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Real Estate Investing School - Finally!A Real Estate Investing School must entail the beginning steps for real estate investing. This website will provide the written steps to follow for beginning real estate investing. Some people learn best by reading while others learn best by being shown in person. If, after reading through this free mini-seminar below, you feel you would be better served by in-person instruction, there are seminars in various cities at various degrees of expense. Finally, there is a contact/submission form at the bottom of the page through which you can schedule a one-on-one 90-minute personalized seminar. In this personalized seminar, we will provide you with detailed information for each step, including specific websites for purchasing property for, literally, as low as ONE DOLLAR.
Property #803323311 4bd/2ba 2100sf $1 There were 5 other properties listed at $500 or less as of 9/28/08 on this site. Real Estate Investing School - Step #1Read Robert Allen's book No Money Down. This book, although not necessarily a recent book about real estate investing, has some solid concepts that could help any investor's progress. Read Robert Kiyosaki's book Rich Dad, Poor Dad. This book provides an EXCELLENT perspective change from how things are normally presented. It challenges the established paradigm and presents a "No Excuses" mindset. Other Rich Dad books are also helpful, motivating and educational. But I'd definitely suggest reading these first two books as a requirement before beginning your real estate investing. They provide the mindset and some basic concepts to understand.
Real Estate Investing School - Step #2Now that you have a very basic foundation. I'd suggest you amass a sum of money. REI Loans discusses traditional financing options for real estate investing.Less traditional but just as worthy options include asking friends and family as well as using your credit cards. Finally, I'd advise you to call five real estate agents, explain that you are interested in buying some property, and ask them if they have referrals for a good mortgage broker or lender. Please know that the agent will immediately try to sell you on a property or get your information so they can call or email you with their listings. Also, they will ask you if you are already pre-qualified for a loan. This is fine. Expect it. (You are also secretly interviewing them to see what type of person they are and their level of knowledge and professionalism. That's another Real Estate Investing School strategy!) Each agent should provide you with a referral. Call each one, feel them out (again you're secretly interviewing them). Ask them what types of loan programs are out there for first time buyers. Take notes of what they say. Also ask them if they usually shop loan applications around to different lenders? (If they do, each one will be a 'hit' on your credit). Decide on a specific mortgage broker or lender that you felt was the most knowledgeable and professional. Complete an application and find out how much 'house' you qualify for. Now you have a range ($0 to the qualified amount) and you can now go shop for a rental property.
Real Estate Investing School - Step #3Given today's market (this was written May 2008), I would look for an REO or foreclosure property. The reason for this choice is that you can negotiate much better with a bank as opposed to an emotional person. People want a specific price for their home for sentimental and/or logical reasons. A bank may need to unload a property because of a deadline and your low-ball offer might be the only one they have on the table.REO's come in all neighborhoods and prices. I feel quite certain that you can find ten that meet your qualified range. They may be in different cities and states but they will meet your money criteria. Please refer to the REI strategy, REI Tips, and REO Properties sections of this website for additional hints and suggestions. Make an offer on the property or properties you feel are the best "deals". So... How do you make an offer??To make an offer, you first have to do some math. I love math so making offers and calculating how much money I can potentially make is fun for me.Ok, let's play. Let's say that I am pre-qualified for $180,000. That means I can afford that much house. So, I would search bank foreclosure sites for REO's that are less than $180,000. I find fifty that are less than $180,000. They are all three bedrooms with two bathrooms. I finally narrow it down to three that are in good areas, have great curb appeal and could bring in about $1100 per month when rented out. (I find this out by inputting the address into Rent-o-meter.com.) As a beginner, I'd make appointments with agents to visit all three (if they are in my area). in the lowest-priced markets. Properties for $5000, $1000, and even $500. Use the contact/submission form below. If they are not in my area, then I explain to the agent that I want them to visit the house(s) for me and take pictures to email me. I also explain that I want them to let me know what issues they see with the house and neighborhood. Remember, this Real Estate Investing School advocates that you always talk to multiple potential resources (e.g. 5 agents, 5 brokers, 5 rehabbers) to fill those team member slots. So, you've already talked to several agents, interviewing them, and now you are comfortable with knowing what to ask for and expect. You eventually find out that the best property is an REO listed for $118,000. You first find out if the bank already has an offer for this house. If not, then you multiply this price by .80 because you always want to get a deal on your real estate deals. This calculation is 80% of the asking price. That's a pretty good deal. You tell the agent to submit your offer of $94,400. PERIOD!!! The reason I say "period" is because the agent is probably going to tell you that offer is too low. In this Real Estate Investing School, I suggest that once YOU have decided on what's right for YOU, don't let anybody tell you different. You submit with your offer an Earnest Money Deposit (EMD) of $2,500. Know that traditionally, the required EMD is only $1,000. But this Real Estate Investing School suggests always making low-ball offers. A higher than expected EMD reflects that you are serious about buying the property even though your offer is lower than asking price. Also know that the EMD check will never be cashed unless your offer is accepted. Don't forget the Escape Clause!I would be remiss in my real estate investing school if I didn't advise you about "escape clauses". An escape clause allows you to legally escape or get out of the signed purchase agreement.So, have the agent add an Addendum to the contract stating the following: "Subject to the Buyer obtaining an acceptable inspection by the Buyer's Home Inspector within 21 days." This escape clause is known as an "Inspection Clause" and it will allow you time to have the house inspected by a qualified home inspector. Inspections usually cost about $300 giving you a detailed 15 page list of everything that is or could be wrong with the property. If something very serious is on the list, (something that might cost $50,000 to fix) the escape clause will allow you to back out of the deal and get your EMD back! Since your offer is the only one on the table, the bank will usually counter your offer. At this point, you decide on how much you want to pay for the house. Remember, there were 49 other houses that you first identified, so if the bank doesn't want to come off the price of this one, another bank or another property might be better financially.
