I'd like to briefly summarize real estate investment strategies and
the skills you need to succeed in each. Here is a list of the most
popular real estate investment strategies:
1. Buy & Hold
2. Fix & Flip
3. Foreclosure
4. Lease Option
5. Commercial/Multi-Family
6. Pre-Foreclosure
7. Probate
8. Rehabbing
9. Seller Financed Notes
10. Short Sales
11. Subject To
12. Tax Lien Certificates
13. Wholesaling
Some of the skills needed for these strategies:
1. Time
2. Money
3. Credit
4. Knowledge
5. Patience
6. Maintenance & Repair Skills
7. Communication Skills
8. Computer Skills
9. Research Skills
10. Organization Skills
11. Networking
12. Short term Strategy
13. Long term Strategies
14. Negotiating Skills
We'll briefly go over the first 4 strategies now and the others in succeeding articles
1. Buy & Hold: Buy & Hold is probably the oldest form of
real estate investing. Hold a $200,000 property for 30 years and it will
be worth over $1,000,000. Buy & Hold gives you Income, Equity,
Appreciation, Deductions, Leverage.
The rule of 100/10/1 rule
applies to find a cash flowing property. (Look at the data on
100properties, make offers on 10 and buy 1). You want to find a property
that is below market, rent it out to creditworthy tenants, hold on to
it for a long period of time and sell it later at a profit or pass it on
to your children. Once you learn how to pick good tenants, being a
landlord is fairly easy. MAKE SURE the property cash flows. I am living
in my first investment. The one I call "My investment gone bad." Make
sure you check the credit of your future tenants and the 2nd to the last
landlord for a reference. Always raise the rent every year even if it
is only $10.
Some of the Skills You Need: Time, Money, Credit,
and Knowledge as well as Repair Skills, as well as money for times of
vacancy and updating.
2. FIX & FLIP: Similar to rehabbing, fix
& flip takes less work because there are minimal repairs/cosmetic
work such as new paint and carpet. When this work is finished, the house
is put on the market for quick sale and quick profits. You need a
network of buyers to sell quickly.
Some of the Skills You Need: Money, Credit, Maintenance & Repair, Networking and Negotiating Skills.
Thursday, October 11, 2012
The Seven Most Dangerous Aspects of Buying and Selling Condos
Buying and selling condominiums (condos) can be lucrative or very
risky. Condos are unique investments that any buyer should understand
before he makes a commitment to purchase one. An individual condo may be
very inexpensive relative to the others in the complex, but may have
hidden issues that are not all that obvious to a perspective buyer.
Condos are generally associated with towering buildings and tightly packed apartments owned by elderly retired residents who downsized from their single family homes. However, they can also be in vacation areas that are essentially extended timeshare properties, or they can be villas and townhouses, or even single-family homes that are in gated and guarded communities.
Their common element is that they are deed restricted to stay a community regulated by a board of individuals who are elected by the residents to the Homeowners Association (HOA). The project developer may have control of the HOA initially but ultimately turns over control to the HOA with a Board elected from residents. Many complexes have strict rules about who can own a unit or live in the complex.
The most common problems when buying and selling condo units are:
1. The HOA can change its rules for ownership at any time - including previewing the financial and credit worthiness of a buyer. This is tough for investors who will be flipping condos for wholesale profits.
2. The HOA can change its rules for rental at any time - so an investor who buys a condo to rent, may not be able to if the rule changes after he owns the property.
3. The HOA has to issue an Estopple Letter for the property to be transferred which can be expensive, time consuming, or not granted at all. The Estopple Letter basically says the seller of the condo is current on his HOA fees and HOA assessments, or a certain amount of money must be paid to the HOA at the closing
4. The HOA will not allow rehabbing of the property unless all permits are pulled and the work is only done during certain hours of the day.
5. Recent legislation has empowered HOAs to foreclose on condos not paying fees or assessments and take over the property so it can be rented by the HOA and the income used to offset the former loss of revenue when the owner wasn't paying.
6. The HOA can go into receivership because of a lack of income to maintain basic necessities or repairs. This usually happens somewhere after 18% of the homeowners stop paying their dues, fees and assessments and can make it nearly impossible to resell the property.
7. The property insurance premiums may not be paid for a lack of revenue and a catastrophic event (fire or water damage) may not be covered despite the homeowners paying their HOA fees.
In summary, before investing in condos, an investor must do his due diligence at a higher level than when he is buying a single-family, non-HOA property. He should talk to existing owners and talk to Board Members to see if they are investor friendly and what their attitude is about renters. It is also imperative to determine if the HOA has a "first right of refusal"
Condos are generally associated with towering buildings and tightly packed apartments owned by elderly retired residents who downsized from their single family homes. However, they can also be in vacation areas that are essentially extended timeshare properties, or they can be villas and townhouses, or even single-family homes that are in gated and guarded communities.
