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The 7 Tips Entrepreneurs Need to Know Before Investing in Real Estate - 21 Oct 2015 12:12

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[[html]]<img src="http://samingersoll.com/wp-content/uploads/2011/06/Real-Estate.jpg" width="363" /><br><br>Why should entrepreneurs invest in the first place? The <a href="http://newlaunch.propertynewssingapore.com/botanique-bartley-d19/">botanique at bartley</a> answer is: to have enough money to live on when we no longer can or wish to work. To put that money aside, however, we have to accumulate enough to offset inflation and the taxes that erode our savings. And for that purpose, real estate is an excellent solution.<br><br>Related: 4 Business Principles Learned Getting Rich in Real Estate by Age 30<br><br>The great thing about real estate is that even in a bad economy, it will usually fare better than stocks. Land, after all, is a finite resource. People need a place to live, work, shop and play — so real estate is really just a matter of supply and demand. <br><br><img src="http://turnercoloradohomes.com/wp-content/uploads/2012/07/Douglas-County-Real-Estate.jpg" width="320" /><br><br>What's more, real estate will continue to appreciate despite occasional slow-downs in the economy. In fact, it's proven to be the best way to create wealth, and an investor need not be a genius or a millionaire to succeed. Here are some tips, then, for entrepreneurs on getting started and succeeding in real estate investing:<br><br>1. Do — plan your financial goals.<br><br>Before you buy that first property, or do your first analysis, determine what you expect from your investments. What are your financial goals? We often discuss the time vs. money concept: The more you have of one, the less you need of the other to reach your financial goals. This means that you shouldnt shy away from taking the time to understand your goals and make sure each investment is a step toward achieving them. If you are unsure exactly how to create financial goals, meeting with a financial advisor is an excellent first step. <br><br>2. Don't — spend a fortune on books, tapes and seminars, then just put all that information on a shelf. <br><br>You absolutely do need to learn some basics before venturing into investing. So, be sure to do some studying, but dont let buying and collecting information become your endgame. Again, having goals in mind will make the process much more straightforward. Its easy to get so tied up in the <a href="http://www.weichert.com/">http://www.weichert.com/</a> research phase that you never actually take action. Instead, write down specific questions you want answered or goals you want to meet before delving into the latest book/seminar/etc. <br><br>Related: How to Live Rent-Free While Building Your Business<br><br>3. Do — look at plenty of properties. <br><br>Dont just grab the first property you look at. Too many investors buy properties because they look nice, or the investors dont want to put the work in to look at whats really out there. Remember, you wont be living there, so dont make your investment decision based on your personal preferences. While you shouldnt fall into the trap of analysis paralysis, make sure you are thorough in looking through properties. Give yourself a wide range of options, then narrow them down based on the criteria (goals) you have set for yourself.<br><br>4. Don't — postpone starting your investment program because youre waiting for that perfect unicorn deal.<br><br>Thats the flip side to number 3, of course. Plenty of beginning investors suffer from a-better-deal-may-be-just-around-the-corner syndrome. This can backfire in a big way, and you could potentially let a great deal slip just because youre holding out for something better. Your task may feel difficult if this is your first property, but you must realize that the perfect deal rarely (if ever) exists. Better to execute on a deal that meets most of your criteria than wait for another that may never come. <br><br>5. Do — a thorough financial analysis.<br><br>Be realistic. Look at different alternatives to determine which makes the most financial sense. And never buy property at a higher price or on less attractive terms than your analysis says made sense. Be wary of sellers that try to over-estimate the value of the property through pro-forma (estimated) data. While you can certainly use a pro-forma to start the conversation, make sure you know the real numbers before closing. Look at previous years tax returns, property-tax bills, maintenance records, etc. to get a good idea of the real income and expenses.<br><br><object width="400" height="241"><param name="movie" value="http://www.youtube.com/v/xoGi7OKJNWk&hl=en_US&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/xoGi7OKJNWk&hl=en_US&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="400" height="241"></embed></object><br><br>The most important figures you should know are: <br><br>Net income (income/expenses) Cash flow (net income/debt financing payments) Return on investment (cash flow/investment) Cap rate (net income/property price) Cash-on-cash return (cash flow/investment) Total ROI (total return/investment)<br><br>In each case, investment refers to how much you invest in the property. "Debt financing" refers to any loans you may have to take out to buy the property. And "total return" refers to cash flow, equity accrual (i.e., equity gained from your tenants paying their rents), appreciation and taxes.