Archive for the ‘For Entreprenuers’ Category

ATTN: Entrepreneurs / Business Minds! The greatest wealth factor is…

tired businesswomantired business man



There is nothing more pitiful than a ready and willing mind but an incapable body.

There is a well-known quote from the philosopher Virgil that says, “The greatest wealth is health.” I also believe that health is the beginning of wealth. In other words, your health will help you create wealth.

If you are in the business of attracting, influencing, selling or leading others, how you show up, your physical appearance, speaks volumes about who you are, how you are and what you are or not capable of.

I know, people shouldn’t judge you, right? Well, here is a clue… they do!


Here is a good question to consider: If your body is the billboard of your personal development, your calling card and your personal 15-second commercial, what is it communicating? Take a good hard look in the mirror (literally) and determine if that is the message you want conveyed. I know this is pretty direct and maybe a bit harsh, but this is the reality of life. This is also why I hope you read this blog—because I am willing to tell it to you straight with no holds barred.

If you want to attract committed, dedicated, disciplined and consistent people into your business, then you have to exhibit those qualities yourself first. And like it or not, how you show up, your physical outcome, is the demonstration of those qualities in you.

So I encourage you to take your physical fitness seriously. If not for the sheer benefit of having you live longer, look younger and feel better, then because it will attract more and higher quality people into your entrepreneurial pursuits.

Source: Excerpt from Darren Hardy’s article: There is Nothing More Pitiful.  Read the whole “no-holds-barred” article here.

Darren Hardy is the publisher and editorial director of SUCCESS magazine.  Darren has been engaging and inspiring audiences with his messages of personal achievement for more than 15 years. A product of the success principles he teaches, Darren became a businessman at age 18, and by age 27 was a self-made millionaire. A successful entrepreneur for more than two decades, he has led several business ventures, including two personal-development based television networks, The People’s Network (TPN) and The Success Training Network (TSTN).



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Renting Out Your House – Is it worth the cost?

house for rent

Renting can be a profitable choice, but it requires an investment of time, money, and organization to make it work.

Here’s how to determine whether renting out your house is worth the cost.

Calculate your monthly expenses
You want to charge at least enough to cover your monthly outlay. So the first step is to use HouseLogic’s free downloadable worksheet to calculate your costs. Start with regular expenses like mortgage, maintenance, and homeowners association dues. 

You may also need to upgrade your insurance coverage. Your agent can advise you about adding landlord insurance, a special type of policy that covers rental properties. As a rule, landlord insurance costs about 25% more than standard homeowners insurance.

If you’re renting the house furnished, make sure you’re covered for the personal possessions you leave behind.  Prepare a detailed inventory of household items. If you’re renting the house unfurnished, figure in the costs of moving and storing your items.

Check out prospective tenants
As a practical matter, you’ll have to formally check out your prospective renters. MrLandlord.com, an information and service site for landlords, suggests a variety of background checks: credit reports, eviction reports, and criminal background reports. None of these is expensive, but you must get your prospects’ permission. 

MrLandlord.com charges $8.95 for an eviction report. A combined credit and eviction report is $14.95. If you want to be especially careful, a countywide criminal report costs $29.95.

Account for maintenance and upgrades
Even with the most scrupulous checks, you can’t be completely sure renters will take good care of your home.  If you’re not within easy driving distance of your rental property, you’ll need to arrange for someone else to keep an eye on the place, even if it’s just to make sure the lawn is mowed. If the tenants are neglecting upkeep, you’ll want to know about it sooner rather than later, since it could be a warning sign of trouble down the line.

 Of course, even if the renters are conscientious, problems can crop up: boilers will fail; roofs may leak; washing machine hoses can burst. If household systems or appliances need repair or replacement, you’re better off spending the money up front, before the fix becomes an expensive emergency.

Don’t want the headaches? Hire a property manager
You can save yourself a lot of time and effort if you engage a management company to oversee the property and take care of the details. Some firms charge a percentage of the rental fee, others a flat monthly fee, based on the extent of services. Property management companies offer a variety of services including general maintenance, rent collection, and—if necessary—eviction.  

