Top Five Reasons to Invest in Real Estate Today

When it comes to real estate, the topic of the day is the downturn in the market, the number of people losing their homes, and how much this is going to hurt the economy. In the seventeen years I have been in the real estate business, I have witnessed every fluctuation the market has to offer. While it is true that many property owners are enduring trying times, rarely does the same happen to knowledgeable real estate investors.

There are those individuals who remain emotionally unattached and invest wisely in real estate. As a result, they live a very comfortable, if not lavish, lifestyle. Investing in real estate, especially during a downturn, can widen an investor’s opportunities and bring about lucrative returns. This is a truth. If you are thinking about becoming a real estate investor or have already made the decision to start, the following information is priceless.

Wanting to secure a comfortable financial future, most of us go to work every day hoping to build a nest egg. Since, it is common knowledge that real estate investors have the capacity to not only build a nest egg but also create a fortune, why aren’t more people joining the ranks of real estate multimillionaires? Why aren’t there more people fighting for a seat on the real estate bandwagon?

Well, the truth behind real estate investing is that it is a business and therefore, must be treated like one for it to prosper. Just like any other promising venture, investing in real estate requires a well-defined vision, a strategic plan, and an entrepreneurial mindset. Even with the overwhelming evidence revealing success, only a microscopic segment of the population is willing to take the risk, do the work and follow through. The rest simply watch and call those of us doing the work “Lucky”.

When I began my career in real estate, I didn’t have a plan. I didn’t invest. I didn’t even see past my next commission check. What kept me hanging on was a desire to live like the people I worked for, most of whom were real estate investors. Years later, I committed to create serious wealth through real estate. As soon as I mindfully committed to my goal, I began to make deals and more money than ever before.

By choice, I am not one of those investors who vacations six months out of the year. I work all the time meeting with clients, looking at properties and refining my strategy. Add to that a growing number of mentoring/coaching clients and my schedule is officially full. Nevertheless, I am continuously increasing my net worth as I am doing something that never feels like work.

Besides creating amazing wealth, being your own boss and having a place or two to call home, owning a real estate investing business has many other advantages. The following five play a special role for the novice investor.

1. Safe Investment

When we use a timeline to compare the real estate market to other investments, such as the stock market, it is easy to see that real estate continues to increase in value over time without any serious instability. Although, there is currently a housing crisis in various parts across the country, every indicator points out that what we are actually experiencing is a readjustment of highly inflated real estate prices. Just as prices may be dropping, in time they will undoubtedly increase. In contrast, the stock market has put investors through a dizzying rollercoaster ride made up of swift highs and abrupt lows throughout history. Regardless of what type of market we are in, it is clear that an investment in real estate guarantees a profit over time.

2. No Cash Necessary

For beginning real estate investors, sometimes the only investment they can make is their time. For every real estate investor, finding a lucrative deal is as good as striking oil. There are plenty of seasoned investors with money in their pockets itching to buy a piece of discounted property. Wholesalers often utilize this method. Therefore, if you are new to the game, consider finding a deal, tying it up and connecting with an investor who can take it off your hands…for a price, of course.

3. Almost Anyone Can Do It

Real estate is such a lucrative field that it opens doors to countless amateur investors everyday. There are how-to books and seminars at every turn teaching would-be investors a myriad of ways to make huge profits in the real estate market. While it is true that overnight success is practically unheard of, anybody with the heart, mind and determination can make it big in real estate. The keys are to continue learning and to monitor market conditions.

4. Leveraging Power

While novice investors can turn a quick profit by wholesaling their deals, Buy-and-Hold investors can yield a profit by borrowing against (leveraging) their properties. Typically, lenders will allow holders of owner-occupied property to borrow up to ninety-five percent of their property’s value and up to eighty-percent of non-owner occupied units. This means that you can either purchase property with a minimal out-of-pocket investment or acquire financing that will allow you to pull cash out of your property’s equity to use for future ventures.

5. Tax Breaks

The popular 1031 exchange and depreciation are just two of them. The United States government has set up multiple tax breaks favoring real estate investors. Owning real estate with the goal of making a profit allows you to deduct interest payments, repairs, and vacancies among other expenses when preparing your tax return. It is important to note that purchasing real estate makes economic sense; it should not be purchased solely for the tax benefits.

Ultimately, owning a real estate business is the way to achieve financial freedom regardless of economic conditions. Whether you quit your job and dive right in or you work at it in your spare time, you can make it happen. Worthwhile benefits are waiting faithfully for the taking.

Luxury Real Estate Marketing – Do Not Fall Into The Chameleon Trap

In certain cultures it is frowned upon to stand out from the crowd. However, if market leadership is your quest as a luxury real estate marketing professional, blending in like a chameleon does to camouflage itself is simply not an option. At a time when competition for attention is escalating, especially online, developing a highly distinguishable, consistent personal or company brand is now an imperative.

Changing your colors to please others, to blend in or to avoid the pursuit of your competition is the antithesis of establishing your brand position and sticking with it steadfastly. Many agents and companies fall into the “chameleon trap” because they simply do not want to make waves. But, if you have the heart of a champion, the heart of an achiever, making waves and creating news is what you live for.

In defense of the chameleon and chameleon-like behavior it is important to note that there is more to the color changing story. Recent research asserts that social signaling, such as attracting a mate, was the major driving force behind the evolution of color change. Blending in for camouflage developed as a secondary survival skill.

