You’ve seen the late night TV infomercials showing how you can buy non-prime real estate for next to nothing and get rich. Common sense should tell you that’s an extreme, dangerous and misleading exaggeration.Nevertheless, IT IS POSSIBLE TO GET RICH INVESTING IN REAL ESTATE. With much persistence and inexpensive self-education wealth from property is within everyone’s reach.Today we seen to find the internet flooded with books offering varied points of view on successful real estate investing, whether it’s homes and condos, apartments, vacation homes, raw land, or REITs. Some cover important basic principals of property investing; others a specialized technique or real estate niche. Many counsel a careful, proven approach; others suggest a more adventurous strategy to accumulate more wealth faster from real property. Some of us will function best with the first approach, while others will have notable success with the latter.Here we will give you a taste of them all, from the 1920′s classic to the latest hot ebook!There are many good books for you if you are just starting to think about investing or even if you have been reading and looking for years. There are sensible books you should read that clearly explain all the essential steps to becoming a successful real estate investor and that also slay many of the myths of real estate investing. While some do oversimplify the process, many not only try to show the process as the brutal one it can be for those unprepared, and the truth as to the efforts actually required to be an successful investor.Book available cover all types of investment properties from single and multiple family homes to apartments and even commercial deals. The problems and challenges involved with each carry risk which must be considered. Also available are recent books explaining in detail how to use tax laws to your benefit, with anecdotal real life examples.You must learn how to use the properties legal depreciation to help off set profits and how and when to sell a property and buy a better one so that you can avoid any capital gains. There are available good income and investment charts, which are helpful in demonstrating exactly how you use the tax deductions to save thousands.Being a landlord is a an very important consideration, offering both profit and headaches. Several good books cover everything from finding tenants, contracting leases, and accounting. Realistic situations are offered to help make you realize the problems of renting to strangers. The potential profits are such as to prevent discouragement, but one does need an honest understanding of what is involved.Other authors will be helpful for those who decide against buying a property and managing the rental trying. You popular and easier choice is a Real Estate Investment Trusts. REITs are companies that invest pooled monies in and manage a portfolio of properties. Their stocks are on available on the stock market. This is not truly investing in property and does not offer the same financial rewards’, but it is a way for you to try reaping the profit of professionals’ investment experience.Weekly we review and recommend books to those thinking of investing in real estate.
In the world of creative real estate investing, few strategies are as powerful or desirable to a real estate investor as Subject-To transactions, in which the real estate investor acquires legal title to a property in exchange for taking over payments on the existing mortgage. Using this strategy, a real estate investor is literally unlimited in terms of the amount of property they can acquire without ever using their own credit.But while subject-to transactions are 100% legal in most of the United States, there are some legal pitfalls that face novice real estate investors. My own experience as a real estate investor suggest there are 7 key legal issues that must be addressed to keep your subject-to real estate investing activities on legally solid ground:
Misrepresentation of Mortgage Terms & Other Liens. Reserve the right to terminate the agreement in the event that the owner fails to disclose all encumbrances against the property along with the terms of those encumbrances. (Remember, all liens become your problem after you accept title to the property.)
Misrepresentation of Mortgage Balance. Property owners frequently misrepresent their mortgage balances, albeit usually unintentionally. Since the balance of those mortgages will become your responsibility after closing, reserve the right to adjust the agreement in your favor if the mortgage balances provided to you are inaccurate.
Stipulate “Non-Assumption” of the Debt. A subject-to purchase agreement must be clear that the buyer is not assuming the debt of the seller. Assumption entails acceptance of liability to the lender, which is not acceptable for a subject-to transaction. Rather, the real estate investor’s liability should be exclusively to the property seller in the form of the purchase and sale agreement, rather than to the lender in the form of a mortgage.
Due-On-Sale Disclosure. It’s absolutely critical to inform the seller that his mortgage is probably subject to a “due-on-sale” clause which gives his lender the right to foreclose the property merely by taking part in this type of transaction. While the lender is unlikely to ever know or care about the transaction, the wise real estate investor will nevertheless give full disclosure about this issue.
Specifically Address The Pay-Off Date. Include language that indicates when you will satisfy (pay off) the existing mortgage(s) and lien(s) against the property. If you have no intention of limiting your time to satisfy the mortgages and liens, include precise language to that effect so that no confusion exists at a later time.
Date of First Payment. Stipulate the date of the first payment that the buyer is required to make, so that the seller will be clear that they are required to continue making payments on the property until that time.
