DEAN GRAZIOSI: DEAN GRAZIOSI REVIEW – REAL ESTATE FEED BY DEAN GRAZIOSI

Opportunities are out there.  Great ones.  Are you ready?  When the short sale knocks, will you be ready to open the door?  Like all investors, real estate investors are thinking ahead and are in a position to move at lightning speed.  Building a savvy, experienced short sale team of experts is a wise decision that can reap big profits and facilitate the short sale process. 

The ideal short sale team consists of the investor, a financial backer, an accountant, an attorney, a certified home inspector and, of course, a licensed real estate agent.  Short sales can have legal and tax repercussions.  Avoid any surprises and engage the accountant and attorney in the process early.  A half hour of advice can facilitate the whole transaction.  In any case, every short sale purchase agreement should contain a one week period for attorney review.

Before you move on any short sale, the buyer should always insist upon a home inspection.  Check all vital systems such as plumbing, electrical, roofing, heating and cooling, foundation, paving and siding as well as termite and/or infestation inspections.  Every seller, including the mortgage holder, will respect the buyer’s right to a physical inspection.  A one week contingency can prevent a lot of hardship down the road.

The real estate agent is the critical component on your short sale team.  Spend some time with the agent and understand the agent’s responsibilities.  The investor should detail the overall investment plan, specific property criteria and property types that are not of interest.  Meet with the agent periodically.  These sessions will serve as the agent’s marching orders.

Increase the real estate agent’s effectiveness by creating a letter of authorization permitting the agent to discuss properties and investments on your behalf.  The letter should contain the date, investor’s name and address and any contact information and all the same information for the agent. 

When the agent finds the ideal short sale opportunities, authorize the agent to contact the lender and procure all financial information about the property.  While the attorney, accountant, agent, home inspector and financial representative are on your team, remember that it is your investment.  Check all reports relative to the short sale.

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Real Estate Investor – Part Three

Even the most experienced real estate investor can get excited when opportunity knocks and pressures their investment plan.  Sometimes good real estate opportunities arise quickly and require immediate attention.  Ideally, the investor has time to involve the team of professionals, but sometimes the pieces are hard to pull together.

One of the mistakes investors make is to act without doing the necessary legwork and before performing responsible due diligence.  A good investor always finds a way to get the homework done on time.  Many times contingencies are the investor’s best friend.  Whatever it takes, protect yourself and your plan.  Use contingencies to assure enough time to perform due diligence and get your estimates.

Another tricky forecast that can get the investor in trouble is the inability to properly project cash flow and carrying costs.  If the strategy is to buy, hold, rent and manage until certain profit levels are achieved, cash flow is critical.  In today’s market management fess for single-family rentals can run as much as 7 – 10% per year.

Real estate investing is about addressing your plan.  Determine if you are a part-time investor or if you are a serious, volume investor.  If you are in it to win it, establish a steady pipeline of possible investments.  Keep the possibilities coming and sweet profits will follow.

Just as important as building that never-ending pipeline is to develop multiple exit strategies.  If you invest in a property and only have one way to exit, you should reconsider the investment.  The real estate market is like any investment market.  There are swings in supply and swings in demand.  Cover all your bases.

Another area where investors must keep their eye on the ball is checking estimates for rehab and repair.  Many times these proposals are a best guess estimate.  Danger lies in those muddy waters.  Get on top of your estimates, allow for increase and proceed accordingly.

Happy real estate investing!

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