Conventional wisdom dictates that if you want to make a purchase with money you don’t have, you go to the bank to get a loan.  It’s a time-honored system used by thousands of Americans every day.  But it consumes an enormous amount of resources, either in the form of your actual monetary payments, the amount of time and energy put into appeasing the bank, and the opportunity costs of not borrowing more cheaply.  Instead of rushing to the bank to fork over your money, why not try to find private investors?  Although it requires a bit more cultivation of relationships on the part of the real estate investor, the benefits of acquiring private funding are myriad when managed responsibly.

The most convenient thing about a private loan is that it’s fast.  There is no bureaucratic or administrative process to wait for—as soon as you reach an agreement with your lender, the money is yours.  Presenting that cash up-front and in-full is a reliable way to buy fast and at a discount.  Second, credit is not involved.  This means two things: 1) you do not need to have good credit to secure a private loan, only the ability to pitch your idea effectively, and 2) the loan will not follow you for the rest of your life by showing up on the credit report.  For an investor, debt can be crippling, and acquiring funding without affecting credit is a very valuable skill to learn.

One other advantage of private versus bank loans is that there is no limit imposed on the amount of funding provided.  In other words, you may be approved for a bank loan, but not for one in excess of $20,000.  If you can find someone with the demand (funds and will) to support your investment project, then you can ask for as much money as you deem necessary or fit.  Further, rather than jumping through the legally-enforced hoops of a bank loan, the private loan allows you to control your environment, by actually participating in the drafting of the contract, rather than merely reading and signing it.

Perhaps the greatest advantage offered by the private loan is the tremendous flexibility it allows an investor.  Especially in the world of real estate and investment, having cash in your pocket allows you to play by whichever rules make sense to you.  It always affords you an exit strategy without leaving unfinished business with the bank.  It means you can make offers on properties with the confidence that you are the buyer who will show up with the cash in hand.  And it is much cheaper than having an investment partner, who will invariably take a larger share of your profit than a simple investor.  If you can, work hard to cultivate your relationships with private investors, which may ultimately prove profitable for your business.

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http://www.indianainvestmentpropertygroup.com

http://www.practicallyfreehouses.com

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Most people assume that when someone fails as a real estate investor, it is because they couldn’t do enough deals to keep their business afloat.  Often, it is exactly the contrary.  Many amateur or unwise investors simply don’t know how to turn deals down.  They end up buying everything they can get their hands on, regardless of its merit as a profit-generating investment, and they wind up drowning in debt and unfulfilled responsibilities.  This, obviously, can be crippling, and is a primary force driving bad investors out of the business.

For those of us left behind—or at the very least those of us clinging for our lives to stay in the game—it is of critical importance that we learn how to pass on the offers that will ultimately hurt our businesses.  Here are some tips to keep in mind.

The first and most important thing to remember is to keep the bottom line in mind.  Although this sounds cold, calculating, and perhaps inhuman, it is the best way to earn a reliable income.  Keeping the bottom line in mind involves the coincidence of two behavioral tendencies: thorough research and emotional detachment.

Thorough research means knowing a property inside and out (quite literally) before buying it.  It means knowing exactly where the value is, exactly what is going to cost money down the line, any hidden expenses, taxes, maintenance, etc.  If it is your first time buying a home (or anything less than your tenth!) you will need the assistance of an expert in figuring out exactly what the property costs—beyond what’s written on the contract.  Once you do your research, you can draw up your own set of numbers which can serve as a tool of comparison during the negotiating process with the seller (it will also demonstrate that you know your stuff, and are not to be taken advantage of!).

Emotional detachment is often a function of experience in the field of real estate, but that doesn’t mean it’s not something you can be aware of and aspire towards in the early stages of your career as an investor.  This is the notion that you cannot simply go around buying all of the properties that you like (you might be amazed at how many investors do this—you probably wouldn’t be shocked to hear how few of them are successful though).  It is important to love what you do—that is the only way to be sure you will do a good job.  That being said, after a few forays into home-ownership, it becomes apparent that when you tour a home for sale, you are evaluating nothing more than the home’s location, structural integrity, and price.  That is to say, everything else (all of the cosmetics and amenities), can be applied in whatever manner the buyer sees fit.  In other words, make sure that if you fall in love with the home, you are not simply falling in love with what the previous owners have done to it (you can decorate any property any way you want).

