The October 2012 edition of The Profit, the official newsletter of the Atlanta Real Estate Investors Alliance (Atlanta REIA), is now ready for download in high or low resolution format. Read and enjoy a variety of articles on real estate investing and more from Alan Cowgill, Deborah Harris, Bob Massey, Jeff Nix, Don DeRosa, Larry Harbolt, Russ Hiner, Jim Hitt, Robyn Thompson, Erven Kimble, Michael Vazquez, Tony Pearl and Mike Barnes. And don’t forget, Atlanta REIA Business Members can advertise in The Profit at deeply discounted rates.

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The topic of Private Money is near and dear to my heart.  When I started my real estate investing career many years ago, I heard about the necessity of finding private lenders.  In fact I even found two.  But then I stopped.  For four years I PROCRASTINATED.  I didn’t get it!!!  For four years I continued to go to banks and jump through their hoops in order to fund my deals.  I also had used hard money lenders, but found them very expensive.  

It wasn’t until I quit my J.O.B. and found that banks wouldn’t loan me money that I realized that I needed to bring private lenders back into my life quickly.  When I took that step, everything changed for the better.

What are some of the advantages of using private money for your real estate investments?  Well, if you haven’t decided whether or not to use private money, I decided to lay it on the line here for everyone to see. Read More→

Several years ago, I attended my first real estate seminar and decided this was the business for me. I could do it in my own time and at my own pace and still make money. Considering I was still working a full time job at the time, this seemed to be just the scenario I was looking for. One of the things they taught us in those seminars was that finding truly motivated sellers was going to be the cornerstone to this business because without motivated sellers there simply are no deals to be made.

After spending a number of years in sales prior to becoming a real estate entrepreneur, I knew that when the prospect contacts you first, you have a much better chance of making a good deal. At the time I didn’t have a lot of money to work with and needed to make every marketing dollar count.

I discovered the same theory applied to working with motivated sellers. A motivated seller is the key to all good deals, and if they contact you first, this significantly increases your opportunity to make a profitable deal. There are lots of opportunities for those who want to find sellers, and some are more labor intensive and time consuming than others. Learning to influence motivated sellers to contact you first will increase your profits immensely, help you make better deals and most importantly save you valuable time. Read More→

As a veteran real estate agent in the Atlanta Market for over 30 years (Yes, I started in real estate when I was 12), the current market is the darnedest thing I have ever seen. First and foremost, listing inventory is down by 36% from May 2011, sending home values up 2.35% from March 2012 for the first time, and, above the national average of 1.3% according to the Case-Shiller Report of June 2012. These new numbers indicate a firming of the market in a positive direction.  Is this a signal that the metro Atlanta real estate market will continue to show signs of improvement for sellers? With an extended period of low inventory since last year, Buyer activity is strong. In 2012, Trendgraphix reports closed sales up 15% compared to 2011. At the same time, the pace of pre-foreclosures (notices of default) and foreclosures has slowed. For the past three months, RealValuator reports that market sales (resales, new homes) have outpaced bank-owned sales.

Recently, mortgage rates have dipped back to historic lows. The Fed has extended “Operation Twist” which is a program intended to keep 30-year rates low. But, mortgage rates are impacted by more factors than just interest rates. There are major legislative issues and other economic factors that could cause mortgage rates to rise. For example, the proposed legislation for QRM (Qualified Residential Mortgages) will require mortgage companies to hold back 5% in capital reserves for every loan. That is expected to be funded by higher mortgage rates. Right now, there is an incredible window of opportunity to buy the home of your dreams and set a future mortgage rate that we will not likely see again in our lifetimes. Read More→

On an annual basis foreclosures have dropped 24% according to CoreLogic. Anyone who has been to a foreclosure auction lately knows that there are fewer sales of foreclosed homes coming through to market. Instead, lenders refinanced over 425,000 underwater loans under HARP in the first 6 months of 2012, the same number as were done all last year.  Short sales are up also.  According to RealtyTrac Q1 2012 short sale activity was up 25% over the year. Does this mean we’ve got the lenders on the run? 

 It appears as if lenders have finally gotten the message that it is better to resolve a distressed homeowner’s problems short of a foreclosure sale.  The five largest lenders were brought kicking and screaming into the reality of settling with homeowners with the $25 billion mortgage settlement with the state AGs.  Mid-level lenders, such as US Bank and MetLife, are also now negotiating for settlements on foreclosure irregularities.  The settlement with the big banks provides incentives for lenders to push loan modifications and short sales ahead of foreclosure, particularly over this next year.  Lenders are resorting to options short of foreclosure not because they have had a genuine change of heart, but because they are being forced to reveal their dirty linen through state investigations and a barrage of lawsuits. Read More→

Advanta IRA Administration, LLC is a self-directed individual retirement arrangement (IRA) administrator headquartered in Atlanta, Georgia. Self-directed IRAs give you the freedom to diversify your portfolio by broadening your investment choices to include real estate. In fact, over 70% of Advanta IRA clients invest in some form real estate including, rental properties, notes, rehabs, trust deeds and much more. By taking advantage of a self-directed IRA, you are completely in control of the investments you make.

Monte Smith is the Educational Director for Advanta IRA, offering seminars and webinars that cover the information and tools you need to get started self-directing your IRA. Please visit the Advanta website’s learning center to find out about the various plans available, rules & regulations, educational webinar schedule, seminar schedule, case studies and a comprehensive FAQ section. Read More→

“An investment in knowledge pays the best interest.” ~ Benjamin Franklin

Remember when your dear Aunt Myrtle asked you to help her sell that Miami condo? You did the research, helped arrange some inexpensive upgrades, priced the home sensibly, and voila! It sold in a week and a half. Aunt Myrtle was so grateful she sent you homemade bread and cookies for a year.

