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WANNA KNOW WHAT MAKES A HOUSE UNSELLABLE?

By Glenn Mananeng

So, you’ve finally decided to sell your house. You prep up the property, do all of the paperwork, get it listed and think that you’re good to go, only to find nobody’s buying your house. Bummer right? Well, you have to back up a bit and think why; is there something wrong with your home? If you’re still clueless as to why your home is not selling, worry not. SellUsHomes has got you covered, and we’re here to help you identify some common reasons why houses just don’t seem to sell.

Undesirable location

navigation-2049643_1280You’ve probably heard that location is everything when it comes to real estate. This can be the biggest obstacle in selling your property. The problem is, you cannot just conveniently move your house. If you are close to an airport, busy road, or highway, this might make it harder to sell your home. Even if your potential buyers are attracted to the house itself, they might not want to deal with these issues.

A bad location is basically up to preference. It depends on your target audience whether they’re families with kids or maybe the elderly. So the question is, can this be corrected? Absolutely!

Remember, you’re selling your property, not the neighborhood surrounding it. Focus on things that you have control over. Focus on the positive, and unique features. Intensify your curb appeal and make it stand out from others. Try to be more open to your buyers and offer concessions such as paying a part of the closing costs or credit towards repairs and improvements. Most investors find that reducing the sales price of the house even by just a bit increases the chances of closing the deal.

Outdated and too personal decor

tiffany-531993_1280This doesn’t just apply to the decor, this covers the fixtures as well. Think of the most likely buyer. If you’re planning to target a much younger audience, you won’t have any luck with your Tiffany lamps and your avocado green shag carpets. You’re offering a home, not a trip back to the 80’s.

We won’t question you with your interior design choices, but consider what your buyers want. If you do some research on how properties that sell fast look like, you’d find that the majority of them have interiors that are catered towards the current trend. A little touch-up can bump the value of your property much higher than you’d expect. Updating your light fixtures, installing a nice clean kitchen top, or even doing a brand new paint job can benefit you a lot. Keeping the decor neutral, reducing clutter and reducing personal items are very helpful.

Maintenance issues

plumber-228010_1280Obvious neglected maintenance and repairs will ward off potential buyers. Buyers want a stress-free purchase. Not a lot of people will be willing to deal with the hassle of repairing a leaky ceiling or addressing plumbing issues. Address needed repairs before you list your home for sale.

Any health hazards that your house might bring to your buyers is not good as well. Dampness and humidity of the interiors can invite molds to form on your furniture and create condensation on your windows. Buyers who have very minimal immunity to these can cause allergies and even serious health problems. Keep a balanced humidity level by providing good ventilation and check the electrical and plumbing systems.

Checking your utilities, and having them serviced, can add assurance that they are working well, and add confidence to a buyer.

Lack of natural light

Most architectural designs promote the use of natural light. This is a major turn-on for a lot of buyers. Nobody wants to live in a house that resembles a cave. Lighting up the interior can give the illusion that the living space looks larger than it normally does. Plus, people feel better when there is more light and brightness.

indoors-3096629_1280If you have the extra cash to install skylights then go for it. However, there are ways to achieve this without little to no expense at all. If you move any furniture that blocks any source of natural light, that would greatly help. You can change the curtains (or remove them) into something with a lighter or transparent material. The introduction or use of glass panels allow light to pass through. Also, opt for a much lighter color scheme for the interiors to compliment any natural light.

Weak broadband service (or lack thereof)

In today’s world, most buyers expect to have a good, stable and strong internet connection. People dedicate most of their time online. Without this amenity in your house, you might be in for longer waiting time.

internet-3471739_1280You don’t necessarily need to have it installed before you place your property for sale. Most telecommunication companies can inform you all about the signal strength and speed of the broadband service. Once your buyers know that it’s possible for the property to have internet connection, you just increased your chances of closing the deal.

Sprucing up your house and making a little effort can be more than enough to increase your chances of a successful sale. However, most sellers find a really hard time in prepping their property before placing it on the market. Don’t be discouraged, because that’s what our team at SellUsHomes is here for.

We realize the difficulties of selling a house can discourage a lot of first-time sellers. That’s why we strive to make the sale as seamless as possible. To learn more, contact us at (734) 224-5947 or email us at info@sellushomes.com

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Does it Make Sense to Buy a New House Before Selling the Old One?

By Edward Brown

You’re interested in moving. You need to sell your old house first before buying a new one, right? After all, you don’t have enough of a down payment for the new house without selling the old one, and you are pretty certain your bank will not qualify you for two mortgages.

You are in a dilemma; houses in your area are currently receiving multiple offers. Inventory is low. Sure, you can sell your house under the same circumstances, but will you be able to identify a new house so that you can simultaneously move from the old house to the new one? Unlikely. Do you sell the current house, move to a rental [or hotel] while you identify and try and close on the new house? Is the extra hassle of moving twice and the added stress of the inability to simultaneously close on the sale and purchase the new worth it? IF you could purchase a new house while still living in the old house worth the added costs involved with having a second mortgage until you sell the old house? How much is “peace of mind” worth in not having the pressure of having to purchase a new house [because you sold the old house too soon]?

