Archive for the ‘investing in real estate’ Category

Avoiding Pitfalls When Buying Fixer-Upper Houses

Wednesday, May 25th, 2011

Pitfalls to buying fixer-upper houses, such as broken plumbing systems, worn out electrical wiring, and cracked foundations can be avoided with the help of a professional inspector prior to purchasing a house. Once identified, these conditions can be laid before the seller, who must either fix the problems to the satisfaction of the buyer, or the buyer can pull out of the deal.

Of course, it takes hard work to find a house, make all of the repairs, and learn how to deal with tenants. If it were easy, everyone would be doing it. You’ll learn not to take life, or tenant problems, too seriously. Shakespeare said, “A light heart lives long.”

The good news is that you learn valuable technical and people management skills that are useful in many other aspects of your life. You are also rewarded with a feeling of satisfaction in your accomplishments, a stronger sense of financial security, and the peace of mind that accompanies it.

Don’t buy a house with a glaring defect

Sunday, January 30th, 2011

Opening up the old mailbag again, I am printing my response to a recent fixer upper email question that I received.

Hello Terry,

I’m writing you with a somewhat specific question.

I am looking at a house at xxxx Star St. in Duluth, MN. It’s a vacant house (so many are nowdays) and the listing price 39k. Repairs look to be 10.9k plus a fee of 1,100 for re-registering it as occupied.

I walked through the house, visually it’s fine. I like the house, don’t get me wrong. New windows, carpets, paint, etc. But the repairs are mostly plumbing etc. Should I put in my bid for 39k EVEN or throw it down for 29k?

It’s in a fairly low crime area, but across the street is a halfway house for prisoners just getting out into the world…Prior values in the 200k for this area before the Great Collapse….

Thank you for your time,

Malcom

Dear Malcom,

What I see is a red flag that should influence your decision.

The location of the house across the street from a halfway house is going to considerably limit what you can do with the house. Regardless of whether you are going to turn it into a rental or flip it, you have a very limited pool of potential tenants or purchasers. In my opinion, most people would not want to live there.

Consider, if you had a tenant who had a choice to rent your property, or one in another neighborhood nearby that did not have a half-way house across the street. Which would they choose?

Granted, the purchase price is low. However, in my opinion, it’s better to spend a little more money for a house that doesn’t have a glaring defect.

There are a lot of properties on the market right now, and many at bargain basement prices. If I were you, I would consider looking around for another one.

Donald Trump said, “Sometimes your best investments are the ones you don’t make.”

Best of luck in your business.

Best regards,

Terry Sprouse

Hit a Holiday Home Run for Your Tenants

Wednesday, December 15th, 2010

Remember your tenants during the holidays with a gift card. This shows them that you are in it for more than the money.

When I was a Peace Corps Volunteer in Honduras, the people I worked with went out of their way to make me feel I welcome and cared for. I try to do the same with my tenants.

Be kind to your tenants and treat them the way you would like to be treated and they will return the favor by taking care of your property, and by providing you with financial security for years to come.

Turn Your Home into a Rental Property (video)

Tuesday, November 23rd, 2010

What is the most powerful thing in the world?

An idea that has been planted in a person’s mind.

To improve your economic security you should plant in your mind the idea you should never sell a house. Converting your home to a rental house can provide long-term rental income and economic security to you and your family.

 

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Remove that Garbarge Disposal Now!

Getting Started; Choosing a Strategy for Real Estate Investing

Thursday, November 18th, 2010

This is a guest post from Sharon Vornholt, an investor at http://bit.ly/LouisvilleGalsRealEstateBlog. Her blog provides very practical information for investing during these times of tight money. She speaks with eloquence and a solid base of knowledge in the area of wholesaling. It’s an honor to have her write today’s guest article. Visit her site to get a free copy of the classic book “The Richest Man in Babylon.”

I am asked from time to time about my real estate business, how I got started as a real estate investor, and how I chose my primary strategy for my business. I became interested in investing in real estate about a dozen years ago. A realtor friend of mine took me to my first REIA meeting as her guest, and I was completely hooked!

I had another business at the time; I owned and operated a home inspection company from 1991 until 2008. It was during that time that I began to “dabble” in real estate. It took me a couple of years to buy my first property which was a rental. In the next 7-8 years I bought several more rentals and did some rehabbing. Wholesaling was still pretty much a mystery to me at that time. Throughout the years, I always attended the monthly REIA meetings, attended seminars, boot camps etc. I have always been passionate about learning the business of real estate investing.

