Investment Strategy: BRRRR vs. Filthy Riches

By Larry Goins

Larry Goins on the BRRRR strategy and Filthy Riches…

Not too long ago, founder of Realty411 Magazine, Linda Pliagas and I were hanging out with some fellow investors in Texas. If you know Linda, she has a fantastic personality, is a serious magazine editor, and is great at bringing people together. She also actively invests in real estate herself. She mentioned that she was just getting ready to refinance some of the free and clear rental properties she had purchased for cash. I’m like “oh, you’re are doing the BRRRR method.” She hadn’t related the term to what she was doing, but it is a popular model being thrown around on the online forum BiggerPockets.

So, what’s BRRRR? How does it work? Is it the best solution for investors?

What is BRRRR in Real Estate Investing?

BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat.

This is a cash and cash flow real estate strategy. Investors will purchase properties for cash, or use short-term, hard money type loans to purchase property. Then dig into repairs and improvements to add value and get them rent ready. Then once that property is in shape and performing, investors attempt to refinance to get cash out and/or get better long-term financing terms, which create more cash flow. The cash extracted can be used to acquire another rental property, while keeping the previous one as a rental.

An example scenario may look something like this:

ARV: $100,000

Purchase price: $50,000

Rehab costs: $10,000

Refinance: $75,000

Ongoing rental income: $800 per month, gross, before debt service and expenses.

The Pros & Cons of BRRRR

This strategy has both advantages and disadvantages.

The Pros:

  • Can be a way to gradually scale your rental property portfolio.
  • Acting as a cash buyer to acquire houses fast and at good prices.
  • Achieving lump sums of cash and cash flow.

The Cons:

  • Slow approach to cash and wealth building.
  • Long term debt, and skimming equity can leave investors in tight spots.
  • Lots of equity tied up.
  • Headaches and risk of rehabbing and renters.
  • Reliance on refinancing.

The reliance on being able to refinance has been a risky stumbling block for many trying to use this strategy. Some have tapped out credit cards or home equity loans, and have been unable to complete renovations to a stage where they can rent or resale properties. Others haven’t been able to find lenders who will give them cash out loans. There is never a guarantee that refinancing will be possible down the road. There are just too many variables, from personal credit and paperwork requirements, to construction challenges, and a changing lending landscape.

Filthy Riches: A Simpler Strategy for Profiting from Real Estate

‘Filthy Riches’ is all about making great money, on cheaper houses. There are some similarities in these strategies. For example; the ability to generate both lump sum paydays, and cash flow.

However, the Filthy Riches plan stands out with a few additional advantages, including:

NO loans needed.

NO bank loans needed by buyers to resell your properties.

NO problem finding deals.

NO getting stuck on the next step.

NO taking on wild risks or gambling on the market.

NO fixing up properties.

NO credit checks.

NO financing delays.

NO limits on where you can buy or sell.

NO competition.

With this strategy, you can make more money on a $5,000 house than the average investor makes on a $100,000 house with the BRRRR strategy.

In fact, you can make 141.88% returns, on a $5k house, with no rehabbing, and no tenant hassles. That’s $45,563.06, back on a home bought for just $5,000! You can take those returns in monthly cash flow, lump sum payments, or a combination of both. This system allows for far easier scaling and diversification, which can rapidly put 19 deals under the control of an investor, within about 12 months.

About Me

I’ve been investing in real estate for over 30 years. I bought my first house in 1985. I’ve been a licensed broker, contractor, and lender. I’ve done all types of real estate deals during this time. This is by far one of the simplest and fastest ways to get started and grow your income through real estate. I still use it today. I have students making over $1M with this strategy in 12 states, and from at least 8 countries.

Whether you’ve been struggling to just get started, got stuck on a BRRRR deal, or want to grow your results faster, you can find out more about how this works in a FREE 7 part video series at FilthyRiches.com .

The Bottom Line

BRRRR can work. Many investors are trying it. Yet, many could get going faster, and make far better returns, with less work, and less risk, by using this proven system instead. Check out the free videos, and see exactly how it works, and if it is the right fit for you. You may be very surprised at how much easier this is!

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

 

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.

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?

