5 Pitfalls To Avoid When Searching For Your Next Investment Property

5 Pitfalls To Avoid When Searching For Your Next Investment Property by Joel Teo

Finding a bargain investment property on paper is only half of the process of property investment. The other half of real estate investing is going down to the property to examine the real estate investment property physically for defects either in terms of the construction and legal title and other liens that can be on the property. You do not want to spend lots of legal costs later to undo the bad lemon you bought into. This article will highlight five possible things to consider when searching for your next investment property.



Firstly, unless you find a property that is really run down and you want to tear it down to its foundations, you want to look out for properties that might have potential electrical and water piping problems. The reason why this is critical is that, wiring and water piping is usually hidden behind walls and other furniture fixtures and repairing them can be a very costly affair since you have to hack into the walls and run the piping and wiring if the problem is very serious. If you are new to property investing try to bring a electrical engineer along with you when you are doing some property inspection.



Secondly, foundation problems are usually harder to spot. When walking around the property, look for cracks appearing at the side of the house and the foundation that goes into the ground. Look for large unusual holes found at the side of the property and cracks on the exterior paint of the building. You might want to bring a civil engineer and a contractor along to figure out how much it would cost to fix the property if you suspect the repairs involved will be substantial. You can also bring them along to give a “grim estimate” to the house owner and bring down the cost of the property.



Thirdly, roofing problems can be a persistent nightmare to you and your potential tenant if you are purchasing the real estate for tenancy purposes. When inspecting the house, look around the ceiling near the windows and around the edges of the walls to look for new paint or yellow spots or cracks with water in them. Most sellers would be smart enough to eliminate the water bubbles after a heavy rain when trying to sell the property, but it is always important to figure out if there is a major leaking roof which might cost you are lot into repairing it. Use this defect to negotiate the price of the property further if you are interested in the property.



Fourthly, another reason why the investment property in question might be a bargain might be because there are legal problems associated with it. Common ones include, multiple owners that cannot agree whether to sell or not. Litigation here would be futile and you should avoid such property once you learn about it.



Another problem might be a lack of clean title. Did you know that the seller can be selling you only the building without the land or maybe there are existing tax liens on your property or some other liens that can prevent you from getting good title to the property? Spending some time chatting with a reliable real estate attorney to learn about common real estate problems in your area can save you lots of legal problems later.



Fifthly, bankruptcy of your seller or one of the part owners of your real estate may depending on the legal proceedings of your state affect your ability to transfer title quickly. Most states make it a requirement that the receiver of the bankrupt has to agree so pay careful attention to the bankruptcy legislation of your state. That being said, sometimes the banks are willing to sell you at a bargain so as to recover the bad debts quickly so do your homework before purchasing such an investment property.



In conclusion, these five pointers can be used as a starting point for you to evaluate your property investment. Spend some time to think rationally about the properties that you have seen and see if they have any of the above flaws and consider if you want to continue purchasing them and whether the costs that you may incur in fixing them will justify the discount of the property to the market value. Above all, take massive action today and pursue your property investment dreams.



Joel Teo runs the property investment article directory that can be found at The Property Investment Resource site



Article Source: www.goodinfohome.com

Real Estate Investors Beware!

By Robb Beltran

Can you really make money in real estate? You bet you can, but you better beware of what you’re getting yourself into. I have been investing in real estate for years now and I can’t tell you how many properties I have bought from burnt out landlords or young couples that really started too soon.

Like anything the key to being successful in real estate investing is education and practice. I have had some really good deals and others I thought were going to drag me down to the deepest of money pits. So for what it’s worth here’s a few observations I think will be helpful to investors just starting out.

Beware of the late night infomercial real estate gurus when they say you can build wealth in real estate with only five or ten hours a week. To be successful you need to be on all the time. It’s all about marketing and following through and networking and did I mention marketing. I am astounded every time I meet a so-called investor and ask them for a card and they don’t have one. How is anyone supposed to know you buy houses or invest in real estate if you don’t tell them every chance you get?

Beware of rentals. Land lording is a pain. I don’t care if you have a management company in place or not you are always going to get calls about something being broken or some inspection the city wants to run you through. New investors should especially be aware that almost all of the tenant/landlord laws favor the tenants. If you want a taste of what can happen rent the movie “Pacific Heights” with Michael Keaton sometime. You may never buy another rental again. Remember peace of mind could cost you more than great cash flow.

