Remember These Five Important Credit Items If You Are Applying For A Traditional Loan

It is no secret that the loan application process can be time consuming and stressful. The last thing you need to deal with is an unexpected item with your credit report.  What most borrowers aren’t aware of is that the credit score you have at the beginning of the process may not be the same come the end of it.  Lenders have the right to re-pull your credit right before closing to verify the score and liabilities.  Just one missed payment can lower your credit score enough that it falls below program guidelines.  When this happens weeks of gathering documents and getting all of the items of the loan can be for naught.  If you are applying for a loan here are a five items with your credit report you need to keep in mind.

  • Know Your Score. The loan application process starts with your credit score. You can be strong in other areas but if your credit score is weak you will have trouble getting approved. As a borrower you need to know where you stand even before you apply for a loan. There are many places that you can find a copy of your report. In addition to the score you can also find all of the liabilities listed as well as any delinquent items. Knowing where you stand and what is on your report gives you time to fix any potential problems. Paying down a balance on one account or removing an old item can give your credit score a quick boost. Improving your score by as little as just 20 points may push it over a threshold that will produce better terms and even a lower interest rate. Without knowing your score you can be caught off guard when you apply and start the process behind the eight ball.
  • Work On Delinquent Items. As you view your credit report you should always see if there are any collections, charge offs or liens currently listed. Even though you may think you have always paid everything on time there may be an old account that has slipped through the cracks. An old credit card from college can single handedly weigh your credit score down without you even knowing it. Collections and charge offs are not the end of the world but must be dealt with as quickly as possible. The older the accounts are the more difficult they can be to remove. Not only do you need to find the account holders information but you need to produce a receipt of payment. Many collection accounts switch hands constantly with the original account holder having no idea who or when it was sold. Any collections or charge offs must be paid off prior to or at the closing. The quicker you can start finding out who and where to pay it is one less thing you will have to worry about in the process.
  • Avoid Excessive Credit Pulls. Every borrower wants to get the best possible deal. In the mortgage world you need to be careful how you go about that. You can’t let every mortgage broker or lender you talk to pull your credit report. A few credit pulls a month are fine but once you go over three you will see a dip in your scores. Excessive credit scores are seen as a sign that you are having trouble getting approved. Even if this is not the case it will be reflected in your score. The solution for this is to pull a copy of your credit prior to shopping around. If a lender asks to pull your credit you can provide them with your scores and any liabilities they need. They won’t be able to issue you an official pre-qualification but they can give you a pretty good idea of where you stand.
  • No New Debt. Once the loan process is started you need to keep things status quo. The average loan time is roughly 45 days. During this time you should avoid opening up any new debt. You may be tempted to take advantage of low rates if you are shopping for furniture. This is one of the worst things you can do. By opening up new debt you possibly lower your credit score but you also add debt to your liabilities. An increase in debt can increase your debt to income ratio. If your debt to income ratio is above program guidelines your loan will not be approved.
  • Make Payments. As obvious as it sounds you need to continue to make your monthly payments on time. As we mentioned just one 30 day late payment can throw your credit score for a loop. Your scores will continue to suffer until you are caught up with that account. There are many borrowers who think they are out of the woods once they receive loan approval and do not have to do anything else. They are in for a gut punch when their credit is pulled right before closing and they are not approved. You only need to make timely payments for one month, maybe two, when you apply for a loan. Don’t make the mistake of thinking you can be a few days late with a small payment just because your loan is approved.

The loan process starts and ends with your credit score. Don’t let a small mistake with your credit report impact your loan approval.

 

Discover Which Real Estate Niche Is Best For You?

There is no right or wrong way to invest in real estate. There are several different paths and strategies you can follow based on your target area and your individual goals.  When most people think of real estate investing they immediately think of rehabs and quick flips.  While this is certainly a viable option it is only one of a handful of ways to approach the business.  Figuring out which path is for you starts with knowing and understanding every available option.  Once you know what is out there you will tend to gravitate to the areas you feel most comfortable with and passionate about.  Here are just five of the many investing options available to you.

