There are so many misunderstandings related with private money lending for real estate investors. In fact, most real estate investor do not understand or participate in private money because they do not understand what it is or how to get started. There is a long a history of private money lenders investing their own money in real estate investments. Like many things, private money comes and goes depending largely on interest rates and the demand from real estate investors and other investors.
Traditional lenders always gave loans based on two things: collateral and your personal pledge to repay. Lenders wanted to lend to about 70% to 80% of the assets values (collateral) and wanted you to be trust worthy based that on your credit score and salary. Private money is different in that the loan is almost entirely based on the collateral and not your personal pledge to repay. This does not mean private lenders do not do some background checking and if you have a history of not repaying things it is unlikely you will be participating in the private lender market.
The definition of a private lender is an individual that you can negotiate directly with on a personal basis to borrow money for real estate investments. The money can be used to purchase rental real estate investments or to supplement funds borrowed from a bank to cover down payments.
Private money became very popular as interest rates on tradition Money Markets and CD's dropped below 5%. Entrepreneurs and other people with extra cash started looking for higher interest rates (north of 12%). If they could get the high interest rate and enough security (collateral) they were willing to do loans without personal credit or the need to be worried about credit scores. That started the revolution that you see today where private money lenders are as big and popular as hard money lenders were 10 years ago.
This trend toward private money will remain as long as traditional interest remain low and traditional mortgage and hard money remains hard to get.
Finding private money is not nearly as difficult as people think. We utilize a number of low key person to person marketing techniques to attract potential lenders. However, I strongly urge you not to use any large public sources of advertising, such as Craig's List, or you may get a call from the SEC and you do not want that.
Here’s how it works …first, you do some simple marketing to find individuals interested in earning 9% to 15% interest on investments secured by local real estate. You will find these prospects everywhere. They belong to your local real estate investor clubs, church’s, civic clubs, parent organizations, friends, family or even neighbors.
You will be surprised how easy you’ll locate them and soon, they will be searching you out. Just let everyone know that you pay high rates of interest for loans that are secured by local real estate.
As prospects express interest, you explain that the investments are secured by local real estate and do not exceed 75% of the after repair value of each home. Each investment is based on a specific property, and they can decline any property which they are not comfortable with. All you require is that they approve quickly and can fund within 7 to 10 days.
I invite you to learn more about Private Money and become a member of our FREE weekly tele-seminar class where we teach tips and strategy on how to grow your real estate investing business and how to raise Private Money by going to http://www.realestatewealthtoday.com/TuesdayTipsSignUp.html.
Mike Lautensack is a full-time real estate entrepreneur, coach and mentor in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE eBook go to Real Estate Investing Blog.
Thursday, December 30, 2010
Tuesday, December 28, 2010
Residential Property Management - The Important of Money Management and Record Keeping
Many investors are surprised to find out how much money management is actually involved with residential property management. Once the right property in the perfect location is selected, many investors believe all they have left to do is collect the monthly rent check from their tenants and then wait for their investment to mature. What the true reality is, there are deposits, bookkeeping, income and expense reports and complete financial records necessary for year-end tax purposes. These overly time consuming but necessary functions can all be efficiently handled by a professional property manager.
Residential property managers become involved with the financial management aspect in order to assist their investors with better management of the overall investment. For example, an investor may be awaiting the monthly rent payment from their tenants, but a property manager would be able to readily assess and bill the tenant for any added fees for items such as late payments or non-sufficient funds.
Keeping the Records
A professional residential property management firm can help to maintain detailed records that will be helpful for annual tax purposes. There are also a number of local and state financial regulations that a residential property manager would be able to assist to be sure you are in compliance with, removing this complicated and time consuming process from the investor.
An investor will also appreciate timely reporting on income incurred on the property or expense reports for necessary repair items. A residential property management company can also provide investors with access to market information to help insure the rental price is current with other similar properties and also to help assess the right time to sell.
A residential property management company can assist an investor with adequately managing the bookkeeping of the rental property. These details initially appear relatively simple but after a few late rental payments, incomplete paperwork required by a tax accountant and multiple repair bills- balancing the cost of the investment becomes critical in determining the overall profit.Mike Lautensack is the owner of Del Val Property Management LLC, a FULL service residential property management company located in Philadelphia, PA.
Mike advises real estate investors how to build wealth and financial security through hassle-free ownership of investment real estate with their "Total Property Management Program". This proven management system allows owners to enjoy the financial benefits of cash flow, tax savings, and wealth creation while it GUARANTEES you will never receive a late night emergency call, deal with a lengthy eviction proceeding or ever have to interact with an irate tenant. To inquire about our services, or get a FREE estimate, please visit http://www.delvalproperty.com
Mike advises real estate investors how to build wealth and financial security through hassle-free ownership of investment real estate with their "Total Property Management Program". This proven management system allows owners to enjoy the financial benefits of cash flow, tax savings, and wealth creation while it GUARANTEES you will never receive a late night emergency call, deal with a lengthy eviction proceeding or ever have to interact with an irate tenant. To inquire about our services, or get a FREE estimate, please visit http://www.delvalproperty.com
Sunday, December 19, 2010
Discover Why a New Real Estate Investor Should Hire a Professional Property Manager
I have a confession to make… you see; when I first started out in real estate investing I didn’t do everything on my own. I had a little secret that most people do not understand. In fact, most people make this mistake over and over again and never even realize how much this same mistake is costing them.
Let me explain, most beginner and intermediate real estate investors do all the work themselves. This includes finding tenants, credit checks, signing leases, maintenance, tenant relationship, rent collection, evictions, accounting, routine inspections and all of the other 100's of things a property owner must do to keep their real estate investments profitable. Seems like a lot doesn’t it? That’s because it is!
If you are an experience real estate investor you quickly learn that the tenant stuff is a lot of work and not very profitable. The real money in this business is finding new profitable deals and arranging good financing not collecting rent and doing maintenance.
So the secret that most new real estate investors do not know is hiring a professional property manager and letting them handle the 100's of tenant issues will free your time to focus on new deals and financing.
