Sunday, August 28, 2011

Understanding the today market



I talk to a lot of so called gurus in this business and read a lot of articles. Their are many ways to invest in real estate and be successful. the key to your success is using the right formula for the market today. In the last 4 years the market has got much tougher and harder to navigate.



I always look for the quickest and best ways to succeed in every market. In 2004-2006 it was flip baby flip. The homes were being bid up over the asking price. In North Scottsdale the homes were going for more than the appraisals. This of course did not last and people lost their shirts in that market. We tend to focus on the massive wealth created but there was massive wealth destroyed also.



When the market stopped being a flippers market it starting being a buyers market. That means more homes than buyers. Since 2007 the market has been a buyers market.



Fast forward to today and you have a very low cost market. Prices have went down and their are some great deals out their. I have focused on the lease option market. With better than 1/2 of the buyers having bad credit the lease option was a great way to get those buyers to purchase. With a good down payment and great cash flow you can get close to the top of the market for your home.



You are really acting like a bank and they are your clients. In my area we tend to buy average priced homes and net cash flow $600 a month. We also get another $20,000-$40,000 on the spread with the lease option. All that means is the difference from what you paid versus the sales price.



Recognizing that flips are not a big part of this market and that people still want to buy homes, lease options get them homes and makes you a lot of money. Ever wonder why banks have large buildings and have great offices? They let people borrow money for a time and make interest on that borrowed money.



In lease option you play both Bank and Investor. You get the best of both worlds buy making a great cash flow(interest) and a great profit on your sale (exercised lease option). Making money in this market is possible if you understand it. Brett Young Rooftopvideo.com

Sunday, August 21, 2011

When will the Real Estate Market Turn?



Everyone is wondering when the real estate state market will get back to normal? I am often asked that very question and I also ask it myself.



There area a few variables to watch.



Have prices of homes bottomed out? I think in most markets they have. I know in the Cleveland market the prices have stayed consistent for a few years now. That probably means that the market in the Cleveland Area has stabilized (wholesale prices). So before buying watch the whole prices of the real estate your thinking of buying.



Unemployment will also be a great factor. I'm not talking nationally or small to medium sized city. The bigger cities is what you want to watch Cleveland, Phoenix. New York, Chicago Etc etc. They will have the biggest swing upward when the market turns. I know in the Cleveland area we are have an employment rate around 8%. Make sure the city your considering is under the national unemployment average.



Cost of living is another factor. What does it cost people to live in the area you are looking at. Cost of living in the Ohio area is very low. You can live in a nice home in a great area for $70,000-$150,000. The area will dictate where you spend the most.



The cost of living becomes a greater figure as unemployment goes up. For example I talk to a lot of people in the Phoenix area and they know people that have their boxes packed waiting for foreclosure. Very sad, but when your going to invest know the area and the employment will sustain the cost of living.



The last thing and I think the most important thing is Lending. The access to money will need to be loosened up for this market to turn. I not saying it needs to go back to the foolishness that they did in the big boom. The lenders will need to have 5%-20% down loans and lower the amount on mortgage for lower mortgage amounts. For example $40,000-$50,000 mortgages are hard to get. Banks have not done that yet.



A great way to get a watch the lending is to go to your local bank and ask them about the market and is it changing? I went as far as asking a small business man that I noticed changed his fast food restaurants name. It was a fast food place that I regularly frequent for coffee. I ask the owner why the name change? He informed me that even though he had excellent credit the bank would not give him any of the money he needed.



The upswing on a down market is the buys are great and the cash flow should be at least 18% or better. In my market that is the case and investors are patient with that kind of cash flow. When the market turns and it will you can decide to hold or sale. Brett Young www.Rooftopinvestment.com





Sunday, August 14, 2011

Better Know Where You Are Buying



Some real estate investment companies sell some very low priced homes that show some great returns. These property need some careful consideration before you jump in head first to buy them.



I have a potential client here from Australia, we picked him up on Friday to go some properties that we were recommending. He immediately showed a address of a property that was recommended to him(Tim is his name). We drove Tim over to the property that he had given us to see, he noticed a big drop in quality of the area. Yes he may get a great return (maybe), the problem would be the quality of tenant and the turn over of tenants in that area. Not to mention the constant rehab that will be needed to keep that property up to snuff.



That is always a bigger problem with having a these type of properties. The first and foremost is getting your cash flow consistently . The other would be maintenance of the property. That could eat up all your cash flow and be a big pain in the rear. When the market turns these types of properties tend do not sell very fast.



We had some more clients in and they were bragging how great a buy a friend of theirs got on Ebay. That is right Ebay! We drove them to the property and they too saw that it was a horrible area. In fact we had to leave a large person to guard our vehicle to even go get a peak of the property. I instructed them they would be better off to just write off the purchase.



When you are buying real estate keep in mind the area's you are buying in. There are great deals out there that get great cash returns. We have some that cost south of $40,000 rehabbed that will get a 18% return or better! We carefully pick our properties and understand what neighborhoods and schools will draw the best tenants.



Let me give you an example we have with a client. His property has been rented for 4 years and he has netted $620 per month over those 4 years. That's over $28,000 net profit. He only paid $40,000 for that property. We have many other examples but in the essence of time.



There has never been a better time to invest in real estate. Just make sure you understand what type of property you are buying and where it is.



Check out some of our properties at Rooftopvideo

Brett Young Valley Realty Rooftopinvestment.com

Saturday, August 6, 2011

Some secrets on picking good tenants


Having passion and smarts is not all it takes to a Real Estate Investor. You need to know what to know and look at on each property. You also need to know who to rent your property to.

We will be going over quality of potential clients in this post. When you have a rental property and want to have a quality tenant you need to look at a few things. The first thing we look at is their credit and background. Calling their last landlord is also a great idea. You can verify that they have been making their payments in their last property. Ask the ex landlord if they would rent to them again.

I also look at some other important details. For example I like to see their vehicle. That is not a protected class and it can tell you a lot. For example a dirty car will usually tell you how clean and tidy they are. My experience has been that junky and dirty vehicles means your property will look the same with them in it. If they have a clean car then you will probably be able to expect that tenant to take care of your residence.

Another way is to sign the lease at their home. You can really get a up and close look at the home they are leaving. Just tell them you would like to meet them for coffee at their place to get all the documents signed. This will give you a great way to see how your property will look like after they leave.

The last one we will talk about is a lease option client. Optioning your property is easy and they have to put more money down. Usually option clients make a great tenant. Even if they don't exercise their option they will probably stay their longer then a regular rental tenant because they fell more like it their home. If they exercise their option you stand to make a great profit at the end of the lease.

So there you go a few tips I've learned over the last 26 years of dealing with tenants and rental properties. There are many more that you can do, but this is a great start. Brett Young www.Rooftopvideo.com