In the early 80’s I picked up a very honest yet motivational ‘how to’ book on real estate investment. In my senior year of college I was set to invest. I actually drove to NJ, looked up as many of these homes as I could, took pictures, and tried to take notes in my then ignorance. After reading the book I bought a shack for $17500, w/ $1000 down, gutted the kitchen and bath, and placed into service what was one of my most successful investments to date.
I’ve used these & other techniques I gleaned from my broker/investor dad, and have shared them with clients for 3 decades.
It comes down to humble work, patience, time value of money, and good mentors – I had my dad ! I keep a few copies of the book for clients I work with. Let me know if you’d like one.
Finally, an article above Readers Digest but below Wall Street Journal – like as much as I do both periodicals. But as I’ve often said, ‘don’t get your financial advise from Woman’s Day and don’t get your cooking ideas from Forbes’.
The approach to real estate investing is not about jumping in or jumping out. Its not the sound bite on the 6 o’clock news. ‘You are NOT buying a candy bar’; this is your hard earned money you are investing so you can improve life a bit. This is the more in-depth approach I prefer to take. Having invested since my senior year in college, and being the son of a real estate broker who invested in 3 states and did quite well, I’ve bought, rehabbed, sublet, rented, built new, managed for self and others, and done it in about every kind of market and every season. As far as I’m concerned, as far as I’ve seen in the 34 yrs I’ve been at this, there is virtually always an opportunity in every market and at any time.
Sometimes its in a cash deal, sometimes its in the timing – time of year, sometimes equity and profit comes from improvements, other times subdividing land. Take a glance at the article or call me and we’ll chat further.
There are always questions you’ll want to ask yourself, eg:
- What do I have more of, time or money?
- Do I need cash now or want to save up for future period?
- Am I in a tax bracket that would be a better fit for setting up a separate holding entity?
There are many more.
If you are working with a professional, make sure they ask you some in-depth questions BEFORE they help you spend your hard earned money.
Article Link: http://e.house/archives/2593
In fact, read everything you can in this website and call me in the morning: http://e.house/
Sample articles –
You already know from Solomon that there’s “Wisdom in the counsel of many…”, so don’t just take my word for it.
Yes, even read the articles about why many think property is a terrible investment, but make sure you read the feedback postings at the bottom of those posts.
So on to that excerpted wisdom:
- “…..One of the better ways to improve your wealth is to reduce your risk on the properties you purchase.This will allow you to buy lower-risk real estate, which hopefully will earn a fair amount of wealth for you over time.Go for these:
1. Properties in very good shape
Too many people buy fixer-uppers thinking they’ll add value by doing a renovation. Then they get mired in a much more expensive and time consuming property than they ever expected. More money into the property means lower ROI…Skip fixers and instead buy properties that are in as good shape as possible, which should get those rental checks coming into your bank account in as short a period as possible.
2. Properties in moderately priced areas with good cash flows
Real estate is all about location, location, location! The properties in the best locations (think beach areas, downtown, wealthy enclaves) generally have very negative cash flows, so those are the location, location, locations you want to avoid. The moderately priced properties in working-class areas are the real gems; they generally have the boring locations, but much better cash flows. Of course pencil out any deal with conservative rents and expenses, and go for beginning year cash on cash return of at least 4 to 6 percent, based on your conservative estimates. (Ask to see my managed portfolio spreadsheet – it think these numbers seem low)
3. Communities with HOAs in good financial, legal, operational shape
There are many, many landmines in buying properties in common interest developments.
4. Properties that come with decent credit quality tenants in place
There is nothing better than buying a property with a decent tenant already in place. You get the security deposit and pro-rated rent, and you don’t have to go in and clean, paint, update or fix too many things in the unit. If you buy properties in areas that have decent credit quality tenants, that’s hopefully the type of tenant you will inherit. Also take a look at the current tenant’s lease, credit application and credit report, if you can, before you make the decision to purchase the property.
