Real Estate Knowledge Is Not Power!

It is often said, “Knowledge is power.” Although I think knowledge without action is just knowledge, I like the phrase “Applied Knowledge is power.” I heard this initially first from Dolf de Roos (Real Estate investor and educator) in his Property Investors School. (Remind me to tell you about his REAP investment analysis software.)

The concepts of these posts are not intended to short-cut the process of building wealth, but to accelerate it. I personally believe that It’s OK to get rich quick! Although you must beware of the short comings of most of the get rich quick opportunities, as many seem to be for the benefit of the originator and not so much for those who come later. Perform the necessary due diligence and understand the business or opportunity before investing your funds.

I mention accelerate the process of wealth building verses short-cutting it, because a short cut implies skipping or leaving out some of the steps in the process. Whereas accelerating the process means you gain the required knowledge and experience by being involved in the process, but in a much shorter period of time. (Concept from 20/20, John Wingert)

Knowledge and experience are essential components to grow and maintain your assets, especially as your asset base becomes larger and larger.

Get Some Real Estate In Your Portfolio

I believe nearly everyone should have some real estate in their investment portfolio. When you understand all the benefits to owning real estate, it becomes almost a no brainer.

Yes, I know the state of the real estate market. One of the keys to understanding the real estate market is that, it is not a national market, so therefore not every community of the country is experiencing a decline. In reality some markets are actually experiencing significant gains (I know hard to believe). Real estate is local, which means that with a little due diligence you can find some great deals, across the country or maybe even in your backyard depending on where you are located.

(To locate some of the highest appreciating markets visit: RealMarketMastery.com)

There are basically two ways to be involved in real estate. One is through the business of real estate. Often a shorter term perspective involving buying and selling it, rehabbing it, flipping it, developing it, or some type of activity that lends itself to a repetitive activity often lending itself to regular, predictable cash flows due to the continuous business activity.

The other way to be in real estate is through the investment of real estate, which is generally a longer term perspective often involving buying real estate notes or deeds of trust, buying property and holding it as a rental, buying land and holding it, or private lending. I will explain some of these terms in the coming posts.

For now just realize that although many of the papers are portraying doom and gloom, many of the people and businesses that know and understand real estate are now searching for buying opportunities.

Don’t wait for the newspapers and magazines to tell you the market is turning around. Begin putting your team of professionals together now and begin your due diligence and research. You’ll be able to determine when the time to buy is at hand.

REALTORS vs. Non REALTORS When Investing

Many people have heard the term REALTOR^® and often think it is synonymous with a real estate agent. Most REALTORS^® are licensed to sell real estate but not all people licensed to sell real estate are REALTORS^®.

You may be thinking, so what is the difference? In general A REALTOR^® is person who is licensed to sell real estate and has agreed to follow a code of ethics and a standard of practice as determined by the National Association of REALTORS^®.

Areas that are addressed in the code of ethics are: Promotion of Client’s Interest, Misrepresentation, Cooperation, Property Disclosure, Disclosure of REALTOR’S^® interest (ownership in the property), Rebates, Compensation, Commingling of Funds, Written Real Estate Agreements, Discrimination, Specialization or lack of, Advertising, Practicing of Law, State Board and Association Tribunals, False or Misleading Statements Regarding Competitors, Representation, Disputes and Arbitration.

(The specifics regarding these areas can be found here: REALTOR^® Code of Ethics.)

So the question is when you are putting your team of professionals together to assist you in carrying out your asset accumulation plan, do you want someone who has agreed to follow a strict code of ethics, or someone who has not agreed to any formal ethical code or standard at all? The choice is always yours to make. Ask, inquire and find out the details of the professional that you are considering.

Being creative in real estate can easily be done by following ethical guidelines. Investing and operating with ethical guidelines creates an even better scenario. When everyone involved in the transaction understands the details it truly becomes a win-win transaction.

