Chris Parks asked:

Lease with option to buy: a lease option has a longer term than a straight option, usually running for as long as one year or longer. Some will even stretch to three years, depending on the whim of the seller. While your lease is ongoing, you can rent out the property and be in a positive cash flow. The second advantage is, the property is appreciating in value. If you have a long lease option, you can then sell the property for the highest price you can obtain.

One last strategy for hot picks: be on the alert for long leases. Long leases will ensure that a property will be rented or leased for long periods of time, not just a year. Some commercial leases for example go for as long as 5 or 10 years. One example is the government. Take post offices as the best illustration. The government will usually rent space for post offices on a long term basis. If the property you are eyeing has government outlets like the post office, the automobile insurance board or the government-sponsored health centres, these buildings qualify as hot property! LOCATION!

You’ve heard about the three principal parameters in real estate? One – location, two – location, and three – location. Take that with a capital “L”. One trick in looking for that pot of gold at the end of the rainbow is to buy the worst property in the best neighborhood, NOT the best property in the worst neighborhood. This is a cardinal rule that sophisticated inventors try never to break.

If you are thinking about offering a lease option, check out: Insider’s Guide to Selling Real Estate

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Andrew Larder asked:

Any trip to Belize starts fantasies of owning a beach villa, or a jungle resort. There are a lot of North Americans in this English speaking, former English colony.

Belize is known for its reef, the second largest in the world, and the fantastic diving that goes with it. Even beginner divers have heard of the Blue Hole, a famous diving spot. Ambergris Caye, “La Isla Bonita” in Madonna’s song, is the main tourist spot.

Along with tourist shops and T-shirt shops, there are real estate shops on the dusty roads of San Pedro on Ambergris Caye. Belize prices can range from as low as $5-10,000 for a beach lot in Corozal Town, a sleepy border town, to much higher prices for properties on Ambergris Caye. The southern resorts like Placencia are somewhere in between, price-wise.

There is lots of online assistance available. Gringos resell their properties, and locals sell to gringos, often through real estate agencies. You can contact a local real estate agency when you are in Belize, or simply scour the listings online.

If you keep in mind the old “buying swampland in Florida” tale, you’ll realize that you simply MUST visit and see for yourself ANY property you buy. You’d take a $2,000 car for a test drive and kick the tires, wouldn’t you? Then why would you make a $100,000 purchase, sight unseen?

Oftentimes the most important part of a purchase like this is YOUR enjoyment – you can buy purely for investment purposes, but will get an additional bonus of sunshine and relaxation if you LIKE the area, WANT to travel there, and VISIT your property to keep an eye on it or stay in it.

As more and more North Americans travel, and with the ease of getting to Belize, and its English speaking, safer roots – there will be more people looking to retire and visit Belize. This should be a continuously appreciating investment with good rental prospects, if you do your home work!

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David Jacobsen asked:

When you look around, it’s amazing how many people are putting some of their extra cash into a real estate investment. Is it just that as the baby boomers get older, more of them are panicking about having enough money for retirement? Or is it just that all the reality shows on television about remodeling rooms and homes has given people the urge to remodel something?

Either way, there’s no doubt that plenty of people make good money from real estate, and so can you. But although you may have heard some of the stories about Joe Bloggs who bought a house without having a clue what he was doing, only to sell it and make a fortune down the road, chances are that won’t happen to you. As more people get into real estate investing, the harder it’s going to be to make money just through pure luck. You need to know what you’re doing to get the best results.

That’s where a real estate investing seminar can be useful. I’m sure you’ve heard the concept of modeling yourself on someone successful if you want to be successful too, and real estate investing is the same. If you can find someone who’s made a lot of money investing in real estate, learn their methods and then copy them, chances are you’ll be very successful too. Unfortunately, most people making lots of money from real estate aren’t interested in sharing their strategies with anyone. If you can find someone and get them to be your personal mentor, great.

