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

The terminology used in many real estate transactions, especially those that are meant to be financially beneficial investments, can be confusing to newcomers to the market.  Short sales are particularly confusing.  Most people starting out in real estate investments are primarily accustomed to more common house hunting methods or property buying procedures that involve an eager seller, considering true value, making bids and having them countered or accepted.  The idea of a short sale is somewhat foreign to most of those new investors.
A short sale is instigated when a seller is desperate to get out of a financially draining situation due to the economic market or loss of income.  In those cases, rather than go through an actual foreclosure, they will seek relief from their mortgage lender and request the ability to sell at a lower price than their actual mortgage reflects in order to move the property quickly.
It is important to note that not all lenders will agree to such an arrangement.  However, in some cases they may consider it advisable rather than lose the entire amount of the loan, or taking the property as an un-performing asset that may sit on the market for years doing nothing for their income.
A short sale can allow you to obtain real estate you would otherwise not be able to afford, or give you the ability to turn it over faster because of the lower cost to you and still make a decent profit if sold at a more realistic rate according to the market value.  Using short sales is an excellent strategy, but you should always seek the advice of a reputable real estate lawyer to be sure all of the documents are in order and the original lender is in complete agreement to avoid possible complications at a later date.

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Being in business for yourself can be risky.  Even when you are successful, it is important to keep your personal assets protected so that if problems pop up your family’s safety is secure.  The way all businesses do that, including real estate investors, is by forming an LLC for all of your related transactions.  Once you are an LLC you will no longer do business in your name, but rather as your company; even if it is named after yourself, it will be an entity protected by the legal structure.
What is an LLC?
LLC is an acronym for Limited Liability Company.  An LLC assigns all debts acquired by your company to be covered by any assets you hold as a company but NOT as a personal asset.  That means if a creditor comes after you, a deal goes bad and you owe money on it, or someone is hurt on one of your properties that you haven’t obtained insurance on yet, you may lose assets your company owns.  However, those assets won’t include what you own personally, like your car, your personal home, or money in your personal bank accounts.
Setting it up
Setting up an LLC is the first move you should ever make when considering any form of business, including investment businesses.  It is simple to start the paperwork for an LLC and they can often be established online without ever leaving home.  All you have to do is pick a name for your company, fill out the paperwork, develop an LLC agreement that most LLC websites will assist you in doing, publish a notice in your local paper of intent to become a LLC, and you have it.  Once you have that vital piece of business taken care of you can begin your career with a feeling of security, knowing that your family is protected from any problems you may encounter in your ventures.

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Fixed-rate mortgages are a safe, stable loan in which the interest rate never changes throughout the life of the loan. However, variable-rate loans continue to be the most popular loan type in the United States because of their very low introductory interest rates. Issues arise when the introductory period ends and the interest rates of variable-rate mortgages can skyrocket. The foreclosure crisis that caused the housing market crash in the US has been mainly attributed to these variable-rate mortgages.

In most cases, if you’re purchasing a primary home or a rental property a fixed-rate mortgage is the best loan to go with. Payments may be a little higher than variable-rate counterparts, but you are assured that those payments will remain the same for the next 20-30 years until the loan is paid off. For the most part, fixed-rate mortgages are the best option for long-term borrowing. Especially in times when the economy is down and the market is poor, fixed-rate mortgages should be seen as the best option as variable-rate interest can cause severe financial hardship.

If you’re looking to refinance a property, fixed-rate mortgages are generally preferable and easy to get in instances where a nice down payment is included. Many homeowners switch from variable-rate to fixed-rate mortgage loans before or shortly after the introductory period of their first loan is complete. If you’re planning to purchase a property and want to finance with a variable-rate loan first, make sure you know the policy for early payoff. Count in the cost for re-appraising the property and any other closing costs for the refinance to see if having a variable-rate mortgage to start will even save you any money. In many cases, these costs end up making it more expensive than if the buyer had just gone with a fixed-rate loan from the beginning.

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They say that 50% of potential buyers make up their minds about a house within the first sixty seconds. A seller can improve the odds for a sale by improving curb appeal and developing selling points such as efficiency. Replacing the windows is a relatively easy way to do this and it is a method often overlooked by sellers.

New windows are more energy-efficient, look nicer, and for a potential buyer they mean one less thing that might have to be dealt with after the purchase. Efficiency is a huge selling point because it lets buyers know they will be spending less on heating and cooling bills. Try to think about convenience for the new owner — what will be the easiest to clean and maintain – as well as the out-of-pocket cost for you.

If the windows are already fairly new, or you are unable to change them out completely but you wish to make them look better, you can replace the old hardware to add character and a fresher, cleaner look. Also, even if you can’t replace the windows, make sure that they can all be opened.  Consult an interior designer for a quick, general idea about changes if you are unsure of what will sell.

By replacing the windows in your investment property you can also modernize your house, thus making it more appealing to potential buyers. Historical properties can be given a more modern energy efficiency. For others, you can change the style, color, and about every other option imaginable to help give your property a look that will help make that sale.