    • Wholesaling. Wholesaling can be a great way to break into the business. One of the things that makes is so great is the limited barrier of entry. Instead of needing ample capital and multiple financing options you can get started on a dime. Wholesaling is the process of putting together sellers with investors looking for a discount. As a wholesaler you basically act as a broker between the two parties. You find discounted deals, get the seller to accept your price and then match that price with an interested buyer. For your efforts you are paid a fee by the investor who agrees to purchase the property. These fees are typically between two and five thousand dollars but each deal is usually on a case by case basis. While you may not hit a grand slam as a wholesaler you can hit several singles throughout the course of the year. You don’t have money tied up in one deal allowing you to quickly move on to the next one. Additionally your risk is far less and your cash outlay reduced. For someone just breaking into the business wholesaling can be a great way to get started.
    • Rehab An Flip. As we mentioned there has been a surge in the popularity of fix and flip investing. You can probably find a home flipping show on TV almost any day of the week. Rehabbing is all about finding good deals, putting the right work in and then selling for a profit. Like any other part of the business this can be easier said than done. There are several steps in the process that must be executed to perfection if you are going to have success. Not only do you need to find good deals but you need to have a great team around you to put your plan into place. It is also important that you put the right work in for the market. Even though anyone can invest in fix and flip real estate it is not advisable to dive right in without properly educating yourself. As successful as your favorite investor may be on TV you can lose money in real estate if you don’t know what you are doing.
    • Development/Building. The longer you are in the business the more options that will become available to you. Instead of working on preexisting buildings and structures you can look for properties not yet available to the market. Working as a builder requires a different skill set and base of education but it can be a great way to take your business to a new level. As a builder and developer the potential for greater profits is much higher than with any other part of the business. With the right location and with the right work it is not a stretch to say that you can double or even triple your investment. These deals are not the norm but the potential does exist.
  • Single Family Rentals. Owning rental property is a great way to transform your portfolio. Most investors don’t think about five to ten years down the road but it comes much quicker than we like to admit. An investor looking to get started as a landlord should consider a single family rental property. Dealing with tenants is often the biggest adjustment, even if it is just one tenant. With a single family rental your monthly cash flow will be capped but you only have one tenant to deal with. Additionally you only have one set of items to take care of in the property. There is only one dishwasher, washing machine or roof to replace if things don’t go right. A single family rental will give you a good idea if like the concept of being a landlord and if you should explore the option of property management.
  • Multifamily & Commercial Investing. If you like the idea of being a landlord and are ready for a new challenge you can increase the number of units you own. You can take the logical next step and explore two to four unit properties. Once you go over four units you cross over into the commercial property classification. With that you can look for apartment buildings, strip malls and mixed use properties. The scope of your work is larger but so are the potential profits. Some of the wealthiest people in the country have made their wealth buying and leasing apartment and commercial buildings. This step usually takes years of contacts and sufficient assets available.

Many successful investors have one niche of the business that they focus on. Always educate yourself and know what other options are out there.

 

5 Things To Consider Before Purchasing A Multifamily Property

There are pros and cons to almost everything in real estate. One segment of investors will tell you that multifamily rental properties are the only way to go.  Another camp will tell you that they are more trouble than they are worth and you should be focusing on single family properties.  The reality lies somewhere in the middle.  Multifamily properties are a great way to accumulate long term wealth but only in the right situation.  Before you get involved you need to know exactly what you are jumping into.  One bad rental property can weigh your portfolio down and become a burden on the rest of your business.  Here are five things you need to consider before purchasing a multifamily rental property.

