Archive for July 2012

The Profit July 2012 Edition

Posted on June 25, 2012 by
The Profit for July 2012 is Here!

The Profit - July 2012The 2nd edition of The Profit, the official newsletter of the Atlanta Real Estate Investors Alliance (Atlanta REIA), is out for the month July 2012! Read and enjoy articles from Jim Hitt, Chris Littleton, Don DeRosa, Erven Kimble, Tony Pearl, Mike Vazquez, Bob Massey, Gordon Catts, Russ Hiner, Deborah Harris, Jeff Nix, Craig Halperin, Robert Woodruff, Dustin Griffin and more. Don’t forget, Atlanta REIA Business Members can advertise in The Profit at discounted rates.

The Profit Newsletter

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Real Estate Investors establishing multi-member LLCs should always consider how broadly or narrowly to define the rights, duties, and powers of their members and managers based on the structures and needs of their respective companies. A thorough declaration of rights and duties in an LLC operating agreement will reduce the likelihood of future confusion and conflict. Furthermore, it will ensure that the members and managers of the LLC understand and have agreed upon each party’s responsibilities and limitations.

Real estate investment LLCs, especially those that either have a member or members out of state or out of the country, or who do business out of state, have especially strong incentives to structure management provisions with care. Limited liability companies can assign limited management duties or rights, such as signatory authority, to parties, without granting those parties full management authority. These non-member managers can save the company time and travel expenses by acting as local agents of the company in certain capacities. Limited liability companies with more complex management needs must give careful consideration to scopes of management authority; operational efficiency should be achieved without sacrificing an appropriate balance of managerial power. Therefore, real estate investors should always consult an attorney who is experienced in entity formation and business transactions before forming their LLC operating agreements. Read More→

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Why Do You Do What You Do?

Posted on June 25, 2012 by

I want to talk to you about the reason you chose to get into real-estate. The “why” we are willing to risk, and spend our resources in real estate as a vehicle to create income for ourselves will make or break the adventure.

I was working in a job and the boss passed me over for a promotion. I decided I would make enough money from real estate to buy the house across the street and on both sides of her house. Then I would rent to the house to social misfits. This would drive down her property value, make her life miserable, and I would have my pound of flesh. What happened was I made enough money on a few real estate deals to buy the house across the street from hers. When I had accumulated that money my goals changed and I bought something which would make more money rather than seeking revenge.

When people go the big seminars of the national speakers they get excited. The speakers stress financial independence, paying off the credit cards, creating a legacy for your children, vacations, and more time with the family. These are all good reasons to become involved in real estate. The truth of the matter is only a few of these items will keep you in the game when luck runs out. There are a few reasons that will keep you passionate about what you do, when the times get hard. I put together a goal to make enough money to have the beautiful women on the infomercials, like Tom Vu. I realized quickly that I had the best friends money could buy. This was not inspiring. Read More→

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Goldmine Properties

Mike CherwenkaMike Cherwenka and Goldmine Properties offers step-by-step real estate success through a proven system with a 17 year track record of over 1,700 wholesale deals on the books.  “With our system, we’ve taken all the risk out of the deal for you” says Cherwenka. Goldmine’s streamlined process includes sourcing properties at 65% of the after repair value, inclusive of the purchase price, providing a certified appraisal, financing of purchase and repairs, providing contractor estimates, agent support for selling or property management for buy and hold properties, and much more. See the Goldmine Properties website at www.GoldMineProperties.net for more information and be sure to stop by and visit their vendor booth at the Atlanta REIA Main Meeting.

Lima One Capital

Lima One Capital“Our mission at Lima One Capital, is to become the nation’s largest and most respected lender dedicated to real estate investors and home builders, emphasizing excellence and integrity in every aspect of our business”, says John Warren, founder of Lima One Capital. With offices in Atlanta and Greenville, Lime One is a fully capitalized, direct lender for real estate investors and home builders.  Lima One holds a firm a policy of no hidden fees, no junk fees, quick self-capitalized closings and the most professional customer service in the industry. Read More→

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The good news for the Atlanta Real estate Market is that 2012 year to date sales rose over 17.1% in 2011 and 23.3 % over 2010. Sales gains in 1Q and 2Q 2011 were even more significant since they were being compared to 2 periods in 2010 which were boosted by government tax incentive purchases, making the 1Q 2012 increase above those gains even more significant (Chart 1).

Chart 1
Chart 1

A lot of this has to do with the drastic increase in the quantity of sales since 1 Q 2011 and especially since 3rd quarter 2011. And, while the number sold increased, 42% of the sales were under $100,000 and 70% of the sales were under $200,000 (Chart 2). Read More→

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In many Metro Atlanta Counties, the tax assessments have been mailed and the deadline to file an appeal is fast approaching.  If you have not received a notice, check with the county.  You do not want to miss the opportunity to appeal if your assessment is unreasonable.   

If you are seeking information for a particular county, you can Google the County name to get the Tax assessor’s contact information.  It is important to be proactive on this. 

In many areas of the country Property values have dropped substantially over the last several years.

The rash of foreclosures, a shrinking employment and a huge number of properties in Lender inventory as well as a high level of homeowners substantially delinquent on mortgage payments has caused an erosion of values.  Depending on where you are living, it is quite conceivable that we have not reached the bottom yet. Read More→

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Our government seems to be placing its bet on large-scale investment groups to help get the country out of the foreclosure mess.  In May the Federal Housing Finance Agency will announce who from among 3- or 400 investor groups will be allowed to compete for a stock of 2500 Fannie Mae/Freddie Mac properties in several major foreclosure markets.  A group of these properties are in the Atlanta area and will be sold in bulk to qualified investors.

