The Truth About These 7 Real Estate Investing Myths

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By Julie A Broad

Many people believe that the secret to successful real estate investing is to time the market - buying at the bottom of the cycle. Other people believe that you have to buy properties that cash flow - and that is the most important thing. While people that believe these things may not necessarily be wrong, they are buying into a real estate myth more than a reality.

If you want to make money in real estate, you have to separate the myth from fact. To help you, here are seven of the most common myths dissected:

Myth 1: You don’t need money to invest in real estate

Reality: You DO need money to invest in real estate, but it doesn’t have to be your money. At the end of the day, every real estate deal requires some cash. Even if you do a no money down deal that does not require a cent for a down payment you will still need cash for things like appraisals, inspections and lawyers.

And, almost every property needs a bit of love when you buy it. Even a simple coat of paint requires some cash. So, you don’t need your own money to buy property, but you WILL need money.

This does not mean someone without a penny to their name can’t buy property - but it does mean that person will have to do some networking to find a few sources of funding.

Myth 2: You need a corporation to buy property without risk

Reality: Every situation is different, so you should always get professional advice to determine what is best for you. In most cases, however, a corporation is not necessary at the start. In fact, if you wish to get conventional financing from a bank, you will not be able to buy property in a corporation without personally guaranteeing it. There are exceptions, but even business owners that buy it for their business (example, a Dr. buying a property for his business), will usually be required to personally guarantee the mortgage on their property.

Eventually incorporating may be beneficial for tax or liability reasons, but when you are just starting out, a corporation is just another hurdle that will slow you down to the point of stopping. When you are first starting out don’t worry about complicated and costly things like corporations, just find a good property and buy it. You can always restructure how you hold your properties later on.

Myth 3: Cashflow is the most important thing

Reality: Cashflow is important, but setting your real estate investing goals and then finding properties that help you achieve your goals is the most important thing.

Focusing purely on the numbers can result in buying problem properties that do not attract tenants easily, do not appreciate, and require a lot of work. You always have to consider what you want to achieve, what your exit strategy is and whether the property will deliver on your expectations.

It is more important to figure out what you want, and then find a property that works for you, then it is to find a property that makes plenty of positive cashflow every month.

Myth 4: Buy the Ugly House on a Good Street

Reality: Sometimes the seller of that ugly house thinks their house is worth more than it is just because the comparable properties around it are of higher value. You also might find yourself with a money pit.

If you have a good contractor, you have the money, and you know you can make the ugly house pretty then there often is tremendous opportunity in finding the ugliest house on a good street. But if you are buying the ugly house on the street, just expecting it to be worth more later because it is surrounded by good houses, remember it is still the ugly house.

And, ugly houses do not attract good tenants, even if they are in good locations. If you are not planning to fix it up, you will have a hard time getting and keeping good quality tenants in that property.

Myth 5: All real estate is a good investment

Reality: Over the long term, properties purchased in good locations will usually be good investments. We rarely hear long time investors say “I never should have bought that place” but we often hear them say “I never should have sold that place” or “I wish I had bought that when I had the chance”.

Over the years, real estate has gone up in value nearly everywhere. However, if you buy in an area that is in decline or dependent on one industry that is struggling (timber, fishing, etc,) you are taking the risk. It is possible for areas to decline and never improve.

You can make poor investment decisions in real estate just like you can with stocks. Not all real estate is a good investment, just like not every blue chip company stock is a good investment.

Myth 6: You need to time the market

Reality: Unless you have a crystal ball, you will never know what is going to happen in the market. The reality is that you just have to find a good deal. You don’t have to wait for the right time. In fact, waiting is the worst thing you can do in real estate. The sooner you buy, the better for your wealth growth. Just make sure you buy a good deal.

Your best bet is to focus on your objectives and find a good area with good prospects for the future, and buy there. If you hold onto it for 5 or more years, you will be able to weather any downward turns the market takes, and as long as someone else is paying down your mortgage and it costs you nothing, or very little, to hold each month, you don’t have to time the market.

Myth 7: Real Estate Investing is Easy

Real estate investing is simple, but it is not easy. It takes work. It takes effort to find good properties. Once you own the property, it becomes pretty easy over time.

For more insider strategies for getting started as a real estate investor, sign up for real estate expert Julie Broad’s free monthly newsletter at her website http://www.revnyou.com Get your free report for making money with real estate here.

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Flipping Houses For Profit - Today

By Alex Nghiem

So you’ve decided to get into real estate investing? You’ve done your research, and realized that of all the potential investments out there, real estate investing offers the best returns, both short and long term. That’s great! Now what?

