Real estate is one of the best investment vehicles to make an income from. With a variety of different methods available, real estate is very versatile and flexible for all types of investors. When it comes to investing in real estate, it is always a good place to start by evaluating your current financial and life situation along with what your goals are. Are you financially secure? How does your partner feel about investing? Would you like to be passive or hands-on? These are some of the many questions you must ask yourself before investing in real estate. Once answered, you can now make a better decision around which method you’d like to pursue when it comes to making money in real estate.
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Rental Property Investing
If producing a consistent source of income every month is important to you, then you may want to look at the method of investing in rental properties. When looking for rental properties, you want to first make sure that you are purchasing a good deal. You may either use financing or cash to purchase the property. When choosing a property to purchase, you should confirm what the rental rates are for similar properties. When you rent out the property, you should charge rent based on the market rate but also confirm that this is enough to cover your expenses for the rental property. Anything left over is your profit. How much you want to earn per deal should be the criteria you establish. It is important to run the numbers before purchasing a rental property. Essentially, this is a very straightforward approach to real estate investing and could potentially produce a significant source of income over time.
Fix and Flip
A commonly known strategy for making money in real estate is the traditional fix and flip. To complete a successful fix and flip, an investor must purchase a property at a discount price, renovate the home, and then put it back on the market at a higher price for a profit. You get to keep the difference between your cost and what you sell for. Fix and flips are a good opportunity to make a significant amount of money in a transaction. Sometimes the fixing up required for a home comes down to minor cosmetics such as replacing the flooring, putting on a fresh coat of paint and updating the kitchen or bathroom. Note, when investing in fixing and flips, it is important to have a firm understanding of what the scope of the project may be. You should walk the property with a contractor before purchasing to get a good estimate on what your costs may be.
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REIT Investing
One of the most basic forms of investing in real estate and also the most passive is buying into REITs. A REIT is a real estate investment trust which is a company that owns and operates income-producing real estate. Shares can be purchased like a stock. In return, you are rewarded with dividends either monthly or quarterly from the income produced by the REIT.
Joe Arias
Joe Arias and his partners have flipped hundreds of properties in the Southern California Region. He has developed cutting-edge systems to simplify and scale the entire remodel process that can easily be applied to flipping, rentals, wholesaling, and other passive income strategies. More recently, Joe founded a real estate investing education company called RealSuccess Investments, allowing him to share his tools and systems with hundreds of up-and-coming investors.
RealSuccess is focused on education on flipping, rentals, passive income, and wholesaling.
Joe is also a best-selling author. He has written 4 books: Finding your RealSuccess, First Steps to Flipping,R stands for RentalsandRetirement, and Wholesaling Real Estate.
“I came from Argentina when I was 20, I am 40 years old now. I didn’t know anyone. If I can do it, anyone can.”
From a young Latino immigrant to a celebrated real estate investor, Joe is a true testament to hard work and discipline. As an investor, he has made it his mission to help others achieve financial freedom while enjoying living a life of passion, fulfillment, and empowerment.
Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.
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For most, transitioning to commercial real estate investing is the next level for many investors. Commercial real estate properties are oftentimes much larger deals and include a larger variety of property types in comparison to traditional real estate investing. To invest in commercial real estate, it is important to know the proper guidelines when investing in this asset class.
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The first guideline to follow is understanding the different commercial real estate types there are and which you’d like to get involved in. Each commercial asset type is its own niche with additional details that must be researched. There are generally 5 overarching commercial real estate types to invest in. The list includes office, retail, industrial, multifamily, and special purpose. Determine which niche you’d like to work on and identify all the variables that go into investing in the specific asset type you are interested in.
Next, investors should understand the difference between investing in residential versus commercial. Residential real estate is valued based on comparable while commercial real estate properties gain their value by square footage along with total revenue generated by the asset.
Understand the different verbiage used in commercial real estate investing and how does it impact the deal you are analyzing. Three important terms to be known are net operating income, cap rate, and cash on cash. Net operating income is the calculator that equals all revenue and costs from a particular property. Generally, net operating income gives investors an idea of how much they can make from an investment. Cap rate is used to calculate the value of income-producing properties. Essentially, the cap rate provides investors with an estimate of future profits or cash flow. Finally, cash on cash is a metric that provides investors with a rate of return on their commercial real estate transactions. This metric is often used by investors that are using financing to purchase their property.
Avoid improper valuations. Investors should be aware that each commercial property is different and there are different variances between different assets. Make sure to do the proper research ahead of time and double-check everything has been accounted for. Missing one detail can mess up the entire valuation and potentially your opportunity to earn a profit.
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Hire the right team. Too many investors try to handle the process of purchasing a commercial property on their own. By having a team established including a good agent, broker, lawyer, and contractor, you can be advised to make better decisions when scouting new investment opportunities. By having an extra set of eyes working on your deal, you are more likely to uncover additional details about the deal and get additional feedback from an expert that can help you make a good judgment of the deal.
Several of the many guidelines have been listed for investing in commercial real estate properties. By doing your research first and aligning with a team of experts, you can find success investing in a commercial investment property and begin generating an income from the asset.
Joe Arias
Joe Arias and his partners have flipped hundreds of properties in the Southern California Region. He has developed cutting-edge systems to simplify and scale the entire remodel process that can easily be applied to flipping, rentals, wholesaling, and other passive income strategies. More recently, Joe founded a real estate investing education company called RealSuccess Investments, allowing him to share his tools and systems with hundreds of up-and-coming investors.