Beware of contractors who want to be paid by the hour and not the job. Unless you are constantly there with them, they will take you for a ride every time. Make them sign a must be completed by clause and if they don’t complete the job by the said date, your cost should be discounted.

Beware of homes sold at sheriff sales or on the courthouse steps. Yes you can find some great deals there, but make sure you do your due diligence and always try to inspect the house first. Judgments and out of this world repair costs could chomp away at your potential profit quickly. I like buying the foreclosure properties after the bank gets them back. They are still “As Is,” but you can always inspect them and have an out if you use a realtor. Better safe than sorry right.

Beware of taking advice from someone who doesn’t own any investment property, rents or swears he knows of the next big market if only he had the money.

I have learned and still believe you can never learn too much about something so when it comes to building wealth though real estate education really is the key. Whether you are a beginner or a seasoned investor the Real Estate Info Network may be just the tool to take you to your next level of investing.

The Real Estate Info Network promotes real estate education through real estate seminars, e-books and real estate investing. Learn how to make no money down deals, profit in foreclosures and short sales and how to rehab your way into real estate riches.

The Real Estate Info Network is also a great resource for free Real Estate and wealth building articles. The Real Estate Info Network really is your connection to building wealth through real estate education.

Robb Beltran is an active real estate investor and publisher of the Real Estate Info Network. The Real Estate Info Network promotes real estate education through real estate seminars, e-books and real estate investing courses.

www.realestateinfonetwork.com

www.belstarproperties.com

How to Profit From Abandoned Properties that Need No Rehab

Upcoming Tele-Seminar With Abandoned Property Expert Reggie Brooks How Do You Get Super Motivated Sellers, Who Own Abandoned Properties That Need No Work and Are Willing to Sell for Cheap?

If you can buy properties at rehab prices, but don't have to spend the cash rehabbing, what does that do to your profits? It doesn’t take too much brain power to figure this one out.

Abandoned Property Expert, Reggie Brooks has figured this one out and he’ll be covering this and a whole lot more about profiting and wholesaling abandoned properties on a TeleSeminar Tuesday August 22, 2006!

Read More and Register Now at:

Robb Beltran
www.realestateinfonetwork.com

“Get Abandoned Property Owners Calling You!”

Upcoming TeleSeminar With Abandoned Property Expert Reggie Brooks
Register, Read More About Each Call: http://www.AskYourMembers.com/brooks/promoRIN.htm

Cash in On the Ever Increasing Abandoned Property Market WheYou Can Get Properties WAY UNDER Value!

As an investor, new or seasoned, you know that abandoned properties can very often be purchased well below value and that represents huge potential profits for you.

The problem has always been getting in touch with these abandoned property owners. BUT NOW, there is a way to get these property owners CALLING YOU!

TeleSeminar Host Norm Reid Will Interview Abandoned Property Expert Reggie Brooks on our next TeleSeminar.

Here is some of what will be covered:

1. How to use the Internet to cash in on the ever increasing abandoned property market.

2. How to profit from properties MOST INVESTORS, consider worthless

3. How to use creative financing strategies that work with abandoned properties that don't work with most other types.

4. How to get Realtors who deal with these type properties to send you leads.

5. How to make thousands of dollars in the next several weeks, just by "wholesaling"

6. How the "Big Boys" are finding properties by the truck load that allow them to do 15-20 deals per month!

And More.

Read more about this TeleSeminar and reserve your place Now:

http://www.AskYourMembers.com/brooks/promoRIN.htm Publish

Finding Your Place In The World of Real Estate

There is never a bad time to begin considering becoming involved in the world of real estate. Although there are times when the economy will dip down, meaning the real estate market will take a short dive, real estate is an ever growing, building world of potential financial gain. There will never be a time in the United States where people are not seeking to find shelter, a place to call home, a place to retire or simply a place to go on vacation. This always makes real estate a lucrative market where those who are willing to take the chance at plunging in to potential real estate investments, a real estate career or real estate purchases will almost always find themselves coming out on the good end of financial gain. Of course, involvement in real estate can be frightening because it involves taking a chance on a piece of property and hoping to see the benefits of the property in the long run, when the future is not known. As most real estate agents, investors and dealers will tell you, though, becoming involved in the real estate investment business has only added to their quality of life.

