Real Estate and the Internet

As it has with almost every business, the growth of the Internet has significantly changed the landscape of property investment.

Many of the traditional requirements still apply, but buying and selling property has been made vastly easier and less costly with the emergence of thousands of sites devoted to Real Estate.

Finding properties is easier than ever, as is finding out more information about them. Not too many years ago finding properties outside a local area required poring over out-of-town newspapers or specialized publications that were expensive and hard to find. Finding information on them often meant relying on local agents’ ability to describe them or taking a lengthy, expensive trip.

Now, with a brief search and a few mouse clicks, you can find more properties than you could ever turn over and more information about them than most of the previous owners know. With the arrival of high-bandwidth connections you can quickly access and view photos, 360-degree views of the interior and exterior, as well as the surrounding area and streaming video in close-up and overview.

Title searches, back taxes owed, legal encumbrances, previous ownership history and other pieces of valuable data are easy to obtain along with the current and past selling price. In some cases, you can get past inspection reports and records of repairs made.

And most of that information is available for nothing more than the cost of your time to find and review it.

Of course, mortgage financing has taken on entire new possibilities with the growth of the sites devoted to that subject. Traditional lenders have taken advantage of the technology, but there are also dozens of mortgage lending sites that have no brick and morter presence at all.

Even out-of-state and foreign markets have been opened up across the globe by the growth of the world wide web of property information. A Spanish investor can find a villa in Italy or France, while an American can easily locate wineries for sale in France or a Bed and Breakfast in England. Properties are available for purchase as a pure investment, a second home – which can be rented for part of the year using Internet sites, or even full-time rental.

Selling, too, has been made easier by utilizing any of the hundreds of sites devoted to the subject. For Sale By Owner is now much more feasible and quicker thanks to sites that advertise property – many of which provide low-cost additional services for helping you make that sale. That’s an average 6% increase – the average cost of an agent’s fee – in profit all by itself. Six percent of $200,000, for example, is $12,000. Subtracting off $100 for a three month listing still leaves a very healthy reduction in cost.

Though it’s always a good idea to see any prospective property first hand, much time can be saved by gathering useful information before a site visit. And with the ease with which appraisers, contractors, title companies and realtors can be found – and more so with the growth of Local Search by the major search engine vendors – buying and selling has gotten even easier.

It won’t be long before transactions can be carried out entirely electronically without leaving your home office. Many states and countries already allow electronic signatures on documents, eliminating the need for mail or faxing of paperwork.

Marketing Real Estate To Property Investors

The biggest difference when selling a property to an investor is keeping in mind you are not selling to a consumer but to another business. When selling the house you can often increase the price by making it aesthetically charming to the possible buyer. But that all changes if the buyer is an investor as they are not looking at the appeal of the house, rather that they are looking at how much income they can make out of it. The figures, for example rent, is more often than not more imperative than the building.

As an investor there are lots of ways you can raise rental income and below are a few ideas.

  1. Do your research – look around at rental homes that are similar to the building you want to rent and find out how much rent is being asked for. Compare your charges to theirs; if you are charging less then you could reasonably raise the rent without losing tenants.
  2. Though finishing a basement to code may involve significant investment, it may pay off in the long run.
  3. Listen to what tenants want, the more you listen the more the you can make a home more attractive on the rental market. Laundry facilities, in fact all kitchen appliances, could make the house more rentable and bring in higher rental fees.
  4. Can you update the insulation to lower the heating costs or switch to a high-efficiency furnace that will save on heating expenses?

Putting together a marketing plan, which will paint your property in a good light to investors, needs to be put in place once you have worked out and understand the financial worth of your home.

You are nearly ready to market your Calgary real estate property, before you do take a look at some final points that will conceivably make things run a little better:

  • You may even have tenants, keep them informed about the decisions you make and what is going to happen. It is extremely disrespectful and unfair on existing tenants if you don’t.
  • Take the chance to listen to your tenants concerns, after all they are going to be worried that they will lose their home. The closing date is going to be crucial to rent payers so try and give them a rough idea when it will be.
  • Even though property investors are more interested in the financial ramifications of the property, this doesn’t mean you don’t need to stage it properly; the property still needs to look its best.

