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3 Reasons to Own Rental Properties in College Communities – Part 2

Feb 4

Posted by admin in Real Estate

Having personally experienced the pleasure of owning rental properties in a college (university) town, there is a wealth of reasons to locate one’s properties in a community that houses a center of higher education. Listed below are just three of the myriad reasons a rental property owner should add college-town rental properties to their portfolio.

* This article is part two of a two-part series

4.) Good Tenants - Of course there are exceptions to this rule, but most college-town tenants are excellent tenants. They pay their rent (and utilities if required) on time, take care of the property, and are often very courteous to the property owner. From personal experience, pharmacy, legal, and engineering students are often the best tenants because they are constantly bogged-down with complicated homework; leaving them little time or want to party (they are also the most driven to succeed which also indicates a lack of partying).

5.) High Tenant Turnover - Is this author kidding? Since when is high tenant turnover a good thing? Welcome to the world of rental property management in a college town. In this atmosphere, high turnover is a key to one’s rental success. First, every year there is a plentiful supply of new tenants, making it relatively easy to re-rent a property. Having tenants leave every one to three years gives the property manager the opportune time to slightly raise the rent, thus increasing the property’s income. Often, the new tenant doesn’t even realize the rent has been raised.

6.) Inflated Property Values - This benefit is a double-edged sword. Property values in college and university towns are almost always higher the surrounding areas because of the increased demand for property within the town. This is good once one owns the property and begins experiencing the power of equity, but it is before one owns the property that it can be very dangerous. DO NOT over pay for a rental property in a college town. Run some numbers (often a net income evaluation) and make sure that the property will produce income at the given purchase price. If one over pays for a property, they have already destroyed their cash flow potential, so be careful.

College towns are great towns for rental properties, but a few precautions should be taken before jumping in. First, investigate the town to make sure that there are enough tenants to go around and that the school is growing; not shrinking. Secondly, colleges and universities that have excellent graduate programs are more preferable, because they get older students that almost always live OFF campus. After satisfying the above two precautions, one is ready to enter the lucrative niche that this article’s title describes.

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Short Sales – How To Influence The Broker\’s Price Opinion (BPO)

Oct 7

Posted by admin in Real Estate

Ok, so you\’ve received the short sale requirements from the lender and you\’ve made friends with the loss mitigations rep that\’s assigned to your potential deal. Next, you are now ready for the lender to order a BPO on the property. Notice that I emphasize \”you\”, this is because I don\’t want you to miss out on a key opportunity to influence the overall outcome of your short sale.

Although many investors are aware of the benefits of influencing the BPO, few know exactly how it\’s done. The BPO is the single most influential component that the lender considers when deciding how much they are willing to accept as a reasonable short sale offer. If your offer is not in the ballpark of the BPO it will most likely be rejected. Many investors give up at this point and assume that the lender is not willing to accept a short sale. It\’s not that the lender is not willing to accept a short sale, it\’s that the short sale offer does not come close to the amount of the BPO. It\’s just that simple. There is a big difference between a lender not accepting a short sale and a lender not accepting the offer.

What exactly is a BPO?

BPO stands for Broker\’s Price Opinion. All this means is that a real estate agent or broker will assess the property and give their professional opinion of it\’s value to the lender. The closer that number is to your offer the better. You want the BPO to be as low as possible. Listed below is a snap shot of a BPO requirement.

1. Run comps and take pictures of the surrounding neighborhood, subdivision, or area.
2. Inspect the overall condition of the home and estimate the cost of repair. Take pictures.
3. Formulate their \”opinion\” of the property\’s value based on the information that was gathered.
4. Submit a detailed report of their research to the lender.

Here are 5 necessary steps to influence the Broker\’s Price Opinion (BPO)

Step 1:
Before your package is submitted ask your loss mitigations rep to order the BPO. Let them know that there is not a lock box on the door and you have the only key. Give them the best number to reach you and have the agent doing the BPO call to set up an appointment. You must be present for the BPO.

