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May 30, 2017

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How To Invest in Real Estate If You’re A Non-Accredited Investor

Non-Accredited Investors: Real Estate Investing 101 The best investments have traditionally been reserved only for accredited investors. How do you get ahead, and get into profitable real estate investments if you are a non-accredited investor?For far too long the most appealing investments have been closely guarded and preserved for only already wealthy investors. That has been one of the key factors in the rich getting richer, while the poor get poorer. This divide is often the line in the sand between accredited investors and non-accredited investors. Newer rules may have opened a small window of opportunity for regular individuals. How can you take advantage of that? Accredited Investor Status The Securities and Exchange Commission (SEC) lays out the rules for qualifying as an accredited investor. In addition to big institutional investors like banks and pension funds, this also applies to individuals. To qualify you generally need to have a net worth of at least $1M. Or you need to be earning $200,000 per year, or $300,000 between you and your spouse.This requirement has long been used to separate who can invest in what. The public argument is that these restrictions ‘protect’ consumers. Yet, they also prevent individuals from many investments and control who can offer investments. The result has often been ensuring only the big old finance companies can control the flow of money, and only their best clients with the most money get access to the best deals. The JOBS Act & Crowdfunding Things began to change with the JOBS Act. This new law was introduced as a solution to breaking down the barriers and allowing more people to start businesses and offer opportunities while giving regular people to invest in a broader and better range of choices.Unfortunately, most crowdfunding platforms and companies with these opportunities have not actually begun accepting non-accredited investors. Why? Because the legal expenses can be costly oftentimes. Yet, structuring an offering and opening the doors to non-accredited investors, can mean a lot more up-front work for the crowdfunding platform. It also can afford the opportunity to a broader base of investors. Options for Investing in Real Estate Fortunately, there are some options for individuals who want to get into real estate investing and are eager to work their way up to accredited investor status. These include:Direct investment in properties all by yourself REITs and funds Select real estate crowdfunding portalsWithout a lot of capital or experience of your own, and to avoid the high multiple layers of fees from old traditional brokers, it is normally best to leverage some expertise and partners to get the best investments. This increases upside potential and lowers your risk, by going into some form of private partnership or crowdfunding offer. Just make sure you understand what you are investing in, and ask lots of questions if you aren’t sure.

May 24, 2017

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What To Look For In Crowdfunding Opportunities

What should investors be looking for when evaluating real estate crowdfunding opportunities?Real estate crowdfunding is quickly rising to be a go-to investment strategy for investors. There are a number of options out there on the web today. Some are good, others not so much. So, what should you be looking at when checking out your options?FitMake sure it is a good fit. Different real estate crowdfunding platforms rely on different strategies and models. Look for the one which matches your desired strategy, is a match in terms of the amount of investment required, and shares your values. Are you looking to flip houses, hold for long term passive income, get into commercial properties, or invest in residential real estate? Are you willing and comfortable to bet $50,000 on a new investment partner, or does $5,000 seem like a smarter move?TransparencyThere are some flashy looking websites out there, with appealing calls to action. Yet, some give very little detail about what your money will be invested in, and how. Others are far more transparent. Look at how much they are willing to share in general, how much they are sharing about how they do business, how your money is used, and other aspects. Those open to sharing tend to do far better over the long term than those operating who may be hiding aspects for other reasons.HistoryThey say the best indicator of future performance is past performance. So, how well has this platform performed in the past? What is the reputation of the owners and managers? See what data they share, but make sure you understand how it is calculated.ReferencesOne of the best ways to choose or at least shortlist crowdfunding options is to get referrals. Ask around. Who have others had success with? Check out online reviews and see what others are saying about those you are considering. Ask the platform if they can provide references.The NumbersDo the numbers make sense?  How much detail will they provide on their business, and the individual opportunities they are offering? What access will you have to the numbers after you invest? What type of reporting is offered to investors? You want as much access as possible, and not only to understand what you are investing in, but how sustainable the model is, and how profits are being collected and distributed.SummaryReal estate crowdfunding has emerged as one of the most attractive investment options available today. Hone in on the best option by using the above factors to shortlist and perform your own due diligence, and then test the waters before scaling up your investments.

Apr 27, 2017

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Does A Property Have To Be Vacant To Close A Deal?

