The Business of Real Estate Investing
Offering a Home To A Lease Purchase or Rent-to-Own Buyer
With a great many potential home buyers coming up short on credit scores and down payments, there is great opportunity for the real estate investor to use lease purchase or rent-to-own to sell properties.
Using Real Estate Assignment Contracts for Investing
Many real estate investors, both new and very experienced, have made a lot of money using assigment contracts. Learn the basics here. Using little or none of your own money, make money assigning property contracts to other buyers.
Profile of an Effective Real Estate Investor Buyer Database
There are a great number of ways in which to invest in real estate. Real estate investing opens up profitable strategies for just about every investing style and risk tolerance. Some of the most profitable strategies will involve resale to other investor buyers. For this, you'll need a good buyer database or "buyer book," as some call it.
Using Twitter as a Real Estate Investor
Though Twitter only turned three years old in March 2009, its user growth the previous year was 1287%. See how real estate investors can use it for profit.
Real Estate Investment Calculations - Your Success & Failure Stories
Real estate investing is part art, but a lot of science in the use of return on investment and valuation calculations. There are a number of very valuable calculations used by real estate investors. Tell us what works for you.
The New World of "Subject To" Financing & "Due On Sale" Clauses
Many a real estate investor has been stopped short of a really great buying opportunity via “subject-to” financing by a concern over the lender’s ability to exercise their “due on sale” clause.
Real Estate Rental Property & Depressed Housing Markets
When real estate home sales are down, and prices are stagnant or falling, there is a great deal of negative media coverage. However, in those times, real estate investors can profit handsomely with real estate rental property.
The Real Estate Short Sale Process Step-by-Step
Real estate investors can frequently make very profitable purchases of real estate through a short sale. Many short sales do not get approved or fall through for a variety of reasons. Learn here the step-by-step process to initiate a short sale, starting with the homeowner-borrower and moving through lender negotiations to the closing.
Short Sale Negotiations With the Lender and Closing the Short Sale
Lenders turn down a lot of short sales, wasting time and money for investors, sellers and real estate professionals. Learn how to get the deal closed.
The Lender's Decision Process for the Short Sale
Once the short sale package is submitted to the lender, there are a number of actions the lender takes before making a decision as to whether to approve the short sale or not.
The Short Sale Purchase Agreement
If a short sale is a possibility, and the price looks like a good investment, then a purchase agreement is the next step. Make sure that you know what to use and more important, what not to use.
The Short Sale Documentation Process
Lenders are all about numbers, so give them plenty of them. When the short sale package is prepared, there is a long list of possible documents to back up the request.
The Short Sale Hardship Letter
Lenders resist short sales, so one of the first things the borrower needs to do is to convince them that it's really their best chance to recoup the most of their investment.
The Short Sale - Borrower Permission & Lender Contact
Once you've identified a potential short sale purchase candidate, you need to get permission from the borrower and contact the lender to get the process started.
The Short Sale Initial Property and Loan Evaluation
The first step in the successful short sale transaction is to evaluate the situation of the homeowner, which includes the home's current value, as well as the mortgage information.
Elements of a Good Lease Document
For investors and property managers, one key to a smoother interaction with tenants is a well-written lease agreement. Learn the basic items that should be there.
Trend Toward More Urban Green Space and Real Estate Investing
As with most things economic, it's all about supply and demand. With environmental concerns growing, many urban areas are converting land to green space, parks and community use. See how this impacts real estate investment.
Investing in Markets With High Home Inventory
In markets where inventory has increased for reasons other than area economic problems, it could be an opportunity for real estate investors to purchase rental properties.
Real Estate Investment - Development Restrictions & Home Pricing
There is a definite relationship between development restrictions and home prices. Learn the factors that influence both here, as they will influence your real estate investment.
Steps to Selecting the Right Real Estate Investment Club
Real estate investment clubs are a popular way for new investors to learn about the business, and for experienced investors to share helpful information and resources. Learn the steps to join one.
What to Expect from a Real Estate Investment Club
Real estate investment clubs have launched many a successful real estate investor. What to expect when you join a real estate investment club.
Real Estate Investing Part-time or Full-tine to Start?
Should you begin your real estate investing part-time or just jump right in? Get the Information here to help you to make that decision.