Note: There are two types of BPO\’s:

a) Full BPO – The agent does a full inspection of the home.
b) Drive by BPO – The agent only takes pictures of the outside and other homes in area.

Always request a full BPO. If a drive by BPO is done you will not have any one-on-one time with the agent, therefore eliminating any possibility of influencing the outcome.

Step 2:
Compile comps, estimated costs of repair, and any other relevant information that will justify a discount. If possible, visit the property prior to the BPO or at the least a half hour before the agent arrives. Make two lists for repair costs. One with all of the obvious repairs such as wall damage, carpet, paint, etc. The first list will be mostly cosmetic repairs. Make a second list of all repairs that the agent will not see with their naked eye (i.e.: roof and water damage, faulty plumbing or electrical fixtures, pests, mold, etc. This list will contain more serious problems. Be sure to have an itemized breakdown of the costs involved. Bring this information with you to the BPO appointment. Be prepared to explain in detail how you came up with your estimates.

Step 3:
Make sure if the house is occupied that the homeowner is not present during the BPO. You do not want the agent asking the homeowner any questions about the property or offering any unwanted information. All communication must be between you and the agent. Follow this rule each time and you will maintain leverage during your negotiation.

Step 4:
On the day of the appointment shadow the agent as he/she does their assessment. Bring a camera and take pictures of every room in the house. The agent will only take a limited amount of pictures and may miss something important. As you are walking throughout the house, point out the most important repairs only. Take notes and make them aware of other homes in the area that are comparable to your offer. Share with the agent the information about the house that you\’ve compiled. Doing these things will help establish you as a well prepared professional and help you earn respect with the agent.

Step 5:
Before the BPO is complete, ask the agent if they have a ballpark estimate in their head. They will most likely tell you that the numbers will be determined once they complete their report. At this time, ask when they will be finished and if you can give them a call at a specific time to get their final numbers. Note: The agent works for the lender and more than likely they will inform you that their report is proprietary to the lender. You have to feel that person out and see if they may be willing to share that information with you. It doesn\’t hurt to ask more than once if necessary.

Let the agent know that you are very familiar with the neighborhood and tell them what you think the property is worth. The agent doing the BPO knows only what they have researched and what they discover once they actually see the property. You will be surprised as to how much your opinion matters. I like to call it YPO (Your Price Opinion). If the agent views you as someone who is educated about the property and the activity in the neighborhood your opinion will be valued and taken into consideration when they make their report to the lender.

Hopefully I\’ve helped shed some light on this most important area of short sale negotiations and that you are able to apply what you\’ve read to your next deal.

Best Wishes!
D.C. Fowler
Author of Making Money with Short Sales
http://www.ShortSaleDeals.com

Writen By : D.C. Fowler

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Real Estate Investing Success Is In The Numbers

Oct 7

Posted by admin in Real Estate

I just got off the phone with John, a student of mine.

My conversation with John was thought provoking and exciting and I thought you needed to hear the same powerful information I just shared with him.

But, first I have a few questions…

Do you want to be enormously successful investing in real estate?

Do you want to have the kind of money rolling in that changes your lifestyle into what you dare dream of only in your wildest fantasies?

Yes, of course! I know you do. So what\’s the secret to success?

It\’s in the numbers!

In a perfect world, every lead you spoke to would turn into a closed deal. Unfortunately, we don\’t live in that utopia. In fact, more leads will lead nowhere than those worth pursuing. Your job is to separate the chaff from the wheat. To find the profitable deals hiding behind a motivated seller. Let me make it very simple – increases in the number of seller discussions increases dollars in the bank. It\’s a game of numbers.

Regardless of your expertise, you have some ratio of deals
to contracts. This is the heart of this lesson. Instead of becoming depressed because you don\’t sign enough seller contracts, recognize this is just a game of numbers. If you
want more contracts, talk to more Sellers. Let\’s suppose that your ratio is on the low side – it is 30:1. That means that you have to talk to 30 sellers to sign one great deal.