  • Increased Price Of Entry. Over the past five years the multifamily market has grown in leaps and bounds. Once devastated by the mortgage collapse multifamily homes have seen an increase in home prices for the better part of the last decade. While this may be great as an owner it can cause some problems if you are looking to buy. Multifamily home prices are at a five year high point and in most markets considerably more expensive than the average single family rental. Rising home prices require additional capital for down the down payment, closing costs and property tax escrows. It also means that the rent generated needs to be higher to offset the rising monthly costs. There is a definite trickle-down effect to every aspect of the property solely due to the increased price of entry. Multifamily investing has its benefits but can make ownership a difficult hill to climb.
  • Higher Mortgage Standards. There is a tremendous difference in the loan items required for a multifamily property as opposed to a single family. With a single family property you can get away with around 10-15% down payment with credit scores considered good but not great. With a multifamily property you need to have excellent credit scores, 20% down payment and have low debt to income. Being strong in two of these areas is not enough. A two or three family property has stricter loan guidelines across the board. With home prices rising coming up with the 20% down payment is a difficult initial hurdle. This money needs to be in an existing account of yours for at least 60 days. Gift funds of any kind are not allowed. Credit scores must be at least 700 and in some cases as high as 720. You also need to look at how you generate income. Most lenders only use 75% of any rental income received and will calculate income based on the adjusted gross income. Before you do anything else you need to reach out to your lender or mortgage broker and find out exactly what you need to do to qualify.
  • Tenants. Having an additional number of tenants can be considered a blessing and a curse. On one hand more tenants increases your cash flow options. Instead of having just one tenant to rely on you can have two, three, four or more checks coming in. On the other hand more tenants usually mean more potential issues. A three family property has three sets of tenants each with their own set of problems and drama. If you decide to manage the property yourself you can expect a phone call from one of your tenants at least every week. This is one of the reasons it is so important to find quality tenants you can trust. If they don’t respect the property or each other you can have a continuous cycle of problems. There is certainly an upside in collecting more checks but you need to be weary of everything that comes with it.
  • Increased Maintenance. Yet another example of differing points of view with multifamily rentals is with the cost of maintenance. Investors that favor multifamily rentals will point to the economy of scale associated. Under this scenario you can cover multiple expenses at once. If the roof needs to be repaired there is only one roof on the property, not three. If the lawn needs to be cut or the driveway plowed there is only one item of each regardless of the number of units. The other side to that coin is that the cost of repairs is generally much higher. Additionally you also need to stay on top of multiple units. This means repairing or replacing multiple sets of dishwashers, dryers, stoves, toilets and more. With increased tenants and units the odds are that something will need to be fixed during every lease.
  • Limited Buyer Pool. Owning a multifamily property works in reverse when you are trying to sell. Even though home prices have jumped higher it still can be difficult finding the right buyer. Not every interested buyer will be able to satisfy the required mortgage guidelines. If, and when, you do find a buyer it will take some time to close. Single family homes are closing in roughly 40 days and multifamily homes take between 50-60. This increased closing timeframe makes it almost impossible to sell in a pinch if you needed to. It also stresses the importance of accepting the right buyer as opposed to the highest offer.

There is nothing wrong with pursuing a multifamily property but you need to know what you are getting into. There are pros and cons associated and it is important that you always form your own opinion.

 

5 Things You Should Do To Your Rental Property Every Year

To maximize rental cash flow you need to stay on top of your property year round. It is not enough to list your rental and wait for tenants to pour in. Even if the property doesn’t necessarily need updates it is always best to be a step ahead rather than a step behind. In competitive markets your property will be compared to every other one in the area. Often times it is the little touches that can make the biggest difference. You don’t need to give your rental a complete makeover every year but you should stay on top of it. Here are five things you should do to your property at the end of every lease.

Paint. It is important to look at your rental through the eyes of a prospective tenant. Even though the walls may not be in terrible shape they are probably more beat up than you think. If you are like most landlords you use lighter paint colors for the high traffic areas. White or eggshell colors retain every handprint and stain throughout the course of the lease. You need to hit the walls with a fresh coat of paint at the end of every lease. You don’t need to be a professional painter to paint a bedroom. For less than a hundred dollars you can buy everything you need to paint a room or two. This may take you a few hours but will make a tremendous impact on the appearance of the property. A prospective tenant can often tell how well the property is maintained strictly by how clean the walls are. Take a few days every year and keep the walls looking fresh.
Preventative Maintenance. Not everything you do to your rental is to attract tenants. A rental property should be treated like an investment. If you want your investment to hold its value you need to take care of it. There are several things you can do to keep the property as healthy as possible. Start with the major items like the furnace, water heater and oil tank. The furnace and oil tank should be serviced every year. You need to change the filters, run the lines and find any potential issues before they turn into larger ones. Not only will you keep these items running longer but they will also be more efficient. You should also take inventory of your appliances. The washer, dryer, dishwasher, refrigerator and stove won’t last forever. Even if you have great tenants they will not take care of these items the same way you do in your house. Take a look at if there are any lingering repairs that need to be made or if they are due to be replaced. If you put a band aid to get you through the year you should prepare yourself to purchase something new.
Floors. Tenant’s eyes go to the walls and floors upon entering a new property. If you are willing to paint the walls you need to do something with the floors. Instead of replacing the carpet every few years you should spend the money to have them professionally cleaned. A good steam clean can make them look brand new. The same is the case if you have hardwood floors. Instead of steaming there are plenty of inexpensive cleaning solutions that you can do yourself. Even if the floors are run down and scratched you can restore them and give them a good shine. The look of old, dirty hardwood floors compared to clean ones is night and day. This is the first impression that your tenant has. The rest of the house may look great but if the floors are run down your tenant may look elsewhere.
Landscape. The floors and walls are important once your tenant enters your rental but what about the exterior. It is entirely possible that your tenant may form a negative opinion before they step food in your property. The curb appeal is a much bigger factor than you may realize. You don’t necessarily need the outside to be pristine but it can’t look like a jungle either. Any bushes and shrubs should be trimmed and neat. If there are weeds in the driveway you need to pull them up. A fresh layer of mulch is a must in the spring. The property should be free of any leaves and long grass. The next time you pull up to your property make a note of how the exterior looks. Anything that catches your eye will probably catch a tenant’s eye as well.
Odds & Ends. You may be surprised at just how many little things impact a tenant’s decision. It is not an exaggeration to say that the little things can make all the difference. The little things can mean anything from replacing the shower curtain to cleaning out the garage. Something as seemingly small as a new welcome mat or updated switch plates can be what a new tenant remembers from the property. Many of these minor items are less than the price of lunch but will separate your property from everyone else. It is a good idea of have your spouse or someone you trust walk the property with you and tell you what stands out to them. If it stands out to them it will stand out to a tenant. Focus on these items before you start your new tenant search.
Even the best properties need a little work at the end of every lease. By spending a few hundred dollars you can attract better tenants and keep your property running as efficiently as possible.

