real estate investing

Real Estate Investing Checklist

March 11, 2020 by Team RE Mentor Leave a Comment

Investing in residential real estate is one of the oldest forms of investing — and it’s an asset class worth considering for your portfolio due to the cash flow, tax and diversification benefits it offers. To ensure you invest wisely, research and advance preparation are key.

real estate investing — Real Estate Investing Checklist

Here are the first steps you must consider if you’re thinking about becoming a real estate investor:

Step 1. Research these three questions:

Where are the best places to buy — and how can you forecast demand in the future? Do your homework and conduct market research, and you’ll gain visibility into which locations are established neighborhoods, where the up-and-coming places are and what areas offer the least financial appreciation.
Is now the right time to buy? Pay attention to economic trends and rent activity in the area you want to invest in.
How much leverage can I afford? Know whether your real estate goals are short- or long-term; this will dictate how much debt you can take on when buying an investment property.

Step 2. Gather your financial documents

Request your credit report from all three credit rating agencies: Experian, Equifax, and TransUnion.
Assemble paperwork, including tax returns, W-2 forms from the past two years, current pay stubs, bank statements from the past several months, current asset statements, etc.

Step 3. Speak with a banker or mortgage broker

Based on your income eligibility and credit score, your banker or broker can help you determine how much financing you’re eligible to receive.

Step 4. Know what type of financing is right for your real estate purchase

Research the forms of financing that are applicable to the type of residential properties you’re considering.
Know what type of financing is best for your investment horizon.
Understand how each loan type’s structure and terms will impact your monthly cash flow and your overall return on investment.

Step 5. Build the rest of your team

Select a broker who knows the area you want to purchase in and will give you candid advice you can trust.
Find a reliable real estate attorney and home appraiser (or home inspector) who will help you avoid last-minute surprises during the real estate transaction.

As with many investments, real estate has potential — but that doesn’t mean it’s an assured gain. Use this checklist to take calculated steps, make careful choices, and weigh the costs and benefits of your actions before making an offer.

Five Real Estate Skills Investors Should Know

March 4, 2020 by Team RE Mentor Leave a Comment

Analytical Skills

Analytical skills to properly analyze an asset being considered for acquisition financing are a critical skill set a successful real estate investor or developer must possess. They should also be able to create a business plan and proforma for that asset and calculate expected returns. – Rod Khleif

Seeing What Others Cannot

The ability to see what others can't see is essential. Sometimes the biggest single thing that makes an investment or development work is the vision of the people taking part in the deal. The ability to see the potential in a deal when everyone else can't is one of the greatest strengths an investor and developer can have. – Dan Dutton

Pricing Analysis

Price is the number one driver of sales. A failure to properly understand current market value and future trends will hinder any sales program or investment portfolio from the outset. – Jeremy Finkelstein

Knowing The Market

Investors and developers need to know the market for the type of real estate investment you wish to do. Understand your numbers and ability for ROI. Plan projects within the scope of those parameters. – Timmi Ann Ryerson

Understanding Value Drivers

Identifying currently undervalued assets is key to any successful investment. You make your money on the acquisition. Most fundamentally, understanding value and value drivers are critical to success here. – Brad Savage

Buy And Flip

February 19, 2020 by Team RE Mentor Leave a Comment

When you're starting out, you have very little time and less money.

One option, therefore, is to flip your deal for a quick profit.

When I say flip, I mean you put a property under contract, close on it, and immediately sell it to another party to realize your profits.

To flip a property, you must be buying the property under market value and you then resell it at market value to another investor.

Why would people sell a property to you below the market value?

There are many reasons:

Inherited a property they do not want
Foreclosure
Bankruptcy
Burnt Out Landlord
Profits falling
Estate sale
Trading up to bigger property
Retirement
Need cash flow
IRS tax debt

People sell below market value for these reasons and more. As you can understand by now, I want systems in place to attract these motivated sellers continuously. I discuss those systems in more detail in these videos.

Let's say you find a motivated seller of a three-family property. It's worth $375,000 but the seller needs to get out quickly and just wants what's owed on the mortgage.

