Teamwork should be the cornerstone of every real estate investors business plan.  Yes -there are many of us that are one or two (wo)man shows whom shoulder a majority of the responsibility’s; however, there are many critical components in the anatomy of a real estate transaction that require different skill . . . → Read More: Real Estate Investing is All About Teamwork]]> Real Estate Investing is All About Teamwork

Teamwork should be the cornerstone of every real estate investors business plan.  Yes -there are many of us that are one or two (wo)man shows whom shoulder a majority of the responsibility’s; however, there are many critical components in the anatomy of a real estate transaction that require different skill levels and expertise.

I started investing in real estate with the core beliefs that I’ve got to get (at least the key) critical things done myself.   After-all, if you want it done right you gotta do it yourself? Right!?!  WRONG!

Ask me how I know?   First off its practically impossible for any individual to acquire all the reasonable skill sets needed to take real estate investing through a full cycle (either in a ‘rehab-to-retail’ resale or a long-term rental investment).  One simply cannot acquire the skills of an attorney, cpa, carpenter, electrician, general carpenter, interior designer, plumber, realtor, lender, and the list goes on…..  ’Don’t be a ‘Jack of All Trades & a Master of None’!

I’ve had to learn the hard way as I’m sure most have too.   What I have found is that building professional relationships with professionals with whom you can count on (and they on you) to accomplish their responsibilities in a competent and timely manner is absolutely critical in building a continual growing investment and business operation.  Five years ago you would of still found me (even after a decade’s plus of experience) camped out at a major ‘rehab-to-retail’ resale project making sure every critical component was handled.  Today,  I find myself being completely hands off with an assembled team of professionals where at times I see that project at pre-rehab stage and not again until the real estate is ready to list for sale.

CAVEAT: That last statement of “Today,  I find myself being completely hands off with an assembled team of professionals where at times I see that project at pre-rehab stage and not again until the real estate is ready to list for sale.”   comes after almost 20 years of real estate investing from multiple angles of the business.  I would not recommend this for anyone who has not been actively investing for a good decade.  Why?  Because true expertise comes with time and experience from doing multiple (and I mean many -say 100+ deals) real estate transaction.  Believe me -I do not say this from ego but from humbled experience.

This is one key critical component that some inexperienced real estate investors overlook and under value:  Real Experience.    However, it is something we all can work hard at and aspire too.  Give it time and it will happen.   I will tell you that I have gone through many trials and tribulations to get to the spot I am at today -and mistakes are still made.

Again, through relationships (and proper checks and balances) we can build a team around us that can excel our cycle of investing and business growth.

Do you want to do 1, 5, 10 or 20 deals this year?

What will it take to get there?

Can you do it yourself?

So yes -a team of professionals is what is needed and real estate transactions with margins to make it work.  From the flip side, we need to be professional too.  If our team cannot count on us to be organized, timely, consistent, and pay for the value they provide -we won’t have a team (of professionals).  Step back from your daily real estate investing and analyze the big picture.  What’s missing and/or stretched?  Go build that team to strengthen the strategy!

Former Articles Regarding Parts of the REAL-Estate Team:

Marketing Real Estate Investments:  A Realtor is a Key Member of the Team

Legal Advice: A Real Estate Investors Team of Advisors

Rehabbing Real Estate Investments: Beware the Contractor

We are forming a bottom in the housing market in most areas of the United States and certainly in Charlotte, North Carolina.  Whether you listen to someone that says the markets great or the sky is falling, it’s important to observe whom it is you’re . . . → Read More: Real Estate Investors: The Foundation is Set -are You?]]> Real Estate Investors:  The Foundation is Set -are You?

We are forming a bottom in the housing market in most areas of the United States and certainly in Charlotte, North Carolina.  Whether you listen to someone that says the markets great or the sky is falling, it’s important to observe whom it is you’re listening to, whether they’re walking the walk, and there’s consistency over time.  You see we can all get it right sometimes and have great book knowledge; however, it takes real life experience in one’s craft (real estate being the topic here) over a decade plus for one to truly start to understand what it is their doing.

