Was searching for some how-to help because I have never before grouted tile and I have two VERY small areas to do in my kitchen, and found this site to be VERY helpful and deep on a lot of topics. This is the HVAC area but on the left you will see many categories to choose from.
www.askthebuilder.com/HeatingDesign.shtml
Sunday, April 27, 2008
And the Beat Goes On...
Well, another three or four self-imposed deadlines have passed for GC at the Wilmington project. Now he says Tuesday... Which week?
The new local painter I hired to re-paint the outside areas that the original nightmare painter did the wrong color, caused some unrest at the site yesterday inflaming the next-door neighbor who had contracted him to paint her porch to match ours as well as the GC who he was pestering.... But when I arrived today he had done a pretty good job.
First pass for the Realtor on Friday blew him away. He couldn't stop raving about what we did to this house and said he found himself muttering the whole time he was there in astonishment. He was so blown away he considered the comps he had brought to not be valid. But today when we got together at the house he disappointed me with his number. My partner and I agreed to go higher than the Realtor is recommending and give it a week to ten days to see what the response is. While the first week of a listing is critical, and it's usually a mistake to price a house based on what you spent, this is clearly the nicest house around the area now and should command a premium, but it could be a risky experiment...
The house is still at least a couple days away from being wrapped up and is once again pretty dirty after already having been cleaned twice in the last couple weeks...
Stay tuned as we finally head for home on this project.
The new local painter I hired to re-paint the outside areas that the original nightmare painter did the wrong color, caused some unrest at the site yesterday inflaming the next-door neighbor who had contracted him to paint her porch to match ours as well as the GC who he was pestering.... But when I arrived today he had done a pretty good job.
First pass for the Realtor on Friday blew him away. He couldn't stop raving about what we did to this house and said he found himself muttering the whole time he was there in astonishment. He was so blown away he considered the comps he had brought to not be valid. But today when we got together at the house he disappointed me with his number. My partner and I agreed to go higher than the Realtor is recommending and give it a week to ten days to see what the response is. While the first week of a listing is critical, and it's usually a mistake to price a house based on what you spent, this is clearly the nicest house around the area now and should command a premium, but it could be a risky experiment...
The house is still at least a couple days away from being wrapped up and is once again pretty dirty after already having been cleaned twice in the last couple weeks...
Stay tuned as we finally head for home on this project.
Thursday, April 24, 2008
Interesting?
Oh yea, another interesting few days at the Wilmington flip-site...
Seems the GC hired a painter they had never used before, one with considerable baggage. Turns out his baggage cost us probably about $4,500 more than it should have and to put the cherry on top, they badly damaged the just-fixed porch roof... Had to hire a local to repaint some of the outside and the GC is gonna completely repaint the interior.
Our Delaware Realtor was supposed to do his initial walkthrough today but, alas, I never heard from him. Not a real shocker actually.
The locals are VERY excited about this house and at least two or three walk through gawking every day. Will be real interesting to see if any try to pony up in short order....
Some more encouraging local real estat e news today from our Suburban West Realtors Association:
Home Sales Continue to Show Growth Locally
While there continues to be flux with the national home sales statistics, there was continued growth in sales for Chester, Delaware and Montgomery counties in March. All three counties showed sales growth from February to March, although still down from March 2007. Additionally, prices continued to be steady, with minor increases from over last year.
Commenting on the statistics for an upcoming news release to local media outlets, Suburban West Chairman Jim Ryal said, "While sales may not be at the record levels they were two years ago, they are still strong. And as important, we are not seeing the significant price drops being experienced in other major markets."
Looking ahead, NAR posted its forecast earlier this month with Lawrence Yun, NAR Chief Economist, summing up the future prospects of the national market, "Existing home sales could start to show a sustained increase within a few months, unless there are some additional economic problems or excessive inflationary pressure," he said. "We're looking for essentially stable sales in the near term, before higher mortgage loan limits translate into more sales in high-cost markets. The wider access to affordable credit should increase sales activity notably this summer as pent-up demand begins to be met."
Seems the GC hired a painter they had never used before, one with considerable baggage. Turns out his baggage cost us probably about $4,500 more than it should have and to put the cherry on top, they badly damaged the just-fixed porch roof... Had to hire a local to repaint some of the outside and the GC is gonna completely repaint the interior.
Our Delaware Realtor was supposed to do his initial walkthrough today but, alas, I never heard from him. Not a real shocker actually.
The locals are VERY excited about this house and at least two or three walk through gawking every day. Will be real interesting to see if any try to pony up in short order....
Some more encouraging local real estat e news today from our Suburban West Realtors Association:
Home Sales Continue to Show Growth Locally
While there continues to be flux with the national home sales statistics, there was continued growth in sales for Chester, Delaware and Montgomery counties in March. All three counties showed sales growth from February to March, although still down from March 2007. Additionally, prices continued to be steady, with minor increases from over last year.
Commenting on the statistics for an upcoming news release to local media outlets, Suburban West Chairman Jim Ryal said, "While sales may not be at the record levels they were two years ago, they are still strong. And as important, we are not seeing the significant price drops being experienced in other major markets."
Looking ahead, NAR posted its forecast earlier this month with Lawrence Yun, NAR Chief Economist, summing up the future prospects of the national market, "Existing home sales could start to show a sustained increase within a few months, unless there are some additional economic problems or excessive inflationary pressure," he said. "We're looking for essentially stable sales in the near term, before higher mortgage loan limits translate into more sales in high-cost markets. The wider access to affordable credit should increase sales activity notably this summer as pent-up demand begins to be met."
Tuesday, April 22, 2008
HAPCO Happenings
If you're unaware of what HAPCO is, it's the Homeowner's Association of Philadelphia and if you own rentals in Philly, you WILL, at some point, come to know HAPCO because they occupy the point in most evictions in the city.
You can find HAPCO at www.hapcoassoc.com and I suggest you do that, if for no other reason than to sign up and get their newsletter which is mighty interesting and pertinent to real estate investors of all ilks. Remember, this isn't a hobby, it's a business, and the more information and knowledge you possess the better armed you will be! The April edition included a feature article on the so-called housing slump and what it means to investors along with a sidebar article about "cash being king" in this market. There are pieces on the how tos of Sheriff's Sales, foreclosures, legislative news that may affect you and a lot of other interesting topics not necessarily focusing on Philly per se.
Our first eviction hearing is scheduled for April 29th.... ;-) No snickering allowed!
You can find HAPCO at www.hapcoassoc.com and I suggest you do that, if for no other reason than to sign up and get their newsletter which is mighty interesting and pertinent to real estate investors of all ilks. Remember, this isn't a hobby, it's a business, and the more information and knowledge you possess the better armed you will be! The April edition included a feature article on the so-called housing slump and what it means to investors along with a sidebar article about "cash being king" in this market. There are pieces on the how tos of Sheriff's Sales, foreclosures, legislative news that may affect you and a lot of other interesting topics not necessarily focusing on Philly per se.
Our first eviction hearing is scheduled for April 29th.... ;-) No snickering allowed!
Saturday, April 19, 2008
Time To Push The Button.....PART 3
Ah yes, the wholesaler. I've discussed this creature a little before but it's certainly a hot enough button to waste some more ether on it....