Does a house need to be vacant before you can close on a real estate deal?There are many vacant homes across America today. However, some of the best house deals are those which still have people living in them. That could be the current owner who is in a distressed situation, or an existing tenant. Great deals can be negotiated on these properties. Yet, many new investors are not versed about this situation and how to handle it.You can write a deal and go to contract on any property, regardless of what it is occupied or vacant. Your contract can specify whether it should be vacated before closing. Sometimes quirks do come up; such as squatters moving in, or sellers not finding somewhere else to move in time. In these cases you may be able to postpone and extend the closing date until the property is vacated.If the property is leased, your local real estate laws may dictate that the lease survives the sale of the property. That means the new owner has to honor any existing lease. If you are buying an investment property this may be a great bonus. If the tenant is paying on time, then it saves you the time, risk, hassle, and money of going out to find a renter. Just make sure you verify their status, rents, lease term, etc. If the tenant isn’t paying, price in a discount for having to remove them, or ensure they will be evicted before you close.Many distressed sellers will find it hard to move. It can be hard for them to rent or buy anything. Others may just find their own purchase transactions are delayed, and don’t have somewhere to move immediately. In these cases you can extend your closing date, or even leaseback the property to the previous owners. This is not uncommon, but it can be unpredictable. If they were not paying their mortgage, and the mortgage company was not able to have them evicted, then how are you going to do it?If you need the property vacant, then it can be smart to help occupants move. Introduce them to a good real estate agent who will find them another home to buy or another rental. Or you may have an investment property they could rent. This is more desirable than leaving them in the existing property, as it breaks that emotional detachment and sense of ownership they may have. Get them into something they can afford to keep.SummaryWhen buying a rental investment property, it can work well when a home is already tenant occupied. If there is a non-performing tenant, price that in or plan to have them out prior to purchase. If you are buying as a new residence, or to flip with major rehab needs, or you need a higher paying tenant – then have it vacated before closing. You have the right and it is good practice to walk-through the property within 24 hours of your closing. In conclusion it is also good to know the market and how quickly you are able to turn the property and have a new tenant in place. Keeping this in mind and being educated on the process of eviction should help you buy the right properties and not be afraid of purchasing rentals with tenants in place.

Apr 10, 2017

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The Top 4 Things To Look For In An Area To Buy In

Making a smart real estate purchase is all about “location, location, location.” So, what should buyers be looking for in an area?Growth PotentialWhether you are buying a home or a rental property, you want to buy somewhere that your property value isn’t going to go down. No matter what you are buying, and why, it is an investment. When you invest you don’t want to lose money. So, it is important to look for an area which offers good growth potential.Some of the factors that may indicate good growth potential include:      Strong local economy       Diverse economy       Increasing population       Revitalization effortsCrime RatesCrime can directly impact real estate. It can impact income property performance, demand, and values. Crime ridden neighborhoods may represent areas which see rents and property prices decreasing, as well as more difficult property management challenges. However, it is important for investors to look at the direction of crime rate trends, the type of crime, the causes of statistical changes, and to apply common sense to the data. For example; direct property crime can be a big concern for property owners. Other types of crime may not be such a threat for owners. Crime can be cyclical too. Areas can be driven down by crime, and then rebound as serious crackdowns happen. Statistics can also be subjective due to various reporting and enforcement strategies.Remodeling and Building ActivityLocal renovation and new building activity is a great sign. It means others are investing heavily in an area. They are bringing in new cash and equity. In most cases this activity will also force up rental rates and property prices. It can also make an area more attractive to new residents and visitors. It is wise to not always be afraid of boarded up homes or homes that are in renovation process….this can mean that investors are working in this area and it is on the upswing. Local building permit activities can give clues to future activity like this as well.City PlansBeing aware of city plans will allow you to best position yourself in areas that are experiencing revitalization. It will allow for you to get properties cheaper and get the upside. Buying in revitalizing neighborhoods also gives you the opportunity to help your community. By rehabbing one house on the block it starts a trend and in no time, the block has more appeal. This gives the community a sense of hope that revitalization is coming. It also urges owner occupants to take a sense of pride in their individual homes. It encourages owners to upgrade their property in order to keep up with what’s going on in the neighborhood.