If you are considering whether or not to become involved in the real estate business, either as an investor as an agent, here are several positive reasons that investors and agents give to begin your career in the real estate business:

Job Freedom

Most jobs require that employees be in attendance somewhere near 40 hours a week, for a certain number of hours a day. There are many in the world, though, who just don’t get along with the typical routine of a 9-5 job and who find themselves feeling trapped by the mundane routine of this type of job. Working in the world of real estate gives investors the ability to see every day as a new challenge with something new going on. Since you are working on your own schedule, preparing your own house viewing days, closing days, and meetings with other investors, you have the freedom to choose when and where this will happen. You even get to choose exactly what part of the country you will begin investing in real estate, which can be anywhere from California to Maine. Remember that real estate does not have to be a full-time job and can take as little as thirty minutes a day to begin investing. Consider using real estate as a side job along with another full-time job until you determine if it is right for you. Many real estate investors started this way and ended up quitting full time jobs to take on real estate full time.

Financial Gain

Some of the most financially successful people in the world are involved in real estate investment. Whether through commercial property investment, renting of homes or apartments, or wholesaling and flipping houses, many real estate investors have made a fortune being involved in the business of real estate. This does not mean that the financial gain will come quickly or easily, but with a little investment on your own part, as well as a little hard work in searching for properties, repairing homes and dealing with the business end of the real estate, you can easily find yourself financially successful. Even if you don’t plan to work on real estate full-time, with just minutes a day, you can begin searching for homes and then investing in one home at a time, rebuilding that home and then reselling it for a profit.

Opportunities for Success

The best part about the world of real estate is that the amount of success you achieve in the investment world is entirely up to you. How much effort and energy do you want to put into succeeding? How much faith do you have in yourself that you can and will succeed? Remember that it only takes a few extra minutes a day, even on the side from a regular full-time job, to begin your investment dream. This will mean taking the time to find real estate investors or agents to work with, contacting financial institutions to help prepare your mortgages, searching for homes and actually putting in the time for repairs, but this can easily be done with a little extra time on your hands. Even starting with one investment property and building on those as you become more confident in yourself. Those who fail in the real estate world, fail because they have not made the most of their opportunities, and those who have succeeded have made the most of those opportunities!

I hope you have enjoyed this article. For more articles on real estate investing, to sign up for our free newsletter and listen to free weekly training teleconferences please visit my website at www.LarryGoins.com where you will also find free forms, documents, EBooks, Downloads and more. Also visit www.FinancialHelpServices.com for investor financing. You will also find wholesale properties for investors and can sign up for notification of new available properties at www.InvestorsRehab.com.

Are you "CLEAR" on What is a Good Deal?

by Attorney William Bronchick

So often beginning investors focus on real estate investing techniques that they lose sight of the important issue - is this a good deal? Learning to recognize a good deal takes research, education and, above all, experience. Here's a good formula to determine whether a potential real estate purchase is a deal. It's a simple acronym called "C.L.E.A.R."

CASH FLOW

Ask yourself, will this property cash flow? Well, that depends on a lot of factors, such as the strength of the local rental market, the interest rate on the financing and how much of a down payment you make. Also, it depends on whether it is a single family or multi-family dwelling. All of these factors considered, ask yourself, "will this provide income for me?"

Also, ask the question, "how will this property cash flow compared to other potential properties?" For example, a $150,000 house that rents for $1,000/month has a better income potential than a $300,000 house that rents for $1,600/month. A four-unit building that costs $400,000 may bring in $3,000/month in the same neighborhood.

Now, of course, whether the property will provide income to you begs the question of whether income is important to you. Is it? Do you earn other income? Do you need more income now, or is future equity growth more important? There's no right answer to these questions, but are all factors to consider when looking at a potential purchase.

LEVERAGE

Leverage is important in investing because the less cash you put down on each property, the more properties you can buy. If the properties go up in value, your rate of return goes up exponentially. However, if the properties go down in value and you have a lot of debt on the property, this can result in negative cash flow (see above). Since real estate is generally cyclical, negative cash flow is only a short term problem and can be handled if you have other income or a cash reserve to handle the negative. "Nothing down" investing is very attractive for the high-leverage investor, but should be approached with caution.

If you are a long-term player, leverage will generally work in your favor if the markets in which you invest appreciate in the long run and your income from the properties can pay for most of the monthly debt service.

