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Real Estate is changing

2007-09-16T13:50:00.001-07:00

Much has been written about the changes coming to the real estate industry as a result of the slowing market. But aside from the possibilities of a handful fewer brokerages, what you’ll see at the end of this lull likely will look quite a bit like what you saw at the beginning.

Maybe it shouldn’t be that way. But that’s the way things seem to turn out.

This is the time when there should be a premium on training, but many of the brokerages who will look most attractive to new agents (read: higher splits of the commission) offer limited training. Here’s a hint … if your broker doesn’t offer a class where you go through the contract line by line, find one who does. The contract is your lifeblood and that of your clients, and if you don’t know it you and they are better off with you not being in business.

This is the time when there should be a premium on mentoring, but most of the mentoring programs are financially weighted heavily in favor of the brokers, chasing many agents off to seemingly greener pastures.

This is the time when pricing should be the key consideration for sellers. But the influx of new agents blinded by dollar signs and oblivious to the market realities means sellers always will be able to find an agent for their listing regardless of the price.

This is the time when many observers believe technology and the Internet will put enough pressure on real estate commissions to drive down what agents charge, whatever amount that may be. But the reality is commissions likely will rise as only a smaller segment of the agent population proves able to successfully sell a home. The idea of disintermediation loses some of its sway in a slower market, where it’s not enough to plant a sign in your front yard and wait for the buyers to come.

When there were more transactions taking place, formal training often could give way (to some degree, at least) to on-the-job learning. But it’s all but impossible to gain the needed skills and maintain those skills with one transaction every few months. And experience has shown few agents make the effort to extend themselves and stay current on changes in the market.

There’s a fanciful notion that the slower market will clear out all the marginal agents - those with little ability, little motivative, little knowledge, etc. And true, many agents who entered the market in 2004 now are seeking full-time employment elsewhere (assuming they didn’t get their license to practice real estate part-time on the side.)

But the ranks keep refilling like sharks’ teeth … another row of brand new agents stands ready to start writing checks as those in front of them fall out of the industry. The supply of those ready to make their fortunes as real estate agents is nearly endless.

If anything changes, it will be a return to the historic failure rates of new agents. It’s often said 90% of new agents never make it through their first year. That figure dropped back in 2005 when even Tobey could have sold a house without my assistance, assuming he had passed the licensing exams.

These days, however, many who enter soon will realize they likely shouldn’t have done so.

Has real estate really gone down that much?

2007-04-01T14:06:00.001-07:00

The Keys News reports from Florida. “It took nearly an hour, but only a few minutes were needed Saturday for auctioneers to sell four residential properties and three commercial buildings. With less than 100 attendees at the auction, those in chairs seemed outnumbered by the agents moving around the room trying to generate bids.”

“A 2,000-square-foot home on Terry Lane sold for $800,000 and a 1,400-square-foot Terry Lane home sold for $500,000. In both cases, the bids were closed without any action from the crowd. Because of this, two similar properties on Terry Lane weren’t offered up for auction.”

“‘We didn’t feel like we were near where we could be, it was a disappointment,’ auction founder Ben Anderson said.”

“‘Has real estate really gone down that much?’ auctioneer Chris Camp asked after no one bid on a Third Street triplex that started out and sold for $600,000. ‘Yes,’ someone in the crowd retorted.”

“Anderson attributes buyers’ hesitation to the concern that the market hasn’t yet bottomed out. ‘It’s a buyers market and everything is shifting and changing,’ Anderson said, adding that buyers have ‘gotten off the bus.’”

“‘They’re going to walk around the block before they get back on,’ he said.”

The Montgomery Advertiser. “Colonial BancGroup Inc. has lent $6.4 billion for construction projects, five times the average for banks nationwide. Colonial lends money mostly to local homebuilders well known to loan officers, according to analyst Robert S. Patten.”

“Since 2000, Colonial has bought six Florida banks with assets of $3.5 billion. A seventh acquisition of a $1 billion-asset bank is pending. Many of the deals looked wise at the time because Florida’s economy was sizzling and home values were soaring.”