A word about Counter-offersCounter offers may go several rounds. Knowing your final number (let's say you won't go over $100,000), then your first counter-counteroffer should be $95,900. Your next counter might be $97,500. A next-round counter might be $98,900 and a final counter might be $99,500.In this Real estate investing school, my advice is to have the following mindset: this is Your game and "they" (the banks, agents, etc) can play in it or not. If they don't give you the price YOU want, you go play somewhere else. It's just that simple. If your offer is accepted you've just gotten your first real estate investment property for less than $100,000. By the way, a 30-year loan for $100,000 at 7.5% is $699.21 per month. If you are able to rent this property out for about $1,100 per month, you will definitely have passive income on this property, even after paying for taxes and insurance. BUT, (and here's a big BUT), you must be able to afford $699.21 per month even if there is no tenant! Let me repeat that, you must make your monthly payment, on time, each and every month regardless of whether there is someone paying you $1,100 every month or not.
Real Estate Investing School - Step #4Go through escrow. This step can last 30-, 45-, 60-, or 90-days. This is the period where a third party (i.e. Great Lakes Title Company, Chicago Title Company) takes care of all the paperwork. They are the holders of your EMD. They are the ones who check to make sure that all liens are taken care of so that you receive clear title to the property. They make sure the money is transferred from your lender to the seller. They take care of everything. When all the paperwork is completed and all the i's are dotted and t's are crossed, they arrange a closing date for you to come in and sign everything. You will read and sign about fifty pages some of which need to be notarized (bring your ID of course). It then takes an additional three days to fund (get the money wired or transferred) and then escrow is closed.Real Estate Investing School - Step #5You now have a property. (Congratulations!)The next step is to hire a licensed contractor to get the property fixed up. Again, you are going to call about five different contractors and get written bids and time estimates for project completion. You already had a home inspection completed by a qualified home inspector so you know what needs to be done. Now you are just comparing prices on who can do it. You also can see which contractor is the most reliable, reasonable and honest. Don't tell them about your home inspection. Just compare what they say needs to be done to what your home inspection says. It's a great point of reference. that we have already contacted, interviewed, and hired. Sign up below. Once you decide on a contractor in terms of fixing items, also be specific in what you want the house to look like. Tell the contractor what color schemes you want, what quality of fixtures you want, and also discuss remedies and solutions for what happens if you don't like the end result. Get everything discussed, negotiated and documented.
Real Estate Investing School - Step #6Now, the home is what is called "Rent-ready". While the rehab was occurring, you were calling and interviewing the next team member, Property Managers. How many do you call? Right, five always provides for a great comparison.Find out what they charge for fees. Find out how they advertise for and screen potential tenants. Find out what their vacancy rate is. Find out how they handle repairs. Do they require a reserve account? How do they deal with evictions. How do they determine what rent should be charged? What level and type of communication will they have? How will you receive your money and monthly statements? Listen and take lots of notes. Decide on the best company, sign a contract and sit back and let the money roll in. Now understand that the sequential steps in this Real Estate Investing School might have taken from October to March. Please know that REI doesn't have to be an overnight success story as long as it IS a success story. It takes a long time to get a process automated. But as long as you did your math correctly from the start, you know that when everything falls into place (and you definitely planned it all out) then it will be a success.
Real Estate Investing School - Step #7Now you can repeat this process. Also, refer to the REI strategy section on other ideas (i.e. Refi-around-the-rosy) to expand your real estate empire. Have fun making all that money and building your Real Estate 401K. This concludes our Free real estate investing training. Y'all come back now, y'hear!
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