By hiring a professional property manager to oversee your properties you can rest assure that all of the tenant activities will be attended to and your property and tenant will be managed in a way that protects your property and keeps it value as high as possible.
I was able to learn this early on it saved me from making many costly mistakes. By hiring a professional property manager I was able to see how they marketed for new tenants, how they collected rent and occasional went to court, how they did the accounting and financial record keeping, and how they managed difficult tenants. All of these issues I could have learned by making own mistakes several times and then learned how to do it right by “trial and error”. But this is costly way to learn. It is far better for the new real estate investor to hire a professional property manager and learn from how they handle these issues.
You may want to eventually manage your own properties but in the early years you should hire a property manager and learn how they do things first. Then after you have seen how it is done you can self manage with a sense experience.
I will also say that tenants are very good at sensing when someone is inexperienced at property management and I assure you they will take advantage of that inexperience to your determent. Tenant will test you to see if you will give them some breaks or if you do not know the local landlord laws. This is also why a professional property manager can help you establish some experience and the ability to stand up to tough tenants.
Your goal as a real estate investor is to create long-lasting PASSIVE income for yourself. Passive income means that you should be earning income from your investments with little to no effort on your behalf. Managing your own properties is not passive income.
Stop wasting your efforts and let a professional property manager oversee your property investments and focus your time on finding new properties and your real estate investment business.
Let me explain, most beginner and intermediate real estate investors do all the work themselves. This includes finding tenants, credit checks, signing leases, maintenance, tenant relationship, rent collection, evictions, accounting, routine inspections and all of the other 100's of things a property owner must do to keep their real estate investments profitable. Seems like a lot doesn’t it? That’s because it is!
If you are an experience real estate investor you quickly learn that the tenant stuff is a lot of work and not very profitable. The real money in this business is finding new profitable deals and arranging good financing not collecting rent and doing maintenance.
So the secret that most new real estate investors do not know is hiring a professional property manager and letting them handle the 100's of tenant issues will free your time to focus on new deals and financing.
By hiring a professional property manager to oversee your properties you can rest assure that all of the tenant activities will be attended to and your property and tenant will be managed in a way that protects your property and keeps it value as high as possible.
I was able to learn this early on it saved me from making many costly mistakes. By hiring a professional property manager I was able to see how they marketed for new tenants, how they collected rent and occasional went to court, how they did the accounting and financial record keeping, and how they managed difficult tenants. All of these issues I could have learned by making own mistakes several times and then learned how to do it right by “trial and error”. But this is costly way to learn. It is far better for the new real estate investor to hire a professional property manager and learn from how they handle these issues.
You may want to eventually manage your own properties but in the early years you should hire a property manager and learn how they do things first. Then after you have seen how it is done you can self manage with a sense experience.
I will also say that tenants are very good at sensing when someone is inexperienced at property management and I assure you they will take advantage of that inexperience to your determent. Tenant will test you to see if you will give them some breaks or if you do not know the local landlord laws. This is also why a professional property manager can help you establish some experience and the ability to stand up to tough tenants.
Your goal as a real estate investor is to create long-lasting PASSIVE income for yourself. Passive income means that you should be earning income from your investments with little to no effort on your behalf. Managing your own properties is not passive income.
Stop wasting your efforts and let a professional property manager oversee your property investments and focus your time on finding new properties and your real estate investment business.
Sunday, May 2, 2010
Real Estate Investors - How to Find Lists For Mailing Postcards to Potential Sellers
Two Types of Lists
Let's talk about the list. The list is important. We've talked about two kinds of lists. One would be a group of houses in a particular area that you would designate. Two would be a demographic - what type of person - meaning people where the tax bill goes to a different address than the home address.
Those are two types of lists that you can acquire. They're certainly not the limit. There are dozens of other ways you can slice and dice this. You could get homes worth a million dollars or more. You could get homes worth $100,000 or less. You could get multi-family properties. You could say, "All I want is multi-family properties." You can get businesses if you want. Invest in shops and retail things of that nature. However you want to do it, whatever list you want.
Ways to Find Lists
What I would suggest is there are a couple of different ways you can get lists. You can go out to a list broker. There are two that I recommend. First is Info-USA and the second is Melissa-Data. Both are national list brokers.
I suspect that if you went to both of them and asked for the identical list you'd find that they'd be relatively close in cost. I don't know that for certain, but they compete head-to-head all the time so I'd gather that their prices are fairly close.
I would suggest you pick one of these, pick which one you like best, and go with it. It's always best once you've identified one of them that you get used to their website. Spend some time and get used to things.
You can call them on the phone or do it over the web. Tell them what you're looking for. They will call you or give you an estimate of how many people would be on the list.
That amount may be too many and you may need to use a smaller space or a smaller area. That's up to you guys. If you're looking for a list of 1,000 people and the first criteria you give them comes back with 5,000, then you may have to shrink down your criteria. You can play with that.
You can also go out to Google and search "list brokers." I'm sure there are dozens of others that would show up.
Let's talk about the list. The list is important. We've talked about two kinds of lists. One would be a group of houses in a particular area that you would designate. Two would be a demographic - what type of person - meaning people where the tax bill goes to a different address than the home address.
Those are two types of lists that you can acquire. They're certainly not the limit. There are dozens of other ways you can slice and dice this. You could get homes worth a million dollars or more. You could get homes worth $100,000 or less. You could get multi-family properties. You could say, "All I want is multi-family properties." You can get businesses if you want. Invest in shops and retail things of that nature. However you want to do it, whatever list you want.
Ways to Find Lists
What I would suggest is there are a couple of different ways you can get lists. You can go out to a list broker. There are two that I recommend. First is Info-USA and the second is Melissa-Data. Both are national list brokers.
I suspect that if you went to both of them and asked for the identical list you'd find that they'd be relatively close in cost. I don't know that for certain, but they compete head-to-head all the time so I'd gather that their prices are fairly close.