The Equity or Mortgage REITs Decision - The Differences Explained
There are definite differences in the type of REITs available for real estate investors. The two basic types are equity REITs and mortgage REITs. Knowing the differences and your tolerance for risk can make all the difference in your investment success.
Success as a Real Estate Investor with REITs - Real Estate Investment Trusts
Many a would-be real estate investor has finished with the seminars, books and videos only to determine that direct real estate investing, flipping or landlording isn't their cup of tea. There's a way to own commercial and rental property, have it managed professionally for you, get paid profits regularly as dividends, realize investment appreciation and more with REITs or Real Estate Investment Trusts. Learn about them here.
REITs and Bonds Compared as Investments
REITs and bonds are not truly competitive as investments, but there are some common reasons why one might own one or both. Learn the differences and compare them.
Real Estate Investment Trusts (REITs) or Utility Stocks?
Should you move into REITs or stay with Utilities stocks? It's a dividend and growth decision, balanced with changing conditions.
Private REITs Compared to the Public Real Estate Investment Trust
Though not widely publicized, private REITs are an investment offering chosen by some over the public real estate investment trust. What are the drawbacks?
Three Home Price Index Data Reports - Case-Shiller, OFHEO & RDX Radar Logic
The latest charts and links to the Case-Shiller Home Price Index, the OFHEO Home Price Index and the newest RPX Radar Logic Daily Index here. Know what the three leading residential home price indexes are saying about the trends.
The 1031 Exchange for Real Estate Investors
The 1031 Exchange is named after section 1031 of the Internal Revenue Code. Using the 1031 exchange, an investor can exchange real estate and defer capital gains taxes on the profits from the sale. As the investor realizes appreciation, they can continue to trade up to more valuable properties, deferring capital gains taxes at each step.
What is a 1031 Exchange?
A 1031 Exchange is named after Section 1031 of the Internal Revenue Service Code. Section 1031 explains how a real estate investor can exchange investment property and defer capital gains taxes.
Real Estate Ownership Through REITs or Real Estate Investment Trusts
REITs, or real estate investment trusts, allow the normal investor to own the commercial real estate. Whether its office space, a skyscraper, or apartments, an investor who purchases shares in a REIT will share ownership, as well as operational profits as dividends. Good earnings, predictability of income and expense, and low correlation with other asset classes, make REITs a good investment for many.
What Should I Know Before Becoming a Real Estate Investor?
Real estate investing has provided great returns and even riches for many. However, a great deal of preparatory study should be done before purchasing your first property. Learn the basics here.
What Mortgage Types are Used by Real Estate Investors?
Mortgage types used by real estate investors are usually the same as used by any purchaser of real estate. However, there are some more creative mortgage types that an investor might employ, depending on their investment objectives.
Should I Be a Landlord as a Real Estate Investor?
Before a real estate investor becomes a landlord, there are several important things to consider. Do you have the time, the skills, the disposition and more?
How is Capitalization Rate Used by Real Estate Investors?
Capitalization Rate, or Cap Rate is used by real estate investors to either determine if an asking price is justified or to value a property using the income the property generates.
Is It Mortgage Assumption or Subject to Mortgage?
A real property purchase with a mortgage assumption is quite different that purchasing a home subject to a mortgage. Learn the difference here.
Rental Property Evaluation Requires a Careful Examination of the Leases
Rental property evaluation involves many factors and mathematical formulas for return on investment, expenses and other factors. However, one of the first things the prospective purchaser of a rental property should do is examine the leases currently in effect. Find out here what to look for.
Title Problems & Clouded Title for Real Estate Investors
Real estate investing frequently involves the purchase of problem properties at a discount to value without the problems. Title problems, or clouded title, is one of these investment strategies. Some owners may sell their property at a discount rather than expend the effort and money necessary to correct title problems having to do with foreclosures, liens, judgments, missing heirs, tax liens, etc.
Real Estate Investing with Undervalued Real Estate
Though it might seem obvious, one of the best ways to profit by investing in real estate is to purchase properties at prices below their real value.