A management company can help you figure out how much to charge, find and vet tenants, and prepare a lease. It will also pay the real estate taxes on your behalf and present you with an annual 1099 form. Many management companies maintain 24-hour emergency lines and a roster of approved service people, so they can take care of plumbing or electrical problems and bill you later. A property manager will also see that driveways and sidewalks are shoveled, so you don’t find yourself with an unpleasant claim against your liability insurance.

 Expect to pay a management company 8% to 10% of the annual gross rent, on average, with a $50 to $85 monthly minimum.

Keep scrupulous records
Whether or not you use a management company, you’ll have to keep extensive business records.  Owners must save receipts for any expenses and to file them carefully. 

The IRS treats maintenance expenditures, like a new hot-water heater, differently from capital improvements, such as a new deck or patio, so you’ll want to consult a tax professional. Meanwhile, keep the two types of receipts separate to make tax prep easier. You’ll have to file Schedule E on Form 1040, which can also serve as a template for the kinds of records you’ll need. 

Finally, because of the complex tax and liability issues involved, many financial experts suggest forming a corporation when you become a landlord. An attorney can advise you about whether incorporating makes sense in your situation.

Source: Richard J. Koreto (HouseLogic.com) –  an editor of several professional financial magazines and is the author of “Run It Like a Business,” a practice management book for financial planners. He and his wife own a pre-Civil War house in Rockland County, New York.



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How to Partner with Sellers to Make More Money

real estate partnerships

One of the most exciting advantage of real estate investing is the number of creative ways to make a transaction or a “real estate deal” lucrative for you and, better yet, for all parties involved.

The important questions to ask yourself before jumping in:
1. How creative are you?
2. How bad do you need the deal?
3. How motivated are your Sellers to sell?

Your goal here is to partner with the seller, assume control of the property and quickly resell the home for a large profit.

Below are important criteria for partnering with sellers on real estate deals:

Home requirements:  The property can be a mobile home or traditional site built home.  The property should have considerable equity (pull comparables in the area).  This technique works best with more desirable homes.  Perhaps the seller has not even marketed the home to properly attract buyers.  The property may have cosmetic eye sores.  Avoid homes that will require costly repairs, extensive curb appealing improvements, code violations, or other money pits.  The property may or may not have a preexisting mortgage.  Look for homes that you believe are just a few inexpensive fixes away from a retail sale.

Seller requirements: The sellers are very motivated to sell, but know the value of their home and demand a fair price.  Sellers will not have the liquid cash to cover the repair costs needed for a fast sale.  Owners may be living out of state.  The preexisting mortgage(s) or late payments may be in default, this could be a reason for the fast sale.  The sellers may NOT continue living in the property once you agree to help.  Sellers must be willing to wait until you re-sell the property for their payday.

The Process: Once you have established that the seller and property are good candidates for partnering, you must have a meeting of the minds.  A specific contract should be created to explain which parties will be responsible for which costs, how profits will be divided and how you will be compensated for your time and experience.  Due diligence should be performed before adding yourself to ANY property deed. Align yourself with a good title company that can research title for you.

I advise using a Warranty Deed to place the home into Land Trust or Personal Property Trust prior to adding yourself as equitable owner.  Using a Trust will not cause seasoning issues later down the road when your buyer is attempting to locate conventional financing.  It is important that you, or your trustee, are named on the deed before you place any money into the home or start marketing the home for sale.

At this point you should have only spent a minor amount of money adding yourself to the chain of title.  The sellers should be moved out of the home by now.  Bring the past due mortgage(s) current to insure the home does not slide into foreclosure while you are trying to sell it (try to split this cost with the sellers).  Remove, replace, and repair any cosmetic damages that may detour a potential buyer to pass on this property.  Spend a few hundred dollars increasing curb appeal, hire a Realtor, and start marketing the property for sale by yourself.

