Do you want to invest your funds in real estate but don’t want to spend the time necessary on the tedious aspects of acquiring and maintaining one or more properties?  Do you know that real estate is one of the best ways to invest but perhaps you have little knowledge of the ins and outs?  The real estate investor has many options at his/her disposal.  There are professionals that can handle some or all of it for you.   

Real estate has become more complicated during the current economic times.  It has also become more exciting and lucrative in many ways.  There are great deals to be had and there are many experienced wholesale investors out there to help you benefit from them.  A good real estate agent can handle complicated deals such as short sales and foreclosures.  Many agents also know excellent wholesalers.  These types of deals can provide a real increase in value quickly.  In today’s real estate market, there are often more deals like these than there are traditional ones.  Real estate professionals are embedded in the market and can often tell you where and how to find such investment opportunities. 

Your first decision is to choose what type of investor you want to be. A Limited Partnership, also referred to as an LP, joint venture or equity arrangement allows one investor to provide funding while another will provide his/her time and skills to find the investment property, handle the purchase and even manage the property if the intention is to hold onto the asset. Profits are split between the investors in this type of arrangement.  

You may prefer to do a Private Placement or PPM where your funds will be pooled with other investors and the entire transaction from beginning to end will be controlled by someone else, usually an experienced management team. 

A skilled real estate wholesaler can provide you a Turnkey Investment Property.  As the investor, you purchase a discounted property that has already been renovated and leased.  Property management is already in place.  This can be done with a tenant in place who wishes to rent to own.  The tenant will buy back the property from you, the investor, in the future providing you with the security of a buyer from the beginning.  Or, it may be a discounted property your wholesaler locates, rehabs and flips providing you with an immediate profit.  It really couldn’t be easier than that. 

So, if you want to be a real estate investor but prefer not to be a landlord, the only work you really need to do is to find a good wholesaler with a support team.   While he/she is working hard, the investor reaps the benefits.

Jay Redding

SuperiorPrivateMoneyReturns.com

As an investor, you want to find the best deals out there.  Performing a little due diligence can go a long way to making those smart investments.  

At the top of your due diligence list is how the property presents itself from the street. Does it have curb appeal? Ensure the value of your potential investment is in line with others in the neighborhood.  

Have a thorough property inspection done by a good inspector.  Know the age and type of your roof, the age and efficiency of the heating and air conditioning units and if all the appliances work.  Are the windows efficient and the wiring safe?  How is the foundation and is there mold in the basement?  Make sure the property has a sufficient perk.  

Is the home located in a historic district requiring you jump through hoops to make improvements if necessary?  And, how about the locations of the bedrooms, baths and kitchens?  Are they in line with current tastes?  Does the type of construction require maintenance?  A clapboard house is quaint as long as you’ve budgeted to have it painted periodically.  

Obtain all necessary documents pertaining to the investment property.  Have a survey done so you know exactly what land you are purchasing.  Perform a title search to ensure there are no liens against the property.  During negotiation is the time to address any issues.  

What is the proximity of the schools and are they considered good ones?  What kind of shopping is nearby and does the investment property sit near easy access to major roads?  Is the house zoned for its current use or the use you intend it for?  

Are there any service contracts in place that are tied to the property?  Do you wish to continue them and if not, do the contracts have termination rights?  Are there tenants in place?  If the investment is currently a rental property, get copies of all leases and review them.  Do they provide for a purchase by a new landlord and what is included in that provision?  Can you change other clauses you may not like or do you have to live with the lease in its entirety?  If a tenant is in the middle of his/her lease term, does he/she have good credit?  How has their payment history been?  If you are purchasing a multi-tenant property, the tenants in place hold a value to you.  Make sure you understand that value. 

Depending on the property, there may be additional questions which should be answered as part of the investors’ due diligence prior to closing on a property.  Knowing the good and bad of the property gives the investor a better negotiating position.  After all, you wouldn’t pay top dollar for a bag of organic apples if half of them were bruised. But, you might pay half price.  Performing your due diligence will ensure you only pay what the property is truly worth.

Jay Redding

SuperiorPrivateMoneyReturns.com

Positive recovery has to happen sometime but it isn’t happening in the immediate future.  The time to invest is now before the recovery happens.  Investing in undervalued assets prior to an economic recovery provides the investor with immediate equity once the market starts the upward climb. 

According to the recent Campbell/Inside Mortgage Monthly survey for February 2010, fifty percent of home sales were for distressed properties.  This is a telling bit of information for the property investor.  Simply put, if half of all sales are ones for foreclosure and short sale properties, then the news is there are deals to be struck and money to be made.  Apparently the high number of these types of sales hitting now has to do with banks having held onto their REO’s (bank owned properties) with the hope that the economy would recover by the first part of 2010.  However, since there doesn’t appear to be a clear end in sight, banks are beginning to put those properties on the market to get what they can for them. 

