Short Sale - Foreclosures - REO - Bank Own Properties

With the continued volatility surrounding the stock market, more and more investors are converting their retirement accounts into self-directed IRAs. We speak to investors almost every day who want to invest in real estate in some form or fashion and want to use retirement funds (that probably aren't earning enough to keep up with inflation) to do this.  Most investors intuitively know that the opportunities to invest in real estate right now are tremendous; however, not all investors have the same investing goals or risk tolerance when it comes to investing.

Many of the investors I speak to simply want to buy and own residential properties through their IRA. Others want to make a good return, but not deal with the hassles of being a landlord. One of the great things about real estate is there are so many different strategies and approaches to suit different tastes.

3 Strategies Investors Can Use to Invest Self-Directed Funds in Real Estate:

1.)    Buy and Own Individual Properties:  This is the most obvious way to invest self-directed funds in real estate; however, investors can accomplish this type of investing in a few different ways. Most investors simply pay cash for individual properties. Other investors are able to obtain non-recourse loans from banks that specialize in this or from private lending groups.  Lastly, some investors are able to buy percentage ownership in a particular property through their IRA. This can be a great strategy when investing with partners.

2.)    Private Lending (hard money):  Another popular way to invest retirement funds is through private lending opportunities. Private lending (also known as hard money), is where an investor lends money to another investor or company actively working in the real estate market. We work with a number of private lenders in our business who like the higher rates of return associated with hard money, but without the headaches sometimes associated with owning property. This strategy works great for investors with a low risk tolerance or hands-off approach.

3.)    Investing in a Real Estate Fund:  I have seen a number of real estate funds pop up over the last few years. Whether you are investing in a large REIT (Real Estate Investing Trust) or a small private placement fund, there are numerous opportunities to pool money with other investors to take advantage of this real estate market. The great thing about investing in a pool is the ability to have your investment in a diversified portfolio of real estate activities. For example,  a fund that my company is currently involved with uses funds to hold individual properties (for cash flow and long term appreciation), for hard money lending and for tax deed investing.  This is great because your invested funds have the benefit of being diversified into a number of different activities that all have the potential to generate very good returns without leaning too heavily towards a particular area.

For those investors interested in investing retirement funds in real estate, the great news is there is something for just about everybody. Whether you want to own individual properties or take a more hands-off approach,  the opportunities to invest in real estate right now are incredible ' especially when you couple this with the ability to use a self-directed IRA to accomplish this.

This Article is Copyright © 2004-2012 BiggerPockets, Inc. All Rights Reserved.

3 Ways to Invest in a Self-Directed IRA in Real Estate

Announcements that a recovery is underway are not paying attention to the huge piece of the home sales pie belonging to foreclosures and short sales.  Distressed market share is not diminishing in the middle of the spring sales season and it is the first time in two years when prices are rising in a majority of markets.

Improving prices are supposed to inspire sellers to act, but if they are, then there is a rush of distressed properties pouting into the market. 

Two separate reports released early this week, both surveys of real estate professionals taken at roughly the same time, found that the discounts either held their own or increased last month.  The Campbell/Inside Mortgage Finance HousingPulse Tracking Survey reported that the total share of distressed properties in the housing market in April, as represented by the HousingPulse Distressed Property Index (DPI), was 47.9 percent, using a three-month moving average. This was the 26th month in a row that the DPI has been above 40 percent.   In other words, 'normal' homes made up slightly more than half the homes sold in America in April.

According to the National Association of Realtors, distressed sales accounted for 28 percent of April sales (17 percent were foreclosures and 11 percent were short sales), down from 29 percent in March and 37 percent in April 2011. Foreclosures sold for an average discount of 21 percent below market value in April, while short sales were discounted 14 percent.

The average price for non-distressed properties declined 1.5 percent from March to April, while the average price for short sales dipped 1.7 percent. For damaged REO the average price fell 1.4% and for move-in ready REO the average price slipped 0.3 percent.

Falling prices and steady sales suggest that inventories of foreclosures and short sales are rising, perhaps partly as the result the backlog of foreclosures that is being slowly released in the wake of the AG agreement to settle the Robo-signing scandal.

Photo: Ryan Dickey

This Article is Copyright © 2004-2012 BiggerPockets, Inc. All Rights Reserved.

Housing Update: Distressed Sales Hang Tough

It’s the human condition, isn’t it' When inexperienced, but newly ‘educated’, we often convince ourselves we know what we don’t know. As a young man I must’ve been the poster boy for that concept. Almost like it was yesterday, the memory of my first ever day as a ‘real estate guy’ is still fresh. Walking from the parking lot to the office’s front door, then entering, the first thing that hit me was the smell of strong coffee — Navy Chief-strong coffee. I knew far more then, than I do today. It’s not even close. What a fool. It was a couple months past my 18th birthday. Know what I really knew that day about real estate' How to drive myself from home to the office, that’s how much.

Though I ‘succeeded’ that first day, it was, to be kind, a wholly fraudulent success. The details aren’t important, boring actually, but it was the beginning of a learning curve which has never stopped. Being second generation real estate broker, son of the broker-owner actually, was subject to  constant ‘review’ and ‘constructive criticism’, exceeded only by those who’ve experienced life as a preacher’s kid. I make that judgment with utmost confidence, as I experienced both firsthand. Don’t try it at home.