“Winterizing” Your Rental Property

Even though fall is just a few months old it is never too early to think about winter. As a rental property owner you need to do everything you can to protect your investment.  There is no season that can produce greater wear and tear on your rental property than winter.  One frozen pipe will cause severe damage that will be costly and time consuming to fix.  Additionally there are several seemingly minor actions you can take that will save your tenants money and increase the useful life of your property.  Providing seasonal maintenance to a rental property is always important but no time more important than in the winter.  Here are a few things you need to do to your rental property before winter hits.

  • Furnace. No landlord wants to deal with tenant issues in the middle of winter. Season maintenance won’t provide all of the cures but it will certainly go a long way. Instead of trying to squeeze every possible hour from your furnace you should take a proactive approach. By getting the furnace updated every winter you can easily add years to its life. Cleaning the pipes and changing the filter may not seem like a big deal but they are. There are plenty of landlords who balk at paying a few hundred dollars every year for something that doesn’t produce a direct benefit. You can either spend a few hundred dollars in November or be stuck with a much bigger problem in the middle of winter. These problems can be compounded if you do not have anyone you can call in a pinch. Regardless of the types of tenants you have the furnace will be used almost every day from mid-November to mid-March. Before the furnace gets used the first time you need to get it serviced.
  • Check Out The Attic. One of the most under appreciated aspects of heating efficiency is insulation. If your tenants have complained about the house not being as warm as they like you should take a look at the attic. For starters you should check the insulation itself and make sure you have enough installed. While you are up there you should also check if there are any cracks or gaps that could be stealing heat. If you do not know what you are looking for there are several people who you can hire to take a look. While heat rises it can also be going right out of your attic if you are not careful.
  • Doors And Windows. Prior to any snow or extreme weather you should take a walk around your rental and check out all of the doors and windows. Many times something minor like the space under the front door can have a major impact on the room temperature. Take a look at any door entry ways in addition to the garage door. A space at the bottom of the garage door can have a bigger impact than you think. You also want to look for any cracks in the windows. Replacing a crack can be a relatively easy fix if you catch it in time.
  • Gutters. If you think that not cleaning out your gutters isn’t a big deal think again. All it takes is one season of leaves to turn a small issue into a bigger one. When your gutters get clogged the water has nowhere to go. This becomes an issue after a few significant snow storms and the temperature begins to drop. The gutters will eventually become packed with snow and eventually frozen. If the snow is significant enough the gutters will begin to sag and possible fall off the house. This can be a nightmare to fix with a foot of snow in the front yard. It can also lead to water buildup on the roof that could possible turn to a leak in your living room. If you don’t get your gutters cleaned you are asking for trouble.
  • Miscellaneous. After you get your furnace service you should make sure everything is running smoothly. Walk around to all of the air ducts and make sure that the heat is coming out. It is not uncommon for there to be minor blocks that disrupt the flow of heat. You also may want to check the insulation in the garage. Older garages with poor circulation can often lead to frozen pipes. A front pipe in the garage typically means no water in a bedroom or bathroom. If your property has central air it is a good idea to buy a cover and cover it up for the winter. It is little things like these that go a long way in heating efficiency.

