Real Estate Investing Articles

The typical real estate investor may be a “jack of all trades,” but that doesn’t necessarily make him successful, it just makes him tired. The successful investor knows that in order to succeed, he has to surround himself with people who are smarter than he – those individuals very knowledgeable in the business and with a good track record. That’s a proven concept, employed by successful businessmen as well as politicians (though not necessarily “good” politicians, just successfully elected ones).

The key to establishing a great team is to put together players who are successful in their own right or have the potential to succeed. Your real estate investment team can have as few or as many individuals as you need – unlike a sports team where you can’t exist without your pitcher, power forward or wide receiver, you can get along with only a couple of players and still succeed.

First String Team Members

Investment Advisor or Certified Financial Consultant – This individual is going to manage your entire investment portfolio, ensuring that the retirement goal that you’ve set remains in focus at all times, and makes recommendations towards achieving that goal. He should always have your best interests at heart.

Real Estate Attorney – A good attorney is invaluable for reading, drafting and understanding legal contracts, knowing the legality of your property deals, and understanding the laws in the state or community in which you own the property.

Certified Public Accountant – Your number cruncher should be well versed in real estate-related accounting transactions. He’s going to be your go-to guy when tax time comes around, and you’re wondering about your deductions and write-offs. This individual may also be an excellent source of referrals for property acquisition.

Real Estate Agent – Unless you have access to the latest MLS updates, your realtor will be your best asset, alerting you to new properties coming onto the market; a realtor with BPO (broker price opinion) experience, provides even more of a benefit.

Traditional Lender or Mortgage Broker – Face it, you can’t do anything without financing; you need to know where or who to turn to for the amount you need, at a competitive interest rate as soon as you find a property.

Insurance Agent – For an investor with a good number of properties, your agent can help you set up policies, advise you to ensure that you have adequate protection at all times, and help you through the red tape of filing a claim.

Title or Escrow Agent – This individual will make your property closings infinitely smoother and relatively stress-free. A competent agent will ensure that your transactional information is accurately recorded, and that you pay only the appropriate fees. They should be looking out for your best interests.

Second String Team Members

Property Manager – When you can’t be everywhere at once, and find the day-to-day tasks of numerous property ownership overwhelming, a qualified property manager will be the best option to run the operation on your behalf, leaving you time to pursue other opportunities.

Property Handyman – A handyman kept on retainer may be a good alternative to a property manager; however, they should have a basic knowledge of what makes a home tick and be available to fix minor repair needs. Your goal is to hire a Ty Pennington or Bob Vila, not a “Tim ‘the Toolman’ Taylor” from the old television comedy, Home Improvement.

Contractors – If you are beyond the need for basic home repairs, and intend to buy and flip properties that may need some “updating,” you need a reputable contractor to assist you with ongoing and new projects. Finding a contractor that contains costs, works to specs, and finishes within the agreed time, is crucial.

Finally, though not officially part of your team, they are the ones who are your real support: your family, friends and mentor. Without their encouragement, would you really be where you are today?

Putting a successful team together may take some time, and it’s important enough a concept that you don’t rush or “settle” for just anyone. Where do you find your team players? Some you may already know, but see them in a different light – as a member of your community, swim club or religious affiliation. You need to ask around, pass around your business cards, get referrals and then interview your candidates.

It’s important to remember the immortal words of the great philosopher-cum-basketball player, Kareem Abdul-Jabbar, “One man can be a crucial ingredient on a team, but one man cannot make a team.”

Barb Zigah is a freelance writer covering real estate and business topics.

If you are interested in reprinting this article on your website, newsletter, forum, printed publication or other communication medium, please consult our article licensing policy.

Posted by Barb Zigah under Real estate investor resources & due diligence & real estate investing | No Comments »

Real estate investors may, like many others, believe in the adage, “if you want something done right, then you’ve got to do it yourself.” Generally, that’s true, but at some point, a real estate investor may have too many properties that make the efficient and profitable overseeing of those properties, without the use of a property manager, next to impossible.