If you want 2 deals in the next month, then you need to talk
to 60 sellers. If you want 4 deals, then you need to talk
to 120 sellers. To be successful, just increase the number
of sellers to whom you\’re talking.

Track your results each month to identify opportunities.

Simply write down every seller that you speak to in the course of a month, and record the results of that call. If at the end of the month, the results fell short of the goal, the tracking form will tell you why. For instance, you may realize that you only actually spoke to five sellers. Sure, you were busy all month. In fact you called these five people repeatedly, following up, trying to make something happen. But in the end, you still only spoke to five potential sellers. This may sound obvious, but many investors try to work a few leads to death, rather than simply increase their number of leads. The answer is to increase the number of calls.

The other answer is to improve your ratio. If you\’re at 30:1,
your goal should be to get to 20:1. Are you talking to motivated sellers?

You are not a real estate investor. You are a problem solver.

If the sellers have no significant problem, they have no need
for your services so you\’re wasting your time. On your tracking
sheet, write down each seller\’s motivation. At the end of the
month, see how were actually motivated. If that number is low,
improve your marketing to attract the right type of sellers.

The best way to improve your ratio is to increase the number of
techniques and strategies you have at your disposal to solve
their problem and ultimately purchase their home. If one technique is all you know you\’ll pass over opportunities looking for the one seller that meets your criteria. Constant improvement and education should be something that never stops in your career. As your abilities expand, your ratio will improve. Suppose you changed your ratio from 30:1 to 15:1. Your profits would DOUBLE! Is it worth your time to track your results? You better believe it. Your monthly tracking sheet will provide precise information as to what needs to be done to improve your results: increase the number of calls; improve the quality of the callers – make sure to attract motivated sellers; expand your knowledge base to maximize your
opportunities. Success is not about luck. Success is in the numbers.

Study the numbers and explode your bank account.

Best of Success

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No Money Down Real Estate Investing

Oct 7

Posted by admin in Real Estate

If you really want to make a wealth of money in real estate you must learn to leverage a small amount of your resources to control a lot of property. One of the techniques I like to use is Subject To financing.

Although some states are attempting to pass legislation to regulate or ban this practice, it is still one of the best ways to easily finance a purchase. My advice is to check with a local attorney to verify if laws have been passed in your state relative to purchasing Subject To the existing mortgage.

What makes Subject To financing so powerful is the ability to take title (ownership) to a piece of property while leaving the existing financing in place. In other words, ownership passes to the Buyer, but the loan remains in the name of the Seller, or more precisely, in the name of the original Borrower. You can easily see why this is such a powerful tool: you can fund most or all of the purchase price of a home with the loan that is already in place! The buyer simply makes up the past due payments to bring the loan current, and commits to the Seller to make on time payments in the future, but does not need to secure new financing.

What about the due-on-sale clause that most mortgages contain today? It\’s true. The lender does have the right to call the loan due – but NOT the obligation to do so. In fact, it doesn\’t make sense for a bank, an institution that is in the money business, to call a performing loan due and risk forcing it into foreclosure. After all, a bank would rather have the on-time payments than the real estate.

What about the Seller? Why would they agree to placing their credit at risk? Since the loan remains in their name, they remain financially responsible. A motivated Seller however, is desperate to eliminate the responsibility for payments. They\’re usually facing foreclosure. You\’re offering the opportunity to remove the burden, AND at the same time improve their credit rating with on-time payments made in their name.

Are you currently using this powerful technique in your real estate business? Unless your state prohibits it, Subject To financing should become one of your first options for the purchase of investment properties. The bank benefits by having the loan payments caught up and current. The Seller benefits from debt relief and credit improvement. And best of all, you benefit by leveraging a small amount of money to finance your real estate transactions.

Best of Success

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The \’Truth\’ About Real Estate Preforeclosure Profits

Oct 4

Posted by admin in Real Estate

If you want to make BIG money in the Real Estate Business you must know the \’truth\’ about preforeclosures; not only do you need to know exactly what preforeclosures are, but you also have to learn how and when to invest in preforeclosures.

