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41	10 Tips For First-Time Sellers 10 Tips For First-Time Sellers Source: Peter G. Miller - January 23, 2002 At first the task seems daunting: You haven't sold a home before, the market looks complex, and what worked for owners 10 or 20 years ago seems inappropriate today...
42	12 Ways to Find a Real Estate Bargain 12 Ways to Find a Real Estate Bargain By Jon Richards
43	A Green Healthy Lawn Can Appeal To Home Buyers A Green Healthy Lawn Can Appeal To Home Buyers Source: Al Heavens - June 13, 2002 There is nothing more unappealing to a prospective home buyer than a brown, weed-filled lawn...
44	A House That Looks Good Will Sell A House That Looks Good Will Sell Source: Al Heavens - September 5, 2002 A house should have curb appeal, they say, but what exactly does that mean?..
45	A Mortgage That Moves When You Do A Mortgage That Moves When You Do Source: Broderick Perkins - June 11, 2003 The mortgage industry's first crack at a so-called "portable mortgage" lets home buyers today lock in record low interest rates they can also use on another home they may purchase years down the road when rates could be higher...
46	A Second Piece of the Action A Second Piece of the Action Source: Broderick Perkins - July 18, 2003 In the tech-driven, economic era gone by, investors collected stock options and stock-heavy portfolios like they were going out of style...
47	Advantages of Different Types of Lenders Advantages of Different Types of Lenders Source: RealEstateABC.com - 2002 What kind of Lender is Best? Portfolio Lenders. Banks and Savings & Loans. Mortgage Bankers. Mortgage Brokers, Wholesale Lenders...
48	An Explanation Of The Legal Documents Required In Buying A House An Explanation Of The Legal Documents Required In Buying A House Source: Benny L. Kass - August 4, 2003 Q. When do I receive the deed to my house? I understand that the lender retains the deed of trust until the mortgage has been paid off and then returns it stamped “paid and canceled”...
49	Analyze Any Property in Less Than One Minute Flat! Analyze Any Property in Less Than One Minute Flat!
50	Are seller-paid points deductible Are seller-paid points deductible Source: HomeGain - October 22, 2003 As of Jan. 1, 1991, homeowners have been able to deduct points paid by the seller. This deduction previously was reserved only for points actually paid by the buyer...
51	Are taxes on second homes deductible Are taxes on second homes deductible Source: HomeGain - October 22, 2003 Interest and property taxes are deductible on a second home if you itemize. Check with your accountant or tax adviser for specifics...
52	Are you "CLEAR" on What is a Good Deal? Are you "CLEAR" on What is a Good Deal? by Attorney William Bronchick So often beginning investors focus on real estate investing techniques that they lose sight of the important issue - is this a good deal? Learning to recognize a good deal takes research, education and, above all, experience. Here's a good formula to determine whether a potential real estate purchase is a deal. It's a simple acronym called "C.L.E.A.R." CASH FLOW Ask yourself, will this property cash flow? Well, that depends on a lot of factors, such as the strength of the local rental market, the interest rate on the financing and how much of a down payment you make. Also, it depends on whether it is a single family or multi-family dwelling. All of these factors considered, ask yourself, "will this provide income for me?" Also, ask the question, "how will this property cash flow compared to other potential properties?" For example, a $150,000 house that rents for $1,000/month has a better income potential than a $300,000 house that rents for $1,600/month. A four-unit building that costs $400,000 may bring in $3,000/month in the same neighborhood. Now, of course, whether the property will provide income to you begs the question of whether income is important to you. Is it? Do you earn other income? Do you need more income now, or is future equity growth more important? There's no right answer to these questions, but are all factors to consider when looking at a potential purchase. LEVERAGE Leverage is important in investing because the less cash you put down on each property, the more properties you can buy. If the properties go up in value, your rate of return goes up exponentially. However, if the properties go down in value and you have a lot of debt on the property, this can result in negative cash flow (see above). Since real estate is generally cyclical, negative cash flow is only a short term problem and can be handled if you have other income or a cash reserve to handle the negative. "Nothing down" investing is very attractive for the high-leverage investor, but should be approached with caution. If you are a long-term player, leverage will generally work in your favor if the markets in which you invest appreciate in the long run and your income from the properties can