COULD 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

 

If Money Could Talk…

By Reggie Brooks

Please don’t misunderstand me; I am not your miracle or your savior. I’m only a medium of exchange to be used as a tool to create your chosen lifestyle. I am not the root of all evil as some of you have believed over the years- I am vital to a prosperous society. Without me, mankind would probably do no better than a primitive agricultural society.

So many people all over the world equate me with power, probably because powerful people covet me. Want to know a secret? I’m sort of like a magnifying glass in that I have a tendency to make an individual more of what they are. Let me explain:

John Rosen of Culver City, California was a kind man. He and his wife and 3 kids attended church and contributed as regularly as their meager income would allow. John worked as a bus driver in Los Angeles and his wife Cathy was a homemaker. Having a family with 3 children assured the Rosens of serious financial challenges. Even so, John was known to give his last to someone whom he deemed as being more needy than he and his family. Everyone knew that John was a giving man.

John received a call one morning to announce that a wealthy relative had died, and that there was a very large sum of money that would be coming his way. The Rosens were saddened by the loss of the relative and happy about the impending financial windfall. It was obvious that their lives were going to make a change.

When the time came, the Rosens received a check of over $750,000! “WOW”! They were elated! They paid their bills off and got a new car. They gave some money to the church and they made some wise investments. Then they did something that I applaud – they looked around, first within their family, then outside the family, and they identified various friends and relatives that were in dire need of the Rosens financial support. Within the first 3 months of receiving that check, not only did they help themselves, they also gave necessary financial support to seven other families! They helped to make the lives of those seven other families better! Receiving that money made them more of what they originally were- a very loving and giving family.

Then there was Bart from New Mexico. Bart was a selfish, self centered man that had no time for the needs of others. Bart was also broke. He was a very poor manager of his funds, which was the reason he was broke. Bart had very few friends and no immediate family to care about. His negative attitude insured distance between him and his peers.

Bart needed to do a little grocery shopping one day, so he got into his pickup truck and drove over to the grocery store. As he pulled into a parking place he spotted a wallet on the ground. Bart jumped out of his truck, swooped the wallet up and got back into his truck. He was so excited about hopefully finding some money that he hands shook while he opened the wallet. $400! That’s what he found in the wallet! Oh, of course there were credit cards, business cards, pictures and identification in the wallet, but Bart wasn’t interested in any of that. They were introduced to the trash can as he approached the store.

He noticed something else as he approached the store. There were a couple of guys standing at the side of the store that got Bart’s attention. When Bart approached the two guys, they told him that they had a brand new 50 inch High Definition TV set worth over $2500, and they were willing to sell it right now for $600. Bart looked in the box and was thrilled to see the TV of his dreams. Bart had the extra $200 in his pocket for the TV, and he had the desire to make a killing of a deal. He told the two guys that he just needed to go into the store and pick up a few items and he’ll buy the TV when he comes out of the store.

Bart loaded the box onto his truck and sped home to enjoy his new toy. When he got home, he got his brother to help him with the box. They got the box to the living room and began to open it. Bricks! That’s what was in the box. Bricks that were meticulously bound and placed in the box! $600 worth of bricks! Is there a moral? How about, “If you are looking to steal, you’ll probably be stolen from. If you’re looking to take advantage of someone, you probably be taken advantage of.”

I’m only a medium of exchange to be used as a tool to create your chosen lifestyle. Use me, but don’t love me. I am not the root of all evil. The love of me is the root of all evil and will cause the weak to do evil things to procure me. When you use me, I will provide you with great things to enhance your life. When you misuse me, I will make your life a living hell. The choice is yours.

 

Reggie Brooks


 

Reggie Brooks, is an international speaker, author and educator, dedicated to inspiring others to achieve personal success through real estate investment. He is also the #1 Vacant, Abandoned & Distressed Property Specialist in North America.

Having risen above a life of poverty, he has achieved what many people consider to be impossible. He went from making $36,000 per year at the local telephone company, to making over $40,000 per month in his real estate business. Today, Reggie delivers his personal philosophies for success at major business venues and expositions throughout the United States. Reggie attributes his success to faith, dedication to success, and to the invaluable coaches he has had along the way.