These questions are a reality in today’s world in many parts of the country, specifically, the San Francisco Bay Area, because of the real estate rebound after the Great Recession. According to Jeff Stricker, a real estate professional with Alain Pinel Realtors specializing in the Silicon Valley in California, his clients are faced with these exact situations much of the time, as property is swooped up almost as soon as it hits the market, and, many times, with multiple, over asking prices. Jeff states that, although it is great for his clients as sellers, those same clients face challenging hurdles when buying a replacement property; competing against other buyers, some with cash only offers, who are willing to bid up a property far beyond the asking price in many circumstances. Some buyers are just so frustrated with the process of competing and getting outbid that they act in ways that they normally would never have thought. Overbidding. Settling for a house that they may not have originally envisioned. The list goes on.

Jeff, however, decided to think outside the box. What would happen if another house was purchased [without the added pressure of “living out of a suitcase”, if you will] prior to the sale of the old house? Is it even possible with the banking regulations that were placed upon financial institutions as well as homeowners over the past decade due to the “mortgage meltdown” that happened in 2008 and on? Dodd Frank rules that placed inordinate restrictions on the ability of homeowners to obtain financing left many people unable to get loans in which they previously were easily able to qualify.

Jeff decided to come up with a spreadsheet wherein, if he plugged in some assumptions, he could figure out if it would make economic sense to acquire a new house before selling an old house. The other part of the equation was to find a lender who would allow for a homeowner to purchase a new home without first selling the old home; thus, carrying two mortgages at the same time. Since most conventional lenders would not touch this, Jeff had to look to alternative sources. He found a company called Pacific Private Money, in Novato, CA that specializes in such a product.

Pacific Private Money can lend enough to the borrower to purchase the new home if there is enough equity in the old home to justify a combined Loan to Value [LTV] of 70% or less. Sometimes, if there is not enough equity in the old home, the borrower needs to add cash to bring the LTV to 70%, but, the ability to purchase a new home without having to sell the old one first can solve many issues for the homeowner. First, the a new home can be identified without adding pressure since the homeowner is still living in the old house until the new house closes escrow. Second, the stress of moving twice is eliminated. Third, and probably the best [and possibly most surprising] is that this solution may actually cost LESS in terms of increasing net equity to the household than selling the old house and buying a new house with the proceeds from the old house [and new mortgage] in most circumstances wherein the new house is more expensive house than the old house.

In a rising market, the earlier the purchase of the more expensive new house and the delay of the sale of the old will increase the net equity to the homeowner more than the costs associated with carrying two mortgages.

For example, let’s assume the old house is worth $1,000,000 and there is currently a 1st mortgage of $200,000. The homeowner desires to purchase a new home for $1,400,000 and has $100,000 in the bank that can be used for a down payment. We will look at two scenarios; the first is where the homeowner sells the current house, rents for a period of time, and then purchases a new home. The second scenario is where the homeowner borrows the money in order to secure the new home while owning the old home.

Obviously, there are many moving targets with the both scenarios, such as how much it will cost to rent a place [in the event of selling the old house first] as well as how long it takes to identify and close on the new house, storage costs for belongings, the cost of obtaining a private loan, and the appreciation assumptions for both houses, just to name a few.

Below, is a calculation making the following assumptions; it takes nine months to close on a new house after selling the old house; houses in the area [both old and new houses] are appreciating at 1% per month; interest earned on bank deposits are at 1% per annum; storage costs are $1,000 per month, a conventional bank loan is not available because the homeowner does not qualify and has to use a private loan company; the costs for the private loan are 9% plus 2 points; the interest rate on the old house is 3% per annum.

 

As you can see, in a rising market, where the new house is worth more than the old house, there is a significant benefit to using a private loan to purchase the new home and sell the old home at a later date. Waiting 9 months to eventually acquire the new house has tremendous opportunity costs, as compared to a net benefit of purchasing the new house right away and eventually selling the old house.

Although assuming a 1% per month appreciation of real estate may seem aggressive, the San Francisco Bay Area, and specifically the Silicon Valley, has experienced such growth. However, even if we lower the appreciation to ½% per month [insert spreadsheet showing .5% per month appreciation], we still see a fairly significant benefit to purchasing the new house now rather than waiting to first sell the old house and then buy the new house.

Aside from the economic benefit, other factors need to be considered; the lack of stress of moving twice should the homeowner decide to sell the old house first and then purchase the new house; what if the homeowner finds the house of his/her dreams now and does not want to let the house slip away? In today’s market, sellers are not willing to take contingent offers. Can the homeowner budget for both houses at the same time while waiting for the old house to sell? Is the market rising? Is the new house more expensive than the old house? How long will it take to sell the old house? These are just some of the issues to consider before deciding one way or the other; however, and this can’t be stressed enough – when a homeowner finds a house they like, they do not want to lose the opportunity of buying it. This means that they can start looking at new houses before putting their old house on the market. This also allows them time to make any repairs or fix up their old house so as to maximize its value prior to putting it on the market.