pay for most of the monthly debt service. EQUITY Does the property you are purchasing have equity? Equity can take a number of forms, such as: A discounted price A potential fixer upper A rezoning opportunity A poorly managed property A foreclosure There are many ways to create equity, but buying INTO EQUITY is your best bet. Find a motivated seller that wants out of his property and is willing to give up his or equity for less than full value. Or, buy a property that needs work that can be done for 50 cents on the dollar or less. In other words, if the property needs $10,000 in work, make sure you get a $20,000 discount on the price or better. APPRECIATION Buying in the right neighborhoods and in the right stage of a real estate cycle will result in appreciation and profit. However, timing a real estate cycle is difficult and can be very speculative. If you buy properties without equity or cash flow solely for short-term appreciation, you are engaging in a very risky investment. Buying for moderate long-term (10 to 20 years) appreciation is safer and easier. Look at long-term neighborhood and city-wide trends to pick areas that will hold their values and grow at an average 5 to 7% pace. Combine this tactic with reasonable cash flow and buying into equity and you will be a smart investor. RISK Risk is a consideration that too few investors consider. Ask yourself, "what if my assumptions are wrong?" In other words, do you have a "plan B"? If you bought for appreciation and the property did not appreciate in value, can you rent for positive cash flow? If you buy with an adjustable rate loan and the rates go up, will this put you out of business? If you have a few vacancies, can you handle the negative cash flow, or will it break the bank for you? Expect the best, but prepare for the worst. Remember, whenever you look at a property to purchase, think "CLEAR".
53	Are You a Dealmaker or a Tire Kicker? Are You a Dealmaker or a Tire Kicker? By Ray Alcorn
54	Are You a Newbie at a Real Estate Club? Having run a real estate club since 1994 with 650 members and having attended 50 or more other clubs around the Country to speak at, I have a few observations and insights. If you want to get the most out of a real estate club, follow these 5 rules... RULE #1. GET WHAT YOU CAN FROM EVERY SPEAKER. Real estate clubs are often under-funded and not-for-profit. As such, they cannot afford to pay professional speakers a fee to speak, so most speakers who volunteer to do so have something to sell. In many cases, it is a book, tape set, mentoring or boot camp. Some people are "offended" that speakers are selling something, insisting that the speaker reveal everything he knows about a topic in a 90-minute meeting. Understand that EVERYONE has something to sell, whether it is a guru selling a course or a minister selling the "the word", while passing around the collection basket. Everyone who speaks at a group has an "agenda", otherwise he or she would not be standing on the stage speaking. Even the most hardcore "pitchmen" do offer some great ideas during their presentations, so you need to get past the "I'm not here to be sold" attitude and get what you can from the speaker. A speaker cannot reveal everything he knows in 90 minutes, otherwise he or she isn't qualified to take the stage. So, you should expect a certain amount of stories, jokes, anecdotes and yes, a sales pitch for something. Listen carefully, however, you might also learn something! RULE #2. RESPECT OTHER PEOPLE'S TIME. Many newbies always expect they can take a veteran investor out to lunch to learn the business. Most veteran investors won't do this, unless they are fairly certain you will bring them deals. And, the "teach me the business and I'll bring you deals" attitude doesn't work. If a veteran investor teaches you everything he knows and you do nothing (or you do invest and don't bring him deals), he's wasting his time. I know this from personal experience, having taught dozens of newbies the business for FREE, thinking they would come bring me deals. At one point, I woke up to reality - people who don't pay for their education RARELY USE IT! Many people know that I charge for mentoring and I charge quite a bit. And yet the more I charge, the more people appreciate the advice and use it. Be willing to pay people MONEY for other people's time. You wouldn't expect a doctor to let you take him out to lunch for a consultation, so why is an investor's time any different? Keep in mind that most investors have paid thousands of dollars over the years for seminars and courses. Many feel that sharing information with others for free is simply unfair in that respect. And, MOST IMPORTANTLY, don't waste other investors' time trying to learn the BASICS. Undoubtedly, you have seen dozens of unanswered posts on CREOnline.com from people asking general questions that can be found in a $15 book. Go to the bookstore and buy 10 paperback books and read them. If