EQUITY

Does the property you are purchasing have equity? Equity can take a number of forms, such as:

• A discounted price

• A potential fixer upper

• A rezoning opportunity

• A poorly managed property

• A foreclosure

There are many ways to create equity, but buying INTO EQUITY is your best bet. Find a motivated seller that wants out of his property and is willing to give up his or equity for less than full value. Or, buy a property that needs work that can be done for 50 cents on the dollar or less. In other words, if the property needs $10,000 in work, make sure you get a $20,000 discount on the price or better.

APPRECIATION

Buying in the right neighborhoods and in the right stage of a real estate cycle will result in appreciation and profit. However, timing a real estate cycle is difficult and can be very speculative. If you buy properties without equity or cash flow solely for short-term appreciation, you are engaging in a very risky investment.

Buying for moderate long-term (10 to 20 years) appreciation is safer and easier. Look at long-term neighborhood and city-wide trends to pick areas that will hold their values and grow at an average 5 to 7% pace. Combine this tactic with reasonable cash flow and buying into equity and you will be a smart investor.

RISK

Risk is a consideration that too few investors consider. Ask yourself, "what if my assumptions are wrong?" In other words, do you have a "plan B"? If you bought for appreciation and the property did not appreciate in value, can you rent for positive cash flow? If you buy with an adjustable rate loan and the rates go up, will this put you out of business? If you have a few vacancies, can you handle the negative cash flow, or will it break the bank for you? Expect the best, but prepare for the worst.

Remember, whenever you look at a property to purchase, think "CLEAR".
Learn more at http://www.legalwiz.com/cmd.asp?af=398676

The secret about credit that will change your life

From the desk of Thomas Kish at
http://m353.infusionsoft.com/go/cfsy/belstar6/

Hi,

In the next two minutes your going to learn something
about credit that most folks will never know.

It concerns the most profitable loophole in the credit reporting system.

Interested?

Almost everyone knows that a loan or credit card in your personal
name gets reported to the credit bureaus. And this borrowed money
shows up on your credit report.

The more you owe on your credit report, the lower your
credit score will be.

But pay attention now there is a way to get loans
and credit cards that NEVER show up on your
personal credit report. And here it is …

When you get a business line of credit or business credit card
*In The Name Of Your Business*, it will never appear on your personal
credit report.

So you can get large amounts of cash from the
banks I work with everyday without worrying about
your personal credit profile. You can then use this cash to do any
kind of real estate deal you find, and you assets remain confidential.

And you can start a business on paper for almost
nothing. Just pick out a cool name for your new
business and submit it on-line.

No matter how much cash you take out in the name
of your business, your credit score never drops.

So you could get up to $200,000 in cash advances from UNSECURED
new business lines of credit and use it for -

1. The down payment on a piece of real estate.
2. Rehabbing a property.
3. Paying cash finders fees or cash for keys to get control of a property.
4. Marketing and advertising costs to find motivated sellers.
5. Pay the utilities and monthly mortgage payments while you wait to sell
the house for a big profit.

This is the best way most people have ever seen
to get cash to buy real estate. Because, in effect,
the money is invisible.

Pretty amazing, stuff. But just the tip of the iceberg
on what you will learn when you start using
The Ultimate Real Estate Investors Guide at,
http://m353.infusionsoft.com/go/cfsy/belstar6/

----------------------------------------------------

Here are some common myths about your credit -

Credit Myth #1 : Checking your own credit can lower your
credit score. This is probably one of the most common credit
myths out there. When you or someone else accesses your
credit file, it is referred to as an inquiry. Your own requests
for your credit report, promotional inquiries by credit card
companies, and "checkup" inquiries by your existing creditors
do not affect your credit rating. An inquiry made by a lender
in order to evaluate your loan or credit application may lower
your credit rating, however.

Credit Myth #2: You have one credit score. This is another
myth that can be confusing for consumers. There are many
types of credit scores -- including those developed by the
each of the three major credit reporting companies. These
scores can vary, because sometimes the information in your
credit history varies from one company to another.

So it is wise to check your scores first before applying for
a loan. The FICO® credit score developed by Fair Isaac
Corporation is the credit score used most by lenders. It is
unique to each individual and takes into account such factors
as the length of your credit history, your debt-to-credit ratio
and payment history.

Credit Myth #3: The higher your salary, the higher your score.
Not true. In fact, your income and net worth are not reported
to any credit reporting company. Your score is based largely
upon the amount of debt you have and your payment history.
The more of your debt you pay off, the likelier it is that you'll
see a positive change in your score.