But that was then.  This isn’t your Aunt Myrtle’s condo market anymore, and it’s not just because of the Great Recession. While prices were hurtling downward, the amount and availability of information online was increasing like crazy. Databases that used to cost hundreds of dollars per year are now available to everyone for free. And that includes resources like MLS listings that used to be available only to real estate professionals.

Zillow is a great example of just how far online resources have come. Established in 2005 by economists, Zillow doesn’t just provide current home listings; it’s a one-stop shop that analyzes everything from the housing market as a whole to detailed information on single properties. The smart folks in charge have developed mathematical algorithms based on comps and other data, allowing Zillow to predict (or “zestimate”) the value of any property based on comps and other data. Enter an address, and there it is: Zillow’s zestimate of a property’s worth, along with pictures and details from the listing. Comps are even available. And a blog. And a mortgage calculator, and a lot more!  The mobile version can also use GPS to find properties nearby. You can sit in your car in front of a house that’s for sale, look up the price, check Zillow’s value estimate, and then see what houses might be available just around the corner. If you happen to be a bird-dogger, Zillow is your best friend. Read More→

When I started investing in real estate 30 some years ago it never dawned on me that there was a strategy to become wealthy.  I thought all you had to do was buy houses, fix them up and resell them, make money then repeat the process. It sounded like a good plan but it was a flawed plan because the money I made from the deals I did went to feed my family first, then what was left went to rehab the next property. I had no plan to accumulate wealth. I had no plan for the future; all I had was a plan to create a job for myself I had to go to work every day to support my family.

One day I was whining to my father that I wasn’t really making any headway putting any significant amount of money into my savings account. It seemed like I was just spinning my wheels and I wasn’t really getting ahead. I was working hard everyday and I had money to feed my family but that was about it. I could have done exactly the same thing working for someone else with a lot less stress in my life. My father who was a brilliant man told me a story about a poor boy that lived during the great depression and for those of you getting started investing in real estate today I think this story is very important to help you understand how to create wealth instead of just make a living. It is called….  Read More→

Here it is the Tuesday after Labor Day, and I’m excited about the upcoming month. The market seems to be changing positively, and I am doing an increasing number of real estate deals. Also, I’m energized because I rested over the three-day holiday. I spent time with my friends relaxing and enjoying great conversation along with sharing ideas. With all of that renewed energy, I made grand plans for the upcoming week.

 But, you know what they say about well-laid plans. Instead of getting to my list, I find myself trying to answer calls as the phone rings off the hook. My plan to achieve five of my goals this week is already going out the window. Suddenly I realize that I’m overwhelmed and losing sight of what I wanted to accomplish. I know that I need to re-prioritize.

Like so many of us, I am challenged on a monthly, weekly, and daily basis to figure out my priorities. I sit down at my desk ready to check things off of my list, and the fires start flaring up. I can easily lose track of what I should be doing and where I should be going.

I’m sure that most of you can relate to this. So, how can we avoid that rushed feeling of putting out fires? If we have the best intentions to accomplish our goals, of doing the next right thing, we must be able to do it while life happens around us rather than letting ourselves get caught up and losing sight. Read More→

Buzz Words and Warning Signs

As investors, we must always be aware that there are fraud promoters lurking in every corner waiting for their next opportunity to pounce on an un-expecting investor. To help you avoid falling victim to fraud, here’s a recent study of SEC Investor Alerts which show some very obvious but worth mentioning ‘buzz’ words every investor should watch out for:

• Guaranteed
• Can’t Miss
• Extremely High Returns
• Safe and Risk Free
• Promised _____% Returns

In the SEC alerts they are primarily discussing investing in LLCs and Private Placements; however, these warnings are absolutely applicable to real estate transactions, private loans, or any other investment a person would consider making. Read More→

Many real estate investors shy away from the ugly house business because they fear hiring contractors. We have all heard the horror stories of rehabbers who loose their shirt because a contractor took them to the cleaners.

I am here to tell you that contractors can be your worst enemy or your best friend, depending if you hire a good one or a bad one. So how can the beginning novice real estate investor make the correct choice- the hard working team player that gets the job done on time, on budget and at a high standard of quality? The answer is by following all eight of the critical prescreening steps below.

1. Ask the contractor you are interviewing, how long they have been in the business?  I prefer at least five years of experience in the trades. I want a contractor who has seen and repaired every strange, odd, and crazy thing that could be wrong with a house. Experienced contractors know how to estimate all tough projects and experienced professionals can give an accurate price to fix any problem.

Inexperienced contractors, on the other hand, under estimate repairs to get the business, and then they try to push their mistake on the home owner by upping the price half way through construction.  The investor needs to say NO. NO is the most powerful word in the dictionary, and a rehabber needs to use this tool.  If they did not have the knowledge to make a good estimate, it is there problem not yours. Read More→

“He who has pity on the poor lends to the Lord, And He will pay back what he has given.” (Pr 19:17 NLT)

Every investment has a Risk/Return factor associated with it. When a business man or business woman is asked to put their finances and/or time into a venture it is wise for them to consider the projected return. The return is compared to the possible loss that is associated with an investment. Conventional wisdom says; “the greater the projected return, the greater the risk one might have to take.” Whether or not greater risk can be justified by larger projected profit depends on the risk tolerance of the business person.

Have you ever considered that pro bono work, charitable contributions, benevolent gifts to the less fortunate, or supporting the poor and unfortunate members of our society as making a loan to God? Just how risky is that investment? Have you considered that such compassionate practices work for the betterment of the bottom line of one’s business? Read More→