Once homeowners know that there is a potential to purchase a new house before selling their old house, they can be proactive in obtaining a commitment letter from the lender. Of course, homeowners should see if they qualify for a conventional loan for buying the new house [owning two houses at once], but they should keep their minds open to procuring a private loan should the bank turn them down. Pacific Private Money is such a private loan company.


Edward Brown

Edward Brown currently hosts two radio shows, The Best of Investing and Sports Econ 101. He is also in the Investor Relations department for Pacific Private Money, a private real estate lending company. Edward has published many articles in various financial magazines as well as been an expert on CNN, in addition to appearing as an expert witness and consultant in cases involving investments and analysis of financial statements and tax returns.

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Outdoor Features That Help Sell Homes

By Damien Justus

If your home is for sale by owner, you’ve probably heard that you’re at a disadvantage. Using a professional real estate agent is helpful to some, but numerous homeowners can focus on selling their own homes on their own terms regularly. By doing your homework and learning what it is that goes into selling a home effectively, you can sell your home quickly. For many, it’s outdoor features that sell houses in many neighborhoods. These outdoor features sell homes faster than any others, and they’re the kind of features buyers won’t soon forget.

Water Features

Beautiful landscaping is always attractive, but it’s not the only thing that sells a house. Outdoor features are meant to enhance lovely landscaping, and nothing does this better than a water feature. Whether you have a small pond installed in which the koi can swim freely or you install an in-ground pool with a resort-style waterfall and hot tub, buyers are going to remember your yard before that of someone else.

Resort-Style Backyards

This might not be such a benefit to those who live where the weather turns cold in the fall and winter, but southern homeowners get miles out of their resort-style pools and backyards. Think along the lines of natural stone pool decks, pavers, waterfalls, hot tubs, sun decks, and outdoor bars where cocktails flow nicely on a hot summer’s day. This sells homes for many buyers, especially those who love to feel as if they’re vacationing in the summer in their own yard.

Outdoor Kitchens

These are one of the most enjoyable outdoor features in any home. People love to spend time outdoors, and they love when they can cook out there. Buyers an easily imagine their kids running through a lush green lawn while they grill some steaks and sip a cold beverage with good friends on the back patio. They want to sit down for dinner as a family with the setting sun before their eyes, and they want to spend time outside. Outdoor kitchens make it easier to want to spend time outside, so people love to have them.

Built-in Fire Pits

If your home is located somewhere with low temperatures in the fall or winter, this could be the best feature to add to your home. A lovely fire pit makes buyers envision cold nights by a hot fire roasting marshmallows with their kids, laughing with friends, and sipping hot chocolate. It’s all about helping potential buyers see their own family doing something enjoyable and fun, and this type of feature helps tremendously.

Decks

Wood decks are an all-time favorite. Homeowners love to have somewhere to place tables, chairs, couches, and even bar areas outside. They love to entertain, to get the family outside, and to enjoy their space. Decks are easy to maintain, they are also quality features, and few people ever look at a home with dismay when they realize they have ample space in which to entertain in their backyard.

Landscaping

It should go without saying your landscaping is the most important outdoor feature in your home. A closely cut lawn, trimmed hedges, and gardens that are well cared for speak loudly. It’s also helpful to have a pressure washed driveway, house, and a pretty front door. You want buyers to feel welcome, which is far easier when everything is clean and welcome.

Selling a home for sell by owner means putting up the best features in your home on your own. Outdoor living is popular no matter where people live, and playing that up almost always helps buyers sell. If you have something no one else has, you could be holding the key to a successful sale in the palm of your hand. Play up these features by adding a few if you haven’t already added them, and watch as buyers salivate over the idea of so much indoor-outdoor living in their new home.


Damien Justus

Damien Justus writes in the home improvement and real estate spaces, and is very passionate about health, cooking, diet plans, and anything that has to do with staying fit. He grew up in Oregon but now is a resident of Salt Lake City, where he has fallen in love with the snow and the people.

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Some Real Estate Lessons

By Bruce Kellogg

Introduction

This is the story of the property in Fig. 1, which is a 3,800 square foot Victorian house that was built in 1898 ( i.e., age 120).  Some years ago, it was converted into five studios and three 1-bedroom apartment units. The purpose of this story is to illustrate many lessons that can be learned about rehab, “flipping”, and syndication.

History

The property was owned by a woman who lived outside the country, an “absentee owner”. She “milked” the property for the cash flow, allowing maintenance to be deferred, and keeping rents low to sustain a steady occupancy. The management company performed to her low standards.