(It happens.)

The mortgage amount is $311,000. You agree to purchase the property for $311,000.

You could make your profit on this property in two ways:

You could assign the property to another investor and get an assignment fee, or
You could close on the property and immediately put it back on the market to resell.

The RE Mentor Team has been successfully investing in Multi-Family Real Estate for over 22 years. Some of our experienced investors have bought, sold and/or holds over 8,000 units. RE Mentor has been teaching this system for anyone who wants to discover it's secrets to create lasting cash flow and wealth, for the last fourteen years.

Head over here and start your training immediately!

“The Nibble”

February 1, 2020 by Team RE Mentor Leave a Comment

Webster’s Dictionary would define the word “nibble” as “a small bite”, but to the person buying something, a nibble is a bit different. To a buyer, a nibble is a conscious or unconscious effort to get the seller to take less, and is usually the last effort to get just a little bit more taken off of the asking price. – Real Estate Club

The Nibble is a negotiating tactic.

Once you have the deal signed and finalized, if anything surfaces that you weren’t aware of prior to the signing of the contracts, ask the seller for a credit at closing. This information often surfaces after the property inspections, when you receive your Due Diligence verification back.

The most common Nibble

is actually the repair allowance we just spoke of. If there are additional repairs that you were not aware of prior to negotiating the sale of the property, ask the seller for a credit.

Other common Nibbles:

Maybe the rents aren’t as high as the seller stated, or perhaps some of the expenses are higher than you were told. Since your offer was based on the information given to you by the seller, you have the right to go back and get a credit for the difference.

Beware, though.

The reason it’s called a Nibble is that you’re asking for small items, one at a time, nibbling away at the deal. If the seller agrees to each, you may end up with quite a bit. You aren’t asking for anything unreasonable. You’re asking for an amount that may be an inconvenience, but not a deal-breaker.

Nibbles are done after the seller is tied to the deal.

The further along you are in the negotiating process before you request these credits, the more likely the seller will agree. The seller already has plans for his proceeds and just wants to close the deal.

Don’t get too greedy, though.

If you’ve got a good deal, take care in handling your Nibbles. Don’t lose the war because you wanted to win the battle.

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Investing in multiple cities?

January 24, 2020 by Team RE Mentor Leave a Comment

We’ll cover that in this video plus:

Yes, cash flow is good, but appreciation is great.
Investing in multiple cities.
What moves markets.
Why markets emerge.
Rapid appreciation.
Retaining equity.

See more? Click here —-> LEARN MORE <—-

3 Ways To Determine The Value Of An Apartment Building

December 6, 2019 by Team RE Mentor 1 Comment

There are three ways to determine the value of an apartment building:

Replacement Cost Approach
Sales Comparison Approach
Income Approach

Replacement Cost Approach

The Replacement Cost Approach determines value by calculating how much it would cost to replace an existing structure. This approach is very time consuming to complete as you must obtain pricing for all materials (from 2×4’s to outlet covers) used in the construction of a property and then calculate replacement cost. Because of this, it is very rarely used.

Sales Comparison Approach

For single-family houses and 2 – 6 unit apartment buildings, the most common approach to determining value is the Sales Comparison Approach. This approach compares similar properties that have sold within the last six months, within a certain geographical radius from the subject property (usually no more than two miles, the closer the better) to determine value.

If you’re buying a 3-family apartment and a similar one on the next block oversold for $220,000, then your property will be valued around that area.

The Income Approach

For six units and more, you would use the Income Approac h to determine the value of the property. This means that you would determine how much income the property is generating and determine its value based on that number.

There are several formulas that investors use to determine value, though one is more prevalent than others; that is the Cap Rate.

You’ll hear people talk about the “Cap Rate.” It’s what most investors use when comparing one property to another.

The Capitalization Rate is the rate at which the Net Operating Income (the income that is left over after all the expenses are taken out) repays the purchase price on an annual basis. Sounds technical, doesn’t it? Don’t let it scare you.