Archive for the ‘home foreclosures’ Category

Get in on the Greatest Real Estate Fire Sale in History

Saturday, March 3rd, 2012

“The greatest  real estate fire sale in the history of the United States rages on.”

— CNBC

Foreclosed properties are selling like hotcakes. Now is a great time to get some great deals on investment properties  Besides the price, below are four reasons why you can count on real estate to provide you with security today and in the future.

Cash flow

With a good rental property, after all the expenses have been covered, including mortgage, vacancy rate, repairs, and property management, you can still receive a good cash flow. This provides a reliable monthly income for as long as you want to keep the property. As the amount of rent that you charge goes up, your profits go up. See Table 1 (U.S. Census Bureau, 2012) for historic monthly rents in the U.S., from the U.S. Census Bureau.

Demand for Housing

There will be always be people in need of a place to live. With our growing population, a gain of one American born every 14 seconds, we will have a population of 400 million by 2050. Based on our current immigration patterns and population growth, there will continue to be a demand for housing well into the foreseeable future.

Appreciation

In the short term, housing appreciation seems to unpredictably rise and fall. However, in the long term, over a 60-year period, house values show a steady and consistent upward trend. According the U.S. Census Bureau, from 1940 to 2010, the average increase in the value of a house was about 5% per year, adjusted for inflation. Table 2 (U.S Census Bureau, 2012) shows historic home values.

While appreciation of 5% may seem low to some people, when we consider that we only put a small percentage down, between 5-20%, and we receive monthly rent checks that more than cover mortgage payments, it begins to make sense. If we don’t allow periodic dramatic rises and falls in home values to shake our confidence, we can count on steady, long-term, profits from our investment properties.

Tax savings

Our kindly Uncle Sam wisely gives tax incentives to real estate investors. The federal government allows you to depreciate your investment (or reduce your taxes to account for physical deterioration of the house) on Schedule E of your annual tax form. In addition, you deduct expenses related to your investment from your gross income on IRS Form 1040, and reduce the amount of income that you pay taxes on.

How to Force Yourself to Write

How to Get Money to Buy Rental Houses (Video)

Thursday, September 16th, 2010

During my interview with the inimitable Dan Ramey, at WBEX 1490 1490 AM in Chillicothe, Ohio, he asked whether or not people should be concerned about refinacing their house to make a downpayment on a rental house.

Naturally, people are nervous about making financial changes during a recession. But, refinancing your existing house to take down payment money out of your equity and buy a rental house is one of the safest ways to start investing in real estate. It’s the most common way that real estate investors use to purchase investment properties.

If you have a steady job and a good credit rating, now is a rare opportunity to get a loan in the 4% interest range. And, houses are selling at fire sale prices!

It’s a good idea to refinance a house that you have owned for a few years before reinancing to take some equity out of it.

Refinancing an existing property for downpayment money is a lot better than waiting until you have enough cash to purchase a rental house withouta loan. Having a loan gives you leverage, because you don’t have to use all of your own money, which could take 20 years or more, to save.

The great benefit is, after you have purchased your rental house, is that you have a stream of income that is in addition to your regular 8:00 to 5:00 job.

You can be laid off, or fired from your regular job, but you can never lose your rental property job!

Here is my new video that shows the process of putting your lazy home equity to work for you:

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Getting Started with Fixer Upper & Rental Houses (Video)

Friday, September 10th, 2010

I think that buying fixer upper houses and turning them into rental properties is the easiest way to make money in real estate. You can do it in your spare time and still work your 8:00 to 5:00 job. And, rental houses can create a steady new income stream, that could even allow you to retire from your regular job, as I did.

This video which provides a general overview of the process for starting up a fixer upper and rental house business.

How to Turn Your Home into a Rental Property – Radio Interview with Ron Ross

Thursday, August 26th, 2010

I was interviewed by the engaging, master radio host, Ron Ross of WJBC 1230 AM in Bloomington, Illinois this morning.

I talked about how to turn a home into a rental property, including:

– how to do the financing

– getting good tenants

– taking advantage of tax breaks

– and preparing the old house to rent.