Seems to me that the fundamentals of investing for the small investor, seeking passive income opportunities, quality neighborhoods, cash flow, determining a suitable exit strategy, and much more, has all taken a back seat to the get rich quick notion of wholesaling, or doing contract assignments. Why is that I wonder....
Well, a good guess is that it's because largely that is what is being taught in the popular seminars. And it's what is being taught because my guess is that a pretty high percentage of people taking those courses have little to no cash and probably a somewhat lower but still substantial percentage have poor to mediocre credit. Thus, many of the attendees are looking for a vehicle to cash in without having to commit to taking title to properties, pay for rehabs and actually do something as unthinkable as BUY REAL ESTATE! Strange but true, the trend is seriously tilted towards wholesaling resulting in a number of problems for the loosely organized investor groups. Since there are now many, many newly minted "wholesalers", who is actually taking advantage of their "deals"? Other wholesalers? I think not. And of what quality are these "deals" being purveyed by newly minted wholesalers?
See, the idea of wholesaling as a venture was rooted in the idea that a good hunter (of real estate opportunities) would occasionally, if not regularly, encounter more deals than they themselves could or wanted to actually complete and so the surplus deals could be assigned (wholesaled) to other investors. Those deals were presumably evaluated in the same context as the first investor would use to evaluate deals for himself thus resulting in a reasonably sound opportunity for another investor to latch on to. At the same time the first investor could make five or ten percent for architecting the deal.
However, we're now into a phase of minting novice investors into full-fledged wholesalers. How good are the deals? From my perspective many are laughable. What is happening in many instances is the self-described wholesaler is simply packaging up everything he/she can find, reverse engineering the numbers to make them fit the learned formulas and then peddling the deals to other investors, many of them unsuspecting newbies anxious for a transaction. Sad but true.
If you disagree with my assessment, please fell free to comment... Seems to me many if not all seasoned investors now completely disregard wholesale deals unless they come from known, experienced, qualified sources, or, an entity fitting the original definition of a wholesaler...
Seems to me that the fundamentals of investing for the small investor, seeking passive income opportunities, quality neighborhoods, cash flow, determining a suitable exit strategy, and much more, has all taken a back seat to the get rich quick notion of wholesaling, or doing contract assignments. Why is that I wonder....
Well, a good guess is that it's because largely that is what is being taught in the popular seminars. And it's what is being taught because my guess is that a pretty high percentage of people taking those courses have little to no cash and probably a somewhat lower but still substantial percentage have poor to mediocre credit. Thus, many of the attendees are looking for a vehicle to cash in without having to commit to taking title to properties, pay for rehabs and actually do something as unthinkable as BUY REAL ESTATE! Strange but true, the trend is seriously tilted towards wholesaling resulting in a number of problems for the loosely organized investor groups. Since there are now many, many newly minted "wholesalers", who is actually taking advantage of their "deals"? Other wholesalers? I think not. And of what quality are these "deals" being purveyed by newly minted wholesalers?
See, the idea of wholesaling as a venture was rooted in the idea that a good hunter (of real estate opportunities) would occasionally, if not regularly, encounter more deals than they themselves could or wanted to actually complete and so the surplus deals could be assigned (wholesaled) to other investors. Those deals were presumably evaluated in the same context as the first investor would use to evaluate deals for himself thus resulting in a reasonably sound opportunity for another investor to latch on to. At the same time the first investor could make five or ten percent for architecting the deal.
However, we're now into a phase of minting novice investors into full-fledged wholesalers. How good are the deals? From my perspective many are laughable. What is happening in many instances is the self-described wholesaler is simply packaging up everything he/she can find, reverse engineering the numbers to make them fit the learned formulas and then peddling the deals to other investors, many of them unsuspecting newbies anxious for a transaction. Sad but true.
If you disagree with my assessment, please fell free to comment... Seems to me many if not all seasoned investors now completely disregard wholesale deals unless they come from known, experienced, qualified sources, or, an entity fitting the original definition of a wholesaler...
Consequences for 'Walk-Away' Borrowers
Daily Real Estate News April 14, 2008
Consequences for 'Walk-Away' Borrowers
The government and the lending industry are taking aim at “walk-away” home owners who stop making payments and months later send the house keys back to their lender. Such borrowers will not be able to get another mortgage through Fannie Mae for five years, unless there are “documented extenuating circumstances.” In that case, the prohibition is three years. Even after the prescribed time has elapsed, a borrower with a foreclosure in his file will have to make at least a 10 percent down payment and have a FICO credit score of at least 680 to qualify for a Fannie Mae loan.
Freddie Mac, which counts foreclosures as major credit black mark for seven years, is now aggressively pursuing walk-away borrowers where permitted under state law, a senior official said.
Federal legislation enacted last year allows home owners who negotiate loan modifications with lenders and have portions of their principal debt eliminated to escape income tax liability for the amount forgiven. Walk-away borrowers, by contrast, have nothing forgiven, and the Internal Revenue Service may demand taxes on the balance they never paid, the IRS says.
Source: Washington Post Writers Group, Kenneth R. Harney (04/12/2008)
Geez, seems legitimate investors are having more trouble getting financing than people with prior foreclosures!
Consequences for 'Walk-Away' Borrowers
The government and the lending industry are taking aim at “walk-away” home owners who stop making payments and months later send the house keys back to their lender. Such borrowers will not be able to get another mortgage through Fannie Mae for five years, unless there are “documented extenuating circumstances.” In that case, the prohibition is three years. Even after the prescribed time has elapsed, a borrower with a foreclosure in his file will have to make at least a 10 percent down payment and have a FICO credit score of at least 680 to qualify for a Fannie Mae loan.
Freddie Mac, which counts foreclosures as major credit black mark for seven years, is now aggressively pursuing walk-away borrowers where permitted under state law, a senior official said.
Federal legislation enacted last year allows home owners who negotiate loan modifications with lenders and have portions of their principal debt eliminated to escape income tax liability for the amount forgiven. Walk-away borrowers, by contrast, have nothing forgiven, and the Internal Revenue Service may demand taxes on the balance they never paid, the IRS says.
Source: Washington Post Writers Group, Kenneth R. Harney (04/12/2008)
Geez, seems legitimate investors are having more trouble getting financing than people with prior foreclosures!
Where Are We?
Second-home Buyers - A Significant Market Segment
by National Association of Realtors Research Staff
In spite of the downturn in home buying activity in 2007, the share of second-home sales was still significant. A new report from NAR Research — The 2008 NAR Investment and Vacation Home Buyers Survey* — shows that nearly a third of all homes purchased last year were bought as either vacation or investment homes.
Second-home Purchases
The combined total of vacation- and investment-home sales declined with the overall market in 2007, but still accounted for 33 percent of all existing- and new-home sales. That share is close to historic norms — the total share of second homes declined from 36 percent of transactions in 2006. The market share of homes purchased for investment in 2007 was 21 percent; another 12 percent were vacation homes. Vacation-home sales dropped 30.6 percent to 740,000 in 2007 from a record 1.07 million in 2006, while investment-home sales fell 18.1 percent to 1.35 million last year from 1.65 million in 2006. At the same time, primary residence sales declined 10.0 percent to 4.34 million in 2007 from 4.82 million in 2006.
Behind the Numbers
There were several reasons behind the decline in second-home purchases. Second homes are generally discretionary purchases. Consequently, in periods of economic uncertainty, the tendency is to “pull back” from buying big-ticket items. Another major factor: disruption in the mortgage market. In the wake of the subprime mortgage crisis, there was a significant tightening of credit during the second half of 2007. Some potential second-home buyers simply put their purchase decision on hold.