One important thing to remember is, by adding yourself as part owner you are not mistaking yourself as a Real Estate Agent and practicing without a license.  When writing up a partnering agreement always remember to clearly state that; YOU will be reimbursed for ALL expenses you made to property, etc. This total expense will be paid to you from the NET profit of the sale.  Only after you have been repaid all monies you have spent on the property, will this new total NET profit amount be split with your seller in any percentage you have previously negotiated.

Even good properties can make you money .  If you can risk only a few dollars to make thousands, how many many of these deals would you do?  Partnering with sellers allows you to control more properties without spending a large amount of cash to do so.


Source:  John Fedro (specializes in investing in mobile and manufactured homes)


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10 Big Mistakes to Avoid When Investing in Real Estate

make money in real estate

Once the real-estate market starts to rebound, investing in property will become a more appealing idea — either as a career or a great side job. Like any other endeavor, though, there’s a right way and a wrong way to go about it.

Bankrate spoke with established, full-time real-estate investors and with professionals, such as bankers, to identify the 10 types of traps into which real-estate investors most often fall.

1. Planning as you go

Andy Heller, an Atlanta investor and a co-author of “Buy Even Lower: The Regular People’s Guide to Real Estate Riches,” says lack of a plan is the biggest mistake he sees new investors make. They buy a house because they think they got a good deal and then try to figure out what to do with it. That’s working backward, Heller says.

“First, you find the plan,” he says. “Then you find the house to fit the plan. Pick your investment model, and then go find property to match that. Don’t find the strategy after you find the home.”

“People fall in love with a property,” says Crowe, the managing director of Springboard Academy, the nation’s only real-estate academy for investors. “I say, ‘Who cares about the property?’ I fall in love with a motivated seller.”

2. Thinking you’ll get rich quick

That kind of wrongheaded thinking is fueled by “these self-appointed gurus who have infomercials and make it sound so easy to get rich in real estate,” says Eric Tyson, a co-author of “Real Estate Investing for Dummies.”

Real estate isn’t easy. It’s a good long-term investment, but so is putting your money in a mutual fund, which is a lot easier. “These gurus don’t talk about all that hard work. You have to be smart, you have to be willing to work, and you have to understand your risk tolerance.”

3. Playing Lone Ranger

A key to success is building the right team of professionals. At the very least, you need good relationships with at least one real-estate agent, an appraiser, a home inspector, a closing attorney and a lender, both for your own deals and to assist with financing for prospective buyers.

In the remodeling and maintenance segment of the business, the team includes a plumber, an electrician, a roofer, a painter, a heating and air-conditioning contractor, a flooring installer, a lawn maintenance service, a cleaning service and an all-around handyman.

You can’t build a business as an investor if you’re spending all your time fixing leaky faucets and putting up ceiling fans.

4. Paying too much

Heller says the biggest reason investors don’t make money is simple: They pay too much for properties.

“The profit is locked in immediately once the investor buys the property,” he says. “Due to mistakes in the analysis, the investor pays too much and then is surprised later when he doesn’t make any money.”

5. Skipping homework

You wouldn’t think you’re qualified to perform open-heart surgery without years of education and training. Yet many wanna-be real-estate investors don’t think twice about taking their financial lives in their hands without even cracking a book.

Educate yourself before you put your family’s financial security on the line. Read articles, check out books from a library, join investor clubs and attend workshops and seminars.

6. Ducking due diligence

Investors often have to move quickly on their deals. That doesn’t mean they sign a contract and write a check without plenty of research, though.

That’s where a lot of newbies trip up, says Houston real-estate agent Laolu Davies-Yemitan. They don’t do their due diligence about the deal, the costs or the market conditions, and they wind up draining their personal savings because the house needs extensive repairs or they can’t sell it.

“Sometimes, new investors are buying property just based on the idea that the property is going to appreciate,” he says. “Usually, they don’t have any information to substantiate that.”

7. Misjudging cash flow

If your strategy is to buy, hold and rent out properties, you need sufficient cash flow to cover maintenance.

“People think they can get a property manager,” Tyson says. But many have never interviewed a property manager and have little idea about how they work. Most managers, for example, are reluctant to take on one single-family home or a duplex, he says, preferring larger complexes. And fees of 7% to 10% of the monthly rent are common.