The bigger investment groups will be able to put up millions of dollars in cash and will, more than likely, be able to drive the prices down below 70% LTV for these properties to be used as rentals.  Analysts speculate that these larger investors purchasing bulk REO deals from the GSEs or banks will be able to command 10-12% return on investment for holding these properties as rentals, well above the market return rates.

In major markets across the country large investment syndicates and hedge funds have entered into a feeding frenzy for bank-owned property sometimes driving the bidding up at auctions or in negotiations with lenders past a point where a small investor can compete. Read More→

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The Owner Occupant

Posted on June 25, 2012 by

When contracting a property from an owner occupant you have to first find out how attached the seller is to the home. Discovering the reason the owner has decided to sell can help in determining the owner’s level of attachment. In most cases, contracting from an owner occupant is more complex because there are usually more emotions involved. For this reason, negotiations should be done in person. The bright side is you do not have to worry about competing with hundreds of buyers. Your competition is smaller thus your chance of contracting the property is higher. With that said, these types of properties take a bit more time to find.

Once you have discovered that an owner is selling because he/she can no longer afford the home, you can assume that the emotions and the attachment levels are high. This is where justifying your offer is very important. The seller is already being forced out of his home and now you, the investor, are looking to purchase it at a low price. Expect an immediate no, some explanation to why the home is worth so much more and/or some yelling. Remain calm! Listen to everything the seller has to say. Once he/she has finish speaking begin presenting your FACTS. Make sure the seller understands that your offer is based purely on factual information. Explain to him/her how you arrived at your offer. Make sure not to speak over the seller’s comprehension. In most cases the seller is not a savvy investor so make your explanation as simple and clear as possible. If you do a decent job the seller will see your point of view and realize your offer is not as terrible as he/she thought it was. Negotiation begins. Read More→

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Hello, my name is Tony Pearl. I’m a successful veteran real estate investor who has done a lot of deals but got bored with it all a few years ago and started ‘playing around’ with marketing on the internet. 

Translation: When the crap hit the fan and real estate started sucking in 2008, I had to do something else to put food on the table, and I chose the internet.

It is my pleasure to bring you the ‘inside scoop’ on how things are progressing for me and other real estate investors who are successfully going online to get buyers, sellers, private lenders, and almost anyone or anything else you can think of to use in our businesses… and how you can do the same! That’s what this column, “Pearls of Wisdom,” is all about.

So unless you’ve been living like a cave man these past few years, you’re surely aware of how almost everybody is online now.  Think about this: Who do you know who DOESN’T have at least the minimum requirements of an email account or Facebook profile? It would probably take you a minute to come up with a name, am I right?  Exactly. Read More→

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Doing Business in Deep Waters!

Posted on June 25, 2012 by

“Those who go down to the sea in ships, Who do business on great waters, They see the works of the Lord, And His wonders in the deep. For He commands and raises the stormy wind, Which lifts up the waves of the sea. They mount up to the heavens, They go down again to the depths; Their soul melts because of trouble. They reel to and fro, and stagger like a drunken man, And are at their wits’ end. Then they cry out to the Lord in their trouble, And He brings them out of their distresses. He calms the storm, So that its waves are still. Then they are glad because they are quiet; So He guides them to their desired haven. Oh, that men would give thanks to the Lord for His goodness, And for His wonderful works to the children of men!”
(Psalm 107:23-31)(NKJV)

As you may know, there are two ways of doing business; the safe and tested way doing business in shallow water, or on the other hand, the risky and challenging path of doing business in deep waters. Many business men and women chose the latter path. Often the outcomes of their decisions are difficult and trying. When this happens there is the nagging doubt of whether of not the right choices were made. Well, no matter, the real mission now is to learn how to navigate in deep waters.

Many think the trials and struggles successful men and women experience on their voyage to success are chance, bad choices, regrettable drawbacks, or limitations acquired or even inherited. These factors have an effect on the voyage, but some of these are fundamental challenges that are always going to be there. The passage from the book of Psalms outlines the principles of what a person can expect when their career and life choices push them into unknown territory or causes them to venture into uncharted waters. Read More→

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“We should not only use the brains we have, but all that we can borrow.”
Thomas Woodrow Wilson

Home Builder Pro Calcs AppOne of the scariest things for new – and even experienced – investors is estimating the cost of repairs on a prospective investment property. If you’re off by even a little, it can cost you thousands in profits. If you’re off by a LOT, well, instead of walking away from the closing with a check for thousands, you might be bringing money to the table.

Finding a reliable contractor is a good first step. (Hint: go to your REIA meetings and network. Ask for recommendations. Interview several.) But the best way to know that you’ve got a good estimate is to become familiar with determining what repairs are needed and how much they cost.

So where do you start? One of the best apps I’ve seen to guide you through this process is the Home Builder Pro Calcs app. (At press time, this app costs $4.99 on the App Store and can be used on the iPhone and iPad.)  Read More→

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How you monitor the condition of the property will influence your relationship with your tenant, how quickly you can turn the property when a tenant moves out, and the over-all income of the property. If you plan on holding a security deposit to be used for damages against a property, you must conduct a comprehensive move-in/move-out inspection.

This article addresses how communication, documentation and setting expectations with your tenants through scheduled inspections will result in a better landlord-tenant relationship, a better maintained property and avoid costly court cases, all of which effect the net income of rental property. Read More→

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