 

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

Investor Dilemma: Hold, Refinance or Sell Your Property

By Dani Beit-Or

As you continue building up your real estate portfolio, it is easy to become complacent and not maximize the full potential of your assets.Even if your initial investments have had some success, you should have decent cash flow, equity and appreciation.  Thus you’ve reached a point where you can be content with what you have or you can substantially improve on the gains you’ve already made!  Regardless of your decision, take a quick moment to analyze your options and let the numbers help decide your next step.

When reviewing your portfolio, the goal is to figure where you will obtain the best return.  In some cases, you’ll discover that refinancing a property and using the cash to purchase additional properties will yield you a higher return.  However, there are times when holding your properties and doing nothing might be the right answer.  Let’s look at a couple of examples that will illustrate what I mean.

Property Example One:

In our first example, we will be reviewing a property that currently has a house value of $420,000.

As you can see, the initial assumption that holding the property as is in our portfolio isn’t a bad decision as it will still yield an annual return of over $19k.  However, after reviewing all three options, you’ll see that selling this property will yield a higher return on our investment and, will give us just over $169k to put into the purchase of 3 to 4 additional properties — growing your portfolio and setting you up for a much higher overall annual return.

Property Example Two:

In our second example, we are reviewing a property that currently has a house value of $140,000.  

With this property, you’ll see that we are open to a couple of different options.  Yes, you could sell this property; however, with the funds you’ll receive, you can only afford one new property.  Depending on the value of the next property, selling one to purchase another one might not yield you the highest overall return.

However, if you were to refinance this property, you would be able to purchase a second property and still maintain ownership of this property.  That option will give you two properties and the opportunity to make a much greater profit down the road.

How to Decide Which Road is Best

It’s a good rule of thumb to review your real estate portfolio annually.  Depending on the market, your current situation, and your long-term goals, you’ll want to review each of your properties individually and decide on each one and not your overall portfolio.

Looking for a little guidance in what your best strategy might be?  Then contact your Advisory Team at Simply Do It! Our industry experts are here to help you throughout your investment life-cycle and not just during the purchase process.  We’ll review your portfolio with you and work with you to come up with the most strategic plan to fit your goals and yield you the highest return on investment possible.

3 Unique Ways to Turn Your Property Into a Money-making Machine

By Ashley Lipman

Almost any property is capable of turning a viable ROI if managed with savvy and foresight. Even bare vacant land can turn a profit if you know where to look for the right kind of customer.

Making money through real estate is as old as real estate itself (which is to say, “as old as dirt”), but we want to present here three often un-thought-of ways you can turn a profit from your land and/or building.

  1. Contract With a Cell Phone Company

There are some 300,000 cell towers in the US at present, and that number is growing by around 10,000 new towers per year. If you have vacant land in a strategic enough location, given the right zoning requirements are not an obstacle, you can make a lot of money by letting a cell phone company build a tower on your land and then collecting ongoing rent for the use of your land.

If a cell phone company approaches you with an offer, that makes it a lot easier (and gives you more “negotiating clout”), but you can also advertise or contact companies to make offers.

But don’t cut yourself out of a solid profit margin needlessly. Rent is this niche area varies greatly, from $100 to $50,000 per year (not month). In fact, you’re better off talking to an expert consultation firm to find out how to get the most cell tower rent before making any final decisions and signing on the dotted line.

  1. Run Your Rental “Empire” Smarter

Owning rental property is about as common a business venture as you’ll find, but the fact is, many landlords aren’t getting the full benefit out of their investments. There’s quite a learning curve involved in taking on land-lording, and so, it isn’t surprising if new landlords (and even experienced ones) have significant room to improve their profit margins.

The number one reason that property owners lose money on leases is, harsh as it may sound, that they lease to the wrong people. Having a unit sit empty can be frustrating, but you’re much better off being patient and upholding high standards. You need to combine two elements: an attractive “deal” to draw in good tenants and a thorough screening process to keep out bad tenants.

That means you make it clear that you will promptly respond to legitimate tenant complaints, make all reasonable and necessary repairs, don’t invade tenants’ privacy, provide (if possible) a tenant-only laundry facility and a game room/social lounge, and of course offer only well renovated and attractively decorated units. You charge slightly more than your target ROI, then you grant a year’s-end discount for paying rent on time or otherwise reward reliable, timely payers.