Though oft times the never ending review and criticism was petty, hurtful, and of little or no value, much of it was priceless. I learned two lessons that can’t be bought, but instead must be accepted.

1. With rarest exceptions, all of what we do is about results of one sort or another.

2. We can either gain experience, expertise, and knowledge — or we can pay for it.

The addendum to #2 is that we too often end up paying for it through our crummy results. When we talk ourselves into the false belief that we have the requisite EE&K, it hardly ever turns out well. The real problem is when we somehow Gump our way through, get a relatively positive result, then conclude we’ve ‘taken our game up a notch’. Speaking for myself, it wasn’t ’til years later that I figured out how lucky I’d been. Not only that, but how gracious my mentors had been. They knew my results were mediocre on the best of days, but they simply kept mentoring me, knowing my epiphanies would come in their own good time. And did they ever.

What does this have to do with real estate investing'

We tend to measure ourselves and our growth in EE&K by the use of relative comparison — usually to others. This isn’t bad in and of itself, but it does have a tendency to delay the brutal truth, which is:

That compared to the actual EE&K required to produce the results for which we work so hard, we’ve not hit the mark.

The most common problem hindering my advancement in real estate investment was the one with which Grandma pegged me perfectly when she said I was behaving as if I’d mastered my job, when in fact I was still at the apprentice stage. Ouch — and a half.

That attitude, the one telling me I’d reached a level not nearly attained, was the main reason I lost three properties early in my career. I didn’t have nearly the EE&K I fancied myself as possessing. Looking back, the results I produced were empirical evidence of that verdict. Our grandmas put it another way when they said we were gettin’ too big for our britches. ‘Course, the problem with investing in real estate, short or long term, is that we can’t always discern what we’ve actually wrought. It can be a vicious catch-22 of sorts.

We don’t know the questions to ask, so we don’t have the answers we don’t know we need.

I’ve seen first-hand how fooling ourselves into overvaluing our EE&K can lead to some decidedly distressful results. Doing things yourself, and/or learning by trial and error, at least when it comes to real estate investing, is akin to lighting dynamite and running. Sooner or later you ain’t gonna be fast enough. Doing that when the market shows signs of transition' A financial death wish.

I saw it in 1974 — in 1979 — in 1991ish —  2006 — and again in 2008/9. All those times, though never the same circumstances, had a few things in common. One of ‘em was that the do-it-yourselfer, for the most part, got slaughtered — as did those like my much younger self, who thought they had the answers they needed. Why'

They’d found all the answers for all the questions they’d ever asked. What exploded their plans, though, were the answers to the questions they never knew to ask.

Expertise — Experience — and Knowledge. Can’t. Be. Faked.

I’ve written here, on BiggerPockets more than two years now, I’ve read countless posts in which very wise authors have beseeched readers to either gain that EE&K, align themselves with someone who has ‘em, or hire it. Listen to these people, cuz they know whereof they speak.

Wisdom is only valuable when we use it, and only costly when we don’t.

Nothing trumps results.

This Article is Copyright © 2004-2012 BiggerPockets, Inc. All Rights Reserved.

Nothing Trumps RESULTS – It’s ALL About Expertise, Experience, and Knowledge

If you have completed more than a handful of short sales, then you have likely have been involved in a value dispute with the short sale lender.  During the course of the short sale, the short sale lender sends out another Broker to complete a Broker Price Opinion (BPO) for the short sale listing. The bank then, in most cases, bases their price on the value stipulated in the BPO. However, often times, there is a discrepancy between the value stipulated in the BPO (what the bank wants) and the offer amount (what the buyer wants to pay). In many cases, what comes next is a valuation dispute. And, at some lending institutions, this is much easier to complete than at others.

Bank of America has recently revised their process for addressing valuation disputes that arise during the short sale transaction.

Here is an outline of the new process (courtesy of our friends at bankofamerica.com/realestateagent):

Here is the evidence you will need in order to support your valuation dispute:

Provide comparables that are recent, proximate (nearby) and similar to the property in question.

When the dispute centers on property condition or hazards:

If your valuation dispute relates to condition and significant repairs are required (which would lower the subject property's value), it's best to have multiple bids in order to support your position. Based on my experience, I can tell you that you should not expect the bank to pay for items such as new carpet because there is a small stain on the living room floor. Big stuff, legitimate supporting documents, and a strong will to succeed could lead to success in a short sale valuation dispute.

moneyblognewz

This Article is Copyright © 2004-2012 BiggerPockets, Inc. All Rights Reserved.

Value Disputes and Bank of America Short Sales

Multifamily investing has never been hotter.  Multifamily apartments that are in great condition are fetching some of the highest prices seen in years.  On the other hand, older dated properties are selling at much lower rates.  If you have an older apartment complex that has become a little dated, now is the time to consider making some strategic upgrades.  It's time to focus on upgrades that will deliver a big bang for your buck in both rental rates and sales price (when you decide to sell).

However, not all upgrades are equal.  You want to consider upgrades that will give you the highest return and maximize your property's value.  Before you get started, remember to do your research.  Make sure the enhancements you do are appropriate for your area, tenant base, and property. You need to know what will make the biggest impact in your area.

We've put together a list of 5 upgrades that should be considered for your multifamily apartments.  These enhancements have been proven to refresh an older complex and deliver a high return for your investment dollar.