One other cause for the influx of lower priced transactions is due to homeowners delay in foreclosing or listing their own homes as a short sale.  Homeowners hit by the difficult economic times try to hold on to their homes for as long as possible.  However, without an economic recovery, are forced to foreclose and we are seeing more of that lately.  As well, the government held a temporary foreclosure moratorium last fall which has now expired causing any backlog of potential foreclosures to come on the market. 

On top of this, the rental market is growing.  As homeowners are unable to hold on to their own homes, renting becomes not only desirable but necessary.  Renting a home in lieu of selling in a low market is the smartest way to provide income while holding onto an asset until the market recovers.  Good news for investors.  

The savvy real estate investor knows this is the time to stock his portfolio with undervalued assets which can currently be rented and then later sold for significant profits once the housing market recovers.  Great investment opportunities exist now and shouldn’t be missed.

Jay Redding

SuperiorPrivateMoneyReturns.com

The investment property is almost yours.  The price is agreed to, contract is signed, the inspector has approved the foundation and wiring and you are ready to close.  But you haven’t had a title search performed.  An investor must know prior to purchasing a property, if there are any impediments to his owning the property in whole.  You need a good title company but how do you find one? 

First, what exactly does a title company do?  It seems simple that the investment property should pass from the current owner to the new owner once an agreement has been met.  But the investor must be assured the current owner holds the title to the property and there are no outstanding liens or judgments.  When a title is researched on a property, any unresolved issues will arise such as second mortgages or liens from unpaid contractors. A good title company will perform all the necessary searches so the investor doesn’t find himself with a problem after closing.  

The title company will find if the property has any easements, restrictions or leases.  For example, if a property has an easement on a portion of the land so that a neighboring land owner can access his property, it could render the property useless to the investor if he needed that piece of land for another use.  A title search helps the investor know his property intimately prior to closing.  The title company will also be handling the transfer of money, payments of mortgages, recording of the deed and any other legal matters required by the transfer of the investment property.  

So, how do you find a good title company?  Like most things, ask around.  Your real estate agent will have the best references as he has dealt with more title companies that anyone.  Take his advice.  But also make sure your lender, if you have one, approves of the company you hire.  The investor should know what services the title company performs to ensure he has what he needs for that particular transaction.

 Your title company will handle the many small details involved with the purchase of your investment property.  A good title company will ensure the investor has full title to his investment and resolve any outstanding issues prior to closing all while keeping the deal moving smoothly so there isn’t lost time and money.

Jay Redding

SuperiorPrivateMoneyReturns.com

Protecting your investment property is a main priority.  An investor needs to have a good real estate attorney on his side.  But since you are not a lawyer yourself, how do you determine who will be the best choice?

First, as always, ask for references.  Veteran investors as well as your investment agent will give the best leads.  You will want an attorney whose practice is seventy percent or more real estate work.  A general practitioner may say he can do a closing, but that doesn’t mean he has the experience you will need to handle your investments.  Of course, an attorney who has been practicing for a long time will know his stuff more than someone who has just finished law school.  That is not to say a firm that has seasoned attorneys as well as recent law school grads isn’t a good choice.  But, you do want to make sure your contracts are being reviewed by someone who has been practicing for at least a few years.

Ask your prospective attorney if he invests in real estate.  If he doesn’t, does he have other clients who are investors?  Either way, he is sure to understand not only the market but your perspective. You want an attorney who has a lot of experience handling properties similar to your investment property.  But, having a wide range of real estate investors will also give him more expertise. A good attorney will no doubt be involved in the local bar association or some other form of service within the legal community.  Any professional who is involved in local associations will know his stuff.  Your county bar association can help you locate attorneys as well as tell you if an attorney is in good standing.

Also, choose an attorney you feel comfortable with.  If a lawyer doesn’t return your phone calls in a timely fashion, he may feel you are not worth his time.  A good attorney will treat his clients with respect regardless of how much money they are spending at the firm.  Choosing a self-employed attorney or one that works at a small firm may be a better decision than one working at a big firm.  Smaller firms can be more motivated and  understand the investor’s concerns better because they are business owners themselves.  As well, there will not be layers of senior partners needing to manage the account and overcharge you for services.  And, ask your lawyer if he likes to work on creative deals such as 1031 exchanges or double closings.  You will want someone with flexibility who is willing to make the deal work for his client. 

