Real estate bubbles, strategies, and the current market

Are we in a bubble market ? Just read from one of my favorite bloggers who boasts: “15 Anibal-Affiliates-RealtyNetWorth-LakeShannon-why-I-sell-lakefront-young-couple-at-sunsetflips currently in progress. 126 flips completed. 15 rentals properties. Follow me to see how I make money in any market cycle.” So here’s the excerpt & my ‘reply’:

  • “…Low-money-down loans have been available for decades, and that is not what caused the housing crash. Really bad loans to people who should not buy houses is what caused the housing crisis. …”
  • reply: I’m presuming this is a ‘cliff notes’ take on the market since we can’t dispense all knowledge in a post. But my quick 2 cents. As a 2nd generation broker/investor/finance degree holder, bad loans where just a part of the problem. We had funds flowing out of other ‘under performing’ investments…e.g: $’s tend to move from CDs to collectables to stocks to real estate, etc. Further, and this makes the topic more of a localized thing, wages must support prices. Las Vegas had speculators running up prices but buyers weren’t all from out of town so prices couldn’t be sustained. Here in NW Detroit suburbs, we are seeing a lot of new industry coming in and hence price strength above what might be healthy in other parts of MI.

The article goes on to say how the market is not at a bubble stage. I think that greatly oversimplifies. So whats the point I’m making? As in Ecclesiastes 3 “To Everything There is a Season.” With-in 30 miles of each other, I have client investments of which 1 area I feel should be liquidated asap as the appreciation has come fast and peaked, the other could be held for a taxpayer that needs deferred income and no cash flow now, but if cash flow is needed move on. In other words:

  • Look at: investor needs (cash, retirement savings, …)
  • Investor tax situation
  • Investor has more time and abilities or more cash to throw at the portfolio mix
  • General economy but also local economic outlook…. very important.

This isn’t like buying a candy bar.



This is not an offer of a guaranteed return. Always do your due diligence before investing.

What kind of ‘Fixer Upper’ ROI is possible when we’re your Portfolio Brokerage Mentor?

How much can I make rehabbing homes?Info-graphic-appreciating-wealth-build

There are many different approaches. Are you in a high tax bracket and want appreciation, taxed and withdrawn at a future date (like retirement) and wish to accumulate rentals? Or, are you in a low tax bracket/ want maximum returns now/ hence ‘Flips’ make more sense? Looking at our charts, you’ll see cheaper homes are better suited for rentals, but all properties are usually better suited for ‘flipping’.

‘Flipping’ homes is not for the faint of heart, nor for a novice. The TV shows are for entertainment – turn them off. I’ve never watched even 1 episode and I’ve ‘flipped’ houses since 1981. Yes, I’ll be glad to share my entire portfolio results to date with you.

The vast majority of folks loose money on rehabs, making lots of cash for ‘wholesalers’. So how do I know when to use a professional ‘Portfolio Broker’ Mentor? (that would be us). Perhaps when said mentor has a track record going back to 1980 and will say “NO” more often then “MAYBE” OR “YES”.

Prefer ‘hands off’ approach? We ‘joint venture’ with clients – you bring $’s, I bring expertise, your principle comes out first, we split the balance at closing. (there is a formal agreement letter but that’s the short version).

For every property I recommend, There are about 25 that I tell the investor “NO” and then tell them why. I want this to be educational as well as profitable for you – it helps us both!

Anibals-Realty-Net-Worth_2016_EOY_JV_ROI

If you click thru on the link below this photo, you can compare with last year EOY results. There has been some year over year appreciation.

  • In this market, this will plateau and makes these ripe for selling to reinvest a better part of proceeds.

Anibals-Realty-Net-Worth_2016_EOY_RENTALS_ROI

VIEW IN PDF:  Rental and Flips ROI Calculations – EOY16

Rental and Flips ROI Calculations – EOY15

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.


This is not an offer of a guaranteed return. Always do your due diligence before investing.

Passing Your Home to Your Children.

When/ How/ If: I Should Deed My House to the Kids

There can be some benefits, but also drawbacks to both the gift giver and recipient(s).

(Speak to your accountant/ lawyer/ lender/ and insurance agent for specific advise – the following is excerpts from counsel received and not to take the place of paid advisers in their respective field of licensing.)Anibal-Group-LLC-RealtyNetWorth-Senior_Services_woman-elder

Some will:

  1. Add the child’s name onto the existing deed.
  2. Make an outright gifting over.
  3. Deed over but reserve a life estate.
  4. Will the property, i.e: a “transfer on death”.
  5. Others consider a revocable trust, irrevocable trust, or a family LLC.

