10 Growing Real Estate Markets to Explore

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By Stephanie Mojica

Housing prices have skyrocketed throughout the United States, leaving budget-conscious buyers scratching their heads trying to find an affordable home in an area with plenty of work, educational, and recreational opportunities. The good news is that dream isn’t a lost cause. REALTOR.com recently released a list of 10 up-and-coming real estate markets.

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1. Johnson City, TN

This Tennessee city of about 200,000 people is near the Appalachian Mountains. The average home price of $379,000 is about 10% less than the national average of $427,250 (as of September 2022).

2. Visalia, CA

For California, this city’s median home price of $400,000 sounds almost too good to be true. Visalia is in the San Joaquin Valley, about 40 miles from Fresno.

3. Elkhart, IN

This city’s average home price of $257,000 is roughly 60% of the national average. Elkhart is 15 miles from South Bend, 110 miles from Chicago, and 150 miles from Indianapolis.

4. North Port, FL

Florida is another traditionally expensive market, but this city of 75,000 isn’t one of them. The median home price of $548,000 is about 30% higher than the national average — but it’s Florida.

5. Fort Wayne, IN

Indiana strikes again with its budget-conscious homes and access to work, education, recreation, and travel. The average house price in this city of 265,000 is $300,000.

6. Lafayette, IN

This Hoosier State city of 225,000 has a median home price of $291,000 — roughly 70% of the national figure. Lafayette is about 60 miles from Indianapolis and 125 miles from Chicago.

7. Columbia, SC

For a capital city, an average home price of $309,000 is pretty darn good. The second-largest city in South Carolina, Columbia has a population of about 135,000.

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8. Columbia, MO

As a major Midwestern college town, Columbia has a lot to offer its 125,000 residents. The median home price of $347,000 is 20% lower than the national average.

9. Raleigh, NC

Another southeastern state capital made this list, and Raleigh is undeniably one of the best cities in this part of the country. The average cost of a home in this city of 475,000 is $463,000.

10. Yuma, AZ

Another city west of the Mississippi made this list, with a median home price of $315,000. This city of about 75,000 is known for its sunny weather.

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Why 2022 is Still a Good Time to Invest in Real Estate

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Despite Inflation, Despite Interest Rates, Despite a Recession

“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.”
—Warren Buffett

By Jeff Roth

Why to Not Worry About Inflation

Let’s take a look at inflation historically.

Yes the Consumer Price Index (CPI) is over 8%, and some say higher because they changed the way CPI is calculated over the years and does not include all items that may show inflation that consumers frequently need to buy.

However, real estate is one of the few assets that is performing well in this inflationary environment.

Values of properties have continued to go up higher than inflation. Buying investment real estate is using the power of inflation to your advantage because prices go higher with inflation because, sadly, the value of the dollar has gone down, and it takes more of those devalued dollars to buy the same house.

Even in 2022, prices are forecasted to go higher.

Rents have also increased greater than the rate of inflation in many places.

So, investing in real estate uses the power of inflation to your advantage.

What about high interest rates?

Why to Not Worry About Interest Rates

Yes, like inflation, interest rates are higher than we have seen in some time, and many would argue the rates were kept artificially low by the Federal Reserve.

So, historically speaking, how bad are interest rates?

Interest rates are elevated, but they still are not as high as they have been at some points in the nation’s history.

Also, if interest rates are lower than the rate of inflation (which they still are in many cases), then the effects of inflation mean you are paying back a long-term debt with dollars that are “worth less” over time because the value of the dollars you are paying the debt back with have been devalued.

Essentially, long-term debt, like mortgages, are an asset themselves in an inflationary environment.

Yet another reason to invest in 2022.

But what about a recession? Won’t that affect the housing market and real estate investments?

Why to Not Worry About a Recession

Home prices have gone up four of the last six recessions.
Part of the reason for this is the lack of housing supply to meet demand.

In fact, a recent study by Freddie Mac states there is a 3.8 million shortage of housing units to meet demand that would need to be built in the coming years in the U.S. https://www.yahoo.com/news/more-housing-coming-national-shortage-035900543.html

This new supply of housing units will need to be built while there is a shortage of skilled trade workers and lingering supply chain issues making material availability and costs unpredictable.

A good exercise, as an investor, is to ask where else can you invest your resources besides real estate and what returns you can expect.

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What Are The Investment Alternatives?

There are many alternatives to investing in real estate. Let’s see how they are performing.

Wage Growth- Surely, with all the job shortages reported, there has to be strong wage growth. Actually, according to the U.S. Bureau of Labor Statistics from Sept.13, 2022, real average hourly earnings are down 2.8%, seasonally-adjusted, from August 2021 to August 2022. Did you get a 9% pay increase this year to stay ahead of inflation? If so, you are doing better than most. https://www.bls.gov/news.release/realer.nr0.htm

Stock Market Performance- Year-to-date total returns for the S&P Index is down 17.12% according to MarketWatch. https://www.marketwatch.com/investing/index/spx

Bitcoin- Digital gold is down 57.76% year-to-date according to MarketWatch. https://www.marketwatch.com/investing/cryptocurrency/btcusd

Gold- The original safe haven investment is down 6.82% year-to-date according to MarketWatch. https://www.marketwatch.com/investing/future/gold

Small Business Performance- According to an article from April 2022 entitled “41 Small Business Statistics: Everyone Should Know,” only 40% of small businesses are profitable. https://www.smallbizgenius.net/by-the-numbers/small-business-statistics/#gref

So, if there really are no great alternatives to real estate investing in 2022 for the average investor, what is the cost for waiting and giving in to the media’s negative drumbeat about inflation, interest rates and a recession?