The twelve sure-fire signs that you need to hire a property manager to care for your investment properties are:

1. You’ve brought an exterminator to the property on Peterson Street to fix an electric ceiling fan, and you’ve brought an electrician to the property on Peterson Avenue to eliminate a pest problem. Your little mental mix-up resulted in two relatively happy contractors, each of whom charged you for two house calls, and two bewildered tenants, wondering what happened?

2. You’ve been so busy that you forgot to collect the rent in one of the properties you own, and now the tenant informs you that they’ve spent the money and will be late getting it to you.

3. You don’t schedule the new delivery of home heating oil in preparation for the upcoming winter and your tenants are calling to ask you how to light a fire in their fireplace… their faux fireplace.

4. You forgot to run a background check on a potential tenant, and they turn out to be serial evictees with a page full of judgments against them on their credit reports.

5. You don’t panic when the phone rings at 2:00 in the morning, worrying that it’s a family emergency; instead, you mutter an expletive before you answer the call, knowing it’s a tenant with a property-related issue (and not necessarily an emergency).

6. You feel bad about raising the rent, and guiltier still if you have to perform an eviction, because you allowed yourself to get caught up in the drama that is your tenants’ lives.

7. You don’t have the time to inspect your properties on a quarterly basis, much less a monthly one, and the majority of the properties are less than an hour’s drive from your office.

8. Your spouse and/or your kids are complaining that your tenants see you more than they do, and you’re neglecting the maintenance of your own property, because you’re exhausted from your handy-man duties.

9. Several of your properties are vacant, and the word-of-mouth marketing scheme and the FSBO signs you planted on the front lawns are just not working.

10. You have no idea what your local, state or federal landlord/tenancy laws require and whether or not you’re in compliance (“Tenancy law? What tenancy law?” and “Fair Housing Act? What’s that?”). Ignorance of the law is not an excuse.

11. You’ve kept your repair receipts, invoices, insurance policies, tenant application forms and all property related documentation in a big box underneath your desk; at the end of the year, when you need your financial statements prepared, you hand the box to your CPA and he starts to cry.

12. You’ve got no back-bone when it comes to confronting your tenants about NSF checks, noise related complaints from the neighbors and/or police, late rental payments and poor property upkeep. You put off the confrontation until you’ve mustered up enough courage, and then begin your conversations with, “Umm. I really hate to bother you…”

It’s true that no one will love your properties as you do, certainly not your tenant and probably not your property manager, but it is in your property manager’s best interests (after all, he does get paid to do this) to keep your interests at heart. Trust them to know the best way to maximize the income that your property can generate, while minimizing the risks of vacancies, non-paying tenants, property damage and loss of property values.

Let your property manager handle the (sometimes unreasonable) demands of the tenants, the middle of the night phone calls, the confrontations and the evictions. Your property manager will also have the responsibility of preserving and even enhancing your properties, through regularly schedule maintenance and landscaping , alerting you to potential problems before they become serious and costly, and handling the day-to-day minutiae that is so time consuming, such as collecting the rents, and paying the bills, utilities and taxes. When and if your property becomes vacant, the property manager’s role is to market your vacancies, help you to set your rental prices reasonably and fairly for the market environment, and run the background check on all potential tenants.

What’s your responsibility, as the property owner? Ultimately, everything is your responsibility; it is, after all, your property. Provided that you’ve chosen a competent, qualified and responsible property manager, though, you’ll spend less time involved in your properties, leaving you more leisure time to spend pursuing the things that you love. Really, wasn’t that the reason that you got involved in real estate investing in the first place, to have time to enjoy life?

Barb Zigah is a freelance writer covering real estate and business topics.

If you are interested in reprinting this article on your website, newsletter, forum, printed publication or other communication medium, please consult our article licensing policy.

Posted by Barb Zigah under Real estate investor resources & real estate marketing & rentals | No Comments »

It’s a statistical fact that almost 90% of potential home buyers start their search for their “dream home” on the Internet, and 72% of those Internet users drive past a home that they first saw online. According to Realtor.com, virtual tour listings get “hit” 40% more than ordinary listings. All of that leads to one conclusion, and the savvy real estate investor understands that they need to move beyond the traditional still (ho hum) photographs of the house and property, and create dynamic video that really conveys a property’s potential. These “virtual tours” are an ideal medium to draw that buyer to you, from anywhere in the world. Though still a rarity, it is not unheard of for a home to be bought entirely over the Internet, (physically) sight unseen, usually by individuals or families relocating from another area of the country, or even from another country.