“Today, a Florida real estate bank must deal with plummeting sales and a growing list of abandoned projects, giving credence to the experts who told the Wall Street Journal that the state ‘is undergoing one of its worst housing recessions ever.’”

“‘Given that Colonial sees itself as primarily a real estate bank, they’re vulnerable,’ said Richard X. Bove, of specialty investment bank Punk Ziegel & Co.”

“Bove said the damage to banks with extensive Florida franchises has yet to show up in their financials. ‘Wait till next quarter,’ Bove said. ‘It’s not just Colonial. A lot of banks are going to have trouble. They’re all in a difficult environment right now.’”

The Sun Sentinel. “If home ownership is the American dream, the scene that plays out every week in Room 385 of the Broward County Courthouse is the American nightmare. ‘Case No. 06-19776,’ intoned the auctioneer, a foreclosure clerk named Barbara Pendergrass.”

“Near the back, Earl Lawrence leafed through his thick black binder and looked up the property, a small townhouse in Tamarac. Bought for $65,500 in September 2000, a foreclosure judgment for debts totaling $188,000 last December.”

“‘They borrowed themselves right out of a home,’ said Lawrence, of Hollywood, a real estate investor who has been coming to the public auctions for 25 years.”

“There were no bids on the Tamarac townhouse Thursday, apart from the minimum $100 that the foreclosing bank made to formally seize the property.”

“The real estate market has become so uncertain, and the debts racked up on these properties so high, even the vultures aren’t nibbling. ‘Would you buy a property for $420,000 if you could only sell it for $400,000?’ said Adnan Kabbara of Weston, a developer and contractor who has bought homes at auction for four years.”

“Properties that would have attracted a bidding war a year or two ago, when the real estate market was soaring, now stay with the lenders. The banks sell them through major national real estate firms, more frequently at a loss.”

“‘The party’s over,’ said Lawrence.”

“With more loans and homes skidding off the rails, the crowd in Room 385 isn’t going to thin anytime soon. As the auctioneer worked through the stack of folders on Thursday, investor John Derynda groaned that he should have brought lunch.”

“‘Two months from now,’ he said, ‘it’s only going to be worse.’”

“A few years ago, condo-hotels practically sold themselves. With real estate prices marching upward, the idea of owning a condo unit on the beach and covering some of the expenses through hotel rental payments seemed irresistible.”

“‘We weren’t salespeople, we were order takers,’ recalled Joel Greene, president of North Miami-based Condo Hotel Center.”

“Today, the market has sobered up. Condos aren’t selling and condo-hotels are caught in the same downdraft. In West Palm Beach, plans for The Harrick, a 138-unit condo-hotel at Lakeview Avenue and South Dixie Highway are on hold. ‘We’re redesigning it as a hotel,’ said developer David Gostfand. ‘The condo market is a little quiet at the moment.’”

“About 1,250 condo-hotel units have been opened in the past two years in Broward and Palm Beach counties, with another 2,500 units approved or under construction. That’s a small number compared with the 15,500 units proposed for Orlando or the 32,800 going up in Las Vegas.”

“Condo-hotel units that sold for $650 a square foot in the late 1990s are offered at $1,200 to $1,400 a square foot now. ‘The big question is with all these projects coming along at one time, are there enough luxury buyers?’ said (consultant) Jack McCabe.”

“Some developers concede that buyers must get a low price per square foot to have any hope of a return on their investment. Jim Clarke plans to begin construction on Clarkes Hotel, a 92-unit condo hotel in downtown West Palm Beach, within 60 days. ‘We’re virtually sold out, but our prices are low,’ said Clarke, who estimated an average unit costs $375,000.”

“Clarke cites a rule of thumb among hotel developers that to be profitable rooms should rent for a tenth of 1 percent of their building cost. If a buyer acquires a unit for $500,000, that translates to room rates of $500 a night.”

“‘That’s kind of hard to sustain down here,’ Clarke said.”

How will foreclosure rates effect flipping houses?