Now is a good time to get on the same page with your tenant. Discuss your snow removal policy and make sure there are no questions at all.  If your tenant thinks the driveway will be plowed every inch of snow they may be in for a surprise.  You should also ask that they inform you if they plan on being away from the house for any extended period of time.  Just a few days of cold weather can cause the pipes to freeze.  If the house is heated by oil you need to remind them that if it gets too low the heat will not work.  It is their responsibility to stay on top of the oil level. It is always better to deal with potential weather issues now than when they actually happen.

By protecting your property in the winter months your tenants will be happy which leads to longer rents which makes your life as a landlord much easier. Now is the time to consider simple winter property maintenance.

 

5 Ways To Boost Your Credit Score

When is the last time you looked at your credit report? If you are even remotely involved in the real estate business the answer should be within the last thirty days.  If you are not on top of your credit report you run the risk of having to deal with unexpected issues when you least expect them.  Instead of utilizing lender financing when a new property hits the market you will be left scrambling for solutions.  At that point getting your score where it needs to be may not happen in the timeframe you desire.  Improving your score can take as little as 30 days if you know the right improvements to make.  If your scores are low and they need a boost there are a handful of moves you can make.  Here are five ways to quickly improve your credit score.

  • Periodic Credit Updates. You should constantly have an idea of where your credit scores are. In the past getting your scores meant going through a third party vendor who had access to Transunion, Equifax or Experian. Today it is easier than ever to know exactly where you stand. There are several companies who provide constant credit monitoring in addition to providing monthly credit score updates. You can even obtain a copy of your report through certain credit cards. Staying on top of your reports is an important part of avoiding fraud and erroneous accounts. The quicker you act when a fraud account is spotted the easier it is to deal with. The longer the account is on your report the more damage is done and more of a burden of proof you need to supply. Removing these items can become a time consuming nightmare that lowers your score every day. The first step in improving your score is finding a way to get your hands on a copy of your report every few weeks.
  • Get Current. Every day that you are actively late on an account has an impact on your credit score. This is the case whether you are talking about a small credit card or a large mortgage payment. Your score will not stabilize until the accounts become current. Current does not mean remaining 30 or 60 days late. It means paying off the account until you are not late. Once the account is caught up you will see an increase each subsequent month. Getting caught up could mean consolidating from one credit card to another or taking money out of savings in the short term. You credit is judged, in part, on the number of 30, 60, 90 and 120 day lates you accumulate. The quicker you can get out of any hole and get current the quicker you will see a spike in your scores.
  • Reduce Minimum Balances. It is understood that timely payments are a huge factor in determining your credit score. However most people aren’t aware that the balance in relation to the amount owed is a close second. You can pay everything on time but if your balances are too high your credit won’t be as strong as you expect. One way to quickly increase your scores are to pay down any high balances. Paying down a $900 balance on a $1000 credit card even just a few hundred dollars has a big impact. If your balances are high on multiple cards you should look into which balance transfer options are available. Paying down a few cards and shifting around some balances on a few others can increase your credit score by twenty points, or more.
  • Remove Erroneous Accounts. Every day that an erroneous account stays on your credit your score will drop. As we mentioned it is critical that you know what is on your credit report at all times. The minute you spot something that is not yours or has been paid off you need to take action. An old collection account or charge off that is not removed pulls your score down. If the account has been paid you need to send any supporting documentation over to the three credit bureaus and have it removed. There are also credit repair companies that can help expedite this process if you need a rush. Without supporting documentation your task is much more difficult. You may have to go back years and track down an old lienholder or credit card. As difficult as it may be it is an essential part of restoring your credit score.
  • Avoid Unnecessary Credit Pulls. A final factor in determining your credit score are the number of times your credit is pulled. A few credit pulls a month will not have any impact on your score. It is when you pull it a half dozen times or more in a 30 day span that your score will be impacted. Frequent credit pulls are seen as a sign that you are looking for credit and having a difficult time getting approved. If you do need a credit card it is best to go through one company that has multiple options instead of shopping around to ten individual companies. You may not think anything of it but you will see the impact the next time you pull your credit report.

You should never take your credit for granted. You truly never know when you will need to utilize credit.  If your scores are low the quicker you take action the sooner you can start on the path of recovery.

 

5 Things You Need To Know Before Making An Offer

make-an-offer-2-624x416-1Most new investors are in a rush to make an offer. They want to accelerate the process and get things started as quickly as possible.  As great as taking action is you also need to know everything about the deal and property you are making an offer on.  A lack of due diligence in just one of a few key areas can completely change the perception of the property.  Prior to looking at any new property you should have a due diligence checklist firmly in place.  This will help streamline the process and allow you to quickly react and avoid a major oversight.  Here are five things you need to know and have in place before making an offer.