5. Properties in low vacancy areas
Vacant units get robbed, incur vandalism and don’t have any rent coming in to cover the bills. If you buy in places with really high vacancy, it might be months or years before you get the property rented out at a fair rental rate. So really think through buying properties in areas with many unoccupied units. Drive around at dinner time: No lights in a lot of neighborhood houses means no one is residing there, and you shouldn’t, either. (I agree with this and talk many folks out of property that requires a firearm to collect rents.)
6. Properties you will own a long time (I’m more apt to evaluate every time a property is clean and comes vacant & take timing into play looking for what can be bought with the sale proceeds of existing investments. )
Many times I’ve actually discourage married couples from building new, buying a fixer upper, or ‘taking a shot’ and investing. Why? Because financial stress can devastate a home and I’ll not take a commission at the expense of a marriage. Yes, I’ve even studied family counseling for years because of the stress that comes with large life changes – like real estate transactions! So I found this very refreshing – just saw this article about how these folks have a date night each week with no business allowed.
I think I’ve heard this story before, they like to rehab homes, he can move the walls, she can add the flair, they don’t do TV but prioritize Christ. Wasn’t sure whether to put this on my MentoringMarriages.com site or on our real estate page.
So what can one actually expect when they purchase an ‘in-place’ real estate investment ? Well here are actual numbers of the highest and lowest producing properties that we’ve set up and mange for active client portfolios.
Clients, request a copy of the below spreadsheet to compare your investments against each other – it will assist in planning ‘which to keep’ vs ‘which to cut loose’. (Non-clients: available for a small fee) Installation and customization available from site or remotely.
In pdf format BOY_Letter_RNW_2016_01_01_sideB
Graphic shows when to be a buyer and when to be a seller.
I’ve used basic timing as part of a strategy to quickly add equity & net worth to clients portfolios for decades.
There is more here than just basic info, e.g. your timing will be different based on if you are a 1st time buyer, move up buyer, scaling down seller, etc. Market timing isn’t the only consideration, but it is a big one.
So what can one actually expect when they purchase an ‘in-place’ real estate investment ? Well here are numbers from picked & rehabbed properties we’ve set up and mange for an active portfolio client.
Active client of ours? Request a copy of the below spreadsheet to compare your investments year to year & within your portfolio. This can assist in planning ‘which to keep’ vs ‘which to cut loose’.
- Non-clients: ‘Remote in’ installation & setup available, or stop in – you don’t even need to bring your laptop.
In pdf format BOY_Letter_RNW_2016_01_01_sideB
NEXT YR 2016 results
This is not an offer of a guaranteed return. Always do your due diligence before investing.
Free Q n A sit down times are the best way to see where you’ve been, where you’d like to go, and explore options for how to get there.
Our typical consulting times for highest and best effect are NOT tax time. This is largely bookkeeping for an otherwise on-going year to year plan.
- Beginning of year sessions we use to plan out strategy and most importantly: timing.
- Tax time. Good time to evaluate what you have to work with and how to get what you don’t yet have to work with, as well as entity options and buy sell strategies.
- Mid year. We sit down at this quiet time and ‘annualize’ your numbers and to date results. Then adjust, plan, and move forward.
- End of year. After the books close its ‘too late’ to grasp some strategies uniquely available at this time. That’s why we recommend 12/10 of each year for a year end review.
We explore with our customer/ client base various tax and other aspects of:
- Your first home/ Buy or build/ MI-FL vacation home
- Move up/ Down size/ Relocating 101
- ‘In-place’ cleaned, rented & managed rentals & tax benefits
- Use real estate to pay for college Links
- Real estate investing in retirement Links
- Real estate investments for cash flow Links
- Real estate as tax shelter Links
- Use real estate investment in your golden years Links
- Diversify Your Portfolio – Purchase Shares in Private Real Estate Investments Link
- About shared investing
- How it works http://www.highya.com/realtyshares-reviews