As an investor you\’ll have to understand and be up-to-date with the foreclosure laws in the state where you live.

A foreclosure takes place when the owner (borrower) is unable to pay his lender the monthly mortgage payments; the lender will notify the borrower and let him know to find the money within a specified amount of time (varies in each state) otherwise the lender will be forced to repossess the home and begin the foreclosure procedure.

The borrower will have to leave his home; more than that, he will not be able to save his credit for other purchases.

The lender will try to sell the home at public auctions for a price lower than the actual market value of the house simply because he wants his money back.

Sometimes the house sells quickly, but often the lender is unable to sell the house and it will remain unoccupied.

Hope you get the BIG picture about foreclosures. Now, you must understand what a preforeclosure is.

A preforeclosure happens before the foreclosure procedure has taken place. In a preforeclosure, you contact the borrower yourself and let him know that you have a serious investor who is interested in buying the home from the borrower.

The borrower has the advantage of receiving money from the investor so he will not be forced to leave his home and his credit will not be ruined.

The lender receives the rest of his money (the borrower\’s mortgage) from your investor. Once you resell the house both you and your investor will remain with a NICE profit.

In a preforeclosure, ALL involved parties benefit: the lender, the borrower, you and the investor. It\’s a Win-Win situation.

Most real estate agents want to keep the information above SECRET because you are \’stealing\’ the business from them.

One of the \’BEST\’ ways to make profits with preforeclosures FAST is by looking on the Internet for preforeclosure listings.

Sign-up with a service that sends you preforeclosure listings (lis pendens) You\’ll receive official notices when a NEW foreclosure process is about to begin. You will also receive information on the house, the names of the lender and the owner (borrower).

Make sure you CREATE a list of the homes you are interested in and start contacting each owner (borrower) by phone or e-mail. It\’s faster than by doing it in person.

Talk with each person in a serious and warmly manner, pay attention to their wants and needs. Let them know that a preforeclosure is really their \’BEST\’ option and provide your SUPPORT and help along the way until you successfully make the deal and beyond.

If they are happy most will tell others about your HELP (e.g. friends, partners, contacts, etc.) thus generating for you more loyal LEADS for future business deals.

Remember: be persuasive, kind and helpful to ALL serious people in the real estate preforeclosures business and you\’ll succeed no matter what.

- Copyright C Mike Upshaw

Mike Upshaw
http://www.BigProfitsInRealEstate.com

For a ** FREE *** mini-Real Estate E-course click here mailto:BigProfitsInRealEstate@getresponse.com

or send a BLANK email to BigProfitsInRealEstate@getresponse.com

NEW Real Estate eCourses (INSTANT Download!) offered:

Course #1: How To Make Big Money With Probate Houses
Course #2: How To Buy Preforeclosure Houses For Big Profits
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Writen By : Mike Upshaw

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7 Reasons Why Real Estate Options Are Ideal For Beginner And Advanced Investors

Oct 4

Posted by admin in Real Estate

Whether you are an advanced real estate investor or just getting started, real estate options can be an ideal investment technique. A real estate option is a way to control a property without owning it and it locks in the buying price for a specified time.

Most investors don\’t understand how to use a real estate option, which is unfortunate because it is one of the most powerful tools in real estate investing. In fact, super successful investors such as Donald Trump routinely use real estate options for maximum leverage.

Here are 7 reasons why options are ideal for real estate investors, beginner or advanced.

1. Since you don\’t own the property, you are not obligated to make house payments. You also don\’t have to deal with repairs, holding costs or tenants. Imagine how flexible you can be if you don\’t have to deal with monthly mortgages or on going repairs.

2. Getting started with real estate options doesn\’t require a lot of cash. In many cases, we have controlled a $100,000 property for $10. This is especially important for a new investor since startup capital is often an issue.

3. Options are great at generating quick cash. Once you have the option locked up, you can market the property to create quick cash. You should focus on making at least $5,000 per option deal, and there\’s no practical upper limit to how much you can make (one of our colleagues made over $300,000 on a land option deal)?all without having to deal with tenants, repairs or holding costs.