Apr 5, 2017

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Property Assessment

How do you determine the value of a property?Determining the value of a property is a crucial part of buying, selling, and investing in property, so how is the best way to do this? How do you do it?There are actually many factors to look at when estimating the value of a property. It is both an art and a science. Some, websites have tried boil this down to instant, automated valuation tools. Most of these don’t work very well, or accurately. Zillow is the most notorious example; with the company’s CEO selling his own home for 40% less than the Zestimate, or about $750,000 under the value his own platform provided. If you really want to know what a property is worth you have to dig deeper into the facts about the property, ensure you have the most up to date information, and even factor in why the property is being bought or sold.The 3 Types of ValuationThere are three main ways of appraising real estate:    The cost approach     The income approach     The comparable sales approachThe cost approach calculates how much it would cost to rebuild a given property today. The income approach is typically used for investment property, and determines value based on the income the real estate can produce. The comparable sales approach is most commonly used for single family residential property, and determining a market value based on the sales of comparable properties.Factors Considered in Determining Property ValueWhen it comes to assessing property value, the deeper and more detailed you are, the more accurate your estimates.First and foremost is location then there are other important considerations to factor in·      Square footage Number of bedrooms Number of bathrooms View Property condition Lot position Community amenities Garages Age of the property Special features like swimming pools Proximity to recently sold properties Terms of a sale (i.e. financing used, seller contributions, repair credits, or Realtor rebates)Where to Find the DataThere are a number of places to find the above data:      MLS       Appraisers       Real estate brokers       Tax records       Building permits       Driving neighborhoods       Title companies       Home inspectionsClearly there is a lot that goes into determining the value of a property. Still, with as much as there is on the line when buying, selling, and investing in real estate, it is worth being detailed and achieving  due diligence and clearly researching when assessing value of a property.

Mar 30, 2017

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Spring Preparation Part II: The Team

 After the winter hibernation, the housing market is back in action. Most one-year leases are up, tax checks are in, and people are going to be looking for places to live. Now that you have prepared your property for spring, it’s time to get your team prepared. While you should have been preparing in late winter, it’s never to late to start to make sure your spring starts off right!Be AvailableAs the weather starts to warm up, especially in the Midwest, activity will increase. During the winter months, showings later in the day were pretty much obsolete because of the extreme temperatures. Being available will keep current tenants happy and will keep a steady stream of potential tenants coming in.Have IncentivesIncentives like $200 off first month’s rent, or discounts for signing a 2-year lease, are great ways to attract a crowd. Think about it, there are a ton of rental properties out there, so you have to figure out a way to stand out. What better way to do that than by offering something for a free or discounted price?Available HomesThe last thing you want to do is watch homes rent while your sitting idle. If you have a home that recently became vacant, make sure you have a quick, but effective turnover. The opportunity for buying homes is also on the rise, so your acquisition team should be doing their do diligence to keep a pool of potential homes to buy.Signs & Automatic MailingsThere are many ways your acquisitions team can prepare for the spring. Being more diligent about placing signs at your rental properties will increase your company’s visibility. Mailers are also a great way to get an owners attention. Stating that you’ll buy the home in cash and as is, is a great way to make deals happen quick.MaintenanceSpring is the time to make sure your rental properties have the best curb appeal possible. Having a scheduled mowing list will make sure you don’t end up with a grass jungle in the front yard. It’s a time to check your basement for dampness that could lead to mold. Having a clear list for your maintenance team will all but ensure that your house are move in ready.Now that you have your rental properties in great shape and your team clicking on all cylinders, you are ready to take on the spring and summer!

Mar 20, 2017

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Why Your PMC Is Key to Your Rental Property Rental Success?

So you just invested or bought your first properties, or maybe you’re a seasoned veteran when it comes to real estate. If you’re new, maybe you don’t want to take on all the tasks that go along with managing a property. If you’re a veteran, maybe you don’t want be as involved anymore. In either case, a property management company (PMC) is a good solution. Picking a company to take care of your rental properties can be an exhausting task, but there are traits to look for in a property management company to make the process go as smoothly as possible.Percentage they collect each monthEvery PMC you go to is going to have a fee they collect every month for managing your properties. Duties like collecting rent, evicting troublesome tenants, etc. 8-12% is the typical fee. Any more then that and they will be taking a substantial chunk out of your bottom line.Cost savvinessRental properties can accrue a number of expenses that can really add up over time. If you allow your PMC to take care of it then you want them to be as cost savvy as possible. If the towel rod breaks off in the bathroom, they should not look for the $75 rod if it’s a $30 bathroom.Market Value RentDeciding what to charge for rent is one of the leading factors that affects your bottom line. Make sure your PMC chooses a market value rent. If the rental property is in an established neighborhood make sure the rent reflects that. The same can be said for a property in an up and coming neighborhood.Tenant TurnoverWithout tenants, your rental property can drain your pockets. The PMC you choose has to work diligently to place new tenants in your property so your property doesn’t sit idle. Your PMC has to work fast, but not at the expense of quality. Placing quality tenants means the difference in having to replace carpet or simply having them cleaned.Ease of communication with tenantsHow your PMC communicates to your tenants can save or cost you a bunch of money. If the rent payment process isn’t easy, this can cause late rent payments. The ease of putting in a maintenance request can mean the difference between stopping a leak and having to replace a rotten floorboard. Your PMC should be available to you and your tenants at all times.Reliability and ExpertiseAll of the traits mentioned above come with a proven track record. If you choose an established PMC, they will know more tricks of the trade.Every house, owner, and tenant is different, so when considering a property management company take a look at all aspects and make the best decision for your rental property.