“It’s a huge expense,” Tyson says. “I can put my money in a mutual fund and it costs a half-percent a year.”

Davies-Yemitan agrees. It’s not uncommon for a property to sit on the Houston market for 90 to 120 days before it’s leased, he says. Meanwhile the owner has to pay the mortgage, the taxes, the insurance, the cost of advertising and any homeowner or condo association dues, he says. If the owner hasn’t budgeted for that, an asset can quickly become a liability.

8. Lowering the volume

If you’re working on one deal at a time, Crowe says, you’re doing transactions, not running a business.

You need a steady pipeline of prospective deals; sufficient volume will weed out the marginal deals and let the good ones rise to the top.

9. Painting yourself into a corner

Many people buy a property and get stuck with it because they have only one exit strategy. They’re going to sell it or rent it out. What if it doesn’t sell? What if the rental market stalls?

Always have two, if not three, ways to get out of any deal. For example, if plan A is to rehab the house, put it on the market and resell it, then plan B could be to offer a lease-purchase to a buyer. Plan C might be to hold the house and rent it out. And as a plan D, there is the wholesale option, which would involve selling to another investor at a below-market price. Hopefully, you’ll still make a profit, but at the very least, you’ll cut the losses you’re taking every month in carrying costs.

10. Miscalculating estimates

Crowe tells his new rehabbers that after they’ve done their homework, they should double the amount of time and money they think it will take. If they can still make money then and they might be able to rent it out, it’s a good deal.

Source:  Pat Curry for Bankrate.com


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How to Buy a Foreclosed Property – 9 Steps

foreclosure price reduced sign

If you’re looking for real estate bargains, consider buying foreclosed property.  A foreclosure takes place when a homeowner or property owner cannot pay the mortgage fees on the property and is forced to give up the land to pay back what is owed.

Here’s an overview of what you’ll need to do if you want to buy a foreclosed property:

Step 1:  Locate properties scheduled for foreclosure sales by checking classified newspaper ads for listings under Foreclosure Notices, Auction Sales or Sheriff’s Sales.

Step 2:  Notify local real estate agents and attorneys that you’re interested in purchasing foreclosed properties.

Step 3:  Check with local lending institutions and government agencies – such as the Federal Housing Administration, Veterans Administration or Department of Housing and Urban Development – about foreclosed properties in your area.

Step 4:  Investigate foreclosure proceedings in your state.

Step 5:  Inspect the foreclosed property to determine its condition and market value; obtain sales prices of comparable properties in the area from a local real estate agent.

Step 6:  Determine ownership, identify potential problems and research any existing liens by conducting a title search on the foreclosed property.

Step 7:  Contact the trustee of the foreclosure sale to inquire about the minimum bid the lender will accept.

Step 8:  Determine how you’ll finance the foreclosed property or find out if the current loan is assumable.

Step 9:  Make an offer on the foreclosed property by bidding at the foreclosure auction or submitting a sealed bid to a lender after the foreclosure sale.



Warnings:

  • Foreclosure proceedings can be complicated, so be aware of your state’s legal procedures for acquiring foreclosed properties.
  • Since properties are usually offered “as is” at foreclosure auctions, inspect the property before you make a foreclosure bid to avoid a costly mistake.
  • Depending on the reason for the foreclosure sale, there may be a redemption period in which the previous owners can make payment in full and get their property back. Check with the trustee to protect your rights.

Source: eHow Contributing Writer


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Going Green: 4 Main Benefits in Any Real Estate Market

Go green in real estate

Going green is the single greatest advantage for any real estate investor in any real estate market.

According to Jim Simcoe, Green Business Strategist of Simcoe Consulting, there are 4 Main Reasons:

Bigger Pockets- Put simply, green properties sell (or rent) faster and for more money. Green properties cost less to operate (usually 30-60% less) and are more valuable. In fact, they appraise average of 10-15% higher than a comparable home according to a study done by SmartMoney in 2008.