Selling property the old fashioned way, via print media and weekend scheduled “Open Houses,” were fine in their day. But newspaper classified advertisements, and listings in the “Take One Free” brochures invariably found at bus and train stations, as well as 24- hour convenience store magazine racks, had a very limited (i.e. local) reach. Even in seller-favorable market environments, the period from listing to closing could take several weeks and even months.

The real estate investor, as the property seller, can benefit tremendously from virtual tours. The primary advantage is exposure — your property is available for viewing all day, every day, to people in your neighborhood as well as half way across the globe. For the vast majority of home buyers, the time factor, coupled with the ever rising cost of gas, is enough to keep them home sitting behind a desk and exploring the available real estate listings online. The virtual tour eliminates those buyers who aren’t serious – you’ve probably heard of them, they’re “professional” Open House visitors, who do it just for sport (and the cookies), and who relish the opportunity to inspect every nook and cranny (and kitchen junk drawer) of a potential new home.

Another advantage, arguably more important than exposure, is that listed homes with virtual tours sell for more money than comparable properties with only static pictures, sometimes by as much as ten percent.

Having access to a video camera, video editing software and a You Tube account doesn’t necessarily give you license to create your own virtual tour. Nor should you attempt to create your own virtual tour just to save a few bucks. That’s not to suggest you couldn’t do this, but any attempt to do so should be objectively judged, by you – because it will be, and perhaps harshly, by the visitors who view it and immediately click out of it. There are several do-it-yourself kits and packages that will help you create a successful virtual tour.

Some individuals have no picture taking skills whatsoever; they are generally the ones who tend to decapitate their subject, and wouldn’t know an F-stop from an O-spot. For those people, the answer is a professionally created virtual tour. Prices vary, but generally the package is well worth the investment. A professionally created virtual tour should also provide you with the ability to link to external sites, such as search engines, blogs, real estate portals, etc. Furthermore, your virtual tour should offer tracking options and site meters, so that you can see which room or features appears to be most relevant to your site visitors.

At a bare minimum, a virtual tour should have these components:

• Simple navigation – is it easy for your visitors to “walk around” the property, find a specific room or zoom in on something special?

• 360º Images – Some rooms and exteriors warrant a panoramic view, just to capture its innate beauty; you don’t want this for every room, just for the ones that you feel can best “sell” the property, perhaps because of their size or their unique qualities.

• Narration, Audio and Sound Track – You don’t need hokey background music, but you should have compelling voice-over dialogue written, so that you can walk your visitor through the rooms, and point out features and modifications that might otherwise be missed. A word about voice-over, if you’re creating your own virtual tour, listen to yourself on audio tape before you take on the role of narrator; the voice you hear is the voice everyone else does, and it may not be as melodic as you think.

• Load time – Internet users love speed, and if your virtual tour takes forever to load, you’ve lost a potential home buyer.

The virtual tour is a win-win situation for both the real estate investor and the home buyer. Think of it as a “Cyber Open House,” minus the refreshments, of course.

Barb Zigah is a freelance writer covering real estate and business topics.

If you are interested in reprinting this article on your website, newsletter, forum, printed publication or other communication medium, please consult our article licensing policy.

Posted by Barb Zigah under real estate agents & real estate marketing | 1 Comment »

Your potential buyer has just pulled up in the realtor’s car. Quick! You only have one chance to make a good first impression, and a potential buyer makes the decision as to whether or not they’re interested in the house within the first 8 seconds of seeing it. So, what do they see when they pull up to the curb in front of your house, even before they alight from the car? Is it a (curb) appealing view? Or do they see window shutters with peeling paint, chipped wrought iron railings, dirt encrusted aluminum siding, patchy brown grass, the remnants of a vegetable garden and the kids’ bicycles and skateboards lying scattered in the driveway? If your answer is yes, then you’ve just lost a sale.

