Kevin Kiene
Supply & demand cut both ways, my fellow real estate junkies. Demand has plummeted, so what do we do? Swim against the tide and start buying, of course.
The Purchase Plan: Double Distress
Prices are down, but if you're a real estate investor worth your salt, you still want a killer bargain. So here's the game plan: where others see distress, you need to see dollars.
The purchase plan involves both distressed sellers and distressed properties. Let's consider the case of foreclosures for a moment; why does real estate sold through foreclosure auction sell for less? Because investors can't get inside to see what kind of shape it's in. But there is no question that buyers at foreclosure auctions, especially in today's market that's far oversaturated with them, will score a good deal, provided they know what kind of property they're buying.
So to take maximum advantage of a distressed seller sale by foreclosure, what safer method is there than to buy a property that you already know needs full renovation? There's a discount built into properties needing renovation, because of the hassle of renovating them. Those hassles, which you'll have to be adept at managing, include maintaining relationships with several of each of the following: hard money lenders (for quick settlements and renovation loans), small, local banks (they're far cheaper than hard money lenders and fill the same niche, but are pickier), licensed contractors, inexpensive handymen, and low-cost permanent lenders if your renovation loan is short-term. A distressed property in shambles, sold through a distressed sale, will effectively give you a double discount, which will in turn create maximum cash flow for the next stage: getting paid.
The Payout Plan: Deferred Gratification
We've already established that you have to go against the grain if you want to make money in a slow market like this one. With a depression in demand and an abundance of supply, you don't want to sell, so what do you do? You build your real estate empire, and watch money flow into your account every month as a landlord. When the market shifts in a few years, you'll be poised to sell all those distressed properties bought for a steal, and make a fortune.
There are some challenges involved in being a landlord, so be prepared. First, your money is not liquid; these investments, by their very nature, are long-term and you will have to wait for the market to turn before you can sell. Second, you'll need to be capitalized, both because your other money isn't available and because rental properties will always throw surprise expenses your way in the form of maintenance, repairs, vacancies, and lawsuits. As a final note, it is a wise and happy landlord who hires a property management firm to assume the headaches for them.
Remember the first thing you learned about money: buy low, sell high. The real estate market can and should be your ally, not your enemy; ride the highs and lows alike, and right now that means buying as cheaply as you can and holding the properties as a landlord. Good luck!
Article Source:
http://www.bestmanagementarticles.com
http://investment-management.bestmanagementarticles.com
About the Author:
Read more articles for landlords and real estate investors at EZ Landlord Forms, along with free real estate forms and real estate investing tips and resources.
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Showing posts with label money. Show all posts
Showing posts with label money. Show all posts
30.6.09
Investment For Your Best Future
by: Don Burnham
What comes in to your mind when you mention the word investing? Do you think of putting your money in insurance, mutual funds, the stock market or even high-yield investments? Does it make you think you need to learn how to invest in stocks or real estate?
The word invest is defined by Webster as 1 : to commit (money) in order to earn a financial return 2 : to make use of (anything) for future benefits or advantages.
Some people think about financial investing only when they are about to retire and they have nothing for retirement, or when they are about to die and they haven’t left anything for their children.
Others shudder when they hear the word “invest,” claiming that they have no money to invest or they feel that is too complicated a subject to even think about, and they are sure they will suffer financial loss.
Many people invest heavily in health supplements, personal trainers and beauticians to make themselves live longer, healthier lives or even to look younger. Just look at the advertising budget for beauty aids and even plastic surgeons!
All these are legitimate concerns when it comes to investing, but I am talking about the most important investment a person can make in his lifetime…
Invest in Yourself. The most important and No.1 rule is “Invest in Yourself” – if you don’t, who else will?
Your parents will invest in your education only until you leave college. and that does not teach you important lessons about financial education.
Think about this: would you depend on colleges or universities to teach you how to make money? Most colleges only teach you skills so you can earn money working for other people. How about business school? Honestly, if business lecturers are such experts at business, why are they still lecturing there instead of making a fortune in business ventures?
Would your boss teach you how to succeed in business so that one day, you will be in his position? You, and only you, have to be proactive enough to take that responsibility. No, he knows that the easiest way for him to make money is to keep you where you are.
