Tag: sell my house

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Wealth Acceleration Strategies for Real Estate Investors

We will all agree that real estate is the best way to build wealth. Using real estate helps by using one key method that almost every other investing strategy does not offer. That being Leverage or borrowing against your property to control something more valuable than the amount of money invested. I can hear you yelling; “What about trading stocks on margin?” Yes, you are right that with a trading account you can trade limitedly on margin or only putting a fraction of money up for the stock. But that is very limited compared with real estate. I have done a 100% LTV mortgage on an investment property before. Now since the Sub-prime melt down you will not be able to do that for a while. But still, people routinely buy property with less than 20% of the purchase price down. Assume you are going to buy a single family house to rent out for 5 years and then sell my house. So you buy a $400,000 single family house purchased using a 80/15/5 conventional mortgage. What does that mean? 80% LTV first mortgage, 15% LTV second mortgage and 5% down payment. You bring $20,000 plus closing costs to the escrow company when you buy my house. So for $20,000 you control a $400,000 piece of property. Your monthly payments on your mortgages are $2,100 including your taxes and insurance. You receive $1,800 rent on the house. And it is vacant for 1 month out of every 12 months because of finding new tenants. Now this is a very conventional deal but very realistic in our current market. Let’s take a look at the numbers:

	Monthly	Annually	Total
Costs	$2,100	$25,200	$126,000
Income	$1,800	$19,800	$99,000
Net	($300)	($5,400)	($27,000)

So looking at the numbers this way it does not look like a very good investment. Paying someone to live in your property $27,000 for 5 years. Remember this does not take into account any repairs or tax implications these are just the raw numbers. But let’s look at it a different way. We are going to assume for the sake of argument that the property appreciation is 10% annually using round numbers. This a absolutely achievable in the Seattle market but will vary depending upon area.  Here is really what you are controlling: Purchase Price: => $400,000   Future Value 60 Months 10%annually: => $644,204   Total Equity Growth: => $244,204   Total % => 61% total growth   So your investment of $20,000 plus your additional expenses of $27,000 of holding cost will bring you an additional $197,204 over that same 5 years. How many of you would spend $47,000 to make $244,204 bringing you a rough profit of around $190,000. That is really the true path to wealth in real estate investing. The use of leverage is really what makes this happen for you. If you were to just invest the same $10,000 at a 10% annual interest you would only make $6,105 instead of the more than $190,000. So using the leverage only found in the real estate make you very wealthy when used over time. Now most of you know that I am a big proponent of creative real estate investing and may think that there is something hypocritical about talking about going and getting a loan and investing for the long term. Remember. This is tactics that I use to make money to invest long term for growth. So this is very true of all real estate. So please take the time to develop a strategy to use the best of both worlds.

Alameda County • Contra Costa County • Marin County • Napa County • San Francisco County • San Mateo County • Santa Clara County • Solano County • Sonoma County

     

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Creative Marketing for Creative Real Estate Investors

We all know that we make money when we buy a house and we pocket the money when we sell my house quick. To have a successful business we need to have good cashflow that covers our expenses and throws off money for us personally. Without this we are not going to be in this business for very long. In order to get good cashflow we need to have deals come our way. To get deals we need to have leads and to get leads we need to market for them. As you can see marketing is the “Key” to this business. Without good marketing everything falls down on top of us. Unfortunately this is where most people make mistakes. Either they don’t do enough marketing or they don’t do good enough marketing. Some people think that sending out a postcard once is marketing. Really if you send a mailing once, you are just wasting your money. You need to have multiple steps as well as multiple avenues of marketing. I advocate that you are using 5 different types of marketing to bring in leads. If you don’t have a marketing budget then you have to use more guerilla types of marketing. You have to do more tasks yourself to stretch your budget. If you have a decent budget set aside you can do more and outsource everything. You can use many types of marketing to obtain quality leads. Just pick any five and run with them. Here is a list for you to pick from: Take this list and pick 5 of them and use them on a weekly basis. Send out letters, hand out flyers, hand out 5 business cards per day, place 10 bandit signs per week, and distribute door hangers to your target neighborhood. Quite frankly, if you are not getting enough lead flow, you are not doing enough marketing. Spend your money where it counts. If one of these methods has not been working for you, change it up a little. Test to see what works and then do more of that. Marketing is the key to a successful business. Be different; stand out from the crowd by being more effective. Effective marketing is a business builder and will prevent your competitors from taking your deals away from you. Take action; make a difference for yourself and others. ___________________________ Need more information, give us a call at (800) 518-0215. See how Ascent Property Solutions can brighten your future.