Keep the bottom line in mind, don’t become overly attached to any properties you tour, and learn to say no by default.  Saying, “No” should become such a habit that when you find the right property to buy, you should have to literally convince and remind and drag yourself to finally say the word “Yes”.  This will prevent deal saturation and overextension of your resources.

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http://www.indianainvestmentpropertygroup.com

http://www.practicallyfreehouses.com

Based out of Indiana, Jay Redding is a real estate entrepreneur, consultant and educator with experience in residential and commercial investing.

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This beautiful home has under gone a lot of work. It now has hardwood floors in the living room and the eat-in kitchen. Brand new windows, new carpet, new roof, new electrical, new plumbing, newer siding, a finished basement, a two car de-attached garage and is ready to be moved in to. Mibor.com listing # 21160783 Aspire Real Estate, LLC

Here is an example of a Tax Lien that RF Tax Liens, LLC acquired in the 2010 Marion County Tax Lien Sale. The one year redemption period ended and the deed transferred. The house sold to one of our investors and the rehab done by RE Repair and Remodel just finished and the investor is now making this beautiful house available to the public. Click here to see some of or other projects.

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Most of us in the business of selling real estate are unsatisfied with our ratio of listing presentations to sales. Ideally, we’d all like to sell a house every time we present one, but obviously it doesn’t work that way. In reality, there are ways to maximize the use of your time by closing deals on more of your presentations. The key, in many cases, is simply persistence.

Everyone has had the feeling of wrapping up a really good presentation, and sitting down to talk it over with your prospective buyers. You come to the table confident about the tour you’ve given and the response and interaction of your customers, and you’re ready to do a deal. But you sense their hesitation, and when it comes time to talk brass tax, they begin to pull away. The most common line is, “We need to think about it.” Clearly, there is nothing wrong with thinking about a major purchase, and you should encourage your buyers to consider the decision seriously before signing any contracts.

But the mistake many investors/sellers make is to allow the buyers to simply walk away when they say they need some time to think. Whether or not you expect a call back from them eventually, allowing potential buyers to get up from the table and leave is a resignation of failure on your part; and while many people consider persistence in sales too be tasteless, keeping your customers interested and engaged can be done both tactfully and gracefully.

One of my first observations of sales as a kid was watching a sales manager at a fitness gym. His job mostly involved employing borderline sales tactics to sell memberships, but that experience offered some valuable fundamental lessons about sales which can be applied in any industry—but particularly in real estate sales. You never, never tour a new customer and let them leave. When they say they want to think about it, you offer to think it over with them. To hash out all the things holding them back from moving forward with something they want to do for themselves (after all, they got up and came to the gym, or attended your listing tour, or sought out whatever else you may be selling). Offer to discuss the issues, to figure it all out together, now.

If not approached tenderly, this effort to maintain involvement can understandably be mistaken for prying into the buyer’s personal affairs, but you can always appeal to your experience with helping buyers and sellers through many transactions to encourage your customers to open up and share with you.

You will be surprised at how often simply keeping the conversation moving along (as opposed to allowing buyers to get up and walk away) can open the doors that ultimately lead to a sale. As silly as it sounds, sometimes a buyer wants to feel wooed, like you care enough about their reasons for buying to get involved and help them work through their issues by providing information and expertise. After all, you are a professional, right?
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http://www.indianainvestmentpropertygroup.com

http://www.practicallyfreehouses.com

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One of the most frustrating elements of real estate investment is being so close to a sale that you can hear the money being deposited into your account, and then losing it because you failed to make some simple consideration that ended up costing you thousands of dollars. Here are some of the countless very simple mistakes that could corrupt your investment property sale, but that can be readily avoided.

Not having good enough curb appeal. This means your home or property simply doesn’t look as appealing as the surrounding properties from the curb. It is a function of landscaping, the outside of the home, the mailbox, etc. Generally, people drive by a property they are interested in before stopping to go inside. If, as they drive by, they are not appealed, then they will never come inside, and there will be no sale. Make sure that if you walk outside and look at your neighbors and across the street, your home looks just as nice—if not better—than the comparable homes surrounding it.