I would suggest you pick one of these, pick which one you like best, and go with it. It's always best once you've identified one of them that you get used to their website. Spend some time and get used to things.
You can call them on the phone or do it over the web. Tell them what you're looking for. They will call you or give you an estimate of how many people would be on the list.
That amount may be too many and you may need to use a smaller space or a smaller area. That's up to you guys. If you're looking for a list of 1,000 people and the first criteria you give them comes back with 5,000, then you may have to shrink down your criteria. You can play with that.
You can also go out to Google and search "list brokers." I'm sure there are dozens of others that would show up.
I invite you to learn more about Real Estate Investing and become a member of our FREE weekly tele-seminar class where we teach tips and strategy on how to grow your real estate investing business and how to raise Private Money by going to http://www.realestatewealthtoday.com/TuesdayTipsSignUp.html.
Mike Lautensack is a full-time real estate entrepreneur, coach and mentor in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE eBook go to Real Estate Investing.
Sunday, March 28, 2010
Real Estate Newbies - A Simple Way to Start Real Estate Investing Without Money Down
The popular notion that it is imperative to invest a great deal of money in order to make profits in real estate business is simply not true. The same goes for a credit or financing facility. There are many ways which can be applied for making real money in real estate business without investing your own money. The idea that I am going to put into words below is not an on-time quick-rich formula. It's a genuine real estate activity. One, which can be adapted as a career. The idea is called bird-dogging.
Bird-Dogging defined
Bird-dogging simply means locating and selling a property to a potential customer. The bird-dog finds a suitable property, locates its owner and convinces him to sell. If the owner agrees to sell, the bird-dog finds an investor who is ready to buy that particular property. The investor buys the property and pays a certain amount to the bird-dog for the services rendered by him. The bird-dog does not need to invest a single penny of his own in the whole transaction. Yet he gets away with a hefty sum.
How to become a bird-dog
The first step in this regard is to find an investor who enjoys good reputation and with whom you will feel comfortable. You can also seek a company that specializes in buying and selling properties.
Ask the investor or the company to register you with them. They will usually assign you a certain area to work in. It is your job to look out for suitable properties in that area and make contact with the owner, and then inform the company or the investor about that property.
What do you need to become a successful bird dog?
There are many attributes that are necessary for you to become a successful bird-dog. Fortunately, you don't have to be born with them. A little time and effort is needed to cultivate such properties. Some of them are noted below.
A knack for properties
You must train yourself to be on the constant look-out for available properties. You must keep your eyes open all the time even when you are driving in the neighborhood or going to the gym.
Moving in the right circle
If you want to be a bird-dog, you must move in the right circle. Your acquaintances must belong to the real estate community so that whenever a particular piece of property or an opportunity arrives; you are first one to hear about it.
Impeccable interpersonal skills
This is the key to success. The bird-dog is like a double agent. He has to convince the owner that the deal he is offering is good enough for him. At the same time he must convince his investor or principal that the deal is good for them too. The activity needs a cutting edge sharpness of mind and impeccable negotiating skills. Fortunately, this is something that you can achieve after spending some time in the field.
Bird-Dogging defined
Bird-dogging simply means locating and selling a property to a potential customer. The bird-dog finds a suitable property, locates its owner and convinces him to sell. If the owner agrees to sell, the bird-dog finds an investor who is ready to buy that particular property. The investor buys the property and pays a certain amount to the bird-dog for the services rendered by him. The bird-dog does not need to invest a single penny of his own in the whole transaction. Yet he gets away with a hefty sum.
How to become a bird-dog
The first step in this regard is to find an investor who enjoys good reputation and with whom you will feel comfortable. You can also seek a company that specializes in buying and selling properties.
Ask the investor or the company to register you with them. They will usually assign you a certain area to work in. It is your job to look out for suitable properties in that area and make contact with the owner, and then inform the company or the investor about that property.
What do you need to become a successful bird dog?
There are many attributes that are necessary for you to become a successful bird-dog. Fortunately, you don't have to be born with them. A little time and effort is needed to cultivate such properties. Some of them are noted below.
A knack for properties
You must train yourself to be on the constant look-out for available properties. You must keep your eyes open all the time even when you are driving in the neighborhood or going to the gym.
Moving in the right circle
If you want to be a bird-dog, you must move in the right circle. Your acquaintances must belong to the real estate community so that whenever a particular piece of property or an opportunity arrives; you are first one to hear about it.
Impeccable interpersonal skills
This is the key to success. The bird-dog is like a double agent. He has to convince the owner that the deal he is offering is good enough for him. At the same time he must convince his investor or principal that the deal is good for them too. The activity needs a cutting edge sharpness of mind and impeccable negotiating skills. Fortunately, this is something that you can achieve after spending some time in the field.
If you would like more information on this topic or to learn more real estate investing tips, ideals or "real world" investing strategies please go to my blog at http://www.learnrealestateinvestingblog.com/.
Mike Lautensack is a full-time real estate entrepreneur, coach and mentor in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE eBook go to Real Estate Investing Blog.
Have you ever thought that with a little help from a experienced coach might help your real estate investing business take off? Consider a mini-coaching session by going to http://www.realestatewealthtoday.com/MiniCoaching.html
Thursday, March 18, 2010
Why Today is The Time to Start Real Estate Investing and How to Finance Your Deals
So you think the real estate market is finally starting to go up and NOW is the time to start investing. Well you may be right but here is the hard part: how do you pay for your investments. This is THE issue that makes or breaks your ability to be a real estate investor. Prices are down as much as 30% in some areas and opportunities are available in every neighborhood, but without money you cannot take advantage of these great prices.
Unless you are going to owner-occupy a property, you will be required to bring 30% to 50% as a down payment to closing. Do you have that kind of cash? The days of 5% to 10% down payments are gone. This is the new realty of today’s’ real estate market.
Additionally, most of the great deals today involve distressed properties that may need work. This work also cost money and you have to be prepared to fund these extra costs. These may included small repairs, fresh paint throughout, new kitchens or bathrooms or new carpets. All these cost money.