Residential Real Estate and Its Importance of the Whole Economy

Residential real estate is one of the viable investment opportunities that are driving the US economy forward. A good number of US citizens have always desired to realize the much celebrated American dream by engaging in property investment. While several individuals have succeeded in owning a home, others are still in the process.

Residential investment vehicles gives investors the opportunity to purchase or sell all kinds of homes such as apartments, condominiums, terraced houses, cooperative houses, duplexes, and so on. Such investment opportunities are always available in many of the states. Buying and selling of such homes are always ongoing in various cities located in the US.

All over the US, there are agencies and individual agents helping people to invest in the residential real estate business. There are also various online real estate listing services that help home sellers to advertise their properties. A good number of US citizens get involved in the residential real estate business on regular basis. This has continued to help the US economy in diverse ways.

The Important of Residential Housing on the US Economy
Ever since the days economic recession which sparked off during the September 2008 financial crisis, the residential real estate has continued to remained one of the most viable tools that still drive the US economy forward. Since the recession ended in 2001, it has also been the primary driver of the US economy. Lots of cash returns have always been realized for the US economy through the residential real estate business. The bulk of the money comes from property taxes which most home owners pay yearly to the government in order to protect their properties.

The residential housing business has also generated lots of employment opportunities for the US citizens. Many young guys are now making ends meet by working as agents in their various cities. Many contractors, land surveyors, loan officers and others have also emerged. They have a lot to do in the residential real estate business. In most cases, they help home buyers to realize their dream while the US economy continues to boost in the process.

Housing for US citizens, it has continued to play an integral role in the US economy. The more several houses are provided, the higher the property tax multiplies. This ensures regular flow of income in the US economy.

There’s also a growing interest of non US citizens in the housing business in the US. Several investors from other countries of the world are given enough room to purchase all kinds of homes in various states. This in turn drives the US economy forward.

Indeed, the future still holds a lot for the US economy. The residential market is actually booming. More good reports are also in the pipeline. The US economy will continue to grow higher as the real estate market thrives. The economy is still reluctant to have increase in housing values, as the property foreclosures inventory is still high.

Real Estate Rental Property Advice: 5 Essential Tips

Real estate can be very rewarding and be a great investment no matter what path you take. This will explain several concepts you must know to be successful with rental property. You can also lose in real estate as we have all seen in the recent economy around 2007 to the present. Knowing the fundamentals and becoming more knowledgeable can make the difference between winning and losing in real estate.

Here are 5 essential tips that are the basic key concepts to understand with rental property.

1) Low Maintenance
Keep this in mind for the long-term success of your property. Have a low maintenance yard with gravel, wood chips and plants that require little effort after the roots take to the soil such as phoenix roebelenii, sago palm, king palm and queen palm. Low or no HOA (home owners association) monthly fee. Carpet and tile that will not show dirt and usage well.

2) Know the Area Well
Before you buy a rental property know what you’re getting into. Know what a good price for that area is, if that neighborhood is improving or declining, will the surrounding neighborhoods appreciate or decline your property, what can you get for rent and does this make sense with your mortgage payment are a few questions in the process you must take to having your investment being well thought out.

3) Good Qualities of a Tenant
It is important to know what good qualities to look for in a potential tenant. These include honesty, a good source of income and stability to name only a couple of the good qualities in a tenant. Listen carefully to find the good qualities in potential tenant. A lot of information can be gathered by simply asking a few questions and listening while they talk to you. Ultimately, you want a good person who will take care of your house and pay rent on time.

4) Red Flags for Prospective Tenants
Knowing what to avoid in a tenant will make the difference between collecting a check each month or calling an eviction company. Bad credit, an existing short sale, low bank accounts and large up front money are only a few of the red flags to watch out for.

5) Finding Tenants
Craigslist.com is the best place to find renters. Bulletin boards and word of mouth can work sometimes but on a very low magnitude so do not rely on this. If you have the time you should post on Craigslist.com and show the house yourself instead of a management company to find the best tenant. Qualify potential tenants over the phone to save each party time if you know it will not work out. Ask how many tenants and what occupations. In addition, ask what their credit and debt is like including credit score, credit card debt and bankruptcy.