#1, Possibly Tax Disaster.

  • Set up an office visit. There are good reasons, but often more bad reasons to use this strategy.

#2, Outright Gift.

  • Irrevocable, the parent loses control and legal right to stay in home. Perhaps the parents will rent back.
  • Ends the parent’s right to claim any preferences on property tax bills, e.g.: the homestead exemption, being blind or over 65, hardship/ low income exemptions.
  • This can dramatically increase property taxes.
  • If real estate transferred to a child is worth more than what was paid to purchase and improve it, then the child pays capital gain tax on the sale of the property. (The $250k/ $500k MFJ primary residence exemption is not applicable unless you own and live in the property).
  • Children’s (ex)spouse and creditors may have the ability to seize the property.
  • vs. Will at death.
    • If a parent’s Last Will and Testament leaves real estate to a child, parent can change their mind w/ a new will.
  • Additional Parent Considerations.
    • To remove the asset for Medicaid qualification, remember that a transfer of your real estate can make the parent ineligible for benefits for nursing home expenses, depending on when you enter the home. The length of time ineligible depends on the value of the real estate, whether it was transferred outright or retained as a life estate. Generally, its a five years look back.

A transfer of real estate is a “gift” and will no doubt require filing Tax Form 709 with the IRS.

#3, Gift with Retained Life Estate.

  • During life, the parent has the right to live in the property, and at death the life estate ends. Property transfer effectively at that time.
  • Some want to avoid probate after death, and possibly to avoid any court administration of their estate.
  • If the recipient child dies first, the child’s share in the real estate could pass to the deceased child’s spouse, rather than to the grandchildren.
    • vs a parent’s Last Will and Testament may provide that an inheritance would go to grandchildren if a child died before the parent.
  • The parent still loses a significant degree of control. If the parent sells the property, the proceeds belong to the parent and the child (remaindermen), split according to the percentage of ownership determined by IRS life-expectancy tables.
    • Capital gain tax would be owed by the child on his or her gains.
  • If the parent retains a life estate and the property is not sold before the parent dies, then under current law there would be no capital gain at the time of death because its cost basis is “stepped up” to the property’s market value on the date of death. This is a good thing for the recipient !
  • For Medicaid, the parent is deemed to own the entire interest in the real estate for five years after a deed execution retaining a life estate. They will also be the owner of the life estate interest thereafter, the value of which is calculated at the time of application for Medicaid.
  • RE: inheritance tax, the date-of-death value is taxable to the child – not lovely. But, the child gets a step-up in cost basis (easier if inherited at death in my opinion).

#4, Will the property.

  • Call the lawyer. Ok, now, plan for the child to do back flips on how much taxes you just saved him/her/them.

#5, The ‘entity’ approach.

  • The nuances will require coordinated input from your lawyer, CPA/ accountant, insurance agent, with some feedback from a real estate broker and your banker.

Bottom line.anibal-affiliates-realtynetworth_deeding-property-to-children-b

  • The when/ how to transfer should involve your accountant, lawyer, insurance agent, banker/lender at a minimum.

As I’ve told clients for decades: “You’re not dealing with a candy bar.”


Tax Strategies for Real Estate

If you expect real estate should involve ROI, then there’s some basics to the outline.

  1. Acquisitions – some we have control, others not – e.g.: inheritance.
  2. Holding – short/ long/ entity/ self held/ purchase for child/ etc
  3. Approach: add value/ flip/ wholesale/ rent/ vacation/ family lease to/ residence with business inside

Most properties will be held for cash income OR appreciation. If you can get both, then neither will probably be optimal.

Regardless, upfront considerations must include:mackinac-bridege-under-constructions-allovermichigan-b

  1. What you need from the property: income now or later (cash flow vs appreciation)
    • I look at these like ‘a job’ or
    • ‘retirement investment’
  2. I will invest more:
    • cash or
    • time & talent

So there will be many vehicles and considerations. SD IRAs, set up LLC, Corporation, etc. One of my favorite realizations is that PROFIT is usually made on the way into an investment in THE BUY. Further when you SELL, what can you/will you do with the funds ? Make sure you have another opportunity lined up if you liquidate a great rental. Make sense ?