RealSuccess is focused on education on flipping, rentals, passive income, and wholesaling.
Joe is also a best-selling author. He has written 4 books: Finding your RealSuccess, First Steps to Flipping,R stands for RentalsandRetirement, and Wholesaling Real Estate.
“I came from Argentina when I was 20, I am 40 years old now. I didn’t know anyone. If I can do it, anyone can.”
From a young Latino immigrant to a celebrated real estate investor, Joe is a true testament to hard work and discipline. As an investor, he has made it his mission to help others achieve financial freedom while enjoying living a life of passion, fulfillment, and empowerment.
Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.
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Like many other investment vehicles, real estate provides an opportunity for investors to generate long-term income and increase their net worth. A major benefit of real estate is that there are many different ways to invest in real estate. You can choose a strategy that best aligns with your goals and risk tolerance and still have an opportunity to succeed. By knowing several strategies for investing in real estate, you too can be prepared to create abundance for yourself and your family.
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Single Family Residential
Single-family refers to a stand-alone house or a free-standing residential building. Think about your typical home or apartment. Oftentimes in real estate, there is a large focus on owning multifamily homes. Single-family investing can be a strong strategy for many for several reasons.
Single-family homes offer higher rental prices. Usually, people are willing to pay a little more for privacy and space. Single-family homes and apartments offer both. Also, tenants tend to stay longer over time in single-family houses. Maintaining a long-term paying tenant is very beneficial for landlords. Tenant turnover can become costly and requires work. Also, for new investors, single-family homes have a lower barrier of entry and is a great place to start.
Multifamily Residential
Multifamily residential is a classification of housing where multiple separate housing units for residential inhabitants are contained within one building or several buildings within one complex. Units are typically next to each other or stacked on top of each other. An example of a multifamily is an apartment building. Multifamily residential is different from multifamily commercial. The difference comes down to the number of units within the multifamily property. Residential is classified as 2-4 units while commercial has 5 plus.
There are many reasons to invest in multifamily residential. Typically, there is increased cash flow. More units equal more rent for the landlord. Also, because we are talking about multifamily residential, this still qualifies for residential-style loans which are more affordable. Finally, multifamily residential is also easier to manage.
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Wholesaling
Wholesaling in real estate is when you as the wholesaler contract home with a seller and then find an interested party to buy it. Essentially the wholesaler contracts the home with a buyer at a higher price than with the seller and you get to keep the difference.
This is a great strategy to involve very little to no money of your own. wholesalers need to find motivated sellers and put the property under contract. By leveraging a network you develop of buyers, you can create a system for finding other real estate investors to assign the contract to.
Fix-and-Flip
One of the most commonly known forms of real estate investing, fix, and flip presents itself as a good opportunity for investors that are willing to get their hands dirty. The upside can be very rewarding as you can net thousands of dollars on a single deal. Real estate flippers have built successful businesses around this model. If you are hands-on and have the ability to make repairs to a home, then fix and flip may be a good place for you to start.
Joe Arias
Joe Arias and his partners have flipped hundreds of properties in the Southern California Region. He has developed cutting-edge systems to simplify and scale the entire remodel process that can easily be applied to flipping, rentals, wholesaling, and other passive income strategies. More recently, Joe founded a real estate investing education company called RealSuccess Investments, allowing him to share his tools and systems with hundreds of up-and-coming investors.
RealSuccess is focused on education on flipping, rentals, passive income, and wholesaling.
Joe is also a best-selling author. He has written 4 books: Finding your RealSuccess, First Steps to Flipping,R stands for RentalsandRetirement, and Wholesaling Real Estate.
“I came from Argentina when I was 20, I am 40 years old now. I didn’t know anyone. If I can do it, anyone can.”
From a young Latino immigrant to a celebrated real estate investor, Joe is a true testament to hard work and discipline. As an investor, he has made it his mission to help others achieve financial freedom while enjoying living a life of passion, fulfillment, and empowerment.
Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.
Real estate can be a rewarding investment strategy that can create abundance and wealth for those that do well. Although almost everyone has the potential opportunity to invest in real estate, not everyone will become successful. There are several traits you need to be a successful real estate investor. Through the power of self-development and determination, any inspiring investor can change their mindset and develop the traits needed to become a successful real estate investor.
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Patience
Too often, new investors eager to secure their first deal eventually may become trigger happy and purchase a deal just to get a deal done. There are many stories of investors diving into real estate and closing on their first deal just to get started but rather did not wait for the right deal. In real estate, your money is made on the purchase so any investor that isn’t patient with finding the right deal may experience a negative return on their investment. To become a successful real estate investor, as important as it is to take action, it is equally important to know when not to and be laser-focused on identifying the right deal.
Education
The best real estate investors understand that they must keep learning and educating themselves. Whether it is consuming new content from books or learning from peers or mentors, to continue growing in real estate, the best investors continue learning as much as they can about the industry. A lot of new investors think they can work with an agent and throw their money around to be successful in real estate. Unfortunately, this is not how it works. A real estate agent can guide you but every person interested in real estate investing should take at least half a year to learn as much as they can and determine their own criteria first. By staying humble and accepting the fact that a consistent educational approach must be taken when investing in real estate, only then can new investors develop the foundation needed to become successful.