Commercial Property Land Can Be Somewhat Challenging

Proper zoning for the type subdividing you have in mind is critical! Eighty percent of the counties in the US having zoning of some kind. Some people look at this as an advantage as it controls the amount and quality of the growth in an area, while others look at it as an infringement of their rights as owners. The counties have zones which are created by the planning or zoning commission and some of the basic zones are; residential, commercial, industrial, and agricultural, with each one having several categories of restrictions. There can be restrictions on the minimum number of acres per parcel that you can subdivide your property into, limits on the number, size, or purpose of buildings, number of homes and population density per acre, etc.

New zoning is not normally that much different from the type activities or zoning already in the place for a neighborhood. But there are stories of people who have owned their property for many years and suddenly are restricted as to hat they can do with it! And without compensation! Zoning laws for particular areas cause some problems but their absence can also. You may have a beautiful tract of land and unexpectedly have a paper mill built near you, or have mobile homes or very small houses appear nearby, or a stock car track! Who knows? Personally I prefer zoning restrictions as long as they aren’t greatly restrictive. If you are involved in real estate, it is beneficial to stay informed of the present zoning laws and proposed changes, as well as other county activities, such as planning for new roads or industrial parks, etc.

Once zoning laws are in effect, the county building and health departments ensure they are abided by as they won’t issue building or sewage permits until they have analyzed your proposed building or subdivision plans. Should you locate a parcel of land that you like but it has the wrong zoning for your plans, there is a possibility that you might get a particular zoning changed. Once I was successful in getting the zoning changed from residential to commercial on a large building lot my wife and I had acquired, which allowed us to sell it to a doctor for a new office. But it was a great deal of trouble and was certainly time consuming. After I submitted the request to the planning commission, we had to get signatures from property owners in the neighborhood stating that they didn’t object to the zoning change, and present them to the commission. Once they received the signatures it still took forever as it had to be advertised and presented at a council meeting. But if finally worked. If a Realtor tells you that the zoning can be changed or a variance received on a particular property, I would be cautious as it is difficult, and sometimes impossible.

Real Estate and Network Marketing – A Natural Partnership

The real estate industry has flocked to the internet, but Network Marketing for Real Estate is very much an ignored art.

“Network Marketing” sounds a whole lot like “MLM”. But they aren’t the same thing at all. While MLM draws people in with promises and hides commissions in multi layers of muddle, Network Marketing is a very up front, informative, direct, honest approach to the business of the internet.

And it is a perfect fit for many, many realtors.

Network Marketing is all about building trust and community, just what realtors are so good at anyhow.

The real estate industry already has a good toehold online. Every single real estate office lists on MLS, and MLS lists those properties online. But that is the beginning and the end of the internet world for most realtors. But it needn’t be

Let’s take Jerry’s business. Jerry is a realtor in Tampa, Florida, one of the areas hardest hit by the housing debacle. Yet Jerry is doing just fine. He does fine because he has learned how to capture clients via Network Marketing before they ever step foot in Tampa. And he has learned how to make extra money doing it.

Jerry’s website doesn’t have a brief bio and a link to MLS. No, it is far more extensive than that. This website:

o Has lots and lots of pictures of the homes in Jerry’s territory, whether or not he actually sold them.

o Talks about the schools in various area.

o Discusses housing values, why it is a good time to buy now, and how to protect the value of your home once you own it.

o Describes the Florida buying process, with inspections and escrow, with a time table laid out.
o Provides a mini-forum where people can ask and answer questions.

o Talks about all the great things to do in the vicinity.

o Provides a free newsletter to keep people up to date on what is going on.

Now, all of this is just a good website. But, if it is based on strong keywords, it will generate sufficient traffic to become a true Network Marketing website with multiple streams of income.

So where are those multiple streams of income?

o from AdSense ads

o from PPP ads

o from display ads from local attorneys, title companies and mortgage companies

o and even a display ad from the County Fair!

There is more Jerry could do as well. He could, for instance, provide small ads for all manner of other businesses in the area, like movie theaters and restaurants. When he’s got traffic, he truly is the master of his domain.