5 Essential Upgrades to Your Multifamily Properties

Now is the time to take advantage of strong multifamily market fundamentals.  But, to do that, you need to maximize your investment.  If your property has become a little dated over the years, it's a great time to consider a little updating.  These upgrades will allow you to enhance your rental income as well as deliver the highest purchase price when you sell.  Focusing on enhancements that will deliver the best bang for your buck will have your tenants, your property, and your billfold thanking you.  They will also allow you to maximize your property's value in a hot multifamily market.

Photo: Dieter Weinelt

This Article is Copyright © 2004-2012 BiggerPockets, Inc. All Rights Reserved.

Multifamily Investing: Updating an Older Property for Maximum Profit

Unless you’ve been living under a rock for the last five years, you know Facebook. You probably can’t go two hours without checking your wall, 'liking' your friend’s comment, and laughing at a video of a golden retriever playing the piano (seriously, check that one out. I’ve put a link on my own Facebook page!)

Additionally, you can’t escape the news of Facebook going public. On Friday morning, Facebook became a publicly traded company worth over $100 billion dollars, with 80% of their value found in their revenue from their online advertising.

Clearly, Facebook has proven that it’s advertising model is the future of advertising and marketing.

Today, I am going to show you how to take advantage of Facebook pay-per-click advertising to sell a home quicker, capture more leads, and super-charge your real estate investments.

A Modern Bandit Sign, With A Twist:

Facebook ads are similar to 'bandit signs' that you might place around your neighborhood but with one major benefit ' you only pay when the ad works.

What would your local newspaper say if you demanded only be charged you when someone calls about your ad, or if you ask your printing company to only bill you once your bandit sign has given you a lead' They would laugh in your face! However, this is exactly what Facebook allows you to do. This is known as 'pay-per-click' advertising, which simply means you only pay when someone clicks. With pay-per-click advertising (such as Facebook, Google, or Bing), you only pay when your advertisement does what it is intended to do ' bring in leads.

Why Facebook Marketing Rocks:

There are multiple ways to use pay-per-click advertising on the internet, and each have their benefits. However, Facebook ads have three unique characteristics that make it an ideal tool in your marketing arsenal.

How Facebook Ad Pricing Works:

The most common question people have when discussing Facebook ads is, 'how much does it cost''

The answer is more complicated than a simple dollar amount, but simple to use. Pay-per-click ad prices are based on an 'silent auction' style, meaning that all advertisers will 'bid' on a price they are willing to pay, based on the criteria you are targeting your advertising to.  You will simply tell Facebook what price per click you are willing to pay, and Facebook will never charge you more than that. Bid too low, and your ad will not be shown. To help you determine your range, Facebook will offer you a “bid range” to set your price within.

In other words, if there are ten advertisers out there who are marketing to people who like BiggerPockets.com' on Facebook, the highest price bid will be displayed first. You have the ability to set both your price-per-click as well as your daily and monthly budget. This concept can be a little tricky to wrap your head around, but will become much more clear as your set your ad up. In my experience, a typical 'click' usually costs between 20 and 60 cents each.

Remember though, you only pay when someone actually clicks on your ad. Facebook will monitor your spending and keep you within the daily or monthly budget you have chosen. If you want to spend $100 per day advertising or just $5 per day, Facebook gives you that option.

Creating Your Marketing Funnel:

Before you jump in and start advertising on Facebook, you need to have your 'marketing funnel' in place. A marketing funnel is simply your step-by-step process to accomplish your goal- from beginning to end.  You don’t want to start paying for advertising without a clear way to turn those 'clicks' into cash. To create your marketing funnel it is important to work backwards, beginning with a simple question: What is your ultimate goal'

Once you have determined your goal, simply decide the best way to accomplish this, working backwards. For example, I am currently using Facebook to advertise a flip I have on the market to sell. My ultimate goal is to sell this home. To do this, I need to have people make an offer – but before they make an offer they will need to get inside the house and tour it. In order to get prospective buyers in the front door, I will need to attract their interest, so the goal of my marketing is to peak a prospective buyer’s interest. I decided the best way to make a prospective buyer interested in my property is to create a website filled with photographs of the property that also includes a form that buyers can fill out to get more information or set up a tour of the home.

A website is not necessary in order to capture leads, but can be beneficial. If you don’t have the technical ability to create a website, use a pre-made template or simply hire an inexpensive freelancer at a site such as Odesk.com or eLance.com. Otherwise, simply create a Facebook business page that accomplishes your goal.

Once your marketing funnel is fully created, its time to begin advertising.

Tips When Creating Your Facebook Ad:

You do not need to have a separate business Facebook page to create ads, but you can if you would like. To set up your ad campaign for the first time, click 'advertising' on the very bottom of your main Facebook homepage if on a personal Facebook page or click 'Build Audience' at the top of your Admin Panel if you are using a business Facebook account. When you create your ad, follow these six steps to ensure a high 'click-through-rate' (the percentage of people who click on your ad compared to the number of people who see it'

Wrapping Up:

Facebook advertising is here to stay, and the best real estate investors are using Facebook everyday to grow their business and build substantial wealth. I am not suggesting to abandon your other marketing techniques, but simply begin exploring the vast new world of marketing online.  Facebook is a powerful tool that allows you to create advertisements that are specifically designed, geographically targeted, and only cost money when they work. However, while pay-per-click advertising is a remarkable way to market yourself, your product, or your business- blindly throwing money at Facebook hoping for leads will get you nothing but debt. It is imperative that you continue to grow, tweak, and monitor your ads so they will provide you with another powerful source of leads, sales, and wealth.

