Saturday, December 21, 2013

Closing out the year

Typically, at this time of the year, most folks like to reflect over the year and look forward to the next year coming.  While I believe it's good to 'reflect', I tend to not like looking in the past nearly as much as I like looking toward the future!  In everyone's life, there are always positives and negatives.  This year has been no different.  More positives than negatives I might add.  However, when you look toward the future, I get excited at what the possibilities are and want to work to get to those.  I might use the experience I gained from last year and previous to build on for future growth.  So, I would encourage everyone to do a lot of the following:

Goal setting:  Set goals you believe you can achieve and then adjust up by 10%.  Scary huh?  We, or maybe it's just me; but I tend to hedge my bet on 'sandbag' a little.  Be honest with yourself and get aggressive.  Really aggressive!!  This is just goals you know.  What's important is the process because if your working toward a goal, you're achieving the purpose and that's giving you direction.  You will be amazed at what you will accomplish doing this.

Organize: This isn't just physical but mental too.  Everyone on earth has exactly the same amount of time in the day.  So, what's the difference in people that get a lot done and those that don't get much done.  The first are probably more organized.  Think outside the box and go crazy with your ideas to improve your organization.  Get up a little early, read for 10 minutes, think about your day on what you absolutely have to accomplish.  If there is nothing to accomplish, make something happen that works toward your goals.  Sounds simple but it takes practice and patience.

Pray:  WHAT??  ARE YOU CRAZY??  How does that fit with anything???  This had better be your most important part of your day.  If you don't spend time in prayer, you will not really achieve the other two.  This is for YOU.  In business, your chasing solutions, customers, sales, etc.  Pray for yourself to give you peace, courage, wisdom, endurance.  In business, you need all of these so why not ask for it. 

This is just a very short list and description of things to think about for the next year.  I'm EXTREMELY excited for 2014.  Will there be struggles?  I would think so.  But, there will be many more successes so through it all, learn to use the struggles as opportunities for growth and was to make your successes even bigger and better!

By the way, here's a couple of good reasons to look forward to the days coming. 

Grandkids will make a bad day good so enjoy the day.  Enjoy the year and look forward to 2014

Wednesday, December 4, 2013

Trust your real estate agent?

I read an article about how a person bought a home in California who's agent encouraged them to be aggressive on their bid for the house because several disclosure packets had been sent out.  Later, the buyer learned they were the only bidder on the house and felt they could have gotten the house cheaper than what they paid for it.

I don't know enough about this story to comment directly to the story.  There are just too many variables.  However, even though the buyer was comfortable in putting in the bid (aggressive or not, they were still willing to pay the amount they paid for the house), the buyer was not happy with the agent.  Was it the agents fault?  I don't know.  Did the agent know more than what they were saying and pushing the buyer or was the agent duped into believing there would be a bidding war for this property and really didn't want the buyer to lose out on a good deal?  Bottom line, it comes down to communication on all sides and trust that your agent is looking out for your best interest.  Personally, I'm not big on 'low balling' offers on houses.  Don't get me wrong, I'll represent any contract that a customer want's me to propose but, I look at it that someday, I'm going to represent the sale of that house and do they want to entertain 'low ball' offers on their house?  There is a difference in low offers and fair offers.  All that is another story.

Your agent needs to communicate to you the clearest, most factual information possible looking out for the best interest of whom they represent.  Buyers need to know that agents don't know everything.  If there is a perception that your agent isn't clear about something in the transaction, questions should be asked.  Your agent should realize that it's not all about them but about the customer and be painfully clear with all facts and don't be afraid to say 'I don't know but I'll find out'.  Sometimes, that alone will build trust.  I know I've experienced that.  Customers will ask me a question dealing with my customers transaction that I don't have a clue about.  You can bet, I'm not going to lie to them.  I get caught in those!  Telling my customers 'I don't know' doesn't make me look dumb but I believe it gives the customer the feeling they're dealing with a human and my customer knows I'll be honest with them.

The next time you are working with a real estate agent, look for clues that they are earning your trust.  Do they seem knowledgeable about the market values?  Are they giving you both positive and negatives of the house?  Do they point out flaws that might not be readily visible?  Do they give you financing options?  Trust in your agent is very important throughout the transaction.  You should feel comfortable to ask any question you need to ask and trust that your agent has given you the most honest answer they can have.  That makes for a fun and rewarding and profitable transaction for everyone involved.