If you want to buy a $100,000 deal you will need $30k to $50k upfront. Then you will need at least $10k to fix up the house with fresh paint, carpet and small repairs. Can you afford this?
So now that you know how much you will need to purchase your real estate investment the question is how you are going to finance this amount. Here are a few options in the current market:
Unless you are going to owner-occupy a property, you will be required to bring 30% to 50% as a down payment to closing. Do you have that kind of cash? The days of 5% to 10% down payments are gone. This is the new realty of today’s’ real estate market.
Additionally, most of the great deals today involve distressed properties that may need work. This work also cost money and you have to be prepared to fund these extra costs. These may included small repairs, fresh paint throughout, new kitchens or bathrooms or new carpets. All these cost money.
If you want to buy a $100,000 deal you will need $30k to $50k upfront. Then you will need at least $10k to fix up the house with fresh paint, carpet and small repairs. Can you afford this?
So now that you know how much you will need to purchase your real estate investment the question is how you are going to finance this amount. Here are a few options in the current market:
- Traditional financing: Local and national banks, as well as mortgage brokers, are still going to be the best source for large-sum and long-term lending on anything four units and under. Expect to pay around 25% down, but interest rates should continue to be well under 7% for the foreseeable future. Make sure you talk to at least one mortgage broker and as many small local banks as possible before settling on a lender.
- Lines of credit: Pulling out equity from your home or other investments should be done with caution, but is a great way to free up funds. Many investors buy and repair properties with cash from a line of credit, with the intent of financing the finished product six months or so after purchase. You should always check with your lender before taking this route, but it can be a great path to affording multiple properties in a short period of time.
- Hard money lender: If you are looking for short-term money to leverage a property while you do repairs, this remains a viable option. Interest rates and fees are generally higher and hard money is currently less available than in years past, but if you develop a successful relationship with a hard-money lender it can really add a lot of flexibility to what kinds of projects you can take on.
- Private lending: Technically, most hard money lenders are private, but I am referring to the type of money that comes from a less seasoned source. Someone like a family member, friend, or even an acquaintance with the desire to invest their money. This kind of money relies mostly on your own personal network, but if you can find a backer with deep pockets, you can both benefit greatly. Since you are generally not competing with other investors for these funds, this money can be more reliable and flexible as well.
- Partnership: In many ways a partnership is a more formal and permanent form of private funding. Instead of just borrowing money under certain terms from someone, they actually have a stake in the property itself. Whether you split profits 50/50 or 75/25, if you need help with managing your investments and/or paying for them, finding a partner can be a great way to open up your options.
As the real estate market continues to improve more and more people will start to come back into the market and as a result prices will start to go back up. Now is the time to get into this market before that happens. These future price increases should be your equity. But you need to get over the financing hurdle.
If you would like more information on this topic or to learn more real estate investing tips, ideals or "real world" investing strategies please go to my blog at http://www.learnrealestateinvestingblog.com/.
Mike Lautensack is a full-time real estate entrepreneur, coach and mentor in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE eBook go to Real Estate Investing Blog.
Have you ever thought that with a little help from a experienced coach might help your real estate investing business take off? Consider a mini-coaching session by going to http://www.realestatewealthtoday.com/MiniCoaching.html
Tuesday, March 9, 2010
Real Estate Investors - The 9 Top Ways to Find Private Lenders
I a sure you are aware the mortgage market in this country has collapsed. I do not mean "it is slow" or "down slightly", I mean it has COLLAPSED. It is almost impossible for a home owner to get a mortgage and down right impossible for real estate investors to get traditional mortgages.
The solution for the next couple of years will be private lenders. But how does a real estate investor find private lenders. Well, finding a private lender is not nearly as difficult as people think. Here are the top 9 ways to find potential lenders for your real estate investing business.
Mike Lautensack is a full-time real estate entrepreneur, coach and mentor in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE eBook go to Real Estate Investing Blog.
Have you ever thought that with a little help from a experienced coach might help your real estate investing business take off? Consider a mini-coaching session by going to http://www.realestatewealthtoday.com/MiniCoaching.html
The solution for the next couple of years will be private lenders. But how does a real estate investor find private lenders. Well, finding a private lender is not nearly as difficult as people think. Here are the top 9 ways to find potential lenders for your real estate investing business.
- Elevator Speech: Prepare a "60 second" elevator speech and network with everyone you know including friends, family and business associates. Spread the word you are looking for investors.
- Real Estate Investment Clubs: Join your local REI group and network and spread the word you are a real estate investor and looking for private lenders to invest in your deals.
- Join professional networking groups: You can join networking groups like BNI and be sure to join and deliver your "60 second" elevator speech at opportunity.
- Postcards: You can purchase lists of high net worth individuals and send a postcard inviting them to call you to get free information form you or attend an informational seminar about your real estate investing business and private lending.
- Letters: Send letters to a high net worth list as above or send it to people that have already called or emailed you from your postcards.
- Small Local Newspaper Ads: You can place ads in small newspapers offering the reader to attend an educational seminar or request a free report.
- Flyers: Post flyers at senior centers and areas where high net worth people attend and traffic.
- Speeches and Presentations: Offer to give a 30 to 60 minute educational presentation about real estate investing and private lender.
- Internet: You can spread the word through social networking sites like Twitter or Facebook. However, I strongly urge you to simple offer to provided educational information and do NOT make an offer to borrow money through internet sources. Advertising directly through the internet will attract attention form your state SEC department and I assure you that this is not the attention you want to attract.
- BONUS -- Talk, Talk and More Talk: Talk to everyone and spread the word about what you do and what services you provided.
Mike Lautensack is a full-time real estate entrepreneur, coach and mentor in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE eBook go to Real Estate Investing Blog.
Have you ever thought that with a little help from a experienced coach might help your real estate investing business take off? Consider a mini-coaching session by going to http://www.realestatewealthtoday.com/MiniCoaching.html
Sunday, March 7, 2010
So You Need Money For Real Estate Investments - Here is How to Use Private Lenders For Money!