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Personal Finance
Before investing in real estate, one of the most important traits to become successful in all aspects of investing is to have mastery over your own personal finances. That means the ability to save and manage your money, pay off debts, and have a high credit score. To be approved for loans to purchase investments, you must have a good financial track record. Without showing discipline over your finances, more likely you will have a difficult time securing the financing you need to invest in real estate.
Overall, the good news is that all of the traits that were mentioned can all be developed with a shift of your mindset. By staying disciplined and taking the time to refine and develop the above traits, you can increase your chances of becoming a successful real estate investor. Start your journey today by turning inwards.
Joe Arias
Joe Arias and his partners have flipped hundreds of properties in the Southern California Region. He has developed cutting-edge systems to simplify and scale the entire remodel process that can easily be applied to flipping, rentals, wholesaling, and other passive income strategies. More recently, Joe founded a real estate investing education company called RealSuccess Investments, allowing him to share his tools and systems with hundreds of up-and-coming investors.
RealSuccess is focused on education on flipping, rentals, passive income, and wholesaling.
Joe is also a best-selling author. He has written 4 books: Finding your RealSuccess, First Steps to Flipping,R stands for RentalsandRetirement, and Wholesaling Real Estate.
“I came from Argentina when I was 20, I am 40 years old now. I didn’t know anyone. If I can do it, anyone can.”
From a young Latino immigrant to a celebrated real estate investor, Joe is a true testament to hard work and discipline. As an investor, he has made it his mission to help others achieve financial freedom while enjoying living a life of passion, fulfillment, and empowerment.
Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.
https://www.realestateinvestormagazines.com/wp-content/uploads/2025/01/investor.jpg4001000dulcehttp://www.realestateinvestormagazines.com/wp-content/uploads/2013/04/logo.pngdulce2025-01-20 04:53:192025-01-20 04:53:54The Traits You Need To Be A Successful Real Estate Investor
In the last two centuries, real estate was how 90% of millionaires made their fortunes. To achieve generational wealth, there is no doubt that real estate should be the main asset class to invest in. For over two centuries, and arguably longer, real estate has continued to offer unique benefits for generating generational wealth in real estate. You are asking yourself whether it’s too late for you to start the journey to achieve this goal. The answer is no! It is never too late to begin. If you plan to pass down wealth to your kids or your grandkids, then real estate is the perfect asset class for this. To best understand how to achieve generational wealth through real estate, it is equally important to know why it works.
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Appreciation
If you are unfamiliar with what appreciation is in real estate, essentially it is defined as an increase in value over time. Real estate generally increases in value over the long run. Compare what a house costs in one of the most expensive real estate markets during the 1970s compared to the value of a home now in the 2020s. In 1970, you could buy a home in San Francisco for an average price of $25,000. An average home price in San Francisco now will set you back $1,700,000. That’s right, your grandparents’ home can be worth over 7 figures. What if they pass that home down to you? That would be considered generational wealth in real estate as you are now taking ownership of a million-dollar asset. Over time, appreciation works in favor of real estate as the asset class stays ahead of inflation.
Depreciation
One of the main benefits of investing in real estate is tax benefits. Depreciation is one of them. This does not mean that your home is losing value. Simply put, depreciation describes the ability to write off some of the value of your asset every year. What this does is significantly reduce the tax burden that an owner is responsible for. Essentially, you are protecting your wealth as your net worth grows. One of the main destroyers of wealth is tax liabilities. Therefore, it is important to understand the proper legal accounting practices that help reduce your overall burdens. Another benefit of depreciation is that often, the write off exceeds the amount of cash flow you may have brought in from a rental. The amount written off oftentimes is more than the entirety of the cash flow will actually help reduce your tax obligations. Of course, you do need to speak with a CPA to get all the details and to support you when filing for taxes. Most CPAs understand how to utilize depreciation properly.
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Loan Pay Down
Most investors of real estate use leverage to purchase properties. This involves taking out a loan to buy real estate and using a fraction of your available cash within the deal. In some cases, there are opportunities to buy without any of your own money. For the sake of keeping the concept simple, if you are just starting in real estate, you can take out a 30-year fixed mortgage with a low-interest rate. Over time as you rent your unit and earn an income from the cash flow, a part of the rent also covers the monthly expenses including the mortgage. Your loan’s principal payment is paid down over time. Each payment adds equity to your position gradually adding to your net worth. By the end of your 30-year term, you will have a fully paid off property that you can pass on to your children.
Leverage
One important wealth generator in real estate is the ability to buy properties using leverage. If you were presented with two options which would you choose? Buy one property free and clear for $100,000 or use the $100,000 towards down payments on 5 properties with each requiring $20,000 down payments. If you opted for the second option, then you understand the power of leverage. You are essentially making your money work harder for you. Tied with loan pay down, rental cash flow, and appreciation, your investments are magnified when you leverage your cash across multiple properties instead of sticking to only one deal.
Forced Equity
When you invest in real estate, investors have the opportunity to make a significant amount of money directly from the purchase of the property. Forced equity is defined as the wealth that is created when you buy a property at a discounted price and improve the property to be valued more. For example, let’s say you bought a property for $50,000 and added $25,000 in improvements, then based on the comparable homes in the neighborhood, your property could be worth closer to $100,000. By improving the property, an investor can force the creation of equity in their deals which overall is a driver of wealth.
Passing Your Property To Your Heirs
Now that you understand all the ways to generate wealth, it is also important to understand the different ways you can pass your properties down to your heirs. There are four main ways to accomplish this. First, you can sell your home to your kids. A second approach is simply giving the property to your kids. Bequeathing your property would be a third option. Last, a deed transfer can be done.