2007-03-30T07:22:00.000-07:00

Real estate investing has changed since the closing of several lower tier banks. What will that do for people interested in getting into investing in real estate? It will definitely make it harder to cash out on a flip or rehab. I have used several B C and D credit banks like Freemont. I used Freemont several times and losing their special programs will make it much harder to get my houses financed, especially in the lower priced housing market. What can we do as investors to combat the tighter underwriting of the banks and mortgage companies that are left? The best way to work around the new rules is to offer lease purchase options or owner financing. Both of these options will allow you to get the house moved, but you will not be able to get your back end money without putting permanent financing on your investment property. I recommend trying a 2 or 3 year lease purchase. Please read my article on lease purchase options for more

Amazing how to rehab video free!

2007-01-15T13:27:00.001-08:00

It sold for $147.00 dollars on the net
for over a year....

The video goes through an entire rehab
from start to finish. It will teach you
everything from soup to nuts.

We even go over the figures so you'll
know exactly what to spend for your
renovations!

You can access the video here:

http://www.youtube.com/watch?v=yP_URs_WT48

Buy and Hold?

2007-01-06T07:18:00.000-08:00

lot of people these days are preaching about the buying and holding method of gaining wealth with real estate. There indeed may come a time in your life or business when youll want to hang on to a piece of property, although youll only be interested in keeping certain types of property. If youre just starting out, flipping a house may be an ideal way to get started.

Basically, there are three ways that you can flip a house, although each one has its own terms, motivation, and type of property. The first method is known as retailing. What this means, is that you buy a house in bad shape, do the repairs to fix it up, then turn around and sell it. There are a variety of houses in need of repairs out there, and several ways that you can quickly flip a house to net profit. All you need to know are the techniques that will get you the most money in the least amount of time.

The second way you can flip a house is though wholesaling. Wholesaling involves finding a home for sale then flipping it to an investor for a fast, yet small profit. To do this, youll need to know the real estate investors in your area, the types of homes that flip the best, and how to fund your property so you can flip it to them. If you live in a big area or a city, youll find that using the wholesaling method of flipping houses is actually easier to accomplish.

The third way to flip a house is by assigning the purchase. Using this method, youll commit to buy the house. Instead of closing the deal yourself, youll assign it to a real estate investor - of course for a small fee. The investor will take the contract over and close the purchase themselves - flipping the house. This can be very profitable, especially if you invest in the right home. You dont need to have your contract worded any special way to be legal, although you will need to determine the assignment fee.

If youre looking to break into the real estate market and make big bucks, youll need to learn all about flipping houses. Flipping houses is very profitable, especially once you have learned the basics. The first and third methods are the best, although they will both take quite a bit of work on your part. Restoring homes isnt easy, and youll need to have a team qualified to handle any repairs. Assigning the purchase may be difficult when you first start out, although it will get easier with time. If you stay at it and do your best to make a profit - youll be an expert at flipping homes in no time at all.

Real Estate Investing Can Make You Rich

2006-12-30T06:13:00.000-08:00

If you are going to get rich, you may have to give up everything you ever learned in school and from your parents and start from scratch. Now that's not a definite by any means. You may not have to start over. If someone along the line taught you, for instance that it doesn't actually take money to make money, then you may already be on the right track.

That's right. Robert Kiyosaki, author of the Rich Dad book series, said it exactly like this: It doesn't take money to make money. I often hear people say it takes money to make money. I disagree. We had no money when we started and we were also in debt. It also doesn't take a formal education.

He then mentioned Bill Gates as someone who never completed a college education. Which would you rather have, a collection of doctorates or Bill Gates' money?

What it does take, Kiyosaki says, is determination and a willingness to learn quickly. But you also have to know what to do with your talents and, most importantly, to know which part of the Cash Flow Quadrant to generate your income from.

The Cash Flow Quadrant is an icon taught to him by his best friend's father, a man to whom he refers in his books as his rich dad. It is an illustration of what his rich dad called the four different types of people in relation to money: Employees, the Self-employed, Businesspeople and Investors. Each quadrant comes with its own outlook on the world. The outlook of those in the B and I quadrants are the ones that help make them rich.

When Kiyosaki says you need to be willing to learn quickly, he doesn't mean go back to school to improve your job skills. He means you should learn about investing, preferably investing in real estate. The rich dad on whom he based his books was a real estate investor. You can get rich investing in real estate because everything else depends on it. At the beginning of his book Cash Flow Quadrant, he pointed out how so many of Hawaii's businesses were sitting atop real estate that his rich dad owned.