Credit Myth #4: Paying off debt will immediately increase your
credit score. This is something many consumers have difficulty
understanding. While paying down debt is likely to have a
positive impact on your credit score, it won't change your score
overnight. Creditors report their customers' payment information
to credit reporting companies on a periodic basis, so it may
take some time before payments you've made are reflected in
your credit score.

-------------------------------------------------

For more great information that you can really make money with …

1. Join me on one of my Fr.ee conference calls
(Watch your email for upcoming call-in times).

We host a variety of money making real estate
training calls every week!

2. Go get my simple 4 step trademarked system for getting up to
$200,000 in UNSECURED new business lines of credit at,
http://m353.infusionsoft.com/go/cfsy/belstar6/

This program is 100% money back guaranteed. So take it for a
test drive and return it for a full refund any time (up to one year)
if you are not delighted.

And please keep the FR.EE bonus items as a thank you for
you time and consideration.

You will never make a smarter financial move.

Go for it!

Sincerely, Thomas Kish
President of CashFlowExperts.Biz, Inc.

About Tom Kish.

Tom is an active full time real estate investor with over 7 million
dollars of real estate bought and sold in a two year period.

Tom Kish's skills as both an investor and a consultant are widely
recognized throughout the industry. He is rapidly gaining acclaim
for his trademarked investing system The Ultimate Real Estate
Investor's Guide.

His break-through program teaches the insider secrets of using
unsecured new business lines of credit instead of cash to
successfully invest in real estate.

There is no one else teaching anything like this simple 4 step
SYSTEM!

Frequently teaming up with other real estate professionals, Tom's
expertise is in great demand. You can catch him speaking live at
real estate expos and conferences all around the country.

As an accomplished entrepreneur with experience in multiple
franchise businesses, Tom is committed to helping others create
the financial security and balance between life and work they
seek and deserve.

CashFlowExperts.Biz, Inc.
Care of - XLR8 Media Inc
2658 Griffith Park Rd. #326
Los Angeles, CA 90039

Use Options To Minimize Risk And Maximize Profits

By Ben Innes-Ker

I received an ad call one afternoon. It was a woman named Leanne. She was married with three grown children. She wanted to sell their house, so I went through the process of screening the call and getting the relevant information about the house, the mortgage balances, and what they wanted. It was a nice house, 3/1, 1300 sf, basement, on 2.5 acres, no repairs needed, just outside a town called Spencer, Indiana. They had two mortgages totaling $64,000 and were $4,000 behind in payments. The property was appraised one year ago for $97,500. We talked for a while and she informed me that since they had gotten a 2nd mortgage, she and her husband Greg were having difficulty staying current on the payments, and Greg hasn't had much work recently so now they are really behind and have to do something. Leanne asked me what I would pay them for the house. I asked her what she was looking for. I believe the conversation went like this:

"Well, if we could sell the house and get $85,000 for it we'd go ahead and do that."

I said, "$85,000. For a cash sale, Leanne, that's a bit higher than I can go. If I did pay you cash and paid off your two loans, are you sure you couldn't go any lower than that?"

"How much lower?"

I told her, "Well, based on what you've told me all I can really do here is save your credit by paying off your underlying loans and back payments. I might be able to go a couple of thousand higher but that would be about it."

"So how much is that?"

"Now this is based on your information now. You said that you had $64,000 owing and were $4,000 behind in payments. If I paid those off and added on a couple of thousand for moving money then that would make it around $70,000."

"Is that what you would pay? $70,000?" she asked.

"That's right Leanne. $70,000 is what I could pay."

Long pause.............. longer pause..................and then a big, long, sigh from Leanne.

"Well how long would this take?" she asked, breaking her silence.

I said, "Well, the way I would have to do this Leanne, is to option your house. You see $70,000 is more than I'd be willing to come out of my pocket with to buy the house, but I would be able to finance it for that much. It would take about three weeks before I get things organized on my end to exercise my option and then another three weeks before we close."

"Six weeks, huh?"

"Yeah. Does that sound like it's going to work for you Leanne?" I asked.

"Well, it could be OK. I don't know. We were really looking for more but let me talk to my husband, Greg, and we'll talk it over. I'll tell him what you said and we'll get back with you tomorrow."

"OK Leanne. When do you think you'd be calling?"

"Oh, probably in the afternoon. Talk at you later."

"Bye Leanne."