Alameda County • Contra Costa County • Marin County • Napa County • San Francisco County • San Mateo County • Santa Clara County • Solano County • Sonoma County

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Are You Able To Think On Your Feet

As a real estate investor, many things can come up during a deal. You have a choice, you can let it throw you for a loop or you can roll with the punches. There have been several times that during a closing the seller revealed something that I should have found out earlier in the process. It stood a chance of blowing the deal out of the water. When I first started investing it did screw up the deal. After learning more about investing I was able to figure things out and recover quickly from these situations. I talked about the cost of education a couple of weeks ago. These are the reasons that I spend so much on education. I quickly remembered tidbits from these workshops and bootcamps that have stood me well over time. I was able to recall how other investors were able to deal with these. I also developed a relationship with other investors around the country that I could call to see if they had ran into this before. With all of this I have been able to overcome almost everything that has been thrown at me. The more you know about investing the more you can deal with the nuances of the transaction. Also, by choosing the right best expert professional to help you, the better off you will be. Obviously you can not know everything about everything. But you can choose to work with those that know a lot about their main job. Take for example a mortgage broker. By working with someone who knows a lot about their trade they can help your client, whether buyer or seller, understand the issues that have cropped up since the sub-prime headaches have come into existence. This can save you from buying a piece of property that may not live up to your expectations. Using the proper home inspector can help you track down trouble when you buy my house rather than when you sell my house, allowing you to take proactive measures in your deal rather than reacting to issues that crop up. Knowing more than one technique will help you when the industry changes. Take for example lease options and the new laws that are being proposed nationally and locally that will hinder these types of transactions. What are you doing now that will help you if that eventuality comes to pass? Start thinking now so that you can survive anything that is going to block your way tomorrow. Alameda County • Contra Costa County • Marin County • Napa County • San Francisco County • San Mateo County • Santa Clara County • Solano County • Sonoma County

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Choosing the Right Target Market Part 2

A couple of weeks ago I talked about choosing to market for houses in areas that were more likely selling a home  creatively. I also went into the fact that I want the price of the house to be around the median for the area because that sells the fastest. Also I don't want to market to houses that are old and would require extensive remodeling before I sell them.

So I first go about looking for neighborhoods that have seen a historical abundance of foreclosures or at least foreclosure notices. Why, because if there have been a number of notices it stands within reason that there will be a number of them in the future as well. Neighborhoods don't change their makeup very quickly.

I like to do a little bit of work narrowing the area where I market, so that I am more efficient and can spend more money per lead. I want to be able to get a higher response rate and be able to hit the leads more often. By doing this I get the chance to know my market and neighborhoods and become the expert while doing so. I narrow my competition at the same time so I am not being compared to another investor by price and how I buy my house.

Being a techie I take things one step farther than most other investors. I upload into Microsoft MapPoint or Microsoft Streets and Maps the excel spreadsheet file of all of the foreclosure addresses in the last several years. I then visually map these out on the screen so that I can view the foreclosure density of neighborhoods. This way I can choose these specific neighborhoods and mail to those houses in the neighborhood that meets my investing criteria.

If I spend fifty cents per address getting a more likely prospect I consider it well worth it. The nice thing is you can buy a mailing list that meets your criteria such as the age of the house, what type of mortgage the owner has, how long the owner has lived in the house and many other demographics you could possibly think of. And then you just bump these up against those neighborhoods and mail only to those houses.

Most of you already know that I am a big believer in sequential mailings. The more times that you hit a prospect with your message the more likely they are to respond to you when they are ready to respond. I heard that it was called front of the mind awareness. This is what brand advertisers are going for. I have even had sellers tell me that they had seen my signs all over and then responded when they got my letter because they hadn't gotten the number off the signs. What I didn't tell them is that I had not put a sign in their neighborhood for over a year. I was getting credit for other peoples advertising money. You gotta love that.

Yes I know this sounds a little complicated. Yes I know that it is easier to send a postcard to those people in pre-foreclosure that to do what I am talking about. The problem is you are going head to head with most other investors when you are mailing postcards to the pre-foreclosure market. I know that most of the National speakers won't tell you that, they will tell you to mail a postcard because it is cheap and easy and that is what most people want to hear.

I guarantee that I get a better response from my mailing campaigns in a tough west coast market than another investor who is just sending a single postcard. So invest the time to define your target market and you will become the expert in your area and be able to buy more houses that you ever though possible.

Alameda County • Contra Costa County • Marin County • Napa County • San Francisco County • San Mateo County • Santa Clara County • Solano County • Sonoma County