Don’t forget that replacing the windows in your home, as well as other energy-efficient measures, increases the value of the home altogether. It usually brings an 80% return on your investment, but may mean the difference between selling or not. When you are looking to sell your home and increase its curb appeal and bottom line value, look to newer, energy-efficient windows that look great.

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So you’re looking to move out of a house or want to make a return on a non-primary home. There are two main options for homeowners in this situation – you can either sell the home, or rent it out. Both options have their pros and cons, and the “right” decision has to be based on your individual situation. Some of the things to consider for renting include the age of the house and the kind of screening and lease agreements you’ll have in place.

Older houses are often cheaper and thus attractive to investors looking for rental properties, but they can end up being more trouble than they’re worth. Older plumbing, wiring and fixtures are more likely to break than newer houses. Water heaters and furnaces may be outdated, inefficient and also prone to breakdowns. These are all fixes that must be made by the owner; they have to be done quickly and out of your own pocket. If you have the time and money to put into modernizing an older house it may turn into a good investment because of the lower sale price and property taxes.

Responsible renters who will take care of the property like their own are worth their weight in gold, and nearly ensure that the property will be profitable. However, there is no guarantee that your renters will be responsible and the house may require even more maintenance. Homes that allow pets are in high demand, but you will have to decide if it’s worth the additional risk to allow them. Being a landlord may require a lot of time and energy, and in the case of people who do not pay on time may require some unpleasant exchanges. Lease agreements must be done properly and legally if you wish to have any protection against legal issues. Many homeowners opt to hire a rental management company to worry about all the issues that may arise. They will handle screening rental applicants, enforcing eviction orders and coordinating repair and maintenance professionals for your property. You will have to decide whether hiring such a company will be worth the cut in your profits.

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 Stains on garage floors are inevitable, but very unsightly. If you’re putting a house on the market, this is often a task on the priority list. First, try to identify what kind of stain it is; this makes it easier to use the proper method for either removing the stain or bleaching it to the point that it can’t be seen. Most commonly, they will be oil stains or other fluids from cars.

If the stain is fresh, you can usually remove it with dish soap, water, a nylon scrub brush and an old towel. Never use a brush with wire bristles as it will leave little pieces of metal behind which will rust over time, causing an even larger stain. You can use cat litter in place of an old towel to pick up the water and oil after the stain has been removed. If you don’t want to go to the trouble of scrubbing, many hardware stores have oil removal products available.

For things such as mildew and algae, it’s best to treat the stains as soon as possible to avoid deep staining the concrete. When treating these stains, you will need a power washer, hot water, and oxygenated bleach or a deck-whitening agent.

To treat berry stains, do not use soap as this will cause it to set. For stains caused by fruit juices use hydrogen peroxide and flour to make a thick paste the consistency of peanut butter. Apply the mixture to the stain in a layer approximately ¼” thick and cover with plastic wrap. Tape the plastic wrap into place securely and allow it to sit until completely dry, usually about 24 to 48 hours. If you have a large stain you may want to consider purchasing a commercial product.

Finally, never use chlorine bleach for rust stains as it sets the stain, making it nearly impossible to remove. You should purchase a commercial product that contains oxalic acid and use rubber gloves, eye protection, warm water and a nylon scrub brush –preferably a long-handled one. Apply the product according to the directions, taking great care to keep it from touching bare skin.

Often, your local hardware store can give you additional pointers for removing specific types of stains from your garage floor.

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When it comes to buying or selling a home, one of the first steps is finding a responsible, reliable realtor to work with. You need to find a realtor that has your best interests in mind, so if you’re in the market to purchase a new home you would need the help of a selling agent. If you’re selling your home, a listing agent will be able to help you get the best price for your home.

In a few states, it’s legal for the seller’s agent to also be the buyer’s agent. In this case, the realtor would receive commission both from the home being sold as well as from the person buying it. Be aware of agents working on both sides; they usually have only their own interests in mind. Your agent should be on your side, working with you to get you the most bang for your buck, whether you are selling your home or purchasing a new home.

When you are shopping for a realtor, one great source for information is friends and family who have recently purchased a home with the help of a realtor. They will be able to give you honest, straightforward feedback on the quality of service they received from their realtor. They will be able to tell you if they would recommend that realtor.

If you don’t have anyone who has recently purchased a home to give you recommendations, then be sure to check the references of the realtor you are interested in hiring, which should be readily available. You should feel comfortable about asking your agent any questions that pertain to your house hunt, and they should be honest and sincere with every answer.

Some relevant questions to ask the realtor should include:

• How long have you been in business?
• Do you work directly with the seller? If so, do you have any obligations to the seller?
• Are you willing to show homes with a lower commission rate?