My opinions are formed on local, State, and National Statistics, mentors, fellow real estate peers, and just about any person I run into not only in Charlotte but several real estate markets around the country.   In Charlotte North Carolina, I started seeing to firming up of our local real estate markets back in July 2011.  What was blaringly obvious came from our hard money lending operations where wholesaler feedback was that the ability to wholesale properties was improving –but most prevalent was the ability for a ‘rehab to retail’ investor to not only survive BUT THRIVE!   I’m serious!  You don’t know how many people I run into that look at me cross-eyed when I talk about this –and even scarier is when that person is a real estate investor.

One thing I have learned over the years is that I need to have the openness and willingness to change with the times –those that don’t won’t survive.  Simply look around you.   So with that being said, If you were a rehab-to-retailer in subprime or basic entry level neighborhoods –forget it.  Odds are those markets are challenged.  How does one know?  Simply look at the real estate comps.  Is there a healthy home sale market for the neighborhood?  With a high concentration of real retail home sales?  Foreclosures, REO’s, Short-Sales should not consist of more than 30-35% max of the neighborhood home sales.  Nothing frustrates me more when I get a call about a real estate opportunity in a neighborhood where there’s one REAL RETAIL SALE in the last 6 months with a ton of distress sales that have sold a little above and a little below this opportunity.  C’mon –let’s not put our blood, sweat & tears into a home to hope and pray we can get a retail buyer.    Let’s improve our odds by working neighborhoods where people who can afford homes want to live.   Let me repeat that:

“Let’s improve our odds as real estate investors by working neighborhoods where people who can afford (to buy) homes want to live”

Now –I’m not perfect.  However, I have been an active real estate investor for many many years and I’m working my real estate markets doing business everyday –not just talking about it.  I will tell you the stats show the formation has been set, the active investors who are working it-know it, and you’ll see the media will take another 4-6 months to really tout it.  It’s happening.  The ball is now moving in the positive direction.  Sure –there are signs of froth here or there.   However, there is money being made everyday in real estate markets.  The sweet spots are at the opposite ends of extremes and during certain stop-gaps of entrapped stability (which is exactly where we are).

If you want it, stop talking, take some action, and keeps the odds of risk on your side of the investment. 

I’ve got something to confess…..  You’ve not seen me around as of late because I’ve been busy.  Doing what your ask?  Investing in the future -that’s what!  Despite the oppressive rhetoric &  rules our misguided politicians dish out,  the over-bearing paperwork &  regulations needed . . . → Read More: Real Estate Investors Need Stability in the Housing Markets]]>  

Real Estate Investors Need Stability in the Housing Markets

I’ve got something to confess…..  You’ve not seen me around as of late because I’ve been busy.  Doing what your ask?  Investing in the future -that’s what!  Despite the oppressive rhetoric &  rules our misguided politicians dish out,  the over-bearing paperwork &  regulations needed to keep our government at bay (both locally, State, and Federal), and the great uncertainty in our American economic engine, I am investing in the future.   What is my #1 investment?  Real Estate.

Those close to me may have guessed that our new internet business would of been the first choice.  Maybe in time -as we build up scalable systems; however,  it is real estate that is hitting up on a number of my positive economic indicators.  While most are filled with doom &  gloom,  demand for good quality housing both at the rental investment level &  rehab-to-retail level is there.   No you say! That’s fine you just keep telling yourself that.

I’ve not been this excited since the last full year of our ‘go-go days’ (2007) in Charlotte,  NC.  Why -you ask,  again?  We are at the beginning stages of Stability in our housing markets.  That doesn’t mean that we might not drop another 5-10% in valuations over the next year.  In fact if you have to sell an investment property,  the probability of pain can be great -unless you truly do know how to buy at a wholesale discount.  Remember Warren Buffet’s quote “Only when the tide goes out do you discover who’s been swimming naked.”   The truth is that there is a lot more to buying at discount then saying “It’s half the price as it was 3 years ago.”

