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If you are new to Commercial properties you need to develop patience. It is something I have had to do. Some times I am successful. You need patience because the numbers and ideas on paper that you work through for your Proforma, see earlier post, take time to implement. It is called stabilizing the property.

While investigate the property, before your purchase, you run a proforma.  You use market occupancies and market rents and come up with a value that you purchased – hopefully lower than that proforma number.  But now that you own the property you find reality hits you in the face.  Your occupancy is higher than your proforma so that will take time to fill those units.  Marketing takes time.  You will also find that you have residences that need to be evicted for non-payment, again time.  Some units will need repair before they are ready, again more time.

All these activities are normal and apart of the daily and monthly activities of your new property.  The best thing you can do is work with and support your property management team.  They are the front line of your property.  In order to speed up resident moving in is give them the tools to market, repair, rehab and maintain the property and units.

You should allow 60 to 90 days to stabilize the property before even thinking about an kind of draw on the cash flow.  You will run deficits in those first 60 – 90 days.  The previous owner will have deferred maintenance that you can’t.  Remember that is why you got such a great deal.  So trust your team and verify.  Maintain some working capital to make up for the deficits you will experience.

When you think of virtual real estate investing, a number of things may come to mind. You might immediately leap to real estate investing being real estate portfolios and real estate retirement plans and hard money lenders or you may think instead of short sales, bulk reo investing and virtual real estate investing. Likely you also wonder how these things will factor into your life as a real estate investor in the current economy.

You can learn a lot about real estate investing. The best way to get the most out of your real estate investing education is to be familiar with some basic information ahead of time. No matter whether you are interested in short sales, bulk reo sales, virtual real estate or just enhancing your knowledge as a real estate investor, knowing some real estate investing basics will help you succeed. Review these three real estate investing basics that even some experts don’t yet know:

1. Real estate investing education always yields positive. Every good real estate deal represents thousands of dollars in potential wealth. Getting the wealth is the key to your success. When you know about real estate your odds of success increase with each real estate deal. A small investment in education has the ability to yield big results when it is implemented.

2. You can succeed in real estate investing regardless of the state of the economy. Many people are under the misconception that success is possible in real estate only when the economy is good. In reality, poor economies are great for real estate investors. You frequently can get properties at deep discounts. Additionally, you may find deals that would not exist in a booming economy. Real estate investing may also turn the tide for a poor economy. When the economy is not thriving, short sales, bulk reo sales and virtual real estate can all thrive. You can save yourself from financial difficulty along with others by knowing how to do these deals.

3. You do not need to have a great deal of money if you want to be a successful real estate investor. You can make a success of real estate investing no matter how much or little money you have. There are lots of deals that you can use other people’s money to do. If you are a good investment private lenders may let you use their money. The best way to look like a solid investment is to have an in-depth knowledge of real estate investing. This will help you show private lenders that you are a good investment if they do not know about real estate investing themselves.

Real estate investing is a great way to create a good amount of wealth. You can create income regardless of the economy. You can create success for yourself using knowledge of real estate investing, short sales, bulk reo sales and virtual real estate. Knowing the basics of real estate investing will help you succeed as a real estate investor. Knowing some real estate investing basics (beyond what older gurus like Robert Allen teach) and applying them will help you succeed as a real estate investor.

Great real estate investing resources are available at RealEstate.BryanEllis.com.

Are you going to sell your house? Many people list their homes, go through the inconvenience of making it available for showings, and then wonder why it hasn’t sold after 2 or 3 months. That’s not the right way to sell a house. You must get your home in tip-top shape before any Realtors or buyers see it. Your best opportunity to get a sale is that first week when it’s new on the market. If your house doesn’t sparkle, Realtors won’t bring their buyers. Even people who discover it for the first time will wonder why it’s been on the market so long. Many will believe that it is overpriced, whether or not that’s true.

On of the most crucial things you can do is to make sure your home is as inviting as a model home. New home builders know how to stage a home. Take a look at the video above, featuring new homes San Diego by Brookfield. Don’t they look inviting and warm? Your house looks inviting and homey to you – after all, it’s your home – but take a step back and make it inviting to anyone who might walk in the door.