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What Are The Opportunity Costs For Waiting To Invest in Real Estate?

There are always costs for not making a decision or making a different decision with your resources.

Let’s take a look at the lost wealth over the next 5 years in lost equity if you wait or fail to invest in 2022.

According to Keeping Current Matters and the Home Price Expectation Survey, you would lose out on $102,787 from appreciation alone.

Additionally, you have three more opportunity costs for not investing in real estate in 2022:

1. Interest rates may very well continue to increase.

2. The money you have to invest will lose purchasing power from inflation.

3. The tax benefits from owning real estate will not be realized.

So, the question is, why wait?

Why Wait to Buy Real Estate?

Real estate appreciation and rent increases are greater than the rate of inflation.

Interest rates are still below the rate of inflation and below historical highs.

Home prices have gone up during four of the last six recessions.

All other investment alternatives are losing value in 2022 on average.

Waiting to invest will cost you future projected appreciation, interest rates may continue to increase, the money you have to invest will continue to lose purchasing power, and the tax benefits from owning real estate will not be realized.

Why wait to buy real estate?

To your success!

Jeff Roth
Contributor

Jeff is the founder of Arbor Advising. Arbor Advising is a consultancy based in Ann Arbor, Michigan that is passionate about helping people reach their financial goals with real estate and real estate investing in Michigan with an established record of success in various market conditions. Jeff believes in the value of education and is a contributor to many local and national real estate publications and organizations. Reach out for a confidential consultation to review your specific goals and objectives and join the many satisfied clients that work with Arbor Advising.

You can connect with him at:
www.arboradvising.com
[email protected]
https://twitter.com/ArborAdvising
https://www.facebook.com/profile.php?id=100083113851229
https://www.linkedin.com/company/arbor-advising/?viewAsMember=true
https://www.instagram.com/arboradvising/

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How To Use Private Money To Secure & Grow Your Real Estate Investing

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By Tim Houghten

We are certainly in exciting times for real estate investing. A lot may feel like it is changing from our 12-year bull run. But if you’ve been through a cycle or two in the past, then this may feel a lot more familiar and predictable.

Success in the months and years ahead is going to largely depend on investors’ financial position and access to capital.

Critical questions all investors should be asking themselves right now include: If their debt has been optimized to survive, what’s next? And, will they be able to secure new funding to keep thriving and growing as more opportunities arise?

Meet Joe

We caught up with Joseph V. Scorese to gain insight on the lending landscape, including what we can expect from lenders and what types of funding is still available for investors.

Joe is Regional Development Manager, Northeast, for Lending One. A national private lender focused on providing loans for real estate investors, LendingOne has funded over $1B in loans.

He has personally been investing in this space since 1992. So, he certainly knows a thing or two about the market, how it works and how to make the most of it.

One of the things that Joseph is most passionate about is educating others on the availability of private money and how it can be used to grow their real estate investing.

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What Exactly Are Private Real Estate Lenders?

Joseph specifically wants investors to understand that there are alternatives to the credit sources that they used to be limited to.

In his opinion, traditional banks and mortgage lenders really let investors down in the wake of the Great Recession. He doesn’t see them stepping up to be competitive or provide the backing that real estate investors need now or will need in the next phase.

At the other end of the mortgage market spectrum have been hard-money lenders. They have certainly had their place in the market, although their high-interest rates and limited scope of underwriting hasn’t made them the optimal solution for many.

Today, LendingOne is a private real-estate lender. A distinctly different industry to the others. LendingOne is backed by Blackstone and its deep pockets of private capital.

They are an asset-based lender. Though in contrast to hard money, they also look at DSCR (Debt Service Coverage Ratio), plus the strength of the borrower and their experience. This allows them to make more aggressive loans — with better rates and terms than hard money lenders — while providing loans that traditional mortgage lenders wouldn’t consider due to their rigid underwriting criteria.

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The Current & Evolving Landscape

We picked Joe’s brain for his insights on the current market and what’s ahead.

While no one knows exactly how things will play out, with enduring inflation — the highest in 40 years — he acknowledges that we could probably use some cooling in the housing market. Not that we need a crash, but more sustainable growth would be wise.

We have already seen a significant reset in the past 90 days. Joe says that in addition to the extra inventory we’ve seen coming along over the past couple of months, there are a lot of foreclosures in the works. It could be another 12 or 18 months before they hit the market. Together these factors suggest that there is going to be a lot more negotiability for acquisitions coming and hopefully more discounts to be found.

So far the only obvious changes in the lending space have been in interest rates. Most of today’s investors weren’t around when rates were at 20% or even 14%. Joe says that while they might not get that high, they are indeed rising. He predicts they will likely hit the 8% to 9% range.

This should definitely be creating a sense of urgency among investors to do two things:

  1. Optimize current debt structures to make it through this phase of the market.
  2. Lock in great long-term fixed rates on new acquisitions while rates are low.

Additionally, investors need to be really getting in tune with their numbers, evaluating their assumptions and bids, and planning for new dynamics in the market.

Loan Programs To Fuel Your REI Business

Joseph V. Scorese says that LendingOne has $3B already committed to lend next year. He expects that to be consistent over the next several years.

