Date Posted : 2010-10-19 | Category : Seller Financed Mortgages | Comment : No Comment
The Problem
When it comes to selling real estate, one of the most difficult and frustrating situations for sellers is when market conditions make it nearly impossible to sell at the desired price point. A high initial listing price might be because the seller simply has an unrealistic idea of how their house stacks up against the competition in the area, or because the owner needs to sell for a set minimum price in order to pay off their loan against the property.
With traditional property sales methods, the only way to prevent the property from sitting on the market indefinitely is to keep dropping the price. Unfortunately, this technique doesn't always work - especially if the seller is unwilling to "discount" their house by much.
In areas flooded with homes for sale, reducing the asking price slightly will not bring the desired result. In fact, it's common that the property will continue to sit on the market without offers, alongside the multitude of other unsold properties with similarly reduced prices.
Anyone experienced in sales understands that making your product stand out from the crowd is a critical technique for success. But if there's too much competition offering the same attributes, the only logical way to attract the attention of serious buyers is to drop the price so that your property is a much better value than the competition.
In cases where the seller is too inflexible with their asking price, this is not a practical solution. Without an alternative strategy, the seller is forced to keep the house on the market for an extended period of time with an unrealistic asking price, hoping for the right buyer to come along. And as you know, that "Mr./Mrs. Right" might NEVER materialize!
The
Seller Finance Solution
Property sellers who want to both obtain their desired price and close on the deal quickly should consider seller financing. Seller financing is a powerful tool to remedy real estate situations that otherwise look grim.
Many home sellers (and their real estate agents) do not see seller financing as a viable option. In actuality, seller financing can bring new attention to the listing and invite a different group of potential buyers - thereby opening up a unique, untapped market.
A large percentage of people throughout the country cannot get approved for bank funding to buy real estate because of their credit situation. Many of these people are still in the market to buy a house, however. The "credit-challenged" are often frustrated with the limitations of apartment living or being renters; as a result, many are willing to pay a higher price just for a chance to get seller financing and improve their quality of life.
A savvy property seller who recognizes this opportunity can salvage an unfavorable situation and turn it into a bonafide seller's market. By using this type of creative financing, the seller could actually end up getting more than the original asking price - without resorting to the questionable strategy of patiently waiting for the "right buyer".
Seller finance can enable homeowners to receive a favorable selling price despite bad market conditions. In addition, the real estate agent (if any) gets to close a deal and move on to other sales, while a home buyer with poor credit is able to become a home owner. It's one of those rare situations where everyone at the negotiating table gets what they want.
Paper Tigers
Many home sellers never consider seller financing because they don't understand the benefits. There are also common misconceptions that it's much too complicated to attempt to orchestrate a seller financed deal, or that there are no buyers willing to sign a private note.
Once a property seller takes the time to learn about the basic process, the advantages of offering financing instead of a lower price to sell their property become very clear. Plus, a little education about seller finance will make it apparent that drafting a secured private note is actually a very straightforward process.
The bottom line is seller financing can enable a home owner to "have their cake and eat it too" - i.e., sell at the desired price, close the deal quickly, and even receive additional income from interest payments as well.
Article source: Our Friends @
http://www.money4iou.com
Date Posted : 2010-08-03 | Category : Buying Investment Properties | Comment : No Comment
The Tsunami of Commercial Foreclosure is well on its way...
You better be ready!
According to the experts in the industry,
Commercial foreclosures wave is promising to sweep through the nation with an overwhelming force and it has potential to bring our economy to another halt.
It is projected that 68% of commercial mortgages could go into default, which could mean that two thirds of all commercial buildings might go into foreclosure. This can cause as many as 700 additional lending institutions to collapse.
What does it mean for you, real estate investor? Unbelievable discounts on commercial properties that are often in great condition and generating positive cash flow. Confused?
Ok, let’s break it down. Most of the commercial real estate loans are done by smaller regional banks and many of these loans are short term loans with balloon payments. And just as residential real estate during the last decade or so, commercial real estate has experienced boom as well. This caused for commercial properties to be in some cases over valued and over leveraged. Sounds familiar?
