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There is no better way to build wealth & financial independence than Real Estate, Warren Buffett, Donald Trump & Rich Dad Robert Kiyosaki all agree. I have experience in various aspects of Real Estate Investments, from Self Directed IRA’ s, 1031 Tax Differed Exchanges, Foreclosure & Court House steps Auctions, and I have done them all, and am eager to share these experiences or “Secrets” with you.

 
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Great Rental History - Norfolk

Great Rental History - Norfolk



Norfolk, VA 23505

Handyman Special - neds some Love !

$69,900

Cap Rate: 9.631%

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Investing in Real Estate Using Creative Financing 8/28/2012

The affordability of American homes has never been greater. Low home prices and low interest rates make buying a home cheaper than renting in many markets. So why do nearly a third of Americans choose to rent? For many people, financing can be a barrier. On CNBC.com’s Realty Check, real estate reporter Diana Olick writes, “The days of free-wheeling lending are over, and credit-worthiness is king. There are low down payment options, like the FHA, but too many potential buyers don’t meet the credit qualifications either for the great low rates or for the loan itself.”1

Homebuyers and sellers and investors on either side of a transaction have found viable alternatives in the form of creative financing. In three types of creative seller financing—installment sales, seller carryback loans, and wraparound mortgages—the seller becomes the lender and accepts payments from the buyer over an agreed upon period of time. This is particularly lucrative for the seller because the payments are amortized; they include interest resulting in greater cash flow. Along with the higher returns, however, comes risk as the seller assumes the burden of dealing with default. It’s always best to consult with an attorney to minimize the risk and also to ensure legal compliance.

In another type of creative financing, called a lease option, the interested buyer rents the home with the option to buy at the end of the lease. The seller becomes a landlord and charges a higher rent, a portion of which will go toward the down payment. The lease agreement includes a nonrefundable deposit that will also go toward the down payment. If the renter decides not to buy at the end of the lease, however, the seller keeps the deposit and extra rent paid. Investor organizations believe that less than 20 percent of all lease options result in a closed transaction.

Creative financing can be a great option on the buying side, too. Many investors who purchase fixer-uppers with the intent to renovate them and resell them for profit use private or “hard-money” lenders. Hard-money lenders, as opposed to traditional lenders, will loan on properties needing minor and/or major repairs and have quicker turnaround times. The downside to using hard-money, of course, is the high interest rate. The interest on a loan from a hard-money lender can be three to four times higher than the interest on a traditional loan. But if an investor is able to turn a property around within the term of his loan, he’ll be in good shape and will likely make a fantastic return on his investment in a very short period of time.

Whether buying or selling, knowing the options available to you as a new—or even experienced—real estate investor can open doors to new opportunities and put more money in your pocket. Creative financing can be a useful tool in executing an investment transaction. Be sure to consult with a qualified attorney; you don’t want to let an unlawful contract ruin a great deal.


1CNBC (http://www.cnbc.com/id/48461343)


The Real Estate Market is Hot—Invest Intelligently and You Won’t Get Burned 8/1/2012

The real estate market has been heating up nationwide, and it’s only getting hotter. On CNBC.com’s Realty Check, real estate reporter Diana Olick writes, “It’s no secret that investors have been inhaling foreclosed properties at a breakneck pace, trying to cash in on an increasingly hot rental market.”1

Recently Bloomberg reported that Blackstone Group, the biggest buyer of U.S. commercial real estate, “is turning to residential real estate after a 34 percent plunge in prices since the 2006 peak. The New York-based company is the biggest investor seeking to enter the single-family leasing market as rents climb and the U.S. homeownership rate sits at a 15-year low.”2

In some markets—Oakland, California, for example—rents are often higher than mortgage payments. SFGate.com reported, “In neighborhoods hit hard by the housing crisis, it would be cheaper for many families to buy a foreclosed home than rent an apartment. The average price of a house in those neighborhoods is less than $150,000. Monthly payments on most 30-year mortgages at that price are usually less than $1,000, while rents on many West Oakland properties are around $2,000.”3

Real estate investors have the added advantage of record-low interest rates. According to Freddie Mac’s Weekly Primary Mortgage Market Survey, the 30-year fixed-rate mortgage for the first half of 2012 averaged 3.86%, while the 15-year fixed-rate mortgage averaged 3.12%!4 Even investors who have the cash are locking in these incredible rates.

So who are the buyers making up this heat wave of investing? Surprisingly, the typical real estate investor isn’t wealthy and middle-aged like you might imagine. The reality is that the median income of the real estate investor is $86,100. It’s not much higher than the median income of the primary residence buyer: $72,400. And nearly 40% of investors made less than $75,000 in 2011.5Today’s real estate investor is really just the average American homebuyer.