Characteristics of Second Homes
The majority of second-home buyers purchased an existing home; 65 percent of vacation home purchasers and 71 percent of investment home purchases bought existing homes, while the remainder purchased new homes. Fifty-nine percent of vacation homes purchased in 2007 were detached single-family homes29 percent condominiums, 7 percent townhouses or rowhouses, and 5 percent other. These results were noticeably different from those in 2006 when two thirds of vacation homes purchased were single-family homes (67 percent) and 21 percent were condominiums. There were no significant changes in the type of investment homes purchased compared with 2006 results. Sixty-one percent of investment homes purchased in 2007 were detached single-family homes, 20 percent condos, 11 percent townhouses or row houses, and 8 percent other. Twenty-eight percent of vacation-home buyers paid cash for their property, as did 35 percent of investment buyers. The median price of a vacation home was $195,000 in 2007, down 2.5 percent from $200,000 in 2006. The typical investment property cost $150,000 last year, unchanged from 2006.
Regionally, the South captured the largest share of second-home purchases. In 2007, 19 percent of vacation homes were purchased in the Northeast, 16 percent in the Midwest, 41 percent in the South and 24 percent in the West. In terms of location, 30 percent of vacation homes were purchased in rural areas, 20 percent in resorts, 20 percent in a suburb and 14 percent in an urban area or central city.
Second-home Buyers
Perhaps not surprising, second-home buyers are generally older than home buyers of primary residences and have higher incomes. The typical vacation-home buyer in 2007 was 46 years old, had a median household income of $99,100. Investment-home buyers had a median age of 42 and earned an income of $92,900. As is the case for home buyers in general, the majority of second-home buyers — 81 percent of vacation-home buyers and 76 percent of investment-home purchasers — were married-couple households. Motivation for Buying a Second HomeIn listing the reasons for purchasing a vacation home, 84 percent of buyers wanted to use the home for vacation or as a family retreat. Thirty percent planned to use the property as a primary residence in the future. More than a quarter (26 percent) of vacation-home buyers purchased their property to diversify investments; 25 percent to rent to others; 16 percent for the tax benefits; 14 percent for use by a family member, friend or relative; and 6 percent because they had extra money to spend.
When asked about the most important reasons for their purchase of an investment home, 51 percent of survey respondents indicated they made the purchase to provide rental income; 39 percent to diversify investments; 21 percent to use for vacations or as a family retreat; 16 percent for use by a family member, friend or relative; 11 percent for tax benefits; 10 percent to use as a primary residence in the future; and 4 percent because they had extra money to spend.
Future Plans
Vacation-home buyers plan to keep their property for a median of 10 years; 38 percent plan to keep their vacation home for 11 years or more. Investment buyers plan to hold their property for a median of four years, with 29 percent planning to keep for six years or more. However, 10 percent of investment buyers plan to sell in one year or less. Eight in 10 second-home buyers consider it a good time to invest in real estate, compared with 59 percent of primary residence buyers. Forty-four percent of vacation-home buyers and 57 percent of investment buyers said they were likely to purchase another property within two years.
*- In March 2008, a random sample of households that had purchased any type of residential real estate during 2007 was surveyed. The survey sample was drawn from a representative panel of U.S. households monitored and maintained by an established survey research firm. A total of 1,965 qualified households responded to the survey accounting for 2,026 home purchases during 2007. Households were sampled to meet age and income quotas representative of all home buyers drawn from the 2007 NAR Profile of Home Buyers and Sellers.
by National Association of Realtors Research Staff
In spite of the downturn in home buying activity in 2007, the share of second-home sales was still significant. A new report from NAR Research — The 2008 NAR Investment and Vacation Home Buyers Survey* — shows that nearly a third of all homes purchased last year were bought as either vacation or investment homes.
Second-home Purchases
The combined total of vacation- and investment-home sales declined with the overall market in 2007, but still accounted for 33 percent of all existing- and new-home sales. That share is close to historic norms — the total share of second homes declined from 36 percent of transactions in 2006. The market share of homes purchased for investment in 2007 was 21 percent; another 12 percent were vacation homes. Vacation-home sales dropped 30.6 percent to 740,000 in 2007 from a record 1.07 million in 2006, while investment-home sales fell 18.1 percent to 1.35 million last year from 1.65 million in 2006. At the same time, primary residence sales declined 10.0 percent to 4.34 million in 2007 from 4.82 million in 2006.
Behind the Numbers
There were several reasons behind the decline in second-home purchases. Second homes are generally discretionary purchases. Consequently, in periods of economic uncertainty, the tendency is to “pull back” from buying big-ticket items. Another major factor: disruption in the mortgage market. In the wake of the subprime mortgage crisis, there was a significant tightening of credit during the second half of 2007. Some potential second-home buyers simply put their purchase decision on hold.
Characteristics of Second Homes
The majority of second-home buyers purchased an existing home; 65 percent of vacation home purchasers and 71 percent of investment home purchases bought existing homes, while the remainder purchased new homes. Fifty-nine percent of vacation homes purchased in 2007 were detached single-family homes29 percent condominiums, 7 percent townhouses or rowhouses, and 5 percent other. These results were noticeably different from those in 2006 when two thirds of vacation homes purchased were single-family homes (67 percent) and 21 percent were condominiums. There were no significant changes in the type of investment homes purchased compared with 2006 results. Sixty-one percent of investment homes purchased in 2007 were detached single-family homes, 20 percent condos, 11 percent townhouses or row houses, and 8 percent other. Twenty-eight percent of vacation-home buyers paid cash for their property, as did 35 percent of investment buyers. The median price of a vacation home was $195,000 in 2007, down 2.5 percent from $200,000 in 2006. The typical investment property cost $150,000 last year, unchanged from 2006.
Regionally, the South captured the largest share of second-home purchases. In 2007, 19 percent of vacation homes were purchased in the Northeast, 16 percent in the Midwest, 41 percent in the South and 24 percent in the West. In terms of location, 30 percent of vacation homes were purchased in rural areas, 20 percent in resorts, 20 percent in a suburb and 14 percent in an urban area or central city.
Second-home Buyers
Perhaps not surprising, second-home buyers are generally older than home buyers of primary residences and have higher incomes. The typical vacation-home buyer in 2007 was 46 years old, had a median household income of $99,100. Investment-home buyers had a median age of 42 and earned an income of $92,900. As is the case for home buyers in general, the majority of second-home buyers — 81 percent of vacation-home buyers and 76 percent of investment-home purchasers — were married-couple households. Motivation for Buying a Second HomeIn listing the reasons for purchasing a vacation home, 84 percent of buyers wanted to use the home for vacation or as a family retreat. Thirty percent planned to use the property as a primary residence in the future. More than a quarter (26 percent) of vacation-home buyers purchased their property to diversify investments; 25 percent to rent to others; 16 percent for the tax benefits; 14 percent for use by a family member, friend or relative; and 6 percent because they had extra money to spend.
When asked about the most important reasons for their purchase of an investment home, 51 percent of survey respondents indicated they made the purchase to provide rental income; 39 percent to diversify investments; 21 percent to use for vacations or as a family retreat; 16 percent for use by a family member, friend or relative; 11 percent for tax benefits; 10 percent to use as a primary residence in the future; and 4 percent because they had extra money to spend.
