Real Estate Investors - “7 Step Formula” to Secure Private Money
First - Determine how much money you need to acquire a certain property and be sure to include the purchase price, closing cost and complete renovation costs. If you do not know the renovation cost be sure to make your best estimate so you do not leave these out.
Second - Start to market for private lenders. Make a point to tell everyone you know and meet “that you investing in discounted real estate investments and are looking for investors.” Show your potential private lenders how to start investing passively in investment real estate. You can also use other marketing strategies such as sending out post cards to wealthy people or putting up flyers in 55+ communities.
Third - You will need to create a presentation kit to educate your potential private lenders to the power and security of investing in discounted real estate. Essentially, position them as “the Bank.” Deliver your presentation to your contacts within your sphere of influence and your warm market, such as business associates, friends, family, realtors, accountants and attorneys to name a few. Some of these people may know other contacts within their own networks interested in investing.
Fourth - You will find that many potential private lenders have CD’s or money market funds that are only yielding 3% to 5%. Your presentation has to show that you can offer your investors anywhere from 9% to 15% return on their money versus the small returns they are currently getting at the bank. If they stocks or bonds they may be even more willing to invest in something as safe as good solid local investment real estate versus losing 50% or more in their stock portfolios. You need to offer them more income with a secure investment.
Fifth - Once you have a potential lender or two that has expressed some interest you need to present your proposed deal. You will need to show them what it will cost to purchase and rehab the property and what it will be worth once compete. You may want to borrow all of the money to purchase the property. Or you may go to a bank and borrow 80% and then use your private lender to fund the remaining funds.
Sixth - Make sure your private lender sends the funds (i.e., certified check or wire transfer) to your closing attorney or title clerk. Never have the funds made out to you or your company. Create a promissory note for your private lender explaining the terms of the transaction and make sure they are in either first or second lien position on the property.
Seventh - Complete the purchase of the property and rehab and be sure to invite your private lender out a couple times to see the progress so they remain comfortable the investment and build a long term relationship.
I invite you to learn more about Private Money Lending and get FREE instant access to a 60 minute audio and 20-page eBook titled “Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders!” by going to http://realestatewealthtoday.com/FREE-eBook.html.
Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive
your FREE Real Estate Wealth Newsletter go to Private Money Lending Kit.
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Real Estate Investing - 3 Important Factors to Consider Before Investing Your Money
One of the biggest concerns is to make sure you have a sound business concept that makes sense. Today, in this environment, the flipping or wholesaling of houses I believe is a very difficult concept.
The universe of investors out there that are looking to take your property over have diminished dramatically over the last few months. That doesn’t say that flipping or wholesaling a year or two ago didn’t make sense. It doesn’t mean it won’t make sense two years out. It probably will.
Buy and Hold
Right now with our environment, the buy and hold concept is what makes sense. To buy at the right price, too. You’re getting dramatically lower prices today than a couple of years ago.
Buy aggressively. Buy right and buy cheap. You should be able to hold properties relatively easy and they should produce positive cash flow in this environment. A couple of years ago that was very difficult to get a property to cash flow. In today’s environment it’s far easier than it was just a year or so ago.
Make sure that the concept of your business plan makes sense given the environment and what’s going on in the world. That’s one of the key elements to it.
Buy in Stable Neighborhoods
Also make sure you’re buying in what I call healthy, growing, stable neighborhoods. Make sure you have done a little bit of demographic analysis of the areas that you’re buying properties in. It’s so much better if the neighborhood you’re buying in is also moving in the right direction.
If you’re buying in a neighborhood that is declining, where drugs, crime, and those kinds of things are starting to take over, it is going to be very hard long term to make significant money. You’re going to have trouble convincing investors to invest with you if you’re buying in rough areas - what I call war zone areas.
I know particularly that in some of these war zone areas, as a property manager, it’s very hard to rent properties in these areas, too. If you do get them rented the turnover is very high, as is the cost of turnover.
The people renting there tend to like to take everything on their way out. That can even include the copper and the appliances, the toilets and sinks and what not.
Focus on Neighborhoods That Are Improving
I would stress that you try to focus on neighborhoods that are improving. They don’t have to be upper economic neighborhoods. They do need to certainly be stable or improving neighborhoods. If the population is growing in those neighborhoods, that’s even better.
That implies there is going to be demand for both buying homes in the future and to rent them. So if you can get in a neighborhood that’s growing in terms of economics and population, it is clearly a far better and more feasible plan to present to a private investor than buying in a war zone.
I deal with a lot of investors at buying war zones. I’m telling you that in my experience over the years it’s a tough way to make a living. I would much rather see you move up a notch or two in terms of the economic neighborhood you’re in.