Don’t be afraid to ask a realtor to lower their commission if you think it’s unreasonable. If many other local realtors are charging 5.5% and your realtor is charging 6.75%, you may want to assess whether the service they provide is worth the difference. Your realtor should be trustworthy and his/her first priority must be getting you a good home at the right price.

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Today’s real estate market is complex, and if you have opted to sell your home during these hard times, you may be discouraged.  Real estate experts such as Dean Graziosi understand the market and before you start the selling process, it is essential that you do as well. 

First of all, contrary to what many believe, you can still sell your home in today’s market.  The truth of the matter is that if you have a home that people want to buy, and the price is right, the house will sell, it’s just a matter of how long it will take to get the job done. 

So, let’s assume you are ready to show your home.  Here is a checklist of some things you may have overlooked. 

• Have realistic expectations when it comes to the selling price of your home.  You must remember that in order to sell your home in a declining market, your home must be listed at today’s value. 
• Is your home in show condition?  Remember, you are not selling what is in the home, but the home itself.  Get rid of the clutter, this makes your rooms look bigger.  You should also clean your walls, floors and doors.  Invest in new light fixtures if they are outdated.  All of these things cost pennies on the dollar and can turn lookers into buyers.  Look at your home from across the street or from next door.  Does anything stand out that you may want to change?  Nice curb appeal is imperative, as buyers will make a judgment about the inside of your home just from seeing the outside. 
• In today’s market, you should be willing to negotiate on terms and financing.  It is much harder for buyers to be approved for home loans today than it was just a few years ago.  Therefore, if you are willing to assist in the financing part of things, your chances of selling greatly improve. 
• Above all, be patient and don’t get discouraged.  While it may take longer to sell your home, if you are proactive, it is just a matter of time.  Remember, chances are you are competing with thousands of other homes in your area, and many of them are foreclosures.  You must take the time to make your home appealing both physically and financially. 

If you think like a real estate investor, you can still find your success in the midst of a failing economy. 

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With the end of the year approaching, here are some ‘forecasts’ for the real estate market for the upcoming year. Of course, like the weather, unpredictability is the key and it’s important to remember that.

According to Lawrence Yun from the National Association of Realtors, he expects that home prices will rise about 2.8% in the coming year. But then again, the NAR is very optimistic in their prediction.

Currently, housing prices continue to drop and this is great news for those looking to invest in the real estate market. The longer a house sits on the market and the more eager the owners are to sell, the higher the probability will be that they will continue to reduce the selling prices. So if you have your eye on a piece of property, patience and persistence are the keys.

Areas to consider when looking for a real estate investment are Phoenix, Arizona; San Diego, California and the District of Columbia where good homes are known to sit on the market for up to half a year or more.

It’s a great idea to begin your search in the real estate market for homes that have been listed for at least three months. The longer they sit, the more anxious the home owners are to sell and the better the selling price will be.

According to CNNmoney.com, home prices are down almost twenty percent from the peak of the real estate market in July of 2006. They also report that there are approximately 18.6 million homes in the United States that are sitting vacant—the most since the Census Bureau began to track this figure in the mid-1960s.

So the forecast for investors in the real estate industry is one of optimism and hope. Good bargains are out there and with interest rates continuing to remain low, the opportunity to buy a beautiful real estate investment property is better than ever. 

Just remember that being patient when looking to buy a real estate investment is a good quality.

Happy Home Hunting for 2009!

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Whether you are a new investor or a professional like Dean Graziosi, protecting your real estate investment is a top priority, and that means you must make smart business decisions.  When it comes to purchasing investment properties, there is no room to cut corners.  This holds true no matter if you are buying a rehab or flip property, or if you are buying a long-term rental property.

One of the biggest mistakes newbie investors make is overlooking the need for an inspection prior to a purchase.  This one mistake alone can sink you before you even get started.  The problem here is that new investors easily get caught up in the moment and they forget that there are good deals in every city and state.  Just because a home is cheap, does not mean you should buy it.  Don’t be too quick to jump if you have not done your research. 

If you are purchasing a property that needs work, not only should you get a proper inspection, but in the case that you still go ahead and purchase the property, it is best to hire a maintenance professional and get things fixed correctly the first time around.  Getting things repaired properly the first time will not only save you headaches, but thousands upon thousands of dollars in the long-term. 

Now let’s say you find a great deal on a multi-unit building and you purchase it without getting it properly inspected.  While it may seem like you have a sound investment, what happens when within a matter of months you find yourself with a leaky roof, air conditioning units that will not work and plumbing problems?  Not only will you find yourself with unhappy tenants, or no tenants at all, but you will be left with huge bills that may cost you everything.   

New investors should never take maintenance and upkeep lightly.  Likewise, if you are renting out your property, make certain you are screening your tenants.  Not only do you want them to pay their bills, but you want to make sure that they respect your property.  If you have repairs that need to be done and you are not certain you can do them correctly yourself, find a reputable company to do it for you.  The bottom line is that mismanagement will put you out of business. Managing your property correctly is the only way to protect your real estate investment.   

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