LendingOne offers a variety of real estate financing options, including the following.

Fix & Flip Loans

Up to 90% of purchase and repair costs, and closing in as little as one week. BRRR-friendly, and interest-only payment options.

Rental Property Loans

Loans for individual rental properties, with 30-year fixed-rate options, no personal tax returns needed, and corporate borrowers allowed.

New Construction Loans

Ground-up construction loans with interest-only payments for up to 24 months.

Multifamily Property Loans

Multifamily bridge loans for value-add apartment building projects with loan amounts up to $15M, and no DSCR requirement at closing.

Portfolio Rental Loans & Blanket Mortgages

These loans are ideal for those with five or more rental units, with 30-year fixed-rate loans, and loan amounts up to $50M.

Smart Money Moves To Make Now

With the insights we gained from Joseph in our interview, it seems there are some obvious moves most investors should be making.

  • Recalibrate your buying criteria to demand better deals
  • Refinance now avoid rate shock on loans maturing in the next couple of years
  • Lock in long term fixed rate loan terms on new acquisitions now
  • Be sure you are staying on top of market changes on a daily basis

Find out more about LendingOne and their financing options at LendingOne.com.

Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.

Four Foreclosure Investor Precautions

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By Tod Snodgrass

The number of NOD pre-foreclosures notices are on the rise. Fortune magazine reports they are up triple digits in 2022 compared to 2021. There are several factors causing the uptick: COVID mortgage forbearance overhang, the current recession, rapidly rising interest rates this year, etc. The increase in the number of homeowners and landlords in trouble is causing a lot of (both note and property) investors to start taking a hard look at how they can profit from these changes in the market. Precautions include:

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1. Depreciating prices. For those who came into the investor market after the last downturn, you may not be aware that residential property prices in many markets dropped by 40%, from peak (2008) to trough (2012). Some areas/types of real estate dropped by even more. The cautionary tale is to be sure to build in enough equity in foreclosure properties you seek to acquire. In an up market, where prices are appreciating double digits every year, how much equity you initially acquire is usually not the first box you check as an investor. However, as the old saying goes: That was then, and this is now. Assuming the recession worsens, you need to build in more of an “equity buffer” into each deal to protect yourself from making no profit (or actually losing money) when you go to sell the property or note.

2. Judicial vs. non-judicial states. The number of virtual wholesale note and property deals are increasing nationwide; wholesalers need to be knowledge about what laws apply in the state in which the investment is being made. About half the states in the nation are what is referred to as non-judicial. That means they typically employ what are known as trust deeds and trust deed notes. The foreclosure is undertaken without using lawyers and judges. Judicial states usually require you to go through the court system to adjudicate your claim. Non-judicial states usually cost less and take less time to foreclose.

See https://retipster.com/judicial-non-judicial-foreclosure-states-list-map/ for a map, as well as details on the specifics for each state.

3. Beware of Land Contracts (LCs). An LC is an agreement in which the owner/seller of a property agrees to act as the bank and personally finance the sale for the buyer instead of going through a 3rd party, such as a bank or credit union. The buyer makes monthly payments to the owner, but does NOT receive actual title to the property until the last payment is made; and the last one is often a “balloon” payment, i.e. for a very large amount (that the buyer perhaps cannot afford to make).

As an investor (of a property or a note secured by a property) who is about to step into this breach, you must give careful consideration to the LC contract that the owner has/had with the LC buyer. What you want to avoid is getting subsequently sued by the buyer after you bought out the interest of the seller.

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For example, does the seller own the property outright, or is he still making payments to a lending institution? If the owner himself did not make regular payments for any reason, the property can be foreclosed upon, leaving the buyer with a worthless contract and no home. Land contracts also leave the new owner (you) tied to the property. If the buyer stops making their payments, you become responsible for the land—which means you could lose the property altogether if the buyer fails to insure it properly or pay their property taxes. 

All of these tricky issues must be taken into account when you are considering an acquisition that includes a land contract. You need to have a very clear understanding of everyone’s rights and responsibilities beforehand. To play it safe, retain legal counsel to look everything over first.

4. Watch out for Super Liens in 20 states. There are approximately 370,000 homeowner associations (HOAs) in the United States. Collectively, this represents more than 40 million households (or about 53% of the owner-occupied households in America). Statistically, about 26% of all Americans live in HOA communities. Typical HOA/association dues & fees run from $200-$300 per month—many charge more, some charge a LOT more.

In most states, when a lender forecloses on a property in a HOA, and the property owner has also defaulted on their association fees, odds are the condo association won’t get paid for those debts. That is because a successful foreclosure action by the holder of the first position mortgage typically wipes out all junior notes and many liens. However, in about 20 states (see the list below), “super lien” laws have been passed that protect the association from being wiped out completely.

A foreclosure by a bank or credit union can take many months. During that time the HOA is not receiving the monthly payments due to them. When the bank finally forecloses and sells the property, and surplus funds are left over, the HOA (in a Super Lien state) can typically petition the court to channel that money to the association, assuming the association has properly recorded a lien.

So, if you are a note or property investor, be sure to check carefully if the state in which you are investing (and where you could potentially foreclose on a property) is a super lien state. If so, you need to take that information into account, and build those costs into your bid price for the note or property.