Now Jerry has a great website that captures potential new clients AND one that provides him with additional income.

It is Network Marketing at its finest.

Network Marketing for real estate is an absolute natural. Look for this wave of new sites to evolve over the next few years.

Buying Real Estate Foreclosure Property

Finding Foreclosures

The easiest way to find foreclosures in a particular area is on the internet. A Google search for foreclosures and an area will provide you with lots of leads. If you are looking locally for foreclosures coupling driving around with a Google search will provide even more information. You can also look up information on foreclosures in county offices in most states. A combination of all three will provide you with many candidates. Try to get an asking price for each property.

Winnowing The List

The next step is to use the asking price (for analysis purposes), taxes, assume an interest rate and estimate insurance costs. Add all of these to determine a monthly payment. Add 25% to 30% to this to get a reasonable rental price. Next couple each property with the bank that owns it. A Real Estate agent can help you with this process but remember, you need to pay the realtor a fee at the sale. If you deal with the bank directly, no fee is required.

Negotiate with the Banks

The next step is to negotiate with the banks. Use your analysis for rental costs to make sure that you can stay within your cost parameters. Explain to the bank why you must have the property at a specific price or lower so that the property will cash flow. Once you have determined a price negotiate a mortgage rate with the bank. This process should be repeated for each of the properties on your list. This may take some time, if a property you negotiated is sold by the bank before you complete your selection process, don’t be concerned. This is investment property not something that you will live in. Think of it as a stock, there are always more to look at.

Pulling The Trigger

At this stage of the game, you have all of the hard numbers that you need. Now you must consider some of the qualitative factors. Where is the property located? Is the area desirable? Are there many foreclosures in the neighborhood? These are some of the factors that I use to make a decision. Use your own judgement. Also if you are buying two properties, should you get two medium priced properties or there lower priced properties.This part of the decision making is usually up to your own personal preferences. If you hired a Real Estate agent his or her opinion should be sought out. In any event, het off the dime, make a decision and get started!

Real Estate and the Recession

Considering the fact that it was real estate that started the ball rolling toward economic disaster in the first place, it’s rather ironic that it is in real estate that investors really have the opportunity to capitalize on economic recession and turn what could be a potentially devastating economic downturn into a major opportunity for profit. Why? Because real estate is one of the major assets whose value is plummeting in the face of a never ending stream of foreclosures and bankruptcies, and it is real estate whose value is guaranteed to go up when the recession is over.

Think about it. Will there ever come a time when real estate isn’t a desperately needed asset? Absolutely not! People are always going to need places to live and places to work, and because of that there will always be a need for real estate. That’s why a huge percentage of entrepreneurs are jumping on board the real estate bandwagon to grow wealth and increase their net worth. It’s one of the only markets out there that’s guaranteed to never become obsolete!

A major contributor to the current economic crises and the fact that major players like Freddie Mac and Fannie Mae are going under is the huge number of people defaulting on their mortgages. When the concept of interest only loans and other special programs designed to help those individuals who otherwise would never qualify for any type of mortgage purchase a home first came out everyone thought it was a great idea-and in many ways it was. It placed the power to purchase property in the hands of people who otherwise wouldn’t have the ability to do it, and it sent banks into raptures as more and more people came to them for assistance in buying or refinancing their first home.

Then reality struck. The bottom line is that many of these homeowners weren’t able to get a mortgage in the first place because they didn’t have the means to repay it, and while for some people the programs worked like they were supposed to (interest only loans for first time homebuyers still trying to find their niche in the workplace, for example, who later became responsible citizens and were able to shoulder the increased burden of their mortgage payment when the time came to begin making payments on the principle) others just found themselves going farther and farther into debt.

Skip ahead six months to a year, and suddenly a huge percentage of these homeowners are defaulting on their loans. Banks are foreclosing left and right, and they’re struggling to get rid of these properties as quickly as possible to get them off their records. Each property goes to a foreclosure auction, where it sells for less than it would have outright at fair market value, and the bank barely reclaims its investment.

Fast forward a little farther, and suddenly huge quantities of people are out of jobs as the economy continues to slide. You have a huge pool of homeowners whose income, once strong and steady courtesy of major manufacturers and/or the United States government, is now no longer sufficient to meet their financial obligations. They can’t pay their mortgages that they took out when their resources were more than sufficient to meet their needs, and the bank has to foreclose on those properties as well.