First, make sure it doesn’t look crowded. Remove the clutter from the kitchen counters. Remove furniture, especially if it’s too big for the room. You are going to be moving anyway, so you might as well start packing now? Get a storage unit – it will be well worth the cost if your home sells more quickly. When you think about how much stuff needs to go, don’t use it’s current state as a starting point. Instead pretend the house is empty. Now what does any home need? A sofa, a television, a dining table, beds in the bedrooms? It doesn’t need knick-knacks, dvds, more furniture than the bare minimum, etc. Buyers want to imagine their belongings in this house. Make sure they can see that there is a lot of space for their things. Do not forget the closets. Buyers will look to see how much room there is. If the closets are packed to the brim, they’re going to imagine that their stuff will barely fit too.

Next, make it neutral. Any personalized features could be less than inviting to some buyers. If you have painted a room a dark or unusual color, paint it off-white before you put your home on the market. Look at how builders stage their models. Any kind of buyer could imagine moving into these homes. The buyer will personalize it their way over time, but it has to be at least okay to them now.

Make sure your home is well lit. Install lights, add lamps or open windows. Light helps make your home look bigger and more neutral.

Curb appeal means how your home looks to buyers when they first see it – from the curb?  I the front yard is a little boring, buyers won’t be excited about going in. If it’s overgrown or messy, they’ll have a negative opinion before they walk in the door. Don’t count on Realtors to help the buyers past that. They’re only human too. They’ll show their buyers houses that they’re excited about. It sets the tone for the whole showing, so don’t skimp here.

Correct the little problems. Are there cracked tiles? Does the lawn need to be mowed and edged? Is the grout stained? When a home doesn’t sparkle, buyers don’t even realize why they don’t like it. A fresh coat of paint goes a long way.

Here’s the most difficult part. It’s your home. It is very difficult – almost impossible – to look at it impartially. It’s a very good idea to have someone else assess the situation. You could hire a professional stager. You could have someone do it for you, or just come in and make recommendations that you can carry out. Or you could find an impartial person to evaluate it. Your Realtor might not be the best choice because they don’t want to offend you and possibly lose you as a client. It should be someone who isn’t familiar with your home. Otherwise they’ll have the same problem you have. You have to be willing to hear what doesn’t look good about your home, and that’s difficult.If you can find the wherewithall to do that, your house will look great to Realtors and buyers viewing the newest home on the market. Your reward will be a quicker sale at a better price.

Rockrose new homes Carlsbad is the newest community by Brookfield San Diego. Come by and see how well these model home show.

Current rates and information on home loans

A number of things likely come to mind when you think of real estate investing. If you are already familiar with real estate investing you may think of short sales, bulk reo investing and virtual real estate investing or you may think of it in terms of real estate portfolios and real estate retirement plans. You may also wonder what type of role these things can play in your life as a real estate investor in different types of economy.

You can learn a lot about real estate investing. To get the most out of real estate investing education, be familiar with basic information ahead of time. You will get the most out of anything to do with short sales, bulk reo sales, virtual real estate and just improving real estate investor abilities by knowing some real estate investing basics. Check out these three real estate investing tenets that many experts do not fully know:

1. You will always end up with a positive yield when you invest in real estate investing education. Every real estate deal has the potential to create thousands of dollars in potential wealth. Knowing how to get that wealth is the key to success. Learning about real estate increases your odds of success when you do a real estate deal. Small investments in education yield big results upon implementation.

2. Any economy allows for success in real estate investing. Many people are under the misconception that success is possible in real estate only when the economy is good. You should remember that a bad economic situation is not usually bad for real estate investors. You frequently can get properties at deep discounts. You might also find deals that simply would not exist in a booming economy. Poor economies can have the tide turned based on real estate investing. Short sales, bulk reo sales and virtual real estate all thrive when the economy is less than thriving. You will have the option of saving yourself and possibly others from serious financial difficulties if you know about these types of deals.

3. You do not need lots of your own cash to be a successful real estate investor. You can make a success of real estate investing no matter how much or little money you have. There are lots of types of deals that you can perform with the money of other people. If you appear to be a solid investment you may be able to use a private lender’s money. An investor who is a good investment knows as much as they can when it comes to real estate investing. Then you will represent a good investment to other people who have money for real estate investing but do not know how to use it.