Once you find that real estate attorney you can trust, treat him with as much respect as you expect.  And don’t try to haggle him too much on his fees.  Make sure you have budgeted for legal fees in your underwriting of your investment.  A good attorney can protect your investments and in turn, your financial future and wealth.  He is no doubt worth every penny.

Jay Redding

SuperiorPrivateMoneyReturns.com

Hiring a good general contractor for your investment property is about as important as finding a good dentist.  If an investor needs to make improvements or repairs, an experienced general contractor will see that the work is completed on time and within budget.  How do you ensure you’re hiring the right one? 

The first step is to get references of contractors who have done good work for friends, family and colleagues.  Contact several and try to get estimates from at least three contractors. Make sure the references are legitimate and not family members or friends of the contractor.  Has he done the same type of work within the same town or city?  Much time is wasted while the contractor is learning the ins and outs of getting permits and plans approved.  A contractor who has been working in a town for sometime will know the local inspector’s sticking points and the town’s agenda.  This can run smoothly if your contractor knows what he is doing but can be a huge time waster if he does not.  

Ask each contractor for a copy of his/her insurance certificate.  General liability insurance is standard and workman’s compensation is even better.  Ask the contractors for their license numbers.  Then you can contact the contractor’s state licensing board to see if any complaints have been filed.  A contractor who has been in business for a long time and doesn’t have any complaints will be a good choice to provide work on your investment. 

When meeting with each, be observant of the details.  Was the general contractor punctual and knowledgeable?  Did he take notes or indicate he was filing it all in his head?  Did he offer suggestions about how to best make alterations or repairs? Make sure you are clear about the scope of work so there isn’t any ambiguity later.  A good general contractor listens well to the investor so he fully understands the investor’s intent.  As the investor, you may not be aware of all the aspects involved with each area of work you propose but you should feel your general contractor does. 

Now that you are receiving estimates, review them thoroughly.  Did the contractor provide a detailed scope of work including everything you mentioned when you met?  If there were alternatives discussed, did he provide a separate price? Finally, is he asking for more than thirty percent as a down payment?  If he is your first choice and he is asking for more, ask why.  And, the final payment should never be requested until the work has been completed and a satisfactory walk through done. 

As an investor, this may seem like a part of the process you would rather not have to handle.  In that case, a good investment agent can take care of this for you.  Consider working with a wholesaler who can provide a turnkey investment enabling you to start making a profit and possibly looking for your next investment.

Jay Redding

SuperiorPrivateMoneyReturns.com

Investing in real estate is a terrific endeavor.  Whether you are a full-time investor or like to dabble on the side, having a team working for you is important.  With all the right folks in your corner, you can not only find great investment properties but keep those deals moving quickly while protecting your assets.  So, who should you have on your team? 

First, you need an experienced and motivated real estate agent.  He should have practice handling short sales and foreclosures.  The investor needs an agent who knows how to go after the good deals and has skills in wholesaling properties.  Many times, this one person can handle your purchases from beginning to end and then some.  Your real estate agent is really the head of your power team.  

Look to your real estate agent for recommendations on the other members of your team.  A knowledgeable agent will know other individuals in the real estate world who have the experience and work ethic you need to succeed in your investment endeavors. 

If you require funding or wish to find other investors, ask your agent if he knows of anyone looking for a partnership.  More than likely, your agent knows many investors since that is the type of work he does.  Look to him for an accountant and insurance agent as well. 

A title company is next on your list.  Particularly in these complicated economic times with the many foreclosures and short sales available, a good title company is absolutely necessary.  Many times, there may be other banks or contractors having liens on your potential investment property.  Your title company will research and inform you of any issues.

 Find a good real estate attorney.  Ideally, a firm who has its senior attorneys very involved with its associate attorneys will provide the best service.  Multiple layers assure you the work will get done in a timely manner but there will be an experienced attorney involved at all times.  Your attorney will not only advise you as you purchase an investment property but will then negotiate tenant leases to protect your investment in the future. 

Often times, your agent may also have a property management department.  And, if that is not an aspect he handles, he will be able to help you find a good manager.  You want a property manager who is in tune with your desires.  If you want to be directly involved or if you really only desire periodic updates, your property manager will perform all the necessary aspects of maintaining your investment.  Your manager will also have many experiences with contractors.  Often times, they have had either good or bad experiences and can offer suggestions.  

Becoming a successful real estate investor is not done alone.  You need a power team to help propel your investment portfolio. But, putting that team together really begins with your real estate agent.  He is your partner along the investment road. 