You see, when you invest in yourself, it means taking on the importance of educating yourself. Education not in the academic or technical sense, though those are necessary skills to be developed in life. But your education doesn’t stop at college.
For most working adults, their education enters retardation stage as soon as they leave college. They stop learning and therefore they stop growing. They only grow sideways from eating too much pizzas or take-out during their busy lunch breaks.
We know that IQ is important, right? But why aren’t the most intelligent people in the world the richest people in the world? There are many accountants and financial planners rushing to their cars every evening trying to beat the after work traffic congestions! They are not rich! They may be well off, but they are not rich!
How about EQ or Emotional quotient? Do working hard, having a great attitude and a positive mindset solve our financial situation? These are important when running a business, but let me illustrate:
If you are driving from Miami to New York using the wrong road map, you won’t get to your destination no matter how fast you drive your car (working hard)! You can work harder, but you would only get to the wrong destination faster! You may have the best attitude in the world or the most positive mindset, but you still won’t get to New York (although the journey wouldn’t bother you since you are feeling positive about it)
You must FIRST invest in your Financial IQ. Having good a financial IQ is not about saving tons of money or dumping it into mutual funds based on some free financial advice. That is less than beginner investing. It is developing a healthy relationship with money and building a wealth of assets that will generate money for you in the future.
What does it take to develop your financial IQ? Delayed gratification is one of the most important aspects to developing your financial IQ.
Take this as a hypothetical example. Would you rather pay for, a pint of milk or a cow? If you buy milk, it is consumed and it is over. You will have to buy milk over and over again when it is finished. Even if the milk costs less than a cow, in the long run, you will still be buying milk again and again.
Now, if a cow were to cost 50 times more than milk, you might pay through the nose when you purchase the cow. But after consuming 50 pints worth of milk from the cow, you would break even on your investment and save more money in the future. In fact, the cow might give birth to 2 or more calves and you could sell one of them for profit!
Get the idea? EVERYONE is capable of creating wealth. When you take a beat up old car and give it an overhaul, paint it with a new coat of paint, and change a few more parts to make it start running again, you could sell that car for more money than when it was just a beat up old car. You would have created wealth in the process!
How about a farm? If you turn a farm into a country home getaway resort, wouldn’t the value of the farm land increase many times?
It is the same principle for chefs, computer programmers and craftsmen. The sum of the whole is greater than the parts. We are all capable of creating wealth even out of thin air and that is the first step to getting our creative juices flowing.
The value of anything is defined by supply and demand. You don’t need to be an economics major to understand this. Money is just an idea. The true measurement of money is not the cents or dollars it represents. It is the value that money can be exchanged for.
If you have developed a product that people want, would they pay more to you than to some one else? Would you apply your skills in creating good assets if you knew that people would see the value in you, that the asset is you plus the asset?
The bottom line is this: Invest in assets that bring long term value. Anything that brings you more income is an asset. Don’t invest too much in liabilities like cars or boats. That’s not investing, that’s spending.
Even houses are not considered assets until they are fully paid off (If you lost your job tomorrow and you can’t pay for your house, is your house an asset or liability?)
Are you willing to step out of your comfort zone and pay the price for financial education or ignore the signs of the times and expect your boss (who may fire you) the government and the bank to take care of you financially for the rest of your life, living below your potential, and never taking risks to better your family’s future? You are the only one who can answer that.
Read more....
What comes in to your mind when you mention the word investing? Do you think of putting your money in insurance, mutual funds, the stock market or even high-yield investments? Does it make you think you need to learn how to invest in stocks or real estate?
The word invest is defined by Webster as 1 : to commit (money) in order to earn a financial return 2 : to make use of (anything) for future benefits or advantages.
Some people think about financial investing only when they are about to retire and they have nothing for retirement, or when they are about to die and they haven’t left anything for their children.
Others shudder when they hear the word “invest,” claiming that they have no money to invest or they feel that is too complicated a subject to even think about, and they are sure they will suffer financial loss.
Many people invest heavily in health supplements, personal trainers and beauticians to make themselves live longer, healthier lives or even to look younger. Just look at the advertising budget for beauty aids and even plastic surgeons!