As real estate investors,  all we need is stability in our real estate markets.  From there we can analyze with more certainty of the time it would take to sell one’s real estate.  When we can calculate that (with great certainty), we can calculate a reasonable market value given a reasonable time to sell.  From there,  we can calculate a true wholesale value reflecting any cost of funds &  repairs.  Yes,  we can all agree there are a lot of strong currents going this way &  that; however,  crawl out of your comfort zone (of doing the same old pattern you’ve always done) and analyze your local housing market.  There are pockets of real estate investing that are working.  We’re seeing rehab-to-retail,  rentals,  and the beginning stages of wholesaling work in our local real estate markets.  When wholesaling works,  that is a sign of stability as it is a free-flow function of supply &  demand of investor flexibility &  beliefs.  And no,  I’m not talking about the ‘sitting in your underwear day-trading real estate in another state fluff’….  I’m talking real-deals transacting at the local level.

That’s it.  I’m putting a majority of my new investments into real estate with an eye towards market distortion wholesale opportunities.  Identifying opportunities is another article (if not more) in itself.   Be prudent.  Be realistic. Grow slow -but don’t turn your back to an investment that provides one of the most basic needs of our day-to-day living.  Invest in that which everyone is running (scared) from -Real Estate.

Rental Properties & The Return On Investment -Not To Mention Time

There can be a fine line between what improvements to a rental property can bring an actual increase in return on investment and that which maybe a waste of time and money.   Often one will here me state that I provide a nice . . . → Read More: Rental Properties & The Return On Investment -Not To Mention Time]]>

Rental Properties & The Return On Investment -Not To Mention Time

There can be a fine line between what improvements to a rental property can bring an actual increase in return on investment and that which maybe a waste of time and money.   Often one will here me state that I provide a nice clean habitable rental property for the area; however, often do not over improve the property.  Traditionally, I do not believe in pushing for a top rental price range in a particular neighborhood as I feel my tenant turnover greatly increases.

You see there is alot more than just getting the highest rent for your rental with it’s newly installed granite counter tops and brushed nickel lights, fixtures, and accessories.  I’ve watched a neighbor in a particular area charging $850 (with at least $15k more in cosmetic improvements) while I’m charging $625.  Basically every year he’s got a tenant moving out with a good 30 days down time, new painting, clean up, and some extra’s here & there.  Meanwhile my average tenant stays for 3-4 years.   Now some will argue with me that I’m missing the boat.  Sure every year he gets $2,475 in extra rents (only 11 months with a one month turn), and he’s spending a good $1,200 in additional maintenance due to the turn.    What’s missing is the return on that extra $15k in improvements versus the lifespan of those improvements, and the time-value of that turn.

If you’ve ever had rentals for a length of time, you know that often your properties wear n’ tear tends to be much greater than your own.  It’s really a crap-shoot and what I call “random chaos” that increases as you increase your rental portfolio.  You see the quick estimate above on the extra $2,475-$1200/$15k is a good 8% return; however, one need’s to earn that $2,475-$1,200/year to offset reinvesting on those depreciating assets ( and random chaos) not to mention take the time to handle the turnover -which at a minimum occupies mental energy if you outsource 100% of the work.   Now, If that investor could get his average turnover to every two years -we’d be talking.  As a generalization the basic return of 8% would double to 16%.  Perhaps, he’d could achieve that goal with a lower rent -say $750?   This is something we all learn with time, experimentation, and experience.

Meanwhile, my $625 rentals are on auto-pilot and often fill rapidly (say 3 days or 1 week) due to the locational deal and word of mouth.  Sometimes when it goes to easy -it’s a sign the place is under-rented (to cheap).  So I’m not perfect either; however, there is one component of this investment operation missing.