Their common element is that they are deed restricted to stay a community regulated by a board of individuals who are elected by the residents to the Homeowners Association (HOA). The project developer may have control of the HOA initially but ultimately turns over control to the HOA with a Board elected from residents. Many complexes have strict rules about who can own a unit or live in the complex.
The most common problems when buying and selling condo units are:
1. The HOA can change its rules for ownership at any time - including previewing the financial and credit worthiness of a buyer. This is tough for investors who will be flipping condos for wholesale profits.
2. The HOA can change its rules for rental at any time - so an investor who buys a condo to rent, may not be able to if the rule changes after he owns the property.
3. The HOA has to issue an Estopple Letter for the property to be transferred which can be expensive, time consuming, or not granted at all. The Estopple Letter basically says the seller of the condo is current on his HOA fees and HOA assessments, or a certain amount of money must be paid to the HOA at the closing
4. The HOA will not allow rehabbing of the property unless all permits are pulled and the work is only done during certain hours of the day.
5. Recent legislation has empowered HOAs to foreclose on condos not paying fees or assessments and take over the property so it can be rented by the HOA and the income used to offset the former loss of revenue when the owner wasn't paying.
6. The HOA can go into receivership because of a lack of income to maintain basic necessities or repairs. This usually happens somewhere after 18% of the homeowners stop paying their dues, fees and assessments and can make it nearly impossible to resell the property.
7. The property insurance premiums may not be paid for a lack of revenue and a catastrophic event (fire or water damage) may not be covered despite the homeowners paying their HOA fees.
In summary, before investing in condos, an investor must do his due diligence at a higher level than when he is buying a single-family, non-HOA property. He should talk to existing owners and talk to Board Members to see if they are investor friendly and what their attitude is about renters. It is also imperative to determine if the HOA has a "first right of refusal"
Sell House and Rent Back - Stop Repossession Fast! - Sell & Rent Back Schemes Explained
If your in mortgage arrears and are facing repossession then you
may be inclined to go to an estate agent in order to sell you property
fast and settle your outstanding debts.
This of course is a possible solution, thought it may not be quick enough to save you from repossession if you are at or close to 3 months arrears with your mortgage. The other problem of course is that you would have to leave your house and solutions do exist that allow you to live in your property.
These solutions are often referred to as "Sell & Rent Back Schemes" they allow you to make a quick sale to avoid repossession even if you are the eviction period, and then allow you to rent back the property form the company that has purchased it. In some cases they will even be able to offer you the ability to buy back the house at a later stage if your situation improves.
So what kind of process would I have to go though when dealing with one of these company's that deal with repossession?
After speaking with them by phone or in person they will assess your situation and will give you a quote their and then for the property. If you wish to rent the property back with the option of buying it back in the future they will give you a quote for this also once you agree that you are happy with the offer then the sale can be finalized in as little as 5 - 14 days in most cases it can be processed as quickly as it takes to get your home valued. The important thing to remember that once a deal is reached your repossession will be halted as the lender will be aware that someone is buying the property and their will be no benefit for them to continue the expensive process of repossession.
Sell & Rent Back Schemes are an option in a variety of events were its necessary, obviously repossession is one situation were it can work particularly well.
If you are struggling to keep up the payments on your mortgage in the short term and it is possible for you to come to an arrangement with your lender than of course this is not a viable option.
This of course is a possible solution, thought it may not be quick enough to save you from repossession if you are at or close to 3 months arrears with your mortgage. The other problem of course is that you would have to leave your house and solutions do exist that allow you to live in your property.
These solutions are often referred to as "Sell & Rent Back Schemes" they allow you to make a quick sale to avoid repossession even if you are the eviction period, and then allow you to rent back the property form the company that has purchased it. In some cases they will even be able to offer you the ability to buy back the house at a later stage if your situation improves.
So what kind of process would I have to go though when dealing with one of these company's that deal with repossession?
After speaking with them by phone or in person they will assess your situation and will give you a quote their and then for the property. If you wish to rent the property back with the option of buying it back in the future they will give you a quote for this also once you agree that you are happy with the offer then the sale can be finalized in as little as 5 - 14 days in most cases it can be processed as quickly as it takes to get your home valued. The important thing to remember that once a deal is reached your repossession will be halted as the lender will be aware that someone is buying the property and their will be no benefit for them to continue the expensive process of repossession.
Sell & Rent Back Schemes are an option in a variety of events were its necessary, obviously repossession is one situation were it can work particularly well.
If you are struggling to keep up the payments on your mortgage in the short term and it is possible for you to come to an arrangement with your lender than of course this is not a viable option.
Everyone's circumstances are unique, in order to make the best decision it always pays to seek expert advice.
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