Real estate investing is a great way to generate wealth. You can create an income in any economy. By using a base of knowledge of real estate investing, short sales, bulk reo sales and virtual real estate you can create success for yourself. Real estate investing basic knowledge will help you succeed as a real estate investor.

Continuation from yesterday’s post  photo credit: Beau B

In addition, take be proactive and begin the search for tenants before your current tenant moves out if you have reason to believe that they will be leaving soon. It is never a good idea to wait until the last minute and then try to fill a vacancy. You might even ask the current tenants if they know of anyone who might be interested in renting the property. It could be quite possible that they have friends who have visited and would jump at the chance to rent the property once it is available.

Keep in mind; however, that as important as it is to rent your property quickly and avoid a vacancy you also do not want to rent out the property so quickly that you fail to conduct a thorough screening. The first time you receive an inquiry on the property, you need to begin the screening process. Take the time to obtain some basic preliminary information about applicants while also providing information about your rental property.

Of course, you must abide by fair housing laws and you also must make sure you are fair in asking the same questions of all applicants so it is a good idea to write down your pre-qualifying questions so you can be sure that you are being fair. If you are unsure of what you are allowed and not allowed to ask by law, consider consulting an attorney.

Before you end the phone call with the applicant, encourage them to drive by the property so they can see it in person and then call to make an appointment with you to see the interior.

From time to time you will have vacancies in your investment rental property. When that occurs, you will naturally want to rent the property as quickly as possible so that you do not lose out on any rent money. It could even be that when you purchase the property, it could be vacant. There could be many reasons why it could potentially take some time to find tenants. Perhaps the location is affecting it. Or, it could be that there are simply a number of properties for rent in the local area. Regardless of why your property is vacant you will need to get it rented as quickly as possible.  photo credit: Alex E. Proimos

For every month that your property is vacant, you are losing money in revenue. There are some things you can do to reduce the amount of time that your property is vacant; however.

First, when your property is vacant, use that time to your advantage by making any repairs that are necessary and handling any maintenance tasks. In addition, you might also consider doing something to make the property more appealing such as touching up the paint or sprucing up the yard.

You might also consider providing some type of incentive or discount in order to get your property rented more quickly. Certainly this will cost a bit of money but in the long run it is often less expensive to provide an incentive in order to get your property rented more quickly than to allow it to sit vacant for a period of time. You might think about reducing the rent or installing something in the apartment that would be appealing to prospective tenants such as a washer and dryer.

Make sure you making strong efforts to market your rental property but running ads in all of the local papers and hanging up flyers at places of interest. Of course, you should also have a For Rent sign posted on the property so that everyone who drives by will see it and know the property is available for rent or lease. Once again, a small amount of money spent on marketing is less expensive than the amount of lost revenue you could incur by allowing the property to sit vacant.

The conclusion of yesterday’s post:

For example, it is common to require that the applicant provide identification that is verifiable. You may require the applicant to present a photo ID with their application so that you can make a copy of it. This type of requirement is valid because you may need it in the future in the event you need to describe adult occupants of the unit. If someone co-signs the application, it is also a good idea to obtain identification for them as well.

It is also quite valid to require information which would help you to determine that the applicant has a sufficient income to rent ratio. If the applicant were applying for a loan to purchase a home, the lender would require similar information. The general rule of thumb is to identify applicants that have a gross monthly income that is three times the amount of the rent. One way to document this information is by requesting copies of the applicant’s pay stubs along with their application. If the applicant is self-employed, you might ask them to provide their last tax return in addition to three months of bank statements. If you cannot verify the applicant’s income, this would be a perfectly legitimate reason to deny their application as you have no assurance that they would be able to pay their rent.

Many property managers and landlords also check credit ratings and scores on applicants as well. The purpose of this is to verify the financial responsibility of the applicant. The general guideline is to obtain a credit report on all applicants as well as any co-signers who are over the age of 18. Keep in mind that you will need to receive permission to run a credit report; however, you can request this information on the rental application. Applicants with low credit scores could be legitimately denied on the basis on being unable to prove financial responsibility.

