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

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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Given that there are terrific buying opportunities in today’s real estate market, the experienced real estate investor learns how to buy at the best price.  Real estate investors leave the emotion at the door and replace that emotion with facts, figures and budgets.  Quite simply, there is no other way to invest today.

So, now we need to build a reliable checklist that will eliminate surprises and lead us to the bottom line.  To build this list, we break expenses into three basic categories.

Purchase expenses – depending on the type property, the investor’s credit history and the lender’s requirements, there can be some variation to the cash requirements at time of closing.

·    Down payment
·    Attorney fees
·    Taxes in escrow
·    Recording fees
·    Survey costs if necessary
·    Title insurance
·    Pre-paid reimbursements to seller

Income & expenses – with most investment property, current and projected income and operating expenses affect the property’s value.  The buyer should understand:

·    Net heating and cooling costs
·    Net tax obligations
·    Net management fees
·    Annual maintenance expense
·    Cleaning or janitorial expenses
·    Lawn and landscape costs
·    Mortgage expense
·    Income

Each property presents unique income and expense opportunities.  When it comes to gathering this information, more is better than less.  Gather as much info as possible.

Immediate Cash Requirements – every property can be improved.  Some improvements are superficial while others can represent major expenses.  Again, the investor eliminates surprises. Check the following systems thoroughly and be safe rather than sorry by calling in experts for structural inspections.

·    Roofing
·    Basement
·    Heating and cooling
·    Exterior
·    Windows
·    Plumbing
·    Pest control
·    Asbestos mitigation
·    Elevator
·    Electrical

The successful investor will expand these basic lists.  Get behind the numbers to repair or upgrade these systems and use structural experts to help clarify the property’s true, not emotional value.  Your due diligence to these building systems could well determine the success of your investment.

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Regardless of what you are purchasing, real estate or otherwise, practicing due diligence should be of the utmost importance.  We’ve all been there at some point, excited about a new purchase, later to find out that it wasn’t what it was made out to be in some way or another.  This is not a situation you want to find yourself in as a real estate investor!

If you are unfamiliar with what due diligence is, it can be summed up with the word research.  When it comes to practicing due diligence in the real estate business, it simply means to find out everything you can about the property and the surrounding community.  It involves fact-finding that can be very time consuming and tedious but will ultimately paint the picture of whether or not a specific property is a wise investment. 

Here are just a few things you want to find out while researching a property (there are more):

• Before you purchase any property, make sure you gather sales and ownership information.  Your local tax assessor or recorder of deeds office should be able to provide the information you need for this purpose.
• Municipal records will tell you if and when a property owner has applied for rezoning or land development approval.
• One bit of information that is often overlooked is to find out if there are any approved land developments or new community construction plans near your potential property.  This includes any new highway projects.  You can find this out by contacting the local municipality office or land development offices.  This is crucial to researching future property values.
• If you are purchasing a home off the beaten path, make sure you look at your local floodplain maps available through FEMA.  You should also contact the municipal sewer and water authorities in your area to see whether or not your property can be serviced by public water or sewer.

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Every real estate investor knows that they need to do a lot of scouting to find good deals.  However, not every investor finds their deals in the same way.  With online sites such as Twitter, Ebay and Craigslist becoming the norm, the most popular method of scouting real estate these days is definitely the internet.  But keep in mind, there are many other ways to find real estate goldmines. 

Perhaps one of the best ways to find your million dollar deal is just to go driving.  Of course, for this to be effective, you have to know what you are looking for when you do it.  Scouting your neighborhood does not mean you should be looking for homes with “for sale” signs.  Instead, you should be looking for neglected properties.  Pay attention to homes that have overgrown bushes, weeds and lawns.  Look for garbage and a general “trashy” appearance.  You should also look for multi-units and apartment buildings that do not appear to have proper upkeep.  The point here is to scope out properties that appear to be falling by the wayside.  You will want to make sure that you do not make yourself highly noticeable.  Think of yourself as a detective and do not purposely interact with anyone on a property you are checking out. 

Once you find a property that looks like it may be a good investment, the next step is to get the parcel number from the local zoning office in your town.  Once you get the parcel number you can look up the owners’ information and prepare a professional letter to them regarding a possible purchase of the property.  If the property owners happen to live out of state, the chance of you working out a successful deal just got that much greater. 

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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.

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When we read Dean Grasiozi’s investment strategy for buying real estate from a foreclosure event, we were sceptical. Although his arguments sounded plausible, we are cautious people.  We usually follow the old adage, ‘if it sounds too good to be true, it probably is’, so we did some investigating.  We checked the listings in and around our area for foreclosures.  To our surprise, we discovered a listing of properties designated for foreclosure by accessing public records which is where, according to the law, a property destined for foreclosure must be announced.

We found 4 different properties all listed at less than 30 000 dollars. One looked like it needed a lot of work; another was too far away from the city for our personal tastes, but the other two seemed like nice properties in good shape so we decided they were certainly worth checking out.

While we realized that we would have to keep constant vigil over the foreclosure announcements to find one that would fit our geographical preferences, we were pleasantly surprised to find verification that Dean Grasiozi’s strategy for becoming a real estate overlord could be put into practise.  We also realized that most real estate agents would have ready access to the same foreclosure information as we did, so the competition for desirable properties would be dense, but in theory, we believe the Dean is telling it like it is. 

It takes diligence and commitment to make it work, but what successful financial venture doesn’t?  There is no such thing as a pot of gold at the end of the rainbow, but there is often a good dollar to be gained from hard work.  Thanks, Dean for the head’s up.

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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.

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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. 

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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.   

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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.

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