If you have tried to get a traditional mortgage, or even a hard money loan, to finance your real estate investments you know how hard it is to get loans in today's post-credit bubble market. It is even harder to get "no money down" loans for your real estate investing business. If you are using traditional mortgage or hard money loans they can take two or three months to close. The problem you will quickly discover is that sellers are not willing to wait that long and get angry at having to continuously extend their contracts or wait for your loan approval.
Banks and mortgage lenders view mortgage loans to real estate investors as a higher risk than loans to home owners. They believe if the home owner is not living in the property and if trouble hits an investor will opt to pay their own home mortgage first and only pay for the investment loan if they can afford to make the payments. This puts the bank in a very poor position. As a result, most banks are looking for real estate investors to put up 30% to 50% down payment to protect their interest in time of trouble. VERY few investors have this kind of cash so it is very difficult or impossible to do deals with traditional mortgage or hard money loans.
Real estate investors still are not advised to use their own money to do their deals. Even if you have 30-50% saved for a down payment on your investment property, most real estate guru's warn, NEVER spend your own money on real estate investments. Most beginners start their investment career saving up for a down payment, but the fact is, serious real estate investors do not use their own money to do real estate deals.
So how do you buy real estate investments if it is so hard to get a loan and you do not want me to use my money to apply to a down payment?
Buying real estate without using your own money IS possible, and it's not difficult. With the right kind of deal, investment property can be purchased without a single penny of your own money.
Enter the world of Private Lenders... Private lenders are individuals with money to lend for investment purposes. They may or may not be wealthy, but they do have excess cash or assets available over and above what they need to live on. These individuals are willing to lend for a higher return than they can get with bank CD's or money markets. There are no limits on the number of private lenders you can have or the number of real estate deals you can do using private money.
If you would like more information on this topic or to learn more real estate investing tips, ideals or "real world" investing strategies please go to my blog at http://www.learnrealestateinvestingblog.com/.
Mike Lautensack is a full-time real estate entrepreneur, coach and mentor in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE eBook go to Real Estate Investing Blog.
Have you ever thought that with a little help from a experienced coach might help your real estate investing business take off? Consider a mini-coaching session by going to http://www.realestatewealthtoday.com/MiniCoaching.html
Banks and mortgage lenders view mortgage loans to real estate investors as a higher risk than loans to home owners. They believe if the home owner is not living in the property and if trouble hits an investor will opt to pay their own home mortgage first and only pay for the investment loan if they can afford to make the payments. This puts the bank in a very poor position. As a result, most banks are looking for real estate investors to put up 30% to 50% down payment to protect their interest in time of trouble. VERY few investors have this kind of cash so it is very difficult or impossible to do deals with traditional mortgage or hard money loans.
Real estate investors still are not advised to use their own money to do their deals. Even if you have 30-50% saved for a down payment on your investment property, most real estate guru's warn, NEVER spend your own money on real estate investments. Most beginners start their investment career saving up for a down payment, but the fact is, serious real estate investors do not use their own money to do real estate deals.
So how do you buy real estate investments if it is so hard to get a loan and you do not want me to use my money to apply to a down payment?
Buying real estate without using your own money IS possible, and it's not difficult. With the right kind of deal, investment property can be purchased without a single penny of your own money.
Enter the world of Private Lenders... Private lenders are individuals with money to lend for investment purposes. They may or may not be wealthy, but they do have excess cash or assets available over and above what they need to live on. These individuals are willing to lend for a higher return than they can get with bank CD's or money markets. There are no limits on the number of private lenders you can have or the number of real estate deals you can do using private money.
If you would like more information on this topic or to learn more real estate investing tips, ideals or "real world" investing strategies please go to my blog at http://www.learnrealestateinvestingblog.com/.
Mike Lautensack is a full-time real estate entrepreneur, coach and mentor in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE eBook go to Real Estate Investing Blog.
Have you ever thought that with a little help from a experienced coach might help your real estate investing business take off? Consider a mini-coaching session by going to http://www.realestatewealthtoday.com/MiniCoaching.html
Monday, March 1, 2010
3 Simple Ways to Start Investing in Real Estate
The internet is awash with creative and non-traditional ways of real estate investment. Reading one of them makes you feel that it is very simple and workable. Then you begin to doubt whether all of them actually work. The truth is they do. All these techniques have been used by someone, somewhere at some point in time. The possibilities of using these techniques are limitless. Once you start putting them into practice, you will find out that they can work wonders for you. Some of the creative methods of real estate investments that you can put into practice are as follows:
Finding money lenders
There are people, even in this slowdown, who are loaded with cash. These people extend short-term loans to their customers with a little higher interest rate than the conventional lenders. You can secure such a loan from a lender and use this short -term facility to invest in your real estate business. You can use these short term loans for flipping houses or any other short term real estate activity. The profit from the business can take care of the mark-up.
Simultaneous buying and selling
The method, though creative and workable needs a lot of hard work and quick wittedness. The phenomenon works like this: You buy a property from an owner and request him to defer the payment to a future date. Within that date you find a buyer for the same property. You ask the buyer to make immediate payment. When the buyer gives you money, you use that money to pay the owner from whom you have bought the property. So what's in it for you? Of course, you are not going to sell the property exactly at the same price at which you bought it. The difference between your buying price and selling price is your profit.
Though seemingly, the idea is simple enough, in reality it is a little bit complicated. First you need to find a motivated seller and convince him to sell his property at deferred payment. Then you need to find a buyer of the same property and convince him to make immediate payment to you. If you decide to start such a venture, it is highly advisable that you have a buyer already lined up before you make the purchase so you do not get stuck with the property.
Assuming mortgages
Another creative method for investing in real estate business is to assume mortgages. The idea is to take over the existing mortgage on a property. In addition to taking the mortgage on the property, you can also get another mortgage for the payment to the seller. The phenomenon is very much feasible since the seller gets higher interest and receives his payment in relatively shorter period of time. But, before you indulge in this activity, you must make sure that the original lender agrees to your assuming the mortgage because his consent is imperative. Also try and make yourself familiar with the local laws of the state in which you wish to operate since the laws differ from state to state and if you are not aware of the existing laws.
