Knob and tube wiring was very commonly used in the last century and if you are looking to buy a home that was built somewhere between 1880 and 1930, then you will probably find this kind of wiring in the house. No one uses this kind of wiring right now. We now have more loadbearing kinds of wiring and we need them too simply because of the fact that we use a lot many electrical devices than we were using back then. Hence, if you come across some property that has knob and tube wiring, you have to be very careful about it. It may not be the best idea to buy such a property, unless you intend to change all of its wiring, which could hike the expense of living in the house.
The knob and tube wiring used open wires, mostly made of copper, running through the floor or any flat line and held together by means of ceramic supports which were known as knobs. The knobs were used to support the wires on the flat surface and they were also used when wire intersections needed to be made.
Quite understandably, this kind of wiring poses huge electrical hazards. In those old homes, these kinds of wirings were installed in ‘safe’ rooms, which people didn’t frequent much. This was possible in those times because homes were bigger and people could afford to have a room solely for their wiring needs. Also, there was the fact that people had grown accustomed to such a kind of wiring in their homes and they knew how to live with it. In today’s times, it is simply inconceivable to have such a kind of wiring. The open wiring can be fatally dangerous to people living in the house, and we certainly don’t know how to live with such a kind of hazard. We cannot even begin to describe how lethal this kind of open wiring system could be to pets and children in the house. Knob and tube wiring is best avoided; there are no two ways about that.
You will find homes in which knob and tube wiring is present and insulated. Your real estate agent might tell you that because the wiring is insulated, it is safe. However, this is not the case. Knob and tube wiring can heat up the room significantly, and if such heating happens a lot of the time, it is possible that the insulation will melt down. This can pose a big risk of electrical fires and shocks. So, insulated or not, knob and tube wiring is always perilous. And, if you read between the lines here, you will have understood that knob and tube wiring can cause your home to become unduly hot.
Also, such wiring is only capable of driving a small amount of electrical power within the house. In those days, most of the electrical and electronic gadgets that we use today weren’t discovered. People still relied on their fireplaces for warmth and there were simple iceboxes to keep their foods cold. Today, each room consumes more electricity than a whole neighborhood did in the 1880s. Definitely, knob and tube wiring is not cut out for our electrical usage in the 2010s.
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The commercial real estate market is currently the most competitive that it has been in a great deal of time. To work effectively and give yourself the best opportunity to succeed, you must find unlisted, off-market deals in addition to looking through listed commercial deals. This article will quickly give you a few pointers on different ways to find off-market deals.
To give you an idea of one particularly successful real estate investor, he has done forty deals worth roughly $100 million over the last three years. Within that time frame, only ten of the forty deals were listed and were marketed conventionally. Thirty out of his forty deals were off-market deals. You are throwing away many great opportunities by not looking for these off-market deals.
The first pointer to keep in mind is that every person can be a potential lead. In addition to buying deals from the major companies such as CB Richard Ellis or Sperry Van Ness, you need to look for smaller brokerages too. There are often many individuals who run small brokerages who may work out of their homes and have a low profile. These brokers can often have great deals which they may have not marketed or may have also under-marketed the property.
The remainder of this article will focus upon two strategies you may use to acquire off-market properties. The first one is the failed transaction. This occurs when a property has gone into contract but failed due to reasons normally involving the buyer. The seller can become very frustrated as a result. This is a great opportunity to jump in and buy the property quickly and efficiently. Use short due diligence periods and potentially include a non-refundable deposit to appease the seller. The seller may be willing to make concessions on price and other matters within the contract because of the speed and professionalism you display through the deal.
The second strategy which you can use is to look at the largest owners within a particular market. Look at the overall portfolios for these owners and see whether there are properties which don’t fit with the overall strategy of the portfolio. These owners may not be used to managing this property and may not be receiving the type of return they would normally receive. You can enter the picture and help them out by taking over a part of their portfolio they do not want or need. This will allow the owner to rid themselves of a troublesome property while providing yourself with a deal which had no competition.
This article on off-market deals should have given you an idea on why it is so important to look for off-market deals along with two strategies to find off-market deals. Off-market deals are a source of deals which you cannot ignore. If you choose to avoid this area, you are limiting the amount of success you can have within the market. Hopefully you are able to use this information within your business in the near future. Good luck.
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There is a belief that an apartment investor can “get away with murder” by not having a professional property management person on site is negligent on the property management spectrum. The stark reality is that next to the rents, the property management aspect is top of the list for essentials in the apartment investing market. The average apartment complex has a few hundred units and at the very least, 40 hours of daily work tasks. These tasks need to be done on the occupants schedule not the schedule of the management. This creates a very interesting dilemma for any of the property investors that feel a 40 hour employee on site is either unnecessary or unwarranted. In both aspects this is incorrect. A simple table will demonstrate why this is a reality and a reason to employ a property manager on site, at least part –time.