Real Estate Investments… Professional Search

Most (but not all) of the asset building strategies that I share are pertaining to real estate in some way. Why? Because I really, really, really like real estate, and the real estate market is such a diverse market place that it allows some of the most creativity in generating win-win agreements. There are many more reasons in which I will expound on in the.

By the way…Yes, I’ve heard and do monitor all the media hype regarding the real estate market. Remember the media’s main objective is to sell stories, advertising and subscriptions (They are running a business. No sales = no revenue = no business.) The reporters reporting are not always digging far enough to unveil the complete story. Chances are if they did it may not be as negative and doom and gloom as it is portrayed, thus it would not be news that sells.

Yes, there has been an overall reduction in the real estate market and yes there is an affect on the economy. And there are still local areas in each general market area that are holding their value or appreciating. Realize these are the areas where you should begin your due diligence for real estate investments, but we’ll get to that at another time.

Real estate is everywhere so you can easily see with your own eyes what is going on in the market place. Better yet there are always several REALTORS^® available to speak with about the numbers in your local market. If you are looking for investments search for a real estate professional that also owns real estate investments.

As in any industry the people who know and understand what is really happening in that industry or market will almost always profit, whether that market is going up or down. I know of many investors who are buying, as prices are great to create some positive cash flow deals. Homeowners, banks and most anyone involved in the real estate industry are now ready to consider the not so ordinary transactions (short-sales, owner financing, carry backs, options, etc.). Obviously not every market in the U.S. is a great place to invest right now. But now is the time to be searching, and understanding your market.

In the event that your market is totally horrible you may consider other higher appreciating markets. (realmarketmastery.com)

When you are buying real estate for investment purposes (Most everyone who is buying for personal or investment reasons, is also concerned with the appreciation component of their purchase.), you should consider working with a real estate professional that is or has invested in real estate.

Think for a minute… would you buy stocks or ask a stock broker’s advice if they have never invested in a stock? Would you take financial advice from a friend who only has a net worth of $100. I think you get the point.

Action Required

In sharing the information with you that I think may be useful or beneficial you may begin to develop thoughts, ideas and curiosity which will generate some sort of action. If you’re like most intelligent people, the action generated leads to the researching of the information to determine how it can be applied to benefit you and your current situation to create a higher quality of life.

Realize that although I may present an idea, concept or strategy that you may benefit from, ultimately you are responsible for doing your own due diligence and research to determine if it is right for your particular situation (see the blog/website Terms of Use).

Covert Assets

Objective: To educate, provoke thoughts, and create curiosity to maximally utilize your available resources (assets) in accelerating your financial growth.

The information here is not about undercover CIA operatives or spies scattered through out the world.
It’s not about the subjects portrayed in movies like James Bond, Mission Impossible, or Jason Borne.  Nope, none of the high security clearance, top secret type of covert hush-hush information.

Although we’ll discuss many uncommon strategies, and opportunities that over time may be able to generate the kind of funding to allow you to operate like a undercover operative, obtaining the best high tech gadgets, the most exotic cars and travel around the world on adventures of your choice.

These covert strategies, “If you decide to accept the mission,” have the potential to fund your children’s college education, provide financial support for an elderly loved one, help you pay off your house within a short period of time, generate passive monthly income and fund a smoke’n retirement that generates money each and every month while maintaining the principle.

It’s time to live the lifestyle you have always intended to live.  You know… the life that works for you, instead of you working for it.

It’s Time To Appreciate… Appreciation

Learn How To Make A Huge Difference In The Size and Growth…

Of Your Real Estate Portfolio.

There are two basic types of appreciation (Forced Appreciation-the hard way involving a lot of work, learning new techniques, searching for motivated sellers, trying to find the same deals that everyone else is also looking to find.

And then there is Automatic Appreciation-the easy way, the automatic increase in value due to the normal market cycle).

Forced Appreciation (Skill, Hard Work, Risk, and Limited Upside)

This approach is what we, as “traditional” real estate investors were taught to focus on. Buy low and (hopefully) sell higher.

