The price range will vary depending on the area of the county that you are in. For my example, I'm going to use a range of $150,000 to $200,000 per property.
I want you to buy these two properties and you should be able to borrow most of the money needed (in some cases all the money needed) from banks, mortgage companies, sellers and other investors.
I want you to repeat the same process for a minimum of five years. At the end of the five year period you would know own ten properties worth one million or more dollars and you will owe one million or more dollars on those properties.
Now the only thing left is to find people willing to pay off your loans on those properties. Those people are all over the place and they are called RENTERS!
At the end of ten to twenty years, what will you have?
You Will Have More Than A Million Dollars Worth Of Real Estate That Somebody Else Bought You!
And not only will you have a million dollars worth of real estate you will have an income of $100,000 + from renting them out because they are all paid for.. and your income will increase as your rents increase.
If you’re saying to yourself that a million dollars isn’t enough and 100, 000 + of annual income isn’t enough, the solution is simple…. BUY MORE!
Learn how to get the money
The first step to get started is that you should learn the rules of the lenders and their programs that they have available for rental properties. To do this you should spend a few hours or more on the phone calling different lenders and asking them these questions:
What type of loan programs do they have available for rental properties? What are the down payment requirements? What is the least amount of down payment required? What does the person have to do to qualify? Do they have any creative financing options to help you buy? Do they have a maximum amount of loans that they will do with one investor? If their program doesn’t fit what your trying to do, do they know of any other lenders who have loan money on rental properties. What are their fees, interest rates, loan terms, closing costs and any other costs of the loan? Once you talk to several lenders you will develop other questions that you should ask and will get a good feel of what you need to do to get qualified to borrow the money. Don’t get frustrated! Many lenders will tell you that you can’t do it or you won’t qualify. Just keep calling more lenders and remember that lender are in the business to lend you money. If they don’t lend money they are out of business.
The other source and I believe the best source is Seller’s financing (In the form of a Contact for Deed, Installment Contract, Seller’s Mortgage). Why is this the best? Because you don’t have all the costs of a traditional lender. There are generally no loan origination fees, appraisal fees, etc. and the best part of seller financing is that everything is negotiable between you and the seller.
How do you get seller financing?… You ask the seller if they are open to it?… You ask the seller if they would like to earn more on their money than if they put it in the bank?
Learn to find the properties
Now that we have an idea about financing we have to start looking for the right properties and analyze the numbers. You want to start by trying to find smaller starter home that a young family or couple would like to live in. Here are some ideas where to look and how to find properties.
Newspaper ads Real Estate MLS system Driving through neighborhoods Advertise yourself Tell people that you are looking to buy houses.. get the word out Get business cards that tell people that you are interest in buying real estate Ask real estate agents to look for you (if you are an agent, ask other real estate agent to let you know if they know of any properties) This is a short list, but you only need to find a couple of properties a year to make this plan work and this short list will do the job. If you want to find more than a few properties a year you should expand your marketing efforts.
Ok, You have now found a property. You have ran the numbers. (Use an Investment Property Worksheet or Real Estate Analyzer Software) and it all make sense. Now is the time to make an offer to buy.
Once the offer is accepted you now want to start the third step… Find a renter who will rent out the property.
Learn to get good renters
Get permission from the seller to allow you to show the property to prospective renters before the day of closing. You should start by advertising in you local paper and contact real estate offices to let them know you have a property available for rent.
Select the best renter based on the criteria that you set up and learn to manage the property.
Repeat the process to buy more and more houses until you reach your goal.
The fastest way to learn is by doing it. This report is short and to the point and doesn’t have every single detail in it. The details you will learn as you go…The key to this is to GO and get started.
About The Author
Dave Schneider has been investing in real estate for over 25 years and is devoting to helping landlords make more money!. For free audio seminars, tools and information on real estate investing and being a landlord, visit this site now: http://landlordtools.com.
Friday, February 2, 2007
The Worst Real Estate Investment Strategy Ever!
by: David Schneider
It’s true, You can make a lot of money by investing in real estate. Yet, many investors are not. And when you look at their real estate investment strategy, it’s no surprise.
The problem is that they have been brainwashed by the so called real estate investment gurus. You know the ones that I am talking about. The ones that tell you that for a few of your hard earned dollars they will teach you all their ultimate short-cut secrets to successfully making millions.
They will tell you that you don’t need a job, money or credit. All you need to do is pay them and they will show you the exact way to invest in real estate. Do what they say, follow their real estate investment strategy and your life will changed forever.
Well I have some bad news for you. In most cases, it’s the worst real estate investment strategy you could ever follow.
Don’t get me wrong, Its’ OK to go to seminars, buy books and audio products if you are using this information to learn certain techniques, financing options, tax laws and other ways to invest. In fact, you should do this, because it will make you more creative and you will become a smarter real estate investor, however it’s not the most important thing that you should do.
>>> The Most Important Step When Investing In Real Estate
Before you start to invest in real estate, you should sit down and create a very specific plan of what you want the outcome of your real estate investment plan to be!
I know that this is not very exciting, however, if you don’t know why your investing and the overall outcome that you want, then how do you know if you making a good or bad decision?