‘Later’ is not the preferred time to plan.


Local large city property taxes are often far over assessed. v2017.01.24

I’m updating this article.anibals-realtynetworth-realt-estate-brokerage-consulting-relocation-management-property-tax-protests-the-power-to-tax-is-the-power-to-destroy

Below is the original posted 3 yrs ago. This has long been a problem. Why? While I can appreciated ‘work load’ as a reason, it eventually becomes and excuse if its not dealt with on the assessor/ local /state government end. Assessors by-pass state law &/or take advantage of their position to frustrate property owners into being unfairly over taxed. Via interviewing property owners and walking thru the process for clients, I witness first hand the ugly side of the process. I’ll not speculate to far on the gov’t employees side of this – you can figure it out for yourself – but what is the results of over taxation and undue burdens associated with ‘tax protests’ ?

Instability. Show me one neighborhood that prospers from having homeowners uprooted. Getting these properties properly and fairly assessed brings a long term increase in the value of an area. At that point, values and assessments can rightly follow. Why is this so a hard message for the local assessor and his boards of review to understand ?


Recent links:anibals-realtynetworth-realt-estate-brokerage-consulting-relocation-management-property-tax-protests



Original article from 2004 –

According the Detroit News, there is a large inequity from property to property. This is true in most large cities in MI. Further, the local board of review personnel often doesn’t know how to or refuses to assist you, the taxpayer they work for, in the process. The article leaves out important details of interpretation. Don’t assume the house you buy will change property taxes for the better – DO assume they will change with ownership change. We can chat further.

=========

Detroit— Detroit is over-assessing homes by an average of 65 percent, leading to higher tax bills, according to a Detroit News analysis of more than 4,000 appeal decisions over the past three years by a state board.


Lead water in the pipes – since 1986

So much talk of lead in the drinking water in Flint MI these days. Well, I’ve owned 2 homes Great-plumbing-ideas-lead-in-water-flint-miin Flint. I have the same wisdom for those folks as anyone who buys a home built pre-1986.

I recall when I built a home, coincidentally in 1986, that I had to switch from a lead solder to a tin solder. It doesn’t flow the same. But, the point is, per “The Safe Drinking Water Act Amendments of 1986”, homes built before `86 tend to have lead joints so it makes sense to drink & cook with filtered or bottled water. I do.

The law prohibited use of lead solders, pipes, and flux in drinking water systems. Plumbing solder lead content was set at 0.20% maximum. ( previously 50/50 mix w/ tin). It also included wording to require states to enforce the provision.


Rental house ROI & remodeling budgets

Jumping into investment real estate this year ? Good info with a quick easy read, my basic Anibal-Group-LLC-RealtyNetWorthcriteria for useful information:

Here’s a huge oversimplification of the article links shown below:

ROI – your rent should be at least 1% of the purchase & set-up cost of your rental. e.g: You paid $85k to buy and rehab, it better rent for $850. Further, expect around 50% of the rent to be expenses (less if you have a mortgage).

My add to the thoughts: Annually evaluate your properties against each other AND against what else you could swap the lesser performing houses for. i.e: You can sell it for $200k/ it rents for $1250/mo., find another that will rent for the same that 1.costs less OR 2.costs the same but will rent for far more.

Renovations – Think practicality and ROI. Don’t go cheap for cheap sake and don’t over pay because its so snazzy. This is a business, not a glossy magazine.

My add to the thoughts: MANY. We’d need to sit down for this as each person, area, and property has different types of strengths and weaknesses. These need to be evaluated up-front BEFORE buying. I still believe that ‘the profit is made at the time of purchase’.



Married folks note: ‘The Demise of Dower – State Bar of Michigan’

Every year I give feedback to people AFTER there has been a life changing event in their family. I strongly recommend that everyone who buys/ sells/ marries/ has children, etc, 13975257_547728985400158_1961526686294140869_o[1]seek a consultation asap with (at a minimum):

  1. Legal counselor
  2. Insurance agent
  3. Real estate/ tax consultant
  4. Estate planner

‘Dower rights’ have changed in MI. A widows automatic 1/3 interest in her husbands real estate will be altered in April of 2017.

You’ve been warned.


Faces_Fall_Petosky_byChalet_Sml_button_FRAMED

Storms/ Trees/ Insurance/ Liability

As always, this is NOT to take the place of calling YOUR agent!