  • Financing. The starting point for any purchase is financing. How you plan on financing the property impacts almost everything you do in the transaction. The terms and price on a property you are paying cash for is different than if one you would utilize lender financing. Either option you chose can work but you need to know which way you are going to go prior to making an offer. If you plan on paying cash you need to have your proof of funds letter updated with any amounts adjusted. If you are using lender financing your pre-qualification letter has to have the proposed purchase price in addition to as much specific information as possible. Your financing can, and probably will, change depending on the specific property. However you need to know which way you want to go prior to making an offer. The type of financing you choose will often influence the decision of the seller.
  • Understand Local Market. Getting an alert about a new listing at a reduced price may seem like a steal but it can end up being fool’s gold. If the property is in a declining market getting it for virtually nothing can still end up doing more harm than good. Prior to making any offer you need to know everything about the market the property is located in. It can be argued that the market is more important than the actual property. You need to understand both the micro and macro view of the property. The micro view looks at properties and trends as close to the subject property as possible. The macro view looks at the town as a whole and the big picture view of the area. It is important that you understand as many trends as you can find and have an idea of what influences them. The local market of the property will often directly influence the property value as well as what your future options are. It is not enough to simply acquire the property and figure things out as you go.
  • Know The Property. If you are going to make an offer on a property you had better know everything about it. Almost every seller will go to great lengths to make their property appear as appealing as possible. If the flaws are not obvious it can be difficult finding them. Prior to making any offer you need to go the extra mile to know exactly what you are buying. Track down the listing history and see if there was any work recently completed on the property. Walk the grounds with your contractor or an inspector to give you an additional perspective of the property condition. In your excitement to make an offer it is easy to gloss over some minor items that can actually have a significant impact. By having someone you trust provide an additional perspective on the property you reduce the risk of finding something unexpected after you take ownership. If you aren’t comfortable with your knowledge of the property you should consider passing until you are.
  • Walkaway Price. There is a lot of work that goes into researching a property and making an offer. There are times when you will do hours of due diligence on a property and not be rewarded with a deal. As difficult as this is it is part of the business. What you can’t do is let one deal influence your actions on the next one. It is important that you have a walkaway number in your head prior to making any offer. Without this number it is easy getting caught up in a bidding war and letting your emotions take over. Sometimes some of the best deals you make are the ones you walk away from. Stand firm with your number and know where to draw the line and walk away.
  • Research Exit Strategies. What do you plan on doing with the property if your offer is accepted? Do you have a backup plan or two in mind if things don’t go the way you anticipate? The longer you are in the real estate business the more you will accept that things won’t always go the way you plan. There will be plenty of times when you need to call an audible and change gears on the fly. If you are not ready to adjust you may find yourself in a situation with a property you desperately want to get out of. Prior to making an offer you need to have multiple exit strategies you can employ in a moment’s notice. The more options you have the more valuable the property is. Never put all your eggs in one basket and assume that everything will go the way you anticipate.

You always want to be confident you are making the right offer on the right property for you and your business. If this means taking a little more time on due diligence than that is what you need to do.  Always know and understand these five areas before making an offer.

 

Six Reasons You Should Consider Investing In Real Estate Today

beginner-investor-2-624x312Real estate investing is one of the best careers you can possibly have. Sure, this may be a little biased but it also happens to be true.  Investing in real estate gives you the ability to make your own schedule as well as the chance to generate unlimited income.  There is no boss telling you where you have to be and what you need to do.  You can invest as little or as much as you like and there are no licenses needed to get started.  The business is truly available to anyone who wants to be involved and the sky is the limit.  If you are on the fence as to whether or not a career in real estate may be for you here are six reasons why you should consider investing in real estate today.