Fig.1

Along Comes “Frank” (pseudonym)

Frank was a newly-minted “real estate entrepreneur”, who had recently completed training in “Apartment Rehab and Re-positioning” by a national trainer. Being a bright fellow and a smooth talker, Frank decided to form a syndication to raise the money needed.  He didn’t have any money of his own. (Actually, he was living with relatives!)

The Syndication

According to title records, Frank raised nearly $600,000 from six partners in a Limited-Liability Company (LLC) structure. He gave each partner a security interest in a deed-of-trust that was secondary to a private first loan of $465,000 from a group of dentists who owned “Novocaine LLC”. Frank didn’t care if his partners were “accredited” or not, as long as he got the money for the project.

The Purchase

An LLC, Frank’s investment vehicle, paid $775,000 for the property. (He thought he “stole” it since the per-unit cost was quite low in this particular market. Actually, counting the deferred-maintenance, Frank had overpaid!) With the loan from the dentists, Frank’s partners put in $310,000 plus closing costs. They had a little under $300,000 left for rehab and holding costs.

The “Rehab”

Fig.2

At first glance, the rehab was fairly thorough. New composition roof, laminate and vinyl floors, tile kitchens and showers, new kitchen cabinets and vanities, new vinyl windows, new stoves and refrigerators, new interior and exterior paint. Frank said he spent $200,000 on seven units. For some reason, one unit was not done. (Did Frank run out of money, and the partners said, “NO MORE”?)

On second glance, not so great. Three years on, the cheap/thin laminate floors are peeling. Frank replaced three gorgeous stained-glass windows with cheap imports. (Fig. 2 is one that survived.) The stoves and refrigerators are “discounted/blemished” with some of the blemishes obvious. (The national trainer probably taught Frank this “money-saver”.) The exterior was pressure washed before spraying on the cheap paint, but not scraped or caulked at openings, so it’s looking ragged now.

Selling the “Flip”

All of the tenants were either helped to vacate or offered a rehabilitated unit at about 40% more rent. (That’s how apartment “turnarounds” are done!)  Frank listed the apartments for sale for $1.5 million. There were a few showings, but only after the price was reduced below $1.4 million did it go under contract. Even then, two parties backed out based on discouraging inspection reports.

Frank hired a new broker who worked “high-end” homes rather than apartments, and Frank did not have the new broker give the prior inspection reports to the buyers (which is legally required). For some reason the final buyers were not made aware of: 1) low water pressure (old, clogged pipes), 2) inadequate electric service, 3) crumbling masonry foundation (not concrete), 4) termites, wood-eating beetles, 5) dry rot and fungus damage at kitchens and baths, 6) faulty exterior drainage system (basement floods in the rain). But the broker made a commission of over $50,000 on the $1.3+ million sale!

Fig.3

The Current Situation

The present owners are still using the same property manager as the overseas woman, the manager with the low standards. Recently, the owners decided to replace the masonry foundation with a concrete perimeter foundation. They hired a state-licensed contractor, who started work. However, probably to save time and money, neither the manager nor the licensed contractor obtained a permit for the new foundation. Someone, a neighbor probably, complained to Code Enforcement, who issued a “Stop Work Notice”. Fig. 3 shows the boarded-up foundation going into its third month.

Additionally, Code Enforcement has “red tagged” the unit that had not been rehabbed. It cannot be rented. Management has removed the range and refrigerator, indicating the unit has been abandoned for the time being.

Conclusions

  • Frank lost money.
  • Frank’s partners lost money
  • Frank has left town
  • The present owners are going to lose lots of $money
  • The contractor’s license is in jeopardy for not getting a permit
  • The owners will likely sue the manager, the contractor, and their broker
  • The broker and the property manager could face disciplinary action by the Bureau of Real Estate

Below is a List of Lessons. What can you add to it?

List of Lessons

  • Don’t try to flip a 120 year-old Victorian (unless that’s your specialty)!
  • Hire only top-quality property managers (and pay them well).
  • Invest only with experienced syndicators with a proven “track record” and plenty of “means” behind them.
  • Borrow only from “accredited” investors, or those who know you.
  • When buying at a discount, make sure it’s a genuine discount. Corollary: Don’t fall in love with the “opportunity”.
  • Rehab with quality materials and workmanship.
  • When buying or selling, use brokers or agents with the appropriate specialty.
  • Invest in all appropriate inspection reports when buying.
  • Obtain permits for all construction work/repairs where permits are required.

 

Bruce Kellogg

Bruce Kellogg has been a Realtor® and investor for 36 years. He has transacted about 800 properties in 12 California counties. These include 1-4 units, 5+ apartments, offices, mixed-use buildings, land, lots, mobile homes, cabins, and churches.

Mr. Kellogg is a contributor and copy editor for two national real estate wealth-building magazines: Realty411, and REI Wealth Mag.

He is available for listing, selling, consulting, mentoring, and partnering. Reach him at brucekellogg10@gmail.com, or (408) 489-0131.