Another mistake a lot of real estate investors make (especially when trying to sell in a hurry—and who isn’t?) is showing the property before you’ve finished working on it. Bringing someone into a dilapidated home and saying, “I’m going to paint, refurnish, and add carpeting,” is encouraging for the buyer to hear, but they are not likely to be an expert at visualizing what that will look like when you are done. More likely, they are just looking at a dilapidated home and listening to the empty promises of a seller. Don’t waste your time and energy showing the home until you are able to present it in the way you want to sell it, and in the way your buyer wants to buy it.

Once you have a buyer express genuine interest in purchasing your investment property, stop selling the home. The old adage, “quit while you’re ahead” is perhaps nowhere more applicable than in real estate sales. Many times, an owner will oversell a property beyond the buyer’s tastes (eager to reinforce the sale), to the point that an interested buyer walks away empty-handed and annoyed. Don’t make this very frustrating mistake.

Another common mistake is to let the buyer be present during the appraisal process. There is nothing wrong with getting an appraisal (in fact it’s usually required), but when the buyer follows the appraiser in-tow, listening as an expert picks apart every little flaw in your home, they are bound to become a bit disenchanted. There may be nothing seriously wrong with the property, but walking around for two hours listening to fault after fault, complication after complication, is bound to deter any buyer.

It may seem like common sense, but if you know there are problems with the property, get them fixed before having an appraiser or inspector come. This is because if you can hire an all-purpose handyman to come fix whatever problems he can, the appraiser may not notice something he otherwise would have been inclined to investigate. When an appraiser notices a problem, more than likely it will require hiring someone who is certified (and therefore expensive) to fix it. Hire a handyman first take care of the simple items to avoid having to hire a licensed professional later. This will save you money up-front, but also avoid blemishes on the appraiser’s report.

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http://www.indianainvestmentpropertygroup.com

http://www.practicallyfreehouses.com

Based out of Indiana, Jay Redding is a real estate entrepreneur, consultant and educator with experience in residential and commercial investing.

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One of the real oddities of life occurs when kids can—simply put—just do stuff. Have you ever experienced this? You may struggle and struggle to learn a new skill, and you turn to the left and see a 6-year-old pick it up and master it in five minutes. Sometimes we chalk it up to the increased synaptic plasticity associated with youth, sometimes we call it instinct. But you might also say that, somewhere along the line, those of us that aren’t kids lost the inherent ability to do some of the things we may once have done naturally. Now it’s time to observe, and learn those lessons once again.

The classic example of a kid’s ability to stump an adult (other than perhaps learning languages and new video games) is a kid’s simple ability to get what he wants. This is not done artfully, skillfully, or even tactfully; rather, kids are successful be means of the bluntest, broadest, but perhaps deadliest tool in the arsenal: persistence. Consider:

CHILD: “Can I have this toy?”

MOTHER: “No.”

“Please? Can I have it?”

“No.”

“But I want it!”

“No, honey.”

“I want it! I want it! I want it!!”

“No! Stop it!”

“I want the toy NOW!!!”

“OK, I’ll get you the stupid toy. Stop screaming.”

Sound familiar? The mother didn’t do anything wrong, but the child did two things right: relied on his relationship with his mother, and refused to give up (despite his repeatedly rejected requests).

This is a skill set many investors have lost, and need to find. Implemented with perhaps a bit more control and precision than the child in the above example, persistence and the establishment of a rapport with your negotiating opponent can be the recipe for getting exactly what you want out of the negotiation. Most investors now realize that negotiating means compromising, and you must be prepared with an asking price and a more reasonable price for which you would settle. But where those investors go wrong is by jumping too quickly to their compromise price. Instead, they should learn from their children or the former version of themselves that sometimes when you ask two, three, even four times for the exact same thing, you might just get lucky.