Most forced appreciation strategies rely on finding “motivated sellers” or distressed properties and people, as they represent the best likelihood of getting the best price and/or terms.

With Forced Appreciation, investors only make money on the “spread” – the upside profit is limited… you make your money by “buying it right” (presumably at below market prices or with terms).

Although Forced Appreciation is profitable, it is not the way to massive, auto-pilot riches.

Automatic Appreciation

“Automatic Appreciation is like the power of compound interest on steroids, because of the ability to leverage the asset”

Automatic appreciation occurs due to the simple economics of supply and demand. This type of appreciation is what most homeowners in many markets experienced before the markets changed.

The huge windfall profits happen simply because of owning property in the right place at the right time… and not from ‘hard work’ or special skills. I’m sure you know of the individuals that jumped on the bandwagon at the height of the market, held their houses for 6 months or less and then sold for a hefty profit.

Where all of those people skilled, or experienced? Heck no! They were the beneficiaries of a fast appreciating market.

YOU MUST REALIZE there are still real estate markets out there today that are appreciating at greater than 10%. The question then becomes…

“Do YOU Know Where These High Appreciating Markets Are?”

As I mentioned above you may have heard the saying, “You make your money when you buy.” The real secret is that you make your money WHERE you buy.

Location, Location, Location, is the mantra that seems to be the most associated with real estate. In the realm of Automatic Appreciation, location and timing are truly the keys to quickly generating wealth.

It’s Now Time To Choose.

1) Work your arse off finding motivated sellers, tying-up and improving properties, managing crews of employees, agents and contractors and spending lots of hard-earned cash, spending time away from family and developing an ulcer.

OR

2) Take A Smarter, Easier Route. Take just 7 minutes to learn the real secret to locating the best most profitable, highest appreciating real estate markets to invest in. It can be as easy as a GREEN LINE crossing a RED LINE. It simply doesn’t get easier .

By the way, you can still apply the traditional forced appreciation techniques in the hot markets and redline your wealth building strategies.

Visit RealMarketMastery.com to learn more about locating the best real estate markets, and open your real estate investing portfolio to a new level of appreciation.

Strategies To Reduce Your Real Estate Invesment Risk On A Vacant Building

In today’s market (or any market for that matter), we as Real Estate Investors and property owners can often find ourselves in the possession of a vacant building.

The vacancy may occur during the initial acquisition phase of the investment, when the fix-up and repairs are being performed, or simply due to tenant moving out of a single family residence.

Here are a few simple strategies that can help reduce some of your real estate investment risk created by a vacant unit/building.  Use the ones that seem to be most appropriate for your situation.

These strategies can be integrated into your real estate business policy and procedures manual to help reduce your risk or loss during a vacancy period.

• The first action you should consider is changing the locks, and while you’re at it make sure the windows are all locked tight.  This is simple and easy to do.

• Immediately purchase or change your property insurance policy if you anticipate the building being vacant for longer than a month or two. Insurance generally costs more for a vacant building, but is worth the extra cost if you should incur a loss of some sort.

• Having a standard homeowner’s policy may not cover the loss if the building is vacant.  Contact your insurance professional to help you determine what temporary changes need to be made or type of policy you need.  Consider having the insurance professional put their recommendations in writing indicating that you are purchasing the correct policy for your specific situation.

• You may also consider getting a “house-sitter” to reduce risk and cost of insurance.  Often you can find a responsible college student to perform this task.  They like to get paid while being able to study at the same time.

• Remember to turn off the water at the main water supply valve, as well as gas, and electricity (at the main circuit breaker switch box) on the day the building becomes vacant.  Imagine if you will the issue that can occur if a water leak is left unattended for several days or even weeks.

• If the area is subject to break-ins, consider having the windows boarded up and the doors screwed into the door frames. Also contact the local police department to put the property on their “watch” list.