Higher Demand- The demand for green properties (SFR, rentals, commercial, multi-family, etc) continues to skyrocket. As consumers become more educated about green living they are more frequently demanding green elements. ‘Green’ used to be only for the tree-huggers. Now it’s for anyone who wants lower utility bills and a healthier, more comfortable place to live or work. The fact that ‘green’ is en vogue right now is a bonus.

Limited Supply- Green homes continue to account for a very small piece of the residential marketplace. Even with builders and rehabbers hopping on the green bandwagon, supply is far less than current demand. It will be several years before this ratio starts to even out.

Free Cash!- Right now there are literally billions of dollars available to real estate investors to either build or rehab green. Money is available through a variety of rebates, incentives, tax credits, etc for all levels of green property upgrades. From $2 lightbulb rebates to $250,000 subsidies for green building, the incentives are there. A great place to find them is the Database of State Incentives for Renewables and Efficiency.

During any remodel, rehab or new construction, ask yourself:

1. What can I do to make this property operate more efficiently?
2. What can I do to make the building envelop more tighter with less gaps and leaks?
3. What can I do to improve the indoor air quality of this property?
4. What materials would make this property less toxic/healthier?
5. What rebates/incentives/credits are available to subsidize #1-4?

The answers to those questions will create the basis of your strategy for your property. Creating high-performance (re: Green) is as simple as that.


Source: www.JimSimcoe.com


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Real Estate Leverage – the Top 4 Don’ts

real estate leverage

Real Estate leverage is the use of borrowed money to increase your profits in an investment.  Building wealth via real estate requires the use of leverage.

Let’s assume you have $100,000 to invest and you purchase a small income property for $100,000.  Let’s assume that income properties have been appreciating at an average of 7% per year.  At the end of the first year of operation,  your property is worth $107,000.  At the end of year two, it is worth $114,490.  Now let’s assume that you put your $100,000 down on a $500,000 income property.  At the end of the first year, it is worth $535,000.  At the end of the second year, it is worth $572,450.  By using leverage or borrowed money to purchase a larger income property, you have increased your profit by $57,960 in just two years.

To get the full advantage of leverage, put the minimum down on a good property which has a strong likelihood of appreciating in value.  Stay away from questionable properties in run down areas.When you purchase a piece of real estate, you make use of leverage when you borrow money towards the purchase price.

Avoid these high risk behaviors and you have a far better chance of realizing success in using real estate leverage.

1. Don’t Count on High Levels of Appreciation
Many a real estate investor has gotten into financial trouble by looking at past history, even if recent, and relying on the future to produce the same results.Even if property has been appreciating at a 12% to 20% rate for a number of years, counting on that rate to continue is an extremely risky proposition. It can cause you to overpay for properties, expecting to realize the difference at sale from appreciation. If it doesn’t happen, you’re holding a loss or worse.

2. Don’t End up With Too High a Payment
It can seem like a great investment to control a property with a very small down payment. You’re looking at the numbers and seeing a really high return on investment due to your low cash outlay.The problem is the higher payments that come with higher leverage. Should the market soften or your properties experience higher-than-expected vacancy or credit losses, you could find yourself unable to maintain those higher mortgage payments that seemed fine at the beginning.

3. Don’t Let Good Financing Result in a Bad Purchase
Many an investor has overpaid for a property because they found nirvana in a high leverage financing setup. Just because you can get a property with very little cash outlay doesn’t mean that it’s a good buy. Look at the value of the property in the context of current and expected market trends.If the property is overpriced, appreciation will be minimal or worse be non-existent. And woe be unto you if the market retraces itself for a while. Your overpriced property will be a significant drag and you’ll not be able to unload it without taking a loss.

4. Don’t Forget That Cash Flow is King
If just one of these “don’t” behaviors sticks in your mind, this is the one that you should consider carefully. Errors in judgement in one or more of the other items here can be overlooked if you have that one great thing – excellent cash flow.If your rental income minus your mortgage costs and expenses is putting a nice cash return in your pocket every month, then the fact that the property didn’t gain in value this year won’t be as worrisome of an event.

Sources: James Kimmons (Taos Real Estate); Advantage Software, LLC


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