This Article is Copyright © 2004-2012 BiggerPockets, Inc. All Rights Reserved.

Using Facebook Advertising to Super-Charge Your Real Estate Investing

Want to know where home prices will be rising in the coming months' No longer do you need to toss darts at a dart board or guess. Someone has actually created an index using the very, very freshest listing data combined with economic metrics to scientifically select tomorrow's hot markets.

Every quarter Move, Inc. operator of Realtor.com, publishes the Top Turnaround Towns (There used to be ten' we just expanded to 25). As a member of the team that created and updates this list, I'm always excited by the latest findings.

The latest list includes seven housing markets hit hardest by foreclosures ' all from Florida ' leading the nation towards a general housing recovery, while unexpected new comers in Michigan, Texas, Iowa and California are showing signs of strength and stability.

The list of Top Turnaround Towns, developed using year-over-year comparative data from the first quarters of 2012 and 2011, is led by Phoenix-Mesa, AZ, Miami, FL and Orlando, FL ' three top foreclosure markets experiencing list price appreciation, along with reductions in inventories and their median age of inventory, all on a year-over-year quarterly basis. Other call out markets include Boise City, ID (4), which has been on the rise steadily since its debut at No. eight in the third quarter of 2011, and Naples, FL, which rose one spot from sixth to fifth in one quarter.

Noteworthy newcomers include Bay Area frontrunners Oakland, CA (6) and San Jose, CA (24), heating up as the nation watches the local hi-tech industry and upcoming Facebook IPO, and the Lone Star State markets of Dallas, TX (12) and Forth Worth-Arlington, TX (18). While Detroit, MI continues its struggle with high unemployment (10.2%), it landed in the 23rd position on the Realtor.com list with a 5.82% increase in list price appreciation, a -29.59% reduction of for sale inventory, and a market that's moving 27.27% faster, all on a year-over-year quarterly basis.

'We continue to see signs of stabilization and recovery on the local level throughout the country, basing analysis on the real-time nature and accuracy of the Realtor.com data,' said Steve Berkowitz, CEO of Realtor.com operator, Move, Inc. 'By all indications, the 2012 housing market is unfolding as we expected, and we're encouraged with the progress local markets are making. However, much will depend on the continued health of our economy, specifically job rates, and how lenders will release their foreclosure inventories now that the 49 state AG Agreement has been signed. All of these key factors will determine how quickly our local housing markets recover and remain healthy.'

*Among the 15 Best Housing Markets For the Next Five Years, Business Insider

**Made the Top Ten Best Real Estate Markets in 2012, ActiveRain.com

***Cities Where Real Estate is Ripe for a Rebound, Forbes January 2012

Highlighted Markets Named in the Q1 2012 Realtor.com Top Turnaround Town Report:

#1 – Phoenix-Mesa AZ leads the nation on the Realtor.com Turnaround Town list after advancing from the #2 position in the fourth quarter of 2011. While it was one of the hardest hit areas by foreclosures, median list prices are up 26.94% in the first quarter of 2012 compared to the same time last year, and the area experienced the largest increase in median list prices of all of the 146 MSAs monitored by Realtor.com. Unemployment in Phoenix is at 7.8%[i] and contributes to its improving local economy and growing demand for housing. The market experienced a -32.94% year-over-year quarterly decline in the local median age of inventory thanks to the sale of thousands of foreclosure bargains. While Maricopa County today generates 1 foreclosure filing for every 242 homes[ii], if inventory remains in check, it's only a matter of time before Phoenix fully stabilizes and has lasting home value appreciation.

#4 – Boise City, ID is showing signs of a rebounding market with encouraging indicators for future stability. With an improved unemployment picture ' Boise's rate was 8.7% in February 2012, better than the state (9%) and national (8.2%)[iii] ' positive housing indicators should follow. The City of Trees had fewer houses on the market in Q1 2012 than the same time last year, which may have contributed to higher demand and a housing market that moved 23.60% faster in Q1 2012 compared to the same quarter last year. Median listing prices rose by 17.53% on a year-over-year quarterly basis, and Boise City’s year-over-year inventory declined by -36.87%, which is the 12th best improvement tracked by Realtor.com. Only 1 in every 519 homes fell into foreclosure in Boise City's Ada County[iv], contributing to the area's stabilization of inventory.