But also have strict rules for not disturbing other tenants, not destroying your property, and as to late fees and eventual evictions. Also monitor tenants for illegal subletting and other ploys. If all that sounds like work, don’t be afraid to hire a property manager: with the right policies in place, you can still do well. And you can still afford to be reasonable, patient, and generous with tenants with legitimate reasons for occasional late rent. It’s all a matter of having reliable, good renters in general, not perfect renters who never have a problem.

  1. Use Your Home to Generate Extra Cash

Another angle for homeowners is to simply use their home itself to generate extra cash. There are many ways to do this, so we can’t quite be exhaustive here. But here are a few prime ideas:

  • Set up a home office. Renovate, say, your attic or basement, or simply use a spare bedroom. If you can work from home even part of the time, you will save lots of money on transportation expenses. You’ll need a computer and Internet connection, but most people already have that anyway, so it’s not an extra cost. And you can typically deduct the cost of your home office from your taxes each year as well.
  • Offer storage and/or parking. Storage facilities are very popular these days, and they charge a hefty price monthly in many cases. If you have an extra shed, garage, or room, (or if you’re willing to put a new outbuilding up for the purpose), you may be able to attract people willing to pay a much-lower-than-normal monthly storage-space rental fee. Or, if you live in a neighborhood nearby a sports stadium, concert hall, or other popular venue, you may be able to advertise cheap, convenient parking and frequently get takers.
  • Take on a roommate. Anyone with a spare bedroom and bathroom, and who is willing to share their kitchen and living room with a “reasonable person,” should consider taking on a roommate. It’s easy to advertise online, in the newspaper, or on local bulletin boards, and you can save your new roommate money with lower rent at the same time you make extra money yourself and maybe gain a new friend.

 

Invest for Success!

By Dr. Albert Lowry

You no doubt want to be a successful investor, but you need to know how to move beyond the wishing stage. I have some tips to help you get started and learn what to do to keep yourself on the right path. We’ll take a step-by-step look at how you too can go from just a dream of being a real estate entrepreneur, to having your own real estate portfolio that is your key to financial freedom for life.

First, you must set goals. Don’t just think about them, but instead put them in writing. The act of writing has the effect of making your goals more real and getting them into the subconscious part of your brain, so that they are always there in the background, motivating you.

Another important point to understand to prepare yourself for success, is that risks and sacrifices are involved. You already know that just about anything that has big potential rewards means that you need to push yourself out of your comfort zone, and this is no different.

Simply put, if you don’t make the effort, you won’t experience the reward. Here’s the level of effort that I suggest: at least one hour per day devoted to studying real estate investing concepts and their real-world applications.

On weekends especially, you have the opportunity to explore the real estate market in your own area by touring neighborhoods, looking at houses, networking with people, and building up a base of knowledge about prices, amenities, desirable areas, and more. You’ll sacrifice the time that you would have spent napping or watching TV, but the potential payoff is long-term financial independence for yourself and your family.

As I mentioned, there is risk involved. Any investment that can make money for you can also lose money. That’s a fact of life, but there are ways to tip the balance sharply in your favor. You can protect yourself by ensuring that contracts are written to your advantage, by paying attention to both what is in a contract, and also what’s not. It is imperative that you read and understand everything that is contained in the contract, including all clauses, and also foresee any contingencies that are not mentioned. You may even choose to have a real estate attorney to help you review property contracts to be sure that there are no “gotchas.”

Now, I promised that I would provide you with step-by-step instructions to Invest for Success. This is a quick thumbnail sketch of the 7 steps involved in the process and important points to know. You’ll tailor a plan for yourself, but this will give you a good start.