Staging your home for sale is a two part job: inside and outside. Your outside has to be as inviting as your home, because it’s a part of your home. So stand back, and open your eyes. What it will take is probably no more than a pressure washing, a little painting or touch-ups here and there, and a weekend’s worth of landscaping. Your destination should probably be your local home improvement center, where you can get everything you need complete the task.

Let’s look at some of the basics to getting your yard and the outside of your house, properly staged.

Declutter the yard – Remove all trash cans, bikes, building materials, garden fertilizer and the like and stow them neatly in your garage.

Eliminate unnecessary junk – Put away the plastic lawn chairs and tables, the kiddy pool and even the barbecue grill if it’s greasy and nasty looking. If you’ve got a car on your property waiting for rehab, now is not the time to leave it languishing – garage it, donate it or junk it.

Cut back the jungle – Prune or pare down all shrubs, trees and plants, especially those situated directly in front of your house. They should enhance the look of your house, not block a potential buyer from looking at it.

Basic yard maintenance – Depending on the season or need, ensure that your lawn always stays well mowed, weed-wacked or raked, and that your flower or vegetable gardens are well tended and neat. Mulch or fertilize to encourage healthy, vital looking plants.

Clean up the property – Pressure wash dirty aluminum siding or even sooty brick, as well as driveways, decks and patios.

Fix or replace damage – Take a good look at your driveway and walkway. Are there cracks or holes, oil stains, patches of grass coming up between the pavers? If they are beyond the need of a little patch work or a lot of scrubbing, consider having them replaced.

Make it colorful – Consider buying vibrant colorful annuals, and plant them in decorative planters, window boxes or along walkways, or flanking an entryway. A new mailbox, house numbers of hardware are inexpensive touches that translate well.

Scrape and repaint – Freshen up anything that looks dingy or has peeling paint, such as wooden shutters, window trim and railings, and most especially, the entrance way door — it needs to be inviting and welcoming.

Brighten up – Buy and install some solar lighting for night time showings; solar lights are more efficient than ever, easy to install, reposition and remove.

Decorate for the season – Don’t hesitate to pull out a couple of seasonal or holiday trimmings, but nothing should be garish or overwhelming. A holiday wreath or trim on the front door, white lights, a jack-o-lantern, they’re to be expected – you don’t want to create a haunted house or Santa’s workshop.

Real estate agents estimate that, with landscape staging, a seller’s return on investment is between 300 and 400%, depending on the area of the country your property is situated in. That $300 or $400 you “invest” at the home improvement center translates into more than $1,200 on your return. That’s a nice net profit.

If you don’t take it upon yourself to make this kind of “investment,” one of two things will happen. Either your potential buyer will reject your house outright or counter offer your asking price. And it won’t be just $300 or $400 less; no, they’re going to shave a few thousand dollars off of your asking price.

In any economy, especially one that favors a home buyer, you need to add the little touches that will make a house a home, even before your buyer signs the contract.

Barb Zigah is a freelance writer covering real estate and business topics.

If you are interested in reprinting this article on your website, newsletter, forum, printed publication or other communication medium, please consult our article licensing policy.

Posted by Barb Zigah under Real estate investor resources & real estate marketing | 1 Comment »

It doesn’t matter what you call it — “a little sprucing up,” “adding some curb appeal” or “home staging” – the numbers don’t lie. A home that’s been “staged” sells, on average, within one month, while an unstaged house, takes almost 6 months to sell. And if that wasn’t enough to convince you, a staged home often sells for the asking price. In any economy, especially one that’s experiencing a downturn, that’s not too shabby.

So, what is staging? On a very elementary level, a staged house is one that is de-cluttered, with furniture rearranged for easy access and pass-through, and simply but elegantly accessorized. Staging is a way of decorating your home so that when your potential buyer first enters, they immediately get the sense, subliminally, that this house, above all others, is the one.

Every seller wants to show their home in the best possible light. Only a decade or so ago, that simply meant keeping the house and yard clean, neat and presentable at all times, just in case the house was being shown to potential buyers. Now, homeowners are recognizing that their “comfortable, lived-in” look doesn’t sell. And professional stagers are cashing in on that recognition, big time. In North America alone, there are over 20,000 professionals belonging to the Real Estate Staging Association, and that doesn’t take into account Realtors who have certification in staging.