If you would like more information on this topic or to learn more real estate investing tips, ideals or "real world" investing strategies please go to my blog at http://www.learnrealestateinvestingblog.com/.
Mike Lautensack is a full-time real estate entrepreneur, coach and mentor in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE eBook go to Real Estate Investing Blog.
Have you ever thought that with a little help from a experienced coach might help your real estate investing business take off? Consider a mini-coaching session by going to http://www.realestatewealthtoday.com/MiniCoaching.html
Finding money lenders
There are people, even in this slowdown, who are loaded with cash. These people extend short-term loans to their customers with a little higher interest rate than the conventional lenders. You can secure such a loan from a lender and use this short -term facility to invest in your real estate business. You can use these short term loans for flipping houses or any other short term real estate activity. The profit from the business can take care of the mark-up.
Simultaneous buying and selling
The method, though creative and workable needs a lot of hard work and quick wittedness. The phenomenon works like this: You buy a property from an owner and request him to defer the payment to a future date. Within that date you find a buyer for the same property. You ask the buyer to make immediate payment. When the buyer gives you money, you use that money to pay the owner from whom you have bought the property. So what's in it for you? Of course, you are not going to sell the property exactly at the same price at which you bought it. The difference between your buying price and selling price is your profit.
Though seemingly, the idea is simple enough, in reality it is a little bit complicated. First you need to find a motivated seller and convince him to sell his property at deferred payment. Then you need to find a buyer of the same property and convince him to make immediate payment to you. If you decide to start such a venture, it is highly advisable that you have a buyer already lined up before you make the purchase so you do not get stuck with the property.
Assuming mortgages
Another creative method for investing in real estate business is to assume mortgages. The idea is to take over the existing mortgage on a property. In addition to taking the mortgage on the property, you can also get another mortgage for the payment to the seller. The phenomenon is very much feasible since the seller gets higher interest and receives his payment in relatively shorter period of time. But, before you indulge in this activity, you must make sure that the original lender agrees to your assuming the mortgage because his consent is imperative. Also try and make yourself familiar with the local laws of the state in which you wish to operate since the laws differ from state to state and if you are not aware of the existing laws.
If you would like more information on this topic or to learn more real estate investing tips, ideals or "real world" investing strategies please go to my blog at http://www.learnrealestateinvestingblog.com/.
Mike Lautensack is a full-time real estate entrepreneur, coach and mentor in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE eBook go to Real Estate Investing Blog.
Have you ever thought that with a little help from a experienced coach might help your real estate investing business take off? Consider a mini-coaching session by going to http://www.realestatewealthtoday.com/MiniCoaching.html
Sunday, February 21, 2010
Real Estate Investors: How to Get Motivated Sellers Calling in Droves Using Post-It Notes
Outside Company Distribution
There are companies out there that do distribution of post-it notes. There's a company called Markot. I 'm not going to recommend them because I tried them and I was not particularly happy. There are others and you can look them up on Google under "post-it note distribution" and your city name. Try one and see how they perform with small batch before you give them more business.
You tell them what neighborhood you want, you give them the post-it notes, and they'll go out and distribute them on each and every door. They'll walk up and down the neighborhood and put them on the doors.
I had some problems with one of my vendors. First, was they'd tell you they were delivering them this week, and then something would happen and it would be next, and then the following week. I had some problems getting them to deliver them on the dates they chose.
Second, I was always concerned when they did finally get around to it, because it seemed like my response was fairly muted compared to when I would have the post-it notes delivered myself by my people I trusted. It always made me wonder if they were getting out there in the exact number they stated.
Hire Someone to Distribute
Again, there's nothing wrong with paying somebody to do it. In fact, that's what I recommend, that you eventually get somebody to hire to go out and put them on doors. It's very easy if you know some people - some young kids, 15 year olds or something like that. You can pay them 10 or 15 cents per post-it note to deliver. They can do it after school or on the weekends. It's a nice part-time job for a kid.
For the most part, if you know the kid and you can trust they'll actually deliver them and they count how many they delivered - you pay them after they're completed. You should know when they're being delivered almost to the moment they're being delivered. That's how often you'll get calls.
If they start delivering them on a particular street at 4:00 in the afternoon and they deliver 300, 400 or 500 of them, it is almost inconceivable that you wouldn't get a couple of calls. That's how effective these are.
Some of these calls might not be very productive. You might even occasionally get a cranky person calling to complain. Tell them you're sorry, apologize, and maybe you'll have the kids run over and pull theirs off the door of something. Just deal with the cranky calls.
You will be getting calls almost immediately so you will know that they're being delivered. I know for sure the date they're being delivered because I get calls. If they deliver on Tuesdays and Thursdays, then I get calls on Tuesdays and Thursdays. If they don't deliver on Wednesday then maybe the phone is quiet on Wednesday. That's how effective these are.
If you would like more information on this topic or to learn more real estate investing tips, ideals or "real world" investing strategies please go to my real estate investing blog at http://www.learnrealestateinvestingblog.com/.
There are companies out there that do distribution of post-it notes. There's a company called Markot. I 'm not going to recommend them because I tried them and I was not particularly happy. There are others and you can look them up on Google under "post-it note distribution" and your city name. Try one and see how they perform with small batch before you give them more business.
You tell them what neighborhood you want, you give them the post-it notes, and they'll go out and distribute them on each and every door. They'll walk up and down the neighborhood and put them on the doors.
I had some problems with one of my vendors. First, was they'd tell you they were delivering them this week, and then something would happen and it would be next, and then the following week. I had some problems getting them to deliver them on the dates they chose.
Second, I was always concerned when they did finally get around to it, because it seemed like my response was fairly muted compared to when I would have the post-it notes delivered myself by my people I trusted. It always made me wonder if they were getting out there in the exact number they stated.