To reiterate, about 20 states allow for some form of super lien. Each of the states has differing laws when it comes to how an HOA lien becomes a super lien. You can learn more about super lien states and their individual laws regarding super liens by looking up your state statutes which can usually be found online. The following states allow for super liens, or some version of priority liens for community associations: Alabama, Alaska, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Nevada, New Hampshire, New Jersey, Pennsylvania, Rhode Island, Vermont, Washington, West Virginia.

What We Do: Provide 100% Joint Venture Funding, nationwide, to real estate note and property wholesalers. Contact info: Tod Snodgrass, [email protected], 310-408-7015

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Converting Home Equity to Cash

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By Rick Tobin

The average American homeowner has the bulk of the household’s net worth tied up in the equity in their primary home where they reside. As noted in my past Equity Rich, Cash Poor article, the average US homeowner at retirement age has 83% of their overall net worth tied up in home equity (or the difference between current market value and any mortgage debt if not free and clear with no liens). As a result, the typical homeowner only has about 17% of their overall net worth available for monthly expenses.

Real estate isn’t as liquid, or the ability to quickly convert to cash, as a checking account. We can’t just go to our local grocery store and ask the cashier to deduct the full grocery cart from our debit account tied to our home’s promissory note or deed of trust. Yet, we all have to eat, so what are some ways to gain more access to cash that originate from the equity in our primary home or investment properties?

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Let’s take a closer look at ways to convert equity in real estate into spendable cash:

● Sell your primary home or rental properties: If so, where will you live? Are rents nearby lower or higher than your current mortgage payments if you need to move? Are there any potential unforeseen tax consequences or benefits? Will you miss the monthly rental income from your investment properties?

● Sale-and-leaseback: You find an investor willing to purchase your primary home while allowing you to stay there for months or years as a tenant.

● Cash-out 1st mortgage: Pay off some or all forms of consumer debt (credit cards, auto loans, school loans, business loans, tax liens, etc.) with a larger mortgage while possibly lowering your overall monthly expenses significantly with or without any verified income.

● Reverse mortgage: A combination of a mortgage and life insurance hybrid contract that gets you cash out as a lump sum and/or with monthly income payments to you while not requiring you to make any monthly mortgage payments. Lower FICO scores are usually allowed and minimal sourced monthly income like from Social Security may be sufficient to qualify.

● Business-purpose loan as a 1st or 2nd: A type of loan that may be tied to an owner-occupied or non-owner-occupied property for so long as the funds are used for business or investment purposes such as assisting your self-employed business or buying more rental properties. These types of loans have much less paperwork and disclosure requirements and can be funded within a few weeks with or without income or asset verification.

Declining Dollars and Rising Expenses

Although U.S. wage earnings rose 5.1% nationwide between the 2nd quarter of 2021 and 2022, the published Consumer Price Index (CPI) inflation rate reached 9.1% in June 2022 which was the highest inflation rate pace in over 40 years. As a result, the purchasing power of our dollars continues to decline while consumer goods and service prices rise too quickly.

In July 2022, credit card rates and overall consumer debt balances across the nation reached all-time record highs. This was partly due to more Americans relying upon their credit cards to cover basic living expenses to offset inflated prices.

Simultaneously, the Federal Reserve increased short-term rates a few times so far this year while making consumer debt balances more expensive. At the June and July meetings for the Federal Reserve, they increased short-term rates 0.75% at each meeting. This was the largest back-to-back or consecutive rate hike for the Federal Reserve in their entire history.

To bridge the gap between expenses and income, total credit card debt balances surpassed $890 billion in the second quarter of 2022. The increase in overall credit card debt rose 13% in the second quarter of 2022, which was the largest year-over-year increase in more than 20 years. Near the start of 2022, the average American had close to $6,200 in unpaid credit card balances as per the Federal Reserve and Bankrate.

An additional 233 million new credit cards were opened in the second quarter. This was the largest new credit card account increase in one quarter since 2008 (or near the start of the Credit Crisis). A consumer who pays just the minimum balance for a credit card with a few thousand dollar balance may need more than 30 years to pay off the entire debt partly due to the horrific annual rates and fees that are generally much higher than 30-year mortgage rates.

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Short-Term Cash Supplies

It would take 64.4 days for a Californian to run out of cash if they had average American savings amounts of $9,647 based upon a recent study from ConsumerAffairs.

Here’s the top 10 most expensive regions in the nation and the estimated time that it would take to run out of cash:
Hawaii (62.5)
California (64.4)
Washington, D.C. (72.1 days)
Massachusetts (73.6 days)
New Jersey (74.8 days)
Connecticut (76.3 days)
Maryland (77.9 days)
Washington (79 days)
New York (79.9 days)
Colorado (80.8 days)

Living Wages, Debt, and Wealth Creation

Another survey conducted by GOBankingRates that was published in July 2022 found that the median annual living wage, which is defined as the minimum income amount needed to cover expenses while saving for retirement, is $61,617 per U.S. household. However, the Top 14 most expensive states required much higher annual household income or living wages as listed below:

1. Hawaii: $132,912
2. New York: $101,995
3. California: $94,778
4. Massachusetts: $86,480
5. Alaska: $85,083
6. Oregon: $82,926
7. Maryland: $82,475
8. Vermont: $78,561
9. Connecticut: $76,014
10. Washington: $73,465
11. Maine: $73,200
12. New Jersey: $72,773
13. New Hampshire: $72,235
14. Rhode Island: $71,334

Nationally, the lowest required living wage income for households was $51,754 in Mississippi.