When I made the leap to full time investor in 2008, I needed to replace the income from my previous business. I already had a pretty good idea of which strategy that I wanted to pursue. Even though I had rental property, I really didn’t like being a landlord and that didn’t take care of my need for a paycheck. I loved rehabbing houses and the process of turning “ugly houses” into a home someone could be proud of, but houses were sitting on the market for long periods of time before being sold. So, I decided against the strategy of fixing up houses and then reselling them. But there were a lot of real estate investors that were still active rehabbers in my area, so I knew that what I would put my focus on was wholesaling.

Wholesaling is a strategy where you can earn large chunks of cash using very little of your own money in a relatively short period of time. In my opinion, it is one of the safest strategies you can pursue when you are starting out. Whatever strategy you ultimately decide to focus on, wholesaling should always be part of your business. If you are a landlord, wholesaling can provide you with cash to pay down the mortgages on your houses. Rehabbers can wholesale some of their unwanted houses to build up a cash reserves for the projects they are working on.

There are two questions that always come up for anyone new to real estate investing. How do I find deals and what do I do with them once I have found them? I have always been a marketer so finding deals was something that I understood. I knew that I would have to develop a marketing plan and work the plan. All of those books, tapes and seminars had prepared me for the many ways to find houses. But I was absolutely terrified that I would find a house, put it under contract and not be able to sell it. This is a huge concern for most folks getting started in real estate investing.

The best place you can start to build a buyers list is at your local REIA club. My club is one of the largest in the country with hundreds of members. Once a month we meet for dinner, and we always have a speaker. Our club is committed to educating its members, and we are very lucky that they bring in national speakers in addition to our local experts. Members also have the opportunity each month to put materials out on a table before the meeting. They can put out information about a property for sale or for services that they can provide to the members. Any member that has a property to sell can go up before the group and do a “property pitch”.

I have bought and sold a lot of properties within that group. You have a ready made “buyers list”. As an added bonus, we have a directory of all of the member’s contact information. So each time I have a property to sell, I can shoot out an email to the groups’ members. If you are just starting to build your buyers list, I have also had pretty good luck adding folks to my buyers list through Craigs List. When I put a property on Craigs List even if I don’t find a buyer for that particular property, I always end up adding at least a couple of investors to my list. Finding buyers and keeping a good buyers list is an ongoing process, but it’s not too difficult once you get the hang of it.

Ultimately, everyone has a different way of choosing their primary strategy for their real estate investing business. Some folks know from the get go that their primary focus is to buy and hold properties and that is all they do. Other people love the rehabbing process, but don’t like being a landlord. I have done just about everything since I started investing in real estate. There is no denying that buy and hold is the way to build long term wealth. Whatever your strategy, I would encourage you to add wholesaling to your investing business. Think of those “chunks of cash” you get from wholesaling properties as a way to fund your business and put extra cash in your pocket.

Sharon Vornholt has been investing in real estate since 1998 and is a member of the Kentuckiana Real Estate Investors Association. She also has a blog for real estate investors of all levels of experience that you can find at http://bit.ly/LouisvilleGalsRealEstateBlog.

Control Your Thoughts & Reach Your Dreams

Monday, October 25th, 2010

What things do you actually have control over in your life?

When you think about it, there are actually very few things that we can control.

For example, I was forced to give up my dream of boxing. I ruined my hands in the ring. The referee kept stepping on them.

We are required to buy insurance for our cars and houses. The kids must go to school and have supplies and clothes. We choose food, cars and most consumer goods based on the advertisements we see on television. Different levels of government and social pressures decide many things for us, or leave us with limited options to choose from.

And, it doesn’t get any better as time moves on. It seems the older we get, the fewer choices that we have. Men still chase women when they get older, but only downhill.

The One Thing We Control

Napoleon Hill says that we have control over but one thing, the ability to control our own thoughts. This is the most significant and inspiring of all human traits. It is part of our divine nature. This divine tool is the sole way to control your own destiny.

Mind control is the result of self-discipline and habit. You either control it or it controls you. The most effective way to control your mind is by keeping it busy with a definite purpose, supported by a clear plan.

The Ultimate Question

A lot of people I know have read Think and Grow Rich, and they say that they think it is a great book. But, very few know the answer to the following question.

What does Napoleon Hill say that you must do twice daily in order to make your desires become reality?

On page 36 of my copy of Think and Grow Rich, Napoleon Hill says that you should have:

1.) written a concise statement of what you want,

2.) how you plan to get it, and

3.) when you will get it,

then you should read your written statement aloud twice daily, once before retiring at night and once after arising in the morning.

What Does This Have to Do With Real Estate?

In the early 2000’s, I thought my job was going to be cut and I that would be unemployed. I decided I needed a steady second income so I wouldn’t have to rely on my 8:00 to 5:00 job to bring home the bacon .