Therefore, changing your colors to attract more of your ideal clients in the process of luxury real estate marketing can be a good thing. The key is to display your authentic colors decisively and consistently.

The chameleon trap that we warn you to avoid is really the people pleaser trap. Change is good providing you please yourself in the process.

Outrageously Low Real Estate Offers Are Now Getting A Second Look From Sellers and Lenders

Foreclosures in the country have pushed past over one million homes. Couple that with folks just trying to sell their home for whatever reason and there is a glut of homes in many markets. While this level is high it is within many historical swings of the past. The point of this discussion is to point out the incredible buyers market that exists in many areas of the country.

Arbitrage in the financial markets takes advantage of price differentials between more than one market. Money is made taking advantage of the differences. In real estate, with the benefit of trained Certified Property Managers and the like, there exists the potential to invest in areas, which are depressed and hold good value in the future. Like examining the financials of a company so the same type of play can be marshaled with investment situations across the country. In crafting offers, returns in the 25% plus range over say a two-year period must be factored in even consider the ramp up into these venues outside of one’s backyard. Finding deals in the backyard would be best, however, lacking that one must look elsewhere. In an example of buying a rental condo in a resort area that has abundant inventory and has plenty of foreclosures forcing prices down some investment play may be possible. If a rental condo is listed at $300,000.00 and has and existing mortgage of $280,000.00 with a pending foreclosure pressing the owner this might be a deal worth looking at. Owners with ARM mortgages with accelerating payments and/or other pressures have come to bear on owners who find themselves in a fix. Many of these condo rental properties with onsite rental offices make for a decent cash flow. In some water front properties the gross rents will approach $30,000 plus per year. In trying to negotiate with a lender with a foreclosure action in hand it is best to have ones own financing or cash to bring to the table. That lender will not cut the price (mortgage) if they are being asked to hold the mortgage. In this example, a proposed “Short Sale” would be probed as a possible action. In this case, the owner receives nothing. The owner may save a foreclosure nick on their credit but that’s it. The lender on the other hand will be offered an offer in the $240,000 range IF the return is figured. The lender takes a $40,000 plus hit on the deal with additional costs for legal fees, past payments, late charges, etc. in addition to the “short” settlement. This is a big hit for the lender. However, Real Estate Owner (REO) properties have to be liquidated. If the lender foreclosed and sat on the condo for another six months and took another hit at sale time, the proposed $40,000 plus hit starts to look pretty good.

An investor needs to determine the condition of market place in a year or two. The economy still has strength, employment is strong, so then it is a question of what will be happening in the market down the road. If that analysis comes up positive then one would continue on the track. An outside force on these waterfront investor condo properties will come to into play as when possibly the dollar falls against the Euro or Pound. Those buyers coming into the market with stronger currencies will see these situations as strong buying opportunities and prices may spike back up. A Realtor needs to market to these buyers immediately. In addition, with stronger currencies abroad vacations in these waterfront condos can almost look cheap with a good deal of safety. A few years down the road, the rentals could be pumping and the demand could be up for these specific properties which can be rented when not being used by the owners. Naturally, there is no guarantee that this will play out exactly that way, but it is an educated analysis basis on the facts currently in hand. When depreciation, interest deductions and other factors are put into the equation, perhaps a $40,000 “short” is not enough. Perhaps it will take a little more. In any case, an investor’s numbers should be shared with the lender to shore up the case for the “short sale” and give a little cover to the work out specialist who is signing off on the deal. The lender will have several BPOs (Broker Price Opinions) of the value as several AVMs (Automated Value Models) to further peg the value. However, if things have not been moving with say six months exposure to the market place, then the lender may be compelled to pull the plug.

Much like when the accelerated depreciation plug was pulled in the 1986 Tax Code, properties must stand on their own. Limited Partnerships and REITs were being offered with low (50% LTV) leverage to realize any kind of cash flow. In this case, a highly leveraged mortgage would insure a negative cash flow. Thus the return on investment will be calculated on a low leveraged situation. The 25% plus return then would be possible. Each case needs to be turned inside out before making an offer. If there has been several price reductions over the listing period with offers of paying all the closing costs and such, then this will garner further investigation. To save a lot of time, the question phased as: “To save us both a lot of time, I’m looking to buy at a deep discount from a motivated seller or a lender who will consider a deep “short sale. I’m very liquid in cash and can close quickly. Is there any shot at a deal on this property?” If not move on.

This glut of properties won’t be here forever. It took a few years to absorb the Savings and Loan fiasco and major write-downs that took place, but it was absorbed and money was made by many. The original owner being in an overly leveraged mortgage situation may have cast the initial foreclosure situation. High leverage kills when the underlying financing is an Adjustable Rate Mortgage in a rising interest rate market. Cash flow disappears. The bleeding begins.

It’s no place for the faint of heart. Like arbitrageurs in the financial markets, it takes a strong will, liquid cash and a good feel for the current market and the future market and how it will all play out. The climate for a play is here and now in some targeted areas. Over 1,000,000 foreclosures, a glut of listings on the market, a falling dollar making attractive situational buys to foreign borrowers makes for a play now. “Knock, knock.” “Who’s there?” “Deal” “Deal Who?”
“To Deal Or Not To Deal, That Is The Question”

Dale Rogers

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