These Top 14 expensive living wage regions also share something in common in that they have some of the highest median-price home values in the nation, especially Hawaii, New York, and California. While the monthly living wages may be highest in these regions, the net worths for homeowners is probably much higher due to so many properties valued well over $1 million dollars.

Ideally, we should all focus on keeping our monthly expenses as low as possible while investing in prime real estate to boost our overall net worth. If so, you’re more likely to retire sooner rather than later while your money works hard for you (or rapidly increasing annual home value equity gains) instead of you working too hard for your money.

Rick Tobin

Rick Tobin has a diversified background in both the real estate and securities fields for the past 30+ years. He has held seven (7) different real estate and securities brokerage licenses to date, and is a graduate of the University of Southern California. Rick has an extensive background in the financing of residential and commercial properties around the U.S with debt, equity, and mezzanine money. His funding sources have included banks, life insurance companies, REITs (Real Estate Investment Trusts), equity funds, and foreign money sources. You can visit Rick Tobin at RealLoans.com for more details.

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Do I Have to Network to Succeed in Real Estate Investing?

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Image from Pixabay

By Tamera Aragon

Yes! I know you may have wanted a different answer, but this is the honest truth. Networking is such an important part of your business. You must introduce yourself and let others know what you are doing. Everyone can be a referral resource for you… and you for them.

The best book I’ve read to help me to become more comfortable with the idea of networking is called ‘How to Win Friends and Influence People’ by Dale Carnegie. It’s a great book that helps you to understand why you need to network with others as well as teaching you exactly how and what to say when you meet with new contacts.

Throughout my own 30 years of owning several businesses, (W0W – Am I that old?!), I can honestly say personal networking has been the most effective … and the most fun way to market myself!

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How to Network Your Way to REI Success

As a real estate investor, where can you reach out to network your business?

1) Search Real Estate Investor Clubs in Your Area.

2) Check meetings and trainings for local Real Estate Associations.

3) Check meetings and trainings at local Title Companies.

4) Check on handyman, builders and contractor associations in your area.

5) Ask everyone you talk to for referrals for networking events that have worked for them.

6) Of course chamber events and networking clubs that meet at breakfast and lunch are a general source to get to know the general public.

What do I say? Just remember the acronym F.R.I.E.N.D.S.

I know the biggest fear and reason many people don’t attend networking events is they don’t know how to approach or what to say to others when first meeting them. I am going to give you a script that will be easy for you to memorize…

Image from Pixabay

For every person you come in contact with at any type of networking meeting, your conversation might go something like this: Just remember the acronym FRIENDS:

F is for Forthright. Be forthright in reaching out and saying hi. Don’t wait for others to come to you.

“Hi there, my name’s __________. What’s your name?”

R is for Remember. You need to first always remember to ask them their name.

Ask for their card – and them hand them yours.

I is for Income. Ask them what they do for a living? How do they make their income?

“Say their name, and ask “What is it that you do?”

E is for Everyone. Everyone likes to talk about themselves.

Ask questions like, “How long have you been doing this?” or “What do you like most about what you do?”

N is for New Business. No matter if the person you are talking to has an occupation that is real estate related or not, you will want to find ways you both can support each other .

Ask : “What sort of clientele could I refer to bring you additional new business?

D is for Determine. After listening for possible ways to support each other, Determine where to take this relationship from this point.

S is for SUMMARIZE: When the time comes to share what you do, be prepared! Have a 30 second summary of what it is you could say to leave an impression on your new friend.

1) Hand everyone you network with your business card.

2) Summarize your business in 30 seconds or less. This is where spending time writing down how you want to market you and your business is important. You want to be concise and clear in describing what you do and what types of referrals would be most helpful. Try to incorporate something that differentiates you from the rest?

SAMPLE: REI 30 Second Commercials

6 Important Things to ALWAYS REMEMBER When Networking;

  1. The important thing is that you are interested in what they do for a living.
  2. Don’t talk about yourself until asked or the timing is right.
  3. Ask them questions about their occupation and how you can be of support to them in their line of work.
  4. If this person is a potential power team member for you, ask if you could contact them in the future. (You would be able to follow your list of questions for power team members and take notes when you called them back)
  5. Make sure to collect a card from everyone you meet
  6. Make sure you have their email address, fax, cell, and correct spelling of first and last name. (Write on the back of the card if any of this information is missing – it shows your interested!)

Questions To Ask When You Meet Real Estate Investors

  • “Do you buy, fix and sell or do you buy and hold?”
  • “How many properties do you own and/or have you sold?”
  • “What part of town do you invest in?”
  • “Really, why that area?”
  • “What do properties cost in that area?
  • “Do you pay cash for them or what banks do you use that are investor friendly?”
  • “What title company do you enjoy using the most?”
  • “Do you know any of the other people here?”
  • “Who are the big investors in this area?”
  • “If you ever come across some good deals and you don’t want them let me know.”
  • “By the way, do you have any property you want to sell?”
  • “We sometimes have properties for sale as well, if you’re looking to increase your inventory.”
  • “Well, Mr. /Ms. Investor based on what you told me and where you prefer to buy; if anything comes along I’ll make sure to call you first”.

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Final Important Points To Maximize Your Networking

Always write notes on the back of business cards you collect, helping you remember the next steps you will want to take with this contact in the future. Often times, just a “nice meeting you” card in the mail or email can be seen as a memorable gesture encouraging future communication to support each other’s business needs.