Buy homes where you would be willing to live. If you’re not willing to drive down to see a property at night, then maybe that’s not the best of areas to be in.
I invite you to learn more about Marketing for Private Lenders and get FREE instant access to a 60 minute audio titled The Marketing Plan — Learn the Marketing Secrets of How to Get People Calling to Give You Money For Profitable Real Estate Deals! by going to http://www.realestatewealthtoday.com/PLS-Vol3-Signup.html.
Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE Real Estate Wealth Newsletter go to Private Lender Presentation Kit.
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Myrtle Beach Real Estate - Upside on the Beach
By Randy Zlobe
One of the fastest growing communities in the US is the “Strand” - the stretch of cities starting at Myrtle Beach and extending north along the South Carolina coast to North Myrtle Beach. Geographically, all of these cities are build around the high water table and the pine bluffs in from the coast, and present beautiful beach walks and lovely scenic vistas for houses. Myrtle Beach is commonly referred to as the “Golf capital of the World”, and was re-founded in the middle of last century as a resort community.
Myrtle Beach has a median family income of around $28,000 per year, and has had stable home prices for the last three years, with most homes on the market running around $225,000 or so, and new construction homes at $230,000 or so. While Myrtle Beach wasn’t immune to the credit crunch of 2007, and the resulting flattening of the US housing market, it was insulated by the strong local economy (much the same way Las Vegas was). While Myrtle Beach’s properties didn’t decline in price as rapidly as several other parts of the country have, they did drop a small amount.
Myrtle Beach’s primary business sector revolves around tourism and visiting, with a secondary sector built around high tech (mostly programming) businesses. With an average tourist influx of over 12 million visitors per year (most of them in the spring through fall), there’s been a building boom, both for people wanting to provide rental condos and time shares to visitors, and for people looking to buy summer homes. A side effect of this housing boom is that existing properties are appreciating in value, particularly as the community grows its own professional economy.
So, what’s the investment strategy for buying at this point in time? Like any investor, you’re looking to maximize your rate of return. Myrtle Beach’s strong local economy means that any building built here or bought here has a solid return on investment. Conventional wisdom says to batten down the hatches during a recession, and focus on savings and keeping your assets liquid. However, with current trends in banking, the weak dollar, and the specter of inflation, a solidly diversified portfolio should contain several real estate investments, or investments in tangibles. Here’s why:
For the first, nationwide, real estate prices are down; there are foreclosure properties on the market that are further driving down real estate prices. While foreclosure rates are higher than normal, they’re much lower than was initially expected when the housing bubble burst. What this means is that picking real estate, in the right markets, can give you significant rates of return as the economy eventually recovers.
In Myrtle Beach, there are several indicators that properties purchased there will appreciate in value. The first is the demographic growth rate - Myrtle Beach is growing by almost 6% per year. That growth rate means that several types of real estate are worth investing in, from second homes to office complexes, as the economy diversifies from its current tourism-driven base.
Myrtle Beach’s other tangibles are its quality of life - it consistently ranks in the top five among surveys of the best communities to live in for the United States - and its solid tax base, which keeps city infrastructure expanding and well maintained. Myrtle Beach’s resort pedigree is built in part around its accessibility, which stems from US 17 running north/south on the Carolinas coast to a passenger train line, which makes it easy to get to from anywhere on the eastern seaboard. That same rail connectivity also helps keep costs down in other ways for residents, which in turn helps foster business growth in the community.
Myrtle Beach is a lovely community with plenty to offer a forward looking real estate investor.
You build your dream home in Coastal Carolina, digMyrtleBeach.com gives you access to all the 
myrtle beach real estate properties available in the Coastal Carolina through the Board of Realtors Multiple Listing Service.
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The Pitfalls, the Pain, and the Rewards of Flipping - Rehabbing Homes
By Daniel Kepka
So your looking to get into flipping or as it is known in the United States, rehabbing to some. We will call it flipping to keep things simple. I have over 9 years of experience flipping homes. From doing a lot of the work myself to hiring people to do it for me. So lets take a look at what flipping a home really is.
Flipping means many things to many people. I define it as buying a home for the sole purpose of making a quick profit, within 3-6 months. I hope this fits most peoples definition of it. I will solely focus on the part of flipping that includes renovating.
Now here is the golden rule. You make ALL your money when you buy the home not when you sell. What do I mean by this? Well, if you buy a home at a sufficient discount, if you bought wisely then all things being equal when you sell you are guaranteed to make a profit.
How does this affect you? Let’s use a scenario. You buy a home for $100,000. The homes in the area, same square footage, same general look and layout sell for $115,000. Now your home needs a lot of work and the ones selling for $115,000 are in pretty good shape. You think you can put in $5,000 and your Realtor fees are $5,000. So you will walk away with a cool $5000 in your pocket. Smart right?