Ok, let’s continue. Previously described set up for another round of financial disasters can turn into a potential gold rush for real estate investors. Here is how. Think back to residential foreclosures. As balloon payments for real estate loans are becoming due, owners will be forced to sell or refinance. With credit not being readily available the second option is not viable, so what are you left with? Right, sell. Now remember the 68% of commercial mortgages that are could go into default? This is the reason why. If you can’t refinance you have to sell or let your lender foreclose on the property. It’s a simple matter of supply and demand.
So here is what is anticipated to happen. An estimated value of 1.3 trillion dollars of commercial properties is expected to become due in the near future and with credit market being in the condition it is in now, chance of all these properties finding refi options are pretty slim to none. And slims are out of town, by the way. On the same token, selling a property most likely won’t be an easy task as well. Why? No credit available.
What does it mean for you?
[lxl] DEALS, DEALS and did I mention DEALS.
And guess what? No money down seller finance deals. That’s right your eyes are not deceiving you. You can find no money down seller finance deals. Check out this video to learn how easy it is.
Date Posted : 2010-04-17 | Category : Best business practices | Comment : No Comment
Top 10 Biggest mistakes real estate investors make and how you can avoid them if you want to protect your investment properties.
So here we go ...
More Words of Wisdom from my good friend, Peter Harris.
#1 – Important reminder: 9 out of 10 property managers are no good!!
In other words, 90% of qualified property managers cannot operate your property to its highest levels. Face it, the property management business is a tough business to make money in. They usually over-commit and under-deliver. It takes years to be successful in it, let alone grow profitably. And no one cares more about your investment than you do.
#2 - Make sure the property management company is in agreement with your business plan and exit strategy for the property.
Did you invest in this property for
monthly cash flow for you to live off of, or for your retirement years down the road, or as a tax-shelter? Whatever the case, make sure your property manager knows, understands, and is in agreement with you.
#3 - You won’t find out if the property management is good or not, until you hire them for 3 months at least. Ouch.
Working with a property management company is like a marriage, you’ll find out if they can really do the job only after you hire them and they’ve been on the job for a time. Choose your property manager wisely.
#4 - To hire the best ones around get a referral from someone who is happy with their own property manager’s performance.
This is absolutely the best way to hire a new property manager successfully. Find someone such as a fellow-investor who is pleased with how their property is being managed.
#5 - Make sure they agree to send you monthly performance reports – get a sample of theirs before you hire them.
Upfront, when interviewing, ask what their
property performance reporting capabilities are for owners. Get a sample of what they currently send out, then tell them what you need on weekly and monthly basis for reporting on the property. If they are incapable, then you have limited ways of holding them accountable.
#6 - Hold the property manager accountable with well-organized monthly meetings and with the “weekly accountability report”.
Every month, like clock-work there needs to be a meeting between you and the property managers. If you let these meetings sly and go by the wayside, think of a child that you slack discipline with. What happens?
#7 - Visit the property routinely (with surprises too).
Upon taking ownership, you should visit the property at least once per month (more if it is being rehabbed) for the first 6 months. Afterwards, site visits once per quarter should do.
#8 – Conduct an annual customer service satisfaction survey of the tenants or often called a “resident satisfaction survey”.
You could easily do this yourself or hire a third party to conduct the survey. The survey should address the following: maintenance of apartments and grounds, maintenance of community facilities (pool, clubhouse, etc.), maintenance of utilities (heat, water, garbage), tenant relations, leasing services, and security. Keep it simple, easy to fill-out, with a self-addressed stamped envelope, with names optional.
#9 - Plan for rainy days because stuff happens = build reserves.
Nothing comes between business relationships more so than the subject of money. Money problems seem to never appear until it’s needed and there is none. Build up and maintain a reserve fund for emergencies.
#10 - Don’t be afraid to pull the plug on the property manager if poor performance lingers.
Here a few signs to watch indicating it may be time to pull the plug: high delinquency of rent collection, worsening occupancy trend, habitually late reporting, and accounting irregularities.
CLICK HERE TO LEARN MORE ABOUT…..Peter Harris, TheApartmentConsultant.com
Date Posted : 2010-03-13 | Category : Buying Investment Properties | Comment : No Comment
Set Your Goal: to
purchase your first apartment in 90 days. In general, this plan is for buying cash-flowing, income-producing apartment investment with built-in equity.
