Your Questions About Real Estate Investing Tips

John asks…

What is you Best Real Estate Investing Tip?

What is you Best Real Estate Investing Tip?
You are more than welcome to post it on Your Creative Real Estate Investing Forum:

http://www.forumforme.com/

Thanks!

John answers:

The best tip I can give you is to be knowledgeable about real estate investing. Listening to the guru’s on TV, buying their program does not make you a real estate investor.

I would suggest that you go to the book store and purchase several books on buying, flipping and selling as well as other books on how to purchase distressed property.

One of the things I would not depend on is a real estate agent,. Most of them are if you don’t have 10% down with a 720 credit score and a pre-approval form in your hand, don’t even want to talk to you, so I would pass on the real estate agent, you will eventually meet one through trial and error,mostly error.

I you do not have enough money to invest in real estate you will need several if not more investors to assist you in being successful.

Next thing is you have to put together a professional team to assist you with your endeavor to become a real estate investor, someone are Notary public, Title Rep, Escrow closing agent, attorney, home insurance agent and others that might be added later as you become better known.

I hope this has been of some use to you, good luck.

“FIGHT ON”

Sandy asks…

Real Estate Investing: any tips and pointers on how to avoid the scams and cons in real estate investing?

John answers:

The biggest con in real estate investing is the concept of get rich quick. No investment is going to cash out in your favor immediately. Discounts are difficult to find and take some research. Due diligence should be given to every deal and if the seller or person bird dogging the deal pressures you drop it.

For the basic investor there are these options: Flips, purchases for income, purchases for holding.

Flips are basically buying a distressed or undervalued property, fixing it up, and reselling it for more than you paid for it. The less real money of your own you have to invest the better and the faster you turn it around the better.

Buying for income is purchasing a property for its residual income value, that is the rent you will receive from tenants. In the mean time you hope that it appreciates in value so that you build equity.

Buying to hold usually means your own home(s).

There is nothing mystical or magical about buying tax sale properties, or estate and REO properties. You don’t need to spend a thousand dollars on some tapes or a seminar to do any of these. Properties up for taxes can be purchased, or the taxes themselves at your local country administration building and the process is free. You have nothing to lose because even if the owner redeems you get paid a big fat premium for your trouble. Beats a CD at the bank and best case scenario you win a property for pennies on the dollar with a clear title.

Scam II: We will find an investor to make your deal work because you have no money. What profit motive is there in that? All the books, tapes, seminars and nonsense about the cash flow connection is just that, nonsense. Make the investment yourself or with your own pool of investors and keep expense and dilution to a minimum.

Good luck and I’ll be looking forward to your profiles in the Wall Street Journal next year.

Charles asks…

Tips on real estate investing???

I would really like to start investing in real estate and I was just wondering if any experienced investors could give me a few tips on how to get started? For example: What is the best and easiest way to buy my first property? Thanks for your help!

John answers:

Getting help from a real estate agent will definitely help. This directory is really helpful: http://www.idxbroker.com/news/256_IDX,_Inc._Introduces.php

just click on your state.

Donald asks…

I want to start Real Estate Investing, I went to an Investment club that gave out great tips for free?

and now I want to apply them. My first deal I want to do an “Assignment of Contract”. I have a seller in my area who has Tax Lien properties that he purchased at the once a year Tax Sale in my State, and he has a property for $100K that has comps in the area for $300k, How do I go about doing an “Assignment of Contract” without paying any money out of pocket for this deal is my question?

John answers:

If you want to do this deal, first learn how to do tax lien/tax deeds in your county. If you check it out thoroughly and it is a great deal, you would put it under a purchase contract that allows assignment. If you don’t know all of the details of a tax lien/tax deed in your area, you may not be getting what you think you are. Then you have to find an end buyer who wants it, and assign the contract to them for a fee. (Or you could purchase it outright and then sell to the end buyer, but then you need to get the money to close unless you can find a title company that will do a simultaneous closing.

Get educated and good luck!

Steven asks…

Tips for real estate investing while overseas?

My wife and I are taking positions in the middle east for a couple of years. We want to know if coming back to the states every 6 months or so and purchasing some foreclosed/short sale/inexpensive properties in the Metro DC area to rent out while gaining equity for a few years is a good idea. Any problems that we may run into? Things we have to do in order to protect ourselves(Corporation, LLC etc)Certain companies to help manage our properties? I know this is alot but I want some good info!

Thanks

We would want to secure several loans with 5 to 10% down on the homes if possible….maybe 2-4 at a time if we could

John answers:

Your overall concept is good, and there are a lot of values in the DC Metro area. (I’m a Realtor licensed in Virginia as well as a real estate investor in Northern Virginia.)

You might want to adjust some of the details of your plan, though. For instance, if you’re coming back to the States every 6 months or so, that’s fine. But don’t come back just to invest in real estate. You can invest while you’re in the Middle East. With the Internet, with digital cameras, with e-mail, and so on, you can do everything from overseas. Give a Realtor the specs for what you’re looking for. As possible opportunities come up, the Realtor will send you the listings. If you see one you’re interested in, you can ask for additional pictures, comps of the property from a sales perspective, and comps of the property from a rental perspective. If you’re then really interested, you can make an offer subject to all the regular contingencies (home inspection, financing, etc.). And you can buy from overseas.

As you probably know, the DC metro area has been notorious for rental income not covering PITI…or coming even close. With prices depressed in certain areas (Manassas, Woodbridge, parts of Reston), it’s actually possible to cash flow some properties today. It’s difficult to say how much longer that’ll last. However, I think you might find more equity appreciation elsewhere–generally closer in, nearer the Beltway.

As for protection, investors like to use LLCs. Check with your accountant; there are some tax advantages to LLCs over Sub-Ss. One other nice form of protection is the use of land trusts. They’re more expensive to set up (several thousand dollars versus maybe $500 for an LLC), but a lot more secure.

You would definitely want a company to manage your rentals. There are some good ones around.

Regarding your hope for 5%-10% down loans, that would be difficult for investment property. Especially if you accumulate several. But you could possibly start off that way. There are other ways to minimize your outlay. One is to lease-purchase or lease-option a property. Another is to do an equity-share with a tenant-buyer.

Hope that helps.

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