Your Real Estate investment secret Ebook

 

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Tenderfoot Education in Real Estate 
Investing 101

Back in the days of the wild, Wild West, when easterners traveled across this vast 

country looking for opportunity in the newly opened territories, they were often referred 

to as a ‘tenderfoot’.

This wasn’t a complimentary term but it was a rather apt one. The easterners wore ‘city’ 

shoes that weren’t designed to withstand the rigors of the western terrain. Their hats 

didn’t have wide brims to protect them from the sun and their clothing wasn’t made of 

tough material like denim.

These new westerners didn’t know how to take care of themselves and because they 

didn’t know where and what the dangers were they didn’t have any idea how to avoid 

them. If you are just beginning to consider the idea of investing in real estate you are a 

tenderfoot and you do need some instruction to avoid losing your shirt…and probably 

your pants, hat and boots, as well. 

First you will need to determine what your strategy will be in real estate investing. Do 

you want to buy a property, fix it up and sell it quickly or do you want to buy a property, 

hold it and wait for the market to increase? Do you want to deal with renters? All of these 

questions are ones that you need to answer before you invest in any piece of real estate.

You will need to learn how to investigate the value of properties yourself. It isn’t fair to 

use the time of a real estate agent and have them show you property after property while 

you try to look for a good real estate investment.

There are several online sites that are helpful in determining the real value of real estate. 

DO NOT rely on tax values. They are not reliable and they are not accurate either. You 

can find a real estate agent that you can work with and you can find recommendations 

for such agents online. 

After you have learned how to determine property values yourself and have chosen a 

real estate agent that you can work with, the next thing that you need is a good broker that you can also work with. Ask your real estate agent for the names of three mortgage

brokers.

Then you will need to find out what interest rates and closing costs each one charges.

(Check out your local bank or credit union as well). Take copies of your three credit

reports and choose a sample property for each broker to run hard numbers on.

Now you are ready to actually make your first investment. You want to choose the lowest

price house in the best possible neighborhood to put a contract on.

Let's say the cheapest two-bedroom house in the best neighborhood in Fort Wayne

costs $100,000 and the next cheapest, comparable home is listed for $140,000. If you

buy the home that is priced at $100,000, you can raise your price to $130,000 the next

day and make a dandy little profit.

Now let’s talk about closing the deal. First show the seller your pre-qualification letter

from your lender. Then get the required inspections for termites and get your appraisal.

Once you have all of your ‘ducks in a row’ so to speak, it takes about 30 days to make

the final close.

A note here about any renovations or repairs that you might want to make to the

property: Before you close, you might want to think about a Purchase and Renovate

loan. A Purchase and Renovate loan wraps the cost of construction up in the loan so

you don’t have many out-of-pocket expenses. This may require an estimate from a

general contractor and plans from an architect as well.

Okay, now let’s go back to the first thing that you needed to do and that was to

determine your strategy. Now is the time for you to execute that strategy that you have

used to invest in this real estate. If you bought it with the strategy of flipping it when the

market went up then you just simply wait.

If you bought it with the strategy of renovating and then selling then it is time to start your

renovations. On the other hand, if you bought it with the strategy of renting it, it is time to

start looking for tenants.

You see, the point of having a strategy for profiting from the purchase of any piece of

real estate must be your first decision because everything that comes after that is

dependent upon it.

Why Invest in Urban Real Estate?

Most investors are not interested in investing in urban real estate. This means that there

is a wide open opportunity for those who ARE interested in investing in urban real

estate. You will likely hear umpteen reasons why you should NOT invest in urban real

estate so let me give you a few good reasons why you SHOULD invest in urban real

estate.

First let’s discuss the pricing of urban real estate. If you keep your ‘ear to the ground’ so

to speak you can find some real hidden gems in the urban real estate market. Not every

low price is a good deal, of course, and just like with every real estate investment that

you ever make, you should be certain that you do your homework.

Really great deals turn up in every real estate market for one reason or another. Don’t

miss those terrific investment opportunities simply because the property is in an urban

area.

Then there are the Section 8 tenants to be considered. Here is an obvious advantage to

investing in urban properties. Government subsidized housing is a 21st century reality

and under Section 8 the government pays a full 80% of the monthly rent. These renters

are often referred to as ‘Section 8 tenants’. There is, of course, always a waiting list of

potential renters and they all want to move into YOUR urban investment property.