Well now it takes you 4 months to fix. There was an unknown plumbing issue and on top of it all the market fluctuated like it does, and houses dropped 1% (doesn’t sound like much but it is). So lets add up about $3,000 in mortgage and taxes, another $1,000 in extra plumbing repairs, and let’s drop the price of the homes in the area by $1,000. So now if you sell your home for the average price you will make $0 dollars in profit not to mention your time invested. This is a terrible deal. So make your money when you buy a home.
Flipping is about numbers. No emotions at all. Make a spreadsheet. Follow the budget. I cannot stress this enough. Follow the budget. A lot of shows on TV say this. But what they do not say is that you have to make your budget realistic. Yeah you might have a $20,000 dollar budget on a $400,000 dollar home. Again might sound like a lot. When you add in carry costs, repairs, labor, your time and unknown costs. It is a small amount. But on the flip side if your home you bought was $40,000 then $20,000 is a huge budget. Please remember to be realistic with your budget and then stick to it as if your life was on the line, which it might be.
How will you make your budget? Use free estimates when you first start. Get in a lot of people to estimate the work. Find some good flooring/tile/cabinet/paint/lumber/etc stores and get prices. How much are 35 2×4 studs? How much is 400 square feet of quality Berber carpet? This will come easier and easier as you get into it. When you get good, you will walk into a home and make a very accurate estimate in minutes.
Now labor. Do you do the work yourself? Well it matters on 2 things. Are you handy? And do you have the budget for laborers/contractors? If your handy I would recommend doing the easier jobs yourself. This saves a lot of money and costs you little time. What jobs? Putting on socket covers, painting, things like that. If you are not handy then you have to budget labor. It will make things harder but it will force you to find the best deals in your area.
So know the nuts and bolts. Where do I start? Get pre-approved by the bank. Know your limit and only use 90% max of it. Leave some cushion for a LOC (Line of Credit). You will need this money, trust me.
Next get a GREAT Realtor. The key word is great. I know you want to save the commissions but trust me again, they are a valuable ally in this business. First, they will find you homes, drive you around and the really good ones will even break down the numbers for you. And you don’t pay them a cent. When you sell they will advertise for you, do Open Houses and in general sell the home way faster then you ever could yourself. I have tried to sell homes on my own in the past and it is not worth it. The wasted time, headache and in the end less money for the same home. But I cannot stress this enough, they have to be on top of their game. No part-time Realtors or ones that don’t do much, or have not clue about investing. They need to be great at their profession. How will you find them? Have them buy you a coffee and interview many. Ask a lot of questions about flipping, are they Full-time, etc. This will take time and might be one of the hardest things to do. But if you do it right and take your time, the Realtor you choose will pay of dividends for you.
What should my Realtor look for? Well, there is a simple rule. Find the cheapest home in the most expensive neighborhood. Also make sure there is something wrong with it that you can fix. A house no one wants is a gem waiting to be picked up and make beautiful again. Also make sure the seller is motivated. You will know this by how long the house is on the market and how they negotiate with you. Some even tell you. Do your own due-diligence and talk to the neighbors on either side. Get some info from them. Then if the all is right, send out an offer.
Next, once your Realtor has found you the home. Remember you made your money already, cause you made it when you bought the home. Make your budget. I assume when you bought you bought a home that was not over your head. What I mean by that is the foundation does not need to be replaced or the entire roof removed. Do work in your scope. You would be shocked by how a little paint, some new carpet and some staging (will get into that in another article) can make a home look like new. Again, and again keep to your budget. Do not forget monthly utilities, mortgage, taxes, labor, materials, Realtor fees, and a 5-10% cushion for any unexpected issues.
Finally, time line. Do not hold your houses longer then 6 months. Unless your doing a major flip where your adding a second story or something. I say this cause the market could change dramatically in more then 6 months, many times earlier then that. And not always in your favor. Most flips should be in and out, like a ninja. You get into the area, clean up the house, make your profit and leave. Budget time realistically. In the beginning if you think painting the interior will take 6 hours, triple that number. That is probably more realistic. Again once you get good you will know exactly. But again get in, 3-6 months later get out. I mean sold and money is in your back on month 6.
In my next few articles I will talk about staging and holding properties. Yes once you have a small nest egg you will start renting, I know, shocking. See you next time people of the web.
Daniel Kepka, after 9 years of 
flipping homes joined his wife Marlene Alcon as a Realtor in the Calgary, Alberta, Canada area. After many mistakes and downfalls he has learned more about Real Estate then most people learn in a lifetime. His love of all things Real Estate fuel his urge to learn.