  • Barriers Of Entry. As we mentioned one of the biggest reasons why new investors get started in real estate is because anyone can do it. If you wanted to practice law you couldn’t just go down to the local courthouse and work on the next case. You would need to go to school for several years than pass a grueling exam. In real estate you can make an offer on the next property that hits the market if you wanted to. There is no licensing requirement or continuing education you need to uphold. A brand new investor has the same opportunity for success as someone who has been in business for years. There is nothing holding you back from getting started or standing in your way from sustaining it.
  • Make Your Own Schedule. As a real estate investor you can concentrate on the business as much or as little as you want to. If you want to close just a few deals a year that option is on the table. If you want to quit your day job start a new career path that option is available as well. As a new investor you can dictate how you want your day to go. You no longer are forced to the same tired routine every day. You can get out of the office and come and go as you please. This doesn’t mean you won’t have to work hard but you will have greater flexibility to do some of the things you may have been missing out with your previous schedule.
  • No Office. Working for a big company and sitting at a cubicle all day has a few distinct advantages and disadvantages. On the positive side you can receive steady income and utilize any health insurance provided by the company. The negative is that you are forced to deal with office politics and usually do the same mundane tasks every day. In real estate there is something exciting and new each and every day. Instead of sitting at a cubicle you can get out and meet people and grow your business. You are the CEO, CFO and President of your own business. You can run in any way you like without someone looking over your shoulder.
  • Unlimited Income Potential. Wouldn’t it be great to have the ability to control your own income? In real estate that scenario exists. There are no caps on how much you can make. If you work hard, network and find deals you can close as many as you can handle. You don’t have to climb the corporate ladder and wait your turn to succeed. This doesn’t mean you will have instant success upon entering the business. The real estate investing business isn’t easy. However you are in control of your financial future more than any corporate job you can ever have.
  • Higher Average Returns. Any type of investing is about balancing risk and reward. You don’t need to be a finance major to know that parking your money in a savings account may not be the best investment vehicle. Sure, you will make a small yield every month but it won’t grow at a very fast pace. With real estate you can turn an average investment into a home run. Additionally you don’t necessarily need all of the funds to come from your account. It is quite possible that you leverage bank funds or even other people’s money to generate a return. Any way you slice it the potential in real estate is much greater than almost any other investment you will find.
  • Cash Flow Potential. When most people think of real estate investing they think of quick flips and rehabs. There are more rehabbing shows currently on TV than ever before. However, rehabbing isn’t the only way to invest in real estate. There are many real estate investors who focus solely on rental properties. A high performing rental property gives the owner a mix of monthly cash flow coupled with long term appreciation potential. With a strong management team in place they can receive all the perks of the property without having to deal with the day to day drama. The ability to open your mail box once a month and receive surplus cash flow is a wonderful part of the business.

There is truly no better time than right now to get started in real estate. Getting started in anything new is never easy but the perks of the business are too great to ignore.

 

6 Things You Should Review Before The New Year

new-year-investor-2-624x416We are officially under 40 days until we turn on page on another year. While that may seem hard to believe
it will be hear sooner than you realize.  If you are like most people you look at the New Year as a time to make tweaks or changes to your business and personal lives.  Instead of waiting for the end of the year you should take some time now to assess where your business is and what may need to be changed.  By doing this you can hit the New Year running and get your year off to a great start.  Here are six areas of your business you should review now prior to the end of the year.

  • Business Plan. Did you do everything you wanted in your business over the last year? If yes, what caused this to happen? If no, what prevented you from achieving it? In addition to reviewing your successes and failures you should look at your business plan as a hole. Does your plan still fit with what is going on in the market? Are your goals still in line with where you want your business to go? There is typically plenty of down time between now and the end of the year. Take some time and look at your business plan and more importantly how you can put any changes into action.
  • Marketing. In the world of real estate you are only as good as your marketing. You can do everything else right with your business but if your marketing is poor you won’t have the results you desire. There are more marketing options than ever before. It can be very tempting to dabble in all of the various marketing options that are on the table. It is always best to pick out just a few and make those your focus. With marketing you want to look at the return rather than the expense. Analyze what marketing gave you the biggest bang for your buck and what failed to hit the mark. Many times just a few subtle changes in marketing can have a huge difference.
  • Systems. Most human beings are creatures of habit. We often do the same things at pretty much the same time every day. With any business it is commonplace to continue doing things the way they have always been done. This isn’t always the best approach to take. You should constantly review if there is a better way of doing things. There are so many facets of the real estate business that can be improved simply by accepting change. There are systems for everything from lead generation to deal evaluation that change be altered. Look at every micro aspect of your business and see if there is a better way of doing things. As long as you accept that change is a part of business it is easier to make them.
  • Lease & Insurance. There are many hidden aspects of a good business. One of the things that make a good business is protecting yourself at all times. Items like leases and insurance are incredibly boring but are essential in the event of an emergency. When is the last time you look at either one of these items? If you are like most people you probably only glance at them when a lease is ending or when your policy is renewed. Looking at them after an incident is often too late. Reach out to your insurance agent to see if you have all of the coverage you need. Spending a few extra dollars a month is worth it to give you peace of mind. With your lease you need to be protected in the event of an eviction or unexpected issue with the property. Call your attorney and ask if they can give your lease a look to ensure you have everything you need.
  • Expenses. Do you have a firm grasp on every expense your business makes? It is not enough to have an idea or be able to take an educated guess. You need to sit down and take the time to go over each and every expense. This is another of those painstaking items that is necessary for business success. By pouring through your expenses not only can you save money but you may be able to find a better way of doing things. A few hundred dollars a month may not seem like a ton of money but added up over the year can equal thousands.
  • Financing Options. The final business item for review is your financing options. Even if you have a primary financing option you should always keep your options open. You never know when you will need a private money or hard money lender. If you use lender financing you should reach out to you lender or mortgage broker to see if there are any new programs available. There are always new mortgage programs hitting the market. There could be one with a reduced down payment or documentation option that fits with your lending profile. At any time you should have at least four different lending options you can utilize if a new deal presents itself.