… as you get in front of people and

NETWORK YOUR WAY TO REI SUCCESS!

Tamera Aragon

Tamera Aragon is a professional online entrepreneur and has bought and sold over 300 properties, establishing her as an expert in the real estate investing field. Since 2003, she has purchased over 10 million dollars in real estate and currently holds properties all over the world. Tamera’s focus is on the booming Foreclosure market, buying Pre-foreclosures, REOs and Short Sales. Tamera who is a noted Author, Success Trainer, Speaker & Coach, shows her passion for helping others with the 17 websites she has created and several specialized products to support fellow investors throughout the world. When Tamara is not busy running her website, she is very involved with her Fiji joint ventures and investments. Tamera Aragon is one of the few trainers and coaches who is really “doing it” successfully in today’s market. Tamera’s experience has earned her a solid reputation in the industry as well as the respect and friendship of many of the top national real estate investment and internet marketing experts. Tamera Aragon believes her success has garnered her the financial freedom to fully enjoy her marriage and spend quality time with her children.

Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.

4 Tips for Qualifying for Commercial Real Estate Loans

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Image from Pexels

By Vista Capital Solutions

Commercial and residential real estate have quite different requirements and qualifications for loan applications. Here are four tips for qualifying for commercial real estate loans.

1. Have Proof of Income Available

The lender will need to know about your income sources and income level before you can be considered for commercial real estate loan approval. This is because the lender needs to be sure your monthly income will be able to cover both your regular expenses and your monthly loan payments. If this is your first time applying for a loan, have your tax forms available, for example, a W-2 form. If you already own or manage properties, bring your portfolio so the lender can review your global cash flow.

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2. Know Your Credit Score

Your credit score won’t hold quite as much weight when you seek a commercial real estate loan as it would for a residential real estate loan, but that doesn’t mean it’s not still an important piece of information. You should make sure your credit score is at least higher than 500. Ideally, however, it should be above 600. If your score falls below 500, you’ll have a much harder time trying to qualify for a loan.

3. Know Your Net Worth

Your net worth will be a much more important factor than your credit score. Net worth is the difference between someone’s liabilities and his or her assets. It will likely be the first thing your potential lender will want to review. Lenders want to make sure your net worth is greater than or equal to the amount of money you’re asking for as a loan, for similar reasons as making sure you have sufficient income.

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4. Inform the Lender of Management or Ownership Experience

Crucially for commercial real estate, you need to inform the lender about your experience in managing or owning properties. Let the lender know whether you have prior experience in these areas or not. If you don’t you may need to explain why you’re seeking to enter the market now. If you do, then you need to be able to show the lender what kinds of properties you’ve owned or managed and how your skills and experience translate to the new property or resources you’re seeking a loan to finance.

If you’re looking to apply for a real estate loan, you should understand both what information is necessary for you to qualify and how the processes differ between commercial and residential real estate industries.

How Do I Know What A Property Is Worth?

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Image from Pixabay

By Tamera Aragon

In considering the price to pay for a property, the first step you must take is to know the ARV (After Repair Value), of a property. Of course there are other costs to consider in buying and selling but it all starts here…The value of the property.

I know I get this question a lot…

Question: “How do I value the property I am interested in?”

I want to start by sharing that comps, or comparables, are regarded as the single-best tool in determining a home’s value. Comps will compare criteria from recently-sold properties in a neighborhood, such as sale price, age of house, size, and square footage and come up with an average value based on these elements.

I like to look at the last 90 days SOLDS and use ½ mile radius at most when considering comps around a property I am looking to value.

On a side note, for easy online access to the information I am sharing here anytime, go to this website where you will find a ton of other FREE tools and resources catering to real estate investors.

So… back to the original question…

Answer: COMPS! You need to use comps to come up with value. This is what the banks use to come up with how much they loan. This is what appraisers use. This is the common way to come up with base valuation of property.

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2nd Question: So you next question I get is, “Where do I find good comps?

Some of you reading this might be a Realtor and have easy access to comps.

However, others who are not Realtors, finding good comps is not so easy. And I know I hated to bother my Realtor to have to look up comps when I am making 20+ offers a day.

2nd Answer: So here ya go…here are some free resources that will help you in getting started in valuing a property using some simple online tools.

NOTE: Most of these sites include the value of a mortgage when it goes into Foreclosure as a sale, which can make these numbers skewed from facts. Be aware of this. However, these are good starting points and can be used in your initial evaluation.

  • Most popular – Zillow – www.Zillow.com who owns the term, “ZESTIMATE”. You just type in the address and their value comes up. If you want to learn how they come up with their Zestimate, go here: www.zillow.com/wikipages/What-is-a-Zestimate
  • NEW – In Beta Form- Find Comps Now – www.FindCompsNow.com Seems to utilize Zillow yet lists the properties used to come up with estimate but adds some interesting features like separating out the cash buyers’ purchases from those who were purchased with mortgages.
  • Offers Comps plus Property Operating Data Tool – Finest Expert
  • Connected to most MLS Services – www.Realtor.com
  • Most Comprehensive – Redfin – www.redfin.com Study showed they had 100% of all homes listed by compared to others.
  • Easy Sort feature to weed out comps that don’t apply (Foreclosures, too old, too far).Trulia – www.Trulia.com Do not just take the value shown.