Each of the options presented has different ramifications from a tax and legal perspective so it is best to consult with your lawyer and accountant to gain the best insight for transferring over your real estate assets.
Overall, real estate can create generational wealth in a variety of different ways. It is no coincidence that 90% of millionaires were created through real estate. Consider starting your journey towards financial freedom and generational wealth.
Joe Arias
Joe Arias and his partners have flipped hundreds of properties in the Southern California Region. He has developed cutting-edge systems to simplify and scale the entire remodel process that can easily be applied to flipping, rentals, wholesaling, and other passive income strategies. More recently, Joe founded a real estate investing education company called RealSuccess Investments, allowing him to share his tools and systems with hundreds of up-and-coming investors.
RealSuccess is focused on education on flipping, rentals, passive income, and wholesaling.
Joe is also a best-selling author. He has written 4 books: Finding your RealSuccess, First Steps to Flipping, R stands for Rentals and Retirement, and Wholesaling Real Estate.
“I came from Argentina when I was 20, I am 40 years old now. I didn’t know anyone, I am CERO generation, usually people say, I am first or second generation but I was the one that crossed the border, no language, no friends, no family, no money, nothing, nada… If I can do it, anyone can.”
From a young latino immigrant to a celebrated real estate investor, Joe is a true testament to hard work and discipline. As an investor, he has made it his mission to help others achieve financial freedom while enjoying living a life of passion, fulfillment, and empowerment.
Learn live and in real-time with Realty411. Be sure to
register for our next virtual and in-person events. For all the details,
please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.
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Real estate is one of the very few investment vehicles where you can force appreciation of your asset. Additionally, there are a variety of ways to force appreciation in real estate which makes this investment class the most flexible to leverage for investors. One way to increase real estate property value is through a change in land use.
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Land use refers to the assigned zoning of a piece of land for a particular type of real estate. There are several types of land use that are typically used to classify a piece of land. The most commonly familiar type of land use is residential and commercial. Additional land use types include recreational, transport, and agricultural. Land use is subject to change with proper approval by the municipality that the land falls under. The most common laws associated with changing land-use types are zoning laws. Zoning laws involve the regulation of the use and development of the real estate.
The purpose of zoning is to divide a municipality into residential, commercial, and industrial. Zoning regulations may include the specific requirements as to the type of buildings allowed, location of utility lines, restrictions on accessory buildings, building setbacks from the streets along with other boundaries, size and height of buildings, and several rooms. Now that you are familiar with the basics of land use type and zoning, it is time to understand how to increase real estate property value through a change of land use.
Plottage
Plottage refers to the increase in value realized by combining adjacent parcels of land into one larger parcel. The process of combining the parcels is known as assemblage. What occurs often is the value of the whole parcel will be greater than the sum of the individual parcels. This is a great strategy when you have the opportunity to purchase the surrounding parcels of land.
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Conversion
This strategy refers to taking an existing building or land and converting the asset for another use. An example of this is taking an old commercial warehouse and converting it into a 100 unit residential apartment complex. Oftentimes, the best approach is finding underperforming commercial assets in growing markets and renovating it for better use that will provide long term cash flow and appreciation.
Zoning
Great for expanding population markets. This method requires taking zoned land such as agriculture and having it changed to residential or commercial. Think about the land that is in the path of progress. Do you live near a town or city that is expanding outwards towards agricultural land? You can spot the progress years in advance and buy up the land and change the land use for that land which ultimately will help boost its value as land becomes more scarce with the growth of expansion by the city.
Real estate has many angles that you can play. Changing the land use of land that you purchase is a fantastic strategy for those interested in taking advantage of appreciation. There are endless opportunities in several growing markets.
Joe Arias
Joe Arias and his partners have flipped hundreds of properties in the Southern California Region. He has developed cutting-edge systems to simplify and scale the entire remodel process that can easily be applied to flipping, rentals, wholesaling, and other passive income strategies. More recently, Joe founded a real estate investing education company called RealSuccess Investments, allowing him to share his tools and systems with hundreds of up-and-coming investors.
RealSuccess is focused on education on flipping, rentals, passive income, and wholesaling.
Joe is also a best-selling author. He has written 4 books: Finding your RealSuccess, First Steps to Flipping, R stands for Rentals and Retirement, and Wholesaling Real Estate.
“I came from Argentina when I was 20, I am 40 years old now. I didn’t know anyone, I am CERO generation, usually people say, I am first or second generation but I was the one that crossed the border, no language, no friends, no family, no money, nothing, nada… If I can do it, anyone can.”
From a young latino immigrant to a celebrated real estate investor, Joe is a true testament to hard work and discipline. As an investor, he has made it his mission to help others achieve financial freedom while enjoying living a life of passion, fulfillment, and empowerment.
Learn live and in real-time with Realty411. Be sure to
register for our next virtual and in-person events. For all the details,
please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.
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Investing in rental properties is a great opportunity to establish an alternative source of income outside your main career. If done well, you can even retire early and live off your rental income. The key to investing in income properties is establishing strong criteria and understanding what to look for that would qualify a property as the right investment for you. By understanding exactly what to look for in the beginning, you can establish a strong filter when researching properties and only allow the ones that align with your investing strategy.