Wednesday, November 27, 2013

It's time for Thanksgiving

Every year at this time as Americans, we celebrate Thanksgiving.  It's a tradition that is good for family and friends to come together, share a meal and enjoy the company of each other.  Many travel and others stick close to home.  As a real estate agent, I am thankful each and every day for the opportunities I'm given to help families realize their dreams, upgrade or just get a fresh start in a new location.  I always take this very seriously because it's such a large purchase, a little stressful and affects families on a daily basis.  I'm fortunate to have a wife that enjoys this as much as I do and takes the same approach with customers.  As a team, we work well together, support each other and can now, after 34 years of marriage, finish each others statements.

We so fortunate to have this kind of career because it doesn't feel like work.  I consider this as a 'retirement' because I love looking at houses, coordinating the transaction and walking the customers through this process.  This could be done til the day I die!!!!!!!!!

My hope for you is that you have the career of your dreams.  That you love what you do as much as I do mine and your family and friends are health and happy.  Take the time to enjoy your world and enjoy your family this Thanksgiving holiday.  We have only one life and you should live it to the fullest.

Thank you for taking the time to read my blog and hope you will come back and get some more information how a real estate agent can help you save money, time and headaches on your real estate transaction.


Tuesday, November 19, 2013

Investment property continued

Last week, I talked about just a few things to consider when determining if investment property is right for you.  This week I wanted to give you a couple of real life examples of properties that were purchased last year and let you see the difference just 1 year can make:

Example 1:  Located a 3 bedroom 2 bath single family home in a quiet suburb town outside of Springfield.  This home was a foreclosure and listed for $75,000.  House was built in 2003.  Brick front, vinyl siding on the remainder and no privacy fence.  HVAC equipment in good shape, roof in excellent shape, interior needed clean up and paint and new flooring.  Other than that, its move in ready.  We offered $73,000 and got the house, closed in 30 days.  The new owner installed a new fence, painted, put in new laminate flooring and did some clean up.  Advertised the house for rent on Craigs list for $775 per month.  After 3 days, an older retired couple called and rented the place.  They described a situation we hear all the time.  They were caught in the economy, retirement investments evaporated just at the time they were retiring, lost their home so moved to the area to be closer to family.  The husband said they will remain renters until they go into the nursing home.  Both draw a social security check every month.  The owner informed me they pay the rent on the 20th of the previous month due to make sure it's on time.  He's not had one issue with that house.  Just this past week, another realtor in our office listed the house immediately across the street from the rental.  It had a couple of upgrades over the rental like granite counter tops but exact same floorplan, square footage, etc.  List price for that home is $113,000.  Now, in 1 year, the owner has received positive cash flow from the house, will depreciate the house on taxes, AND conservatively pick up $35,000-$40,000 in equity.  By my calculations, the investor has picked up $45,300 for his $7300 down payment, not to mention again, the depreciation he'll get to claim on his taxes.  Not bad for 1 year of investing on 1 house.

Example 2: Same investor came across a house for sale that is not in his normal area he's interested in but to him, it seemed like a great deal.  3 bedroom 2 bath house on a corner lot with good visibility from a secondary through street.  Neighborhood not bad but low middle income.  House is a frame house, vinyl siding around and square footage is a little small.  Asking price was $50,000.  We offered and was accepted the $50,000 for the REO property.  This house needed work and quite a lot which is why I was shocked he wanted the house.  It needed new flooring throughout, kitchen cabinets needed redone, of course paint throughout along with a new fence for the back.  After getting into the house, the inspector didn't find it needed a new HVAC which set my client back a few bucks unexpectedly.  While he was working to get the house in shape, every day, people would stop by the house to see if he was interested in renting it.  He would say he was but wanted to finish the house first so he'd take their name and number and call them back when it was completed.  He wasn't even sure how much he would rent it for at that point.  He only had a range in mind.  Once completed, he started calling back the prospects.  All returned and was ready to rent......all 14 of them.  Yep, he had 14 prospects with no advertising.  He rented the house for $675 per month which was about $50 more than the neighbor next door with the exact same house.  This house happens to be his best cash flowing house of his group right now.

