Mar 032014
 

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Speak with fellow real estate. It is helpful to get the advice of investors who are more experienced than you. It can be helpful to have contacts who know a lot about investing in real estate investing. You can easily find a community of investors online. Join a few forums and make an effort to meet some of the users.

We are at a fantastic time in the real estate cycle to be executing real estate value investment strategies. It’s time to get off the sidelines and get in the game. There are 8 value creation strategies you can use to generate big profits in today’s favorable market for real estate value investors.

Learning about real estate costs in the way of time and sometimes extra money. It may be that you just sacrifice some of your time to pick up the basics. Learn all the things you can right now in order to make money in real estate.

While cash flow is important to an investment, the real big kahuna that pulls the heavy weight to making money in the value investing space is equity build-up. We are value creators. We take undervalued real estate assets and find entrepreneurial ways to make money – real money, sometimes in a very short period of time.

Remember two things when your negotiating on any real estate transaction. First and foremost, listen more than you talk.Your primary concern is to protect your interests and increase your net worth.

With property values drastically down in many markets across the country, it’s time to capitalize on this amazing “once in a lifetime” buying opportunity.

Don’t overextend your efforts in real estate.It is better to start small than to invest to much right out of the gate. You don’t want all of your savings to be taken up. Your investment should supplement not replace your existing plans. Once you’ve realized success, you could reevaluate your plans.

Through research and analysis, we can uncover value creation opportunities by identifying inefficient markets. Question: Where have prices fallen below their intrinsic value that offer great value creation opportunities? Once you have uncovered a value opportunity where you can create value, you will use one of these 8 value creation strategies to capitalize on an inefficient market.

Come up with a solid plan when you are investing in real estate investing. Have a good plan for your property before you invest.Figure out if you’re going to buy and hold, rent, flip or buy and hold the property. It is easier to choose an investment property when you have clear goals in

8 Value Creation Investment Strategies

1. Buy Real Estate Below Replacement Cost

2. Buy Lower Class Properties and Reposition Them to Higher Class Properties

3. Buy and Revitalize Underperforming Properties

4. Buy Properties in Rebounding High Growth Markets

5. Convert Properties to Other Higher and Better Uses

6. Buy Distressed Troubled Loans and Notes

7. Buy and Add Additional Square Footage to Existing Property

8. Buy Property and Reposition to Target Niche Tenant Base

Some strategies are easier to use while others are more advanced. Some strategies are better used early in the real estate cycle recovery while others may be better to use well into the growth period of a real estate cycle. Mix two or three strategies together and really boost the profit potential of your deal.

Feb 262014
 

THINGS YOU SHOULD KNOW BEFORE INVESTING IN A REAL ESTATE SYNDICATION

No doubt if you have a self directed IRA or substantial investment funds, you have considered investing in real estate. However, you may lack the funds to invest on your own or the desire to deal with the hassles of property management. A viable option for you may be to invest in a real estate ‘Syndication’ (i.e., a group real estate investment) as a passive investor.

Always get a good feel of the local values are like. Finding out who the average rental rates and mortgage values in a particular area can tell you more about a home’s value than the neighborhood.

What is a Real Estate Syndication?

Look around for like-minded individuals and try to learn from them. Real estate investing is very popular field. There are a lot of people who feel the same way. If none are located in your area, there are numerous online resources to pursue. Get in the mix and learn from your peers can teach you.

In a real estate Syndication, a ‘Sponsor’ or ‘Syndicator’ (which may be an individual or an entity) will typically identify a real estate asset, such as an existing commercial or multifamily property (or vacant land for development), that will yield a sufficient return to pay themselves and their investors from cash flow during operations and/or equity on resale.

Dedicate some of time to learning about and making real estate investments. You must budget your time spent on other activities in order to make good profits consistently. Ditch the poker night or another guilty pleasure so you go to in order to become a better investor.

The Sponsor may obtain institutional financing for a portion of the purchase price and then pool funds from private investors to finance the down payment and closing costs, or they may raise all of the purchase money from private investors. The Sponsor’s job will consist of finding a suitable property, putting the group of investors together, and managing the asset on their behalf. For its efforts, the Sponsor will receive fees and/or a percentage of the ‘Distributable Cash’ (i.e., profits) left after all expenses and loan obligations have been paid.

Get to know other people who invest in the real estate market. It is important that you get pointers from others who are more experienced than you. A few friends knowledgeable about real estate investment can help you out. You can easily find many others through the Internet. Join a few forums and make an effort to meet some of the users.

What Kind of Returns Do Syndications Offer?

Problems with tenants may consume a lot of time for you.

Typical investor returns can range from 6-12% (or more) annualized, calculated against the amount of money invested. The range varies based on the type of investment and the level of risk to which an investor may be exposed. The higher the return offered, the greater the risk.

Be certain to choose regions that are in a well-known area in which potential tenants might be interested.This is vital since it increases the resale value with this type property. Try looking for properties that can be kept up easily.