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Follow these Instructions to get the best free comps from Trulia.

  1. Go to: www.Trulia.com
  2. Type in the address, city, state and if possible, the zip code for the property you need to run comps.
  3. Wait for small box on right to pop up and click on the words “view details” inside that box
  4. On this page look for tabs about 1” down – one says comparables – click on that tab
  5. On this page ignore the comps you see and scroll to the very bottom of the screen and click on the words view more comparables
  6. On this page you will see a tab for “Solds” and a tab for “For Sales”. These are the comps you want
  7. Note: This site also takes into account properties the bank has taken back at full price owed because they buy these on the court steps. Therefore, ignore the property prices that are out of line with the majority.
  8. Put properties in order of proximity by clicking the “proximity” tab and then clicking the arrow. This puts properties in order of how close they are to your
  9. Use the Per Square Foot price located on the right side.
  10. Average the Per Square Foot price by adding up those located a mile or less from the property and averaging the number by how many properties you added up. Example:
  11. 10 properties added up to be $1000.00
  12. Divide 10 properties by the $1000.00 total and that means the property you are researching is worth $100 psf (per square foot)
  13. Multiply this per square foot price by the square footage of your subject property.

Image from Pixabay

Again, there are many other factors to consider when looking to buy a property for investment services, (More on this in future blog posts.)

Are you interested in real estate investing?

Be sure to click on the link below to take advantage of many that I use in my REI biz.

On a side note, for easy online access to the information I am sharing here anytime, go to this website where you will find a ton of other FREE tools and resources catering to real estate investors.

If you have any other ideas, experiences or questions about using and finding comps, please leave me a comment below! It’s great to have the interaction and appreciate hearing from you.

TAMERA ARAGON

Tamera Aragon is a professional online entrepreneur and has bought and sold over 300 properties, establishing her as an expert in the real estate investing field. Since 2003, she has purchased over 10 million dollars in real estate and currently holds properties all over the world. Tamera’s focus is on the booming Foreclosure market, buying Pre-foreclosures, REOs and Short Sales. Tamera who is a noted Author, Success Trainer, Speaker & Coach, shows her passion for helping others with the 17 websites she has created and several specialized products to support fellow investors throughout the world. When Tamara is not busy running her website, she is very involved with her Fiji joint ventures and investments. Tamera Aragon is one of the few trainers and coaches who is really “doing it” successfully in today’s market. Tamera’s experience has earned her a solid reputation in the industry as well as the respect and friendship of many of the top national real estate investment and internet marketing experts. Tamera Aragon believes her success has garnered her the financial freedom to fully enjoy her marriage and spend quality time with her children.

Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.

Friends Do Business with Friends

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Image from Pexels

By Dan Harkey

Business & Finance Consultant

cell 949-533-8315 email [email protected]

“Being and Time” written in 1927, best discussed the concept of authenticity, of being, and caring. Martin Heidegger, a German philosopher, is an excellent read. In Heidegger’s study, he referred to as “Dasein,” which means “Being-there.” One may interpret it as “being-ever-present.” Also, to be fixed, embedded, and immersed in the physical, literal, and tangible day-to-day world. Another good read about the development of Heidegger’s concept of authenticity is in the book, Eclipse of the Self by Michael E. Zimmerman.

In the late-1970s into the early-1980s, I developed a unique strategy and grew from a high school business teacher to one of the highest producing real estate agents between Newport Beach to San Clemente between 1978 and 1984, and later in the mid-2000s to produce up to $10-25 million per month in sales volume in the real property lending business. On a side note, I developed the business curriculum in the 1970’s for Saddleback School District in Orange County, CA. The classes included word processing/keyboarding, typing, business math, consumer education, economics, and accounting. This was pre-computer science days.

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Before 1980, I was an early adopter of cross-selling. I created a real estate brokerage, a public escrow company to close the sales, a mortgage company to originate residential and commercial real estate loans, and a general insurance agency to place the insurance policies on the purchased property. Additionally, the insurance agency placed investment property coverage, liability coverages, auto insurance, life & disability insurance. An adjunct company that I formed was a property management company to manage residential and commercial rental income property, including commercial leasing.

Effective salesmanship is a learned skill set but developing into an authentic and unique being is the treasure. Confucius and Dan say, find a man who enjoys his work, and you will find a person that will never work another day in his life.

If one’s objective in the sales business is to follow up with your few friends, the potential success will be minimal. An effective sales network starts with a few but grows into thousands and tens of thousands.

The 80/20 rule applies to the sales profession. 20% of the salespersons develop 80% of the sales. Conversely, 80% of the salespeople develop 20% of the sales and resulting profits. Successful salespersons are willing to do the heavy lifting and do tasks others refuse to do.

It will help if you start by defining your universe of possibilities. In other words, what is the maximum and broadest number of individuals or prospects that you may develop to sell your products, goods, or services? Is it 1 or 1000 or 10,000? Size matters! A salesperson’s understanding of this process may be limited by lack of experience, willingness to take the risk, or just plain lack of enthusiasm for engaging in a long- term systematic enterprise. A more straightforward explanation is that some people are just plain “lazy and irresponsible.”

Image from Pixabay

I have consulted with many eager salespersons. Yes, the size of one’s prospect lead base matters. But relationships matter more. The size of a prospect network may start with 10 or 20 but grow to 1000 or more. You may start with a smaller number but limit the number of lead potentials unless you sell multimillion-dollar products with a considerable profit margin. Two examples may be Caterpillar and airplanes. These items cost from mid five hundred to hundreds of millions of dollars.