And we ended the call. I thought the deal sounded good, but I didn't know what the husband was like and anticipated he would come back with all sorts of objections about the option. What was it? How are we protected? Why can't you pay more? Rather than worry about it I reviewed the answers to all of those questions and then set about finishing what I was doing before the call.

The next day at about 2:30 pm the phone rang. It was Leanne. She told me she had spoken to her husband about it and they had decided to go ahead with the $70,000 Option deal I had proposed to her yesterday. They wanted me to come out and explain it to them a bit more and get the paperwork signed. I made an appointment for the next day at 5:00 pm.

The following day, I showed up at their house in Spencer and after some small talk began to tell them about the option contract and what it meant, that it gave me the right to buy but not the obligation to, and that they also had the right to continue trying to sell the house on their own if they wanted to do that, that clause is written in the agreement. I explained to them how I was going to sell the house with owner financing and then sell the note for cash to pay them off.

They agreed with me that it should be easy to sell on a Contract, but they wanted to know how long it would take me. They then informed me that the house had been listed for nine months and hadn't sold. I didn't know that. Well, I couldn't be sure, but I expect it would take about three weeks to find my buyer. I would need a three month option, but it should only take about three weeks to find the buyer. I then went into an explanation of how I would market the house, how I qualify all my buyers first and then only call them for a walk-through when that's the only thing left to do. No pesky appointments.

All of this, including a bit of tangential chatter, took about three hours. But at the end of it all, Leanne and Greg signed the agreements and seemed to be comfortable with me and my plan. They asked one last time if I could pay them a bit more than $70,000. I explained that this was the most that I knew I could deliver to them. I could agree to pay them more but if I did that I would be dealing with unknowns and it could cause problems later if I wasn't able to deliver their price. So rather than get their hopes up with a higher price, I would prefer to stick with the promises I know I can deliver on. They seemed happy with the explanation.

So I drove home with the signed Option Agreement, pretty happy. The next day I ran the following ad:

Spencer - Contract. Owner
Will Finance Gorgeous 3br 2 ba
home on 2.5 ac. $105,000. $900/mo
+ Down Pmt. Call 333-4455

I set up a voice mail box to pick up the calls. The greeting repeated all of the information in the ad as well as the address and told the caller to drive by the property and, if interested, to call back and leave a message with their name and phone number.

After two days I began getting calls. Most people wanted to know how much down was needed. For each of these my response was "how much do you have?" They would say something like a thousand dollars and then they would say they couldn't afford that high a payment and they had credit problems and they didn't like the area. After two weeks, I'd spoken to about 30 junk callers like this, but also had about five people with good enough income and credit and varying amounts of acceptable down payment (5%+). After three weeks of screening calls I found a lady who said, "Hey that's a nice house. I want it." Her name was Candy and her husband was Charles.

I took an application over the phone and prepared to pull her credit. Candy and Charles made a combined income of $6,000 per month, easily covering their debts. I asked her how much she had to put down, and she said none. She didn't have anything to put down. I told her I needed something to show their commitment to buying the house, and with her income she should have had something saved, what was going on? She went on to tell me how they had just been through a very long and drawn out child custody battle with Charles' former wife, had won the custody of the two kids but had been cleaned out by the attorney fees. I told them I needed some sort of down payment, even if it was just symbolic. She said she had none. They had a good income but no cash right now, that's it. I asked what her credit was like and she said perfect. So I told Candy that I would give her information to the note investor who would be buying the mortgage to pull her credit and review her information. If the investor sees a high credit score on the report and OKs buying the note with no down then we could do the deal. It would take a day or so but I would get back with her when I got word. She sounded even excited when she said, "OK, call me as soon as you know."

Before I called the note buyer, I drew up the deal on a piece of paper so I had some hard numbers to work with. I decided the purchase price would be $105,000 so this would be the new value. A year earlier the house had appraised for $97,500. Allowing for appreciation, $105,000 was on the high side but reasonable. It was a nice property. I knew this particular notebuyer went up to 82% ITV (Investment To Value) with their note purchases, and that their minimum discount was two percent. This was a solid borrower so I figured 3% to be on the safe side. What I was trying to do was find out what would be the note amount that when discounted two percent would leave me with the 82% ITV maximum that the notebuyer would pay. Well, 82% of $105,000 is $86,100. And if I divide $86,100 by .97 I get $88,762.89. I decided to make it $88,500 to stay with round numbers

So my deal was: 1st Mtg: $88,500 at 9.9% for 30 years, fully amortized 2nd Mtg: $14,500 at 10% for 15 years, fully amortized 3rd Mtg: $ 2,000 Down payment ($200 per month for 10 months).