<br><br>Once you have understood these figures, you should have enough information to determine whether or not acquiring the property fits with your financial goals.<br><br>6. Don't — try to buy property that the seller is not motivated to sell.<br><br>If the seller is motivated to sell, youre not likely to get the price best aligned with your financial goals. So, how do you know if a seller is motivated? Look at the asking price. For example, If the property has been on the market for a year for, say, $200,000, with little-to-no price reduction, the seller is clearly not very motivated to move the property. However, if that same property has been on the market for a year and has had its price moved down considerably, the seller most likely wants to do whatever it takes to get the property off his or her hands. Of course, this raises the question of how to find motivated sellers. There are many approaches, and not all of these will work for you, depending on what property you want. But a few trusted methods include: <br><br><object width="400" height="241"><param name="movie" value="http://www.youtube.com/v/fWpExOqtQwE&hl=en_US&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/fWpExOqtQwE&hl=en_US&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="400" height="241"></embed></object><br><br>Attending open houses Looking for vacant/unattractive properties that are for sale Spreading the word about yourself and what properties you are looking for — truly Going the old-fashioned route and looking in the classifieds of your local paper <br><br>These are just a few ways to find sellers, but there are potentially dozens of other methods, depending on what type of property youre looking for.<br><br>7. Do — know the difference between real estate investing and the business of real estate.<br><br>As an entrepreneur, you already have a business, and real estate investing is best used to support that business, not replace it — unless thats your intention. In other words, dont get so caught up in executing transactions that your core business falters. If that happens, youll be facing a bumpy road to get back to stability. Unless your business is itself real estate, or youre looking to get into the business full-time, always remember that pursuing these deals is a means to an end, not an end unto itself. <br><br>So, if youre interested in staying ahead of taxes and inflation while building security for the future, real estate investing may be for you. What are you waiting for?<br><br>Related: Detroit Is Beckoning to Tech Entrepreneurs<br><br>[[/html]] - Comments: 0

How Smart Is 'Flipping' Real Estate? - 20 Oct 2015 03:27

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[[html]]Though the temperature hit 100 degrees in Delray Beach, Fla., last summer, eager buyers lined up and waited outdoors for days.<br><br>Was it Springsteen tickets? A free tank of gas? Neither of these.<br><br>Watch "20/20" Friday night at 10 p.m. ET<br><br>The men and women waiting for this modern-day gold rush to begin were looking to buy condominiums in south Florida, a real estate market that over the past four years has become one of the hottest in America.<br><br>But is it overheated?<br><br>New Jersey native Jay Lutz didn't think so when he and his wife purchased a condo unit in Delray Beach's Pineapple Grove Village that he never planned to move into.<br><br>"We didn't get our first choice or our second choice, but <a href="http://newlaunch.propertynewssingapore.com/coco-palms-d18/">http://newlaunch.propertynewssingapore.com/coco-palms-d18/</a> we're pretty happy with what we got," Lutz said.<br><br>Like other buyers, the Lutz family was happy to spend $350,000 for a one-bedroom condo and up to $800,000 for a three-bedroom unit — only to resell those units immediately.<br><br>"If I can get a buyer and I can flip it right away, I'll do it," Lutz said.<br><br>"Flipping" in real estate lingo means buying and quickly reselling properties for big profits. In south Florida and other popular real estate markets, it got to the point where people were buying and flipping contracts on condos before they'd even been built.<br><br>Big Returns on Investments Seduce Buyers The preconstruction market in Miami has seen some of the highest investor returns in the United States. "People are seeing 2, 3, 400 percent returns on what they invest in a construction condo — over about a year," Mark Zilbert, a Miami real estate broker, said last year.<br><br>"What kind of drives the desirability in the Miami area is where the waterfront locations are," Zilbert said.<br><br>Zilbert estimates that at one point, up to 80 percent of condo purchases were purely speculative investments, made by people with no plans to ever live in one of the tens of thousands of new condos transforming the Miami skyline.<br><br>Though some people who bought in plush waterfront towers intended to move in, the profit potential became too tempting. That's what happened to condo owner Darryl Randall.<br><br>Showing the "20/20" crew around his condominium in downtown Miami Beach, Randall said, "This three-bedroom unit was purchased originally at $1.1 million, and right now we have it listed right at $1.8. Planned on staying here forever, but $700,000 is $700,000. And in a market like this, it's time to move up and move out."