Getting the Highest Return

To make the most money possible in real estate, the standard philosophy is to “buy low, sell high”. Most people try to do this, and many do not succeed because it’s hard to do. When trying to get the highest return possible, keep your  costs down and do everything possible to draw in the highest bidders.

Once you own the property, do as much of the repair work yourself, as long as it is of a professional level. You can hire out, however make sure there is enough money in the deal for everyone. Shoddy work and inferior materials will cost more to correct later. With difficult projects, hire a trained professional from a small scale operation. Large contractors with several employees have to factor their large
overhead into their prices.

When looking to maximize your profits, try to save money with your lender. Look around for cheaper loans with the less popular lenders. The large banks and financing companies usually have high fees and rates. Don’t accept overpriced fees. For example, your lender is charging $75 to deliver a few papers a short
distance, ask for it to be reduced.

By educating yourself on the legal and accounting aspects of real estate transactions, you can save yourself thousands of dollars. If you learn the basics of these two areas you will know when to ask for a  professional’s help.

When negotiating, be firm but flexible. Attempt to find a win-win situation where both you and the other party walk away from the table happy. Be clear on what you want, and what you can be flexible on. If the other party walks away angry and feeling cheated, they might try to sabotage your attempt to make a profit.

If you are selling your property, it’s important to also shop around and negotiate for the best prices on high priced items, real estate commissions, and closing costs.

“Staging” is setting the scene by making your property look its best. You will get the highest price for a property that has been properly prepared.

Actively market your property and you’ll get the largest pool of potential buyers possible. It is a benefit to the seller if there are several interested parties in your property.

Bail Out Stalemate. How is this effecting you the Real Estate Investor.

Originally published at Chicago Wholesale Deals. Please leave any comments there.

I hope you are doing well. For me, well I’m having a bit of a challenge right now. With this bail out plan or no plan as the case may be, everything seems to be at a standstill. What should we call this,”Rescue America Bill” or “Bail out The Banks Bill”. Some call this “The Invest in America Bill, “The Paulson Plan” Is a Deal or No Deal. I’m so confused. How about you.
I don’t really care what they call it, is Congress ever goig to come up with an agreement. If and when they do, how is it going to affect you as. For me as a Real Estate Investor, this is what is happening to me now.
The so called motivated seller seems to put negotiations on hold hoping fore a miracle. Banks aren’t lending unless you are willing to jump through numerous hoops, be willing to pay through the nose and can prove you don’t need the money. What I crock of bull we need to put up with. Then of course we have the private money lenders. Mine say thier all tapped out or not willing to let go of it for now.

Mean While I will still keep looking for those great wholedealdeals for you.
Thanks for sticking with me. To show my appreciation, go to the link below to download an eBook from
a Chicago area appraiser and a good friend of mine Jeffrey Knize.

http://chicagowholesaledeals.com/ForeandFlips.pdf

Let me know what you think. Please comment below

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Chicago Reduced Price Homes

Originally published at Chicago Wholesale Deals. Please leave any comments there.

200 reduced price homes for sale in Chicago with down payment and financial assistance. Price range $150k to $450K. City of Chicago prvides help. Fore more on this…

http://www.chicagotribune.com/business/chi-fri-incentives-homes-0905-sep05,0,2216898.story

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Managing Your Risk

Originally published at Chicago Wholesale Deals. Please leave any comments there.

Managing the risk associated with investing in real estate is key to protecting your self from loss. The most important aspect of risk management in real estate is to know the law. It’s essential that you have a working knowledge of the real estate legal structure and requirements.

After you’ve researched property availability, cost, and buyer interest, you’ll need to hypothesize about what the future holds for your market. Will prices go up or down?

When considering your risk, keep the following points in mind:

1. Think about the local economy. Are there jobs available or are most companies in the area losing jobs? Are new homes being built more or less than over the past 5 years?

2. Make wise financing choices. When picking your funding source, think about how long you plan to keep the property. Adjustable Rate Mortgages (ARMs) are attractive because of their lower down payments and lower rates. You can pick the duration of the loan – typically either 1, 5, or 7 year ARMs – and your rate will be adjusted to the prevailing rates after this period of time. If you plan to hold onto a property longer than the ARM, ARMs can cost you more because of the higher interest rates. It may be more prudent to opt for a fixed rate mortgage with the shortest length you can handle financially.

3. Pay a large down payment to reduce your risk. If you can put down 10%, you’ll have instant equity in the property, and most likely get a better interest rate.

 4. Be creative with your mortgage payments. Make larger monthly payments then require, or make one extra payment a year you’ll reduce your principle.

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Subject To And Lease Option Investments

What are they?

Subject To and Lease Options usually go hand in hand, but are completely separate real estate practices. These strategies are glorified buy and holds, with Subject To being the front end (buying) and Lease Options being the back end (leasing and sales). “Subject To” is short for “subject to the existing mortgage.” It is a way to control a property by having the seller of the property continue to hold the financing in their name, but give the interest, benefits, and responsibility of the property to the investor. Lease/Options are two separate documents that are used to lease properties out to people who are willing to do more of the roles of an owner and thus receive an option to buy the property at a later date.

Subject To

Pros:

No need to go to a bank for financing
Ability to pick up low owner-occupied interest rates and lower monthly payments
Strong tax benefits
Long-term passive residual income

Cons:

Most deals don’t have much equity in them
More complicated documents
Most sellers won’t qualify because they are way over-leveraged, terms of their loan are not favorable, or they are not motivated enough to keep financing in their name.
Marketing Advice:

Market in areas where there are properties that have been on the market a long time and lots of houses listed.
Neighborhoods that have newer homes or areas where there is still building going on can be excellent areas to find these deals.
Show credibility with all sellers, but especially with these sellers in order for them to feel comfortable giving you the house but keeping their name on the loan. Joining the Better Business Bureau or local Chamber of Commerce can be great credibility builders. You can also never have enough testimonials from past sellers. Doing honest, ethical win/win deals will help with this more than anything.
Lease Option

Pros:

Ability to get chunks of cash with NROC (non-refundable option considerations)
Long-term wealth building ability
Less tenant management issues than regular rentals

Cons:

More additional forms and education required than regular leases
Tenants who are supposed to be doing repairs to property might neglect them and cause more severe problems
Marketing Advice:

Directional signs at busy intersections near property are very helpful.
A voicemail system to screen possible tenants is a huge time saver.
Large colorful signs with Take One boxes hanging on them are huge.
Use a lockbox instead of showing tenants the property yourself.