Jan 18, 2017

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Investing in Real Estate: Grading and Foundation Issues

Foundation issues can be one of the scariest property flaws for many of those investing in real estate. What issues should be looked for when evaluating a property? Can these problems be fixed? When should you walk away?Real Estate Investment and the Foundation ChallengeFoundation problems can be very serious. These are structural defects which can prevent financing. They can also get very expensive to tackle. They are often the result of grading problems, but not exclusively. In some parts of America foundation issues are quite commonplace, like in Texas. They may be rare in other states like Florida. Most investors and companies such as ours avoid at any sign of these types of problems. There can be unforeseen costs and financing challenges associated with these properties. At the same time this makes these properties a great opportunity for those ready to take it on. There can be less competition from other buyers, and that means potential for big discounts.Grading & Foundation Issues to Look for in a PropertySome properties have obvious grading and structural issues. Some are easily spotted by uneven building lines. Walls, floors, ceilings, or the entire structure may be at odd angles. Previous inspection reports or appraisals may reveal the presence of these problems, even if they are not immediately visible in photos.Other signs of potential problems may include wear and erosion around the exterior walls of the home, standing water, trees in close proximity to the dwelling, and interior leaks.Uncorrected these issues can erode the foundation. Other foundation issues are a result of excessive pressure on the foundation and pressure load which causes stress on the foundational walls. You’ve got to be alert to these issues before making an offer, or price in the worst case scenario.How to Handle Foundation and Grading IssuesThe first thing to do is to get multiple inspections and quotes on fixing the issues. You want to know exactly what the problem is, how long it will take to remedy, and how much that will cost.If current damage isn’t that bad foundations and grading can be fixed or supported. This may range from costing $500 to well over $30,0000. In some cases you may want to tear-down and rebuild. More affordable and minor remedies and preventative measures may include; improved grading, better gutters and drainage, tree and root removal, or installing new foundation piers and beams.SummaryFoundation and grading issues can be very common in some real estate markets. This is something to be alert to, but which can also present great value opportunities. Know what to look for, who to ask for guidance, and when it makes sense to move forward or pass it up.

Jan 18, 2017

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How to Minimize Winter Weather Damage to Rental Properties

How can landlords best protect their rental properties during the winter?Extreme weather, as we experience in the lovely Midwest can definitely test and threaten rental homes. What smart moves can landlords make to winterize properties and protect their investments?Getting PreparedGoing into winter it is a great time for owners of rental properties to inspect their holdings, take stock of condition and needs, and to ensure they are prepared. Prevention is far better and less costly than trying to fix things after the fact. That applies to all types of severe weather and natural disasters, including harsh seasonal weather.Make it a habit, and system to routinely schedule property inspections before heading into the worst weather each year.A part of this is having clear rental lease agreements which define whose responsibility certain items are (landlord or tenant). Then of course making sure you as the landlord have your end covered. That means supplies, contractors, and systems for dealing with maintenance, and responding to emergencies.Be ProactiveA part of routine maintenance and inspection at this time of year is certainly checking the gutters and keeping them clear. Be sure drainage is set up right to keep melting ice and snow flowing away from the property and foundation.Check roofs for leaks and condition. Check doors and windows for drafts and water tightness. You don’t want unnecessary damage. If you are responsible for utilities this can be an area which creates or depletes cash flow as well.Check heating. Will the furnace last through the winter? Has the filter been recently changed?  Whether it is your responsibility in the lease or not, you certainly don’t want a grandmother or young family freezing in your property.Cracks in sidewalks or porches or driveways are best fixed before a freeze and thaw which can make these problems and liabilities far worse, and more expensive.Be CoveredOne of the real challenges for real estate investors at this time of year is that they are not local. Either they have been investing from a distance, or they are off to spend the season in sunny/ warmer weather. That’s great, but someone needs to be on hand to keep an eye on the property and respond to calls. Get a property manager and have a plan for how to respond to various issues like the heat going out, slip and falls, and tenants being snowed in.This is also an ideal time to check your insurance coverage. If your property has gone up in value you may want to raise your coverage. Make sure premiums are up to date.What are you doing to protect your investments this winter?