In addition, you should check references. Typically, you should ask all applicants to provide the names and telephone numbers of individuals who can verify the applicantís income sources as well as character references.

Finally, make sure you follow-up to check that the applicant has been able to successfully rent a dwelling in the past and paid their rent on time. In the event an applicant is unable to meet this requirement but does meet all other requirements you may consider requiring the applicant to have a co-signer.

Establishing tenant selection criteria can be one of the most confusing areas of operating rental property for many people. On one hand, you want to make sure you choose the most responsible tenant possible; a tenant who will pay his or her rent on time and one who can be relied upon not to destroy your property. Yet, at the same time you must make sure that you abide by fair housing laws.  photo credit: kodiax2

Before you actually begin renting out your property it is a good idea to sit down and determine the criteria you will use to choose that best tenant. Without guidelines you will have no choice but to rely on your instinct to choose the best tenant and this could result in trouble if you are only relying on your feelings to make a tenant selection. One of the worst risks you can take is to let your own personal opinions and biases guide you in your decision because this could open the door for a discrimination lawsuit.

First, you should always make sure that you notify prospective tenants that you utilize a fair system to make your decision. Ideally, it is best to include this type of statement on all rental applications. For example, you might state our policy is to rent our units in compliance with federal, state and local fair housing laws.

If you are fairly new to operating investment rental property, you may not be cognizant of fair housing laws. Be sure to consult your stateís fair housing office to determine those guidelines which you must follow.

Beyond fair housing laws, it is important to make sure you establish criteria that is concrete by which to judge all potential applicants.

To be continued……

This is a continuation from yesterday’s post:

1. Remember that this is a business situation and don’t refuse to consider offers that will net you a profit just because the profit isn’t as good as you’d like. A house sitting empty on the market accrues carrying costs and is ripe for all manner of disasters. You want to get in and out as quickly as possible so that you can free up your investment to move on to the next project. Entertain all offers seriously even if they aren’t what you were hoping for. You never know when one might be the best you’re going to get.  photo credit: roarofthefour
2. Don’t take it personally. Once again a home is a very personal thing to most people. While you may have worked very hard selecting colors, materials, flooring, etc. not everyone is going to share your tastes. Do not alienate potential buyers by attaching personal emotions into the mix and getting angry because they do not appreciate your hard work. I hate to add this but it happens a lot more than you might think when flipping houses.
3. Spend as little money as possible while making bold changes. This is the best way to maximize your profits. You want the changes to be visible and effective. Don’t overlook the value of curb appeal you need to put serious effort into improving the exterior of the home as well as the interior because this is what people will see first and the change that will invite them to take a look at what you’ve done inside.

Little changes make a big improvement in the value (especially the perceived value) of a home. Make the necessary changes and sell the house as quickly as possible in order to bring in the best possible profits.  By far the largest factor to consider and establish before you purchase the property is the exit strategy.  You want to have multiple strategies in todays environment.

When it comes to real estate investing a house flip is a great way to go. It’s also a rather bold move for many who are considering this as a first time real estate investment. At the same time you can minimize the risk while maximizing the profit potential by following a few guidelines.  photo credit: roarofthefour

1. Have an inspection. For whatever reason there are many people who enter into a property flip situation without ever having a valid and complete inspection of the property made. This means you could be doing work that will need to be undone at some later point in the process. You want to avoid this situation if at all possible and it is easily done (in most cases) by having a thorough inspection. There will almost always however be some unanticipated surprises along the way.
2. Establish a budget and stick with it. Most people flipping houses plan a budget. Unfortunately, for whatever reason, very few actually stick to the budget they originally established. It is a good idea to leave a little wiggle room in your budget for unexpected emergencies but be firm on the spending limits for specific projects. If you go over on those projects eliminate something elsewhere in order to save money.
3. Consider the target buyer when making adjustments. You must understand when purchasing a house to flip that you are buying the house for someone else and you need to make adjustments, changes, and improvements according to what your target market demands, expects, and can afford to absorb the costs of you adding. It doesn’t matter how beautiful you’ve made the house if no one that is willing to live in the neighborhood can afford your asking price when all is said and done.

To Be Continued….