• Post “No Trespassing,” signs at the building if indicated

• Work with the surrounding neighbors to help keep an eye on the property and notify the authorities, and yourself, if any unusual activity occurs at the property.

• With larger complexes or buildings, consider hiring a private security firm to watch it for you.

There you have it, a few simple common sense activities to help reduce your real estate investment risk when faced with a vacant building.

Onward

Real Estate Investing Policy and Procedures Manual

As a Real Estate Investor you should consider keeping a note book of your best practices.

There continually seems to be better ways of performing an activity.

An example may be your rental agreement. The process you currently go through to search for and find the best tenants for your properties may already work great.

But let’s say you begin a conversation with another rental property owner/real estate investor, and he tells you this story about the issue he had with his tenants.

He reveals to you how he went about taking care of the issue, although it cost him a couple thousand dollars to do so. He mentions to you how he added a one sentence phrase to his rental agreement and is now able to prevent the same thing from happening in the future.

In essence he has added that clause to his policy and procedures manual or the way in which he goes about doing his business.

You begin to think to yourself, I could just simply learn from his experience and prevent a similar situation from happening to me. You approach your legal advisor about adding the same or similar clause to your current rental agreement, and they agree it is a good idea.

Bam! Now you have addressed that particular issue and changed the way you go about doing your real estate investing.

The point I’m making here is that there are continually new ways to improve your real estate investing results. So increase your awareness and be in search mode for new ideas and strategies to incorporate into your own policy and procedures.

Being a member of a local real estate investment group or property owners group has many benefits in addition to the scenario above.

Benefits of having a policy and procedures manual:

1. You have a reference guide to address certain aspects of the business and do it in a consistent manner.
2. You may grow your portfolio to a size in which you would like to hand over some or most aspects of the processes to someone else. Having a policy and procedures manual will guide them in taking care of the processes in the same way you would do it.
3. If you should become ill and be unable to take care of the real estate business due this unexpected illness, you would have a reference guide for others to follow and keep the business running smoothly, until you recover.

So as you read through these blog posts consider copying and pasting some of the ideas into your own real estate policy and procedures manual.

A simple way to begin this process is to think about all the things you do when you are being active with your investment real estate and then make some subject headings regarding the major areas of the activity you do. Then record the appropriate information under each heading.

A few subject headings may be: Buying, Selling, Renting/Leasing, Hiring Contractors/Vendors, Move-out checklists, Move-in checklists.

Begin your manual today!

More To All and Less To None

Personal Real Estate Investor Magazine

Personal Real Estate Investor Magazine has been around since 2004. I first heard about it from a couple of real estate investor friends that were using it to advertise in.

I remember being in a title company waiting room and seeing a stack of them sitting there. With permission I snagged one to take home and peruse.

I later decided to subscribe to it, and have been very pleased with the tips, insights and investor strategies. I will most likely refer to it often in my posts and comments here as there are many useful tips and strategies contained in the magazine.

The magazine’s editor is Andrew Waite, who invests in real estate himself and seems to be quite knowledgeable about it. I’ve listened to him on several real estate related radio shows here in Phoenix, Arizona and he brings to light several issue that the major media providers seem to overlook when reporting on the real estate market.

The magazines single mission is:

“To help our readers make money! To reduce the costs, both initially and over the life of your investments. To help you get the most out of each transaction at each point in the total life-cycle—plus your investing lifetime (and even that of your heirs).

To help you invest smarter by finding, acquiring, improving, managing and trading—whether it’s turning over a single investment-grade property or building a portfolio of rental homes and apartments.

The process is not hard, though the market is potentially complex. That is why we are here: to reduce complexities, provide road maps, checklists, templates, visual aids—and an insider’s Rolodex.”

In short the magazine is about learning from others mistakes and maximally profiting form real estate investing.

Their mission statement is very similar to my objective in creating this blog. To assist others in making real estate investing easier and more profitable.

You can learn more about this magazine and subscribing to it at: http://www.personalrealestateinvestormag.com/

More To All and Less To None