That adds up to a very nice and sure monthly income for you. Renters don’t always pay

their rent but the government does send checks on time and in full thus eliminating much

of the rent collection hassle.

Let’s not overlook the fix and flip opportunity afforded by urban real estate investments.

Okay, let’s face it. Today’s real estate market could be better….a lot better…but just

because the over-all market doesn’t seem to be all that healthy at the moment that

doesn’t mean that there aren’t some great fix and flip opportunities out there and

particularly in the urban areas. The trick to making a profit on an urban property is to sell

with incentives included and, if it is a rental property, with a tenant already in residence. Don’t forget about the good old government of the United States of America. The

government funds projects to rehab entire neighborhoods in urban areas and they do

soon a regular basis. The local government gets funding and usually offers attractive

incentives to developers and home owners investing in these urban neighborhoods.

Not only that but you can some really astounding interest rate offers that will let you keep

your money in your pocket and out of and danger at all. This creates a win/win/win

situation. The government gets to spend money which they seem to do so well. The

inhabitants of the neighborhood get better housing and you make a nice profit.

Everybody wins!

There is the tired old real estate saying, “The only three things that matter in real estate

are location, location and location.” That really is NOT necessarily true. Do you

remember playing the board game Monopoly when you were a kid? Remember those

first little properties that were located right at the beginning of the game?

They were cheap. They were REALLY cheap. If you bought one of those right out of the

gate, so to speak, you could have a hotel up on it almost immediately and every player

in the game was going to have to land on it and pay you. It was a pretty good location

but not an expensive one. It was one that you could afford to make improvements on

quickly.

Remember? Think of investing in urban real estate like you would think of investing in

Baltic Avenue or Mediterranean Avenue. You don’t pay much for the property but

improvements don’t cost much either and you can make a profit easily and quickly. It

was good strategy for Monopoly and it is a good strategy for real live urban real estate

investing.

Urban property investments meet all of the criteria for sound real estate investing.

There is a good rental market in an urban area. There are lots of people who need

housing and that housing is very often government subsidized.

Urban property is usually low priced and can even be purchased at extremely attractive

interest rates as well.

The market is stable in urban neighborhoods. There isn’t a boom or bust mentality.

Demand is not likely to decrease.Investing in urban property can be a very good decision but you should always do your

homework before you invest.

The Secret to Real Estate Riches Lies
in Location, Location, Location

According to the old real estate saying, “The only three things that matter in real estate

are location, location and location.” The fact is that a ten bedroom, eight bath home with

cathedral ceilings and a swimming pool that is sitting next to a garbage dump is nearly

worthless.

On the other hand a little one bedroom, one bath shack sitting in the middle of downtown

Dallas would be worth a small fortune. So you can see that the location is of the utmost

importance when you are considering a piece of real estate to invest in.

What is it that makes the location of a piece of real estate valuable? The answer is fairly

simply really. The value is based on nothing more than the desirability factor. Desirability

is a fluctuating intangible that is really hard to nail down.

Property that is totally undesirable to one person might be just the next person’s dream￾come-true. And this phenomenon is true for real estate investors and for home buyers

and for renters. It is true for all aspects of the real estate market.

The main point for any real estate investor to consider first is what their strategy will be

for making a profit on a property. Buying is only half of the equation and whether the

location of the property is good or bad depends upon that profit strategy.

For example: If an investor is going to invest in a property with the intention of just

waiting for the market to go up, prime real estate is probably the very best choice.

Locations that are near entertainment centers or developing areas would be best

because the likely hood that the property will increase in value simply by waiting is a

pretty good bet.

On the other hand, if an investor is going to invest in a property with the intention of

renting it and making a monthly income from it, he might be better off to look into urban

properties. Urban properties wouldn’t be considered ‘prime’ real estate but they are

‘prime’ rental properties. Then there are real estate investors who are handy with their hands. They can make

repairs and renovations to rundown properties themselves, sell it for a great deal more

than their purchase price and make a very nice profit. The location that these kinds of

real estate investors often find the best is in neighborhoods that are made up of mid

priced homes in working neighborhoods.

There are many factors that real estate investors consider when they are deciding which

property to invest in. One factor can be what I call the ‘snob’ factor.

It’s strange but people will pay a lot more money for a small property in the ‘right’

neighborhood than they will for a larger property in a less desirable neighborhood.

However...one person’s definition of a ‘good’ neighborhood will not be anywhere close to

another person’s definition of a ‘good neighborhood.