After I concluded that buying fixer upper houses and renting them out was the best second income for me, I wrote down my desire on a piece of paper and carried it around in my wallet.

I wrote, ” I will find and buy a fixer-upper house in the next 60 days.” In less than a month, I found and bought my first fixer upper house, and that was my start in this business.

That was the first time I experienced the power of this technique. I have had many subsequent successes with the technique as well.

Like most of us. you have ideas and dreams. But, if you go beyond just identifying them and you write them down, and put your passion into them, they are more likely to come true.

Confessions of a Fixer-upper-holic

Turn Your Real Estate Business into a Micro-Empire (video)

Thursday, September 30th, 2010

Starting a fixer upper & rental house business is just the first step. Learn how to turn your business or passion into a mico-empire by sharing your knowledge with others.

Turn Your House into a Rental Property: Podcast of radio interview with Dan Ramey

Thursday, September 23rd, 2010

Here is my radio interview with Dan Ramey of WBEX in Chillicothie, Ohio.

I described the process that I use to turn a house into a rental property. I advocate that people use this when they are ready to buy a new house. Instead of selling their old house, they should just turn it into a rental property.

The average American buys 7 houses during their lifetime. If they kept all their old houses as rentals, they would have a pretty substantial monthly income by the time they retired.

Interview with Dan Ramey 09-15-2010

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Remove that Garbarge Disposal Now!

William Nickerson – real estate better than stocks

Thursday, August 5th, 2010

William Nickerson, in his book How I Turned$1,000 into Three Million in Real Estate – in My Spare Time, said “you success with real estate properties is enhanced because you can retain control of it.”

Many people have made money in stocks, but they relinquish control of their money, except when to buy or sell.

When investing in real estate properties, you can retain personal control in all stages of the selection, operation and improvement of your investments. You are the captain of your own ship.

More radio interviews scheduled

Aug. 10, 9:10 am, Dave Kelber will interview me, WRNJ 1510 am Hackettstown, New Jersey.

Aug. 11, 8:10 am, Mark Wayne will interview me, WICH 1310 am, Norwich, Connecticut.

Aug. 17, 6:50 am, Jason Mansmith will host me, WRPN 1600 am, Ripon, Wisconsin

Here is the complete list of my upcoming  radio interviews. I will keep you posted as more are added

Aug. 10, 9:10 am, Dave Kelber show, WRNJ 1510 am Hackettstown, New Jersey.

Aug. 11, 8:10 am, Mark Wayne show, WICH 1310 am, Norwich, Connecticut.

August 17, 6:50 am, Jason Mansmith show, WRPN 1600 am, Ripon, Wisconsin.

August 20, 8:30 am, I will be on David Sutton’s show, KSRN 1490 am, Los Alamos, New Mexico.

August 25 at 8:08 am,  I will be on Jeff Anderson’s show, KSDR 1480 am, Watertown, South Dakota.

When we buy a fixer upper house, “we are what we are”

Monday, August 2nd, 2010

I was watching the movie Australia last night, starring Nicole Kidman and Hugh Jackman. It was such a classic tale that it sent chills down my back.

A man starts up a small cattle empire in the outback of Australia. He is killed and his inexperienced wife has to take over the operation. She’s in way over her head, but in order to save the ranch she has to drive the herd thousands of miles to the market. She asks her ranch hand to lead to trail drive.

The tough ranch hand assembles a rag tag group, which include of a drunk, two aboriginal women, a young boy, and the wife, to herd the cattle.  Despite stampedes, poisoned watering holes, and other travails, they keep moving on.

We are what we are

Before the trip begins,the ranch hand addresses his team and goes over the “dos and don’ts” of working a cattle drive.

At the end of his speech he says, “Well, we are what we are.”

He said it with some degree of exasperation at having to use vastly unqualified people on the drive.

But, I also thought that he said it with a sense optimistic determination. As if he is saying, “This is all I have to work with. Its not as good as it could be, but I’m going to make it work and we’ll get these cattle to market.”

I am what I am

When you buy your first fixer upper house, it also requires that you take the attitude that “Well, I am what I am.”

You don’t have all the experience that you might want to begin, but you don’t let that stop you. There’s a lot to learn and you learn as you go. Your determination gets you over a lot of obstacles.

Upcoming Radio Interviews

August 20, 8:30 am, I will be on David Sutton’s show, KSRN 1490 am, Los Alamos, New Mexico.

August 25 at 8:08 am,  I will be on Jeff Anderson’s show, KSDR 1480 am, Watertown, South Dakota.

Watch this space for further developments!