To really profit from flipping houses, you need to have a good strategy. You need to decide how you’re going to go about things, and what your time frames are. Here are a few basics you’ll need to figure out before you get started.

Your Budget

Before you start flipping houses, or getting involved in real estate investing, it’s wise to know your budget. Whether in cash or loans, your funds are finite, and you’re going to have to set a limit on what you’ll spend. Remember though, when venturing into flipping houses for profit, that your calculations need to take into account the cost of repairs and renovations, and possibly realtor or lawyers fees, as well as the cost of the property itself - you don’t want to get caught short when you need to buy supplies, or pay contractors!

Suppliers

If you’re serious about real estate investing, and making profit off the houses you flip, it’s a good idea to find a few good suppliers of paint and other hardware, that offer great prices - the less you pay, the more money you’ll make. Consider buying paint in bulk, and saving. There’ll always be a use for paint, and if you get neutral colors, you should be able to use it on more than one house!

If you stick to the same suppliers, you might also be able to get discounts, or free deliveries, which all add up to more profit for you.

Be Prepared to Get Your Hands Dirty

When you venture into flipping houses as a real estate investing strategy, you’re going to need to do a lot of the dirty work yourself. Stripping, painting and other labor intensive, but not complicated jobs should all be on your to do list.

When it comes to more tricky and specialized tasks, like plumbing, tiling or electrical work, find a local contractor who offers reasonable labor rates, and supply the materials yourself - you’d be surprised at how much you save, but be careful of using really cheap contractors too - the saying cheap and nasty didn’t come out of nowhere, and if the price seems too good to be true, it might just be.

Plan Well

Ideally, you should have a plan to renovate before the ink is even dry on the contract for the home you intend to flip. The sooner you can get your property ready for sale, the sooner you’ll recoup your money, and, if you’re using debt finance, you’ll save on installments. Make sure you plan your renovation well, take time off work if necessary, and if you have it, and you should be able to flip your property in record time.

As with all real estate investing, flipping houses is about knowing the market, careful planning, and being ahead of the pack. Make sure you have all your ducks in a row, and you should be able to make a lot of money, in very little time.

Learn More About Real Estate Wholesaling Download the FREE Wholesale Manifesto Now: Click Here

Alex Nghiem is the co-founder of several Real Estate investment websites and is a well respected coach. His latest project is the just completed Wholesale Manifesto. Learn All about - Real Estate Wholesaling Here.

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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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Why Wholesaling is Critical to Your Real Estate Success

By Alex Nghiem

So what is wholesaling exactly? Wholesaling is buying deeply discounted properties at massive discounts and selling them quickly to investors to create lump sums of cash.

Wholesaling is a strategy for quickly generating cash and is the opposite of land lording (also referred to as buy and hold), which is a longer term strategy. It is beyond the scope of this document to explain land lording in detail but suffice it is to say, many, many investors get in trouble because they become landlords mistakenly thinking the cash flow from their tenants is enough to keep the investors afloat. Wholesaling quickly creates cash and as Warren Buffett says: “Cash is king.”

Wholesaling enables you to solve the #1 reason why businesses fail, which, is lack of cash flow. Having steady cash flow eases a lot of stress and greatly increases your chance for success. Wholesaling is a great way to do real estate business because it doesn’t require you to purchase the property. Instead, you “put a property under contract” using $10 and you then attempt to sell it for a higher price than you put it under contract. The difference is your profit.

When done properly, wholesaling can generate thousands, even tens of thousands of dollars, for very little work. Wholesaling doesn’t require credit, cash and it requires very little time to master (since you’re not doing that much, to be quite honest).

Wholesaling has been around for decades here are some additional strategies we employ to improve the classic approach to wholesaling :

• We don’t do our own marketing to get deals because doing your own marketing can take time and significant capital (especially when you’re first starting out)
• We focus on getting the buyers first
• We also market our properties to buyers on a local and global level
• We add systems so we can delegate the work and we then automate wherever possible for even more efficiency

By adding these key improvements, we can consistently buy and sell 5-6 houses a months while running 2 other businesses and travel throughout the country to teach our approach.

At this point, you are probably thinking that real estate investing is a great business to be in. However, that would be a little misleading because you’re really NOT in the real estate business actually.

What Business Are You Really In?
Contrary to what you may think, you’re not in the real estate business. You’re in the business of marketing your real estate business. The business of a Real Estate Wholesaler is that of a marketer.

Learn More About Real Estate Wholesaling Download the FREE Wholesale Manifesto Now: http://www.wholesalingmanifesto.com/members/

Alex Nghiem is the co-founder of several Real Estate investment websites and is a well respected coach. His latest project is the just completed Wholesale Manifesto. Learn All about -Real Estate Wholesaling Here.

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