Attorney Review. Ask your attorney to review your contract with each separate transaction, as subject-to transactions have received some negative publicity which has led to changing laws in a few states. Further, require in writing that the seller have the contract reviewed by their own attorney to avoid any future charge that the seller was misled or pressured into the agreement.
Subject-To transactions are undeniably one of the most powerful ways to quickly and easily increase the size of your real estate portfolio without using your own credit. So use these tips to make sure that you’re not only acquiring a lot of great properties, but you’re doing so in a legally safe manner.
To begin with, let’s look at the nine steps to successful wholesaling.1. Build your BUYERS LIST (this is CRITICAL as a 1st step!)2. Market and ATTRACT Sellers to you3. Analyze the Opportunities and leads that come to you4. Negotiate the best possible solution – Make Offer5. Control the Investment (via written contract or option)6. Sell the paper or the property (get a buyer contract)7. Close with your Seller (i.e. “Buy”)8. Deposit Check!9. Ask the Seller “What are you going to do with your profits?”Right now lets focus on 4 and 5. What kind of contracts or documentation do you need to invest in real estate as a wholesaler? You will need one of these four or five documents to begin with: Letter of Intent (L.O.I.), Offer to Purchase, Offer to Purchase and Contract, Contract to Purchase, or the Option to Purchase. You may also want to present the “Residential Property Disclosure” and “Lead Based Paint” addendums at this time.Letters of Intent and Offers to PurchaseThe Letter of Intent and Offer to Purchase are both option documents which carry no legal weight. They are simply a means to get your foot in the door so to speak.Letters of Intent tend to be more popular with commercial property, while the slightly more formal Offer to Purchase is commonly used for residential property. Get the numbers agreed upon first, with the basic terms laid out in a simple outline and if everyone likes what is stated, then draft the contracts.If no one can agree on the numbers in the Letter of Intent or Offer to Purchase there is just no need to keep beating each other up over the terms, move on. Generally you will want to offer well below the market value for the property, sometimes as little as 50%.I’ve gotten some pretty heated callers with the “What is wrong with you? How could you insult me with such a low offer for my house?” calls from these. To which I simply say, “What offer did I put on your Letter? What do you feel your property is worth? etc.”100% of the time I engaged the Seller in a productive conversation, I’ve even purchased properties that way!The Contract to PurchaseOnce you work out the numbers and terms, you put them in a Contract, both parties sign the final agreement, and you are focused on moving toward the closing, not more talking.The Contract for the Sale and Purchase of Real Estate is the main legal document used by the Buyer and Seller to establish and agree upon the terms and conditions of the property sale.When possible, use your state Realtor® approved contracts (with modifications, i.e. cross out, change, or add an amendment changing the Assignment paragraph to ALLOW assignments).Please make sure you get any documents you use in your investing business reviewed by your attorney and approved for your state or the state you are making your offers in.Each country, state, county, city, etc. has different laws and rules that govern what can and what cannot be done contractually and in real estate investing. Now, the safest way to buy and sell real estate is all cash, using traditional Realtor® approved contracts and documents.You should always try to control the creation of the documents and if you are not able to do so, NEVER sign anything without taking the time to thoroughly review each and every line in full and careful detail (or sign it, and carefully review each and every line during the 72 hour legal review and retraction period (if applicable.)The final documents we will review are the Option documents. For wholesaling, and many other types of transactions in real estate, these are a favorite among the pro’s of creative real estate.You get an option to purchase from a Seller, you control the property, and if you set it up correctly, you only risk a small Option Fee. I often use less than $100.Remember that as a wholesaler your goal is to get in and get out quickly while making a nice profit. Options allow you to control property so you can focus on selling it or getting the financing for it or finding a tenant, etc.