I filled out a Paper Worksheet with all the relevant details about the transaction and faxed it along with the 1003 Standard Loan Application I had filled out for Candy and Charlie to the notebuyer, with a note saying that it was the 1st Mortgage that I wanted to sell. She called me back the next day with her quote. It was 97.5%. They would purchase the note for 97.5% of the face amount. Boy! That was even better than I had expected. No problem with the lack of down payment, the borrowers had good credit. 97.5% of $88,500 was $86,287.50. My immediate thoughts were that I would be clearing about $15,000 cash at closing, after closing costs. Gee. Gee Whiz! That's a nice profit.

With the quote in hand I called Candy to give her the good news and made an appointment for her and Charlie to see the inside of the house the next day. I was cautious about being too optimistic as no money had changed hands and they hadn't signed a contract yet. Meeting them at the house, I showed them through pointing out all the good things and telling them what I knew about the house. We moved on to the yard showing them the property lines and eventually got back to my truck.

I asked them, "Well, what do you think?"

I wasn't sure, but I think I made some sales mistake by asking them that. At any rate, this question seemed to bring to light the fact that Candy was having a bit of trouble taking the step and committing to the deal. Charlie was saying it looked fine let's sign, but Candy was umming and ahh-ing and looking very uncomfortable, looking around, and giving these furtive looks to Charlie as if to say, "save me." She started to say "well I don't know" kinds of things and then asked if they could think about it. I hated to break the easy-going mood that had existed up until now but the time had come for us to get a little more serious. About this, I knew there were some sales rules to follow.

I told them, "Well, maybe on another house you could, but on this one I'm going to have to know what you want to do today. Because I've got another three buyers lined up, on hold, pending the outcome of what you guys decide to do today. It's OK if you don't want to buy. But I just need to know it today. I promised I would give these other buyers an answer by tomorrow. The house is available, and it's yours today. What would you like to do?"

I think that's the Now Or Never Close. If it's not, it should be, because it worked. They looked at each other for a long time. I can't imagine the fireworks going on in their brains, but after nearly a full minute of silence Charlie said, "let's just buy the damn house!" Candy looked at him a little longer and said, "Yeah, OK Charlie, OK". We then OK'd the paperwork, and I took a $500 check from them to bind the agreement.

From here, I gave the closing agent both the option contract I had with the sellers and the Purchase and Sale Agreement I had with the buyers and told her I was creating three owner financed mortgages and selling the First to a notebuyer, and I wanted to do a simultaneous closing, using the funds from the note sale to close on my cash purchase with the sellers. She said, "no problem."

I must admit I heaved a sigh of relief. I gathered the documentation from Candy and Charlie that I needed for the notebuyer (tax returns, pay stubs, the purchase and sale agreement), ordered the appraisal, title report, and stood by. The appraisal came in dead on $105,000. Candy called me "every" day and after three weeks she was a nervous wreck.

Finally, we scheduled a day for the closing, to execute the documents. We closed the transaction with the sellers first. Understandably Leanne and Greg were a little somber about having to part with their home, but they signed the documents, we shook hands and they left. On the other end of the spectrum, Candy's smile was a mile wide as she and Charlie bounded into the room. We chatted and I watched as they signed the mortgages that obligated them to pay me $15,500 cash now, $155 a month for the next fifteen years, and the Third that was $200 a month for ten months. Ten minutes later it was over. They gave me a lift down the road to my car, and on the way Charlie said, "Thanks Ben. We don't know how you did it, but thanks." We shook hands and they dropped me off.

The next day I got a call from the closing agent telling me that the wire from the notebuyer had come through and that I could come in and pick up my check. I drove in, signed a few more things and she slid the check across the table to me. I looked at it. $15,551. Being the professional, she proceeded to tell me that I should present my Land Trust to the bank when depositing the check, they'll want to see the paper trail. But then she let slip that, "Hey that was a pretty good deal. You put in $5, held title for ten minutes and got $15,500 back. That's not bad." I agreed and said, "It's a reaction to blocked up toilets and bouncing rent checks." We chatted a bit and I went to the bank.

(c) 2000/2005 Power Marketing, Inc.

Ben Innes-Ker is a full time real estate investor and author of the Motivated Seller Magnet - Automatic Lead Generating System.