Do Your Market Research: one of the most important rules on where to buy apartment buildings is to buy where there are JOBS. If there is an absence of jobs and job growth, there will be an absence of persons to rent to. If you have no one to rent to, your apartment investment will likely fail. The easiest way to gauge a healthy job climate is to call your local chamber of commerce and get connected to the economic development department. Within this department are all the statistics you’ll need to see what the current unemployment rate is as well as what the future holds. I like to get info straight from the street as well. I’ll call several local property managers and ask them the question point blank: “how’s the job market today?”
Start In Your Own Backyard First: I suggest starting your market research and having an intention on investing in your own city first. It is by far the easiest and most efficient way to begin. Investing out-of-state for the first-timer should be your last resort and should be done with the help and guidance of a skilled-advisor or hands-on consultant. By starting locally, you’ll be able to drive around, meet people in person, check up on the property easily, and learn the business faster.
Be Smart and Find a Local Property Manager: Smart business people team up with smarter teammates. Property managers know all the ins and outs of operating and running apartments – that’s how they make a living. So why not have them as your advisor right now as you’re learning the business? Property managers know neighborhoods very well, if they’re safe, if they’re easy to get tenants, and how stable they are. As soon as I find a potential deal, I get my property manager on the phone and I ask them about the neighborhood and apartment complex. This is my way of “kicking the tires” before I jump in. This way, it will save me a trip to the property and allow me more time to evaluate more deals.
Start Generating Leads: Now that you have a goal, some market research under your belt, and have a city to start in, you’ll need to start finding sources of deals or leads. The simplest way to get leads is to start calling local real estate agents or brokers. I suggest calling them on the phone first and if there is a “connection” there, meet them for a cup of coffee. Even though you are qualifying them, you should be focusing on building a rapport with them. If you don’t like them or if they don’t like you, it’s not worth doing business with them. Life is too short folks! I emphasized this many times that the real estate investment business is a relationship business. So, after you spend a little time building rapport, start sharing with them what you’re looking for.
Start Networking: Here’s that “R” word again. Relationships. Join a local real estate club and start attending their meetings. Go to investment seminars not to only learn the latest techniques, but to meet new people. One of the wealthiest people I know has very little money, but he is the master at networking and meeting people. I see him as truly wealthy. There’s richness in the relationships he brings into his life. The best deals are not going to be found on the internet. The money you need for the down payment is not going to land in your lap. These two things WILL surely come as a result of new relationships you develop.
Analyze Hundreds of Deals: Finding a deal worth making an offer on is a numbers game. You’re going to have to kiss a lot of frogs to find the one prince. The more deals you analyze and look into, the sooner you’ll reach your goal of buying apartments. The bonus of looking at a lot of deals is that you’ll become sharper and sharper at evaluating them. In no time, you’ll be able to qualify deals in a matter of minutes, sometimes seconds.
Get Your Financing: It’s never too early to start thinking about and taking action on how to get your deals financed. You likely fall into one of the two following categories: one, you have your down payment already saved up and it is accessible. Or two, you have very little money for a down payment and you’ll need to go out and find it. Or maybe you fall into a combination of the two? Either way, let’s get than going as well.
Get Your House In Order: What I mean by this is that you’re going to have to change your frame of mind from a homeowner/renter to a business owner. Once you buy your first apartment building and rent to someone, you are hereby a business owner whether you want to be or not. Being a business owner brings great liabilities and responsibilities with it. It’s time to set up an entity (LLC, LP, Corp., trust, etc.) that’s going to own your apartment building and business.
Written by Peter Harris TheApartmentConsultant.com
CLICK HERE To Learn How To Create a Financial Fortress in 90 Days or Less Investing in Apartments.
Date Posted : 2010-03-10 | Category : Best business practices | Comment : No Comment
Two years ago, I received a call from a colleague who explained that she and three other people were part of a Mastermind Group and one of the group members was moving out of state. This created an opening – they had all voted and I was their first choice.
“Would you be interested in becoming our newest member?” she asked. Without hesitation, I replied, “Absolutely! In fact, I’m thrilled to receive your call. Last year, I added to my Treasure Map (my picture board of the goals I want to achieve in my life) that I wanted to form a ‘Braintrust’ group where we work collaboratively to help each other think and strategize about business growth.” Two years later, I am thrilled to report that our group has witnessed the birth of two new business ventures, new business models, two new books and a new baby – yep, little Lucy joined our group last November. This Mastermind Group is the heartbeat of my business. They understand my goals, my challenges, my successes and my failures. They know what’s in my heart, what my talents are, and how I can leverage these to help others. Over time,
they have become more than just members of my Mastermind Group; they have become close friends – an unexpected and cherished benefit.