Then there is the ‘visibility’ factor. If a neighborhood or an area has become famous or

even infamous, property values rise regardless of the location. Convenience is another

factor when considering the desirability of the location of a piece of property. People do

like to live close to where they work and where their children attend school. Rising gas

prices just might work wonders for real estate prices in inner cities.

The desirability of the location of any piece of real estate can be determined by a great

many different factors for real estate investors and for home buyers and renters. If the

location is desirable for the investor’s purposes he will invest.

If the location is desirable for a home buyer’s purposes then he will buy. If the location is

desirable for a renter’s purposes then he will rent. So basically, you can roll all of the

various factors for determining whether a location is good or bad into one simple work;

desirability.

We are a nation of individuals. We all see things from a different point of view. Look

around. There are people living everywhere. They live in big cities, small towns and in

urban and rural areas. Who can determine what a ‘good’ location really is?

There is a proverb that says, “Beauty is in the eye of the beholder”. The modern version

would be ‘whatever floats your boat is good’. In real estate it would translate to ‘if the

location serves your purpose then it’s a good location’. 

How to Find Hot Markets for Buying
Investment Property

Investing in real estate is not a new path to financial success. It is a well worn path and it

is so well worn because it is such an effective way to make a great deal of money in a

relatively short period of time. But you have to be a forward thinker to make any serious

money in the buying and selling of real estate.

The objective is to buy low and sell high and that means that you have to make a guess

(an EDUCATED guess) as to what is GOING to happen tomorrow or next week or next

year or ten years from now and not base your decisions on what happened yesterday, or

last week, or last year or ten years ago.

Think about the neighborhood that you grew up in. Your mom and dad bought the house

when the subdivision was new. It isn’t new anymore. It isn’t on its way UP. It is on its

way DOWN.

The residents and the buildings are all beginning to show their age. That is the nature of

real estate. What goes up will eventually go down. You always want to buy when the

area is on the rise and not when it is in decline. There are, of course, exceptions to this

rule but there aren’t many.

In short; you need to find the hot markets when buying investment property and in a

nutshell the hot market is where the people are GOING. Determining where people are

going is the trick.

Buying in an area that is already popular can be a hot market providing you can make a

good deal on the property but finding out about upcoming changes in the infrastructure

can lead you to where people will be going in the future.

Infrastructure changes are such things as major highway construction, marinas or

entertainment facilities. Basically, you base your real estate market investments upon

the cold hard facts and not what you hope will happen or what your barber tells you. Right now isn’t a great time to invest in real estate in the USA but there are hot

properties overseas that you can take full advantage of while you wait for the US real

estate market to recover. Costa Rica is a good example. Costa Rica is only 3 hours from

the mainland. It is a hugely popular vacation destination and beach front property has

been on an upward spiral for several years but it appears that the trend is going to

continue.

Real estate investing is not an exact science. You always have to weigh the risk against

the potential reward and if you do decide to invest in overseas property it is wise to

employ a local attorney to oversee the process. Then there is always the ‘cool’ factor

that shouldn’t be overlooked when searching for hot investment real estate. For

example: in California there is an area called ‘the Venice Beach’ area. There was a film

made there a few years ago that was loaded with skate boarders and surfers. Suddenly,

Venice Beach became a very ‘cool’ place to live and real estate prices soared! So don’t

overlook ‘cool’.

Keep both eyes on large corporation expansion plans. When corporations build, expand

or even relocate the real estate market will boom simply because of demand for housing

and small businesses. If a Wal-Mart is going to be built in a town, can a McDonald’s be

far behind? And all of those people who will be coming in to run Wal-Mart and all of the

small businesses that it spawns will need housing.

Yes! Business can cause real estate prices to go up and can create hot properties for

investment purposes. Remember that old song that Willie Nelson recorded, “You have to

know when to hold ‘em, know when to fold ‘em, know when to walk away and know

when to run”. Although the song was about gambling the advice is solid for investing in

real estate.

Choosing what properties to invest in should be made strictly upon solid facts. A building

permit for a marina is solid proof that a marina is going to be built and that the adjacent

property values are going to go up. Your cousin telling you that he HEARD that a marina

was going to be built is NOT a fact. It’s hearsay and you shouldn’t bet a lot on hearsay!

Investing in real estate is an excellent way to get a very high return but you really do

need to know what you are doing to keep from losing your shirt.