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Stack of Money
For many of us, we know all too well about the troubles with financing these days. One minute, you think you have it all figured out and then the bank turns around and pulls a product away from you.  I have seen it firsthand and it is very frustrating.  There are layers upon layers of guidelines that you have to abide by to get a mortgage these days.

Have you ever stopped and thought about private financing?  If not, you need to.  Private financing is a way to get around some of these crazy guidelines and stipulations that these banks are pushing through.  When I say private financing, I mean talking to someone that knows you, likes you, and trusts you and of course, likes what you are doing with the money. Private investors are more lenient with their requirements and as long as you treat them good, they will be good to you.  Do some research on the topic of private financing. A great source for education on this topic is

When one door closes, another door will often open. Don’t get discouraged by financing issues. Create your own avenues. Nobody said this was easy. If it were easy, everyone would be doing it.

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Determining Investment Property Offer Price

Determining what to offer for a property is the first and most important part of buying an investment property.  You make your money when you buy a property, not when you sell it.  It doesn’t matter what the asking price is, we want to put in an offer that allows us to make a profit.  To determine the highest value that you are able to pay for the property and still make a reasonable profit, you can use the same process that we use.  First, we pull comparisons to determine the After Rehab Value (ARV) of the property as compared to the asking price.  If it is already at a discount, we will spend more time trying to get it at the price that we need.  We will then estimate the repair costs either by looking at the property or sometimes just looking at the pictures and using high numbers to cover unexpected costs.  We then use the equation below to determine our Maximum Allowable Offer (MAO).

 (ARV)*.70 –(rehab costs) = MAO

Example:  ARV for a property is $100,000.  It will need about $20,000 to rehab it, so I need to get the property for less than $50,000.               ($100,0000)*.70 -$20,000= $50,000.

Using this equation when deciding what to offer for properties will help you easily determine the MAO to ensure a profit for you when the property sells.

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How to get more offers accepted

If you are buying or looking to buy REO properties, you need to know how to make offers and get your offers accepted.  We make multiple offers per week to increase the odds of getting a property at a good price but there are things you can do to make your offer more attractive than others.  Typically, we put in at least 10 good offers to get 1 accepted offer.  The REO Broker is looking to move his properties as quickly as possible with as little disruptions as possible, collect his commission and move on to the next one.  For this reason, you need to make your offer the most attractive to the REO Broker so that your offer is chosen.  A cash transaction is always the most attractive as it allows for a quick closing and there is a higher probability that the closing will go through.  We typically waive the inspection on the property unless we have some concerns we need to get checked out that could make or break the deal.  If you are an agent, you can also offer up your side of the commission to further sweeten the deal for the broker.  If the property is a deal worth buying, you should do as much as you can to make sure your offer stands out more than any other offer to increase the odds of getting it accepted.  Keep in mind, it is not uncommon for a lower offer to be accepted just because it is stronger, has a higher probability to close and can close more quickly.

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Goal Tracking

Did you set goals for 2011? If so, have you revisited those goals? If not, you need to. Every 2 to 3 months is a good time to revisit your goals to see if you are on track for your yearly goals. It’s also important to have weekly goals, monthly goals, six month goals, yearly goals, and longer term goals that you are always constantly working on. I make it a point to go back and review my goals every 2 to 3 months just to make sure that I am on track with where I want to be. If you’re not looking back at your goals that you set previously, you have no idea what to measure yourself up against.  For instance, if you have set a goal to lose 25 pounds this year, where are you at today?  We are two months into the year, so by now, you should have lost at least 4 pounds.  This is what I mean by measuring yourself and your goals.  Now this example was very literal considering you were actually measuring yourself, but I hope that it paints the picture.  If you haven’t lost those 4 pounds yet, what can you change going forward to make that goal a reality? You can’t wait until November and look at the year. That only gives you one month to meet your goals. You need to constantly evaluate yourself.  Maybe you are on an accelerated pace and you want to push for an even higher goal, great for you. However, you would have never realized that you were on an accelerated pace if you weren’t monitoring your goals.  I encourage you to review your goals on a consistent basis once a month, or every other month, or even once every quarter. Just do that and get into a habit of it. It’s a good thing to do to keep you on track. It will help you be successful.

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Home Staging Results

We recently wrote about the importance of home presentation in today’s market, but have not seen such amazing results as what we have witnessed this week.  We just finished our most recent rehab on a house in Fishers, IN that is outside of our typical price market.  We were expecting to hold the property for at least 30-60 days based on the price market we were in.  After an excellent rehab by Gary Bartunek at Real Estate Realm, LLC, we paid to have the house completely staged by Home Matters, LLC.  The house was listed at 12:30 on Wednesday and by 5:00 pm on Thursday, we had 5 offers, 3 above asking price, and finally accepted one that was $11,000 above our asking price.  Without a doubt, we would have not had this much action on our property if we did not stage it.  We figure we made at least double our money back from what we paid for the staging.  Don’t believe that staging will help move your property and earn you more money?  I assure you that it will.

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Rehab Subgroups

As you may or may not know, we will be holding a Rehab Subgroup this Saturday at our recently rehabbed property in Fishers, IN.  Rehab subgroups can be a great way to further your education in real estate investing, while at the same time networking with a number of like minded local investors.  At our rehab subgroup we hope to teach everyone the step by step process of rehabbing a single family home from, start to finish, for BIG profits.  You will get copy of the scope work for the property and be able to walk through the property and see firsthand all the changes that were made.  This is a free educational event, so take advantage of it while you can.  If you can’t make it to this particular event, do some research in your area and find one that you can attend.  Educating yourself is the first step in helping you accomplish your goals, whatever they maybe.

For more information on this particular event, check out this video from Paul Esajian from Fortune Builders and the A&E hit show “Flip this House”.

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Real Estate 101

Computers DeskIt is amazing how much education you can find about any topic. Obviously, the internet has become a wonderful source for educating ourselves on different topics.  However, you must proceed with caution.  Not all education resources are equal.

Whether you are interested in buying or selling your own home, or an investment property, you must first be educated about the process.  On top of that, it also helps to have a professor or mentor, so to speak. I have several mentors that I can pick up the phone and call if I have questions about a scenario. I have been in the Real Estate business for over 10 years, but I still have questions and I still need education.  If someone who has been in the Real Estate business for over 10 years still requires education, don’t you think it would be good for you to align yourself with a mentor of some sort if you are just starting? Of course it is a good idea.

If you are looking to purchase your first owner occupied home, or sell your home, you will want to get in touch with a good real estate agent experienced in buying and selling homes. If you are looking to buy or sell an investment property, align yourself with someone that has experience in real estate investment.  I have been offering free educational meetings, monthly for the last 6 months to interested parties. If you would ever be interested in attending one of these free trainings, get in touch with us and we will get the information out to you.

Education is the golden nugget, but you must not just be educated about your topic of interest, you must also apply your knowledge. This is where most people fall short.