What is a Mastermind Group?
The term Mastermind Group was coined by Napoleon Hill in his classic book, “Think and Grow Rich.” In it, he defines “Master Mind” as the “coordination of knowledge and effort, in a spirit of harmony, between two or more people for the attainment of a definite purpose.” He adds, “No two minds ever come together without thereby creating a third invisible, intangible force, which may be likened to a third mind.” I have been touched by this invisible force more than once, and it has catapulted my sometimes disconnected ideas into a powerful business plan.
How does a Mastermind work?
Each group creates its own agenda based on the desired outcomes, frequency and length of the meetings. I like to think of my Mastermind Group as my informal board of directors with whom I leverage for strategic advice. A Mastermind Group is not a networking group where you join to generate prospecting leads. Rather, it’s a safe forum where you can present your toughest business issues to secure feedback and insight about how to proceed. A Mastermind Group is also your sounding board – a place where you think out loud and receive feedback about your ideas and strategies. When you form a Mastermind Group, it’s important to keep in mind that ultimately, each person is the CEO of their own business and that the final decision belongs to the individual. To make a Mastermind Group work, I suggest that you keep your group small, say three to four members at most. Each person needs to have adequate time to present (we allocate 90 minutes per person). Only allow new members with unanimous consent of the group. In terms of the agenda, while there are many Mastermind Groups who target their meetings to specific topics, we keep ours open so that the biggest issue(s) facing each member is discussed.
Who do you select to join your Mastermind Group?
My suggestion is to identify people who are thinkers and doers … people who make it happen, not just talk about what they want to do. My group is comprised of speakers – we represent different aspects of this business and each has a different business model. Screening potential members is critical. Decide who you know that shares similar values.
For us, we:
1. Are passionate about creating and growing value-added businesses.
2. Have a strong commitment to help others succeed.
3. Have “skin of a rhino” (meaning we receive feedback really well).
4. Operate with high integrity (what is discussed at the meeting is never discussed with others).
5. Enjoy the creative process (sometimes don’t get to ‘the final answer’ during a meeting, it’s not uncommon for us to germinate over the ideas and then fling emails and phone calls back and forth).
6. Care about one another’s success and happiness on both a personal and professional level.
If you are in sales and want to create a Sales Mastermind Group, consider inviting people with different industry backgrounds, such as health care, manufacturing, environmental engineering, consumer products, etc. The diversity of your business models will offer an important texture and richness to your discussion.
Do not invite competitors. This will inhibit members’ willingness to be candid – a core ingredient to a successful Mastermind experience. Also, select people with similar levels of responsibility – business owners with business owners; sales managers with sales managers, CFOs with CFOs. A mismatch often results in the more experienced members doing most of the coaching and over time, losing interest and leaving.
Where do you host the meeting?
Depending upon the number of members in your group, the length and frequency of your meetings, and the agenda, decide what forum will best support your meeting’s success. For us, we rotate meeting at one another’s offices. This is a full day event so we plan in advance how to handle lunch – whether we bring our own, order out, or have it prepared ahead of time – which we usually work through regardless. From personal experience, I have learned not to schedule anything too taxing that next day. I’m typically drained. I appreciate having quiet time to think about and process what I’ve heard so I can develop my action plan.
The benefits?
Brilliant insights. Cutting-edge strategies. Innovation. A feeling of deep connection to others. The personal rewards from helping others succeed. Joining this Mastermind Group has changed the trajectory of my business. The synergistic nature of this group is dynamic and energizing. I don’t feel alone in my business venture. Rather, I feel connected to a dynamic group of success partners. Their unfiltered advice and insightful feedback has become additive. Refuse to become a victim of this economy. Create a Mastermind Group. Take time to recruit the right people. Once accomplished, expect to gain fresh ideas, novel strategies and proven methodologies that will help you take your business success to the next level and beyond.
Written by Christine McMahon www.ChristineMcMahon.com