AVR - After Repair Value in Real Estate Investing
Real estate investing frequently involves the purchase of a property in need of work, getting it repaired or remodeled and then selling or flipping it at a profit. This requires the ability to determine approximate repair and remodel costs and the value of the property after completion. This value is the ARV or After Repair Value
Home Repair Estimating for the Real Estate Investor
Real estate investing, and especially the flipping of properties, frequently involves the purchase of a property in poor condition and repairing and remodeling it to result in a profit when it's sold. Obviously, great risk is assumed if the real estate investor isn't able to accurately estimate repair costs. Here are resources to help.
Using Financing for Real Estate Leverage
Carefully selected and applied, financing with lower cash up front can increase your ROI (return on investment) cash on cash with leverage. In short, even after the P&I payment is factored in, you can dramatically increase the percentage of ROI in the right situations.
Real Estate Investments as Compared to Corporate and Government Bonds
A comparison of investing in corporate or government bonds as opposed to real estate investments, primarily rental properties. Bond interest is static, thus purchase power falls with inflation. Generally rents will increase with inflation for several reasons.
Why Should I Invest in Real Estate?
With a major portion of the 1990's Standard & Poors Earnings running at 5% to 6%, with dividend earnings running 2% or less, an astute real estate investor would have done much better. With a strategy of only purchasing properties with expected rental yields above 6%, the added return potential of amortization, leverage, appreciation, tax advantages and more make real estate a sound alternative to other investment vehicles.
Risk Reduction Strategies for Real Estate Leverage Investing
Real estate leverage for investors can be a very useful and profitable tool. However, certain risks can be reduced with the proper research and planning. Using these strategies can significantly reduce the risks of real estate leverage.
The Don'ts in Using Real Estate Leverage
Leverage, or the use of other people's money to control real estate, is an effective tool for real estate investors if used properly. Using only 10% down payment can produce a very attractive Return on Investment if other factors are properly balanced.
Ways that Real Estate Investment Property Returns Profits
Real estate investment property provides numerous advantages over other types of investments. This is primarily due to the different ways in which the real estate investor can realize returns on their property investments. These include mortgage payoff, appreciation, tax advantages, gains from inflation, and more.
Real Estate Depreciation for the Investor
The cost of income producing property is recovered through depreciation, a non-cash accounting entry which may produce yearly tax deductions. You cannot simply deduct your mortgage or principal payments, or the cost of furniture, fixtures and equipment, as an expense. Depreciation must be calculated in accordance with the rules stipulated in IRS Publication 527.
Real Estate Evaluation and Analysis for Investors
There are some key elements to keep in mind when you’re evaluating a potential real estate investment. Some are quantitative (What sort of cashflow should you expect? What kind of rate of return are you shooting for?) Some are qualitative (What kind of investor are you? How much can you take on at once? What’s your risk tolerance?) All of them are important. Here’s some things I think investors should consider.
Mortgage Options for Real Estate Investing
The type of mortgage that you select as a real estate investor is a key factor in determining your level of risk and the cashflow that your investment will generate. Here are some things that you should consider. Options include fixed rate, arm adjustable rate, zero down, balloon, exotic and low documentation loans.
Landlording 101 - Landlord Basics for the Real Estate Investor
Taking the step from buying and selling real estate properties to buy-and-hold strategies and landlord status is a large one. Be sure that you examine your capabilities and desires, plan for management, and that you're capable of dealing with tenants, managing rents, repairs and vendors.
A Good Real Estate Investor Might Not be a Good Landlord
Perhaps you've been buying and selling some real estate profitably, and you're now considering buy-and-hold as a strategy. The job of landlord, working with tenants, communicating with repair persons, and collections of past due rents might be easy for some, but make sure you're up to the task.
Avoiding Landlord Burnout for Real Estate Investors
The most reliable way for real estate investors to build wealth is to identify solid investments and over time use leverage to grow their portfolio of properties. This means managing tenants, and being a landlord is not for everyone. Learn what the real estate investng courses and seminars don't tell you, as well as how buy-and-hold strategies can be as lucrative as flipping properties.
Preparation Before Selecting a Tenant for Your Real Estate Investment Property
Selecting the appropriate tenant is a key part of the landlord process. Considerations include setting rent at the right level, knowing when to use a real estate agent, meeting the applicant, doing the appropriate due diligence, and staying on the right side of anti-discrimination laws.