#6 – Oakland, CA is showing the vital signs of a turnaround based on Realtor.com’s first quarter 2012 data. With an unemployment rate of 8.7%, far below California's 11.4%, Oakland's economy is growing. In the first quarter of 2012, median list prices in Oakland are up 7.07% compared to the same time last year, and inventory is moving 46.43% faster during the same time period. These factors were enough to move Oakland into the sixth spot on the Realtor.com list of Top Turnaround Towns. Also, in January 2012 the New York Times ranked Oakland fifth on its list of 45 places to go in 2012[v]. Today, Oakland’s market is a huge contrast to the -41.6% decline in median sale price it saw from first quarter of 2006 to the third quarter of 2010.[vi]

#18 Fort Worth-Arlington, TX hit the Realtor.com Turnaround Town list for the first tim in Q1 2012 thanks to the alignment of several key factors. As the 16th largest city in the U.S., this Gateway to The American West didn't experience the housing boom like other U.S. cities and enters 2012 on solid ground. With unemployment in Fort Worth at -7.1% below the national rate of 8.2%, and the median household income above the national level, it's no wonder demand for housing is growing. In the first quarter of 2012, median list prices in the area are up 8.9%, inventory is down -26.87%, and the median age of its inventory fall by -20.65% to 73 days ' all compared to the same time last year. With stable list prices, reduced inventory counts, and a faster-moving market, smart buyers just might find the home of their dreams at the right price if they're prepared to act quickly. Fort Worth made the ActiveRain.com Top Ten 2012 Best Performing Real Estate Markets[vii] and Forbes' list of cities Where Real Estate is Ripe for a Rebound.[viii]

#23 – Detroit, MI was one of the country's hardest hit areas in the recession thanks to the 2007 and 2008 layoffs in the Motor City's auto industry. Unfortunately, this put Detroit at the top of foreclosure lists for years. Now, however, improving auto sales are helping to turn Detroit around. At 10.2%, its unemployment rate[ix] is still above the state and national rates, and foreclosure rates in the four counties that constitute the Detroit area are approximately 50% to 100% higher than the national rate[x]. However, there are encouraging signs for the local housing market. The largest over-the-year unemployment rate decreases in the U.S. this past March were registered in the Detroit area[xi]. List prices are starting to rise, up 5.82% on a year-over-year quarterly basis, while inventories are shrinking, down -29.59% in the first quarter of 2012 compared to Q1 2011. The median age of inventory has also declined -27.27% on a year-over-year quarterly basis down to a median of 56 days. he largest

Methodology:

Market rankings are based on their year-over-year median price appreciation, reduction in year-over-year median age of inventory, and inventory reduction levels as observed on Realtor.com, as well as unemployment rates on a year-over-year basis. The Realtor.com Top Turnaround Town Report is based on an algorithm that combines those four key measures with searches for properties on Realtor.com and the ratio of searches to listings in order to equalize markets by size. The resulting report reflects price changes that have taken place and gives weight to supply and demand dynamics that create continued progress towards growth and stability in future months.

This Article is Copyright © 2004-2012 BiggerPockets, Inc. All Rights Reserved.

Top Turnaround Towns: Tomorrow's Hot Real Estate Markets

You are probably reading this blog to find out just how ridiculous it’s going to be.  If you are a rehabber, real estate agent, home stager, or involved in marketing real estate in any way, you might want to read on!

When my family began real estate investing, we were completely dependent upon a Realtor that we hired to find us good deals.  Do you know what that meant'

MINISCULE PROFITS!

We found out very quickly that finding a house to fix & flip through the open market (MLS) was difficult if you wanted to make a decent profit.  Well, we did want to make a decent profit!  After watching hours and hours of “Flip That House”, I was trained to expect big profits.

Without any marketing tools in our hands, we became very dependent on the MLS to acquire houses to rehab.  Here is what kept us afloat:

Watching TV

… More specifically, we watched HGTV and any home decorator shows.  The revelation that I received and that became one of our greatest assets is this:  The lifestyle trends of what people like in their home begins with the TV!  Don’t think it crazy.  Where do the popular hair-do’s come from'  Where are people getting the latest wardrobe fashion trends from'  You got it, TV!

By watching and studying home shows and what their designers are pushing, you can learn what the public is going to gravitate towards.  From the color combinations on walls to the texture of carpet to the style of toilet, the information that can be gleaned about what is in style is all right there.  You can also learn about the style or age of different houses and the best way to effectively design the remodel.

We learned many things that helped us “press the comps” when we marketed them for sale.  For example, we never sell a house with a screen door blocking the front door.  We always remove the screens from the windows.  By just removing these two items (store them in the garage for the buyer though), we dramatically improve the curb appeal.

One of the best shows to watch as a fix & flip investor is “House Hunters”, where an agent would walk retail buyers through 3 houses before they picked one.  You would get to hear their positive and negative feedback on each home.  Absorbing all of this information found itself very useful when we would rehab.  The end result is that you create an end product that most people are attracted to.  Why are they attracted to it'  They saw it on TV!

If you want to get every penny out of your rehab, go watch & observe & learn from the ones that are setting the standard for YOUR BUYERS!  If your rehab looks like it is out of HGTV, you will maximize the potential of that house.

So, you can blame me when your family calls you a couch potato.  Just tell them,

NO MORE MINISCULE PROFITS!

Image(s): FreeDigitalPhotos.net: Ambro

This Article is Copyright © 2004-2012 BiggerPockets, Inc. All Rights Reserved.

Increase Your Rehabbing Profits by Watching TV, Really!

A quick rundown of the important real estate news from the week of May 12 ' May 18, by the numbers:

$90 Million – Price paid for a Midtown Manhattan penthouse, breaking the record for the highest price paid for an apartment in New York City. The previous record holder was an $88 million home purchased by a Russian billionaire in December 2011.

3.79% – Average rate on a 30 year fixed mortgage this week according to Freddie Mac. The rate is once again at a record low, falling from last weeks average rate of 3.83%.