Future Plans
Vacation-home buyers plan to keep their property for a median of 10 years; 38 percent plan to keep their vacation home for 11 years or more. Investment buyers plan to hold their property for a median of four years, with 29 percent planning to keep for six years or more. However, 10 percent of investment buyers plan to sell in one year or less. Eight in 10 second-home buyers consider it a good time to invest in real estate, compared with 59 percent of primary residence buyers. Forty-four percent of vacation-home buyers and 57 percent of investment buyers said they were likely to purchase another property within two years.
*- In March 2008, a random sample of households that had purchased any type of residential real estate during 2007 was surveyed. The survey sample was drawn from a representative panel of U.S. households monitored and maintained by an established survey research firm. A total of 1,965 qualified households responded to the survey accounting for 2,026 home purchases during 2007. Households were sampled to meet age and income quotas representative of all home buyers drawn from the 2007 NAR Profile of Home Buyers and Sellers.
Friday, April 18, 2008
Time To Push The Button.....PART 2
"Why on earth do I want to buy a little crappy house in Philly when I can buy an apartment building, or a laundromat, or a big house in the country and flip it or rent it, and make gobs of money?"
Why oh why do all of the programs, for the most part, teach starting out with what is typically called "bread and butters"? Well, there are a number of reasons, not the least of which is that you should make your mistakes, and you WILL make mistakes, BIG mistakes, on smaller projects, learn from them and gradually move up into bigger deals on more complex property types. That said, some people grow comfortable with bread and butters, and some eschew them from the jump.
What's a bread and butter, anyway? Well, in the Philly area it's a three bedroom, two bath row home, and it is defined as such largely because there are just so damn many of them around here. By some estimates there are approximately 750,000 in the city of Philadelphia alone not to mention many thousands more in the surrounding older suburban areas like much of Delaware County, the Norristown area and other areas developed in the early part of the 20th century. Additionally, a three bedroom row home is the most desirable for renters because the alternative is a two bedroom — there aren't many four bedroom rows in Philly — they provide the maximum potential rent, are relatively easy to come by, and while there is no such thing as standard rehab, your goal should be to standardize as much of your materials and as many of your processes as you can. By focusing on like properties you'll make that aspect of your endeavor a little easier.
There are some drawbacks to working with this type of property for sure. Consider that there is a single point of failure in the process of producing income from your passive income-producing home. That means that should your tenant, your one tenant, skip, you have no income and so the entire burden, the mortgage, taxes, etc., all fall back on you. For example, say you owned triplexes or larger apartment complexes (take your time!), the risk of losing all of your income goes down exponentially. Of course the complexity of finding, repairing, and managing goes up exponentially as well (as also should the cash flow)!
And so life goes on. Finding bread and butters the traditional way, though Realtors®, is the lifeblood of residential investor communities because it works. As you get a taste and discover whether being a landlord is to your liking, or whether flipping works for you, you'll discover whether you're adventurous enough to start to move upstream into the world of larger multi-family properties, commercial properties (retail, industrial, ie- manufacturing) or development projects. Cut your teeth first. Avoid more complex deals such as foreclosures, pre-foreclosures, short sales, etc., and stay in the mainstream where things are more predictable and manageable.
Why oh why do all of the programs, for the most part, teach starting out with what is typically called "bread and butters"? Well, there are a number of reasons, not the least of which is that you should make your mistakes, and you WILL make mistakes, BIG mistakes, on smaller projects, learn from them and gradually move up into bigger deals on more complex property types. That said, some people grow comfortable with bread and butters, and some eschew them from the jump.
What's a bread and butter, anyway? Well, in the Philly area it's a three bedroom, two bath row home, and it is defined as such largely because there are just so damn many of them around here. By some estimates there are approximately 750,000 in the city of Philadelphia alone not to mention many thousands more in the surrounding older suburban areas like much of Delaware County, the Norristown area and other areas developed in the early part of the 20th century. Additionally, a three bedroom row home is the most desirable for renters because the alternative is a two bedroom — there aren't many four bedroom rows in Philly — they provide the maximum potential rent, are relatively easy to come by, and while there is no such thing as standard rehab, your goal should be to standardize as much of your materials and as many of your processes as you can. By focusing on like properties you'll make that aspect of your endeavor a little easier.
There are some drawbacks to working with this type of property for sure. Consider that there is a single point of failure in the process of producing income from your passive income-producing home. That means that should your tenant, your one tenant, skip, you have no income and so the entire burden, the mortgage, taxes, etc., all fall back on you. For example, say you owned triplexes or larger apartment complexes (take your time!), the risk of losing all of your income goes down exponentially. Of course the complexity of finding, repairing, and managing goes up exponentially as well (as also should the cash flow)!
And so life goes on. Finding bread and butters the traditional way, though Realtors®, is the lifeblood of residential investor communities because it works. As you get a taste and discover whether being a landlord is to your liking, or whether flipping works for you, you'll discover whether you're adventurous enough to start to move upstream into the world of larger multi-family properties, commercial properties (retail, industrial, ie- manufacturing) or development projects. Cut your teeth first. Avoid more complex deals such as foreclosures, pre-foreclosures, short sales, etc., and stay in the mainstream where things are more predictable and manageable.
Wednesday, April 16, 2008
Time To Push THE Button.....PART 1
Okay, it's time to get right into the real purpose behind this BLOG. Those pesky, irrepressible, overly abundant How To Make A Million Dollars In Two Days real estate programs.
I know you've seen or heard about them, and you've probably taken one or more of the courses I'm referring to, haven't you? I have... By now you know that they're real intent is to make money, for them, not for you. And, since we live in the good old USA, there's nothing wrong with that. So long as you understand that going in, or at least coming out.
Another one of my cornies is "a mistake is only a mistake if I don't learn anything from it". Is taking one of those courses a mistake? Potentially a costly mistake? Depends. What was your motivation for taking the course? What did you get out of it? Was what you got out of it worth $5,000, $6,000, $7,500 or as much as the $20,000 you paid?
Virtually everyone comes out of any motivational (and these courses ALL include to some degree a motivational piece, to provide, if nothing more, distraction from the lack of depth of subject during the discourse) seminar or program all pumped up and ready to knock'em dead. And then, later, reality sets in, when it hits home that there's work involved, and it's not as simple as demonstrated on the whiteboard, the air is let out of the balloon. (Refer to the posting a few days ago about running a business...)
As far as I'm concerned the value of most, or at least some of the programs active today is the insight into proven, what I call formularized buying. Actually, being a Realtor, formularized buying is the bane of many a Realtor tasked with submitting offers for a fledgling investor using one of the taught formulas. The unsuspecting Realtor is handed what he/she sees as a "low ball" offer and the offer is quickly, unceremoniously rejected by the listing agent, and the investor's agent is probably at least minimally chastised for wasting the listing agent's time with such an offensive offer.
But the formulas have value, and learning how to interpret the numbers is a key aspect that is not really taught very well, if at all, although the foundation is provided. The problem is that people go in thinking the program is the whole enchilada, it's not. Realtors who don't understand the formularized buying methodology are frustrated by "learned" investors and investors are tasked with searching out Realtors who "get" this kind of buying. The result is a lot of frustration for newly minted course graduates over the first 60- 90 days out in the field trying to cultivate their new real estate empire.