The web can be intimidating sometimes, particularly for the real estate agents who are looking for people who could buy properties for sale. Yet even so, many of them have become successful beyond acquiring their licenses and knowledge of existing laws and regulations. Lots of websites dedicated to real estate are out there claiming they have the best agents to help buyers find a good property. Some will even try to entice viewers by saying they have discount real estate agents who can offer their quality services at low prices. But what exactly do you need to know when you’re looking for an agent?The following are the things to consider in searching for that perfect agent:1. Good reviews – Look for agents who have good reviews and avoid those who have a number of issues to their names. You can easily find websites dedicated to reviews of different real estate agents and it would be wise to begin your search reading what these agents’ previous clients have to say.2. Experience – Deal with agents who have extensive experience. Some web sites feature agents who have problems getting leads. The rule is to do your research and know which agents are performing well. Agents who are not skilled and experienced can cause both home buyers and sellers major losses.3. Expertise – Watch out for those who claim that they are experts in the area where you plan to make a real estate purchase. The agent must simply have essential knowledge to give you guidelines and strategies required for buying or selling your home.4. Professionalism – Real estate agents should always be good negotiators. Be assured that the real estate agent you are considering handles himself in a professional manner. That means you can always reach them anytime you need to discuss something and they always respond to your emails or text messages.Of course, it is always important to find an agent with whom you have good rapport. Remember that this sale is not only going to be between you and the seller. In fact, before you get to the seller, you go through the agent first. Thus, you need to have a good relationship with this person to increase the chances of your transaction being a success. An agent who listens to what you say is probably the right one. He has to consider your preferences and he has to respect them and not keep forcing his ideas or suggestions on you. Some agents go overboard and fail to recognize the fact that the buyer’s requirements are always to be met. Therefore, if the agent does not agree to what the buyer wants, there could be a big problem.
If there were any pessimists in the real estate markets, they are being proven wrong. As the prices continued to mount on in the recent years, these pessimists forecasted an explosion and tumbling of the industry. They were about to recount the big margin losses of the sector in 1980s and 1990s. But as the real estate capitalization rates remaining high, we come to a conclusion that it is just a mythical bubble and not realistic!As the sector is becoming competitive the accounting practices involved with the real estate is also gaining importance. The main points on which the real estate accounting firms must concentrate can be listed as follows.o A special, integrated approach- The approach while managing the finance must be integrated. The accounting, tax and consulting needs to be specifically taken care of by professionally qualified people.o Consultancy with a cutting edge – Property management and operations, financial analysis, market risk assessment, financing and structuring, and information technology plays a very important role in the functioning of an organization. These things can provide a big cutting edge to your company, if managed properly.o High expertise- There should be expertise people who know about the competitor and those who can forecast the trends. The thorough knowledge of the real estate history and the competitor analysis can make the whole difference.o A 360 degree commitment- There should be a complete commitment to the clients. The relationship that the firm makes with the client is the best part of their business. The customer loyalty is the utmost important thing.Now let us analyze the services offered by real estate accounting firms. Personal tax services, capital gains, installment sales and individual tax return preparation are prominently done in most of the real estate accounting firms. The operational improvement services, internal control reviews and the compensation programs must be designed carefully in order to make the business run in a smoother way. The audits, reviews, compilations, cost certificates etc are performed at these places. These are very crucial when it comes to get certifications from U.S department of Housing and Urban Development. Evaluation of expert reports and expert testimonials are also reviewed by the professionals in these accounting firms.When a company gets bigger, its tax implications also get bigger. So preparing the tax returns, entity selection considerations, project analysis, alternative minimum tax issues etc are to be handled in a professional manner. These can be taken care by real estate specialized accounting firms only.Estate planning, family limited partnerships, gifting strategies, asset transfers, tax credit programs, cash flow analysis and what not: The services list of real estate accounting firms goes endless. But one should be careful in choosing their accounting firm. Just concentrate on the quality of work they do and the quality professional they have. The rest can be history. So with the big boom of real estate industry, the specialized real estate accounting services are also in its form. You can also seek search engine optimization services from outsourcing firms to promote your real estate website.
If you are thinking about getting involved in the real estate market, whether that be in a big way or small way, you need to remember that it is serious business. Often people lose money and valuable time as they did not take the necessary precautions into consideration.It is easy for the average Joe to get confused when it comes to legal lingo and this can often result in disastrous problems. Avoid this altogether by hiring an attorney. These individuals are professionals and can drastically reduce the chances of losing money.While an attorney can provide a buyer with many different services, the most noteworthy is of course the fact that he or she will be able to review the purchase contract before anything is finalized.In addition to reviewing this essential contract, the real estate lawyer will be able to review other documents such as insurance policies, mortgage documents, or the deed. Having these papers reviewed in full will ensure no costly errors are made later.Real estate attorneys can also assist by revising buyer contacts, voiding a purchase contract, and help the buyer get property or utility taxes paid. These services are commonly offered; however, it is different in each state.Keep in mind that no real estate attorney will offer their services free of charge, so you will need to set aside some funds for their services. Of course, this is money well spent, as it ensures the buyer is protected from any costly errors.Having an attorney will give you freedom, as you will not feel so tied down by the worry and stress you may experience from trying to complete legal documents. The fewer worries the buyer has to put up with the better.Just ensure you understand all the fees associated with the real estate attorney, otherwise you could end up spending more than you wanted to.