 3.04% – Average rate on a 15 year fixed mortgage this week according to Freddie Mac. The 15 year, which is popular for refinances, is also at a record low.

$144,899 – Average manufacturing wage in San Jose-Sunnyvale-Santa Clara, California. The average wage is the highest in the nation, as many of the jobs are high-tech jobs.

78% – Number of homes sold in the first quarter of 2012 that were affordable to those earning the national median income ($65,000). It’s the most affordable homes have been in 20 years.

36% – Drop in home prices since the peak of the real estate bubble.

$29.3 Million – Listing price for singer Celine Dion’s 24,00o square foot home. The house is located on a 20 acre private island in Canada.

5 Points – Rise in builder confidence in May according the National Association of Home Builders/Wells Fargo Housing Market Index. The 29 reading is the highest since May 2007.

This Article is Copyright © 2004-2012 BiggerPockets, Inc. All Rights Reserved.

Real Estate News by the Numbers: Week of May 12 ' May 18

While first getting started in real estate, the issue I had to deal with most was the pace at which I moved.  Move too slow and you’ll never get any momentum behind you and lose out on credibility. Move too fast and you get overextended and end up wearing a straight-jacket in a padded room. It’s a very fine line that the beginning investor must learn to toe, along with the experienced investor learning to maintain.

There are many great resources out there for getting started in real estate and navigating the waters, but the one area that I never really learned about per-se, but definitely found myself fighting against, was the proper pace to proceed.

Before I ever put any “skin-in-the-game“, I went through and did what the majority of ‘getting-started’ in real estate education teaches:

These suggestions were helpful, no doubt, but they’re all things that are done before you take that first big step of putting a deal under contract. Your personal long term goals are will dictate how you should proceed after taking this initial big step, but  you essentially have three options: walk, jog, or sprint.

I’m writing this article on the premise that you (like myself) are in the camp of wanting to create a real estate strategy that provides you with income that allows not only for the bills to be paid, but allows for free capital that you can choose to do whatever you’d like with (vacations, cars, kid’s education, other investments, etc.). With this in mind, let’s take a look at the difference paces you can choose.

Walking

After I got my first deal under contract, this is the pace I took at the start, and I was shocked at how big a mistake it was. Walking, although making you feel more comfortable, is the last thing you want to do. I backed off the networking I had been doing with people, I ended a direct mail campaign I had rolling, and I placed the majority of my attention on the rehab. Wow! Talk about killing my own momentum for the sake of “feeling comfortable”. The sad part is, I had read multiple posts and blogs on BiggerPockets about avoiding this very thing, yet I still did it! It is human nature to want to feel comfortable, but trust me (and the others encouraging it), step out of your comfort zone a bit.

Walking also had an adverse side effect that I never anticipated, a loss of credibility. Through my networking and marketing, I had begun to build some solid relationships with people in the industry, and my phone was ringing – obviously a good thing. By stepping into my comfort zone though, I lost the credibility with those among my relationships. I don’t mean credibility in terms of them thinking I was a scumbag or anything of that nature, but “lost credibility” in terms of my name and number being moved down their lists of people they would call when they had a hot deal. My want to remain comfortable created indecisiveness when the phone would ring, and this lead to people making me less of a priority, which from their perspective was totally understandable.

Wanting to walk is human nature, but if I could go back and start over, this is the one thing I wish I could correct. Bottom line, listen to the others warning about this and take their advice like I should have done!

Sprinting

It’s bizarre how things work, but as humans (or at least me) we seem to always struggle with finding that middle ground. After I realized how much walking was hindering my long term real estate goals, I swear, someone shot me out of a cannon. I went from a sweet old lady taking her time crossing the street to Olympic sprint champion Usain Bolt.

Not only did I get my marketing back up and running, I injected it with some steroids and it was booming. The problem was, I forgot that I didn’t have an office full of people who could answer the calls and analyze if they were worthwhile deals. This lead to gray hairs sprouting up on my head the way the grass grows after a spring rain. It was crazy! I was waking up to answer emails, return calls and then heading out to either look at properties, check in on a property rehab, or meet someone for coffee or lunch. Then of course when I would return home, I had emails and phone calls to reply to. By the end of every day, I felt like a sprinter. The only difference, instead of my lungs burning and being out of breath, my head and mind were the body parts totally exhausted.

What I learned quickly was that with a one person company, there is an inverse relationship between marketing and customer service. The ‘more’ marketing you do, the ‘less’ customer service you can provide (and vice-versa). Customer service is the name of the game in real estate. To put it bluntly, there are a boatload of slackers trying to make it in this business, and by simply returning phone calls and emails within a few hours, you can put yourself strides ahead of your competition in terms of professionalism from your customer’s perspective.

It is completely counter-intuitive, but its how things panned out. The more I sprinted and worked hard, the more of a slacker I became. It would take me a day… then a day and a half… and then in some instances two days to return an email or phone call, and that is flat out UNACCEPTABLE! Not only did sprinting cause me to lose out on some hot deals, it also put in me the slacker category of some of my customers. A place that should be avoided like the plague!

So if walking causes you to lose credibility, but sprinting causes you to become brain-dead and a slacker, what is the answer'

Jogging

This was my saving pace that brought sanity and solid customer service back into my life, while at the same time allowing me to keep a good amount of momentum and deal flow. There are two components that I use to jog.

