Invest to Realty - Informations for investing

One of my favorite real estate investing stories is about a man in California who used to just send out offers on a hundred MLS listings at a time. He never looked at the properties. He just offered 25% less than the asking price on each one, trusting that the listing agents were pricing these homes somewhere near the actual value, and so assured that he had a good deal if the seller accepted.

Sometimes a seller would accept his lowball offer. This happens more often when you make hundreds of offers instead of just a few. Of course, he always included an “inspection and approval” clause in the offer. This is common, and it meant that if the home had real problems, he could back out of the deal later without forfeiting his deposit. In the meantime, he very efficiently found the truly motivated sellers.

My favorite part about this story, apart from it being true, is that it demonstrates that success in real estate investing, as in life, is often just a “numbers” game. Try enough times, and you are more likely to succeed.

The story also demonstrates that with a good clause or two in the contract, you don’t have to worry about making an offer before you see a property. This is true with buy investment property or your next home. If you make the offer in the right way, and the property it isn’t everything the seller says it is, you can reject the deal with little or no loss. However, why wouldn’t you want to look at the property?

Real Estate Investing By The Numbers

You might skip looking at a property before making an offer because of time constraints, especially if the property is far away. If you can’t get it for a price that makes sense, why spend your time traveling to look at it? A good price and terms that make sense - these are what is most important.

You’ll probably want to look at the actual property eventually, but whether or not you see the property before you make an offer isn’t nearly as important as making sure the numbers make sense. For example, investors value income property according to current cash flow, or at least they should if they want safe and viable real estate investments, so start by verifying income. Ask for actual income figures for the past 12 months. It’s a good idea to think about the potential income if the rents are raised, or vending machines are added, but you should base your offer on the current income.

Fortunately, this can be done by phone and by mail. You can also verify all expenses this way, but if any expenses listed by the seller seem unusually low, they most likely are. Substitute your own best guess in place of any suspicious numbers.

Subtract the expenses from the gross income to determine the net operating income, then apply the appropriate capitalization rate to arrive at the value. Not sure how to do this? Learn how, don’t just ask someone to do it for you. You really should understand the principle of how to figure value based on a cap rate. Real estate investing is all about the numbers.

Subtract your expected loan payments (talk to your banker), from the net operating income to see how much cash flow you’ll have. Now you can figure your cash-on-cash return based on how much of your own money you put into the deal. Simply divide the annual cash flow by your investment.

Do the numbers work? Then you can safely make an offer. The various inspections will tell you if there are problems that will affect the cash flow, and you can always renegotiate if there are such problems (assuming you made your approval of all inspections a contingency of your offer). Of course you can go look at the property now, but real estate investing is about the numbers.

Steve Gillman writes on all real estate topics. Visit his website for:

1. A photo of a beautiful house he and his wife bought for $17,500.
2. A free book on how to save thousands buying your next home.
3. A free real estate investing course.

Visit
http://www.HousesUnderFiftyThousand.com

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Although the preconstruction real estate investing option has been around for many years and is nothing new, it just recently became well known to the masses and real estate investors all over the world are scouring the web for the best new construction and preconstruction real estate projects in areas where real estate prices are skyrocketing (Baja Mexico, Costa Rica, Bulgaria, Cabo San Lucas, Orlando). While the sudden increase in demand has influenced many legitimate developers to offer more projects and developments, it has also seen the emergence of many ill-prepared developers into the market. Here are just a few ways you can properly screen your preconstruction real estate developer / brokerage and make sure you are not signing with a less then reputable developer:

1. Read Small Print - Before investing in a development, be sure not to fall victim to the curse of the small print. Avoid ending up the subject of those horror stories about real estate investors who are suckered into scandalous contracts with real estate developers. Some real estate developers will not let you sell the property until years after it is finished and others will charge huge penalties if the property is sold early. Always, have an attorney look at every contract before you sign anything.

2. Find a Preconstruction Brokerage - Unless you are VERY well connected in the area’s preconstruction market, it’s a good idea to go through a real estate brokerage that specializes in preconstruction real estate developments. There are several reasons why using a quality brokerage can help you, but most importantly, they know the developers and can discern between which can ensure quality and which are “accident prone”.

3. Research the Developer’s Past Projects - If the developer has had huge delays in past preconstruction projects, it will probably happen in the next several projects. Remember that your time is money - even if you get your full deposit back 2 years later, because of constant delays you may lose hundreds of thousands of dollars worth of wasted time and resources.

***Note*** As real estate developers have learned that the word “preconstruction” alone can sell out a project, they have created a new trend in the industry by labeling every phase of the project a “preconstruction phase.” Often these are low-quality condo conversions or condotels that are not worth half the asking price. BE SURE you are buying in the actual preconstruction phase before purchasing!!!

Just remember, the bigger the preconstruction real estate market gets, the more you have to watch out for fly-by-night developers and unethical brokerages that don’t have your best interests in mind.

Phil Laboon 412-253-0841 For more Real Estate Investment Information please visit our website. For a complete run down of how to find the right preconstruction real estate brokerage, agent, broker, or developer, visit our Real Estate Investment Information website and browse our huge collection of free preconstruction news, information, and advice.

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The decision to develop an internet marketing strategy is a big one. If you are ready to take the plunge by developing a real estate website, you may be concerned that your investment will be money down the drain. Poor search engine results will cause even the most well designed website to disappear down the ranks of search results. To guarantee results from your real estate website, you need a website that will show up near the top in search engine results.

While this may sound complicated, there is an entire segment of the internet marketing industry that revolves around this topic, called search engine optimization. The fact is, if no one can find you, then you will not benefit from having a real estate website. By developing a website that is highly visible to search engines, your site will be one of the first that shows up in search results, and therefor, more likely to be visited.

The problem with internet marketing is that it can seem so complicated to the average business person. To have the most effective website, you do not have to know everything about web development, but there are a few things to keep in mind. Anyone who wants money to submit your website to search engines is probably more interested in your money than in results. Search engine technology is designed in such a way that a website does not need to be submitted.

Search engines will find your real estate website by there selves, in a process called crawling. To have your real estate website be picked up it needs to contain useful content. In addition, high quality links can make your website more attractive to search engines. Unlike search engine submissions, search engine optimization is money well spent. By having a professional develop content for your site, or check over the content that you already have, you can greatly increase your internet visibility.

Once you have developed an attractive and informative website, your site’s ranking will start to rise. By developing and maintaining a well thought out internet marketing strategy, you will soon have a real estate website that draws customers, and business, your way.

Keith Schilling operates RESEO Marketing Inc. which focuses on providing real estate solutions to agents around the world

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