Professional stagers are not simply interior decorators; they are trained to create a warm and welcoming atmosphere, by minimizing a home’s flaws, through depersonalizing and de-cluttering the evidence of human existence, while emphasizing improvements to the property and landscape as a means of adding value. Excuse me? In simple language, they get rid of the junk, and make the most of what you’ve got. If you’ve got nothing or an empty house, they can take care of that, too. Many stagers have access to furniture, rugs, accessories and all manner of decorative household item, and for a fee (of course), can strategically place them in your empty home.

Staging doesn’t have to be expensive; you can get a basic consultation from a professional, who will charge by the hour, and make recommendations that you implement. Fees start at $75 per hour and upwards. For a pull-out-all-the-stops home staging, including provision of furniture and accessories, it might run as high as $4,000. But before you roll your eyes and close this tab, consider this, the return on your staging investment can be as high as 300%, but is almost never less than the initial cost.

It’s possible to stage your home yourself, provided you can be totally objective. The best way to do this is to take pictures of the rooms in your house, both during daylight hours and at night time, and take a good, honest look. Pretend that it’s not your property at all. What would and could you do differently? If you’ve got a friend whose decorating style you’ve always admired, why not ask for their help, as well?

There are some basic steps to staging your home, and getting it ready for sale. Most of them are do-it-yourself jobs, requiring little money, and a little more time.

Reduce clutter – Clear your house of “almost” everything that’s unnecessary; box it and pack or give it away… you’re moving anyway, right? You needn’t pack it all, though, this is still a home, and a “few” personal pictures or a couple of stand-out pieces of a favorite collection will add warmth.

Streamline – Keep only your “essentials” in your essential rooms, such as your kitchen and bathrooms. A potential buyer doesn’t need to know your preferred brand of deodorant.

Reorganize – Move furniture around, if necessary, to create a natural flow or walk through. Too much furniture in a room tends to make the room look smaller, so if you’ve got excess, stash it elsewhere.

Refurbish – Scrub, clean, paint, patch or polish your walls, floors, ceilings and windows. A bucket of soapy water, a can of white paint and some elbow grease may be all you need to revitalize a room.

Let the sun shine in – Open up the drapes and blinds during the day, and be sure you’ve turned on all of your ambient lights whenever the house is being shown in the evening.

Setting the mood – A couple of lightly scented candles (don’t overdo it, it’s a shrine) and music playing softly on your stereo (no hip-hop, rap or opera); if appropriate, light a fire in the fireplace. All of these are subtle but welcoming touches.

Individually, all of these are small, easily attainable improvements. Combined, they’re powerful enough to send the subliminal message that you want to convey: That this is your dream home.

Barb Zigah is a freelance writer covering real estate and business topics.

If you are interested in reprinting this article on your website, newsletter, forum, printed publication or other communication medium, please consult our article licensing policy.

Posted by Barb Zigah under Real estate investor resources & Uncategorized | 2 Comments »

A private REIT offers investors the opportunity to gain large profits in non liquid real estate investment trust.

A REIT is a solid vehicle for allowing those with limited capital to invest in real estate. REITs are essentially mutual funds that invest in the purchases, management or even financial lending for real estate investing. There are two further categories of REITs. The first is a publicly traded REIT which is available on the stock exchange and then there are private REITs that are not publicly traded. While most people have a clear idea of what a publicly traded REIT entails their understanding of a privately traded REIT may be very limited. This is why a clearer understanding of what a private REIT entails is needed so as to know whether or not this is the right type of investment for you.

A private investment, whether it is a REIT or some other type of investment, is an investment into a business for an extended period of time. The payments to the investors will be dividends over a period of time based upon either the profits or gross revenue of the investment. Here is an example of how a private REIT works: you are required to invest a minimum of $35,000 into the REIT and this will cover the “life” of the REIT which is, say, seven years. Your dividend residual income will be 3.5% gross over the course of seven years. That means the REIT must turn a profit of $1 million dollars in seven years for the investment to break even. If it earns a $3 million dollar profit in three years then you have tripled your initial investment in seven years which would be a colossal investment. However, if seven years go by and it becomes obvious this is a money losing venture…you are stuck. Since it is a private REIT you can not sell your shares in the manner of a publicly traded REIT.