These are just 2 examples of how investment property can work for you if you're ready to work for the deals.  It may seem these deals just popped up but there is some work and research done on a daily basis.  The key is knowing what a good deal looks like when you see it.  Know the market, know your limits and comfort levels and get a good, honest realtor that can help you find those gems that are out there.  Additionally, they'll help you navigate the sea of paperwork on the REO's and do the heavy lifting on negotiations and coordination to make the closing day smooth as silk.  A good hard working realtor can be a key asset in your stable of people getting you leads on houses just on the market or those worn out from over exposure because of having too high price for the property.

Anytime you have questions or suggestions for an article, drop me a note or make a comment on a post and I'll respond.  Hope you have a super week this week.


Monday, November 11, 2013

Investment property - is it right for you?

Over the past few years, with the real estate market being soft, there has been a lot of interest for many to want buy investment property.  Some have stayed away because they didn't know how low the market was going to drop, while others threw caution to the wind and jumped in with both feet wanting to take advantage of the market.  Believe it or not, both can be right and wrong at the same time.  Here's how.

If you are skeptical about the market because the timing wasn't right for you financially, you probably made a good choice.  However, there are a ton of different ways to overcome that financial fear.  If you had jumped in with a good plan, worked the plan and stayed true to your own abilities, you should be in good shape poised for continued growth and equity in your property within the next 5 years.  If you jumped in and are neck deep with abandon recklessness, you can bite off more than you can chew and get upside down very quickly causing a ton of financial stress and burden on you and your family.  Bottom line, to become involved in investment property, the VERY first thing you should invest in is your education.  There is MUCH more to investment property than just buying a house, fixing it up and selling it or renting it.  MUCH MORE.  Here's just a few things to consider before you jump into investing:  

1.  What's your goal?  Every business, venture or investment should have a goal.  Short term and long term goals should be established early and reviewed often.  Don't be afraid of goals changing because they probably will.  You want to be flexible as the market changes, adjustments in financing, pricing, etc.  Main thing is have goals and work toward them.

2.  Look for a mentor.  It's difficult to admit that you don't know everything but a mentor can be invaluable for you as a real estate investor.  You will find there is a ton of rejection in this business.  You have to have some tenacity to stick with your plan and not become discouraged.  A mentor won't be in the trenches you are in.  They will and should be a source of encouragement for you, be a sounding board and resource of knowledge.  With that in mind, a mentor may not be in real estate!  They may be from any walk of life that helps you develop and are encouraging.  A mentor needs to be honest with you, someone you trust and listen to.  You may not agree 100% of the time but giving you a perspective that helps you make the most informed decision you can make.

3.  Learn your market.  If you don't know your market and invest in property, your flirting with disaster!!!  Learn the market your investing in.  Are prices going up, going down, stagnant?  How is new construction in your area?  Are there new industries moving into your market or are they leaving?  How is the unemployment in your area?  What resources do you have for vendors, contractors, suppliers?  If you have an REI club in your area, it could be a great source of networking with other investors and realtors helping you with this information. 

4.  Self assess your finances.  With any investment, there is always risk and reward.  You need to know what your tolerances are and how much your willing to invest.  How do you want to structure your financing of investment?  All cash?  100% financing?  (yes, that is very possible)  Hard money or private investors?  The list can keep going but studying each of these and the pros and cons of how to finance your deal will plan a key roll in your success.  Having a plan B or alternate can give you some comfort hedging your risk.

5. How much time are you going to spend?  Unlike buying stock where you push a button buy your stock and pray, real estate requires you to be more involved.  How much or little your involved can determine your success or failure.  If you work full time and only have the weekends, you can still make it work but you don't get double digit returns without being active.  It's a business and you want to treat it like that. 

The more you know and educate yourself on this business, the more success you will have.  A word of caution about education.  Don't think that you will read books, get a mentor and become wildly successful with just that.  Education gets you started and motivated but ACTION is the best education.  Alternatively, you can get 'analysis paralysis' if you do nothing BUT educate yourself.  So, don't fall into either trap.  Educate yourself, get with a good Realtor, study yourself, the market and finances and TAKE ACTION. 

Next week, I'll drill down on some of this information and give you some real life examples of some investors I've worked with to show you how investments can work.  Have a super week!

