Archive for The Profit
Real Estate Agents and Investing
Posted on October 31, 2014 byWhen I began looking into investing I assumed that I needed to be a real estate agent so I can learn how to buy and sell real estate. Thus I began taking real estate courses in 2005 and became a real estate agent. I learned that those classes only taught me the law but nothing about how to contract, buy and/or sell real estate. All this came from on the job experience and each transaction taught me something new because no two transactions are the same. For this reason you should be cautious when selecting a real estate agent.
Today, as a broker, I make it my goal to properly train my agents thoroughly. Too often my agents and I work with other real estate agents that have not been properly trained. In fact, many times, those agents have called us to ask how to do/handle certain parts of the transactions. It has happened so often recently that we had to figure out what we would and would not assist with due to liability. We determined if the answer to the question is a fact we would answer. If the response is an opinion or company based we request that they ask their broker. I believe that this has happened more and more as a result of 100% commission brokerages. Agents receive their license and start at a 100% commission brokerage where there is minimal to no training because they are paying 100% commissions. What you end up with is an inexperienced agent that will learn at the client’s expense. When investing in real estate this can be a blessing or a nightmare. Read More→
Federal Court Clears Way for Homeowners to Fight Back Against the Banksters
Posted on October 31, 2014 byAnother day, another court ruling against the banksters who have fraudulently foreclosed on millions of homes! I have been writing about how the courts have been wising up to the games the banks have been playing to foreclose on properties that they have no claim to, and the latest ruling is one of the biggest. The Federal 6th Circuit Court in Ohio has cleared away a major hurdle that has stopped a lot of homeowners in their tracks.
In many homeowners’ cases, a major claim is that their note never made it into the trust that the foreclosing bank is acting as the servicer for. As soon as the homeowner makes their initial charge that the loan never made it into the trust, the bank would respond saying that, since the homeowner is not an owner or investor in the trust, they have no standing to challenge the validity of the transactions that purport to transfer the note into the trust. Since they have no standing to demand to see the chain of title on the note, their main claim is tossed out by the court, and their case is dismissed.
The 6th Circuit Court’s has ruled that the homeowner DOES in fact have the standing to challenge title and therefore the validity of the transactions that claim to show the note belonging to the trust. Not only that, but the court found that whether or not the homeowner had previously defaulted on his mortgage. The court was incredibly forceful in their ruling, almost recommending a RICO action against the banks. Read More→
Top 10 Ways to Get Help from IRS.gov
Posted on October 31, 2014 byWith only a few days left on extensions for business filing (Sept 15th) and a few weeks for personal (Oct 15th), I recently have had a number of clients who need some basic information that really has to come from the IRS. It might be a form or other basic information. Always check with your CPA first then if you still need assistance look at the IRS website.
When you’re looking for tax information help, you want to find it as quickly and easily as possible. That’s why the IRS redesigned its website. It’s now even more user friendly.
Here are the top 10 reasons to visit IRS.gov: Read More→
Getting Sponsored
Posted on October 31, 2014 byMultifamily real estate can be one of the most profitable real estate business models but it can also come with some barriers to entry. Qualifying for a loan to buy apartments can be challenging but not impossible. One of the major misconceptions today is that a bank will lend only on the value of the property and will not look at your personal financial standing for the loan qualification. This simply is not true. A lender will always look at the financial wherewithal of the borrower. The good news is that you can have partners that bring some of the things that you may not have and help you to qualify for a loan.
What I am discussing here is what we call a “Sponsor”. A Sponsor is a partner that brings the needed qualifications that will help you get the loan and the deal done. Sponsors can bring many things to your business besides money and net worth. They can bring experience too. Let’s start with the money side first.
Most banks and lenders will want you and your team to have a net worth greater than the loan amount. If you want to qualify for a $1,000,000 dollar loan then you and your team will need to be worth at least $1,000,000. If you don’t personally have that much net worth then you will need to bring on a partner or partners that do have it, in order to satisfy the lender. Net worth is a gray area that will ultimately be judged by the lender, but for this conversation I will give you some guidelines from the loans I have done. Read More→
What About When Certain Property Values Fall?