But if you can’t find a personal mentor, then look around and find a real estate investing seminar run by someone who’s made a success of real estate investing. There are plenty of companies that run real estate investing seminars, usually because they’re trying to flog their latest development, and it’s probably a good idea to steer clear of those. Ask around, particularly if you have friends or family who invest in real estate, to see if they can recommend a seminar they’ve been to.

Do some searching on the Internet, and you’ll soon come across a number of real estate investing seminars. You can also search based on a presenter’s name, to see what other people have to say about the presenter’s background and the success of his or her techniques. Most importantly, leave your credit cards at home, so that if the seminar is mostly about selling you lots of expensive resources, you can go home and sleep on it before blowing a stack of money. After all, you want to use most of your money for investing in real estate.

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Marilyn Roberts asked:

Wholesale real estate investing is where you find a property that is below market value and needing repairs, then you resell the property to a real estate investor without you actually having to buy the property.

You would make an offer on the property and once it is accepted you would then sell it ‘as is’ to an investor. The investor will get the financing, buy the property, and make all of the repairs.

One thing you need to do in the contract is place an addendum giving you the right to assign the contract to someone else. This way you don’t have to apply for a mortgage, have good credit, have a lot of cash (usually $10.00 to $100.00 for a deposit) or make make repairs.

These types of deals can be made over and over in a short period of time. It is not hard to find investors that want this kind of property. They are always on the lookout for them and it is worth a fee (anywhere from $1,000.00 to $10,000.00) to them if the property will be making a profit for the investor. Sometimes the fee will depend upon how good a deal you find. The investor will look at the after repair value to determine the value of the deal.

You can find these types of investors in the newspapers all of the time or you can place your own ad. Real estate investments clubs are also a good place to find these investors. The club’s members consist of investors, hard money lenders, wholesalers, mortgage companies, and real estate companies, etc.

Although you won’t be making the kind of money you could make from flipping the property yourself, you can have fast deals with little money or work. You could build up a little nest egg pretty quickly.

Wholesaling properties isn’t for everyone but it is a good way for a beginner to get started without taking a lot of chances. You will be learning how the real estate investor is figuring the profit potential of a property and that alone is good experience to get before you start buying properties for yourself.

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Luoanne Bryant asked:

Considering real estate investing? Or looking for the next big idea in real estate? People nationwide are continuously searching for new ways to sink their teeth into the lucrative market that is real estate investing. Before you choose your next big move in real estate be sure to analyze current market trends and choose a strategy accordingly.

There are several avenues to take within the rather large realm of real estate investing. Whether you execute more traditional types of real estate investing such as buying low and flipping or accumulating rental properties, there are several profitable routes to take. Consider using a combination of strategies in order to diversify your real estate portfolio and ultimately maximize profits.

One significant trend forecasted for the coming years is the rise of foreclosure investing. Due impart to exotic loans and the rise of interest rates, the amount of foreclosures nationwide is predicted to skyrocket in the coming year.

Perhaps you’re more interested in a preemptive move? Along the same vein as foreclosure investing is the trend of pre-foreclosure investing. Some of the same sites that offer foreclosure lists also offer pre-foreclosure listings. You can even get helpful tips on approaching owners who are in a financial bind. With pre-foreclosure investing you can avoid the auctions and wield more control over your transaction. Most importantly you would be helping the homeowner avoid a credit disaster.

With all the resources available online, foreclosure and pre-foreclosure investing is much easier than once considered. Some websites such as Foreclosure.com provide listings for foreclosures and pre-foreclosures. Foreclosure listings services also have helpful tools and resources making them a one-stop real estate investment shop.

Along with foreclosure and pre-foreclosure investing seems to be the strategy of holding the property as opposed to flipping and selling it right off the bat. Because the market has seen a rather abrupt slowdown, the profit is no longer in the flip but in the hold. Consider other options such as residual income from a rental property. Or it may be wise to invest more time and money to improve the property seeing as though there is no longer a need for conveyor belt housing.