But he doesn't just mean you have to learn the nuts and bolts of investing. You do have to learn about those things, at least to the point that you are able to intelligently choose a professional to help you with your investments. But more importantly than that, you have to learn how to think like an investor, and possibly a bit like a business person too.

That is a far cry from thinking like a Self-employed person. According to Kiyosaki, a self-employed person is someone who owns a job, not a business. You don't own a true business, he said, unless you can leave it for a year and return to find it still making money for you. Businesspeople, he said, know better than to try to do everything themselves. In order to save time and money, they hire people to do the things they can't do or don't have time to do. That's why hiring a qualified real estate professional to guide you in your decisions can be a good investment in and of itself.

However you decide to do it, learning the nuts and bolts of real estate investing yourself or by hiring a qualified person to advise you, it is definitely time for you to move to the I quadrantthat is, if being rich is something you'd like to consider.

About the Author
Investment Property Specialist - Alex Anderson Connects Real Estate Investors With High-Quality Investment Properties. Get A Free Copy Of, "The Investor's Rental Guide"

What is a sandwitch deal?

2006-12-30T06:07:00.000-08:00

This is a great way to make money in real estate especially if you do not have alot of money. The object of this type of deal is to find a motivated buyer and seller and place yourself in between. This is a very easy way to make alot of money with absolutely no risk. Here is an example of a sandwich deal. Find a motivated home owner who wants 100k (for example) for his home. Find out how much the home is worth on the market. If the house is worth 10% or more, make him the following offer: I will lease purchase the home from you, but you have to give me a break on the price and I cannot put anything down. If he says no and it is a good enough deal, try and work something out or just leave. If he says yes, get them to sign an assignable lease purchase agreement. Make sure it is assignable, because you now have the ability to lease the home to someone else or sell it for anything you want over the sale price. Now here is the best part, put a for sale or lease to own sign in the yard and find someone to put in the house. Make sure and get the owner to put in the lease when they will vacate (sooner the better) and do any small cheap touchups that will make it sell faster. I normally run ads in the paper that say something like Lease purchase in all areas. Now, how much do I make? I usually try and get 10% off the sellers price and ad 10% to my ask. That makes a 20% profit for doing very little work (no credit used and no risk) When i say there is no risk, that is not entirely true. You usually have about 30 to 45 days to get someone to give you an earnest money check to cover your first lease payment. There is a way to make more money in the long run, but less up front cash. Instead of selling the home, lease the house for 10% down and ad 20% to the sales price. Most people who lease to own never worry about the price of the home, just the payment. Give them a payment that makes you $100 or so dollars per month and wait for you payoff. Remember that only 20% or so will ever buy the house so you will be able to keep the downpayment they made and re lease the home when they leave. I try and save up a few months rent incase someone skips out on me. If you get 20 or thirty of these lpos going, you are making good money per month and you have zero liability for the house. Here are some items to always watch for:
Make sure you pay the house not directly to the lender (not original owner)
do not make any repairs to the house
make sure the lease contract is assignable
try and get as nice an area as possible
do not give the home owner any cash unless it is a great deal
have an amount you want to make on each deal or walk away.

how do i refinance my home

2006-12-22T12:50:00.000-08:00

Do you have questions about refinancing your primary residence? This decision can be very important to your bottom line. A great way to start your investigation on refinancing is to look at a comparison site like http://www.lowratebroker.com