Factors to Consider in Setting the Rent for Your Real Estate Investment Property
Determining the proper amount of rent to charge for your real estate investment property is done with consideration of supply, demand and your interests at the time. Information can be obtained from local realtors, the mls and newspaper listings of comparable rentals.
Managing Repairs to Your Rental Property
Setting a realistic repair budget, thinking about repairs before the rental property is purchased and the age of items such as the roof, air conditioning, heating, and carpeting are all part of managing the repairs to your real estate investment rental property.
Dealing with a Mold Problem in Your Real Estate Rental Property
As a landlord, particularly in humid parts of the country, you'll possibly be confronted with a mold problem in a tenant occupied rental property. To lessen the possibility of litigation, address the problem quickly, call in professionals, take tests, and correct the problem promptly.
Fixed Rate Mortgages for the Real Estate Investor
The 30 year fixed rate mortgage is generally considered to be the standard offering, and for many years this was the only type of mortgage available for investors. The investor secures a loan at a fixed rate which remains unchanged over the life of the loan. The loan is fully amortizing, meaning that at the end of the term the loan will be completely paid off.
Interest Only Mortgage Loans for the Real Estate Investor
An interest only mortgage loan allows a real estate investor to defer principal payments. This could be to avoid early negative cash flow, to flip the property, or to free up cash for other real estate investments. Generally, the interest only loan is counting on high property appreciation.
The ARM Adjustable Rate Mortgage for the Real Estate Investor
An adjustable rate mortgage (ARM) is a mortgage with a variable interest rate, one that is linked to a published index rate index. An ARM may have an introductory period during which the rate is fixed. An ARM may have a lower initial rate, which makes it suitable for investors who do not plan to hold a property for a long period of time. A potential drawback is that real estate investors who opt to hold their properties will be exposed to the risk of interest rate fluctuations.
Zero Down Mortgages for the Real Estate Investor
You won’t have to look far to find information on zero-down real estate investing. This is the method of choice for real estate “gurus” who are selling investment courses. Zero down may be the right strategy for some investors and will give you a higher rate of return on your investment, but beware of the pitfalls.
Balloon Mortgage Considerations in Real Estate Investing
A balloon mortgage is a mortgage that amortizes over a longer schedule than the term of the mortgage – meaning that payments will be calculated as though the mortgage were a longer term (say 30 years) but at the end of the term (say 10 years) the remaining balance will be due.
Exotic Mortgages for Real Estate Investing
Over the past several years lenders have come up with a number of complex mortgage types generally categorized as “exotic options”. These complicated structures may offer some advantages to sophisticated investors in terms of flexibility and lower payments, but all carry increased levels of complexity and risk.
The RPX Radar Logic Daily Index of Home Prices
Radar Logic, Inc. produces a daily home price index that presents daily reports of home price trends at 1 day, 7 day and 28 day intervals. It is to be used as a traded security to allow those involved in the housing industry to hedge their exposure through purchase or short sale of this index.
How the Case-Shiller Home Price Index & the OFHEO HPI Differ
There are several notable differences in the way that the OFHEO HPI and the Case-Shiller Home Price Index are calculated. The differences can produce short-term divergence between the two indexes. Learn the differences here.
Should You Join a Real Estate Investment Club?
The decision of whether to join a real estate investment club or not is an individual one. Join or not? Get some help here.
Locating the Right Real Estate Investment Club
Real estate investment clubs have grown greatly in number and membership. As in many endeavors, people find support in groups with like interests. A real estate investment club could be right for you, and it could help you to get your start in the real estate investment world. Here's a list of resources and clubs.
Acquire Properties for Real Estate Investment Through Lease Purchase
A valid strategy, especially in times when home sales are down, is to acquire control of a property with a lease purchase agreement. Legalities differ by state, but generally a real estate investor can use a lease purchase to acquire a property for subsequent sale or lease to someone else.
Fannie Mae Homepath Mortgages for Real Estate Investors
Fannie Mae's Homepath Mortgage product is available to real estate investors. With a low priced foreclosure purchase, this loan program can get you in with 3% down, no appraisal fees, and no mortgage insurance.
FHA Waives Rule - Will Insure Mortgages on Homes Sold Under 90 Days
On Friday January 15, 2010, the rule prohibiting FHA loan guarantees for mortgages on homes sold within 90 days of previous sale was waived for one year. The new rules and how investors and flipping fit in.