<br><br>But Randall's condo languished on the market for months. Then he sweetened the deal by throwing in all the furnishings and his $125,000 dollar Maserati. It worked.<br><br>"And the final selling price was $2.3 million," Randall said.<br><br>Despite the hefty sale price, having to throw in those enticing extras after the condo sat on the market for months may have been a sign that the south Florida real estate market was weakening.<br><br>And some speculative buyers were getting cold feet. Shortly after the Lutz family put a down payment on a new condo, they decided it was too pricey and got their money back.<br><br>A Sudden Change in the Climate All the little signs were adding up, and by last winter the Florida real estate market had taken a dramatic turn.<br><br>"It stopped, frozen. Selling investment property was very difficult," said realtor and investor Peter Celnicker.<br><br>Celnicker came to Florida as the market was soaring. After five years of savvy buying, he said that by last summer he was a millionaire — at least on paper.<br><br>Then, almost overnight, the market changed.<br><br>"I mean, it was really that quick. [It] went from an absolute seller's market where you could sell a property literally in 24 hours to a buyer's market where it can take three, four months to sell a property," Celnicker said.<br><br>Celnicker attributes the chill to higher interest rates and a punishing Florida hurricane season. But he and his investment partners had put some money aside, rented out all their properties, and weathered what they hope is the worst of it.<br><br>"I knew as long as I could ride out those first couple of months, then I'd be safe," Celnicker said.<br><br>There are a lot of unknowns today in south Florida real estate, where there's concern that words like "hot" and "flip" may soon be replaced with "chilly" and "stalled."<br><br>One reason: Experts now say Miami Beach has perhaps the most overvalued real estate in America.<br><br>"Construction costs have gone up, prices have gone up and so there is a point, we think, that buyers are reluctant to overpay for an apartment — especially when there's an oversupply," said Zilbert.<br><br>He remembers the moment he realized the market was changing.<br><br>"There was a day that I woke up at the launch of a new building, and I contacted my clients and I sent out my e-mails and I did my advertising, and not a single person wanted it. Not a single person showed up. And the feedback was, 'I think prices are gettin' outta control,'" Zilbert said.<br><br>But even in harder real estate times, Zilbert has a way to make money and, he said. He can bail out investors who may have gotten in too deep. His Web site, CondoFlip.com, can connect desperate sellers with "vultures," people who are ready to buy at a low price.<br><br>And he's recently added something called the panic button.<br><br>"The CondoFlip panic button gives the seller an option — push the panic button and then we have vultures lined up, and it's something that is going to probably happen more often than we would like to see. And people will lose some money," said Zilbert.<br><br>Celnicker agrees that desperation has hit the south Florida real estate market. "I think there's going to be a lot of desperate sellers," he said.<br><br>And speculative investors who bought into the high-priced, preconstruction condo market in south Florida may be in for a rough ride, Celnicker believes. But he won't be one of them because he bought low-end properties that can be rented to cover costs if there's a downturn in the real estate market.<br><br>"This is not a 'get rich quick' thing. This is a minimum two- to three-year investment. Real estate is a long-term investment vehicle, and you have to be prepared for contingencies. And if you are, then I think it's a very safe investment. But if you're just jumping in because your neighbor made $50,000, you could get stung," Celnicker said.<br><br>Buyers, Zilbert says, are becoming more cautious. "There's not a day that goes by that I don't take a buyer to a property he or she will find something he absolutely adores, wants to purchase it, but at the end of every conversation is, 'I think I'm going to wait six months and see what happens.'"<br><br>Some realtors say even if the "flipping" frenzy has cooled for some investment speculators, Florida's got an ace in the hole. It's still a place where people want to buy homes and condos they actually plan to live in.<br><br>"We have a thousand people moving to Florida every single day. Then add to that all the vacation, the second-home buyers from Europe and around the world," Zilbert said.<br><br>If you're ready to buy a south Florida residence right now, the market could be working in your favor.<br><br>Take those Delray Beach condos launched last summer. It turns out 40 percent of those units are still available, and some of the prices have dropped dramatically.<br><br>That's good news for new buyers, but not so good for those who paid $100,000 more just eight months ago.<br><br>But, after all, no one ever said buying real estate came without risks.<br><br>[[/html]] - Comments: 0


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