Posted on October 31, 2014 byThere are indicators home values in recreation and in particular what are considered mountain homes in many US market areas lost tax value year over year. The data I have been seeing using REIAComps this year is proof which can affect your investing business.
For those of you already connected to REIAComps, the control and feeling of confidence you have over your deals is priceless. Having tax data at the ready adds power and knowledge to your tool belt. Using REIAComps to investigate the changing tax value of dwellings gives you an unfair advantage.
For not the first time the value of the property on many county tax rolls went down in this year’s reassessment of many recreation homes. What this has meant is an increase in the tax millage rate for these counties, school districts and municipalities. Read More→
The Profit Newsletter October 2014 Edition
Posted on October 1, 2014 by
The October 2014 Edition of The Profit Newsletter is available for download just in time for our Atlanta REIA Main Meeting on October 6th. The Profit is an digital, interactive newsletter for new and seasoned real estate investors delivered as an Adobe PDF file to read on your PC, Mac, Smart Phone, iPad or other mobile ready devices with a PDF reader. Many of the articles and ads in The Profit contain many hyperlinks you can click or tap to visit websites, watch videos, listen to audios, download content, send emails, comment on articles, share socially and much more! The high res version of The Profit is “print ready” for those who want to print the newsletter on their home or business printer. Also, be sure to Subscribe to The Profit Here so you don’t miss a single monthly issue.
How Land Trusts Can Benefit You
Posted on October 1, 2014 byThe land trust is an agreement that allows real property to be held privately for a beneficiary. That way, the beneficiary, whether it be you or your entity, does not show up on the title in the public records.
Follow me here. Say you have $1 million insurance coverage for liability. You hit an attorney in the cross-walk with your car. Will he settle for the insurance limits or will he sue for more? Or what if your insurance company denies your claim for some reason? How much will the suit be? Well, that usually depends on how deep he thinks your pockets are. If you own property in your own name, the lawyer suing you will easily find your house and any other properties you own in the public records. This could easily become a $3 million suit.
Before you even know you will be sued, the opposing attorney could have the sheriff park in front of your house, knock on your door while you are eating dinner and hand you your lawsuit in front of all your family and the neighbors!
But, if you have your property in a land trust, beneficial ownership is hidden. Your land trust is not filed in the public records. Your ownership stays private. No one knows who the beneficiary is but you. Read More→
Follow Up and Close the Sale of a Lease Option or Owner Financing Deal
Posted on October 1, 2014 byOkay, we’re almost at the end of our series of articles on how to get through the entire process of buying and selling on a lease purchase, ACTS or owner financing deal. The last two steps in our process are to follow up with your buyer to get them to the closing table, and set up the closing so you can actually get it down and collect the final check.
Alright, so let’s assume that to this point you have been out into the market place and attracted prospects to call you and have found one or more that have enough money to get your attention. Now, you’re ready to move forward. In our case, we try to find 2-3 prospects, and, of course, the ones with the most money rise to the top quickly. Unless they get screened out from something we discover about them, they usually win the battle.
Once they are located and they have seen the house, now it’s time to get an oral commitment from them that they want it. Then, it’s time to do your due diligence prior to setting a meeting. When we put a lease option tenant buyer in a house or sell it with owner financing, there are a few things we want to see in the form of a report. That list is a credit report, a Megan’s law report for sex offenders, a background check, a criminal check, a debt-ratio report, and proof of income. Read More→
Self-Directed SEP IRAs – The No-Nonsense Retirement Plan for Real Estate Entrepreneurs
Posted on October 1, 2014 byIf it’s a combination of high contribution limits and downright simplicity and ease of administration you’re looking for, and you have significant cash flow coming from your own business, practice as an independent contractor or other earned income from self-employment, then the SEP IRA, including the Self-Directed SEP IRA may be the way to go.
How it Works
The SEP IRA, or Simplified Employee Pension plan, is an employer-funded, defined contribution pension plan available to businesses of any size, including single-employee corporations, independent contractors and self-employed individuals.