How can you measure the pace at which you’re going at' Always be asking yourself this question: what am I doing today, and am I running it, or is it running me'

If you answer: I’m not doing much at all so therefore I’m running it… you are walking, pick up the pace and step out of that comfort zone!

If you answer: My schedule is jam packed, and if one meeting goes over 15 minutes my whole schedule is ruined… you are sprinting, take your foot off the gas pedal!

If you answer: I will be busy today, but a portion of the “business” is me needing to run a few errands… you are jogging and not letting your schedule own you!

All situations are different. If you have a partner, your jogging pace will be different than someone like myself who started out all alone. Bottom line,  it is imperative that you find that sweet spot that ensures that you have a steady stream of phone calls, but at the same time allows you to remain credible and avoid the slacker category.

Photos: whologwhy, Asela, thor_matt83

This Article is Copyright © 2004-2012 BiggerPockets, Inc. All Rights Reserved.

“Jogging” into Real Estate: Setting the Pace for Your Investing Success

Is your passion hang gliding' Bull riding' Planking' No matter what your hobby is; forget it. If you are an investor looking for the perfect 10 rental, you won't have time to do any hobbies if you aren't efficient. Investors may need to look at tons of properties to find one keeper. To rule out properties quickly, speed up the process by starting your inspections on the outside. Many of your big ticket items are found outside, not inside a house. Personally, I'd rather pay for paint over fixing foundations and roofs.

Below are a few hints for weeding out properties without ever going inside.

Take Some Speed

When inspecting properties, your main focus is to cull out the duds ASAP. It's all about speed. How fast can you make a decision to say 'no' to a property' The more 'no's' you go through, the sooner you will find a 'yes.' If you drive into a neighborhood and don't like the mobile home park in the vicinity, keep driving. Don't feel compelled to think: 'I might as well look inside now that I'm here. 'Feel uncomfortable with the water tower abutting the property' Abhor properties with steep driveways' Shun rentals at the bottom of a hill because of drainage issues' No biggie. Don't get out of your car. You have inspected and rejected the investment just by driving up to the property.

Go with Gaga: Start on the Edge

If the property passes your 'drive up, look around the neighborhood' test, it's time to get out of the car. Bring your notes or iPad to write up a preliminary punch list.

The very first time I went to look at potential rentals, I had no clue what I was doing. I planned to go straight to the kitchen to see how cute the layout was. I figured tenants would like a spacious kitchen. Luckily, my mentor, Brian Porter, wouldn't let me go in the house until I had walked the perimeter.

So What do you do' How Do You Start your Property Inspections'

Start out by circling the property. Go clockwise if the fences allow. Check out the foundation with an eye for cracks, holes and slumping walls. Hope to see an intact HVAC unit that doesn't date back to the Eisenhower era. Be prepared to go in accessible crawl spaces so skip the high heels and suits. As you continue your tour, note the condition of the roof, gutters, the siding, and the decks. If you don't like what you see, time to leave for the next property.

Junk Yards'

While walking the perimeter of the property, check out the yard as well. Do you see any money drainers such as a swimming pool or dilapidated outbuildings' What are the retaining walls trying to tell you' Trees are nice for shade and appearance, but are any huge limbs waiting to fall on the roof' Do the neighbors horde tires and rusted cars in their yards' If you feel uncomfortable with the creek behind the house, skip going inside and focus on the next property.

Once you have completed your outside tour of a property, you can decide whether it's worth your time to go inside. If the property is a definite 'no,' feel no regret in driving away before entering. Congratulations! You just gave yourself more time to find a keeper.

Question for Readers:

What hints do you have for physically inspecting the outside of a property'

Photo: Sean Ellis

This Article is Copyright © 2004-2012 BiggerPockets, Inc. All Rights Reserved.

The Outer Limits: How to Speed Up the Property Inspection Process on New Deals

Ah, Asia.

It used to be so mysterious, exotic and dangerous. And in many peoples' minds, it still is largely populated by martial artists and dragons, mysterious and foreboding, head-to-toe tattooed organized crime figures, deranged and dangerous regimes and bewildering technology, all nestled against a backdrop of incomprehensible cultural norms, sights and alien alphabets. All in all, more the substance of fiction and romance, travel reviews and unearthly cuisine than a place to invest one's money in.

It's almost a shame, therefore, in a 'MythBusters' kinda way, that for a larger and larger percentage of foreign investors, the far-east has already become far less mysterious and alien. As technology, multi-lingual and global reaching corporations couple with minds and hands freely migrating from one corner of the globe to the other, cultural chasms become bridgeable gaps, and language barriers become little more than wisps of smoke, easily dispersed with the placement of competent teams in particular areas, or the utilization of such existing, localised teams, in much the same way that one manages properties on the other side of town. As always, due diligence is key.

As previously discussed in BP and other leading online forums, there are many out there who believe that staying local isn't necessarily the safest, nor the wisest route to take, in today's global financial climate. This series of posts isn't an attempt to debate the 'correctness' or 'validity' of one school of thought over the other, but rather to try and establish 21st century Asia, and various real-estate hubs contained therein, as viable alternatives for foreign investors – hopefully achieving this by providing some up to date, reliable information regarding financials, legalities, risks and reasonable expectations for returns 'enabling would-be investors to make informed considerations and decisions regarding investment in Asia generally, or in any country specifically.

