Real Estate… Answered

This month, I’m scheduled to close on two luxury homes. The first is worth a conservative $1.5 million and we’re buying it for $950,000. The other deal is smaller but still excellent. It’s worth about $620,000 and we’re paying $430,000. So, just in January, I’m pulling in about $740,000 of equity.

While I’m hesitant to reveal all my secrets, I gave a revealing teleconference in 2004 about how to buy luxury homes, finance them, and sell them. Fill out the form below to listen to it:

Ask several experienced landlords about advertising and they’ll tell you it’s a waste of money. But it’s not true. In certain circumstances, where other free methods are inadequate, a landlord can use advertising to give their real estate investment that extra little push toward positive cash flow. The key is understanding how to focus your advertising on the right people with the right message.

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Vacancy — no word is more motivational to a landlord. You’re required to pay your mortgage payment, regardless of whether you have the house rented. So, finding a tenant literally makes the difference between losing money or making money from your real estate investment.

The conventional wisdom is to buy an ad in your local newspaper and hope for the best, but most landlords will tell you it’s both ineffective and expensive. Here are two tips for finding a tenant WITHOUT spending a fortune on advertising:

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This is a common problem for landlords. Sometimes, tenants don’t understand that a 12 month lease means they’re legally obligated to pay their rent for 12 months. So, they decide to move out. Your cash flow disappears and you have to spend months fixing up the property and finding a new tenant. Is there anything you can do to protect your real estate investment?

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As a landlord, you need to choose your investments carefully. Pick the right property and you’ll bring in profit, month after month, year after year. The opposite is also true. Buy a dud rental property and you can enter a world of frustration and loss that lasts months or years.

For a landlord, each real estate investment is long-term, so it’s essential that you understand what you’re doing. In this post, we are going to dissect the "anatomy" of a good rental property.

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Yes! Sometimes, snatching up a house before it goes into foreclosure will give you a better real estate investment than waiting until after the bank finishes foreclosure proceedings.  The reason is control. After the bank forecloses on a property, they control it. The loss mitigation officer decides when to sell and for how much.

On the other hand, if you can catch the property before the bank foreclosures, the seller is still in control. They decide when to sell and for how much. And motivated sellers are much more likely to give you a good deal than the bank. There are multiple reasons, but here are the most persuasive two:

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For the average landlord, trusting a property manager with governing their real estate investments is like a parent trusting a new babysitter with their children. It’s agonizing. You’ll will worry about them finding the right tenants, maintaining the property, and keeping up cash flow. Can a property manager really do it as well as you, the original landlord?

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The foreclosure niche is dominated by investors with cash. When you’re a beginner, it’s easy to hate them for it. You can spend hours performing due diligence, arranging your financing, and scraping together a down payment, only to have a cash investor scoop the foreclosure right out from under you. It wastes a lot of time. If it happens often enough, you start to feel like a failure.

The good news is, with a little ingenuity, you can still compete. Occasionally, another investor will rob you of a great foreclosure deal, but you can dramatically increase your chances of fending them off. The key is your story. You need to present yourself to the bank in a way that makes them believe you are a reliable buyer. If you tell the story well enough, you can become even more attractive than a cash buyer. You can make the bank want to sell you their foreclosures.

Consider the following examples:

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If only it were as simple as pulling out a list! Banks purposefully hide foreclosures from investors. From their perspective, investors are scavengers then bury them with lowball offers. Average homebuyers, on the other hand, are thrilled when they can negotiate a small discount. So, naturally, the bank markets to them.

You can still find their properties, but you’ll have to do your homework. As a person that goes through 100 leads per week, I’ve found it’s essential to use multiple sources of information. Bank web sites, foreclosure services, and the MLS — you’ll need them all in order to keep yourself supplied with a steady stream of leads.

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Foreclosures are hot. Really hot. Every investor and dozens of his relatives are looking for them. And for good reason. Banks are in the business of loaning money, not selling off foreclosed houses. Investors take advantage of their disinterest by offering them a swift but low settlement. At least, that’s how it works in theory. With so many investors interested in the market, is it starting to become overcrowded?

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