Four Reasons to Come out of Pocket for a Great Property Manager on Site
• Professional Presence: Many Residents Prefer and Expect a Person On Site
• Customer Service Advocate: Professional Approach
• ‘Fire’ Person: Daily ‘fires’ That Blaze and Can Destroy an Investment/ Separate from the Real ‘Flames’ of a Fire
• Maintenance Issues: If There is no Dedicated Maintenance Person On Site the Professional Property Manager Will Know Who to Call or Do it Themselves
• Collection: Collector of the Rental Units Dues.
These issues listed above are very important and that list is just a microcosm of the reasons that can be formulated in the realm of property management for apartment investing success. Many other reasons are commonsense related and need no further defining and if they did then possibly there are other investment alternatives in the horizon. The apartment investor realizes all too well that the risk of failure in the business of renting units to strangers is relatively high. The nature of the business screams for the property to be adequately protected with a professional on site during the working hours of early morning to late afternoon. This is just how it is so when the check is being written, for the purchase of the apartment complex, make certain that an additional percentage is weaved into the final amount. This will make it that much easier to hire the property manager off of sites like IREM.org.
Are There Reasons to Not Employ an On Site Property Manager?
Yes. The size of the apartment complex may will decide what time of management you will need.. The tasks are so monumentally challenging to own and operate an apartment investment that the reasons for not employing a trained professional are almost not there. For some areas of the United States, where the rentals can be seen as almost homeownership by the clientele, these are the ones that can afford to not have an on-site property person. In the end the apartment investor that is serious about maintaining the integrity of both the rental units and their own will think very seriously about the hiring of an on-site property manager.
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I have seen some troubling images in recent times, all due to the present state of the housing market. I have seen images of wild animals who have taken up residence at abandoned homes, images of neighborhoods that are now virtually empty of their once owner occupants, and stories about groups of former homeowners who have taken to living in tents as they transition forward in their lives.
All of these things are sings of some of the troubling economic times we face and there has been one particular type of real estate that has proven to be somewhat ‘economy proof’. That type of real estate is multi-family real estate and there is a very good reason for this. People need a place to live and cost-effective rental housing is a logical place to turn when times are tough.
The past few years of our economy could easily have been titled ‘The Rise and Fall of American Homeownership’. During the good times, politicians were raving about record numbers of homeowners across our country and people were basking in a glow of economic bliss that many had never experienced before. However, much of this was founded upon sketchy financing programs and basic issues like housing affordability were cast aside.
The result, as we are now seeing, is a current record number of foreclosures and abandonment of homeownership, as people try to regroup and determine how best to move forward in more challenging economic times. Subdivisions have emptied, homes sit empty, yet people still need a place to call home, even if it’s just a stepping stone to a better tomorrow.
What I have found, as an owner of many multi-family properties, is that the same period of time that has caused so much unrest in single family real estate has created a boom in the occupancy and demand for my rental units. Sure, there are also single family homes available to rent, but these are more expensive to rent and also require more maintenance than an apartment.
In short, business is very good as a multi-family apartment owner, and the present economy is showing no immediate signs of a rapid recovery, especially for the residential homeowner. When you are seeking out investment opportunities in real estate, you generally look for properties that can be purchased at a discount, properties with good appreciation, and properties that produce cash flow.
Multi-family properties, when they are purchased properly, offer excellent opportunities for all of these benefits and especially so when demand is high from consumers who are looking to rent. As much as it is a shame to see bad things happening to good people, we as investors must look for opportunities to both profit and meet consumer demand. Multi-family properties offer such a winning combination and are thus worthy of your investment consideration.
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Any real estate investment deal worth doing should be able to withstand a little due diligence, and commercial properties are an excellent example of this. I want to discuss examples of due diligence you’ll want to perform for your pending deals include:
· Property Inspection
· Market Analysis (values, rents, etc.)
· Title Inspection
· Lien Review
· Confirmation of Seller’s Mortgage Balance and Payment
· Confirmation of “Currency” of Seller’s Mortgage
· Mortgage Terms (e.g. fixed or adjustable, prepayment penalties, etc.)
Let’s spend some time on the final due diligence items from the list, which concern either title or financing, both of which are also critical prior to any commercial property purchase.
Title Inspection
The title to a property shows the chain of ownership and will feature any liens that are attached to it. Both of these factors are important to look into, before you ever close on any real estate investment. Because of family or business arrangements, chains of ownership are not always as clear as you’d like them to be, and your due diligence allows you to confirm that acquisition of the property can be a smooth transfer of ownership.
Lien Review
Another aspect of title inspection for a commercial property is the review of any liens on the property. Liens can come in many shapes and sizes but some of the primary types are listed below:
· Property tax liens
· Income tax liens
· Mechanic’s liens
· Judgment liens
Tax related liens are either due to local property taxes going unpaid or to state or federal taxes that are similarly delinquent. Tax related liens have high priority, when it comes to transferring ownership cleanly, and this is a potential issue you need to be clear about with any real estate investment you consider.
Mechanic’s or judgment liens are usually easier to address during the due diligence period, but are also worthy of your review, as they can still affect the closing process for a commercial property. When these liens appear, it is often a matter of contacting who laced the lien to see what they will accept to consider it fulfilled.