Notice how most state (including our real estate investment book writers) that they want (or the goal is) a passive investment?  That’s sort of ironic when one is investing in single family and small multi-family investment properties -now isn’t it?  Even if you use a property manager, it certainly isn’t passive.  My goal is to make my rental property portfolio as passive as possible.  This would include easy day-to-day management, wear n’ tear on the property, and the handling of tenant (resident) turnover.  All of this becomes easier with a resident with whom we know and have developed a business relationship with.  Much easier if said resident isn’t moving out every year!

So if your residents are moving every year, identify what is causing the move out.  Discover what it takes to get stable qualified applicants to apply & stay in your rental investment.   Perhaps -you are pushing the rents.   I don’t know about you but I get worn out when residents move out every year -especially if you have alot of them.

Now-I will add the disclaimer that I know many real estate investors that are having success at pushing market rents with superior rental properties.  I’m not saying it can’t be done; however, if it is -it’s being done by a disciplined professional.   So it can be done -you just better really know (rather than think) you know what your doing.   The goal of the article is to get you to think.  Think about what we can do to improve the return on our investments & while achieving our lifestyle goals too.

I’ve had a whirlwind couple of months as our local real estate markets have been heating up for the real estate investor who knows how to take advantage of the distortions and execute.  At the same time, I’ve added on a new . . . → Read More: Passion is the Key to Life -Not to Mention Real Estate Investing!]]>

 Passion is the Key to Life -Not to Mention Real Estate Investing!

I’ve had a whirlwind couple of months as our local real estate markets have been heating up for the real estate investor who knows how to take advantage of the distortions and execute.  At the same time, I’ve added on a new operation to my set of investments &  businesses.  I will say that I haven’t felt this fulfilled, impassioned, and energized in my endeavors since I launched my hard money lending operations in 2003-2004.   The moment is here and now. If your a real estate investor and you haven’t done so already -stand up, start dipping your toe in the water, and take action.

Passion is the key!  Faith,  belief,  and the conviction to move forward despite the static that swirls all around you.  That is what it will take to not only survive but thrive in real estate (and any other direction in your life).  We all know there is alot of static in the world of real estate.  Let’s just get real and call that tsunami that officially hit in 2008 -crippling our financial markets and putting the death grip on any future real estate growth the official moment that “the real estate depression”  hit.  We all know friends, relatives, and acquaintances that took large losses if not losing it all -some of us were caught with our pants down.

Personally,  I’m going through a phase of some 80% offense (venturing forward into new investments &  opportunities) and 20% defense (still facing some challenges of investments made at or near the peak).  And as if you hadn’t noticed, a point of reflection.  This is quite the opposite of 2008-2009 when I went to peak cash positions and triage mode to move out any rehab-to-retails investments I had to take back from my hard/private money lending operations.  Lots of shells, 1/2 completions, and finished product that just wouldn’t come close to cash flowing if turned into rentals.   Here’s some thoughts I posted back in 11/2009 in “You Can’t Handle The Truth”.  We’ve not hit the bottom; however, opportunities (as I’ve been saying in previous articles) are here.

One thing that has struck out in my reflections is the character of people: whether it be your family, friends,  acquaintances,  passerby-er’s,  or even yourself.  The worst of times will bring out the worst in people.  Fear,    Greed, and ego thrive.  In the g0-go days, I often told people to leave your greed and ego at home and tuck your gratitude in your pocket before you go out into the World everyday.  Boy -aren’t those words to live by!

What struck out was how the naysayers have come out of the woodwork.  Letting you know what you can and cannot do.  Of course 99% would never know as they never do anything.   Also, in times of weakness others may try to feast on your vulnerability.  While others will simply take their game to the corners of the room fearing to be outed for what they are.  I may have come across harsh towards real estate marketer’s (guru isn’t appropiate) whom sold their wares and shouted buy right through the peaking real estate markets.  Truth is some didn’t (and still don’t) care about you or I -they just wanted to sell a coarse.  Ego &  Greed.