For example, an investor or self directed IRA might take a position as a ‘debt partner’, in which case the returns will be calculated as interest on the amount invested. Such returns may be in the lower ranges, but the debt partnership position may be ‘preferred’ or ‘secured’ by a lien against the real estate, which is a lower-risk position.

Do not make the assumption that your property will always go up. This assumption to make when dealing with real estate market and for any one piece of property. Your best bet is to invest in things that give you a nearly immediate positive cash flow right away. Property value increases will definitely be good for your income.

Another option for investors is an ‘equity partnership’ position, where the Distributable Cash is split proportionately between the group of investors and the Sponsor, whose compensation can range from 25-50% of the Distributable Cash. In this case the investor returns may be greater, but they will be dependant on the performance of the property and the Sponsor’s ability to maximize returns by increasing income and decreasing expenses.

Land that is situated near water or in the future.

What Information Should I Get from the Syndicator?

When purchasing an investment property, it makes sense to affiliate yourself with a good handyman. If you don’t do this, costly repairs may have a negative impact on your cash flow.A reliable handyman is great for any tenant emergency that may arise during the day or night.

Prior to accepting any investor funds, the Sponsor is required by securities laws to provide a set of offering documents that explains the terms and discloses the risks of the Offering to prospective investors. Further, Sponsors typically answer to their investors by means of periodic newsletters, financial reports, and/or teleconferences. Unlike a stock investment, investors may also have some limited voting rights regarding major property decisions affecting the investment.

Have an idea of your time is worth. You may love remodeling homes; however, but is all the manual labor really the most productive use of your time? Or is it better spent searching for another great investment opportunity.It’s worth it to free some time for more important parts of the business.

Checklist: 10 Things You Should Know

Be patient when beginning. It could be a longer time than you anticipated for your first deal. Don’t get nervous and put your money into something you don’t really want. That is not a wise use your money. Wait it out until a great investment that’s great.

Before investing in a real estate syndication, you should carefully review the entire offering documents provided by the Sponsor and ask questions regarding the following things:

Think about getting with a management company to help with your properties. The property management company screens renters for you and handle any repair costs. This will help save you extra time to focus on searching for other avenues for investment.

The Sponsor’s background, education, and experience with similar investments, if any.

Location truly is the pivotal component of real estate. Think about the location and how it might be in the future.

The team members involved in acquisition and operation of the property, including attorneys, CPAs, other members of the Sponsor, property managers, and affiliates that may receive fees, etc.

Try to invest in several properties within a short distance of each other. This way you cut down on your properties. It will also allow you become more familiar with the area.

Cash distributions to investors during acquisition, operation, and disposition of the property including the proposed timing and anticipated percentage returns.

Don’t leverage yourself out all of your money on the actual purchase. You need to keep cash on reserve in case anything unexpected crops up.

Proposed Sponsor fees and cash distributions.

Begin your investing with the purchase of a single property. You might be tempted to buy multiple properties right off the bat, but don’t bite off more than you can deal with. Begin with a single property and learn as you want to use. This will benefit you in the future.

Proposed duration of the investment.

Figure out what type of building you to invest in. Buying a property is only part of real estate investment is about.You have to think about how you will maintain it well to sell it. One-story homes are easier to work on than multi-family properties. Don’t take on more than you know you can handle.

Property information, including the type and condition of the property, the purchase price, financial history, proposed ‘value add’ and exit strategies, and pro forma financial projections.

Don’t spend everything on any one deal. Anything that takes tons of your time from you isn’t an actual “deal.” It could be a sign that you are not have time for other deals on tap.

Withdrawal options for investors.

A great way to find out how worthy it is to invest in a good financial investment is by looking at the area. If you look around and see lots of empty rental properties in the area, chances are that people may not want to move in to yours either.

Dispute resolution provisions.

Be aware of whether the purchase is short or long term. This will affect the amount of money that you need available. If you are planning on holding on to the property for a while, it does not hurt to spend a bit more.

Voting rights of investors.

Think about getting an investment partner that you could trust. You tend to minimize your risk when investing with a partner. Remember that you also reduce your returns.

Provisions for removal of the Sponsor.

Build a reliable team of experts that you can provide sound advice. You must know the right kind of different people you can call on that have expertise in a variety of different fields so that experience is on your side.

Seek Professional Advice

Do not go too big when you can afford with your real estate. It is a good idea to start small than to invest to much at the process of real estate investing. You would not want to exhaust your savings to be at risk. Your first goal here is to use these types of investments as a supplement not replace your existing plans. After you have been successful, you can figure out if you want to change how you are doing things.

In addition to satisfying yourself with respect to all of the items listed above, you should seek advise of your own attorney, financial advisor or accountant regarding the investment.

Patience is key when looking to buy a property at the right price for you. You may wish to go farther afield to find better luck if you extend your search outside the area you were originally looking in.

Your attorney should determine whether the offering complies with applicable securities laws. A Sponsor that disregards the applicable laws may expose itself and the entire investment to unnecessary civil or criminal liability, or they may be unaware of their fiduciary obligations to their investors.

Don’t make the latest trends. Not all people are alike when it comes to a house.