Over the next few days, how those lessons relate to:
Bread and Butter Houses
Foreclosures and Short Sales
Wholesaling (Contract Assignments)
I know you've seen or heard about them, and you've probably taken one or more of the courses I'm referring to, haven't you? I have... By now you know that they're real intent is to make money, for them, not for you. And, since we live in the good old USA, there's nothing wrong with that. So long as you understand that going in, or at least coming out.
Another one of my cornies is "a mistake is only a mistake if I don't learn anything from it". Is taking one of those courses a mistake? Potentially a costly mistake? Depends. What was your motivation for taking the course? What did you get out of it? Was what you got out of it worth $5,000, $6,000, $7,500 or as much as the $20,000 you paid?
Virtually everyone comes out of any motivational (and these courses ALL include to some degree a motivational piece, to provide, if nothing more, distraction from the lack of depth of subject during the discourse) seminar or program all pumped up and ready to knock'em dead. And then, later, reality sets in, when it hits home that there's work involved, and it's not as simple as demonstrated on the whiteboard, the air is let out of the balloon. (Refer to the posting a few days ago about running a business...)
As far as I'm concerned the value of most, or at least some of the programs active today is the insight into proven, what I call formularized buying. Actually, being a Realtor, formularized buying is the bane of many a Realtor tasked with submitting offers for a fledgling investor using one of the taught formulas. The unsuspecting Realtor is handed what he/she sees as a "low ball" offer and the offer is quickly, unceremoniously rejected by the listing agent, and the investor's agent is probably at least minimally chastised for wasting the listing agent's time with such an offensive offer.
But the formulas have value, and learning how to interpret the numbers is a key aspect that is not really taught very well, if at all, although the foundation is provided. The problem is that people go in thinking the program is the whole enchilada, it's not. Realtors who don't understand the formularized buying methodology are frustrated by "learned" investors and investors are tasked with searching out Realtors who "get" this kind of buying. The result is a lot of frustration for newly minted course graduates over the first 60- 90 days out in the field trying to cultivate their new real estate empire.
Over the next few days, how those lessons relate to:
Bread and Butter Houses
Foreclosures and Short Sales
Wholesaling (Contract Assignments)
Monday, April 14, 2008
So You Say You Never Wanted To Be In Business For Yourself....
Real estate investing.... What comes to mind? Donald Trump? Fun trips to Home Depot? Fear? Unruly tenants? Lots of money? More fear?
Well, I think the biggest surprise to most people who venture into the real estate investment game, at ANY level, is the obvious fact that they're now running a business. Problem is it's never that obvious until they're a bit into things and it dawns on them, perhaps by the hammer of their accountant, that they're running a business and need to manage it as such. And that, my friends, is where the fun ENDS for many!
Yup, flipping houses is gobs of fun. Turn on any flipping show, Flip This House, Flip That House, you name it, and what you see, for the most part, is fun and games. Here's the reality: budgets need to be managed; accounts need to be opened and maintained; contractors need to be managed; paperwork — tons of paperwork, from licenses, to permits, to contracts, to receipts, to mortgages, to tax returns.... Should I stop? There are tax ramifications — do I act as a sole proprietor, form an entity like a C-Corp, S-Corp or LLC? Where can I get credit? Who can I trust? Who will do the physical work? How do I know I'm not getting ripped off?
Yes, real estate investing is a business, whether you're doing it as a side thing, full time, or just as a hobby. You're gonna encounter contractors who aren't running their business as such who will cause you a lot of grief (ever hear of something called a mechanic's lien?); city inspectors who will toy with you; banks (my generic term for money lenders) who will make you cry; tenants who you'd like to make cry; and houses that will make you wish all you were doing was crying!
There is still money to be made buying, selling, renovating, and holding property, obviously — it is still the best investment vehicle there is — just do it with the blinders off and knowing what you're really getting into. And be as prepared as you can, because anything that can, will, go wrong.
Well, I think the biggest surprise to most people who venture into the real estate investment game, at ANY level, is the obvious fact that they're now running a business. Problem is it's never that obvious until they're a bit into things and it dawns on them, perhaps by the hammer of their accountant, that they're running a business and need to manage it as such. And that, my friends, is where the fun ENDS for many!
Yup, flipping houses is gobs of fun. Turn on any flipping show, Flip This House, Flip That House, you name it, and what you see, for the most part, is fun and games. Here's the reality: budgets need to be managed; accounts need to be opened and maintained; contractors need to be managed; paperwork — tons of paperwork, from licenses, to permits, to contracts, to receipts, to mortgages, to tax returns.... Should I stop? There are tax ramifications — do I act as a sole proprietor, form an entity like a C-Corp, S-Corp or LLC? Where can I get credit? Who can I trust? Who will do the physical work? How do I know I'm not getting ripped off?
Yes, real estate investing is a business, whether you're doing it as a side thing, full time, or just as a hobby. You're gonna encounter contractors who aren't running their business as such who will cause you a lot of grief (ever hear of something called a mechanic's lien?); city inspectors who will toy with you; banks (my generic term for money lenders) who will make you cry; tenants who you'd like to make cry; and houses that will make you wish all you were doing was crying!
There is still money to be made buying, selling, renovating, and holding property, obviously — it is still the best investment vehicle there is — just do it with the blinders off and knowing what you're really getting into. And be as prepared as you can, because anything that can, will, go wrong.
Sunday, April 13, 2008
The End IS In Sight, At Long Last
The last time I posted about Project Wilmington I was largely lamenting the difficulties we were encountering with that city's badged inspectors and how they were dogging us. We're now about seven weeks over schedule almost exclusively because of bureaucratic delays but the home stretch is finally upon us. The GC says they will be finished by this coming Wednesday with the plumber, electrician, and painters all due to complete their finish work by then. The cleaning people are tentatively scheduled for Friday after the bedroom carpets go in on Thursday. Hopefully, we'll officially get the property on the market by Friday (and sell it by Monday....).
This was a productive week as the new hardwood was virtually completed, I worked out some stress doing some landscaping there myself (yea, I know...) and made some local friends as the female populace kept coming by to congratulate us on a beautiful project in their midst (hopefully one of them knows someone who wants to move into their neighborhood!). Lot's of "oh, my Gods" all around... Music to my ears!
As this project comes to a close and we ponder where it's taken us we are planning a project wrap-up dinner meeting to review the lessons learned and how we'll apply those lessons to future projects. For example, we WILL announce at the intimate event that this was our LAST Wilmington project. That's for sure. We also will come away with a deep appreciation and understanding for our new GC, and the lesson learned with them that we certainly can feel comfortable doing projects with far more distressed properties than we were comfortable with before. We've also learned that it's critically important to manage ALL minute details, both financial and logistical, regardless of outside interference (like L&I delays).
But the best part of this project drawing to a close is the renewed optimism in the Wilmington market for getting it relatively quickly sold and at the number that is rattling around in my head. (I will recap all the numbers AFTER the deal is completed for all to conjure, but not until then.) While the real estate market in Chester County is not nearly as depressed as many of the widely publicized disaster areas like California, Florida, Nevada and Arizona, I was becoming increasingly concerned about the state of the Wilmington market as I saw a slowdown affecting Philadelphia. It's a natural assumption that as a recession picks up steam (guess that's an oxymoron) the hardest hit will be those in urban areas and Philly's economy appears to be drawing to a halt in many regards. Wilmington though, lately, very lately, appears to not be getting hit as hard in the real estate market is the perception I had for Philly. But we'll see VERY, VERY soon. Stay tuned.