I've decided to open with Singapore, one of the world's safest and favourite corporate havens and probably one of the easiest of Asian countries to enter for the foreign investor, due to its international nature and English-oriented environment. It's also tiny and highly populated, so you can't really buy in a 'bad area' ' although there are certainly better ones.

In this, as in the next posts in this series, I'll try and focus on general and unique characteristics, recent history and trends, taxation, finance and current potential opportunity, and leave you savvy folk to draw your own comparisons between the various environments, as well as between each of them and your own familiar back yards.

Singapore as a Destination for Real Estate Investment

'Singapore boasts of a competitive, corruption-free, open business environment. The Port of Singapore is one of the busiest in the world as the country focuses on electronics and chemical exports to richer industrialized nations'over the years, Singapore has diversified its economy and today it has become a research & development hub, bio-medical hub, banking and finance center and in recent times the health-care destination of Asia. Today, Singapore is a knowledge-based economy and attracts multinational investments. Its open trade policies, social stability, world-class infrastructure and international communication links, are some of the reasons why foreign investors flock its shores.'

(Extract and following taxation info from 'Guide to Quality of Life in Singapore ' Economic Environment' & information sections on www.guidemesingapore.com - also compiled from lengthy forum discussions on leading Singapore property forums)

Singapore Facts (Death, Interest & Taxes)

The above, while certainly a tad rose-tinted, is not far from the truth. The city-state is a highly-regulated, purposefully international business-centered economy, and home to a growing number of multi-national corporations who chose it as their headquarters due to its safe, crime & corruption free and tax-friendly financial environment.

With corporate income tax capped at 17% and personal income tax rising slowly from 0% to a comfortable 20% cap (non-residents, unfortunately, are taxed a flat 15%), the average Singaporian is a competitive, success driven, highly educated, English and Chinese speaking, multi-lingual capitalist citizen of the world in every sense of the word ' and knows it well. This mentality probably accounts for the fact that Singapore banks can and will lend money to non-residents based on foreign income ' up to 80% officially (more like 50-70% in practice), at very reasonable interest rates.

If you think this means you can borrow and bolt – don't get funny ideas. These guys will hunt you down anywhere in the world, and can afford to (think HSBC for a typical Singaporian global approach & penetration philosophy). Property tax is based on the rental value of the property, and can come up to 4% of the income again, so a 'better safe than sorry' approach that factors in something like 20% in 'income-related' taxes is probably not a bad idea. An annoying 10% additional tax for non-reisdents on new development properties is often negated by vendor discounts, as an incentive to enter the market.

There's no CGT, which is nice considering prices went up 75% in the last decade, but don't bet on this to continue ' in the next post we'll discuss Singapore's unique, heavily regulated residential property market and what this means for the foreign investor in practice, compare current prices, expenses and cashflow, and present some speculations by analysts as to what's coming in the next few years.

Please feel free to query, comment, and steer this discussion in any other way, shape or form ' would love to hear your thoughts

Ziv

Images: Tommaso Meli – Kabuki Mask, Dinukshan Kuruppu – Singapore Skyline

This Article is Copyright © 2004-2012 BiggerPockets, Inc. All Rights Reserved.

Real Estate in Singapore: Explorations of Asia for Property Investors

In a rare glimpse into cyber warfare tactics, a top U.S. official has explicitly acknowledged that the U.S. government hacked into websites run by Al Qaeda's affiliate in Yemen, changing advertisements that boasted about killing Americans into advertisements that underscored the deaths of Muslim civilians...

The percent of Americans who identify as 'pro-choice' regarding legalized abortion is at a new low of 41 percent, according to a newly released Gallup poll. The figure is one percent lower than the previous all-time low registered by Gallup, which was in May 2009....

Polls opened for a second day across Egypt on Thursday in a gripping presidential election in which candidates are pitting stability against the ideals of the uprising that ended Hosni Mubarak's rule.

The fallout from Facebook's messy initial public offering widened as shareholders sued the social network and its bankers while a trading firm revealed a massive loss on the shares and threatened to seek "remedies."

At a fundraiser for his re-election campaign in Denver, President Obama set out to upend conventional Republican wisdom that his administration has been defined by excessive government spending.

A fire on a nuclear-powered submarine at a Maine shipyard has injured six people, including a firefighter.

Pakistani intelligence officials say a suspected U.S. drone fired two missiles that killed 10 alleged militants in northwest Pakistan near the Afghan border.

Two weeks after President Obama declared his support for gay marriage, former Secretary of State Colin Powell told CNN that he has "no problem with it."

Fire crews hampered by wind gusts and the driest conditions in two decades in the U.S. Southwest made slow gains on battling dangerous forest and brush fires, including one in Nevada that doubled in size overnight.

Eight months after a repeal of the military's 'don't ask , don't tell' policy, the U.S. Air Force Academy today graduated its first group of openly gay cadets.

Hewlett-Packard says it's laying off 27,000 workers, 8 percent of its work force, as it restructures the business.

Secret Service director Mark Sullivan defended his agency against charges it has displayed a "pattern of misconduct" at a Senate hearing prompted by a recent scandal involving agent solicitation of prostitutes in Colombia.

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