Investing in real estate is a terrific endeavor.  Whether you are a full-time investor or like to dabble on the side, having a team working for you is important.  With all the right folks in your corner, you can not only find great investment properties but keep those deals moving quickly while protecting your assets.  So, who should you have on your team?

First, you need an experienced and motivated real estate agent.  He should have practice handling short sales and foreclosures.  The investor needs an agent who knows how to go after the good deals and has skills in wholesaling properties.  Many times, this one person can handle your purchases from beginning to end and then some.  Your real estate agent is really the head of your power team.  

Look to your real estate agent for recommendations on the other members of your team.  A knowledgeable agent will know other individuals in the real estate world who have the experience and work ethic you need to succeed in your investment endeavors.

If you require funding or wish to find other investors, ask your agent if he knows of anyone looking for a partnership.  More than likely, your agent knows many investors since that is the type of work he does.  Look to him for an accountant and insurance agent as well.

A title company is next on your list.  Particularly in these complicated economic times with the many foreclosures and short sales available, a good title company is absolutely necessary.  Many times, there may be other banks or contractors having liens on your potential investment property.  Your title company will research and inform you of any issues.

Find a good real estate attorney.  Ideally, a firm who has its senior attorneys very involved with its associate attorneys will provide the best service.  Multiple layers assure you the work will get done in a timely manner but there will be an experienced attorney involved at all times.  Your attorney will not only advise you as you purchase an investment property but will then negotiate tenant leases to protect your investment in the future.

Often times, your agent may also have a property management department.  And, if that is not an aspect he handles, he will be able to help you find a good manager.  You want a property manager who is in tune with your desires.  If you want to be directly involved or if you really only desire periodic updates, your property manager will perform all the necessary aspects of maintaining your investment.  Your manager will also have many experiences with contractors.  Often times, they have had either good or bad experiences and can offer suggestions.   

Becoming a successful real estate investor is not done alone.  You need a power team to help propel your investment portfolio. But, putting that team together really begins with your real estate agent.  He is your partner along the investment road.

Jay Redding

SuperiorPrivateMoneyReturns.com

Are you thinking about purchasing real estate as an investment?  The best way to start is to acquire a real estate agent.  But, depending on what type of real estate you’re investing in will determine the type of agent you need. 

If you’re looking to invest in residential real estate and grow your portfolio over time, you will want to work with an agent who specializes in residential acquisitions.  This is a professional who primarily works with other investors locating properties that may be undervalued for reasons of foreclosure for example.  These types of agents are immersed in the residential investment market and are aware of local opportunities to increase value quickly.  Real estate has traditionally been known as a long-term investment opportunity.  However, recent times dictate many opportunities to increase value in your investment quickly.   If your reason for purchasing real estate is to build an investment portfolio, you will definitely want an agent who has his finger on the pulse of the below market housing scene. 

If you’re looking to purchase a commercial building, you may require a different agent.  While there are many agents who specialize in both investment residential and commercial property, you need to be sure your agent knows his stuff.  You are going to need help in underwriting the investment and determining any upgrades needed prior to leasing.  This agent will be the one helping you lease your investment property after it has been purchased.  He needs to understand how to market this type of property, what commercial tenants are looking for and how to negotiate rents for office space. 

However, if your interest lies within the retail market, you will require a different type of agent.  Retail real estate is truly a small world.  Agents who specialize in this type of real estate are very specialized. A retail agent will be able to help you purchase the right location for your endeavor.  A retail agent has a great depth of knowledge on the types of national tenants looking for space, what type of space they prefer and the markets they are currently looking to break into.  He will also be valuable in helping you determine which local tenants will enhance your investment and which ones to avoid.  Additionally, retail leases are structured differently from commercial.  A retail agent will know which clauses are market standard, which ones you should negotiate and which ones to hold firm.  Your retail investment is really only as good as the tenants who occupy it. 

Whatever type of investment property you wish to purchase, choose a real estate agent who has a great depth of experience in that area.  The more knowledge you have going in, the better your investment will perform.

Jay Redding

SuperiorPrivateMoneyReturns.com

Although investing in real estate can be highly lucrative if managed properly, there are also myriad risks involved that can cause an investment project to go awry.  Some of these dangers include overpayment, economic downturn, and unforeseen problems with the property.  Although some of these risks are outside the realm of the investor’s control, most can be avoided with thorough preparation, and all can be mitigated by the investor to avoid major financial losses.