Your CPA or financial advisor should evaluate the financial merits of the investment based on past financial statements for the property and pro forma projections provided by the Sponsor.

Where Can I Meet Syndicators?

Become a member of your local real estate investment clubs and attend their meetings on a regular basis, and attend the informational seminars offered by your self directed IRA administrator.

Feb 202014
 

Once you know that you will be investing in real estate, establish an LLC or other such entity. This protects you and your investments. There are possible tax benefits concerning the business transactions you make.

Whether you are operating a large portfolio, a single asset or searching for a new acquisition, have you found the best strategy to reach the goals and objectives of your property’s strategic action plan? In today’s market it is critical that you have a strategic action plan for each property so that you can maximize income and value.

Always try to find out what the local values.Finding out the average rental rates and whether they rent or own can provide an idea of the financial statements.

If you were playing a game to win, you would have a strategic plan to win the game. Right? Sure you would. Well, it’s the same thing when positioning real estate assets. You need to win the game with higher NOI and continuing value appreciation to generate higher profits for you and your investors.

Dedicate some of your time to learning about and making real estate investments. You must budget your time spent on other activities in order to make more money over the long haul. Ditch the poker night or softball league that you have more time to hone your investing skills.

A strategic action plan’s primary purpose is to put into action a plan of strategies that will put your property on a course to achieving your goals and objectives. Without a plan, you might get lucky reaching your final destination, but maximizing the income and value potential of your asset(s) needs to be organized so that your properties success is predictable. Your investors want to see and understand how you plan to reach your final destination.

Stick with what you’re comfortable dealing with. You can have much more success by focusing your market niche. Whether you specialize in flipping homes, only working with starters, or starter homes, stick with what you are familiar with if you want to see success.

Since a strategy is at the core of your plan, you need to develop a strategy that best positions your property in the marketplace as a problem solver to your tenants underserved needs. Your strategies should be supported by capitalizing on your properties strengths and minimizing its weaknesses. Spend some time conducting a complete evaluation of the local market, areas comps and your properties strengths, weaknesses, and the wants, needs and desires of your potential tenant.

Do not make the assumption that your property will always increase. This is an assumption is dangerous regardless of the type of property you own. You should probably just stick with properties that can provide you with a cash from right away. Property value increases will then add to your income.

While finding the highest and best use of your property is important, it’s MORE important to find the highest and best tenant for your property. Your strategic action plan should be focused on executing a strategy that gets the highest paying tenant for your property type and class so that you can maximize NOI and value.

If you buy a property to rent it, use caution when selecting a tenant. The person will need to be able to pay both the first month along with a deposit. If they cannot meet these basic monetary requirements, there is a great likelihood that they will be poor tenants, they will also fall behind on their rent. Keep looking for better tenant.

If you have a strategic plan for your assets, review the plan. Ensure it has a strategy to attract and lease to the highest value tenant for your property. If you do not have a plan, get started, today!

Jan 282014
 

People around the world love investing in real estate to make money, but there is also the chance of losing a ton of money. To realize your goals and keep a tight grip on your money, the advice that follows should receive your full attention. Continue on for helpful information about real estate investing.

Spend some time finding others will similar interests and trade insights. Lots of people want to get involved in real estate investments. Business groups are beginning to form in many areas to serve the needs of real estate enthusiasts. There are many forums that you can go to talk to people. Get out there and see what your peers can teach you.

If you’re planning on investing in real estate, you’ll want to make sure to take time to learn all that you can and have time to give to the business side of it on an ongoing basis. This means that you may have to cut back on an activity to end up making more money in the long run. Toss that softball league or poker night to make yourself a better investor.

If you want to be a real estate investor, you need to consider how much free time you actually have to devote to the enterprise. Tenant problems can really kill your time. If you really don’t think you have time to do these things, a property management company should be hired to assist you.

Do not assume that the value of property will always go up. Its a dangerous thing to assume when considering a piece of property. It is much safer to invest in property that is already producing an income. If the property value increases as well, that’s just icing on the cake.

If you are seeking a good investment property, take care to assess its potential for increased value. Remember that good location is a plus when it comes to excellent resale value. Think about long-term projects and costs rising later on, which can boost your original investments.

You want to be educated concerning investing in real estate prior to making any purchases. Mistakes in investing in real estate could leave you in a big ditch. Training is an investment more than an expense, and it helps you protect your money for years to come.

When you are buying real estate investment properties, have someone who is handy at fixing things to help you out. If not, you might find your profits are eroded by having to pay for pricey repairs. A reliable handyman is great for tenant issues that may arise during the day or night.

Buy local properties. Since you are familiar with the neighborhood, you are not taking as great a risk. Plus, if you’re renting, you can be more secure in the fact that you know what’s going on in the place. The true way to control the investment is through self-management because it is nearby.

After reading the above article, you should be well-versed on what it takes to succeed in real estate investing. If you fail in following these tips, you might risk losing lots of money. Keep an eye out for books and articles with tips that can help. Ideally, you will find a profitable venture.