Hire Someone to Distribute
Again, there's nothing wrong with paying somebody to do it. In fact, that's what I recommend, that you eventually get somebody to hire to go out and put them on doors. It's very easy if you know some people - some young kids, 15 year olds or something like that. You can pay them 10 or 15 cents per post-it note to deliver. They can do it after school or on the weekends. It's a nice part-time job for a kid.
For the most part, if you know the kid and you can trust they'll actually deliver them and they count how many they delivered - you pay them after they're completed. You should know when they're being delivered almost to the moment they're being delivered. That's how often you'll get calls.
If they start delivering them on a particular street at 4:00 in the afternoon and they deliver 300, 400 or 500 of them, it is almost inconceivable that you wouldn't get a couple of calls. That's how effective these are.
Some of these calls might not be very productive. You might even occasionally get a cranky person calling to complain. Tell them you're sorry, apologize, and maybe you'll have the kids run over and pull theirs off the door of something. Just deal with the cranky calls.
You will be getting calls almost immediately so you will know that they're being delivered. I know for sure the date they're being delivered because I get calls. If they deliver on Tuesdays and Thursdays, then I get calls on Tuesdays and Thursdays. If they don't deliver on Wednesday then maybe the phone is quiet on Wednesday. That's how effective these are.
If you would like more information on this topic or to learn more real estate investing tips, ideals or "real world" investing strategies please go to my real estate investing blog at http://www.learnrealestateinvestingblog.com/.
Sunday, January 10, 2010
Real Estate Newbies - A Simple Way to Start Real Estate Investing Without Money Down
The popular notion that it is imperative to invest a great deal of money in order to make profits in real estate business is simply not true. The same goes for a credit or financing facility. There are many ways which can be applied for making real money in real estate business without investing your own money. The idea that I am going to put into words below is not an on-time quick-rich formula. It's a genuine real estate activity. One, which can be adapted as a career. The idea is called bird-dogging.
Bird-Dogging defined
Bird-dogging simply means locating and selling a property to a potential customer. The bird-dog finds a suitable property, locates its owner and convinces him to sell. If the owner agrees to sell, the bird-dog finds an investor who is ready to buy that particular property. The investor buys the property and pays a certain amount to the bird-dog for the services rendered by him. The bird-dog does not need to invest a single penny of his own in the whole transaction. Yet he gets away with a hefty sum.
How to become a bird-dog
The first step in this regard is to find an investor who enjoys good reputation and with whom you will feel comfortable. You can also seek a company that specializes in buying and selling properties.
Ask the investor or the company to register you with them. They will usually assign you a certain area to work in. It is your job to look out for suitable properties in that area and make contact with the owner, and then inform the company or the investor about that property.
What do you need to become a successful bird dog?
There are many attributes that are necessary for you to become a successful bird-dog. Fortunately, you don't have to be born with them. A little time and effort is needed to cultivate such properties. Some of them are noted below.
A knack for properties
You must train yourself to be on the constant look-out for available properties. You must keep your eyes open all the time even when you are driving in the neighborhood or going to the gym.
Moving in the right circle
If you want to be a bird-dog, you must move in the right circle. Your acquaintances must belong to the real estate community so that whenever a particular piece of property or an opportunity arrives; you are first one to hear about it.
Impeccable interpersonal skills
This is the key to success. The bird-dog is like a double agent. He has to convince the owner that the deal he is offering is good enough for him. At the same time he must convince his investor or principal that the deal is good for them too. The activity needs a cutting edge sharpness of mind and impeccable negotiating skills. Fortunately, this is something that you can achieve after spending some time in the field.
Bird-Dogging defined
Bird-dogging simply means locating and selling a property to a potential customer. The bird-dog finds a suitable property, locates its owner and convinces him to sell. If the owner agrees to sell, the bird-dog finds an investor who is ready to buy that particular property. The investor buys the property and pays a certain amount to the bird-dog for the services rendered by him. The bird-dog does not need to invest a single penny of his own in the whole transaction. Yet he gets away with a hefty sum.
How to become a bird-dog
The first step in this regard is to find an investor who enjoys good reputation and with whom you will feel comfortable. You can also seek a company that specializes in buying and selling properties.
Ask the investor or the company to register you with them. They will usually assign you a certain area to work in. It is your job to look out for suitable properties in that area and make contact with the owner, and then inform the company or the investor about that property.
What do you need to become a successful bird dog?
There are many attributes that are necessary for you to become a successful bird-dog. Fortunately, you don't have to be born with them. A little time and effort is needed to cultivate such properties. Some of them are noted below.
A knack for properties
You must train yourself to be on the constant look-out for available properties. You must keep your eyes open all the time even when you are driving in the neighborhood or going to the gym.
Moving in the right circle
If you want to be a bird-dog, you must move in the right circle. Your acquaintances must belong to the real estate community so that whenever a particular piece of property or an opportunity arrives; you are first one to hear about it.
Impeccable interpersonal skills
This is the key to success. The bird-dog is like a double agent. He has to convince the owner that the deal he is offering is good enough for him. At the same time he must convince his investor or principal that the deal is good for them too. The activity needs a cutting edge sharpness of mind and impeccable negotiating skills. Fortunately, this is something that you can achieve after spending some time in the field.
I invite you to learn more about Real Estate Investing and become a member of our FREE weekly tele-seminar class where we teach tips and strategy on how to grow your real estate investing business and how to raise Private Money by going to http://www.realestatewealthtoday.com/TuesdayTipsSignUp.html.
Mike Lautensack is a full-time real estate entrepreneur, coach and mentor in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE eBook go to Real Estate Investing Blog
Sunday, January 3, 2010
The Pros and Cons of Renting to Section 8 Tenants?
You may be a brand new investor or a seasoned investor looking for new ways of increasing your income. Some of the real estate guru’s have made big money selling real estate investing courses touting the benefits of government programs, specifically Section 8 housing, and how you can make money hand over fist. Others take a more cautionary approach, essentially arguing just the opposite.
With two opposing views, who’s right, who’s wrong, and what’s the difference?