This becomes especially true when you’ve established some sort of relationship with your opponent (not necessarily friendly, but he shouldn’t hate you going into the discussion). This ensures that—provided your opponent has some degree of conscience—it will be more difficult to write off your repeated requests (just as it was for the mother to refuse her son over and over). If your opponent has no connection to you as a person (rather only as an opponent), it will be infinitely easier for him to simply get up and walk away from you.

The combined effect of this relationship with a bit a juvenile persistence is often your opponent’s—albeit reluctant—willingness to accept your offer. And the difference between achieving your asking price, and settling for your compromise price, is the very difference between being an average investor, and a great one.

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http://www.indianainvestmentpropertygroup.com

http://www.practicallyfreehouses.com

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Sellers of homes employ myriad strategies for advertising their properties to buyers.  The trick is to know how to compile all of that information, and where to look to effectively and efficiently find the best deals on the market—and there is no shortage of great deals in a buyer’s market like this.  The first place to look is generally the Multiple Listing Service (MLS), but don’t count out For Sale By Owner lists and other, even more grass roots approaches.

Historically speaking, the MLS has been producing good deals for years.  Essentially, the MLS is an active list of every property listed for sale by a broker—that’s a lot of properties!  With so many houses for sale, obviously the MLS is not a list of great deals.  Like most other things, it exists on a bell curve, where a few deals are terrible, most are just about average, and a very few are great.  Don’t pull up the MLS and expect to instantly see a list of money-makers.  It becomes your responsibility to filter the enormous list down to the properties which meet your business’ specifications, which have highly motivated sellers, or which raise some other flags indicating an opportunity to profit.

The MLS is generally considered the most trusted tool in the business.  It is real estate in the digital information age, a continually updated gold mine of details and photos about hundreds of thousands of properties which can be selectively filtered.  You can see the condition and specification of the homes, and in most cases peruse photos.

But if you want to cut to the chase, and get rid of the MLS brokerage middle man, you can always turn to one of the many For Sale By Owner (FSBO) lists.  This comes with caveats, and the buyer must be forewarned of these issues before proceeding with FSBO lists.  First and foremost, you are now dealing with a market of sellers who were not willing to pay a 6% fee to have someone sell their home.  This could be a good or a bad thing: either they are cheap and it’s going to be hard to get a good deal from them; or they are destitute and highly motivated to sell.  They could be experts and not need any assistance selling, or they could just be testing for offers and not willing to pay a fee (because they are not actually ready to sell).  Whatever the reasoning, always be careful when dealing with someone willing to cut corners to save money.

Just as a smart market investor would not pour all his money into one investment, nor should you put all your resources into following one strategy or the other for finding good deals.  Get creative with the internet, with fliers, posters, etc., making targeted out reaches to specific neighborhoods and property types that meet your business profile’s needs.  Use multiple strategies, get on the phone, put your name on every list, and never close the door on a lead before you’ve had a chance to explore whether or not it could be a money making deal.

Tell us what you think by leaving a comment.  If you would like to be notified when new posts are made to this site, be sure to subscribe to the RSS feed.

http://www.indianainvestmentpropertygroup.com

http://www.practicallyfreehouses.com

Based out of Indiana, Jay Redding is a real estate entrepreneur, consultant and educator with experience in residential and commercial investing.

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There is no catch-all evaluation of current real estate conditions.  That is to say, although we hear a lot these days about the “buyers’ market”, it is impossible to utilize one trend as a means of describing an entire national or international market characterized by complex idiosyncrasies.  Here is a list of factors which must be considered when attempting to gauge the climate of your market.

The first and most obvious of these parameters is pending home sales, which gives a since of just how much business is being done in a given market.  It is not as useful to look at the raw number of sales as it is to look at the changes and trends over the course of the past few years.  For example, although it’s a difficult time economically in this country, pending home sales nationally have increased by 17% over the course of the last year (indicating a rise in deals done and the start of a healthy comeback of the real estate industry).

In addition to pending sales, you will want to take into account how many of those sales are new vs. existing homes.  This gives a sense of what’s happening in the community—whether or not projects are under way, buildings are being built, communities being developed, etc.  Existing home sales are good, but new home sales mean your community is healthy enough to grow.