Before the show I heard Ron going through the news and he said that ratings were so bad at CBS that Katie Couric was showing up to work in sweat pants, a tank top and a ball cap too.

So, during the interview, I mentioned that one of the advantages of working with rental properties was, like Katie Couric, I can show up to work in sweat pants and a ball cap.

Listen to the entire radio interview.

Upcoming radio interviews

September 2 at 7:40 am, Good Morning Rochester with Rich Peterson, KROC 1340 AM, Rochester, Minnesota.

September 2 at 11:25 am, John Brown’s Mindset, KTRS 550 AM, St. Louis, Missouri.

September 15 at 8:05 am, the Dan and Mike Show with Dan Ramey, WBEX 1490 AM, Chillicothe, Ohio.

Conducting Formal Due Diligence

Wednesday, January 30th, 2008

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I am currently reading “Real Estate Investing for Dummies” by Tyson and Griswold, a well-written and thorough book that covers the basics of what real estate investors should know. I’ve long considered “Investing in Real Estate” by McLean and Eldred as one of the best introductory texts for real estate investing. Yet after reading the “Dummies” book, I find it equally as good, and perhaps a little more accessable for the new investor.

Here is my list of Top New Real Estate Books that I posted on Amazon.

To assist those who invest in fixer upper houses, I’m incorporating key parts of the “Due Diligence” chapter from the “Dummies” book with my own real estate observations.

Once you have made an offer on a house and it had been accepted by the seller, the “due diligence” period begins and you have until the close of escrow (or completion of the sale) to check out the physical and financial condition of the property. If you discover that the property has problems, but you think the deal is still worth pursuing, the seller may be willing to correct any deficiences, or give you money to to complete the necessary work yourself.

It’s during this time frame that you must get all of your questions answered and be sure you know what you are getting. If done properly, it will require quite a bit of effort on your part. But it must be done, if you wait until after the property is in your possession, its too late to ask the seller to replace that broken furnace.

You should work closely with the seller but take his word for anything. Only trust what you have in writing.

In my case, most of the house that I buy aren’t bought from the owner. They have been reposessed by a bank, the Veteran Administration or HUD. But I still do due diligence by having my friend/handyman go through house with a fine tooth comb. He knows more about the house repair than anyone I know.

There are two key components of due diligence process:

1. review of books and records
2. the physical inspection

A thorough look at these two components should allow you to determine if the property is worthwhile, priced right, and your goals. The due diligence is your last opportunity to either complete the transaction, or cancel the escrow, have your money returned, and look for another property.

Next post: Reviewing Books and Records

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Schuab on buying bargains during the real estate meltdown

Thursday, September 20th, 2007

John Schuab is one of my favorite writers on real estate investment. He’s been investing and teaching for a long time and he almost always has valuable insights to pass along. His book “Building Wealth One House at a Time” is one that I refer to often. Here is a review that I wrote of his book at Amazon.com. (You’ll need to scroll down to see the review.)

Schuab recently posted a very good article on his website entitled “Buying Bargains as the Sub-Prime Market Melts Down.” He makes the point that “cash is king,” and the true bargains are available to those with cash. He provides a good description of why the market crashed, and how to approach purchasing properties under the market conditions that we now operate under.

Schuab suggests:

“Target several of the best neighborhoods in your town. Neighborhoods that you know will appreciate in value over the next ten years. Walk those streets looking for empty houses. Some of my best deals have been in the better neighborhoods in our town. Your competition will be looking in the traditional rental neighborhoods. Avoid the competition and buy better properties at bigger discounts.”

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Home Foreclosure Insights on NPR

Thursday, September 6th, 2007

The latest in a string of good news for real estate investors is that home foreclosures rates are surging to new records. An interview on NPR this morning with Glen Daniels, a director at Foreclosure.com, offered some insight into their business. Daniels says that the amount of foreclosure properties that he deals with are up but the number of buyers are down. This is because buyers are are uncertain about what the market will do next, and because of the credit situation with banks tightening credit lines which make it harder for buyers of qualify.

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