What happens if:3808286

  1. My tree falls on my house.
    • A: my insurance should pay
  2. ” and the ins.co. had asked I remove/trim it beforehand.
    • A: I pay
  3. My tree falls on neighbors property.
    • A: their insurance should pay
  4. ” and the tree was dead/ dying.
    • A: I was negligent, I will probably pay
  5. A neighbors tree fell on my house.
    • A: living tree – I/my insurance pays, dead/dying – they/their insurance pays.

You already know that no matter what you asap inform your insurance company with “notice of an event which could give rise to a claim”, even if you’re sure there will be none. Why? You are not the insurance expert AND you don’t know what the future holds. Contact them now.

Basic point: Check your yard for hazards, check with your agent for coverage gaps.


These are short answers.  Again, you are best advised to at a minimum QnA your: Insurable risks professional, accountant, lender/banker, realty professional, legal adviser when changes happen or are anticipated.Faces_Fall_Petosky_byChalet_Sml_button_FRAMED

If you’d like me to assist further, contact me w/any questions or comments. Recall, using anyone in my referral network qualifies for reimbursed services (FREE) on your next buy/sell activity.


Great Car Enthusiast Garages – ‘with attached house’ !

Are you one of Michigan’s thousands of ‘car persons’ ? I’ve brokered for 3 decades and owned many classics myself.

If you’re a local, you seen my office just down the street from Boomers Shark Club, home of the famous huge weekly car cruise-ins, or the Dream Cruise in Flint, or the Fenton Dream Cruise ‘tune-up’, or even in Brighton MI (below). If you’re a dealer, you’ve seen me all over the country at dealer auctions searching out sweet unique rides for clients.

anibal-affiliates-realty-net-worth-greatcarcaves-car-show-brighton-michigan

As a local 30+ year real estate broker with loyal clientele & lots of hands on construction & car experience, I’m also great source of hot rod & other car related referrals.

Let me walk you thru your Buy/Sell situation knowing the value of a Great Car Space !


Bonus: Here’s some exceptional adaptive use spaces for Great Car Caves, Showcase Garages, Wrencher Spaces, and Daily Driver Comfort Zones. How do you rate them ?

My dedicated webspace for car lovers ! Great Car Caves – custom garage spaces in MI and FL



For your friend at a time of loss.

Remember when you first realized you need ‘something more to offer’ when friends are at a hard time ? I remember well. I felt empty that I didn’t have deeper compassion for a grieving neighbor at a time of traumatic loss in the family. It was time to turn off the 12463529_10208993491577858_96798857_nentertainment and read.

Here is a nice starter list for you to develop deeper empathy and your loved one. I especially like C S Lewis books. He experienced an early loss of a spouse married late in life, a compassionate deep thinker who is easy to follow.

http://www.recover-from-grief.com/grief-and-loss-books.html

I guess the ever growing family counseling library I have is why I’ll sometimes call myself ‘your financial therapist’. If a loss was yours, “….what you are feeling is normal, and you are not alone.”

 


Let Me Share A Secret. (aka: Realty Relocations & Referrals)

Let Me Share A Secret.

Real estate nationwide relocation referrals moving

Just read a post about ‘The secret life of Realtor Referrals’. It was something like: ‘oh let me “help” you…you’ll get nothing and I get $$!’ kind of an article.

Phooey to that noise. It didn’t, so we shall, discuss ‘the better way‘.

Here’s MY Secret:

When using the referral process, ask:

  1. What will YOU get/give ?
  2. What will I get/give?
  3. What will THEY get/give?

There should be an obvious ‘WIN/ WIN’ situation, or move on.

For 3 decades my philosophy has always been, if I can’t get for you more than what I get in return, I have nothing to offer – have a good day.

  • A typical broker/agent has no mechanism in place to assist you in the referral/ relocation process, except what they’ll get financially from another office.
  • Further, and what the article skipped over, is the ‘relocation companies’ as well as sites like ‘Estately’. These tend to be mechanisms to, for example, simply grab front page search results and sell the leads to agents. Zillow, Adwerx, and Trulia do similar things but in a ‘flat up front fee’ way.
  • Franchise offices ? Here you get a referral from something more akin to an AutoZone auto parts store sending you to another AutoZone. Fine for auto parts. (Our local NON-FRANCHISE auto parts store actually suggests referrals to shops they have no affiliation with! Yeah !) Again, its often a ‘no services added’ fee. Just keeping the profits in-house, right?