The real estate market is plunged into chaos, property values are falling rapidly in an attempt to stem the tide of destruction sweeping from coast to coast, and clever investors are rubbing their hands together in glee.

During an economic recession homebuyers simply aren’t buying homes. They’re pumping their money into other things. This inspires desperate homeowners to put their homes on the market for far less than they’re actually worth in an attempt to make a sale that will be adequate to allow them to pay off the bank and be free of the mortgage default hanging over their head.

Enter the real estate investor. They soothingly placate the homeowner, assuring them that of course they’re there to put everything to right. They contact the bank to let them know that they will be purchasing the property so that the bank can halt any legal foreclosure proceedings they may have initiated, and then they pay the happy homeowner and send them on their way, holding the deed to the property.

This process is repeated over and over again every day during an economic recession, particularly once that recession has begun to have a positive (or negative, depending on how you want to look at it) effect on the value of the housing market. It’s not at all unusual for a clever investor to find a homeowner who has built up some equity in their home and who will gladly sell it for a fraction of the cost it would go for on the open market.

In dollars and cents, it means that it’s not at all unheard of for an investor to purchase a $350,000 home for under $200,000 during an economic recession. The value of the property has fallen so far and the homeowner is so far behind on their financial obligations that they are willing to let the property go for a song just to dodge the stigma of bankruptcy or foreclosure that would otherwise be lingering over their heads.

After the investor has the property in his hands he has a choice. He can either choose to turn right around and sell it to a rehabber or private homeowner. He can hold on to it, rehab it himself and rent it out (since affordable rental property will be highly in demand in the face of the rapidly failing housing market, with hundreds of families ousted from their homes and left to find another place to live), or simply sit and hold on to it.

As an investor during an economic recession it’s vitally important that you understand the basic framework of a recession. THE RECESSION IS NOT GOING TO LAST FOREVER! Sooner or later the economy is going to start getting back to normal, and when it does the value on your investment is going to rise back up. That $200,000 home is suddenly going to sell for $350,000 again-more if it happens to be in an area that sees a tremendous boom as a result of the ending depression.

That means that if you can afford to do it, the best thing you can do at this point is play a waiting game. You know the value of your property is only going to rise, and if you rehab it while you’re waiting you can watch the value rise even more. Let’s take that $350,000 house and use it for an example again. Let’s assume for a moment that the house is sitting on a lightly wooded lot with a big backyard an easy commute away from a major, booming industrial area.

Let’s also assume that the industrial area saw a major boom as a result of the ending recession, and that because of that boom property values in the area were jerked back up. That house that was worth $350,000 and sold for $200,000 is suddenly worth $400,000; however, while they were waiting for the end of the recession the homeowner also took the opportunity to rehab the property, doing some landscaping, adding a pool and a spa room and installing all new plumbing and appliances.

Suddenly that property that the investor bought for $200,000 and invested $40,000 to fix up is worth over $500,000. Even with the additional $40,000 investment for the rehabilitation the real estate purchaser is going to walk away with a tidy $100,000 in their pocket-more than many executives make in two years, and all because they were clever enough to take advantage of an opportunity when one presented itself on the back of an economic recession.

If you’re looking for a way to take advantage of the recession and you have the time and the money to do it, I strongly recommend real estate. The good thing about real estate is that if you know the ins and outs of the business you can enjoy a return from this career whether you choose to think in the short term or the long term-although, for the sake of this book, I’m going to encourage you to put at least a little bit of thought into the long term.

Commercial Real Estate Investment Properties

Over the years, my clients have understandably wanted me to pursue every avenue to sell their property. To do so, they often request that I list their property as an investment in addition to listing it under a particular commercial real estate category. While this may seem like a good idea, in my opinion, unless you really have a property that can be considered an investment property, it is not particularly helpful.

Recently, one client asked to have their office building listed as an investment property. Office properties can be an investment but in my opinion, this property did not qualify. It was about 50% vacant and all of the leases in place were short term leases.