Inventory is a very important parameter, as it gives the investigator an idea of how many homes are listed for sale (which can be compared to the number of homes sold in the same time period for a sense of market efficacy).  A lot can be gleaned simply from studying how many and what types of homes are currently on the market.

The next big feature of the housing market to analyze is interest rates.  Although when taken alone, interest rates don’t provide a clear picture of what’s happening in the market, they do give a sense of the affordability of home ownership.  When mortgage rates are as low and attractive as they have become over the last few years, buyers have added incentive to pull homes from the overstocked inventory of the buyers’ market.

Finally, no analysis of the real estate market would be complete without including a consideration of the economy in general.  In the same area as your real estate market query, you’ll want to know the income level and unemployment rates, as well as any foreclosure statistics.  This will give you a good sense of the amount of disposable money available in these communities, and will provide insight into maximizing your opportunities to get a good deal.  Low-income combined with debt makes for a very dangerous cocktail, and although it can be a sign that the economy is suffering, such motivated sellers can provide great opportunities for savvy buyers.

Wherever you are looking to invest in real estate, do not be swept up by too many reports of national real estate trends.  The fact is, although many of the economic problems currently being faced by this country are ubiquitous, real estate success and failure is a local phenomenon.  Just because it’s a slow economy, doesn’t mean it’s not a great time to jump in!  And just because everyone is reporting that it’s a buyers’ market, doesn’t mean any deal you find is a good one!  Be careful and conscientious, and have an understanding of the statistics and trends pertaining specifically to your local real estate market before making any investment decisions.

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http://www.indianainvestmentpropertygroup.com

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For the real estate investor, finding buyers in a slow economy is often a bigger challenge than finding sellers.  Buying a house is a financial investment that some people are afraid to make in a slow economy.  However, there are buyers out there who you need to attract.

A good first step is to hire a realtor that has extensive experience in selling the type of home that you have and is a full time realtor.  Realtors are especially helpful if you are flipping properties because they know that you will have consistent product for them to sell. As a result, they should be constantly marketing for potential buyers and keeping those potential buyers abreast of the properties that are in the pipe line.  This will increase the likely hood of having multiple buyers in different stages of the buying process at the same time and increasing the odds that one of those buyers will be the right one for your property. You want a realtor that is pro-active and aggressive.  Just putting an ad in the paper or on the MLS is not enough: the realtor should be holding open houses, sending out flyers to the community, finding local hot spots with high traffic and have an extensive network of lead generating connections. In addition, they should be technologically adept, posting on craigslist, backpage, Ebay, and the MLS or have a system already in place that does this for them because the majority of potential buyers now look on the internet first before ever contacting a realtor.

You can also create relationships with realtors who are moving properties in your area by inviting them to a showing of the house before you list it.  You can offer an extra bonus if they bring a buyer in a certain time frame, but even if they don’t, it is still advantageous to create a working relationship with the local realtors.  It will give you credibility if you plan to do more sales in the area, as they will know who you are and the quality of your properties.

Generally, expect a much longer timeline to find a buyer in a slow economy.  Make sure you budget these additional expenses into your overall evaluation of the property before you make the purchase. Keep in mind as well that there will be more houses on the market and greater choices for the buyer.  So if you want to get your house sold quickly, develop a plan to make your house stand out in the crowd from the very beginning. If the house is still taking a long time to sell, reducing the price may help.  But make sure that when you initially price the house; that you are comfortably in the local market range and not over pricing.  Over pricing in this economic environment could mean the kiss of death.  Check up on your realtor to ensure that he or she is being as aggressive as possible, and evaluate feedback from showings.  What are you hearing on a repeated basis?  Is there anything you can do to address the concern?  Listening to you potential customer feedback will provide insight as to what you may need to adjust. Often, it is only something minor and thereby finding the buyer you’ve been waiting for.

Tell us what you think by leaving a comment.  If you would like to be notified when new posts are made to this site, be sure to subscribe to the RSS feed.

http://www.indianainvestmentpropertygroup.com

http://www.practicallyfreehouses.com

Based out of Indiana, Jay Redding is a real estate entrepreneur, consultant and educator with experience in residential and commercial investing.

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