Tuesday, November 5, 2013

When to invest in real estate

A couple of weeks ago, someone asked me when was the best time to invest in real estate.  I know when someone asks me that, they typically have some alternative motive.  My answer:  ANYTIME is the best time.  NOW is the best time.  There is an old Chinese proverb I like that says the best time to plant a tree was 20 years ago.  The second best time is today.  That applies to real estate.  If you look back over the past 30 years or so, look at the price of real estate and what was available then compared to what it is today.  Now consider, if I had purchased that house, it would be paid off now and how much would it be worth?  How much would I have collected in rent over these years?  How much in taxes could I have saved with the depreciation?  The list goes on and on.

Today, with interest rates being below 4% (5% for investment property), prices being flat for the past couple of years, you just can't get a better time to invest in real estate for long term returns or a residence.  Consider what savings accounts will get you from banks on CD's.  A local bank I was in the other day offered a 3 month CD a whopping .09%!!!!!!!!  Yes, you can invest for longer for .5%.  You'd have to get out to 3-5 years to get close to 1% interest.  Now consider a small single family residence with a decent down payment of $5000 - $10,000.  Assuming that property will give positive cash flow (NEVER invest in a house that won't either), you can expect to get modestly 5% - 8% returns.  Yes, there is a commitment there.  There is risk, potential expenses etc.  But, that return is AFTER considering those risks.  In a perfect world, you can and should get double digit returns on your investment.  I'm just more conservative with my numbers. 

There are so many ways to invest in real estate that are more secure than many other investments.  If you ever consider doing that, make sure you employ a good realtor on YOUR side that helps you along the way.  Having one on your side will be an invaluable asset that will help you along the way.

Have fun, enjoy the ride along the way.

Monday, October 28, 2013

Talking to a lender

It's been a while since I've posted here.  Since the last post, there has been a shift happening in the real estate market that continues.  With rates being low and prices fairly steady inventory still low (in Springfield anyway), there is an important component that you want to pay attention to when purchasing your home.  That's the lender.  Many don't know that much about real estate and even less about financing so, how do you even start a conversation with a prospective lender? 

First, know there are some real similarities between lenders.  They all quote you terms, rates, etc.  Beyond that, there can be hidden costs associated with closings, processing, office fees.  Servicing is something few think about but can be important.  Just a few things that you'll encounter with a lender so, here's a few questions you might want to ask the next time you are shopping around for a new home loan:

1. After talking rates, terms, points are there any other fees associated with the origination of the loan?  A good lender will be very up front about their fees and give you a breakdown of them before you even take the first step.  It's important to feel comfortable with your lender just like your agent and this is a big part of earning that trust.

2.  Do you service my loan after you've got me as a customer?  While this is not a show stopper it's something you do want to know about.  In some cases, the lender may know who will service and will do a good job handing your loan off to them.  They will be clear at the closing table confirming what you were told up front.  Most will give you the name and address to send payments.  Don't panic if they don't have that information but it's comforting to know right away.  You will be notified of this information shortly after closing.

3.  What financing options do I have that fits my needs?  You will disclose your financial condition to the lender before you settle on the loan.  With that, a good lender will help you save money; sometimes recommend products that will require no money down (yes, they do still exist).  If the lender offers you only a 10% or 20% down loan, keep shopping for a lender.  Unless you have some special circumstances that keep you from qualifying for other loans, you should be qualified for several programs that give you plenty of options.  Here's an example, I'm working with a couple that has some special requirements needing a 4 bedroom house for $80k.  Not unheard of in this market but difficult to find move in ready.  With a phone call from the lender and customer, we were able to have the customer qualified for about $20k more!  How?  A little more down borrowing from their 401k gets this family a move in ready home and opens up many more possibilities for the right home.

4.  As with 3, has your lender worked with your real estate agent?  It's highly important that your agent and lender communicate well throughout the entire transaction.  You, the customer are not the expert, they are.  Their job is to keep you informed and in the loop every step of the way!  Also, your lender should have some experience under their belt processing and closing loans. 

This is obviously, not all the questions you need to ask but it will get you started and give you some information that is important to think about before you become locked in with a lender.  Just don't be afraid to ask questions, look for help from your real estate agent in finding a qualified lender.  Good agents will guide you through this process and be an excellent resource in this step.  Most will send you to lenders they've worked with but don't feel you have to use just them!  Hopefully, this will help make this process as smooth and painless as possible.

Buying a house can be stressful but good agents, and good lender should take away this stress and help you feel confident you've made the right decision on the right house!