When you consider today’s market conditions, it’s not surprising that investors are popping up everywhere. But not all discounted properties are good investments, no matter how low the price and interest rate may be. Several factors affect a property’s return on investment, and they all need to be carefully considered. For example, experienced investors know to invest for cash flow—a property’s return on investment in the form of monthly rent. It’s immediate, steady, and can build wealth over time. Many new investors tend to think in terms of appreciation, but intelligent investors know that investing for cash flow helps ensure a profitable investment regardless of appreciation.


1CNBC (http://www.cnbc.com/id/47890798/Investors_Get_Creative_with_Hot_Rental_Market)

2Bloomberg (http://www.bloomberg.com/news/2012-07-03/blackstone-makes-foray-into-houses-for-rent-mortgages.html)

3San Francisco Chronicle (http://www.sfgate.com/default/article/Investors-buying-renting-many-Oakland-3674915.php)

4FreddieMac (http://www.freddiemac.com/pmms/)

52012 National Association of Realtors (NAR) Investment and Vacation Home Buyers Survey


Secure Your Future—Invest in Real Estate 6/25/2012

There are a number of reports and studies circulating on the internet and in the media about Americans’ lack of retirement planning. A survey conducted by LIMRA, a financial services trade association, showed that approximately 49 percent of Americans say they aren’t contributing to any retirement plan.1 While this trend isn’t exactly new, it’s still a concern considering that retiree health care costs have increased an average 6 percent a year since 2002, according to a study by Fidelity Investments.2 Additionally, according to a new Gallup survey, Americans’ expected retirement age has increased from 60 to 67 over the last decade and a half.3

It’s clear that saving for retirement has become more important than ever, but many pre-retirees wrongly assume that when they reach 65, Medicare will be able to cover most of their health care expenses. Unfortunately, this just isn’t the case, and many Americans are forced to continue working past age 65.4

Of those who are saving for retirement, the vast majority invest their money with banks, brokerage firms, mutual fund companies and insurance companies. The reality is that investing in real estate can give you a much greater return on investment (ROI) because it factors in a unique type of return: cash flow. Cash flow is an immediate return and adds significantly to a property’s overall ROI. For example, the S&P 500 Index from 2000-2011 decreased 23.8 percent. If you were to invest $100,000 dollars in a rental property during the same time period, however, the cash flow you would receive (based on Census Bureau average rent prices) would provide an ROI of 101.8 percent.5

When you consider appreciation rates, real estate has shown less volatility than the S&P 500 Index over the last 40+ years. Real estate has only had 4 years of negative appreciation, the result of our recent housing collapse. The S&P 500, on the other hand, has had 11 years of negative appreciation.6

Real estate investments perform better than bonds and certificates of deposit (CDs) as well. The average bond yield from 2000-2011 is 4.22 percent.7 The average yield of a 6-month CD from the same time period is even less at 2.84 percent.8 Despite the housing market crash, the median sales price of existing homes from those same years, 2000-2011, increased 19.2 percent.9

Unfortunately, many people have shied away from investing in real estate because of the housing market’s activity in recent years. Savvy investors, however, have taken advantage of the new opportunities and continue to find great deals. Many have even invested their retirement funds in real estate and are slated for a secure, comfortable future, while building generational wealth. The little known self-directed IRA option allows for this, and as its name implies, allows the investor to direct his or her investment account activity—real estate included!

In times of increasing retirement living costs and widespread retirement planning oversight, it pays to research your options and take control of your finances—and secure your future.


1CNNMoney (http://money.cnn.com/2012/05/10/retirement/saving-retire/index.htm)

2USA Today (http://www.usatoday.com/money/perfi/retirement/story/2012-05-09/rising-retirement-health-care-costs/54863320/1)

3Gallup (http://www.gallup.com/poll/154178/expected-retirement-age.aspx)

4USA Today (http://www.usatoday.com/money/perfi/retirement/story/2012-05-09/rising-retirement-health-care-costs/54863320/1)

5MSN (http://investing.money.msn.com/investments/market-index/?symbol=%24inx)

6Ibid

7Federal Reserve (http://www.federalreserve.gov/releases/h15/data.htm)

8Ibid

9HUD Historical Data (http://www.huduser.org/portal/periodicals/ushmc/ushmc.html)


Avoiding the 3 Most Common Pitfalls in Real Estate Investing 6/1/2012

New real estate investors can sometimes get caught up in common pitfalls that end up costing them time and money and, ultimately, turning an investment into a bad deal. But not all of these pitfalls are self-evident. Being aware of the potential risks and knowing how to prevent them will help keep you from falling into these traps.