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Is Timing The Real Estate Market Possible?

By Fuquan Bilal

Can investors really time the real estate market, or is it wiser to just consistently invest, and hold?

We all know that there can be fluctuations in real estate prices, even if values are constantly going up over time. So, is it possible to time the market? If so, what does it take? What’s the best way to do it?

Why Try to Time the Market

Trying to time the market is critical in publicly traded stocks. Stocks are now believed to be 70% or more overvalued. It can take a decade or more to recover from that, just to get back to par. There isn’t anything you can personally do about the stock prices. You just have to wait. Worse, there is no downside protection. If it goes too deep, there is a PR scandal or the industry changes, all capital may be lost. It is vital to sell before the market begins to dip, and buy again before it begins to go up, if you want to avoid negative returns.

Real estate is a little different. You can absolutely find greater bargains during tougher times, and sell high in bullish times. This strategy can absolutely help to maximize returns.

However, real estate is a tangible, hard asset, that will be there no matter what. It can also produce income, which doesn’t vary much as asset prices fluctuate. Plus, you can control the value of your real estate assets with improvements and repositioning.

Reasons Not to Try and Time the Real Estate Market

There are two main reasons that most individuals and investors shouldn’t try to time the property market. The first is that investors are notoriously bad at it. Most almost invariably wait too long to sell, and end up folding at the bottom of the market. Then they wait far too long to buy, and miss all the gains.

The second reason is that transaction costs can be high. Between time spent on due diligence and hard closing costs, you stand to lose a decent chunk of change if you sell and rebuy the same property in an effort to time it. Depending on where you are, and the fluctuation, this may be more of loss than if you just held, and received income from the property in the meantime.

Factors Involved in Timing the Market

There are an enormous amount of data points and factors to watch when trying to time the market, including:

  • Affordability
  • Interest rates
  • Treasury bond yields
  • Taxes
  • Rents
  • Building costs
  • Seasonal fluctuations
  • Supply and new constructions
  • Default rates and bank balance sheets
  • Days on market
  • Population growth and migration patterns
  • Jobs and wages
  • Local economic trends

Best Moves

There is a lot to know, learn, master and monitor to effectively time the market. If you are epically good, you can do far better than most in timing the market. Even then, you may not want to sell all your holdings, as you’ll probably want to reacquire them within 48 months or so.

At NNG, we leverage a strong research team, deep data that is way ahead of what the public sees, and maintain a strong mix of assets and strategies, so that some are being turned at their ideal timing, while others are held for consistent yields

Investment Opportunities

Find out more about investing in secured debt and real estate, go to NNG Capital Fund

 

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What’s Your Best Investment Strategy?

By Ramon Tookes

Real estate investing is and will always be one of the best ways to build wealth. As with any investment, you must have a strategy. In real estate, three main strategies are wholesale, buy and hold, and fix and flip.

Most people think that fix and flipping is my favorite strategy, but it’s really not!! My favorite is buying and holding. I really enjoy buying and holding for several reasons. One, buying and holding creates long term wealth also known as generational wealth if properly managed. My goals include leaving a legacy and properties for my children and my children’s children and so forth. This is the strategy for that. Two, buying and holding gives you the opportunity to control real estate, which is not being made any more. Three, the properties should and usually appreciate (increase in value) over time. Finally, when you buy and hold properly, you can create cash flow for saving, investing, and financial freedom.

I enjoy wholesaling. Wholesaling is making a fee for finding a property for a buyer that will successfully execute their goal. This can be done with assignments and double closings. I like this strategy because it takes away a lot of the responsibilities and stress of ownership. Wholesaling can lead to quick profits. If you are building a wholesale system, it requires hard work, which most people that want to wholesale fail to realize. There are lots of fast moving pieces in the wholesale business especially in this market. I have wholesaled hundreds of properties during my career, but have had the most headaches using this strategy.

And yes, I do enjoy fixing and flipping. I am known as “Mr. Flipology” because I teach/train investors how to properly flip real estate through my investing educational and training course called Flipology 101:the Bootcamp. This not only includes single family residences, but also land, multifamily, and commercial. I enjoy flipping because it leads to large profits, build communities, and I get a satisfaction of seeing a homeowner own a property that they love. As with the other strategies, to successfully flip, you must create systems. These systems involve lots of other people including contractors.

These strategies are implemented according to your preference and what you can use most effectively. Do not try to use one of the other because someone else is using it. Many of the properties that I wholesaled or flipped I wished that I had bought and held them. I know that this is after the fact, but most people who have built massive wealth in real estate have done so through buying and holding.


Ramon Tookes is a real estate investor, coach, author, wealth builder, public speaker, radio celebrity and developer with 20+ years of experience in the industry. Ramon currently oversees the daily operations of The Tookes Group, a firm that he founded in 2005, specializing in real estate investment consulting.

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WHY IS NEW CONSTRUCTION THE HOT STRATEGY FOR INVESTORS RIGHT NOW?