Confirmation of Mortgage Terms
A final form of due diligence you’ll need to consider is a review of any financing terms that the seller of a property has to adhere to. This review may include such items as confirmation of payment and payoff terms, confirmation of the currency of an existing mortgage ( to make sure the payoff is what everyone thinks it should be), and review of any relevant mortgage “fine print” that may affect the final closing numbers for the transaction.
Remember that due diligence is not just there as something to do, just for the sake of doing it. It is designed to protect you, especially given that commercial real estate represents an often-substantial investment of resources.
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Success is often gauged by one’s income. That’s just the way of the world, regardless of how much you agree with it, and it is important to understand that there are several forms of income. Most traditional careers or means of earning a living focus on one particular income stream, that being the type where you trade time or effort for compensation.
Look at a traditional job. You spend a certain amount of time and effort and you get a paycheck as a result. If you don’t work, you don’t get paid. Employers (at least some, anyway) work to help their employees create a better tomorrow through building of retirement accounts. These represent a sort of asset that is cashed in later in life to replace a previous income source.
Assets are a second from of income that we should all pursue. Whether it’s the selling of items of value, retirement accounts that build over time, stocks that pay dividends, or appreciating commodities like real estate, assets all represent an income source. The catch is that many assets need to be sold or liquidated in order to produce income, thus relieving you of the asset in the process.
Okay, so we’ve seen that traditional and asset based income each have their ups and downs. What about other income sources? What options exist? As a successful real estate investor and a successful entrepreneur, I’m a huge proponent and example of how monthly residual income can truly change your life. Ready to hear more?
Real estate is one of those great investment vehicles that truly offers you the entire gamut of income opportunities. It can pay you now, it can pay you later, and it can pay you residually or monthly. Few investments can claim to do that and, for this reason alone, real estate is a winner.
With respect to real estate, I want to talk a little about what I like to call the philosophy of monthly income. I refer to it this way because a commitment to generating and maintaining monthly income from real estate is indeed a philosophy and likely one that differs from the way things have always been for you.
Ask yourself what income sources you’ve relied upon in the past. For most of you, the answer will be traditional income of some sort or another. Whether it’s income from a job or quick cash income from real estate, this is what most people are used to and, for this reason, it is easy to sit in a comfort zone with this type of income.
What I’d like for you to do is consider a slight change of philosophy, or a paradigm shift if you will. What’s the best kind of income? I think it is the kind that you don’t have to work for and that comes in, whether you’re doing anything or not. That is what monthly residual income is and is what it can be for you when you invest in the right sorts of things, such as apartments.
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Huntsville, AL .. August 28-30 2009
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Despite the current slump in the housing market, it can be an attractive time to acquire funding for a real estate property. I made my move into the real estate business at a time when it was “risky” and not a sure thing, but I have comprised systems that allow me to not only survive the slump, but profit from it. We all know the time to buy is not when you hear everyone saying it a great time to get in the market. We want to get in before that. I had a mere $800 to my name when I decided I to make real estate work for me. There are many ways to go about funding your next real estate deal, but today I would like to focus on grants, private investors, sellers, liquefying assets, and loans.
Grants:
The government dishes out millions of dollars each year in grants to those seeking funding for real estate ventures. This is mainly because one of the government’s main duties is to provide housing for U.S residents. Not only are the grants there to help the brokers, but also acts as an outsourced entity for the government. There are not only federal grants for which you can apply, but also state level grants as well.
Private Investors:
If you can be provided with an opportunity to sit down with someone who is willing to entertain putting forth a little investment capital for a possible venture, wear your best suit and tie. Have a professional proposal detailing your outlying costs and show the bottom line of your profit margin. Chances are your investor will be looking for a faster return on their money than a financial institution will.
The seller (can you believe this?):
Yes, you can possibly obtain the money needed for a property from the seller. It may benefit the seller more to finance your purchase than to maybe face foreclosure. In some instances the seller is willing to add additional money to the price of the property to account for the down payment and the closing costs. This additional money may need to be covered in a certain time period such as a deferred down payment. It will increase your interest to carry that extension on your balance; however it will buy you some time to earn more capital.
Liquefying any assets:
If you feel strongly about entering in to the market and have tried other avenues to obtain capital; you may think about liquefying any available assets. You can cash in any stocks, bonds or other savings. Also you may contemplate turning over your 401K in hopes that you can replenish your retirement fund with a much more lucrative investment in larger sums. Especially if you can invest then into a CD account which yields higher interest. However, seek professional guidance before making this move. We always need to think through our investments from how to get a deal to the proper exit strategy!
Loans:
If all else fails, it is still possible to obtain an investment loan from a bank or credit union. You may be required to possess a higher credit score and/or have substantial collateral to convince the bank to fund your venture. In this instance you may or may not receive the full amount necessary, and will also need to consider the interest rate that will be assessed above the loan. This will be essential when completing a bank proposal.
The right way to fund a deal is different for each circumstance. As a professional investor it is important to be able to use all the tools necessary to get the deal done. Understanding all your options enables you to be the investor that gets the deal done. Once you establish yourself as a closer the deals will start to run to your door.
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