Real Estate Investment Trusts have been widely touted in the past few years.
REITS are generally expected to yield a 10-15% return in 2010 and will benefit from new tax laws that tax Trusts but leave REITS out of it- according to the National Financial Post.
To the typical investor this sounds great- especially if you've gotten burned in the stock market.
But are you investing or really making money? You have to consider management fees and other things that eat away at your bottom line.
Let's go head to head with REits on a simple example- wholesaling:
A Real estate investor controls a property for a small amount of $50. He does no work on the property, and pays no management fees. He goes to his local real estate investor's club and 'assigns' the contract for $3,000 to a rehabber who feels he can make $20k on the deal when it's all said and done.
What's the return on this for the Real estate investor?
You see the difference.
Are you investing or making money?
Many folks get into real estate and look at only one thing: Profit.
What is left to chance is the fact that you can actually lose money in this business if not done right.
This is exactly why I always recommend getting a basic education in real estate investing and begin by wholesaling or assigning contracts to more experienced in investing. You'll gain experience and start to realize what a good deal really looks like- instead of what you just read about in the guru books.
The Real Estate version of MSN had an article showing five mistakes we real estate investors- especially flippers get mixed up within.
We come into things without knowing what we're doing
We don't realize the time it actually takes to buy, fix, hold, and flip a property. And we run out of cash.
Remember, even with no money down deals- cash is still needed- if not your's someone else's.
Lack of skills in investing and the fix up business, as well as lack of patience - getting wrapped up in selling quickly or doing a deal before you're ready is another trap.
Save yourself a ton of heartache. I'm giving it to you for free. It's a Free power point presentation on how you should get involved in real estate. A basic roadmap so you get started right and you finish right.
to your success!
Dennis
I need to tell the truth.
Real estate investing is not just a bed of roses. There can be some serous legal implications when you're dealing with people, houses, land, HOAs, and banks.
The Subject To method is one of them.
Basically, with subject to the buyer or real estate investor, gets the deed to the home, but does NOT assume the mortgage or refinance the home immediately.
People investing in real estate need to disclose all the stuff that can go wrong to the homeowners.
They need to know that they will no longer own the home, but they will own the debt.
Transalation: if the new buyer stops paying, the bank's going after the Them, not the new buyer since the previous homeowners are the only ones that signed the mortgage or deed of turst.
You need to give the homeowners a dose of reality- good and bad. And the disclosure needs to be in writing.
Do it for their benefit
do it for your conscience
Do it, cuz it's right.
Do it for ......... Dennis
An Article in the FDL reporter saddened me as forclosures are happening in that area in exponential form.
What's worse, is that some banks just don't get it and as the article showed 'won't even budge'.
I commented there that homeowners need information and representation to stop foreclosure and tax sales.
Many banks have options such as :
Forbearance agreements
Repayment plans
Even Temporary Stays where payments are not due for a time period while the homeowner tries to sell the home
Short Sales
Etc.
Real Estate Investors also have a role in educating homeowners as well as at times providing the necessary cash or purchase needed to avoid foreclosure.
Real Estate Investors can also act in the capacity of private lender to forestall foreclosure and tax sale as well.
At times properties are not in prime condition and cannot be sold to the general buyer.
Investors with cash, construction financing, etc can also step in these situations as well.
Bottom line. Talk to a professional. Get some advice and get someone on your side.
Dennis
I get questions all the time as to how to make money quickly in real estate. Many of these questions are from new investors that are a bit frightened about doing their first deal.
Risk, the newness of it all, scares them a little bit.
You can do it! You just have to be willing to put in the effort and be willing to step outside of your comfort zone.
I had a real estate investing student of mine that signed up over 100 houses in his first two years in the business.
I'd like to share with you how he did it:
1) First he took some investing classes so he knew what a deal is supposed to look like. In other words, you need to know the numbers going in.
2) He learned how to market for properties
3) Put the property under contract
4) All the while, he was going to local real estate investment clubs and putting out flyers showing himself to be a bonafide wholesaler.
Guess what? He started doing deals by simply locking up properties under contract and flipping the contracts (purely legal by the way) to the investors that would actually close on the deal and pay him a fee for it.
You should expect to get about $1,000 for every $5,000 of profit your end buyer investor expects to get on the deal.
I have a property investing software on my website I would like to give you.
You just have to plug in the numbers to fit your local area, but you're welcome to it. Just use the Contact form and submit it!
Dennis
Looks like a lot of folks. And for good reason too!
The latest Homeownership Survey shows that foreclosure buyers and other investors are expecting to get 25% or better discounts and then having their property appreciate on top of that with an improvement in the housing market.
RealtyTrac.com reveals that lenders are anxious to unload tons of inventory of repossessed and foreclosed homes- offering them at very appealing prices.
With tax credits, and low interest rates, many investors hope to cash in on this current market.
Either way, you can't bank on appreciation alone. If the deal isn't good on its face (right now- in the present) .. then it isn't a deal.
You've got to know all your numbers going in. What are the repairs, holding costs, cost of investment. What is the after repair value- presently (not what you hope it to be).
My free property analyzer is available for the asking. Free when you ask nicely by using the contact form to the right :-)
Dennis