This is not, however, a scam. When you invest in a business the business can not allow you to pull your money out because that would tank a business. If you promised a small child $1000 to run a lemonade stand for a year and asked for your money back after three months the lemonade stand would likely have to close shop. A private REIT follows the same logic. If you make an investment you are locked into it because providing the ability to pull out the investment would de-fund the business. This makes it an unsuitable investment for anyone that needs short term liquidity of their investment funds. But, it is also what makes a REIT a potentially huge investment as a successful private REIT could yield a huge windfall profit.

Let it be known the main benefit of a private REIT is the fact that it may end up paying a far higher interest rate than a publicly traded REIT. However, it is a far, far riskier venture. You can think of a private REIT investment as an investment in a real estate business. A private business is generally riskier than a publicly traded stock, but also offers a greater opportunity for gain.

A.M. Caro is a freelance writer from Southern California.

If you are interested in reprinting this article on your website, newsletter, forum, printed publication or other communication medium, please consult our article licensing policy.

Posted by A.M. Caro under REITs | No Comments »

The short sale follows the maxim that is universal to all forms of investing, the notion to “buy low and sell high.” Granted, this is not always easy to do but when such an opportunity presents itself then the opportunity should be taken advantage of. This is where the concept of a short sale brings great opportunities for those looking to purchase real estate at a low price.

When the seller of a home owes more than what the value of the home actual is worth the seller is facing quite the conundrum. It simply would not make much sense for an individual to continue paying a mortgage that is more than the value of the home. In the absence of a change in their financial circumstances, the homeowner will often allow the bank to foreclose upon the home.

This, of course, creates a conundrum for the bank. Banks are in the business of lending money. Banks are not in the business of selling real estate. As such, the bank may be willing to sell off the house and recoup some of their money as soon as possible. The operative word here is “some.” In other words, the bank may be willing to take less than what is owed on the property. In some cases they may even be willing to take less than the property is worth in order to avoid the foreclosure and sales process. This, in real estate parlance, is what is known as a short sale and it can present a tremendous opportunity for a real estate investor.

Keep in mind, just because the bank is offering the property as part of a short sale does not mean that the bank will be willing to practically give the home away. There may be a need for a little haggling and negotiation for the price you want and don’t be surprised if the bank does not totally give in to your demands. However, do not be disappointed either and simply move on to your next potential acquisition.

Now, some may frown upon capitalizing on a short sale because it would seem as if the investor is taking advantage of the person whose home was foreclosed upon. This is simply not an accurate statement because the buyer in the short sale has absolutely nothing to do with the foreclosure itself. The foreclosure is the result of the borrower not meeting obligations with the lender and the lender acquire the property. In many cases a short sale will include provisions that release the borrower from any further obligation for the difference between what is owed and the price for which the property is sold. Should the bank make the short sale this will also keep a foreclosure off the borrower’s credit report. In essence, a short sale that goes through is typically very beneficial for the borrower.

A short sale has the potential to be great opportunity for acquiring real estate at a bargain price. And, as every wise investor knows, no good opportunity should ever be overlooked because such deals do not present themselves very often.

A.M. Caro is a freelance writer from Southern California.

If you are interested in reprinting this article on your website, newsletter, forum, printed publication or other communication medium, please consult our article licensing policy.

Posted by A.M. Caro under foreclosures | No Comments »

From time immemorial, trailer and mobile homes have gotten a bad rap. As a New Jersey native, I am well acquainted with the disparaging remarks, many of which inquired into my own residential pedigree. And no, I grew up in a 7-room brick house on an individual lot, which my parents owned for almost two decades. Perhaps those rejoinders had the effect of subconsciously alienating me from the concept of a mobile home as a good investment. Years ago, when I worked on Wall Street, a co-worker, a bank vice president no less, vociferously stated that when he retired he intended to buy a mobile home. I thought he was kidding. Now, I realize, the joke was on me.