Pitfall 1: Emotion vs. Logic: Buying on emotion, not math.

Most business transactions and investment decisions are based on numbers and whether they make logical sense. Buying a home, however, is an emotional experience—it’s where lives are lived, families are raised, and memories are created. It’s natural for us to hold great emotional value in our dwellings, and we look for homes that are a good fit emotionally. When purchasing a home as an investment, however, it’s important to treat it as such and keep emotions at bay. To be successful in real estate investing, it’s best to think of the purchase as a business transaction or investment—focus on the returns. Calculating the numbers, such as the cash-on-cash return, for example, and determining if a property overall is a logical investment are the most important factors to consider.

Pitfall 2: Dealitis: Thinking that every property is a good deal

There are plenty of inexpensive properties in the current market. Home prices have dropped drastically since 2007. Just because a home is significantly underpriced doesn’t mean it’s a good investment. You need to take the same cautionary steps to evaluate the value of a property listed at $40,000 as you do for a property listed at $400,000. A low-priced property could have serious structural issues, the relative property values in the area could be low, or the property’s expenses could be too high to provide cash flow. Many people wanting to take advantage of the current market’s low home prices have been burned because they didn’t do their homework and acted too quickly. It pays to consider all elements of a real estate investment property. The return will dictate whether the price is right for you.

Pitfall 3: Analysis Paralysis: Spending too much time analyzing and missing opportunities.

The flip side of Dealitis is Analysis Paralysis. Doing your due diligence is important, but you don’t want to take too long to make a decision. With a properly written contract, you’re allowed adequate time to back out if you decide the deal isn’t right. This is what contingency/ inspection periods are for—a thorough inspection and analysis. If you hesitate too long, you might miss a good opportunity.

Even experienced investors can fall into these traps, which is why it can be helpful to work with an agent who specializes in investment properties. There are risks involved with all types of investments, and real estate is no different. But being aware of these pitfalls and having a knowledgeable real estate agent on your side, along with his or her team of professional advisors, will help keep you safe.


Take Control of Your Future: Use Your SD IRA to Invest in Real Estate 4/17/2012

Did you know you could use your nest egg to purchase an investment property and increase its value through cash flow? You can roll your traditional IRA or 401k into a self-directed IRA (SD IRA) and—as the name implies—have direct control over where your funds are invested, namely a cash flow-producing rental property.

Traditional IRAs, in most cases, are distributed among stocks, bonds, and mutual funds at the discretion of the bank or financial institution by which they’re managed. The financial institution acts as the trustee or custodian of the IRA; it distributes, receives, and holds the account funds for the investor. In most cases, the investor is out of touch with his or her investment activity and just hopes for the best.

While approximately 97% of all retirement account assets are invested with banks, brokerage firms, mutual fund companies, and insurance companies, many people don’t know there are other retirement investment options available and that many of these options have greater return capabilities.1 Real estate, limited liability companies, private companies, and joint ventures are just a handful of possibilities. These investments require that you first roll your IRA into a self-directed IRA to allow you to direct its activity. Because self-directed IRAs are less profitable for financial institutions than traditional IRAs, and because fewer institutions are proficient at handling them, they’re more reluctant to communicate this option to investors.2

There’s no penalty for rolling your retirement funds into an SD IRA, but like a traditional IRA, it requires an account custodian. The difference is your ability to tell your custodian where to invest your funds. For example, you can have your custodian purchase real estate with your SD IRA, then hold the property as a rental investment and have the cash flow go back into your SD IRA. As a bonus, the fees associated with SD IRA custodians can be lower than traditional IRA fees.3

It’s much simpler than most people think. The first step is to find an SD IRA custodian. Not all banks and brokerages handle this type of account, and you’ll want to find one that specializes in SD IRAs. And be aware, rolling your IRA into an SD IRA typically takes six to eight weeks.

Once you have your SD IRA all set up, you can make an offer on a selected investment property in the name of your SD IRA. After negotiating a deal, your custodian executes the contract. There’s extra paperwork involved when going this route, but your custodian can help guide you through the process.

If you’re interested in boosting your retirement and diversifying your investments, using an SD IRA to invest in real estate is a great strategy. You’ll want to consult with your accountant and find a custodian who is experienced with SD IRAs. This method is certainly more proactive and lucrative than leaving your retirement funds in the hands of someone else and simply hoping for the best.


1Allen, Matthew M. Leverage Your IRA: Maximize Your Profits with Real Estate, Scottsdale: LIFESUCCESS PUBLISHING, 2010.

2Ibid.

3http://www.biggerpockets.com/articles/3088-4-reasons-to-invest-with-your-sdira-in-real-estate


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