This was a productive week as the new hardwood was virtually completed, I worked out some stress doing some landscaping there myself (yea, I know...) and made some local friends as the female populace kept coming by to congratulate us on a beautiful project in their midst (hopefully one of them knows someone who wants to move into their neighborhood!). Lot's of "oh, my Gods" all around... Music to my ears!
As this project comes to a close and we ponder where it's taken us we are planning a project wrap-up dinner meeting to review the lessons learned and how we'll apply those lessons to future projects. For example, we WILL announce at the intimate event that this was our LAST Wilmington project. That's for sure. We also will come away with a deep appreciation and understanding for our new GC, and the lesson learned with them that we certainly can feel comfortable doing projects with far more distressed properties than we were comfortable with before. We've also learned that it's critically important to manage ALL minute details, both financial and logistical, regardless of outside interference (like L&I delays).
But the best part of this project drawing to a close is the renewed optimism in the Wilmington market for getting it relatively quickly sold and at the number that is rattling around in my head. (I will recap all the numbers AFTER the deal is completed for all to conjure, but not until then.) While the real estate market in Chester County is not nearly as depressed as many of the widely publicized disaster areas like California, Florida, Nevada and Arizona, I was becoming increasingly concerned about the state of the Wilmington market as I saw a slowdown affecting Philadelphia. It's a natural assumption that as a recession picks up steam (guess that's an oxymoron) the hardest hit will be those in urban areas and Philly's economy appears to be drawing to a halt in many regards. Wilmington though, lately, very lately, appears to not be getting hit as hard in the real estate market is the perception I had for Philly. But we'll see VERY, VERY soon. Stay tuned.
Wednesday, April 9, 2008
The Zany World of Credit
Credit, Webster says, well Merriam-Webster says, it's all of the following:
1. reliance on the truth or reality of something;
2. the balance in a person's favor in an account;
3. influence or power derived from enjoying the confidence of another or others;
4. a source of honor;
5. something that gains or adds to reputation or esteem;
6. recognition by name of a person contributing to a performance;
7. recognition by a school or college that a student has fulfilled a requirement leading to a degree;
Oh yea, I missed one... the provision of money, goods, or services with the expectation of future payment...
Geez, seems to me the credit purveyors of old, the banks, mortgage companies, etc. also have missed this definition as well as number 1 above. See, right now there is a serious credit squeeze going on... oh, yea, you knew that. But why is it? Why is it when the government has stepped in to bail out failing institutions like Bear-Stearns and are backing billions in deals done that it's become difficult to get financing for all kinds of projects?
Let's go back to an earlier post where I talked about those nasty self-fulfilling prophecies. If you say things are bad long enough, they will become so regardless of whether they are or not. The way I see it, the banks (I'll just use that term to cover all mortgage lenders) got VERY greedy during the feeding frenzy from like 2002- 2006 and started giving every Tom, Dick, and Larry money regardless of, ahem, credit worthiness or the prospect of getting paid back. They also naively (really?) ignored the fact that at some point the market would turn and values would not continue to simply go straight up forever, meaning a lot of people who bought new homes, in particular, might be faced with dire circumstances come time to refi their ARM or interest only loan if the value of their new home didn't at least maintain it's value.
A lot of people like to blame the borrowers, some, if not many, of whom are walking away from their homes because they're upside down and can no longer afford them OR, see them now as bad investments. To be sure, many of these homeowners are to blame, but my guess is a much larger number of cases can be blamed on the lenders, and guess what, that's fine, but WHY are people now, who had nothing to do with those decisions, being squeezed getting financing? The backlash is affecting consumer confidence, the housing numbers and a number of other aspects of the economy for NO reason, the way I see it. Now I'm certainly no economist, but if the banks would simply return to a normal MO methinks some of the bad news might go away, or at least ease up a little!
Just like the corporate misdeeds of the likes of Intel laying off thousands at the worst possible time just to make Wall Street happy, the banks squeezing credit now is to me a cardinal sin! Write your Congressman!
1. reliance on the truth or reality of something;
2. the balance in a person's favor in an account;
3. influence or power derived from enjoying the confidence of another or others;
4. a source of honor;
5. something that gains or adds to reputation or esteem;
6. recognition by name of a person contributing to a performance;
7. recognition by a school or college that a student has fulfilled a requirement leading to a degree;
Oh yea, I missed one... the provision of money, goods, or services with the expectation of future payment...
Geez, seems to me the credit purveyors of old, the banks, mortgage companies, etc. also have missed this definition as well as number 1 above. See, right now there is a serious credit squeeze going on... oh, yea, you knew that. But why is it? Why is it when the government has stepped in to bail out failing institutions like Bear-Stearns and are backing billions in deals done that it's become difficult to get financing for all kinds of projects?
Let's go back to an earlier post where I talked about those nasty self-fulfilling prophecies. If you say things are bad long enough, they will become so regardless of whether they are or not. The way I see it, the banks (I'll just use that term to cover all mortgage lenders) got VERY greedy during the feeding frenzy from like 2002- 2006 and started giving every Tom, Dick, and Larry money regardless of, ahem, credit worthiness or the prospect of getting paid back. They also naively (really?) ignored the fact that at some point the market would turn and values would not continue to simply go straight up forever, meaning a lot of people who bought new homes, in particular, might be faced with dire circumstances come time to refi their ARM or interest only loan if the value of their new home didn't at least maintain it's value.
A lot of people like to blame the borrowers, some, if not many, of whom are walking away from their homes because they're upside down and can no longer afford them OR, see them now as bad investments. To be sure, many of these homeowners are to blame, but my guess is a much larger number of cases can be blamed on the lenders, and guess what, that's fine, but WHY are people now, who had nothing to do with those decisions, being squeezed getting financing? The backlash is affecting consumer confidence, the housing numbers and a number of other aspects of the economy for NO reason, the way I see it. Now I'm certainly no economist, but if the banks would simply return to a normal MO methinks some of the bad news might go away, or at least ease up a little!
Just like the corporate misdeeds of the likes of Intel laying off thousands at the worst possible time just to make Wall Street happy, the banks squeezing credit now is to me a cardinal sin! Write your Congressman!
Tuesday, April 8, 2008
Keep It Close....To Home
In the lessons learned category, keep flips, rentals, and your kids, close to home. Well, the first two anyway....
It is an added, and unnecessary degree of difficulty to deal with contractors and/or tenants when your investments are far enough away from home that you actually have to debate the virtue of going to the property. If you really think that you can just hire a contractor for a rehab or a PM to manage your properties and the distance is irrelevant, then you haven't learned the lesson yet.
Contractors are a funny bunch, not funny "ha ha like I amuse you" (quick, who said that in what movie?) but funny like, one day they're your friend and the next they're someone else's friend and you can't find them. They're kind of like your best friend in high school who just fell in love (lust?) for the first time and is attached to his/her lustbuddy to the extent that you no longer have a bud on a daily basis hitting you up for whatever it is he's she is short on.
Yes, contractors like you to show them the money, and when someone else shows them more, they go play in their sandbox, so the key is to keep them on the hook, do not give them too much and keep them challenged. Yes, challenged, because like athletes, contractors, good ones anyway, have big egos and like to prove they can do anything, better than anyone else, but they never want to prove they can do it for less.....