Given the dismal state of the U.S. economy, many individuals who suffered in the wake of the sub-prime crisis with ruined credit and the loss of their primary residence, are unwilling to even consider the back-step of living in an apartment. At the same time, though, they recognize that they no longer have the capacity or resources to buy another property. For these individuals, rental of a mobile home is a practical alternative to apartment dwelling.

Some considerations need to be addressed, when determining the viability of buying a trailer or mobile home property for investment purposes.

1. There is a clear distinction between a mobile home and the land it sits upon. Ideally, an investor should purchase both; you will have considerably less value if you only own the mobile home and not the land, and significantly more control, by owning both.
2. Just as with regular property, size matters; the bigger the better, both in terms of the mobile home itself and the plot of land on which it sits. Doublewide properties tend to appreciate faster than their singlewide counterpart.
3. Supply and demand; by focusing on properties for middle and lower income markets, you’ll have a steady stream of people in need of affordable housing. Affordable housing tends to be a scarce resource in any economy, good or bad.
4. Within a mobile home park, the individual owners pay park fees which may include taxes, insurance and electricity for common areas, advertising for vacancies and maintenance for the road through the park. These vary from park to park, and may be fixed or variable.
5. Reduced maintenance costs; the home and property are proportionately smaller, requiring proportionately less maintenance and cash outlay. In many instances, even a minimally skilled investor can handle routine maintenance.
6. Positive cash flow; all things considered (i.e. lower mortgage payments, lower carrying costs, deprecation, etc.) your rental income should more than cover your expenses.
7. Obsolescence is obsolete; if and when the mobile home itself become outdated or is beyond repair, it can often be upgraded or replaced, quickly and relatively inexpensively. Just make sure you can make back your interest and a tidy profit before the mobile home becomes obsolete.
8. Variety; an investor is not limited to a trailer that looks as though it was just unlatched from an 18 wheeler. Many have attics, basements, decks, sheds, pantries and multiple bedrooms and baths, just to name a few amenities.
9. Consider the rules and regulations of the park that your property lies within. Do you have enough control of your own property, or will they be controlling you? The purpose of rules and regulations is to keep out the negative element; an apparent abundance of “park laws” is not necessarily a bad thing.
10. Affordable housing will always be in demand. Baby boomers and senior citizens alike are demanding alternative housing, for a variety of reasons, including the inherent lower cash outlay and reduced maintenance requirements afforded with buying a mobile home. This bodes well for the mobile home investor as either a good source of steady rental income or an ideal flipping property.

While the information presupposes the purchase of an individual mobile home property or two, don’t hesitate to consider an investment in an entire mobile home park. Warren Buffet, who knows a thing or two about investing, no doubt saw the vast potential when his company, Berkshire Hathaway, acquired Clayton Homes, a nation-wide manufacturer of mobile homes. He’s not the richest man in the world for nothing.

Barb Zigah is a freelance writer covering real estate and business topics.

If you are interested in reprinting this article on your website, newsletter, forum, printed publication or other communication medium, please consult our article licensing policy.

Posted by Barb Zigah under mobile homes | No Comments »

Many novice real estate investors spend a good deal of time acquiring real estate wealth without any focus on asset protection. That’s a mistake. With too much exposure, you run the risk of having those assets attached in the event a lawsuit judgment doesn’t go in your favor. Landlords are named in more lawsuits than any other class of people. While some of those cases appear frivolous, others are valid. A landlord risks being subjected to judgments, fines, fees and penalties in varying amounts. In a perfect world, the real estate investor will never be sued. Unfortunately, this isn’t a perfect world.

The goal, if I may paraphrase John D. Rockefeller, is for you to “control” your assets, not “own” them. A Certified Public Accountant will have a whole-host of asset protection strategies to draw upon. Below are some of the protective strategies:

Insurance
This is simple basic protection; an umbrella policy is generally used by investors who have a sizable number of unencumbered assets with a good deal of equity, to ensure that any claim, including catastrophic ones, will not place those assets at risk.

