Real Estate Investing Articles

When it comes to real estate investing those who are looking for unique methods of investment that are radical departures from traditional methods will be sorely disappointed. No, that does not mean that there are no new innovations present in real estate investing. Actually, new spins on traditional investment strategies are developed by innovative minds everyday. However, there are a finite number of basic methods of investing that have worked in the past, work today and will work in the future. Such is the case with the renovation of a downtrodden home in order to increase its value for resale.

This is a very simple concept: a home that has fallen in disrepair will be acquired at a cheaper rate than one that has been properly maintained. Then, the new owner fixes up the property which will increase the equity of the home. Hopefully, the costs of the repair will be below the equity value of the home making this a quick profit. Then again, a quick profit is not even necessary as long as the value of the home increases over time and this value exceeds all costs associated with the home.

Does this mean the process of repairing a home is easy? No, this can be an involved process depending on your personal situation. So, if you have never entered into this type of repair work then you probably would not want to swallow a project that will require tons of renovation work. Perhaps a home with a few renovation needs would be best to start with such as a home that needs a roof, new aluminum siding or a paint job as individually the costs of these repairs will be less than a collective of all these repairs.

Now, if you are able to perform the repairs yourself you are in a very strong position. For example, if you are able to paint a home yourself the costs associated with this venture will be the raw materials required for painting. If you hire a painting company not only will you have to pay for the raw materials but you will also have to pay for labor. Additionally, if someone else is performing the labor you are not in control of the amount of time required to finish the job. This statement is not designed to dissuade people who wish to outsource their repair needs it is simply designed to place the costs into their proper perspective. It is also designed as a way of motivating those who have the ability to do repair work themselves to get into the real estate investing game.

Many homes in need of renovation are not disaster areas. They simply are the result of benign neglect probably because of budgetary constraints, age of the owner, etc. But someone with the desire to renovate the home and restore its previous grander can do well in real estate investment. It has been done successfully before and it will continue to be done successfully in the future. Let that act as your inspiration.

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

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Posted by RENVEST under house flipping & real estate investing | No Comments »

Before we look at the value of a number of late night real estate infomercials, it is important to stress that any source of information that is helpful should be commended. If it was not for presence of valuable resource information on a number of subjects then the ability to learn about a subject – and become successful – would not be possible. Now, there are those who say that those who sell seminar tickets, books, and CDs about real estate investing are frauds. The reason they are frauds is because if they were really “smart” about real estate then they would not need to sell books in order to make money. This is about as faulty as faulty logic can get. Well, a baseball player making $10 million a year does not “need” a raise to $35 million, but we have seen a precedent for that. So, it is not absurd to think someone with investing skill would cross collateralize by expanding their empire to informational products. Then again, if they were earning $500,000 a year with real estate and $1.5 million a year with informational products…well, do the math. There is really nothing wrong with informational products that offer significant value.

So, the real question that needs to be asked is the following: does the product that is being sold actually have value? In many cases, the answer is yes, but you don’t need to spend money for it. Much of the information found in a variety of infomercials is actually common knowledge in the real estate business and not really worth spending money on.

For example, there are tons of real estate infomercials that stress the concepts of buying foreclosed properties, flipping properties and renting properties out higher for more than their mortgage payments. All of these concepts are legitimate ones, but none of them are radical and most of this type of basic information can be found for free on the internet. Actually, IN DEPTH information on this subject can be found for free on the internet. But when a person comes across a sales pitch for this information via an infomercial and it is the first time they have come across the info they have a tendency to elevate the product sold on the infomercial to be a little more valuable than it actually is.

If there was one problem, however, with infomercials it would be the carnival hucksterism that many of them profess. For an infomercial to be successful it must convince you that its concepts are exclusive and unique and that you must act fast. Remember, they won’t be buying time on your local TV station forever so if you don’t act fast they are out of luck! And, of course, the infomercials promise a lot of money with little effort quickly. This is the one aspect of real estate infomercials that are especially egregious. You can make a lot of money in real estate, but only with a lot of effort over an extended period of time. That is the true secret to real estate success whether you pay for the truth or not.

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

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Posted by RENVEST under Real estate investor resources | No Comments »

Real estate investing has always been considered a safe investing plan. Unless you were a “sucker” looking to purchase swampland in Florida, real estate investing was considered a winning strategy because barring unusual events the equity of a home would generally increase. But, the current subprime mortgage crisis has seriously impacted the current real estate investing landscape. However, this impact may actually be good for some people.

Some may wonder if the subprime mortgage fiasco has had a massive negative effect on the real estate investment market. Well, it would be foolish to assume that all the bad publicity generated by the subprime mortgage crisis has had a ripple effect on real estate investing. The prices of houses have fallen dramatically and loans have proven harder to secure. However, this can be considered a blessing as opposed to a negative.