Stop for a moment and think about your advisors. Who are they? What do you look for when selecting them?Most of the business owners and executive clients that we’ve worked with over the years have a team of advisors that typically include:Accountant
Insurance AdvisorFew, if any, have a real estate advisor. It often amazes me that while real estate is typically one of a business’ top three controllable expenses, there is no one connected to the business strategy to support real estate decisions.Even when the time comes to hire a broker, I’ve learned that most people judge their satisfaction on whether they like the person, or think they’ve done a good job. The real estate world is very complex, and the decisions you make carry significant risk associated with them.What should you look for in an advisor or broker? Focus on these seven attributes and you’ll see significantly better results:Business Acumen – you need to hire a businessperson who can support your real estate, facility and/or space needs, not a real estate person who can support your business. When you interview advisors to make sure they understand business in general and your business specifically.The team behind them – the one-man superstar agent may still play on TV, but in the real world, life is simply too complex. Make sure you understand who the team is the agent and how the agent/advisor is supported.Who will do the work – in addition to understanding the team behind them, make sure that you are clear on who will be doing the work? Understanding everybody’s role is critical to creating the success you desire. Remember, that most agents spend the majority of their time finding new business and it’s the people behind them that do the actual work that you are going to rely upon.Integrated Services – real estate is a complex ecosystem. It’s important that the agent/advisor you work with understanding and be directly able to support every aspect of the process. Make sure your agent/advisor has the understanding and ability to support construction management, vendor negotiation, facilities management and negotiation.Conflicts – the real estate industry is fraught with conflicts, both hidden and otherwise. It is absolutely critical that you ensure that your agent/advisor provides a fiduciary level of service to you and your business.Investigative abilities – How good is your agent/advisor at finding what isn’t obvious? When they review a lease do they see only what’s written, or do they understand how the landlord’s business is structured with the ability to connect those dots to a favorable negotiation position for you? This is only one small example of how this ability is important.The network behind them – How good is the network of advisors, vendors, and influencers behind the person you are hiring? Remember, these are the people your advisor learns from and goes to when addressing your needs.
If you are selling residential real estate, no doubt you want to sell it fast and keep prices competitive. People have pretty high expectations out of properties today and they’ll look for a better deal if they can’t get it from you. If you want to sell off your residential property as quickly as possible and you still want to make sure you make some money on your home, the following are some tips you need to use.Tip #1 – People Pay Less the Longer Your Home SitsHave you ever seen homes that have prices that have been slashed a huge amount? More than likely this has occurred because the home has been on the market for a long time without any potential buyers. While some of the reasons for your home sitting without selling may be a reasonable one, most people will think that the home has a problem or is a bad deal. Homeowners that are stubborn really pay, so you need to work on selling as fast as possible for the best price on your piece of real estate.Tip #2 – Use a Real estate AgentThere is a lot of real estate that is affordable today, and there are more homes out there than buyers. This means you need to make sure your home really stands out and you can do this with a good advertising campaign. However, you’ll need someone that knows how to effective market and advertise a home, which is where a good real estate agent comes into play. Use a real estate agent that will come up with a good marketing campaign to help make sure your home sells quickly.Tip #3 – Expect to Get Less than You AskYou need to expect to get less than you ask when you are trying to sell residential real estate. No longer are you going to get people trying to outbid others for your home. Today you can expect to have quite a bit of haggling and you’ll need to compromise if you are going to sell. Having a real estate agent is important because they can help you to get through the deal to a price that is reasonable. So, when you set the price on the residential property that you are selling, just expect to get less than you ask for. It is important that you allow a professional to do the negotiating for you to get the best price.Tip #4 – Ensure a Professional Reviews the PapersBefore you sell your piece of residential real estate, even if you’re selling it without an agent, it is important to have a professional take a look at the paperwork. The contract should be looked over carefully by someone that knows what they are dealing, since a typo or a small mistake can end up costing you a lot of money or a lawsuit.Tip #5 – Research the MarketIt’s important that you research the market in the area before you even try to sell your home. Sure, you may like those pink counters in the kitchen, but it may turn buyers off and make your home take a long time to sell. You want to ensure that your home appeals to many buyers so that you can sell as quickly as possible. Look at other homes and popular properties to make sure you do the right things to your home to make sure that your piece of residential real estate sells as soon as possible.