Let’s never forget the rules:

• People before profits
• Lead by example

Those who know me often call me conservative.  Want to know why? Sure I’m afraid (at times) to take a loss; but most importantly I’m afraid that you’ll be susceptible  to a loss when listening to my opinion.   I want to make sure I do everything I can to insulate someone from problems when following my thoughts; unfortunately, some still won’t listen when asking but most unfortunate is that 99% is execution and only 1% -the advice.

So where is your passion?  Are you pursuing it!?!

Where’s mine?  I love real estate.  I am making new investments; however, I’m not going full force -at least at this moment.  This is passion number #1.  Unfortunately, I like to work and fill my day with challenges.  That is were my new internet operation comes into play.  I have unleashed a new set of challenges that I wake up wanting more of…some skills that can (and will) be applied to real estate too.  What I’ve also re-discovered is courage to forge forward (in new directions).   You see there are times that we need to identify,  quantify,  and face our fears.  This is when true growth occurs.

I’ve had the opportunity to spend some time with another real estate investor over the past year on regular intervals.  20% of the time is about real estate -the other is about personal growth.   I’m not sure whom has helped whom more?  That time has helped me face my realities and commit to taking action on goals.  I’m looking to push myself more with public speaking, technology, and marketing.   Will my over-all tools and plan of attack change?  No.   I‘ve going to harvest this passion and take full advantage of the energy to move forward in life.

The moment is here &  now.

Real Estate Investing & The Firming of The Housing Supply

Seems as though the Press is finally affirming what we real estate investors have been seeing for months “The availability of distressed homes through foreclosures and REO sales is down dramatically”.   This drop in supply (at least temporarily) is firming up pricing and . . . → Read More: Real Estate Investing & The Firming of The Housing Supply]]>  

Real Estate Investing & The Firming of The Housing Supply

Seems as though the Press is finally affirming what we real estate investors have been seeing for months “The availability of distressed homes through foreclosures and REO sales is down dramatically”.   This drop in supply (at least temporarily) is firming up pricing and helping the homeowner move their home while bargain basement competition slackens.   Many investors who run strictly by the numbers are having a harder time finding distressed homes that hit their target market pricing.

Yes, it is pushing the problem forward -one that we still have to face and work through; however, one could argue that it’s creating some short-term stability why we heal (or offset other headwinds) in our economy.  Of coarse, there is an unseen cost to all this and it will be one absorbed primarily by us (The U.S. National Debt) through our government.

While we are in this pause as our Mortgage Lenders negotiate a way to work through the hair of the ‘robo-signing’ effects, our leaders would be wise to finally realize and/or admit as to whom it is that will soak up the majority of this dead housing inventory.  Care to guess who that is?  How about YOU – a real estate investor.  In reality I thought it would be worked out already and we’d be feeling the effects of this surge of homes on the market -looks like it won’t be till the end of 11′ or beginning of 2012 at the earliest.

I have been stating for over 2-3 years now that the way of soaking up the excess housing inventory is by providing lending to real estate investors backed by the government (just like individual home owners).  Sure -we need responsible lending.   Care to guess the last time this succeeded?  How about during the Savings & Loan Crisis when over 750 lending institutions went bust.   I don’t want to get political; however, this is one of many insights as to how the people at the top are running our country.  Folks -we don’t have to reinvent the wheel -simply repeat what works.  Other thoughts can be read at: “Wake Up Washington”.

So the good news for now is that wholesaling of real estate investments is coming back for those that know the ‘art of a deal’.  We’ve even been party to some transactional funding here in Charlotte, NC.  through our hard money lending operation.   The best of all is that those whom are experienced in ‘rehab-to-retailing homes should have a very open window of limited competition through next Summer.   The downside will be more competition and marketing towards the direct owner purchase and an eventual cascade of distressed homes from lenders.   That will spell tremendous opportunities; however, create additional stress on home sales -especially if your attempting to sell a rental or a basic home (not fully rehabbed).