S or C-Corporations and Limited Liability Companies (LLCs)
By law, the “owners” or shareholders of either an S or C-Corporation, or the “members” of an LLC are not legally responsible personally for the actions of the business; the only exception to this law is that of outright fraud. Even if an investor is the sole shareholder/member, he is not personally liable for losses or judgments against the corporation or the limited liability company.

Land Trusts
A land trust is merely a document that “conceals” the investor’s name on the property title as listed in the public records. It is a simple document to create and can be done by any real estate attorney, and is relatively inexpensive. While the land trust does have tax implications, namely because trusts are often taxed at a higher tax rate, its overall benefit is the privacy of ownership. In most cases this privacy of ownership can be quickly negated by a title search, which will reveal the ownership before the land trust transfer.

Revocable Trusts
A revocable trust is an agreement, in which control of assets is transferred from an owner to a designated trustee. Because an investor is permitted a good deal of flexibility, there are often changes to the asset composition, or appointment of a new trustee, if the investor is not satisfied with the trustee’s administration.

Irrevocable Trusts
An irrevocable trust can never be altered or canceled, in any way shape or form. Period. It is the ultimate in asset protection, because you are in effect, placing your assets beyond your reach. Because of the irrevocability of it, an investor must be one hundred percent certain of the capability and trustworthiness of the Trustee. In effect, they now control the asset, not the investor.

Watertight or “Bulletproof” Protection
This is a strategy whereby, with the assistance of a capable lawyer, you create a layered wealth protection strategy, which will shield your assets from seizure. Effectively, you build layer upon layer of single strategies, which throw up “legal” roadblocks to litigation activities. The foundation is typically the creation of a land trust, which is combined with one of the limited liability companies. The possibilities are almost endless.

These are very simplistic explanations of the various forms of wealth protection, and an investor would be wise to consult with an attorney or CPA for further advice. The bottom line is that an investor would do well to consider one or more forms of asset protection to safeguard their real estate wealth. One lawsuit can ruin a lifetime of wealth building.

Barb Zigah is a freelance writer covering real estate and business topics.

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Home Inspections should be a very critical piece of any investors due diligence process. Due diligence is an important concept that anyone interested in real estate investing needs to commit to memory. The most logical example of due diligence would be to compare the sales price of a home to the sale price of similar homes in the surrounding area. If a house’s asking price is $250,000 and similar homes are going for $180,000 then a number of questions need to be asked regarding the true value of a home. This type of due diligence is very common and often not overlooked. Home inspections, on the other hand, are often considered as optional for some investors… at their own peril!

Home inspections should be undertaken on each and every property, lest an investor finds his or her plans for the property will built on shaky ground. Costs for necessary improvements to the property should always be considered by investors before deciding to purchase a property and at what price. Home inspections are primarily for the purpose of sniffing out some of these potential problems. For example, the home could be infested with termites, have a leaky roof or need to have its malfunctioning siding replaced. Had you purchased the home without discovering these defects, you would have overpaid relative to your cost/benefit analysis.

These problems can be avoided up front by paying for a home inspection. Home inspectors will examine the property, note the flaws and provide advice on steps that can be taken to correct the flaws. Good home inspectors should even be able to give you ballpark estimations for replacing and repair costs. Clearly, no one would want to make an investment without full understanding and disclosure of what the investment entails. So, the question remains why would anyone enter into a real estate investment undertaking a home inspection?

Finding a reliable home inspector is not as difficult as some would assume. There are a number of professional home inspectors who work in cities all over the United States. It is best to select one who is properly licensed and has significant experience in the field. This is not to say that someone with limited experience can’t do a good job. There are many builders or contractors turned home inspector that are able to translate their prior work experience directly to the art of home inspection. Since most home inspectors cost about the same amount, you would do well to find one with lots of experience and excellent referrals.

It will be critical to make sure the home inspector has complete and total access to the home and is given a reasonable amount of time to inspect the home without distractions. Keep in mind, the home inspector is basically safeguarding your potential investment and you want to make sure they do a proper job without interference.

The ultimate purpose of home inspection for an investor is to ascertain the true value of a home, including any necessary improvements. If it’s true that you make your money when you buy a home, then a home inspection should be mandatory.

A.M. Caro is a freelance writer from Southern California.

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