First, let’s get something straight right off the bat: people are still buying and selling real estate. Yes, the subprime mortgage crisis has had a dramatic impact but it has not had such an impact that it has ended real estate transactions all together. So, as long as the real estate market has not completely collapsed and buying/selling real estate has become a thing of the past, you can always find an avenue for earning income in real estate. Barring something along the lines of the Bolshevik Revolution where the government seizes all land you will still have real estate investment options available. Therein, lay the key here: real estate prices will invariably rise in the future. If you are able to weather the storm until it reverses course you will be able to come out of the depreciation problem the subprime mortgage crisis created.

Here is a fact: if you currently do not have a subprime mortgage, and do not have a property that is being foreclosed upon, then you are not feeling the brunt of the crisis. If the equity of you home has fallen because of the ripple effect of the crisis but it is still more than what you paid for it, then you still are ahead of the game. In fact, when the real estate market eventually makes a comeback you will probably regain some if not all of your lost equity. In fact, you may even discover your equity increasing again depending on how much time passes. Patience here is the true key to success.

Additionally, you could even use the current subprime mortgage crisis to your advantage in the sense that this is currently a buyer’s market. This can give you the option of buying real estate in short sales, foreclosures or through other avenues which would provide a cheaper acquisition price. If you are able to purchase these homes on fair fixed interest rates, and not with interest only mortgages, no down payment loans and other such nonsense, you probably will avoid a host of problems that the subprime crisis has yielded. In a way, you could even airlift an old worn out cliché and apply it to this situation: “one door closes and another door opens.”

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

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Posted by RENVEST under mortgages & real estate investing | No Comments »

You can put the blame for the concept of restricted land use and zoning laws directly on the Manhattan skyline. Almost a century ago, in 1915, when the Equitable Building’s 42-story shadow cast almost seven acres of land into perpetual gloom, New York City residents started complaining about property devaluation (and haven’t stopped since). A year later, the first zoning laws were enacted, and have since changed numerous times to accommodate an ever burgeoning populace.

The real estate investor who does not know or understand the zoning laws for the area in which the investment or rental property lies does so at his own risk. Laws vary broadly from city to city, even within the same county. The intention of zoning laws is to help property owners and their tenants to peacefully co-exist, with the full backing of the law.

But zoning laws can and do change over time, and an investor should understand that what a tenant may or may not legally do today, may not be the case in the future. In some instances, the misbehavior of your renters, especially if you are the owner of a multi-dwelling complex, can generate complaints to zoning officials, resulting in changes to the existing laws. You, as the property owner, have the obligation to ensure and enforce the applicable zoning laws.

What you can do:

First, be aware of the zoning laws yourself. Contact the local planning board, and get a copy of the statutes, even before you purchase a property for rental usage. Consider how possible changes to the zoning laws might affect you.

Second, clearly understand the demarcation of zones; as urban sprawl continues to spread, you may find that a potential rental property complex is actually in a zone designated for commercial use. That may be a risky investment; if it was brought to the attention of the Planning Board they have every right to deny its continued use as a residential property. While you might think you can apply for a variance after the fact, the big “what if” should be foremost among your considerations.

Third, advise your tenants, in writing, that the property is zoned for residential occupancy, and a home-based business may not comply with the zoning requirements. All tenants should seek permission from you first, and not just assume that because they’re “quiet or won’t bother anyone,” that it wouldn’t be a problem.

Fourth, zoning laws are not written in stone; there are circumstances which may warrant a variance, which is an exception to the existing law, or for an application for zoning change. The approval of a variance to existing zoning laws is generally simpler to obtain, usually requiring only a statutory review of the specified criteria. On the other hand, a zoning change application is a lengthy procedure, since you are suggesting that the highest and best use of the property is other than the one it’s designated for. The appeal for re-designation may test the resources of the property owner, both in terms of time and money. Under either the request for variance or the zoning change, a property owner should be prepared to argue his point in front of a public hearing of the planning board, and be ready to refute any opposition.

Residential zoning laws can be a major obstacle for property owners and investors, but provided that you’re aware, up front, of what you can and can’t do with your property, you won’t be caught in a property zoning nightmare. Property owners must be proactive with respect to the zoning laws, and should bear in mind that what they assume to be the legal permitted use of a particular, potential investment property, may in actuality be an illegal use of the property. That wonderful duplex you visited at an open house, and have your eyes (and hopes) set on, may be zoned for single family dwelling. The onus is on you to verify that information before you buy. “I didn’t know,” won’t carry much any weight, with the local zoning board.

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

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Posted by Barb Zigah under due diligence & real estate investing | 1 Comment »