There are a couple of Pros to Section 8 investing. But as you will quickly see the list of Pros is much shorter than the list of Cons.
First, if you rent to Section 8 tenants, you know you’re going to get your rent money. As a general rule, it’s going to come in like clock work. You’ll have your money each and every month, conveniently deposited into the bank account of your choice.
Second, if you advertise the fact that you accept Section 8 tenants, you will have no shortage of prospective tenants lining up with a housing voucher ready to move in on a moment’s notice. When tenants are hard to come by, say in a strong housing market, it’s an excellent way of guaranteeing a steady flow of renters willing to be your tenants.
Unfortunately, this is where the list of positives ends.
Section 8 tenants can present a host of challenges and problems to you from a variety of angles.
First, as a property owner, you may be lured by the easy money that renting to Section 8 tenants can generate, but if you think the Paperwork Reduction Act applies to Section 8, you have a lot to learn.
Whenever you deal with any government bureaucracy, there are massive paperwork considerations. If every I isn’t dotted and every T crossed on every form the government throws your way, you’re in jeopardy of not being paid, having your payment delayed or even worse being declared a slumlord.
We have also seen when all the paperwork and other delays can take anywhere from 3 to 5 months to complete. During this period your property sits empty with no income.
Second, Section 8 requires property inspections. In order to participate in Section 8 you first have to qualify as a property owner, which means an inspection. If the inspector finds deficiencies of any kind, they have to be corrected on the government’s timetable. Once you’ve met the timetable, you have to repeat the inspection process. When you’ve waded through all the red tape necessary to accept tenants, you really get into the heart of the problem of the Section 8 program dealing with tenants.
Third, there are Section 8 tenants who are attentive to your rules, but there are plenty of bad apples. If you have a troublesome renter one that can’t/won’t pay their rent on time or is a constant troublemaker, your inclination is to give them their walking papers (i.e., eviction). But if the individual you’re trying to evict is a Section 8 renter, you have to follow due process rules that are stricter than any state laws anywhere.
Once you’ve begun eviction proceedings, Section 8 tenants are entitled to free or very low cost legal assistance. Once an attorney enters the picture, this turns into an expensive, time consuming process. You need to ask yourself at what point does a guaranteed rent payment become not worth the hassle, the expense and the headache?
Fourth, we generally see that Section 8 pays about 70% to 80% per month of what you might get for normal tenant. So you need to make decision as to whether this discount is offset by the consistent payment source.
Fifth, Section 8 renters aren’t famous for taking care of your property. So unless you’re willing to entertain the thought of having to make extensive repairs with little hope of recovering damages it is probably in your best interest to not involve yourself in the program to begin with.
As you can see the Cons of Section 8 investing outweigh the Pros. Our experience is the program has many problems and we rarely recommend Section 8 investing.
With two opposing views, who’s right, who’s wrong, and what’s the difference?
There are a couple of Pros to Section 8 investing. But as you will quickly see the list of Pros is much shorter than the list of Cons.
First, if you rent to Section 8 tenants, you know you’re going to get your rent money. As a general rule, it’s going to come in like clock work. You’ll have your money each and every month, conveniently deposited into the bank account of your choice.
Second, if you advertise the fact that you accept Section 8 tenants, you will have no shortage of prospective tenants lining up with a housing voucher ready to move in on a moment’s notice. When tenants are hard to come by, say in a strong housing market, it’s an excellent way of guaranteeing a steady flow of renters willing to be your tenants.
Unfortunately, this is where the list of positives ends.
Section 8 tenants can present a host of challenges and problems to you from a variety of angles.
First, as a property owner, you may be lured by the easy money that renting to Section 8 tenants can generate, but if you think the Paperwork Reduction Act applies to Section 8, you have a lot to learn.
Whenever you deal with any government bureaucracy, there are massive paperwork considerations. If every I isn’t dotted and every T crossed on every form the government throws your way, you’re in jeopardy of not being paid, having your payment delayed or even worse being declared a slumlord.
We have also seen when all the paperwork and other delays can take anywhere from 3 to 5 months to complete. During this period your property sits empty with no income.
Second, Section 8 requires property inspections. In order to participate in Section 8 you first have to qualify as a property owner, which means an inspection. If the inspector finds deficiencies of any kind, they have to be corrected on the government’s timetable. Once you’ve met the timetable, you have to repeat the inspection process. When you’ve waded through all the red tape necessary to accept tenants, you really get into the heart of the problem of the Section 8 program dealing with tenants.
Third, there are Section 8 tenants who are attentive to your rules, but there are plenty of bad apples. If you have a troublesome renter one that can’t/won’t pay their rent on time or is a constant troublemaker, your inclination is to give them their walking papers (i.e., eviction). But if the individual you’re trying to evict is a Section 8 renter, you have to follow due process rules that are stricter than any state laws anywhere.
Once you’ve begun eviction proceedings, Section 8 tenants are entitled to free or very low cost legal assistance. Once an attorney enters the picture, this turns into an expensive, time consuming process. You need to ask yourself at what point does a guaranteed rent payment become not worth the hassle, the expense and the headache?
Fourth, we generally see that Section 8 pays about 70% to 80% per month of what you might get for normal tenant. So you need to make decision as to whether this discount is offset by the consistent payment source.
Fifth, Section 8 renters aren’t famous for taking care of your property. So unless you’re willing to entertain the thought of having to make extensive repairs with little hope of recovering damages it is probably in your best interest to not involve yourself in the program to begin with.
As you can see the Cons of Section 8 investing outweigh the Pros. Our experience is the program has many problems and we rarely recommend Section 8 investing.
I invite you to learn more about Real Estate Investing and become a member of our FREE weekly tele-seminar class where we teach tips and strategy on how to grow your real estate investing business and how to raise Private Money by going to http://www.realestatewealthtoday.com/TuesdayTipsSignUp.html.
Mike Lautensack is a full-time real estate entrepreneur, coach and mentor in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE eBook go to Real Estate Investing Blog
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