All these are legitimate concerns when it comes to investing, but I am talking about the most important investment a person can make in his lifetime…
Invest in Yourself. The most important and No.1 rule is “Invest in Yourself” – if you don’t, who else will?
Your parents will invest in your education only until you leave college. and that does not teach you important lessons about financial education.
Think about this: would you depend on colleges or universities to teach you how to make money? Most colleges only teach you skills so you can earn money working for other people. How about business school? Honestly, if business lecturers are such experts at business, why are they still lecturing there instead of making a fortune in business ventures?
Would your boss teach you how to succeed in business so that one day, you will be in his position? You, and only you, have to be proactive enough to take that responsibility. No, he knows that the easiest way for him to make money is to keep you where you are.
You see, when you invest in yourself, it means taking on the importance of educating yourself. Education not in the academic or technical sense, though those are necessary skills to be developed in life. But your education doesn’t stop at college.
For most working adults, their education enters retardation stage as soon as they leave college. They stop learning and therefore they stop growing. They only grow sideways from eating too much pizzas or take-out during their busy lunch breaks.
We know that IQ is important, right? But why aren’t the most intelligent people in the world the richest people in the world? There are many accountants and financial planners rushing to their cars every evening trying to beat the after work traffic congestions! They are not rich! They may be well off, but they are not rich!
How about EQ or Emotional quotient? Do working hard, having a great attitude and a positive mindset solve our financial situation? These are important when running a business, but let me illustrate:
If you are driving from Miami to New York using the wrong road map, you won’t get to your destination no matter how fast you drive your car (working hard)! You can work harder, but you would only get to the wrong destination faster! You may have the best attitude in the world or the most positive mindset, but you still won’t get to New York (although the journey wouldn’t bother you since you are feeling positive about it)
You must FIRST invest in your Financial IQ. Having good a financial IQ is not about saving tons of money or dumping it into mutual funds based on some free financial advice. That is less than beginner investing. It is developing a healthy relationship with money and building a wealth of assets that will generate money for you in the future.
What does it take to develop your financial IQ? Delayed gratification is one of the most important aspects to developing your financial IQ.
Take this as a hypothetical example. Would you rather pay for, a pint of milk or a cow? If you buy milk, it is consumed and it is over. You will have to buy milk over and over again when it is finished. Even if the milk costs less than a cow, in the long run, you will still be buying milk again and again.
Now, if a cow were to cost 50 times more than milk, you might pay through the nose when you purchase the cow. But after consuming 50 pints worth of milk from the cow, you would break even on your investment and save more money in the future. In fact, the cow might give birth to 2 or more calves and you could sell one of them for profit!
Get the idea? EVERYONE is capable of creating wealth. When you take a beat up old car and give it an overhaul, paint it with a new coat of paint, and change a few more parts to make it start running again, you could sell that car for more money than when it was just a beat up old car. You would have created wealth in the process!
How about a farm? If you turn a farm into a country home getaway resort, wouldn’t the value of the farm land increase many times?
It is the same principle for chefs, computer programmers and craftsmen. The sum of the whole is greater than the parts. We are all capable of creating wealth even out of thin air and that is the first step to getting our creative juices flowing.
The value of anything is defined by supply and demand. You don’t need to be an economics major to understand this. Money is just an idea. The true measurement of money is not the cents or dollars it represents. It is the value that money can be exchanged for.
If you have developed a product that people want, would they pay more to you than to some one else? Would you apply your skills in creating good assets if you knew that people would see the value in you, that the asset is you plus the asset?
The bottom line is this: Invest in assets that bring long term value. Anything that brings you more income is an asset. Don’t invest too much in liabilities like cars or boats. That’s not investing, that’s spending.
Even houses are not considered assets until they are fully paid off (If you lost your job tomorrow and you can’t pay for your house, is your house an asset or liability?)
Are you willing to step out of your comfort zone and pay the price for financial education or ignore the signs of the times and expect your boss (who may fire you) the government and the bank to take care of you financially for the rest of your life, living below your potential, and never taking risks to better your family’s future? You are the only one who can answer that.