It’s important to establish the type of criteria you have for yourself. How much cash flow are you looking for a per deal? Some people live in markets where $200 per door is a healthy cash flow and is desirable. Other more expensive markets produce an average of $500 to $800 a door. Depending on how much cash flow you are interested in earning from a deal, further narrows the type of properties you will be buying.
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What price range can you afford? If you live in a state like California, an investment property may cost you upwards of $700,000 compared to states like Kentucky where a property may only cost $50,000. Budget what is possible for you. Some investors may house hack and leverage 5% down while others are forced to put 25% down. If you live in a market and know the prices, understand what type of financing you have accessibility to and what you can afford.
Are there certain specifications about the home that you prefer? Some investors do not want to purchase a home that may be 50 or 100 years old while other investors only look for those types of homes. Maybe you look for a certain bedroom count or amount of bathrooms. Some investors look for spaces that additional bathrooms or bathrooms can be added so a basement would be very beneficial.
Research different neighborhoods. Especially if you live in a large metropolitan area or city. Sometimes investing in one street and not the other can make a huge difference in the purchase price and potential rental comps. Schools may play a role as well. It is better to invest in a part of town with a good school district. People are willing to pay more for their kids to go to a good school.
The job market is critical when looking at the rental market. Are there enough employers in the area? There are markets across the country where the main employer in town is one factory and if they go out of business, so does the whole town. You want to make sure there are a large number of employers and companies in the area that can sustain a healthy job market.
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Overall, many different factors go into looking for income property. Each investor should develop their own criteria based on their situation and needs. By taking the time to assess what is important to you, you can make better decisions when refining your filter for different income properties that you search for.
Joe Arias
Joe Arias and his partners have flipped hundreds of properties in the Southern California Region. He has developed cutting-edge systems to simplify and scale the entire remodel process that can easily be applied to flipping, rentals, wholesaling, and other passive income strategies. More recently, Joe founded a real estate investing education company called RealSuccess Investments, allowing him to share his tools and systems with hundreds of up-and-coming investors.
RealSuccess is focused on education on flipping, rentals, passive income, and wholesaling.
Joe is also a best-selling author. He has written 4 books: Finding your RealSuccess, First Steps to Flipping, R stands for Rentals and Retirement, and Wholesaling Real Estate.
“I came from Argentina when I was 20, I am 40 years old now. I didn’t know anyone, I am CERO generation, usually people say, I am first or second generation but I was the one that crossed the border, no language, no friends, no family, no money, nothing, nada… If I can do it, anyone can.”
From a young latino immigrant to a celebrated real estate investor, Joe is a true testament to hard work and discipline. As an investor, he has made it his mission to help others achieve financial freedom while enjoying living a life of passion, fulfillment, and empowerment.
Learn live and in real-time with Realty411. Be sure to
register for our next virtual and in-person events. For all the details,
please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.
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As a real estate investor, especially a wholesale real estate investor, distress or abandoned properties are often the best homes to find under market value. Many of these homes, though, have owners who skipped town and are now just about impossible to find. Luckily, there’s a method for finding these homeowners called skip tracing. You can easily track down someone who has skipped town with no forwarding information through skip tracing as a real estate investor. Skip tracing will allow you to find the homeowner and move forward with a deal to purchase the property you’re after.
Quite a lot goes into skip tracing that you wouldn’t normally expect from real estate investors. You may have to do a little bit of digging to find the homeowner of the property you are looking to buy. Luckily there are tons of tools you can use to find someone who left absolutely zero breadcrumbs. Not only can you utilize search engines, but tons of websites have databases you can look through to find your person.
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What is Skip Tracing?
Essentially, skip tracing is the process of finding someone who has skipped town with little to no warning. They did not tell anyone where they were going and left no information on how to reach them. Despite this person leaving no trail, skip tracing is the process of searching for them or their contact information. To do this, one might hire a professional skip tracer or use their own savvy to try and locate them. There are quite a few tricks you can do on your own to find out where a person has gone even though they have not left any information. Many people utilize Google, social media, the post office, and other assets to find someone. This is considered skip tracing.
What are Skip Tracers?
There are professionals who are often private investigators, and they specialize in helping you find the owners of the properties who are incredibly hard to find. Many real estate investors hire the help of skip tracers to find the owners of properties they are interested in buying. These skip tracers typically start looking for a person by looking through public resources like utility bills, job applications, credit reports, DMV records, public property records, loan applications, background checks, and court records. They also carry out in-depth searches through multiple online databases that contain information not available to the public.
Although skip tracing costs money, it can be a huge benefit to any new or experienced real estate investor. Not many other real estate investors take the time or spend the money to hire skip tracers to find abandoned property owners. So, if there is a property owner who is extremely hard to find, you’re likely going to get to them first and have a better shot at buying the property. With competition for standard properties being high, using the method of skip tracing to beat competitors to vacant properties can be a massive advantage as you look to increase your portfolio and really start growing your wealth.
Why Do Investors Use Skip Tracing for Real Estate
As previously mentioned, abandoned homes can be really great for investors. The two investors who likely have the most interest in these homes are real estate wholesalers and real estate flippers. A wholesaler will offer the homebuyer an agreed-upon amount for the home, then they will find an interested buyer, likely another real estate investor, and connect the two. They will then make a profit based on a percentage of the final sale. While wholesalers are always on the lookout for houses that are under market value, it can be hard to get them against so much competition. When someone disappears and is hard to find, they significantly cut down the competition. Now, all the wholesaler has to do is find the homeowner and convince them to sell, and they have a profitable venture. Similarly, flippers are looking to buy homes like these because they have great potential to be repaired and sold for a large profit margin. Since all of the real estate flippers are after the same homes, finding properties like these can actually be a big break for some investors.