Drop by http://www.showmeproperty.net and search for Calgary homes, MLS listings, check mortgage qualification and so on!
Daniel Kepka
Discover Real Estate Ltd.
Calgary, Alberta
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Real Estate Investing - 8 Common Mistakes to Avoid
By Kevin Cole
Every new investor dreams of starting a real estate investment company, making lots of money and living the “good life.” What most fail to realize is that if you do not know what you are doing, investing in real estate can be extremely complicated and costly. If you take it slow and learn to do it right, investing in real estate can be very profitable. In this article, I will explain 8 common mistakes a new investor usually commits and how you how to avoid them.
Mistake #1 - Failure to Invest in Education
Before you start spending your money, you need to take time and learn the basics of real estate investing. This doesn’t necessarily mean you need to spend thousands of dollars on seminars, or “guru” related courses; it simply means you should spend time researching the different investment strategies to understand what you need to do to be successful. You can get a good understanding of real estate investing basics by reading several books or visiting a few good REI websites and reviewing some of the free articles. Remember, the more information you learn, the more money you will earn.
Mistake #2 - Failure to Start a Business
Many people start out investing on a small scale using their own name, cash and credit. What they don’t realize is that any mistake can cost you everything you worked so hard to build. Before you start investing, do your research and create a business entity that best fits your needs. In most cases, an LLC or a Corporation will be the most appropriate entity to use for your business. By creating a business entity, you will be protecting your personal assets if something goes wrong down the road.
Mistake #3 - Failure to Obtain Insurance
Insurance is something that most people will never need, but for those who do, it is money worth spending. Almost all Fire Policies (Homeowners Insurance) contain one or more exclusions relating to “Business Pursuits of an Insured” which means you may not be covered if a loss occurs. Depending on what type of property you own and what you intend to do with that property will determine what type of insurance you will need. If you plan to purchase a single family home for a rental, you will need to obtain a Landlord Policy. If you intend to buy and sell “Flip” properties, a Commercial General Liability Policy might be the way to go as many will cover contract liability. As a best practice, make sure you speak to a knowledgeable Insurance Agent when deciding what type of insurance you will need.
Mistake #4 - Failure to Strategize & Plan
Real Estate Investing is like any other business, so why would you fail to treat it like one? If you want to be successful, you need to develop a clear plan of action on how you are going to succeed. Before you start investing, decide what strategy(s) works best for you. Don’t worry if it takes you some time to determine the right strategy, but when you do figure it out, make sure you stick with it.
Mistake #5 - Failure to Create and Maintain a Budget
One of the first things you will need to do is figure out how much money you have to spend. Don’t try to buy an apartment complex if you only have enough money for a condo. Once you figure out how much money you have to spend, focus your time and energy in developing a plan that fits your needs. If you over budget, you might limit yourself on your growth potential. If you under budget, you most likely will get yourself into trouble, which will result in a large amount of debt.
Mistake #6 - Failure to Correctly Estimate the Cost of Repairs
So many people buy houses thinking a new coat of paint, some carpet and tile is all they need to flip their new house for a profit. This mistake will not only cost you time, but it can cost you the entire deal. When you are looking to purchase a property, invest in a local contractor to review the property to provide you with a list of repairs that will be needed and the cost to complete each repair. This step will save you time and thousands of dollars on the back end.
Mistake #7 - Failure to Create a Team
Everyone has heard the saying, “You’re only as good as the weakest link.” If you plan to invest in real estate and you do not have a strong team around you, YOU will be the weakest link. It is very important to surround yourself with a strong team of individuals and continue to maintain a great working relationship with these people. Your team should consist of the following individuals: a Real Estate Agent, a Mortgage Broker/Lender, a Hard Money Lender, an Insurance Agent, an Appraiser, an Inspector, a Contractor, a Title Company or a Closing Attorney. It will take a lot of time and effort to develop your team, but when you’re finished, your success with show.
Mistake #8 - Failure to Take Action
After you educate yourself, start a business, obtain insurance, identify a strategy or plan, create a budget and create your team, there is nothing left but to put it all to work and take action. It might be scary at first, you might make little mistakes; however, if you don’t take action, you will never make money and be successful.
Investing in real estate can be difficult and if you go at it wrong, it can be extremely costly. On the other hand, investing in real estate can be very rewarding, professionally and economically. Don’t be afraid to seek help with a professional. In fact, most of these mistakes can be avoided if you know what you are doing. The more information and research you acquire, the fewer mistakes you will make.
Kevin Cole is a Real Estate Investor in California and is a Partner of BC Property Acquisitions, LLC, a premier Real Estate Acquisition & Investment Company specializing in the buying, renting and selling of Residential and Commercial Properties. You can reach Kevin at http://www.BCPROP.com
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