Buying a home is a major decision because it involves choosing a place where you will live for a number of years. This decision also has major implications on your financial status because of the usually high cost of homes and the loan applications that accompany such purchases.Due to the enormity of the decision of purchasing a piece of property, most buyers solicit the help of real estate agents. Real estate agents are persons licensed by the government of a certain jurisdiction to handle real estate sales. Usually, real estate agents are under the employ of real estate brokers who can be either individuals or companies that have overall responsibility for the actions of real estate agents. There are also instances when real estate agents use the services of real estate appraisers to help them determine the market value of a home that is put up for sale.Getting a LicenseGiven the delicate and complex nature of real estate transactions, it is important that buyers get the right information so that they are properly guided in their decisions. Real estate agents, brokers, and appraisers need to have an understanding of the market and the technical aspect of real estate. To be able to get a level of competence in real estate, these persons need to take courses on the different aspect of real estate and take a licensing exam so that they can be certified by the state as persons who can handle real estate transactions.Traditionally, people who wish to become agents, brokers, and appraisers enroll in institutions that offer courses on real estate subjects and take the subsequent exams for licensing afterwards. However, it is now possible for people who to take these courses in the comfort of their own homes because online courses are available on the Internet.Online CoursesA search on the Internet can lead to you to a large number of online schools that offer real estate courses. Under this set-up, students enroll online, receive their materials through e-mail and they take exams online. These online courses promise that taking these courses is the same as or even better than the traditional way because students do not have to deal with the problems of traveling and face to face communication with instructors. These courses also offer review lessons on how the students can improve their chances in the licensing exams given by the government. Apart from being more convenient, these online courses also offer potential agents more opportunities since real estate courses on the different states are also offered. Given this new development, people who wish to be agents can now also avail of the benefits that the Internet offers.
The development permit is one of the keys to a successful real estate development project. Problems getting a permit approved can cause major delays and result in increases in holding costs. We like to do everything possible to ensure in advance that our development application will be approved smoothly and quickly.Once we secure control of a site, we assemble the project team that will design and document the proposed development in accordance with the requirements of the Local Authority, the design brief and development mix.Depending on the complexity of the project, our real estate development consultant team usually consists of:- Property Accountant
- Property Lawyer
- Town/Land Planner
- Civil/Hydraulics/Structural Engineer
- Land Surveyor
- Landscape Architect
- Quantity Surveyor
- Finance BrokerOther possible team members, such as acoustic and traffic specialists, may also be required by the Local Authority to submit a detailed report with the Development Permit Application.To minimise the risk of disputes, we create a written agreement with each consultant. The agreement we typically use describes, among other things, the basis on which fees are calculated, the fee structure and services to be provided at each stage and the method by which we agree for the consultant to proceed to the next stage.The architect will draw up plans for submission to council (these aren’t the detailed plans required for construction) that fit in with the planning regulations and the local authorities development guidelines, using a contour survey prepared by the land surveyor. The town/land planner is often involved at this initial stage, providing advice on the overall planning policies of the Local Authority.Today most architects use sophisticated 3-D CAD software to compile drawings as it allows for ‘virtual’ buildings to be created. This system has the added benefit of creating fly-throughs and 3D images (also useful for the sales process and submission to Council) as well as documentation of the building for the Development Permit Application and for Construction by the Building Contractor.We normally tailor our designs and standard of finishes slightly above the requirements of our target market, so they stand out from other developments on the market. This way our projects have the potential to attract a premium rental and sale price plus it makes it a lot easier to sell, if we need to.The Local Authority will assess the submitted Development Permit Application for its impact on the neighbours, local community and the environment, typically including:- Privacy for neighbours
- Traffic generation
- Overshadowing of neighboursAdverse impacts on air, water, and noise levels
- Amount and type of waste the project will generate
- Other areas of concern include historic districts, parks, open space, trees, and wildlife habitatsIf the consultants have all done their jobs well, most of these concerns will all be addressed to the satisfaction of the Local Authority within the development application, and approval should be given within a reasonable timeframe.The actual development approval process will obviously vary between areas, and it is continually under legislative review, so up-to-date information should be obtained from the local authority and/or the Planning consultant on your RED Team.
After a Development Permit Application is lodged with the local consenting authority or Council it would typically follow something similar to the process below:- Initial Review
- Expert Referral
- Advertising and Notification Period
- OutcomeSeveral factors can delay the development application consent process which can end up becoming costly to a property developer. Here are some of the most common assessment delays:- insufficient information
- non-compliance with development rules
- poor designs creating unacceptable impact on the neighbourhood
- objections from neighbours or other groups
- unsatisfactory impacts on trees
- complexity of assessment reports
- external referral delaysIt’s not necessarily the end of the process if Council has refused the development permit application. An experienced architect and planning consultant can greatly assist in challenging a planning decision.