As you already know, we are a long way before we get through this.   We are a  good 3-5 years for what I call a supply/demand stability.  I’m not calling for rapid appreciation; however, wealth will be created during this time for those that take advantage of good prices, good quality, and/or financing terms.   Take advantage; however, for rentals (long-term holds) the fruit won’t be truly borne for many years down the road.   As I stated in “Blood In The Streets”,  2011 won’t be pretty, but don’t let it stop you from making educated advances.

What’s next for the talking heads (Press)?  Perhaps a firming of prices (due to supply constrictions), a settlement in robo-signing which will start a onslaught of relocated familys & housing supply, tighter vacancy rates,  home sales increasing on a year over year basis starting for the month of July 2011, or government backed investor financing?  I know what I’d like to see but there’s no telling what direction we’ll go in this wild ride we all call life.

Can you believe we are mid-way through 2011!?!  For the past 3-5 years,  real estate investors across the country have been battling the the deflationary effects (not seen since the Great Depression) on the housing markets.  Sure speculators were wiped out; however, lots of conservative (everyday hard . . . → Read More: Real Estate Investors: Do You See The Opportunities?]]> Real Estate Investors: Do You See The Opportunities?

Can you believe we are mid-way through 2011!?!  For the past 3-5 years,  real estate investors across the country have been battling the the deflationary effects (not seen since the Great Depression) on the housing markets.  Sure speculators were wiped out; however, lots of conservative (everyday hard working) American’s whom either hold a rental or rehab a home to re-sell whether part or full-time either lost everything or have had to buckle-down at a never foreseen level for our generations.    The ball of momentum is changing -it’s up to you as to whether your going to go with it.

The last 60-90 days have been an absolute whirlwind for me -as it’s been the busiest I’ve been in years.  Part of this -reflects a new business; however, my phone is ringing more than ever with the discussions of a “Real-Deal”.   I’m not talking about the homes for sale @$40-50k (dime a dozen) that used to sell for @$100k.     Sure -we might agree that it’ll be worth $100k in 10-15 years -again.  How does that make us a living (or lock in a gain) today?  That’s right -it doesn’t.   You need to have the ability to buy that house for $15, 20, or 30k.    At those prices, one has the ability to sell the property now (under 60 days) for a profit and/or to rent it out and make a sizable cash-flow.  As a hard-money lender or landlord (with liquidity), those are the deals that I’m interested in.  Sure -if you can obtain owner-financing (check out some of my financing articles), then one can pay a higher price with the ability to offset it in the terms let alone capture control of the real estate.

There is a constriction in supply of both distressed and quality rehabbed homes for the retail home-buyer.   We are still seeing the lagging effects of the ‘robo-signing’ and thus, foreclosures and reo’s have stalled.  Hang on -they’ll be back (and it might just be this fall/winter).   We are also seeing less & less good quality rehabs for the home buyer.  Either rehabbers are going out of business or their operations are getting bogged down in bloated inventory from shoddy rehabs or poor locations.   This is opportunity!   I have witnessed more wholesaling activity in the last 90 days then the prior 9 months.   For the past 2-3 years, I have advocated that wholesalers were getting squeezed the most in the world of real estate.    They are now in demand -again.   Those who can find and pass along good value will see success.

Now -these maybe short-term blips as I’m discussing fresh data that is short in duration.  I have espoused (in earlier articles this year) that I believe 2011 will be tough and filled with panic.  You can see how that storm could play out to be frightful going into the winter months.  Ignor the static.  Be conservative with your numbers.  Look around -others are having success.  While the numbers out this past month for Jobs were abysmal, don’t worry -they will come.  Look for the needs and fill it.