Is Skip Tracing Legal?
If you go through a professional skip tracer, the process is legal. Most states require skip tracers to be employed as independent private investigators who have a license with skip tracing certification options. States also have laws that dictate how you can use the information you got from skip tracing, which your skip tracer should expand upon based on your state. Make sure to only ever use a skip tracer who operates under all rules and regulations.
How to Use Skip Tracing for Real Estate
Skip tracing can actually be a very easy yet effective strategy to find property owners who have properties that are under market value. Essentially, you want to be able to find an alternate address for vacant property owners who are hard to find. From there, you’ll be able to contact them and see if they are willing to make a deal with you. Most people who have abandoned their properties are willing to accept fairly reasonable offers.
The hard part is that these property owners rarely leave details behind of their new address and contact information, so it’s almost impossible to find them once they’ve left. That’s why so many real estate investors either try their own hand in skip tracing or hire a professional.
One trick that many real estate investors try is using the United States Postal Service to get the property owner’s new address. What you do not want to do is walk into the post office and ask for their information. The post office is not obligated to provide you with their forwarding address. They are only allowed to give that information to law enforcement, licensed private investigators, or any other entity under court orders. So how do you get around this? All you have to do is send a letter addressed to the property owner at the address you wish to buy. Mail them a letter and on it, write “Do Not Forward – Return Service Requested.” Now that you wrote this, the post office will not be able to forward your letter to their new address and will have to return it to you. If they set up mail forwarding, you’re in luck! The letter will come back with a sticker on it detailing their new address. If it comes back with no address, that’s when you will have to look into skip tracing to find them.
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What to Try Before Hiring a Skip Tracer
If the post office trick didn’t work, your next step should be to use all of your resources before hiring and paying for a skip tracing service. Depending on what you need from the person, you may be able to do your own version of skip tracing and get what you need. For just an address or phone number, the internet may be your best tool.
Often information about someone can be found through a Google search, social media, or through the county assessor’s database. Many people even have their phone numbers linked to their Facebook profile without even knowing it. If they are the owner of a page or group, go into the info section and see if it has a contact email or phone number. Using social media, you may be able to look through their photos or connections’ photos and find out their new location. From there, do a Google search for their name and location and see if you can get an address or phone number. You may even be able to find them through a people search or a phone directory.
The following are a list of sites you can try to track down the property owner:
FindPeopleSearch.com
Pipl.com
TruePeopleSearch.com
PeopleSmart.com
PeekYou.com
YellowPages.com
AnyWho.com
TLO
Spokeo
Accurint
If you call a number and it’s not them, see if they have any connection to the person you’re looking for. You never know; sometimes, a dead end is just a redirection.
Hiring Skip Tracing for Real Estate Investments
Once you have exhausted your search to find the new address or phone number of the property owner on your own, you will have to look into skip tracing services.
Luckily there are plenty of skip tracing services to choose from. Speak with some of your real estate connections and see if anyone has had a good experience with a specific skip tracer. If you are unable to find a referral, do your own research. Read the reviews and make sure they look legitimate. Do not, no matter the price, hire a skip tracer who does not act ethically. It doesn’t matter how great the potential property investment is. It’s not worth breaking the law or involving yourself in sketchy practices.
Generally, skip tracing is not a very expensive service. Using a licensed investigator with skip tracing certification will only cost you around $25 per hour for their services. You could hire an unlicensed skip tracer for around $18 per hour, but it’s not worth the risk over such a small price difference.
What to Do If You Don’t Find the Owner
If you’ve exhausted all of your resources and you cannot find the owner of the property that you want to buy, just put this effort on pause. Move on to other projects and start looking for other properties that you find to be good investments. Add this property and any evidence you found into a spreadsheet where you can keep all skip tracing leads. After a few months, revisit your sheet and do a quick search on a few of the tools provided in this article. While there may not have been any information on the homeowner a few months ago, they may have down something to now appear in a search. Continue to do this every few months until either the property is sold, too run down, or you’ve moved on to different business ventures.
Summary
Skip tracing real estate is not for everyone. If you are a real estate investor looking to get into property management, you likely do not need to waste your time tracking down owners of abandoned homes. On the other hand, if you are someone who is just starting out in real estate, this might be a good thing to try. It could get you a step ahead of your competition, and you may be able to strike a really good deal with the homeowner, as they will likely be motivated to buy. If you are in the business of wholesaling or flipping homes, skip tracing is also something you may want to consider for your business. While it’s a lot more effort than other methods, it has a potentially great payoff if you succeed.
Joe Arias and his partners have flipped hundreds of properties in the Southern California Region. He has developed cutting-edge systems to simplify and scale the entire remodel process that can easily be applied to flipping, rentals, wholesaling, and other passive income strategies. More recently, Joe founded a real estate investing education company called RealSuccess Investments, allowing him to share his tools and systems with hundreds of up-and-coming investors.
RealSuccess is focused on education on flipping, rentals, passive income, and wholesaling.
Joe is also a best-selling author. He has written 4 books: Finding your RealSuccess, First Steps to Flipping, R stands for Rentals and Retirement, and Wholesaling Real Estate.