Similarly, I have had clients ask to have land listed as investment property. Certainly, there are people who will buy and hold land for a potential windfall down the road but unless the land has a lease or some sort of on-going income potential, I do not think that it is appropriate to consider it an investment property.

For a true investor, neither of these cases would get you past first glance. For something to be an ideal Investment property, it should have the following –

  • Ongoing income streams – Usually this would be rent. In the past, some people have assumed an appreciation of the property over time in their decision process. In my opinion and in light of the tremendous devaluation of real estate over the last few years, that is a mistake. When making an investment decision, the best practice is to consider the actual income streams themselves in valuing the asset.
  • Long terms on the income streams – Ideally lease terms remaining should be 10 to 20 years. When buying an income property, a new owner does not want to pay for a property that may be vacant in 1 or 2 years.
  • Single tenant users – This is not to say that people will not consider multiple tenant properties however, as you increase the number of tenants, you also increase the number of potential headaches associated with the property.
  • Credit Tenants – Whether you have a single tenant or multiple tenants, the leases associated with the property are only as strong as the tenants.
  • Triple Net Leases – Ideally, an investor will simply want to collect rent and deposit a check. For them the best leases have the tenant responsible for the property taxes, insurance, utilities and maintenance of the building.
  • Full or nearly full occupancy – Some properties are advertised as income properties which have significant vacancy. These properties often advertise a cap rate for the property that assumes the vacant area will be leased at the asking lease rate and the asking price for the property. In my opinion, this is misleading. If a property is not fully leased, quoting a cap rate in this way makes no sense. An investor making an intelligent decision would be best served selecting a property which is fully occupied.

For Investors to compare apples to apples, they need an investment alternative that is basically as simple as any other investment option. With stocks, bonds, or interest bearing accounts, you simply invest the money and do not have to take on property maintenance, leasing and other chores and expenses. Of course, these criteria significantly reduce the number of properties which you might consider and I realize that not every property will have all of these features. But I will also tell you that properties like this do exist and can be found.

There are definitely properties which will sell that do not have all of these features and expectations of these features differ somewhat with the type of property (i.e. retail vs. office). However, if you are marketing the property as an Investment option, the successful seller will try to match these criteria as closely as possible.

Buy (REO) Real Estate Owned Properties

Because titles to the majority of foreclosed properties end up with the lender, you may find that your next opportunity to purchase the property is from the lender’s real estate owned (REO) department that specializes in handling foreclosed properties. Some investors have found that this is one of the best times to buy a property because they’re not dealing with an emotional or unreliable owner. Discovering the ins and outs of the lenders’ policies and procedures of disposing of these foreclosed properties can be invaluable to your goal of buying real estate at below market prices.

The days of stealing prime REO properties from the Resolution Trust Corporation (RTC) are gone. The RTC was a quasi-federal government entity established by congress to dispose of the tremendous number of foreclosed assets of the major lenders during the property market downturn in the early ’90s. Due to the numbers of properties and the relative inexperience of and limited due diligence by the RTC in some areas of the country, a once-in- a-lifetime real estate investment opportunity did fall into the lap of savvy rental property investors who had large amounts of cash, could act quickly, and then had the financial horsepower to ride out the market downturn.

Lender REOs remain one of the favourite strategies for the late-night infomercial gurus, but the reality is that the lenders are neither foolish nor benevolent. Although these nonperforming loans are a negative on their balance sheet, they’re not going to sell a property below its market value just to get it off their books.

The disposition specialists in the REO department are professionals who understand the real estate markets well and are usually wired into the best property brokers in the market. These mortgage brokers are often compensated as a percentage of the sales price and thus also motivated to achieve the highest value as is reasonably possible.

The only angle a real estate investor usually has with an REO is financing and the continued operating losses that often occur because the lender is merely holding the property and isn’t willing to invest the time and money necessary to enhance the property physically and reposition it to perform better in the market.

Sales are as-is, and lenders are often exempt from the standard disclosure rules. When lenders have an excessive number of REOs, they become more flexible, but they’re often limited by the Office of Thrift Supervision (OTS), a government agency that oversees many savings banks and savings and loan associations and routinely audits their loan portfolio and their REOs.