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

New real estate investors often sit at home chomping on the bit thinking about the riches to be made and sure they are going to strike gold immediately. They’re not flakes. It happens and the fact that it happens makes many jump before they’re ready. That’s where the trouble starts. In order to avoid falling victim to the over-eager deal get all your ducks in a row and be sure you understand all of the concepts behind what you are doing, and what the numbers REALLY say about a proposed project.
It’s easy to read numbers the way you want them to be rather than as they are. The way this happens most often is over-anxious investors look at the numbers without considering what is underneath them. A lot of money is lost on real estate deals that have nothing to do with the actual purchase/sale of the property at all. You may be shaking your head thinking I’ve jumped off the edge of my sanity but here’s how it goes:
Super Investor looks at a deal and sees: sale price $100,000.00, market value of the property $150,000.00, repairs needed (after close inspection of property—he did do ’some’ of his homework) $30,000.00=potential profit $20,000.00—SWEET! Super Investor jumps on that baby like white on rice.
What Super Investor forgot to calculate were the legal fees (if he’s smart enough to have a lawyer look over contracts etc), realtor fees (if he’s smart enough to use one to sell the home), cushion for that ‘oh my God the roof is falling in’ repair that pops up in the middle of a project, and any number of little things that eat away at profits that look good if you only consider the purchase/sale figures.
Real estate IS a great investment and there is lots of money to be made if you do it wisely. Take the time to really learn what you need to know going in and avoid jumping.

Bookmark With

The world of real estate investing can get very confusing especially if you don’t have someone to guide you through. Thank God I found someone in Dean Graziosi. It is just that unless you understand the ins and outs of making a profit form real estate, you wont really understand what you are hearing. One moment it may seem like everybody is blogging, talking on twitter, or setting up a wiki that says that property is a great investment, and how it goes up in value (true), and the next moment you will be hearing how real estate investing is so volatile (and it can be).

The truth is that real estate investing is “easy” and “difficult” at the same time.  It is difficult when you have no idea what you are doing, and aren’t interested in putting in the time and effort to learn, and its easy when you have done your research, your work and everything that should be done for such a purchase.

The biggest factor that will determine whether you make  a profit from real estate  now or not is the location. You see, property prices change from community to community. This is due to the size of a community, its industry, or economic health, property laws and taxes.  This affects the value of the property and the quality of life of the people that live here. Even, the type of schools in the area influence the price of the property.

If the neighborhood is quiet, clean, and there are good schools around, then generally the price of real estate will be higher. If on the other hand the area has a lot of crime, most of the homes are run down and the area looks un-kept then the price will be cheap, but the question is do you really want to buy in such an area? Can your really make a profit from real estate now? These are questions you should ask yourself before investing in real estate in these types of areas.

Bookmark With

One of the biggest mistakes new real estate investors make has absolutely nothing to do with technique.  No, believe it or not it’s all about the mindset.  A mindset is nothing more than the habitual mental attitude that determines how you think and respond to a given situation.  The truth of the matter is that most new investors have failed before they even start because they have mentally set themselves up to fail. 

The most common contributor to a negative mindset amongst real estate investors is a lack of confidence.  This can be for many reasons including a lack of funds, the inability to find great deals, an investment gone badly, or simply a lack of education.  One of the best things you can do to get yourself out of the pit is to set realistic short-term goals.  Even small accomplishments will help boost your confidence and will set you up to achieve your long-term goals.  Celebrate your small successes, no matter how trivial they may seem.  In the grand scheme of things, each success is a huge step toward your final goal. 

Another key to creating an investors state of mind is education.  An educated investor is a prepared investor.  The more you self-educate, the more prepared you will be in any situation, and that creates confidence.  Moreover, if you have experience with an investment that didn’t quite work out as you hoped you must learn what you may have done wrong or you are doomed to repeat it. 

Whatever you do, never forget that there is always more to learn.  When you fail, pick yourself up, find out where you went wrong, and go try it again.  If you want real estate millions to be a reality for you, you must play to win. 

Bookmark With

Many people will attest to the fact that a new investor can learn a lot from a good mentor.  Let me repeat that, a good mentor.  Not all mentors are created equal and not all of them practice what they preach.  There are many companies out there offering training and mentoring programs for new investors.  If you are considering taking one of them, make sure you do your research.  Failing to do so can cause you to lose thousands of dollars, and that money is much better off invested in a piece of property. 

The key to getting off to a good start in real estate investing is finding someone who is truly successful and following their lead.  If you can find a local professional that will take you under their wing, you will learn the most in the shortest amount of time.  A good mentor will not simply bombard you with books and videos and then leave you on your own.  If you want to make money in real estate now, you must know how, where and when to strike while the deal is hot, and this means getting out there and watching deals go down. 