How do you suppose these scenarios affect the transaction without producing a better result ? Well, the brokers/agents I speak with usually have the ‘I pay them X% for what?!!!’ The broker/agents that do take referrals tend to place the lead & client in a lower service level than organically derived customers.

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Here’s my detailed secret, via http://AllOverUSA.com (yes, a shameless sell), I offer the upfront ‘ugly’ work that should be done by BOTH the person(s) being referred, and the brokerage/agent that will be on the ‘short list’ given to my customer/client that I’m working to forward a file with. Yessir, service for expected fee – novel eh? A buyer/seller needs to be ‘hardened off’ into reality – no agent likes this up front aspect of the realty experience. Further, agents should be screened….drilled and grilled AND be held accountable thereafter. Accountable is of value we the referral comes from a fellow pro much more so then if it comes from your friend or neighbor – after all, will it matter to the agency on receiving end vs. the result will matter A LOT to both the forwarding agency (in this case US), AND the receiving real estate agency.

So what’s my best sell when someone says ‘well, I can just do it myself and save’. Not really, there is NO cost to my clients getting referred and there can be maaaany rewards. AND, yes indeed, I have multiple times used other offices services in the same way I tell clients to use mine – all for the same reasons ! We used to call that “Practice What You Preach”.

All of my LinkedIn articles:


Its been a great summer

  • Its been a privilege assisting customers and clients this summer.20160816182131
  • Its not too late … Shall we grab a bite and discuss YOUR situation ?

Fireplace Makeover With Details and Before and After Pictures

What these folks did with a large brick fireplace to make it look more modern is quite exceptional considering neither had carpentry experience (so they say).


“Do you have a fireplace that is an outdated eyesore?  Here is how we updated ours without removing a single brick.Picture1[1]
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When to use a real estate lawyer

Well, anytime you want to is the short answer.

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Further, most brokered transactions involve standard forms that have been drafted by lawyers. These are the same lawyers that produce materials and workshops the local attorney uses as reference. So do you need a lawyer ?

There are certain client situations that I’ll simply not move forward until and unless my customer/client consults with legal counsel. For privacy concerns I’ll not discuss them here but will chat in general terms with you and share more information to help you in your decision.

One local ‘go to’ real estate attorney I’ve used over the years is (request contact info). More oft than not, I’ll be part of the initial meeting to assist my client in clarifying what we are dealing with.

Working with the same professional over time creates a ‘default’ set of assumptions each have w/ the other, meetings tend to begin at a more advanced point. Its often optimal if you can pick pros that are slightly older than yourself – they will tend to be in a stage of life that you are about to be in.


(Speak to your accountant/ lawyer/ lender/ and insurance agent for specific advise – the following is excerpts from counsel received and not to take the place of paid advisers in their respective field of licensing.)


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Like Chip & Joanna Gaines of Fixer Upper, remember to seek wise counsel.

Investing in property ?Anibal-Group-LLC-RealtyNetWorth
Like Chip & Joanna Gaines of Fixer Upper, I recommend you seek wise counsel ‘and all these things shall be added unto you’ says Biblical scripture.

When there is more that 1 person as part of the buyer / seller / ownership  package, I take just as seriously the ‘non-financial aspects’ of the transaction. A move is a top stress item per every counseling material you read and study. Since its part of my business, I’ve studied family counseling materials for decades, taken counseling workshops (outside of my profession) and consumed countless hours of programming relating to, well, relating.

I think these kids have it right in the interview link. When the purpose is shared jointly and above either of you, the ‘team’ approach brings you together, not in competition with each other.




Real estate auctions, can you trust them

Those flipping TV shows can’t be wrong, can they ? Oh my. If only customer/clients

realized they are buying a house, not a candy bar. (photos of actual house shown to client).

“If it was that easy…” right ? Here’s some of the better article excerpts I’ve found.