4. Using options is a great way to enter the luxury home market or control properties in hot markets. Since these are higher priced homes, you should expect to pay a higher option fee. We have controlled $500,000 properties using $100 to $1000. In many markets, a $500,000 is a starter home but the point is that you can control a lot of real estate for a very modest fee.

5. Options are scaleable because a single real estate option can be used to control a small deal or a large one.

6. Options offer multiple exit strategies. You can either exercise the option to buy the underlying property; you can sell or assign the option to another party; or you can ensure that the seller has to pay you off because the option creates a flaw in the title.

7. Using options allows you to convert dead leads into viable ones. For an experienced investor, this alone can add tens of thousands of dollars to his business because most deals that are not viable with other techniques (foreclosures, short sales, etc.) are often great candidates for real estate options.

8. BONUS REASON: Real estate options are very flexible and can be used with all types of properties including single residential homes, multi-units, apartment buildings, commercial properties and land. You can also specify the option period, which offers additional flexibility. In many cases, you can even extend the option period, often for an additional modest fee.

In summary, using a real estate option is an ideal investment technique for beginners because options don\’t require much cash and can generate cash quickly. For advanced investors, using options to convert dead leads into deals can add tens of thousands of dollars per month.

Copyright 2005 Alex Nghiem

Alex Nghiem is the co-founder of Wealthautopilot, which provides coaching and educational products/events for real estate investors who want to turbo charge their results immediately.
To get a weekly free newsletter on cutting-edge real estate tips and a 6-part course on real estate options, visit http://www.wealthautopilot.com/course-a

Writen By : Alex Nghiem

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The Capital Asset Pricing Model Of Stock Investing (CAPM)

Sep 28

Posted by admin in Stocks Mutual Funds

In 1990 Harry Markowitz, Merton Miller, and William Sharpe shared the first Nobel Prize in the very young area of financial economics. The Nobel committee recognized Harry Markowitz for developing portofolio theory, Miller for the theory of corporate finance, and Sharpe for the Capital Asset (stock market) Pricing Model also known as CAPM.

CAPM was the crowning acheivment of theoretical economists bent on proving that markets are efficient and work together mathematically with the precision and elegance of a Rolex watch. In the 1980s, researching financial economists began to notice a slew of empirical results that are not consistent with the view that stock market returns were determined in accordance with CAPM and stock market efficiency.

It is useful for you to understand what CAPM is because you will read or hear about it as you progress as a stock market investor. CAPM is a regression model designed to separate out the general stock market price changes from price changes specific to a given stock. The general stock market price change is called unsystematic risk. An investor can get the same return as the general stock market buying a mutual fund that is indexed to the stock market such as the Vanguard 500 fund (symbol VFINX). For this reason the amount of profit you receive on a specific stock that is as much as the stock market indexes is said to not be priced into the stock in terms of the risk you are taking.

The amount you make or lose on a given stock as compared to the stock market averages is considered to be priced by investors to compensate for the additional risk you take in buying stock in a single company instead of a fund indexed to the stock market. The profit or loss that you receive as compared to the stock market is called systematic risk. The capital asset pricing model measures systematic risk with a regression coefficient called beta. When I talk about beta now you know what it is; it is nothing more than a measure of additional potential return an investor should receive for purchasing a single stock based on how risky that stock is. I want to emphasize that CAPM is based on the notion that the stock market efficiently translates all information known about the stock market into stock prices for stock investing purposes.

Dr. Brown can teach you how to invest through The Delano Max Wealth Institute (http://www.DelanoMax.com). He is dedicated to providing you with courses and seminars that teach prudent savings and investing habits. Dr. Brown is also a finance professor at the University of Puerto Rico at Rio Piedras. He is also recognized as an expert at low risk, high return investing and takes great pride in helping others retire safely.

Writen By : Dr. Scott Brown, Ph.D.

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