“I came from Argentina when I was 20, I am 40 years old now. I didn’t know anyone, I am CERO generation, usually people say, I am first or second generation but I was the one that crossed the border, no language, no friends, no family, no money, nothing, nada… If I can do it, anyone can.”
From a young latino immigrant to a celebrated real estate investor, Joe is a true testament to hard work and discipline. As an investor, he has made it his mission to help others achieve financial freedom while enjoying living a life of passion, fulfillment, and empowerment.
Learn live and in real-time with Realty411. Be sure to
register for our next virtual and in-person events. For all the details,
please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.
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We are very excited to announce our 5th Annual Los Angeles Real Estate GRAND Expo. The GRAND Expo returns on Saturday, October 26, 2024, 9:00 am to 6:00 pm. We’re taking over the entire Iman Cultural Center for the day.
Last year, the GRAND Expo was the largest real estate event in Southern California! We had over 800 investors, 64 vendors, and 12 national speakers. This year will be even LARGER! An entire day celebrating real estate investing and you can be involved. Best of all, the GRAND Expo will be FREE to attend. This Expo is going to be grand, really GRAND!
SPEAKERS. There will be national guest speakers (in three breakout rooms). Here is a partial list of speakers:
1. Jonah Dew – “The Money Multiplier” 2. Eddie Speed – “Buying Discounted notes” 3. Steve Matley – “Syndication” 4. Joe Arias – “How to Get Started Investing” 5. Christopher Meza – “Developing Raw Land” 6. Tony Watson – “Tax Advantages for R.E. Investors” 7. Lauren Wells – “Passive Income Strategies” 8. Marco Kozlowski – “How to Buy Lots and Lots of Houses” 9. Amanda Brown – “Invest in Commercial Real Estate” 10. Ken Letourneau – “Tax Sales Master” 11. Arturo Olivas – “Create More Deals” 12. Steve Matley – “Do More Deals Bringing Partners together” 13. Tim Edenfield – “Top 5 Secrets to Out Of State Investing” 13. Rick Sharga (Keynote) – Real Estate Economist
INVESTMENT EDUCATION. Just think of it! An all-day in-depth educational extravaganza celebrating real estate investing. Most importantly, this will NOT be a sales pitch. Each of the speakers have contractually agreed to educate and teach us successful real estate investing strategies. So regardless of whether you are a new investor, already own properties, or are very experienced, our Grand Expo is for you.
COMPLIMENTARY PRIVATE CONSULTATIONS. As a special unique feature of our Grand Expo, you can sign-up for private half-hour consultations with your favorite guest speakers. Registration will occur Saturday morning, starting promptly at 8:00 am. First come – first serve. So come early and schedule your private consultations. A once in a lifetime opportunity to get free advice from national real estate experts!
VENDOR EXPO: Don’t miss our “Vendor Expo,” which will occur throughout the day in the North Hall. We’ll have 70+ vendors where you can “meet and greet” real estate professionals with services and products that you’ll want to utilize in your real estate investing. (If you have a product or service that would be valuable to real estate investors and would like to be a vendor, please contact us directly.)
FOOD TRUCKS. What would a Grand Expo be without food trucks? A day full of workshops, vendors, networking, and real estate investments demands sustenance, and we’ve got you covered. We’ll have 3-4 international food trucks in our central courtyard, plus a coffee wagon (for caffeine injections throughout the day).
DATE: Saturday, October 26, 2024, 9:00 am to 6:00 pm.
LOCATION: Iman Cultural Center, 3376 Motor Avenue (between Palms and National), Los Angeles, 90034.
FREE PARKING: Street parking (free and metered). There are also two FREE parking structures just two blocks away. The first structure is at the northeast corner of Motor and Palms. The second structure is at the northeast corner of Motor and National. From either parking lot it’s short two block walk to the Iman. Valet parking ($15) will also be available.
FREE ADMISSION: Admission to our Grand Expo will be COMPLIMENTARY (free!), but reservations are recommended.
PRODUCERS. The Grand Expo is joint presentation of the Los Angeles County Real Estate Investors Association, Sam’s Real Estate Club, Realty411.com, Women’s Real Estate Network (“WREN”), REI Wealth, and Greater LA-REIA.
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Becoming a real estate investor gives a person the fantastic opportunity to generate passive income, but if you want to be successful, you need to have a strategy. According to HUD, there are between 10 million and 11 million individual investor landlords managing an average of two units each in the United States. While it may be somewhat easy to become a landlord, it is challenging to be a successful landlord who brings in a profit each month.
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Being a landlord should be treated like being a business owner and should include a business plan. Your income property business plan should include things like financing options, marketing strategies, budgeting for maintenance and repairs, and your long-term goals. It should also include identifying your ideal tenant but be wary of fair housing laws. When determining who you would like to rent to helps you narrow down the type of amenities your property should have. Prospective tenants may demand specific amenities like a pet-friendly rental with a yard or that the unit is within close proximity to public transportation and schools. These amenities may call for higher rental rates but could also come with their own headaches and affect your return on investment.
Residential Properties
Single-family home or townhome, condo, or manufactured, pricing strategies are pretty much the same. Many landlords use the 1% rule. This rule suggests charging 1% of the home’s value for rent. In reality, it is not that simple and there are other factors to consider.
Where Should I Start?