The bottom line is to use good, reliable, reasonably priced contractors who are up for whatever challenge you throw at them. And the key word is reliable. You know Bobby wasn't your most reliable friend after he met Sara at the dance and forgot your name!
It is an added, and unnecessary degree of difficulty to deal with contractors and/or tenants when your investments are far enough away from home that you actually have to debate the virtue of going to the property. If you really think that you can just hire a contractor for a rehab or a PM to manage your properties and the distance is irrelevant, then you haven't learned the lesson yet.
Contractors are a funny bunch, not funny "ha ha like I amuse you" (quick, who said that in what movie?) but funny like, one day they're your friend and the next they're someone else's friend and you can't find them. They're kind of like your best friend in high school who just fell in love (lust?) for the first time and is attached to his/her lustbuddy to the extent that you no longer have a bud on a daily basis hitting you up for whatever it is he's she is short on.
Yes, contractors like you to show them the money, and when someone else shows them more, they go play in their sandbox, so the key is to keep them on the hook, do not give them too much and keep them challenged. Yes, challenged, because like athletes, contractors, good ones anyway, have big egos and like to prove they can do anything, better than anyone else, but they never want to prove they can do it for less.....
The bottom line is to use good, reliable, reasonably priced contractors who are up for whatever challenge you throw at them. And the key word is reliable. You know Bobby wasn't your most reliable friend after he met Sara at the dance and forgot your name!
Saturday, April 5, 2008
Recession Resmession!
So, I guess officially we're in a recession. It'll be interesting to see when this second recession of the wonderful Bush years actually started (they usually define the timeframe on these things in the rearview mirror) but I think some of the cause and effect lies in the mere fact that if you say something often enough it eventually comes to fruition. Hell, I wonder if the powers that be aren't actually happy the attention has been diverted from other things, ahem, can you spell Iraq, with all the bad news about the economy. My wife said two malls she visited today were very busy and I can say that starting last week real estate open houses were briskly visited. But irresponsible corporate giants like Home Depot just seem to enjoy fueling the fire by laying people off at the perfect time when they could demonstrate a modicum of responsibility and bite the bullet rather than adding fuel to the fire. But of course business today isn't about responsibility, it's about making Wall Street happy. You know what, the LAST thing businesses should do in bad times is cut back. But, alas, they always do. A few years back, during the 2001- 03 recession, Intel co-founder Andy Grove gave a talk at an annual Intel partner conference I attended and made a point of lecturing us on down times being the best time to invest in our companies and expand.... About a month later Intel layed off ~10,000 people....
We're about to put our Wilmington flip project on the market, hopefully within the next two weeks, and of course I'm concerned about the market, especially an inner city market. The inner cities are where economic slowdowns are most noticeable and we can only hope that someone wanting a nice house in the city won't be paralyzed by all the nonsense bouncing around. Worse, we have to hope that an interested buyer there can get a mortgage as things have tightened up considerably by another segment of the irresponsible corporate brotherhood. Of all times to squeeze things on credit, while the bailouts pile up and cash is made as available as Tums to these people (the banks, mortgage companies, etc.)....
Yes, it's a good time to buy, whether for your primary residence or for investments. Whether it will remain a decent time to sell nice properties, only time will tell as we get closer to peek selling season over the next 4-8 weeks.
We're about to put our Wilmington flip project on the market, hopefully within the next two weeks, and of course I'm concerned about the market, especially an inner city market. The inner cities are where economic slowdowns are most noticeable and we can only hope that someone wanting a nice house in the city won't be paralyzed by all the nonsense bouncing around. Worse, we have to hope that an interested buyer there can get a mortgage as things have tightened up considerably by another segment of the irresponsible corporate brotherhood. Of all times to squeeze things on credit, while the bailouts pile up and cash is made as available as Tums to these people (the banks, mortgage companies, etc.)....
Yes, it's a good time to buy, whether for your primary residence or for investments. Whether it will remain a decent time to sell nice properties, only time will tell as we get closer to peek selling season over the next 4-8 weeks.
Friday, April 4, 2008
Money, Money, Money, MuNAY
Sing along with me, money, money, money, muNAY! I have a corny old adage I live my business life by, and that's "you can't have one eye on the customer if you have both eyes on the bottom line". CFOs and other financial types tend to frown on business people who worry about anything other than the bottom line. By my way of thinking, THAT kind of thinking is a large part of what is wrong with the world, and particularly business today. The days of actually serving the customer, you know, customer service, have been replaced by lip service from companies of all kinds, public, private, large, small, utilities, you name it, who have not only lost their way, but don't even remember ever having one!
Yea, yea, so where am I going with this.... If you focus on the costs and the price and nothing but the $$$$ you will lose money, you will not make as much, you will forego forging relationships that in the end will mean lost opportunities, and yes, lost money. Focus on doing things the RIGHT WAY. Focus on doing quality work and feeling like what you're putting in will maximize your return and NOT on spending $10 less because "it doesn't matter". Quality sells and in the end you will be rewarded for doing things the right way.
Many of the modern investing programs will teach you to NOT manage rentals yourself, to not try and sell properties yourself, to not waste your time ane energy doing the manual labor yourself. Listen to the people with the experience and wisdom. Trying to save commissions will result in getting less for the property in more time. Doing work yourself will generally result in sloppier work (assuming this is not what you do for a living — the hands-on part) and take longer. Managing rentals will, well, drive you crazy and probably out of the passive income game.
Do right by your properties and tenants and even employees, and they'll do right by you.
Yes, I had to have one crazed, naive post in here somewhere....
Yea, yea, so where am I going with this.... If you focus on the costs and the price and nothing but the $$$$ you will lose money, you will not make as much, you will forego forging relationships that in the end will mean lost opportunities, and yes, lost money. Focus on doing things the RIGHT WAY. Focus on doing quality work and feeling like what you're putting in will maximize your return and NOT on spending $10 less because "it doesn't matter". Quality sells and in the end you will be rewarded for doing things the right way.
Many of the modern investing programs will teach you to NOT manage rentals yourself, to not try and sell properties yourself, to not waste your time ane energy doing the manual labor yourself. Listen to the people with the experience and wisdom. Trying to save commissions will result in getting less for the property in more time. Doing work yourself will generally result in sloppier work (assuming this is not what you do for a living — the hands-on part) and take longer. Managing rentals will, well, drive you crazy and probably out of the passive income game.
Do right by your properties and tenants and even employees, and they'll do right by you.
Yes, I had to have one crazed, naive post in here somewhere....
Thursday, April 3, 2008
Wednesday, April 2, 2008
As the Market Turns
Mulling what I wrote the other day about investors selling off their portfolios at the wrong time, it strikes me very odd that investors aren't out there right now going hog wild over a lot of deals that should represent good value compared to 18 months ago. Perhaps the tightened (and yes, I will get to that) credit market is having an effect but I don't see near as much drive in less experience investors who appear paralyzed along with the soccer moms who seem to be buying less Barbie Dolls for Suzie these days.
What this tends to reinforce for me is that, and I'll probably say this a number of times as this Blog goes on, people go to seminars and what have you, pay good money to be taught how to do things, like find and buy investment properties, and the day they walk out they revert to whatever predisposed notion they went in with about the topic. Example- when's the best time to buy investments? When they're down, of course. Yet, people will sit on the sidelines until, yup, you guessed it, things go back up, when they'll buy high and then probably sell again when things go back down. Why is this?