By Michael Poggi

Author, Public Speaker, Professional Investor and President of THE MILLIONAIRES INVESTMENT GROUP LLC.

WHY IS NEW CONSTRUCTION THE HOT STRATEGY FOR INVESTORS RIGHT NOW?

new-home-1664272_1280-1024x678COULD IT EVEN BE SAFER AND MORE LUCRATIVE THAN FLIPPING? And how about 20 percent returns from passive investing from new construction using your IRA OR 401 K PLAN !!

We have all seen the TV shows that make Fix and Flipping appear so simple that anyone can do it and make a huge profit overnight right?

Unfortunately that does not always happen in real life, Sometimes, people purchase a property make a small mistake when estimating the repairs and there go the profits out the door. It comes with lots of aggravation and uncertainties.

Fix and flips are the preferred strategy for most beginners because they have not learned how to build houses from scratch. The problem is, if the fix and flip goes wrong or gets delayed, it can cause big losses or losing the property to a lender. Fix and flips that have good margin are harder and harder to find and take time. The amount of time that it takes to find great deals cost you money. Bidding on houses that gets bought by higher bidders who sometimes even pay retain is also a problem.

Other Times, an Investor will hire a contractor in good faith and the contractor takes much longer than expected, changes their bid in the middle of a job, leaves the job site and goes to work on another job, or even doesn’t show up at all. Hiring different contractors for each flip also causes problems when you don’t know the contractor well or his prices are too high.

Enough is Enough. Time is money. Michael Poggi, President of The Millionaires Investment Group has been using his very profitable way to make a great return utilizing our New Construction Strategy. This Strategy is Turn-Key and very Profitable. Investors that are tired of the high risk and low return of the stock market love new construction for passive, more predictable returns. We have seen around 20 percent returns per year for passive investors who like no hassle turn key strategies. Investors partner with us on new houses but do not need to do any work. It’s all turnkey done for you.

The Millionaires Group is building New Construction Homes in Beautiful well established Residential Neighborhoods in Florida. Our company is making a profit on these homes about every 6 months from the day we start the new houses. We prefer this strategy instead of just fixing up an old property which always seems to come with hidden problems. Instead the group is creating high quality new homes with a 10 year warranty in fabulous neighborhoods.  Which Property Would you Choose? New houses on the market with a ten year warranty sell faster and more profit than a typical fix and flip.

Since the homes we are building are located in different established residential neighborhoods in Florida, the risk is mitigated vs building only in a new subdivision where there are no or very few houses. The neighborhoods have had new homes built years ago all around our lots so that we are seen by hundreds of people driving by from day one. This gives us a chance to sell the house faster and without a realtor and make us more profit.

The permitting process is faster due to building the same 5 floor plans over and over. The planning and zoning department sees that it is the same houses being submitted again and again and now they approve it much faster and easier than if we submitted a new fix and flip which is different every time and could have code violations which slows down the process.

The homes are built by our trustworthy contractor builder teams who are building the same set of 5 Quality floor plans over and over which makes less room for mistakes and surprises. They are modern eco friendly and energy efficient. We build safe 3 bedroom 3 bathroom 3 car garage to sell fast compared to other size and other harder strategies. Picking the right floor plans that are the proven fastest selling houses took lots of practice and experience. The typical square footage is around 2200 square feet. Out cost including the land, the permits, environmental and construction is around $ 180,000 or more. This is the perfect size home to sell fast. We have perfected the strategy to build only what people most likely would say yes to before the house is even finished. We sell the houses before they are finished for just under $300,000.  The net profit is shared with the investor who put up the 180k or 50 k down payment. The investors have seen 20 percent average per year from this method.

When you consider the stock market risk of stocks and mutual funds and the fact that many of those investments never do well, it makes perfect sense to transfer money from stock accounts and IRA’S  and 401 K plans into safer strategies like new construction. What is the risk of stocks or mutual funds going down? Very high !!!  What is the potential upside for typical stocks and funds  ?  Usually not that great or losses. More wealth is made from real estate and safer. IRA’S can be converted to a self directed IRA which can be used for new construction. This helps grow wealth faster than betting on the market. You can get a personal loan from your current 401 K plan for up to $ 50,000 !!!  This can be used for new construction turnkey deals.

The ability to leverage new construction is even better!!  You can’t leverage your money in mutual funds but you can in real estate. With only $ 50,000 down payment you can borrow the rest of the funds from one of our preferred lenders and spread out your money even farther. So, for investors who only have $50,000 to start, they can get a loan for the rest from our sources that fund new construction and be able to be in a new construction deal quickly. We do not pool investors together and we use one separate entity for each house. EACH INVESTOR IS PROTECTED BY BEING AN OWNER OF THE PROJECT ON TITLE,  and operating agreements to show what the builders responsibility is. The land that we own get put in to the investors name so we can build the house in their name.