Lease Purchase VS Sale

2006-12-18T15:54:00.000-08:00

Lease Purchase VS Sale

What is a LPO (lease purchase option) and how can it help me? An lpo is a great idea for any real estate investor. You an make extra money and pay less taxes by leasing a property instead of selling it. You do not have to even own a property to lease it. The first thing you need to do in order to lease a property is find out how much you need down and how much you need per month. Most investors want around 10 percent down and a couple hundred dollars per month profit. I normally lease a house that I know will be hard to get someone qualified or I don't really want to take a profit right away. The typical person who tries to buy a house via lpo does not think that they will qualify for conventional financing. I think the most important thing in considering a person for an lpo is how much they make per month and how long they have been on their job. I also look at the rental history of the person and how long they have lived in the area. Give your customer at least 2 years to convert the lpo and let them know that the home will appreciate every year for them and the price on the contract is what they will pay no matter what the market does. It should be easy for the leaser to get qualified if they make at least 12 payments on time via check or money order. Most banks view a 12 month lpo as a refinance instead of a purchase, therefore you can put someone in your property, charge them a premium and play the odds on them even being able to fill the contract. Here is how an lpo works:
Buyer signs at least 2 year lpo and puts down at least 10 percent (non refunable)
Buyer is responsible for all maintaining, taxes, insurance (get proof)
Buyer has a finite time to execute contract and if they cannot, they forfeit the down payment and have to either sign another lpo or vacate the property. Do not make the lpo assignable or transferable.

How can I make money off an lpo without home ownership? You can control a piece of property by simply leasing it from the owner and assigning it to another person. Here is an example:

Home owner wants out of the property now.
Real estate investor gets them to sign an lpo
Investor has them vacate property and make it look presentable
Investor now finds a person to sub lease the property from them. You get the same out of this as if you owned the property.
Investor collects the monthly rent and pays Home Owners Mortgage.

Here are the pitfalls:
Home Owner goes bankrupt (check your state)
Leaser damages property.

The advantage of this type of lpo is that you have almost nothing to loose. If you cannot find someone to lease the property or the leaser does not pay the payments, you keep the down ayment and via the lease agreement you contact home owner and let them know that you are canceling the lpo. Remember that if the seller is motivated, you will not have to put anything down and sometimes you can even get them to pay you.

posted by rob @ 5:05 PM 0 comments

Sunday, November 05, 2006
The After pics

Go to this link to view the after photos
http://rehabpicsafter.blogspot.com/

posted by rob @ 2:54 PM 0 comments

Thursday, November 02, 2006
Rehab pics BEFORE

here is a link to some pictures of a before rehab
http://rehabpics.blogspot.com/

posted by rob @ 10:24 AM 0 comments

Wednesday, November 01, 2006
Is networking important for rehabers?

Ask any rehaber and they will tell you that they get a lot of their houses from other rehabers in their network. Most new rehabers ask why would someone giveaway a property that will make money. The answer to this question is very easy, it takes about 20 offers to get one good house. What happens when you get 3 or 4 out of 20 offers? Lets say that you have been in the business several years and you have 4 houses, what would you do if you could not get to all those houses? Would you turn down a good deal or would you buy it and flip it to another investor for a little profit. Most investors only work on 1 or 2 projects at a time, the other houses they own can be easily flipped to other investors for a quick profit. I usually price my flip to investors cheap because it is so much easier to sell to a pro. It is easier to sell to a pro because they know that numbers are all that matters and if they know the project will make them money, they will cut you a check. I usually do not let the investor know what I paid until the deal is done. Most investors do not care how much profit you make as long as they know you are not taking advantage. Remember the most important thing about networking is to not try and kill the buyer, because one day you will probably buy from them.

posted by rob @ 8:29 AM 0 comments

Monday, October 30, 2006
Great Free Sites

Great Free Sites

Where do you start finding rehabs? The internet is full of great information and some of it is free. Here is a list of sites I use almost everyday.

http://www.rehablist.com
This site is great. You can sign up free of charge and get fresh rehabs sent right to your email. This is also a great networking tool.

http://www.realtytrac.com
This site gives a free 7 day trial, but after that it is pretty expensive. I would sign up for the free trial and see if you like it enough to keep it. The one negative is that most investors know about this site.

http://www.realtracs.com
This site is great if you are in the Nashville Tennessee area. It shows you listings of all MLS houses.

You can search MLS listings in your site and find out your free site alternative. Set yourself up with automatic email notifications of any house that is listed in your specific price range.

http://www.lowratebroker.com

This site will find your customer or yourself the best rate on a new mortage or refinance. You can get a potential buyer to go to the site and get pre approved, so you do not waste your time on someone who is not qualified.

posted by rob | 9:32 AM | 0 comments

Friday, October 27, 2006
Finding your comps

How do I know how much a potential real estate investment is really worth?