You may want to formulate a strategy to communicate daily to develop new business leads that, hopefully, will become lasting friendships. Therein lies the process, how do you turn prospects into friendships. I do not want to suggest that you create superficial but develop friendships that are bonded by authentic caring and communication. Can you call a friend and have a general conversation and enjoy the time spent without the thought of getting something out of it?

Herein lies the struggle between the salesperson who will never or only marginally become successful and one that can develop into a master salesperson with life fulfillment in relationships with others.

Image from Pixabay

Yes, you locate a buyer; you do not create one. In other words, if you were taught that slick language, like handling the objections and then switching to assumptive close works, Fuller Brush Company and Encyclopedia Britannica may have a job for you. Also, using online tools like LinkedIn and Facebook may be effective or a complete waste of time. A new link with a new person is only the most minute beginning and introduction to developing a future relationship and eventual friendship.

To be effective, a salesperson needs a good customer relations software package (CRM) to manage prospects, memorialize conversations, histories, families, events, interests, backgrounds, and essential aspects of developing a friendship. The effective salesperson needs an email marketing system like Salesforce or MailChimp.

The more you understand your friends more the relationship will grow. They will look forward to talking with you, and you will have mutual interests. And, of course, you will enjoy talking and sharing things that are interesting to you.

Now comes the strategy of calling 10 to 25 prospects per day to become friends over time. What can you do for them? How can you assist them in accomplishing their goals? Continue the exercise until you develop so much business that you can hire assistants. Delegate as much of your job tasks to others, then get back on purpose.

Image from Pixabay

If you make your outbound calls and receive an answerphone, leave a message, then follow up with an email with a purpose message. “Just calling to catch up,” or “Just called to check if I can do anything for you or your clients,” Or “just called to share an interesting article or news segment that I read.”

A difficult part of any conversation is developing the habit of listening rather than doing most of the talking. No, I am not that interesting, no matter who told us we were. It is easy to talk about me when having conversations with others. We can all become amused about ourselves and our life histories. It is imperative to stop talking and start listening.

Developing authentic friendships that will choose to work with you will be a natural transition from acquaintance to business prospect to genuine friendship. The process requires you to learn about your friend’s background, family, and what is important to them, not about you. What can you do to improve their lives, help their client, or help them put bread on the table?

Find a person who develops enough friendship relationships to do business, and you will both have a whole and enriched life. The journey is never complete!

Developing your unique ability will create a positive magnet around you so that people will be drawn to you through developed friendships, social networking, enhancing your satisfaction, professional career, and the same for those who meet you.

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My opinions, which comes from experience:

  • 20% of the people and friends in your life give you 80% of life’s satisfaction. Conversely, 20% of the negative, disrespectful, and unreliable people will result in 80% of the dissatisfaction. Tolerating people with negative attitudes, belligerent, rude, condescending, game playing, or jealousy does not fit into a satisfying life journey. Included in this group are superficial, sycophantic, and parasitic friendships. Eliminate all these people from your life, pronto?
  • Develop a management infrastructure and support system around you. These may be employees or independent contractors. Only with a whole support staff and operational techniques and strategies can you develop into high sales volumes and consistently deliver a quality outcome. If you allow weak staff members or weak systems, this will drag you down and make you marginally effective.

Thank you for taking the time to read this article.

Dan Harkey

Dan Harkey is a contributing author to Weekly Real Estate News and is a Business & Financial Consultant. He can be contacted at 949-533-8315 or [email protected].

Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.

Tips For Flipping Commercial Real Estate Properties

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Image from Pixabay

By Vista Capital Solutions

Flipping commercial real estate properties can be expensive– there’s no doubt about that. From taking out loans to paying for repairs, it’s hard to say what a project’s final expenses will look like. Luckily, there are a few things that even first-time flippers can do to reduce their final expenses.

Image from Pixabay

Pay in Cash Whenever Possible

Did you know that you may be able to cut a deal if you are able to pay for something in cash or for a majority of the final cost in cash? This is true even at professional lending institutions and loan offices. The best way to find out if a business will give discounts for paying, in part, with cash is to simply ask.

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Even if a business or loan officer will not give discounts for paying in cash, you will still benefit from paying as much out of pocket, to begin with, rather than taking out the entire amount for repairs that you need in loans. This is because the less money you take out in loans, the lower the payments will be. As a bonus, interest will not compile as quickly, which will also help to save money.

Use Fix and Flip Financing Programs

There are financing programs designed specifically for property flippers, and cover the costs of acquisitions and renovations. Fix and flip lines of credit, and fix and flip loans, can be used by property investors to tackle individual projects, on up to hundreds of units simultaneously. Fix and flip financing programs are structured around the value of the property involved, and are very accessible to property flippers at all levels.

Image from Pixabay

Work With a Partner

Lastly, having a business partner can help to relieve the burden of some of your expenses. When you have a business partner, all of the expenses should be divided between the two (or more) of you. This option can work whether you can pay in cash or not and whether you can get a government-funded loan or not. Just make sure that you are working with someone you can trust, as you will also need to share your profits.

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When looking to fix and flip commercial real estate, try to pay in cash, take out loans with low-interest rates, and work with people who you trust. Doing all of these things can go a long way to saving you a lot of money.