The most common place you will run across real estate scams is online at sites such as Craigslist.  People from all over the globe can market on Craigslist and you will often run across scams from people located overseas.  A good rule of thumb if you are just getting into real estate is to deal locally, with people you can actually meet in person.  If you are looking for a mentor to get you started, you can always post an ad on your local Craigslist site and then meet with that person to go over their credentials.  You will also want to find out what their charges will be and what their “training” will entail before you make a decision.  Keep in mind that being prepared and practicing due diligence will get you far in this business.   

Bookmark With

No matter what niche of the real estate market you find yourself in, there is nothing more important than understanding your local market.  First and foremost, you must understand the real estate trends in your local community.  This is crucial for several reasons.  Neighborhoods within a community vary greatly in respect to value.  If you do not keep up with which areas are appreciating in value and which ones are depreciating, you can easily find yourself making risky investments.  Regardless of the national headlines and the poor economic outlook, there are always isolated communities that do not follow the trends.  Your job is to find them.

Secondly, the value of properties is constantly changing, especially in today’s market.  Keeping abreast of the local property values in your market is the key to turning a good profit.  Home values fluctuate by the thousands, even tens of thousands of dollars in a given month and if you are trying to sell a property, timing the sale during the “up” times is imperative.

Creating positive cash flow is the bottom line in real estate investing.  Let’s say you want to rent one of your properties for $800 per month with a $200 positive cash flow.  Now, let’s say that you haven’t done your research and do not know with any certainty that you can rent it for $800.  When all is said and done, your local market will only bear $600 per month.  Now you are flat even with no positive cash flow and potentially could be in the whole if your expenses ever increase, and eventually they will.  This is not the situation you want to be in.  If you want to be a real estate millionaire and profit from real estate right now, you will have to educate yourself so that you can think like one.

Bookmark With

The words scam and fraud are very familiar words in the world of real estate investing.  No matter if you are a man woman, seasoned professional or beginner, risky real estate transactions abound.  Your job as a savvy real estate investor is to avoid them at all costs. 

While all real estate transactions have some associated risk, there are things you can do to minimize major financial loss.  First and foremost, it is wise to assume the worst and hope for the best.  Unfortunately, this world is full of people willing to do whatever it takes to make a buck, and lying, cheating and stealing are just some of the tools they use to get ahead.  Expect the unexpected in every situation and you will be prepared for whatever gets thrown your way. 

When it comes to protecting yourself as a woman look at your assets in the world of real estate investing there is nothing more important than exercising due diligence. While your word may be as good as gold, you should never trust what someone simply tells you as truth.  You already know as a woman you have to go the extra step to compete in a man’s world. You should always consider yourself to be an investigator.  You should research and verify all real estate documents and paperwork.  In fact, as far as real estate appraisals go, you should never accept an appraisal that you did not personally order.  This will dramatically lessen the chances of you having to go back and fix a mess created by using a false appraisal. 

Women Real estate investors can never eliminate risk 100%.  The best thing you can do to protect yourself is to fully understand and take responsibility for all aspects of the real estate transaction that you can control.  

Bookmark With

Every real estate investor is in the business to make a profit. As in any business, the larger the profit margin, the better. However, real estate has so many different facets involved in the investment that it can be difficult for a new investor to determine the exact dollar amount of their profit after they make the sale. Because of the cost in not only materials, but time and labor expertise it can be easy to overlook assets that have been invested in the property.

First, calculate every penny invested in the property. This can be closing costs, interest payments, and the price of any improvements done to the property. Account for every expense down to the last .10 screw. These are your out-of-pocket business expenses. Your sale price minus this number is not your profit on the property.

Don’t undervalue the work you do on the property. For every bit of work you do yourself, determine a fair wage for a professional to come do the work. Spend five hours deep-cleaning the house or shampooing the carpets? Call a couple of local businesses to find out how much they would have charged to come do the job, and calculate that amount as your expense.

Did you spend time taking sale pictures or visiting with your real estate agent? Time is money, so be sure to calculate in a fair wage for that time spent as well. This can be either your wage at your current job that you have to take time from to do this work, or a fair wage for a receptionist or personal assistant.

While that sale price minus the dollar expense may look like a nice number, it doesn’t tell the whole story on the profit scale. If you spend any kind of time, money or effort on this piece of property, make sure it’s accounted for and figured in. If the numbers don’t pan out with this figured in, you’re not getting your money’s worth out of this investment.

Bookmark With

While foreclosure auctions have long been a favorite place for investors to scope out new opportunities, the downturn in the economy and the accompanying high foreclosure rates mean the pickings are better than ever.  That is, the pickings are excellent for anyone who happens to have money to spare.