In order to make a profit off of a real estate investment, you will need to first find out how much your property will be worth after fixup. There are a few ways to find out your potential investments worth:
Professional appraisal
Tax records
Recent comparible sales (comps)
internet sites like www.zillow.com

The first way on the list is a professional appraisal, this is the most accurate, but it can cost up to $400 for this service. Tax records are a good place to start, but they are usually 10 to 25% below the MARKET VALUE of the property. Comps are great and most real estate agents will give you a list of comps or let you know the approximate cost per square foot in the area. Internet sites like zillow are a great place to start your research on a potential investment, but do not make this your decision maker. I recommend getting comps and if you cannot find any comps within a 6 month period it is possible you will have a long selling cycle.

posted by rob | 2:36 PM | 0 comments

Loan to Value

Loan to value

How much will the bank loan me to fix up an investment property?

Banks are willing to invest in a piece of property if they believe that it will be worth more than the acquisition price and fix up. Most banks will only loan a percentage of the subject to appraisal. The percentage of value for most banks on construction loans is between 75 and 90 percent. The loan to value ratio of your bank is very important. As an investor, you will need money for the property and all expenses incurred for fix up. Most investors try and keep 10 percent of the loaned money as front end profit. Here is an example of a typical flips numbers:
Property cost 50k
fix up cost 14k
subject to appraisal 100k
bank loan to value percentage 80%

In this situation, you will have an up front profit of 16k. You will need to keep out money for interest payments and other costs.

For loan information go to http://www.lowratebroker.com

posted by rob | 2:34 PM | 0 comments

Home Inspections

Home Inspections

If you are new to real estate investing, a home inspector can really be a great tool. Flipping a house can be very profitable, but there are several things that you will need to inspect before you buy a possible investment property. If this is your first flip, you will definitely need to get an inspector if you are not sure about the following things:
Electrical wiring
Plumbing
Mold
Water damage
Foundation
Roof
Flooring

The items listed above can be very expensive if there is a major problem. Most real estate investors will crawl under the house and inspect it for everything on that list. If you are going to use an inspector, make sure they are licensed and have been in business at least 2 years. Most investors use an inspector that deals mainly with rehabs. Inspectors are not very expensive, but they are worth it if they find a major problem. When considering your first flip, know your limitations and call in an expert when you are not sure about something in the house that may be very expensive to fix. If you miss a foundation problem, you may have to pay 4 to 5 thousand dollars just to get it up to code. The biggest problem with everything on this list except the roof is that it does not really ad value to the house if you have to fix the problem. Every real estate venture that you do will lower your dependence on experts. One important tip is to stay with the inspector while they do your property. If you stay with the inspector and ask questions, you can learn how to do it yourself.

posted by rob | 2:32 PM | 0 comments

Monday, October 16, 2006
Is The Real Estate Market Getting Worse?

New mortgage applications dropped even though interest rates dipped to a 6 month low this week. This week applications are over 20% below this same time 1 year ago.Some experts are saying the overall momentum for the real estate market is definitely downward and possibly entering a recession.

As we all know, extremely low mortgage rates sparked the housing boom, but the recent plunge in mortgage rates did not motivate consumers to take action. Some real estate markets that have seen some of this volatility are Northern Michigan Arenac County, Las Vegas, Nevada and the Bay Area, Laguna Beach and San Diego in California.

Will the Federal Reserve cut rates again?

As the Unites States housing market slows to a crawl, it may also negatively affect the overall economy. The Federal Reserve will have a tough decision to make. Short-term interest rates may have to be cut instead of increased.

In addition, the Federal Reserve also has concerns about inflation. Rates may need to be lower sooner than expected, but how will that affect the real estate market?

The National Association of Realtors said existing home sales fell for a fifth straight month in August. Also home sale prices dropped from the previous year. This has not happened in 11 years.

There are also other reports indicating strength in the U.S. real estate markets. The Commerce Department said sales of new U.S. homes rose in August. New single-family dwelling home sales increased 4.1 percent in August from a downwardly revised July rate