Whatever your real estate flavor of the month may be, one thing is certain, real estate investing will always be a safe bet.

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Chris Parks asked:

The concept of note brokering, or converting a stream of payments, secured by a mortgage, to up-front cash can be done with discounted notes.

The main reason why an owner of a property will sell with owner financing is to earn more money on their money. The most common reason is when a buyer can not qualify for traditional financing. The benefit to the seller is that they can often get a higher rate of return on his/her money.

Another option is that a seller can have a buyer qualify for a traditional first mortgage on part of the sales amount, and then offer to take back a second mortgage to cover the balance. This often lets the seller get a higher price for his property, while letting the buyer still qualify for a mortgage.

If an owner sells a property with owner financing the owner is basically considered the mortgage company. But what happens if the seller who is holding a note and collecting monthly payments from his buyer decides that he/she wants to now use the money for something else, some other investment or financial need, or simply decides that collecting payments is not all that fun? Often times they want to sell the note.

Some note-owners have no idea that they can get cash for their note (discounted of course) or they do not know where to start. As a note broker your job is to introduce note buyers and note sellers and collect a fee for your service.

Popular ways to find those holding mortgages is to

1) Run a classified ad (in the Real Estate Services section of your newspaper) looking for note holders or

2) Direct mail or

3) The World Wide Web.

Use the public records of recorded mortgages to find those who are carrying a note. Since all mortgages and trust deeds are filed in the county clerk’s office this information is available to the public. Next, where do you find buyers for these notes? The same way actually; use ads, direct mail, and the web.

Lastly, the internet has made research in general and this whole process even easier now than ever before. You can simply type note holder or note buyer or note broker into your favorite search engine. Look through the results, read and find out how each of their programs work. You can find buyers, find sellers and of course make sure you know how you (as the note broker) will get paid when you broker a successful deal.

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Hanshi Terry Bryan asked:

Real Estate Investing is a sure fire way to earn some serious cash. Napoleon Hill in his book “Think and Grow Rich” identified that more people earned and held their money in real estate than any other vehicle. You can make quick returns on your money, as well as hold properties for long term appreciation. The return on your money far outweighs the pennies you earn on mutual funds and most 401k plans.

All wealthy people invest in real estate, no matter how they obtained their wealth. In some fashion, they will invest in real estate simply because it is the best way of perpetuating huge returns on their money. Donald Trump, Bill Gates, Warren Buffet and countless other wealthy people, all own several properties all across the world. This is no coincidence.

What makes real estate investing so attractive, is the ease in which it can be done. You don’t have to be a licensed realtor, and with so many different methods of investing, you will never be at a loss for deals. And the best part is that it does not take money to begin investing in real estate. All you need to do is learn from someone who has the experience and know how, and the ability to help you through your first deal.

It’s easy to purchase a course on real estate investment, but the reason so many people fail to ever actually buy one property, is because they lack a mentor and a mastermind team. Think how much easier it would be to buy that first property with someone helping you through the transaction.

And to get the quality life that you have always been wanted and the one that you truly deserve is by getting into the game of the real estate investing world.

Real estate loans give us the break to purchase property while putting very little, if any, of our own money down. It appears that “banks believe real estate is a safe venture.” It is also a fast-growing industry and always in demand. Population is very much on the rise so there is always the need for residential properties and the inflation is high.

The massiveness of the world’s assets is in real estate. It is an exceedingly expensive product. Each sale you make produces more profit potential for this reason.

There is no other vehicle that has produced more wealth than real estate investing. If you are planning on accumulating enough wealth to retire on and take care of your family, real estate should be a big part of that planning. I am surrounded by people in the investing community that just can’t seem to get started and then there are their neighbors that are making over $100,000 a month working part time. As I stated before, a big part of that is not having clearly defined and written goals, and if you did that already then you have probably moved into the top 10% already.

So make the decision to get in on this lucrative business today, you can’t afford not to!