  • Property taxes, utility bills and assessments are sometimes not available at the time of auction or are not paid from the auction proceeds. These become the responsibility of the winning bidder. For example, water and sewer accounts for the property may be delinquent in the name of the previous owner and service may not be reconnected in some municipalities until the accounts are brought current.
  • Hubzu: One persons experience: “… I have been bidding for weeks on a distressed property and have gotten the same run around that others have posted on this forum. The photos they had listed were not current. I enlisted the help of a local agent and then drove over 500 miles to view it myself. It was in MUCH worse condition – no flooring , at least 1/3 of the drywall taken out, appliances in disrepair or gone, all interior doors and facings removed due to water heating flooding the unit while it was bank owned…”
  • One expert’s single word of advice for folks who dream of buying a foreclosed house at auction: “Don’t.”… “I caution anyone who isn’t in the (real estate) business: Buying (at auction) can be one of the worst decisions you’ll ever make,” says Jim Hamilton, a Realtor in Los Gatos, Calif. Another bit of counsel from Hamilton: If you want to buy foreclosures at auction, plan on making that your full-time job. If buying a house is like navigating an obstacle course, then buying a foreclosure is like crossing a minefield.

More info:



The tale of 2 houses, aka: WHEN to cut bait.

This is the story of 2 types of investors and 2 types of investments. After reading, tell me if having a seasoned long term hands on skin-in-the-game professional in your back pocket is useful. Fair enough ?

2  types of Investor:823hubbard-flint-mi-1986

  1. Knows when to cut bait
  2. Holds on until value is all gone, damaging credit.

2 types of Investment:

  1. House still looks nice, area took a dump.
  2. Looked hideous, still does, but the area made it a good investment – in fact, there are brand new homes next door where there were abandoned inner city lots.3134birchrow-eastlansing-mi-1982-b
    • Point: Numbers dictate financial logic & help you know when to act.

I’ve had this one current client since opening my office over 3 decades ago.

Twice in that time I’ve issued ‘now is the time to buy’ alerts. I don’t do that lightly and I give reasons and research – AND put my money into said markets.

This one client did in fact pick up over a dozen investments in the 1st round. Then, as the area began to turn and he was invested ONLY in that local area and 1 property type, over a 5-10 yr period I begged him to bail before it was too late. Yep, didn’t do it.

Its not just a nationwide economy that affects these decisions, there are buy/sell opportunities all the time and many many local factors come in to play, more so local factors over statewide & nationwide in my opinion.

Welp, here’s some local info on the below ‘pretty house’ I owned in the same area.

Property Overviewfeedback_thinkAboutIt

  • Crime Rate: High
  • School Rating: D
  • Registered Offenders: 68 within 1 mile
  • Average Home Price: $24,000 within 1 mile (I sold for $15k more in 1988)
  • Foreclosures: 50 within 1 mile
  • Environmental Hazards: 24 within 1 mile

I’d bought, cleaned it up, made profits on renting for a couple years and in the 2nd year more so on selling it… waaaaay before the area took a dump. (my 1986 fence & rose bushes are still there).

ALL CURRENT PICTURES.

823hubbard-flint-mi-1986b


Below are current photos of THE most profitable house I ever had, AND the ugliest.

Made about 150% ROI every year  for 11 years with virtually no tenant turnover (1 for 7yrs, 1 for 4 yrs) + an additional 1000+% on my initial investment in the year of sale. Held: 11yrs, profit: $125-225/mo x 11yrs + $11000 at closing all for $1000k down payment and a few bucks for new kitchen cabinets and carpet.

  •  That tree in the front yard was 12 inches tall when I planted it in 1982.
  • Still has same kitchen I put in 30+ yrs ago after a gut and swap on my summer off from college at MSU. A bit shabbier now – well, a lot shabbier.

3134birchrow-eastlansing-mi-1982-b3134birchrow-eastlansing-mi-1982-e3134birchrow-eastlansing-mi-1982-g

Additional takeaways:

  • The immediate & local market dictates a ‘good’ investment and timing.
  • Investments are usually ‘cash now’ OR ‘appreciation for later’ RARELY BOTH.
    • The best ‘cash flow’ properties usually gain little/nothing/or are eventually abandon. Use these to live on.
    • The best ‘appreciation’ properties break even or have a small loss in ‘cash flow’ while held. Use these for retirement or other future savings.
    • ‘Appreciation’ properties are usually best at accumulating wealth.

If it was as easy as the TV shows, 94% of all investors would not loose money in real estate. If it was not a good investment, ‘the Donald’ would just be ‘Donald’, ‘Rich Dad/ Poor Dad’ would not be a book.


Related:




She made a Million Dollars recycling homes – 35 years ago!

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.

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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.



What is a Good Real Estate Market to Invest in ?

Finally, an article above Readers Digest but below Wall Street Journal – like as much as I do BN-MC504_DELRAY_P_20160114115058both 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.

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