you are not willing to spend $150 and the time to read 10 basic books, YOU AREN'T READY TO BE AN INVESTOR - PERIOD! RULE #3. LET PEOPLE KNOW WHY YOU ARE THERE. If you sit in the corner drinking coffee, you aren't networking and marketing your most valuable asset... YOURSELF! If your club does not have big name tags, MAKE YOURSELF ONE. Make it BIG and COLORFUL. Have a statement about what you do and what you are looking for. There's one guy at our club whose nametag reads, "THE MOBILE HOME GUY." Everyone knows him. Everyone calls him when they need to sell a mobile. Be creative and aggressive. Ask your club leader if it is permissible to pass out flyers - bring big, colorful flyers that read "I HAVE HOUSES TO WHOLESALE - CALL ME" or "I AM LOOKING FOR REHAB PROPERTIES ON THE WEST SIDE- CALL ME." Get yourself a fancy business card and hand it out to everyone. And, don't use the cheap computer-printed garbage, go spend $50 and get some nice double-sided cards that explain who you are and what you do. In short, if you show other investors you are serious about taking action, you will get their cooperation. RULE #4. JOIN MEMBERSHIP IMMEDIATELY It amazes me how many people hesitate to join membership in their local real estate associations. For a few hundred bucks, you get access to one of the best resources you can find - other investors. Why spend all your time looking for the "right" mortgage broker when you can ask other people in the club? Why run ads in the paper for your wholesale deals when you can send an email to a dozen other investors you met at the club? Heck, even the fact that you are a member of the club will give people a reason to do business with you versus someone who isn't a member. I've been running a real estate club for 9 years and I can honestly tell you that I always go to the membership roll whenever I need a deal, a partner, a recommendation or money to borrow. Also, volunteer to assist with the meeting. Volunteers often get on the "inside track" to becoming a board member, which gives you a lot of influence in the club. Offer to write articles for the newsletter on your own area of expertise that may be related to real estate. If you are an experienced investor, offer to teach a beginner's class or host a breakfast meeting. RULE #5. RESPECT THE RULES Be considerate others at the meetings. Every club has rules, so be mindful of them. Show up early so you don't disrupt the meeting. Don't pass out flyers without asking permission. Don't stand in the back of the room and yack while the speaker is onstage. Don't shout out questions to the speaker without raising your hand. Close the door to the room quietly when you go to the restroom. And, for Pete's sake, TURN OFF YOUR CELL PHONE!
55	Ask Questions and Make Money Ask Questions and Make Money By Lonnie Scruggs
56	Avoiding Interest Overlap When You Refinance Avoiding Interest Overlap When You Refinance Source: Benny L. Kass - June 23, 2003 Q: My husband and I will be closing on a “no-cost” refinance next month. However, we have run into some unforeseen costs...
57	Be a Smart Investor... Do the Math Should I use cash or credit? ARM loan or fixed rate? Ten percent down or twenty percent? Should I pay down debt or keep a cash reserve? These are all good questions, and here's some of the answers. Cash vs. Credit: The Concept of Leverage In order to understand real estate financing, it is important that you understand the time value of money. Because of inflation, a dollar today is generally worth less in the future. Thus, while real estate values may increase, an all-cash purchase may not be economically feasible, since the investor’s cash may be utilized in more effective ways. Leverage is the concept of using borrowed money to make a return on an investment. Let’s say you bought a house using all of your cash for $100,000. If the property were to increase in value 10% over 12 months, it would now be worth $110,000. Your return on investment would 10% annually (of course, you would actually net less, since you would incur costs in selling the property). If you purchased a property using $10,000 of your own cash and $90,000 in borrowed money, a 10% increase in value would still result in $10,000 of increased equity, but your return on cash is 100% ($10,000 investment yielding $20,000 in equity). Of course, the borrowed money isn’t free; you would have to incur loan costs and interest payments in borrowing money. However, you could also rent the property in the meantime, which would offset the interest expense of the loan. Taking leverage a step further, you could purchase ten properties with 10% down and 90% financing. If you could rent these properties for breakeven cash flow, you would have a very large nest egg in 20 years when the properties are paid off. Balance that with what you could make by investing the cash flow on one free and clear property for 20 years. And, of course, look at the potential risk of negative cash flow