The Millionaires Investment Group is excited about the progress that has been made utilizing this strategy. For more information about partnering with us call our office to arrange a call with one of Mr. Poggis staff members. 954-306-3586 or info@themillionairesgroup.com

 

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A House or a Home?

By Albert Lowry

What’s the difference between a house and a home, and how do you make the best purchase choice in either case? Those seem like straightforward questions, but there’s a lot to take into consideration to make a smart decision.

First of all, a house is a property from which you expect to make money, and a home is where you live. There are some factors in common for choosing a good deal for either one of these but also some differences that you should be aware of.

In today’s market, for both houses and homes, it generally makes sense to avoid getting the biggest, most expensive dwelling you can. Buy only what you need, and you’ll have the opportunity to make improvements with the money you save. You can determine what would be right for a home size for yourself. In the case of buying houses for investment, the ideal size for a rental unit is 3 bedrooms and 2 baths. It’s what most renters want, so you have a better chance of charging a good monthly rental price and having high rates of occupancy.

Another factor that holds true for both houses and homes is the familiar real estate mantra of “location, location, location.” You can make more money from renting out a house in a desirable area. For the place you call home, you also want to be in a nice neighborhood where you enjoy living and your property retains its value.

That being said, don’t limit yourself to one area. There are good neighborhoods throughout most cities and towns, so it may be to your benefit to get out of your familiar zone and widen your circle to try to find some hidden gems.

When you’re out hunting for properties, one of the best suggestions I have for you is not to restrict yourself to drive-by shopping. A house or home may have little curb appeal, but be a real bargain for its appealing interior. You can always create curb appeal later with some sprucing up, so don’t let the initial let down of the exterior keep you from exploring further. Knowing that little trick will put you in line for some real bargains, plus you won’t be competing with others who passed up a bargain because they didn’t know this important tip.

Another common mistake people make when buying properties is to buy according to emotion rather than taking the time to do the necessary research. Judgement is distorted by emotions and that can lead to bad decisions. Instead, ask yourself whether the home you have your eye on will truly meet your long-term needs. And for a house, objectively determine its future profit potential and back that up with thorough research.

In both cases, you’ll want to consider the proximity of schools and shopping, whether it’s for your own quality of life, or for the house’s perceived value as a rental unit or as a resale. If promises have been made about future desirable development in the area, check for yourself that it really is a sure thing before paying a price that’s based on that expectation.

For any property you are considering purchasing, whether a house or a home, look for anything that has the potential to cost you a lot of money later on, even if it falls outside the scope of the professional inspection.

Now, suppose that you’ve found a property that you would like to buy. How can you get it for the price you want? I want to share with you some professional investor negotiating tips that have worked very well on a good number of deals I’ve made.

The first applies more to house purchases. To be a successful investor, it’s necessary to make a lot of offers. As a buyer, you always want to pay the price that you’ve determined to be a good value for what you’re getting. Plenty of sellers won’t see eye to eye with you, but there are others who will, and you’ll pay the right price.

There are the certain techniques that will help you achieve this. If a realtor has shown you a property you’re interested in, later try contacting the seller directly to ask some questions. Be personable and talk to him as a human being, not as an adversary. Ask him what the basis is for the price of the property. If you do a little research and find that it is not in line with comparable properties in the area, that can give you some leverage with the seller, especially if you present the facts in a reasonable and friendly manner.

If you are going to ask the seller for a lower price or for concessions, it’s a good idea to bring their expectations down with some finesse. One way to do this is to avoid showing interest in a property and point out its shortcomings in a way that allows the seller to save face and see your point of view.

You’ll find that if you perform your property search diligently, make rational judgements, submit a lot of offers, and negotiate effectively, you will pay the right price for either the home of your dreams or investment houses that have big profit potential for you.

Your partner in prosperity,

Dr. Albert Lowry

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The Deal of the Century

By Alton Jones

Is this your last opportunity to create greatness?

For all we know, it might be. That’s certainly how I live my life. But as the holidays come up, I see more people getting into the slowdown mindset. Thinking they won’t be able to do anything between Thanksgiving and new years, they stop trying. There are no good deals to be had this time of year, right?

This mentality is absolutely wrong. I believe that every opportunity might be the last to create greatness. Life is short and uncertain. We’re always existing in one of three zones — green, yellow, or red. When you’re green, you’re kicked back. In yellow, you’re about normal. But in red, you’re working hard every minute, constantly on the move, looking for the next angle and the next opportunity. I’m always in the red zone, and I hate to see people slack off to green this time of year.

Never get a good deal this time of year? I believe that the deal of the century comes along at least once a week. But you have to be operating in that red zone to get it. You have to be looking for the great seller, the private lender who will bring you the deal of the century. You have to be willing to fight to the end to get it.

You also have to deliver value. On our first Rehabs2Riches boot camp, the hotel practically had to kick us all out at the end. I was delivering high-quality content so impactful that the attendees didn’t want to leave. They were scared they’d miss out on the golden nugget that was gonna put them over the top. They stayed until the last minute, the last second of day three, because I delivered value.