He is constantly fine-tuning his marketing and business systems to make his investing more profitable with less effort, so he can spend more time enjoying life with his wife and 2 young children. He shares these unique profit-making systems with his Power Marketing Members.

How Valuable is Your Time? Rebuilding New Orleans

Time is money. We’ve all heard that and in real estate investing it couldn’t be truer. Rehabbers depend on time or the lack there of to make their money. The more time they sit on a property, the less they make. Long-term real estate investors hold property for one or more years to cash in on appreciation and they make their money when their tenants pay the rent on time. How valuable is time though?

It’s been said that money can buy a watch, but it can’t buy more time.

On a recent trip to New Orleans I learned that time itself appears to be more valuable than money in the Big Easy these days.

In partnership with volunteers from Dubuque Iowa and Catholic Charities of New Orleans Operation Helping Hands (www.catholiccharities-no.org ), Belstar Properties spent time, not money in New Orleans. It has been almost one year since hurricane Katrina ravaged New Orleans and the Gulf Coast, but it looks as though it could have been yesterday.

Waist high in debris and battling humid temperatures in the hundreds we were volunteering where money could not be found.

Hundreds of thousands of New Orleans residents simply cannot afford to pay to clean out their houses and rebuild. Money from donations help of course, but it is the time of thousands of volunteers and workers that are truly the most valuable asset in New Orleans right now.

In nine days our group of nine volunteers completely cleaned out the debris and gutted two properties. One off them was a duplex in central New Orleans. Two properties may not seem like much when there are still 140 thousand still uninhabitable, but for the residents of those homes our time was as good as gold.

William Smith, the owner of one of the homes we worked on was thankful for the donations given to him by Operation Helping Hands, but he didn’t thank us for those. Surrounded by his family and teary eyed, he thanked us for our time. “I can’t believe you all took time out your lives to come down and help us,” he said over and over. “Thank you.”

It was those two words that made my time down there worth it. I could have used those nine days to make more offers or rehab another house, but for me so far this time has given me the biggest return of any investment I have ever made.

There are still thousands of residents waiting for their time to get their lives back on track. Their time will come when more volunteers can donate more time to help and continue helping to rebuild New Orleans. As real estate investors we know there is a lot of money to be made in real estate and we always seem to make the time for the next deal. The question to ask yourself though is how valuable is your time and can it be used, even for a little while, for a greater good?

If you can’t take the time to go down to New Orleans yourself, I urge you to continue your donations to programs like Operation Helping Hands, www.catholiccharities-no.org so that others can.

Bubble Schmubble, Real Estate Investing for Now and Forever

The real estate world is still being bombarded with the luminous thought of the real estate bubble bursting or popping or whatever it’s supposed to be doing. High priced markets and hot areas like Miami, Las Vegas and Phoenix have certainly seen a recent decline in pre-construction and condo flips but investors haven’t left town just yet and if they have let me know because I’ll be there on the next flight.

New investors don’t have to be afraid of the bubble hype; they simply need to understand that real estate investing is about strategy and education. The right strategy will push you though any bubble or market. You simply need to educate yourself on what strategy is going to work for you. One of the big factors you should always remember when investing is that you make your money when you buy, not when you sell. Taking a gamble on a hot new market and its appreciation is just that, a gamble. If you buy a property at 30-50% below after repair value or fair market value today, your investment and return will only grow from there. You don’t have to wait for the appreciation. It’s already there. If the market grows in value, that’s just a bonus. If you’re a flipper and your worried about the potential bubble, then it’s time to change up your strategy. Now may be its time to find a tenant buyer or renter. In these markets, the key is to have someone else paying down your mortgage while you are building equity and even earning some positive cash flow.

As the interest rate continues its climb up again more and more people are going to find themselves in trouble. Those who took advantage of the adjustable mortgage rate that was a deal a few years ago will soon be looking for a way out. Renters looking for their first home will now have to wait a little longer unless you are ready and able to help them.

I believe the so called bubble markets are soon going to be a virtual candy store for the savvy investor looking to take advantage of the worried investor or homeowner looking to dump their investment for something better.

Almost every late night real estate guru preaches the key to making money in real estate is finding a “motivated seller.” In these markets people are going to find themselves more and more motivated as time goes by. Divorce, bankruptcy and death show no bias so be ready. If you want to stay in the investing game, stay on course, buy low and smart and rise above the bubble hype to stay educated on all the different ways to truly make money in real estate investing and wealth building.