from repairs and vacancies on ten properties. Finally, consider the tax implications - if you have cash flow, you have taxable income; if you have increase in equity, there's no tax until you sell. Cash Flow vs. Cash Reserve On a similar note, the size of your down payment will affect your cash flow on rental properties. Let's consider two examples. Example 1: $100,000 property with $20,000 down. $80,000 loan @ 6% interest, including taxes and insurance is about $600/month. Assuming you could rent the property for $800/month, you have $200/month cash flow or $2,400/year. Not bad. Example 2: $100,000 with NO money down. $100,000 loan @ 8% (higher rate is generally common for zero-down loans) would make your payments closer to $900/month. With zero down, you have $100/month NEGATIVE cash flow. Which is better? Well, it depends on what your goals are and what the rest of your financial picture looks like. Let's say your goal was to hold the property for 10 years. In the first example, you have $200/month cash flow, but no cash reserve. In the second example, you would have $100/month negative cash flow, but you have $20,000 in reserve. The knee-jerk reaction of some people is that example #1 is safer. But is it really? Think about it... in the first example, if your property becomes vacant for one month, you'd be out of pocket $600. It would take three months to make that up. In the second example, you have $20,000 in cash cushion to make up the deficit. With $20,000 in the bank, you could handle $1200/year negative cash flow for 16 years. If the property were in an appreciating market, you'd come out fine, even with negative cash flow. Another factor is the choice of loan. You could buy a property with nothing down and an interest-only loan fixed at 5% for three years. If your exit strategy is a lease/option that should cash you out within 36 months, why do a fixed-rate loan? The point here is that you should not AUTOMATICALLY go with a fixed-rate loan. Nor should you seek positive cash flow as the ONLY goal. Likewise, you should not buy properties with nothing down and negative cash flow and assume that short-term market appreciation will be the only source of your profit. Paying Down Debt For years, our parent's generation discouraged debt as a "bad" thing. For some investors, the goal is to own properties “free and clear,” that is, with no mortgage debt. While this is a worthy goal, it does not always make financial sense. If you have free and clear properties, you will make certain amount of cash flow and pay a certain amount of income tax. If you need more cash, you are forced to sell the asset, creating a taxable gain. If you refinance a property, there's no taxable event. And, since mortgage interest is a deductible expense, the investor does better tax wise by saving his cash. Think about it... the higher the monthly mortgage payment, the less cash flow, the less taxable income each year. While positive cash flow is desirable, it does not necessarily mean that a property is more profitable because it has more cash flow. More equity will obviously increase monthly cash flow, but it is not always the best use of your money. On the other hand, paying down debt may make sense if you can't get a higher return elsewhere in the market. Also, if paying down debt can have other rewards, such as bringing a loan below 80% LTV, you may be able to cancel private mortgage insurance and save additional money. In short, don't rely on assumptions... do the math! Are you looking for 1-on-1 Advice from a Professional you can trust? Check out the E-mentoring program from William Bronchick
58	Be a Smarter Negotiator: Five Basic Principles Be a Smarter Negotiator: Five Basic Principles By Roger Dawson
59	Be Wary Of The All Cash Offer Be Wary Of The All Cash Offer Source: Benny L. Kass - June 9, 2003 Q. We have just received an advertisement in the mail offering "all cash” for our house, or in the alternative to give us a monthly payment for our equity...
60	Before Looking Before Looking Before you actively look at homes to buy, it's necessary to know how much you can qualify for. Use mortgage calculators to determine how much you can buy with your down payment and closing cost money and what your monthly payments will be. Know Your Credit Worthiness Look at your credit report before you go to a lender. It is not uncommon to find problems with reports, especially if you have a common last name. To get copies of your credit report, start at My FICO Score. Get Pre-Approved After you see your credit report and any problems are cleared up, get pre-approved with a lender. Take the steps necessary to get a letter from the lender stating you are "pre-approved" for a loan in a specific price range. It's important to have this letter before you make a contract offer to buy real estate. Once your pre-approved, you know what price range of homes you should be looking at.
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