Yes, why is it that fledgling investors are taught to use Realtors to buy AND sell, yet as soon as they want to sell they think they don't need a Realtor anymore? Why do they learn to NOT do it themselves, yet the first thing they do (in the name of saving money) is do things themselves instead of hiring pros? And then they refuse to use a Property Manager because it costs money. And they remove long-proven heating systems to put in VERY VERY expensive to operate crap like electric resistance heat, and the list goes on...
So, why is it? Why do people love to give other people their money to "learn" how to do something only to not do what they learned in order to save far less money than they paid to learn what they're not doing?
Got it? Good, now 'splain it to me cause I don't get it!
What this tends to reinforce for me is that, and I'll probably say this a number of times as this Blog goes on, people go to seminars and what have you, pay good money to be taught how to do things, like find and buy investment properties, and the day they walk out they revert to whatever predisposed notion they went in with about the topic. Example- when's the best time to buy investments? When they're down, of course. Yet, people will sit on the sidelines until, yup, you guessed it, things go back up, when they'll buy high and then probably sell again when things go back down. Why is this?
Yes, why is it that fledgling investors are taught to use Realtors to buy AND sell, yet as soon as they want to sell they think they don't need a Realtor anymore? Why do they learn to NOT do it themselves, yet the first thing they do (in the name of saving money) is do things themselves instead of hiring pros? And then they refuse to use a Property Manager because it costs money. And they remove long-proven heating systems to put in VERY VERY expensive to operate crap like electric resistance heat, and the list goes on...
So, why is it? Why do people love to give other people their money to "learn" how to do something only to not do what they learned in order to save far less money than they paid to learn what they're not doing?
Got it? Good, now 'splain it to me cause I don't get it!
My first post here
Well here goes nothing........
My real estate investing "career" started in my mind about 10 years ago and man I made a ton of fake money in my head.... in reality it started on 2007. Finally took the plunge along with my business partner to invest in Scranton, Pa and Wilkes Barre, Pa and soon Philadelphia.
We have many goals but the main one is to buy and hold as many properties as possible to create passive income, then move to bigger better properties, flips, etc etc. I am here to share my experience and network. We are wrapping up a rehab right now and going through the refi process. What a pain right now! We bought it right and hope(d) to cash out a bit of money with a 75% or 80% LTV. Up until this past Friday the 75% looked like a reality... now it looks like 70%. All is good unless that changes... who knows what tomorrow will bring, we can go to 65% but don't tell the bank! At 70% it still cash flows which is the main goal.
Anyway I am looking to just share information and give my honest feedback and share my experiences here. Oh and if you have a time machine let me know so I can go back 10 years and get my Money!
My real estate investing "career" started in my mind about 10 years ago and man I made a ton of fake money in my head.... in reality it started on 2007. Finally took the plunge along with my business partner to invest in Scranton, Pa and Wilkes Barre, Pa and soon Philadelphia.
We have many goals but the main one is to buy and hold as many properties as possible to create passive income, then move to bigger better properties, flips, etc etc. I am here to share my experience and network. We are wrapping up a rehab right now and going through the refi process. What a pain right now! We bought it right and hope(d) to cash out a bit of money with a 75% or 80% LTV. Up until this past Friday the 75% looked like a reality... now it looks like 70%. All is good unless that changes... who knows what tomorrow will bring, we can go to 65% but don't tell the bank! At 70% it still cash flows which is the main goal.
Anyway I am looking to just share information and give my honest feedback and share my experiences here. Oh and if you have a time machine let me know so I can go back 10 years and get my Money!
Tuesday, April 1, 2008
To Rent or Not To Rent...PART 2
Where was I, oh yea, you wanted to borrow my Proof of Funds...
On a more serious note.... Rentals.... My S. Philly Property Manager, yea, property manager, oh, you never heard of such a thing? Hold on, anyway, my PM says that for some strange reason, with home sales down, the expected surge in renters hasn't materialized. So where have they gone? Hmm, maybe they're all out looking for a Proof of Funds so they can buy a house!
Anyway, back to the good old days when buying rentals and hopefully seeing them cashflow and appreciate was standard fare... Where have all the good old-fashioned investors gone? All converted to wholesalers or on the sidelines? Seems to me a lot of people are trying to dump portfolios. Nothing like the good old investor adage of buying high and selling low.... Well, not exactly, most all will make considerable profits on their portfolios, I just find it odd to look to sell off now when most likely holding for another couple years should see considerable increases if only the modest value reductions of the last year are reversed. But, hey, they're all smarter than me.
So what is hindering buying rentals? Perhaps 70- 75% LTVs? Perhaps the wary eye of the banks towards honest people just trying to make a buck? Dunno. Maybe it's some very poorly performing Realtors hindering the process? I know of a particular street in South Philly with four rentals for sale that have no lockbox, the keys the Realtor provides don't work and the properties keep undergoing price reductions. Hmm, maybe they'd sell if someone would let a prospective buyer (me!) in!!!
Yes, we knew at some point I'd just use a posting to go on a rant.... Had a rough day, wa wa!
Back to that thing called a Property Manager. Find a good one and USE him/her! Do NOT be a landlord if you want to stay sane and not get bogged down in the BS of landlording! Pay the 5, 6, 8%. Let them deal with the BS. Just make sure they're doing the job! Proper reports, timely checks, keeping after the tenants, etc.... A good one is as hard to find as a good contractor, yup, make sure you send them a turkey for Thanksgiving!
On a more serious note.... Rentals.... My S. Philly Property Manager, yea, property manager, oh, you never heard of such a thing? Hold on, anyway, my PM says that for some strange reason, with home sales down, the expected surge in renters hasn't materialized. So where have they gone? Hmm, maybe they're all out looking for a Proof of Funds so they can buy a house!
Anyway, back to the good old days when buying rentals and hopefully seeing them cashflow and appreciate was standard fare... Where have all the good old-fashioned investors gone? All converted to wholesalers or on the sidelines? Seems to me a lot of people are trying to dump portfolios. Nothing like the good old investor adage of buying high and selling low.... Well, not exactly, most all will make considerable profits on their portfolios, I just find it odd to look to sell off now when most likely holding for another couple years should see considerable increases if only the modest value reductions of the last year are reversed. But, hey, they're all smarter than me.
So what is hindering buying rentals? Perhaps 70- 75% LTVs? Perhaps the wary eye of the banks towards honest people just trying to make a buck? Dunno. Maybe it's some very poorly performing Realtors hindering the process? I know of a particular street in South Philly with four rentals for sale that have no lockbox, the keys the Realtor provides don't work and the properties keep undergoing price reductions. Hmm, maybe they'd sell if someone would let a prospective buyer (me!) in!!!
Yes, we knew at some point I'd just use a posting to go on a rant.... Had a rough day, wa wa!
Back to that thing called a Property Manager. Find a good one and USE him/her! Do NOT be a landlord if you want to stay sane and not get bogged down in the BS of landlording! Pay the 5, 6, 8%. Let them deal with the BS. Just make sure they're doing the job! Proper reports, timely checks, keeping after the tenants, etc.... A good one is as hard to find as a good contractor, yup, make sure you send them a turkey for Thanksgiving!
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