Whether you are getting ready to purchase an investment property or preparing to put it on the rental market due to tenant turnover, when deciding how much to charge for monthly rent you need to figure out a rental price that is high enough to cover your mortgage and operating expenses while ultimately giving you extra cash each month. But, you can’t just set a rental rate based on how much profit you’d like to make on your rental property. Unfortunately, it doesn’t work that way. Many factors go into determining how much to charge for rent. Let’s discuss them.
First, let’s talk about market rent. Market rent refers to the average rent price for a rental property and is determined by the real estate market value. When you get ready to list your property for rent, it is essential to see what your competition, other landlords, are charging for their rates. Some factors which affect the amount you can charge in rent are:
Square footage
Number of bedrooms
Number of bathrooms
Garage or covered parking spaces
Pet policies
Property type (single-family home, condo, etc.)
It is a good idea to research property values in the area where your property is located. This part of the process should be pretty simple. You can either look at one of the many online home search websites to do your research or ask your real estate agent to give you access to an online portal through your local MLS. Either way, you will be able to see what is available in your area filtered out by the homes that have similar features.
Depending on the type of property you have purchased, there may not be an identical comp to base your price on. One way around that is to look at the price per square foot in your neighborhood in properties as similar as you can find. Even if your property is 1200 square feet and the house down the street that just got rented out is 1600 square feet, you can still look at that number to help you determine your rate. So if the 1600 square foot house rented for $2,000 per month, that would make the price per square foot $1.25. You could then base your price on that number by multiplying $1.25 by 1200.
Rental Property Expenses
As we discussed, you cannot just set a rental price based on how much money you need to make in order to cover expenses and generate a profit. At the same time, you need to be aware of your costs so that you can set the price high enough to make a profit. When determining how much you will need to charge for rent each month, there are some additional, not so fun considerations to take into account.
These include:
Mortgage payments
Property taxes
Insurance
HOA fees
Property management fees
Maintenance fees
Rental income taxes
Utilities
Each of these items are additional expenses that you will have to cover and can vary by city or even neighborhood you purchase in. These fees are typically the same year-round, so it is somewhat easy to put them into your plan when working to determine the monthly rental rate.
Commercial Properties
The process of arriving at a rental rate on your commercial property is similar to that of a residential home.
You will need to look at similar properties to what they are renting for, just like you would with a residential property. In general, you would look at the property’s size, location, and number and type of tenants that the property currently has. In addition to these somewhat basic factors, you also need to consider the following:
Charging by usable square footage: This is the amount of space that the tenant uses alone, not including common areas that any tenant can use. So in an office building, it would be the actual office space versus the building’s lobby.
Leases are much more complicated: There are multiple ways to enter into a commercial agreement lease, here are three primary lease structures:
Triple Net – Tenants pay their base rent plus taxes and insurance on the building. These are the most common types of leases.
Full-Service Gross – Tenants pay the landlord on fee, and the landlord is then responsible for all other expenses like taxes, insurance, maintenance, and utilities. These types of leases are common in office properties.
Modified Gross – Landlords pass on some but not all of the cost of utilities, maintenance, janitorial, etc.
As the landlord, you will have to figure out much to charge for base rent and calculate how much the additional expenses will be. You still want your lease price to be attractive to potential tenants and competitive against other property managers.
Something else to consider is that commercial leases tend to last for more extended periods of time. Typically the lease period can be three to five years, so it is imperative to choose an amount that will hold up to that longevity.
Unless you are a seasoned investor, it may be wise to work with a property manager to help you with the day to day dealings. They can even help you determine how much to charge in rent.
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There is So Much to Consider, and I’m Overwhelmed
Looking at all of these factors is overwhelming. Rental rates can change by the week, and doing all of this research only to find that prices have increased or decreased before you can get the property listed can be discouraging. It is essential to understand why prices change so quickly. Like any other product on the market, supply and demand is always a factor in how much something costs.
Some landlords may choose supply and demand as the only factor in determining a rental rate. Others may place their rates somewhere in between the neighborhood market rate and HUD’s fair housing rate. Whatever strategy you choose, make sure your property stacks up to other properties in the area and you should be okay.
Final Thoughts
Pricing your investment property, be it residential or commercial, is one of the most important factors in being a successful investor. If you do not charge enough to cover all of your expenses, you will lose money making your investment a bust. Very simply, look at the current market rates based upon the size and condition of your property in order to determine how much to charge for rent.
Joe Arias
Joe Arias and his partners have flipped hundreds of properties in the Southern California Region. He has developed cutting-edge systems to simplify and scale the entire remodel process that can easily be applied to flipping, rentals, wholesaling, and other passive income strategies. More recently, Joe founded a real estate investing education company called RealSuccess Investments, allowing him to share his tools and systems with hundreds of up-and-coming investors.
RealSuccess is focused on education on flipping, rentals, passive income, and wholesaling.
Joe is also a best-selling author. He has written 4 books: Finding your RealSuccess, First Steps to Flipping, R stands for Rentals and Retirement, and Wholesaling Real Estate.
“I came from Argentina when I was 20, I am 40 years old now. I didn’t know anyone, I am CERO generation, usually people say, I am first or second generation but I was the one that crossed the border, no language, no friends, no family, no money, nothing, nada… If I can do it, anyone can.”
From a young latino immigrant to a celebrated real estate investor, Joe is a true testament to hard work and discipline. As an investor, he has made it his mission to help others achieve financial freedom while enjoying living a life of passion, fulfillment, and empowerment.
Learn live and in real-time with Realty411. Be sure to
register for our next virtual and in-person events. For all the details,
please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.
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