Entrepreneurs in each of these categories initiate a SEP IRA plan to cover all qualified employees. The plan sponsor then funds the plan on an equal basis for each covered employee. You cannot set up a plan to cover yourself alone, if you have other employees. You must contribute to the plan for all qualified employees, equally, across the board. However, this is obviously not much of a concern for independent contractors and for businesses owned and operated by a single employee or a husband and wife team. Read More→
A Few Horror Stories
Posted on October 1, 2014 byTo maintain the spirit of the season (Halloween) I thought I would tell you about a few of the mistakes that I have made in the real estate business and share the lessons with you.
Know the value of something before you buy it!
My first mistake was to pay way too much for my first deal. It was a duplex. The numbers worked as far as cash flow was concerned but I never researched my comparable sales in the area. I paid twice what everyone else had bought duplexes for. It cash flowed so I was able to operate but that killed any exit strategy of selling or refinancing. Cash flow is great but you must always have an exit strategy before you buy. Make that a part of your deal analysis.
If something is cheap… there is probably a reason.
I have bought some tough properties in some tough areas. I have been successful with them but I also managed them myself. Learning the art of management has been great but it has also been a tough road and has kept me from buying more deals sometimes. What I have learned is that if you want to a reposition a deal you need to make sure it is in a good area. Most of the repositions I have done were in areas of town that were not so great. When you see an apartment complex that is selling for a good price you need to analyze the deal with your eyes wide open. Sometimes properties are selling at a discount because they need physical repair and sometimes they are selling cheap because they need repair and are in bad area. When looking at reposition deals pay close attention to the demographics of the area the deal is in. Look at the median income of the area. Is there job growth? What is the vacancy of the other properties in the area that are like yours? Look at the rent roll in the delinquency column. Are they actually collecting rent? You don’t want to do reposition deals in marginal areas even if you can buy them cheap. Your property is only as strong as the tenants you can rent to. No matter how much work you do to the property…if you can’t collect the rent it’s not a good deal. Read More→
How a Payment Policy Can Help Your Business
Posted on October 1, 2014 byIt is the goal of this column to answer questions about QuickBooks and how it is used in the REI arena. Knowing how to record transactions in the proper way and have your set of books in good shape when it comes time for taxes. It is our intention to do this with you, the members, submitting questions to info@smallbusinessadvisor.biz and getting answers here in this column.
From time to time I have clients ask me questions that are related to the finances of their business and how they should implement certain business practices. These questions do not always relate directly to QuickBooks® but how these things are handled may directly affect how they are entered in QuickBooks®. I felt that one of these may be of interest to the AtlREIA membership and have compiled a few answers here:
Q: Why would I need a Receipt of Payment Policy- in writing – for my business?
A: A uniform payment policy keeps customers and employees on the same page and improves cash flow management. You may use your payment policy to spell out accepted methods of payment and accounting practices. If your business extends credit to customers or sells a subscription or membership service, you should clearly define the expectations for payment as well as the consequences for failing to make payment. As a landlord you should have already done a credit check on your tenant – which does not mean they can’t have problems from time to time. Read More→
Knowledge = Success
Posted on October 1, 2014 byThe third-quarter results of the Atlanta real estate market are exciting and positive!
It IS possible to make money in this market, and I’ve been in this business for long enough to guide you through it.
On the market right now there is a
- 3.5 month to 5.3 supply of single family houses above $250,000
- 2.9 month to 5.1 supply of single family houses below $250,000
- There is high demand from cash buyers
- There is an increase in demand and value in the rental market
What do YOU need to know?
Marketing through your own resources for “off market” leads is the best tactic. Hedge funds have slowed their buying. They are recovering their assets right now because they moved too fast and have a lot of vacant inventory that is nonperforming.
Consider your time value. Working FMLS and hoping to get a 30% off price tag is not a good strategy because you will spend all of your time making offers just to get one deal. Realtors are doing a great job of pricing properties correctly to sell in 90 days; take advantage of this. Even the beat up properties are being priced right. Read More→