Take advantage of any down time between now and the end of the year to set yourself up for next year. The better in touch you are with these six areas the better position you will be to have a great 2017.

 

Why November Is A Great Time to Buy

As we quickly approach Thanksgiving the end of the year is right around the corner. With this often comes holiday parties, excessive days off and a general lull in the real estate market. In real estate this can present a great opportunity to buy. With your competition mailing the rest of the year in you can take full advantage of it. Even though November is traditionally a slow sales month there are still good deals to be had. You just need to know where to look and how to approach them. By closing just one more deal before the end of the year it will set your business up for a great start next year. Here are five reasons why November can be a great time to buy.

Reduced Prices. Sellers know that the end of the year can be a difficult time to sell. With the change in weather mixed with the holidays there are many buyers who decide to postpone their home search until the New Year. Partially because of this sellers are inclined to reduce their asking price. Even if they don’t come right out and lower the price they may be inclined to accept a below asking price offer. If there are any properties you have had your eye on now is a good time to at least make an offer. You never know what a seller may be thinking and want to do with the property. They may be desperate to sell by the end of the year and willing to come off their list price. A good tip is to look at properties that have had a price reduction in the last 45 days. If they took one reduction there may be a chance they are open to accepting any reasonable offer that comes their way.

Motivated Sellers. As we mentioned there are many sellers who are desperate to sell before the end of the year. By finding motivated sellers you can stumble upon good deals. One group of motivated sellers at year end time are lenders. Banks are not in the business of being property owners. Although the number of short sales and foreclosures has declined there is still a good amount of inventory in many markets. Banks holding these properties would love nothing more than to clear their books of them by the end of the year. Ask your real estate agent for a list of all bank owned, short sale or foreclosed properties in your area. Go through them one by one and look for properties that have either been on the market for some time or require cash buyers. Don’t be afraid to make an offer you feel comfortable with as long as you can close before the end of the year.

Tax Break. There are a handful of tax incentives or breaks that expire at the end of the year. As a buyer you can write off several closing costs expenses and apply them to your 2016 tax return. This alone may not be a reason to buy but if you are on the fence it can be a deciding factor. There are also a handful of sellers who want to take advantage of these benefits on the other side of the transaction. If you can target a seller who has recently purchased a property you may be able to get a good deal. This is especially the case with fellow investors. Scour through as many real estate listings you can find online and target properties sold by investors. They may be highly motivated to sell by the end of the year and will often offer a steep discount to do so.

Quick Turnaround Time. Not every real estate purchase is done through a cash sale. If you purchase your properties with lender financing you may still have time to close by the end of the year. With decreased volume lenders have the ability to turn your loan around much quicker. Instead of waiting days to clear an underwriting issue it is possible get these taken care of the same day. The downside is that there are plenty of days off or half days towards thanksgiving but there is also more of employees looking for work to do. Ask your lender or mortgage broker what their current turnaround time is. If you have all of your loan items in place it is very possible that you can close your purchase well before 30 days.

Supply. The end of the year is usually filled with ample property supply. This gives buyers the ability to sift through inventory to find exactly what they are looking for. It is not uncommon to find the best deals of the year at the end of it. Sellers understand that after the calendar turns there is still three to four months before the spring selling season. This is four months of carrying costs or mortgage payments they would have to make. With increased supply you know exactly what you are buying with a seller who may be willing to turn the page and move on from the property.

With the weather turning and the days getting shorter there is a tendency to work less. However if you can finish up the year strong and keep your eyes open for deals you will be rewarded. November can be a great time to take advantage of the market.