With foreclosures flooding the market and everyone staying on a tight budget, prices are staying quite low at auction and a large number of houses aren’t selling.  For those who have the capital to put into a real estate venture and have a bit of expertise to help in determining which are potentially good investments, this is an opportunity that won’t likely be equaled. The big question on many people’s minds is, how do I buy these foreclosed properties at auction?

The first thing to understand is that many properties never make it to the auction block, because an auction just about guarantees higher prices and smaller profits.  However, if you’ve made up your mind that you want to wait for foreclosure auctions, find a listing of foreclosures and pre-foreclosures in your area.  These can be obtained from several online sources, or the notices of foreclosure can be found at your local courthouse. Many times, realtors and real estate agents also keep lists of area foreclosures.

Research all properties of interest ahead of time. Request a viewing, if possible, or at least drive by the property to see what it looks like from the outside. Run checks through the courthouse to determine what liens are on the property and if there are any back taxes owed on it. Finally, write down all the details on each of the properties of interest and determine how much you’d be willing to pay for a given property, then find out the date of the auction and make sure you’re there to bid on your chosen property.

Buying at auction carries a number of risks. Namely, there is a lot of time and effort involved in researching properties, and there’s always the possibility that you will be bid over. Alternatively, the property may never make it to auction either because of a pre-foreclosure sale or because the owner came up with the means to stop the foreclosure process on their property.

Bookmark With

Whenever you purchase a piece of real estate, there are certain closing costs involved. Most people know this before they go into negotiation for a mortgage, though the vast majority of investors and potential homeowners do not fully understand what is involved with each of these fees. In addition to the costs discussed below, these can include survey fees, credit checks, home inspection, points and more.

Each lender is different, so consulting your loan officer is the first step to understanding your closing costs. Ask them what kind of origination fees they have, if there are points involved, and what kind of structure they have for property taxes. Many lenders will require a portion of your loan payment go to an Escrow account to pay for property taxes, homeowner’s insurance, and other such necessities to protect their investment. For the duration of the loan, Escrow fees are taken out of monthly payments; however, at the time the loan is approved there may be two or three months’ contribution to the Escrow account up front.

Origination fees are the fees exacted by every lender at the time the loan is approved to cover the paperwork, time with the lending officer, and other such fees. In many cases this is approximately 1% of the loan’s value, but this number can add up quickly so be sure you know what that cost will be before finalizing a loan.

Appraisals are almost always part of the closing cost. Lenders need to be certain that, in the case of a foreclosure, they will be getting a sound, valuable property. This requires that a licensed appraiser come to the prospective property and test its soundness on a range of aspects that may affect its overall value. Depending on the size of the home, this could add anywhere from a couple hundred to a couple thousand dollars to the cost.

The loan officer responsible for your prospective mortgage can cover all the closing costs with you before the loan is finalized. If the officer is unwilling to go over these in fine detail until you understand and are comfortable with all the costs involved, request another loan officer or go to a different lender. Lenders are in the business to help you purchase property and should always be willing to take the time to explain every facet of the process to you so that you can rest assured you’re getting what you’re paying for.

Bookmark With

Thousands of homeowners around the nation have recently become acquainted with the feeling of having a home go into foreclosure. This process generally begins when a homeowner is three or four months behind on their payments. Owners are generally given 120 days (depending on the state) to bring the loan current, plus pay any legal fees accrued through the foreclosure process up to that point.

Often, this means the owners must come up with as much as a couple thousand dollars in addition to the back payments on their property.  For many, especially those who are already financially distressed, this sum is far out of reach on short notice. These owners generally have the choice of either letting the home foreclose, or finding a buyer for the home before the foreclosure goes through. There is another option as well, one in which the owner may give their permission to their lender, or ask permission of the lender, to sell the home in a short sale – or for less than is still owed on the property.

The most obvious advantage to the owner in the case of a short sale is that they will not have a foreclosure on their credit if the home is sold while in pre-foreclosure. Credit scores are quite unforgiving in cases of any loan default, but arguably the worst of all of these as far as the credit is concerned is a mortgage default. These are generally loans with a high balance with a low percentage paid off, and are invariably reported to all the major credit bureaus.

Foreclosures can be costly, and the cost must be borne either by the financial institution initiating the foreclosure, or by the owner who wasn’t able to make their loan payment in the first place. The cost and risk can be significantly reduced for both parties by a short sale, and the lender may claim any difference as a loss on their taxes. In most cases, once a short sale is agreed upon, a deficiency judgment cannot be made against the owners for any difference between the owed amount and the sale price.

Finally, short sales are beneficial to the buyer because they often allow for great discounts off the market value of the property without the hassle and risk of foreclosure auctions. Many times, buyers looking to purchase at auction expend a lot of effort only to have their target property go for higher than their top bid, or not even make it to auction at all. There are a number of ways to buy distressed properties and short sales are but one option to explore when looking to make an investment.

Bookmark With