I believe that price is only an issue in the absence of value. People don’t care how much you know until they know how much you care. I’ve had people sell their home to me over other buyers not because I offered more money — I didn’t — but because I created a value for them. The home had been their mother’s, and in the family for over 50 years. They needed to know that it was going to be treated with respect.

I understood the emotions behind that, and exercised the golden rule. I asked a few simple questions about what was most important to them, and then showed them they could trust me to respect the house.

I found that deal by operating in the red zone, and I secured it by delivering value to the seller. And it wasn’t really about real estate — it was about building a relationship, because as I always say, we’re in the people business.

And if we’re in the people business, why wouldn’t you be operating in the red zone this time of year? Holiday events, family get-togethers, and business cocktail parties — they’re all opportunities to build relationships and find the deal that will put you over the top. You’re surrounded by people who you should build relationships with, even if they can’t do business with you right now. They might refer you to someone else down the line. But you can’t be dawdling along in the green zone and expect to find it.

The deal of the century is happening this week. Stay in the red zone and go get it.

 

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Dealing With “Balloon” Payments

By Bruce Kellogg

“Amortizing” Versus “Balloon” Notes

An “amortizing” note is one where the principal amount is paid off over the term of the loan. A “balloon” note is one where the payments are not sufficient to retire the debt, and an outstanding balance is due at maturity.

What Is The Problem?

The problem arises when the borrower does not have the funds necessary to pay the “balloon” amount when it comes due. Oh, oh! So, here are some ways to deal with that!

Refinance the Property

The first recourse for an owner who wants to keep the property is to refinance either the property itself, or another property in the portfolio. This is a good approach as long as financing conditions are favorable. If conditions are not favorable, other approaches will need to be considered.

Sell the Property

If the owner does not care to own the property any longer, they can sell it and have the sale pay off the loan. Or, they can sell another property to pay off the loan. If conditions are not favorable for selling, again, other approaches will need to be considered.

Renegotiate With the Lender

This is not an ideal approach because the borrower is negotiating from an inferior position. The lender “has the upper hand” because they can always foreclose. So, the borrower should offer the lender a monetary “inducement” for an extension, either a fee, an increase in interest, or payment amount, or both. But, it gets the job done! (Unless the lender says, “No”!)

Protective Note Terms

The best way for a borrower to protect themselves from becoming in an uncomfortable position is to negotiate protective terms in the note in the first place. One might be called a “rollover clause” or an “extension”. Here, for example, the borrower gets a time extension, say two years, for a 2% interest rate increase. This must be written in the note as one of its terms.

Another approach is to convert the note into an amortizing one when the balloon payment is due. Again, these terms need to be negotiated when the note is written and included with the other terms. In some cases, lenders do not need a cash payoff and enjoy receiving reliable note payments from a proven borrower.

Bring In A Cash Partner

If the above approaches aren’t working, the borrower can bring in a cash partner. This basically involves selling a partial interest in the property for cash to pay off the “balloon”. An escrow is recommended with title insurance, and an attorney should draw up an agreement between the parties, who might not be familiar with each-other.

Return the Property to the Lender

This is the least-desirable alternative in most cases. It involves giving up. If it’s going to be done, it needs to be done right, with an escrow, deed with a “Deed-in-Lieu-of-Foreclosure” recitation, title insurance, and transfer of any rents and deposits back to the lender. The lender should cancel the note, and return the original to the borrower. The lender should also record a “Full Reconveyance” in the escrow to clear the title.

File Bankruptcy

This is an alternative, but a risky one. The day a bankruptcy is filed, a 30-day “Automatic Stay” of all collection actions is established. After 30 days, the lender can file a “Relief from Stay” request to foreclose on the property. There is a hearing, and in the case of homeowners the bankruptcy judge will urge the parties to work something out. In the case of investors, the “sympathy factor” is usually low because investors are considered to have resources and several years to handle the “balloon”. The lender is due the money, the judge is likely to rule. (i.e., no relief!)

Conclusion

A “balloon” payment is one of those things that isn’t a problem, until it becomes a problem. It is best to deal with it up-front, in initial negotiations, when the note is originated. During the term of the note, keep working to pay it off. If the due date comes and the payoff funds are not in-hand, find expert help. You’re going to need it!

Good luck!


 

Bruce Kellogg

Bruce Kellogg has been a Realtor® and investor for 36 years. He has transacted about 800 properties in 12 California counties. These include 1-4 units, 5+ apartments, offices, mixed-use buildings, land, lots, mobile homes, cabins, and churches.

Mr. Kellogg is a contributor and copy editor for two national real estate wealth-building magazines: Realty411, and REI Wealth Mag.

He is available for listing, selling, consulting, mentoring, and partnering. Reach him at brucekellogg10@gmail.com, or (408) 489-0131.