One of the biggest risks in investing in property is overpaying at the time of purchase.  It can be very difficult to accurately assess the value of a property, based on a multitude of factors including market conditions, location, condition of the property, and even the current demand for that specific property.  This risk is easily managed by making proper use of the appraisal process.  It is essential for the investor to employ third-party appraisers (who have no other affiliation to the transaction or any of its parties) to come to an agreement on the current value of the property.  It is equally important for the investor to not simply rely on capital appreciation to earn profits; rather, he must only purchase the properties which can be appraised and bought under the market value.  This will ensure that, regardless of capital appreciation, the investor has an opportunity to bring the property up to and beyond the market value for resale.  If the investor overpays for the property initially, it will be very difficult to earn a profit.

Another danger is simple economic downturn.  This is the notion that after an investor makes his purchase—no matter the price—the property becomes inherently less valuable than when it was purchased due to economic conditions.  As in the stock market, the rule of “Buy Low, Sell High” applies in real estate.  While this can not always be predicted or measured with extreme accuracy, the risk can be reduced by an investor in a couple of ways.  The investor should always try to purchase properties that have distinctive characteristics and are in a good location, so that the property will still hold some appeal even in the worst of economic times.  It is vital to both rental and resale that a property stands out and can be distinguished from the hoard.  Additionally, if the investor plans to rent the property, economic downturns can be effectively mitigated by requiring longer-term leases from tenants.  This provides legal insurance of the investor’s level of income over the course of the lease, regardless of the economy.

Unforeseen problems can easily throw a wrench in the wheels of profiting off of real estate investment.  Some such problems include environmental contamination and system failure on the property.  Simply speaking, if the investor does not notice these problems at the time of purchase, they are sure to arise eventually once ownership is established, and they will reduce the value of the property (or in some cases make it uninhabitable altogether).  It is of vital importance, therefore, that an investor have the property thoroughly inspected before purchase for such environmental problems as asbestos or lead paint contamination, or more systemic problems such as heating and air-conditioning failure.  If a thorough inspection is performed, the investor can rest relatively assured that fewer unforeseen problems will arise once he owns the property.

Although there are countless risks in any business endeavor, real estate investment included, these are a few of the major ones which can be relatively easily managed through thorough preparation leading up to a purchase.

Dealing in foreclosed homes and buildings can be an excellent avenue for real estate investors to make substantial profits, if the right approaches are employed.  A foreclosure occurs when a piece of property is used to secure a loan—this is called a mortgage, and usually occurs through a bank—and that loan cannot be repaid in a timely manner by the property’s owner.  The bank reserves the right to foreclose the loan and acquire the property as compensation, at which point the bank or creditor generally attempts to resell the property in a public forum to secure the money that was lost in the foreclosed loan.  Typically, foreclosed homes and properties are not in excellent condition—otherwise the owner would simply have sold the property in order to repay their debt to the bank.  Combine the often-poor condition of these properties with the fact that the bank tends to be more concerned with making back the money it lost (as opposed to devoting the resources to try to profit on the transaction), and the result is often the sale of the foreclosed property at a price well below the market value.  With a little work, a real estate investor may seize this opportunity to purchase cheap property, and in turn make a profit on its resale or rental.

Foreclosed properties are most often sold in public auctions.  A savvy real estate investor, who understands the direct relationship between increasing variable interest rates and foreclosed loans, will pay close attention to their local economy and market to find opportunities to purchase inexpensive property.  If they are successful at an auction, they have most likely achieved one of the primary goals of real estate investment: purchase property below the market value.  At this point, the investor will have options as to how he intends to sell or rent that property at or above the market value (therefore earning a profit on his investment).  Which option he chooses will be a matter of the condition, location, and context of the property, as well as the investor’s personal preferences.

One classic strategy is to improve the quality of the real estate, enabling the investor to sell the building or land at an increased price.  This tends to be the most labor-intensive approach, as it requires actual work towards property management and improvement (or at the very least contracting actual work) to make repairs, renovations, updates, etc.  Obviously, as the condition of the real estate increases, so follows its value.  Once the investor feels he can sell at or above the market value, based on the improvements made, he will attempt to do so for a profit.  This processing of buying, fixing, and selling is often called “flipping” a property, and although it is risky, it can be extremely lucrative if managed carefully.

Another option is to essentially employ the same strategy of purchasing and fixing up a foreclosed property, but in lieu of reselling, the investor may choose to retain his investment while still making marginal profits.  This is done by renting the property to a tenant.  Again, the value of the property is a function of the property’s condition, so the more improvements that are made to the home or land, the more the investor (or in this case the landlord) may charge for rent.  While the investor may not earn one lump-sum profit as with resale of foreclosures, the rental process allows him to retain and profit marginally from his investment over as long a period of time as he chooses.  Whichever strategy the investor employs, the same rule applies: purchase under the market value, sell or rent above the market value, and profits will be earned.