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Jeanette Joy Fisher asked:

Is real estate investing a bad bet in today’s economy or does the media just love doom ‘n gloom stories? Take a look at what leading economists say about the real estate market.

Statistics Challenge Murky Media Coverage

We’ve all been bombarded recently by reports in the various media about how the real estate boom of the past few years is over. Whether you read it in the newspaper or a magazine or see it on television, it seems as if the media has decided the real estate bubble has burst and the housing market is in the initial stages of a major swoon. Not so fast, say a number of leading economists who are challenging the negative view being portrayed in the media.

If you look at the numbers, they seem to back the opinion of the economists. For instance, the median home price across the country has dropped only 1.7 percent in 2006. That statistic certainly doesn’t signify a bust in the real estate market. They way property values have been increasing over the past decade, that figure is more of a bump in the road than a major disaster. Most homeowners are still far ahead, even with the slight decline in home prices they experienced this year.

According to most economists, America’s housing market is simply undergoing a badly needed price correction after five years of record-breaking sales and double-digit appreciation. It’s really more of a confirmation of the soundness of our supply and demand economy than the catastrophe being reported by the media.

Even the Federal Reserve’s vice chairman, Donald L. Kohn, recently told a group of New York analysts that the Fed expects the recent housing correction to be much less dramatic than the media would have us believe, and that the correction will be relatively short-lived.

Interestingly, Kohn’s speech received hardly any mainstream media coverage. Kohn told his audience that the current downturn may actually be good for the economy as a whole, because it represents a chance for America’s supply and demand system to rebalance in areas that have seen dramatic increases over the past few years, allowing buyers who may have been priced out of their desired neighborhoods to begin looking for homes again.

Encouraging Economic Factors

There are other factors that may also spur a fairly quick market recovery, including the number of new households being formed and an increasing population. Kohn believes that the inevitable turnaround should begin relatively soon. Statistics from the National Association of Realtors (NAR) also would seem to back up Kohn’s optimism. Kohn’s same optimism is also supported by the fact that long-term mortgage rates are only about a percentage point above historic lows.

The recent decline in both gas prices and the country’s unemployment rate both indicate that Americans are better positioned to make their house payments. To further debunk the doom-and-gloom predictions of a housing swoon, the Fed has stopped raising interest rates, as well, which indicates that they are comfortable with the situation.

So the next time you turn on your television and hear about the catastrophic condition of America’s housing market, remember that you can’t believe everything you hear. The actual figures simply don’t support what the media is reporting.

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James Orr asked:

So, how do you calculate positive cash flow on a real estate investment? Are you saying that cash flow is the difference between the monthly rent amount and your mortgage payment? If so, shame on you.

There are more expenses to running a rental property other than the mortgage payment. Most banks use 75% of the monthly rent amount as a guide for what they believe to be a better indication of what you’ll actually take to the bottom line. For example, if the monthly rent is $1,000 per month, they will say that you have $750 per month of income.

So, where does that other 25% go? Well, it goes toward maintenance, vacancy, management, taxes, insurance, legal, accounting and the other expenses you would from running a business-and don’t be fooled; real estate investing IS a business.

There is a calculation that is used often in commercial real estate investing that a few of us have adapted to the residential real estate investing world: net operating income.

Net operating income calculations involved determine what the true income is from the property (not including the mortgage payment).

So, if you had a $1,000 per month rental income and subtracted the taxes, insurance, a reasonable estimate of the effect of vacancies, maintenance and management, the number you are left with is your net operating income for that property.

If we calculate this number first, we can use a financial calculator to determine what the most debt a property can support with that monthly payment and the interest rate we can borrow at.

If the amount we can borrow is greater than the purchase price (minus whatever we are prepared to use as a down payment), then we can honestly say the property looks like it has a positive cash flow. If it is lower than the purchase price, then we know that we need to put more money down or that we have a negative cash flow which is really, in my mind, like making a down payment over time.

So, next time you do your analysis of an investment property, I encourage you to do your own net operating income calculation to determine the cash flow on the potential real estate deal.

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