>>> Two Important Questions
The only reason to invest in real estate is to make money. There are two important questions you need to ask yourself.
1.) When do you want the money and how much?
2.) What are you willing to pay to get that result?
The answer to these questions will help you determine your real estate investment strategy.
Let me give you several examples.
>>> Buy and Sell Strategy
If you want the maximum amount of money in the short run, you should be buying real estate with the intent of a quick sale and profit. This may be buying fixer-uppers or looking for below market properties that you can sell for a profit quickly (know as flipping).
To do this, the price you will have to pay is your time to find, analyze, fix, finance and sell the properties. Once you sell any of your properties and realize your profit, you must go out and repeat the process again and again to continue to make a profit.
One problem with this strategy is that when you stop buying and selling your profits stop. So it’s important to make sure you take some of your profits and invest in something that will produce the income you will need and want later on in your life.
>>> Buy and Hold Strategy
This strategy is to buy properties, rent them out and have the tenants pay for the properties. Once the properties are paid for, you will continue to have rental income for the rest of your life.
The price you pay in this strategy is not only the time to find, finance and analyze, it’s the problems that may occur when ever you have tenants. So you will need some type of a system to manage or you can hire a management company to do this.
Personally, I like the Buy and Hold strategy because you are building up assets and income that will come to you for the rest of your life. To deal with the management part you need to create a system of policies and procedures.
Whether your strategy is to Buy and Sell, Buy and Hold or maybe a mix of the two, the key is to plan for what you want your ultimate outcome to be.
If your outcome is to have an income of $100,000 per year without any work, you may choose to buy and hold enough rental real estate that will provide that.
In summary, the worst real estate investment strategy ever is when you don’t take the time up front to to decide exactly why your are investing in real estate and what do you want when you are all done
About The Author
Dave Schneider has been investing in real estate for over 25 years and is devoting to helping landlords make more money!. For free audio seminars, tools and information on real estate investing and being a landlord, visit this site now: http://landlordtools.com.
It’s true, You can make a lot of money by investing in real estate. Yet, many investors are not. And when you look at their real estate investment strategy, it’s no surprise.
The problem is that they have been brainwashed by the so called real estate investment gurus. You know the ones that I am talking about. The ones that tell you that for a few of your hard earned dollars they will teach you all their ultimate short-cut secrets to successfully making millions.
They will tell you that you don’t need a job, money or credit. All you need to do is pay them and they will show you the exact way to invest in real estate. Do what they say, follow their real estate investment strategy and your life will changed forever.
Well I have some bad news for you. In most cases, it’s the worst real estate investment strategy you could ever follow.
Don’t get me wrong, Its’ OK to go to seminars, buy books and audio products if you are using this information to learn certain techniques, financing options, tax laws and other ways to invest. In fact, you should do this, because it will make you more creative and you will become a smarter real estate investor, however it’s not the most important thing that you should do.
>>> The Most Important Step When Investing In Real Estate
Before you start to invest in real estate, you should sit down and create a very specific plan of what you want the outcome of your real estate investment plan to be!
I know that this is not very exciting, however, if you don’t know why your investing and the overall outcome that you want, then how do you know if you making a good or bad decision?
>>> Two Important Questions
The only reason to invest in real estate is to make money. There are two important questions you need to ask yourself.
1.) When do you want the money and how much?
2.) What are you willing to pay to get that result?
The answer to these questions will help you determine your real estate investment strategy.
Let me give you several examples.
>>> Buy and Sell Strategy
If you want the maximum amount of money in the short run, you should be buying real estate with the intent of a quick sale and profit. This may be buying fixer-uppers or looking for below market properties that you can sell for a profit quickly (know as flipping).
To do this, the price you will have to pay is your time to find, analyze, fix, finance and sell the properties. Once you sell any of your properties and realize your profit, you must go out and repeat the process again and again to continue to make a profit.
One problem with this strategy is that when you stop buying and selling your profits stop. So it’s important to make sure you take some of your profits and invest in something that will produce the income you will need and want later on in your life.
>>> Buy and Hold Strategy
This strategy is to buy properties, rent them out and have the tenants pay for the properties. Once the properties are paid for, you will continue to have rental income for the rest of your life.
The price you pay in this strategy is not only the time to find, finance and analyze, it’s the problems that may occur when ever you have tenants. So you will need some type of a system to manage or you can hire a management company to do this.
Personally, I like the Buy and Hold strategy because you are building up assets and income that will come to you for the rest of your life. To deal with the management part you need to create a system of policies and procedures.
Whether your strategy is to Buy and Sell, Buy and Hold or maybe a mix of the two, the key is to plan for what you want your ultimate outcome to be.
If your outcome is to have an income of $100,000 per year without any work, you may choose to buy and hold enough rental real estate that will provide that.
In summary, the worst real estate investment strategy ever is when you don’t take the time up front to to decide exactly why your are investing in real estate and what do you want when you are all done
About The Author
Dave Schneider has been investing in real estate for over 25 years and is devoting to helping landlords make more money!. For free audio seminars, tools and information on real estate investing and being a landlord, visit this site now: http://landlordtools.com.
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