Apartment & Multifamily Investment
Definition of apartment & multifamily investment.
Cash Flow in Apartment & Multifamily Investment
Definition of cash flow in apartment & multifamily investment.
There are ample reasons why some investors love apartment investing.
Apartment investing is overlooked by many single family rental property investors, probably because they believe financing is outside their abilities. This usually isn't the case, and there are a number of excellent reasons to become involved in apartment investing.
How Much Will A Lender Loan? The DSCR, or Debt Service Coverage Ratio
One of the calculations lenders use to determine whether they'll do a mortgage on a commercial property, and how much they'll loan, is the DSCR, or Debt Service Coverage Ratio. Learn how to use the DSCR.
Cash Flow in Apartment Investment is a Function of Economy of Scale
Excellent cash flow in apartment investment is in large part due to economy of scale in the concentration of expenses for a large number of units in a small area.
Apartment & Multifamily Investing Vacancy and Credit Loss Control
Vacancy and credit losses in apartment investing come right off the top, diluting cash flow. Learn about apartment investing vacancy and credit loss control.
Financing for Apartment Investing
Apartment financing isn't as difficult as many investors might believe. Financing for apartment investing is based primarily on cash flow, rather than the credit scores and other income of apartment investors.
Lender Ratios in Apartment Investing Financing
Lenders use a couple of ratios in apartment investing financing, DSCR, or Debt Service Coverage Ratio, and the Break-even ratio. Learn what they are and how to calculate them.
Apartment & Multifamily Investing and Financing
Apartment & multifamily investing creates excellent cash flows, as well as benefiting from the normal tax and other real estate investment advantages. Learn in this article series about how economy of scale increases cash flows, how they're improved, and how lenders use ratios to analyze cash flow for mortgage decisions.
Real Estate Investors Taking Advantage of Price & Mortgage Problems
The housing price and mortgage collapse beginning in 2007 is yielding opportunities for real estate investors in the period 2010 into 2011. Learn about the factors contributing to this opportunity and how investors are taking advantage.
Real Estate Investing Buyer List - How to Build Yours
Successful real estate investors have a pipeline of resources that provides leads for locating deals. One component of their pipeline is a buyer list. Learn here how to build one that will provide you with buyers for deals.
Real Estate Investor Seller List for Profitable Real Estate Investing
Successful real estate investors build a seller list with motivated sellers who they can then match with buyers from their buyer list to make deals happen. Learn techniques here for building a powerful seller list.
Economy of Scale in Multi-family Real Estate Investment
This article will help the real estate investor to see how a six unit apartment project will normally have a higher investment percentage return than six single family rental homes.
Real Estate Investing Through Market Cycles
Long term successful real estate investors are in the markets through the cycles that come with real estate, whether local or national. Learning how to adapt strategies to the current market is why they're successful.
Lease to Own for Real Estate Rental Property Investors
Using the lease-to-own strategy, a real estate investor can create monthly positive cash flow while locking up a home for future purchase. Learn how it works here.
The right real estate professional for your real estate investment team.
Successful investors build a team around them to grow their business. Real estate investors need at least one real estate professional who can meet the specific needs of the active real estate investor.
Choosing an Attorney for Your Real Estate Investing Team
Anyone wanting to do more than just dabble in real estate investing should carefully select a real estate experienced attorney to fill out their real estate investing team.
Selecting an Insurance Agent for Your Real Estate Investment Team
The insurance agent you select for your real estate investing team can help in more ways than just insuring houses.
Choosing An Accountant for Your Real Estate Investment Team
Whether you've ever needed one in the past or not, a good accountant should be in your future if you intend to be successful in real estate investing. Find out why and what to look for in a good accounting professional for the real estate investor.
Choosing a Title Company for Your Real Estate Investing Team
Active real estate investors end up sitting at a lot of closing tables. Choosing a good title company for your real estate investing team can make the experience more pleasant and profitable.
Reversing or Accelerating Markets for Real Estate Rolling Growth Investing
While this article is specifically addressing mid-2012 and the real estate market changes taking place, it can apply at any time in any area when markets reverse or accelerate.