  1. Develop a simple plan. Keep your real estate portfolios local and plan to focus on single family homes at the beginning.
  2. Learn your market. We touched on this earlier because it’s important to know prevailing costs per square foot, develop the capability to assess quality, and have a good working knowledge of which amenities are desired in your area. That will give you the ability to spot bargains. Using a mentor who has succeeded in real estate investing can help you fast-track this process.
  3. Think like a businessperson. Like any business, you will want to buy at wholesale and sell at retail. You’ll make businesslike assessments of each property to determine whether it should be held for rental income or sold for resale profit.
  4. Learn to identify hidden bargains and act quickly. Acting quickly does not mean acting impulsively, though. You still will carefully structure your contracts with contingencies and the option to assign the contract, which will protect your interests and profit potential. If your plan is to flip, be sure beforehand that no “major surgery” on the property is required. Any improvements you plan to make should be visibly beneficial and have the potential of raising the rental price or the resale value.
  5. Learn landlording. Even if you plan to turn the task over to a professional management company, you still need to know the fundamentals of how to manage properties and tenants. Otherwise, how will you know whether a management company is doing a good job for you, or not?
  6. Establish trade accounts with companies such as building supply stores. This will enable you to save money, get into the loop with local tradespersons and other real estate professionals, and build your line of credit. It will also help you establish good bookkeeping, which gives you a sound basis for business decisions on your properties. I suggest keeping a daily log for your expenses. You’ll be glad you did when you’re doing your recording keeping, and at tax time.
  7. Borrow money for your investments. You can use banks, 50/50 partners, or private individuals. When you use seller-assisted financing, creative financing terms are often possible, such as shared future appreciation on the property or no-money-down deals.

In summary, decide what you’d like to do, and ensure that you have the proper knowledge and formula for success to make it happen. Remember that nothing at all happens for you unless you take action, so why not get started on your dream today?

Your partner in prosperity,

Dr. Albert Lowry

The Solution to the Investment Guru Gap

By Russ Keith

How did you get started in real estate investing?

Maybe someone else…a friend, family member…or even your spouse, was bitten by the property investing bug and you caught it.

Or maybe you were invited to a weekend property investing seminar and found yourself thrilled with all of the prospects for financial freedom that property investing holds.

There’s no doubt about it…investing in real estate can be a real life changer, but what happens when all of the energy and excitement you felt after the seminar begins to fade?

After all, investing in property is no cakewalk…if it were, everyone in the world would be doing it.

And as fun and educational as a property seminar can be, what happens when everyone packs up and goes home, and you’re left with the feeling of “what now?”

Maybe you start by watching the videos on the guru’s website. But what happens if confusion begins to set in after watching them? Or maybe you understand what you need to do, but you can’t get answers to specific questions about your market.

What do you do then?

More than just an education in investing

Through their investment meetup group called Crush It, REI Systems Academy founders Russ Keith and his wife Kim noticed a trend.

Some investors would come to the meetings for about 8 months or so, but then would simply disappear. When Russ called them up to find out how they were doing, he discovered these investors had run out of money or just got frustrated, disheartened and then quit.

When he drilled down further into what was going on, Russ discovered that once the “new” had worn off from the investment seminars these people had attended, they were left without a compass.

The videos, website and other material left by the property investing guru couldn’t really help the investors with the mental shift they needed to move from an “employee”  to a “business owner” mindset.

Nor could it address the particulars of the investors’ marketplace.

Filling the guru gap

REI Systems was created with the goal of filling in the gap between the education investors receive at property seminars and the day to day investment decisions every investor needs to make.

What makes REI Systems different?

Investors receive a real education in property investing, from real educators who have been teaching high school and university level students for more than two decades!

Russ and Kim have also flipped properties for nearly 30 years, earning between $14,000 and $80,000 profit on each homestead flip.

How does it work?

You’ll meet with Russ and up to 9 other investors in a classroom setting once a week for three hours over a 16 week period. At the end of each class you’ll be given homework and told what to do, step by step.

If you have any questions between sessions, Russ is always available to help. He’ll answer your question(s) and if he thinks it can help the rest of the class he’ll share the information with them at the next class.

When you begin putting your knowledge to the test, Russ will be there every step of the way. He’ll even walk with you as you inspect a potential investment property.

In fact, if Russ hasn’t heard from you in a while you can expect to receive a phone call to find out what’s going on.

Your success is that important!

Bottom line, you can pay tens of thousand of dollars for one 30 minute call a week and a bunch of videos with a travelling investment guru, or spend much, much less and be mentored by local investors – and educators – who know the market and know what it takes to succeed in that market.

It’s your call.