1. Do Learn the Art of Leverage

Please don’t be this guy; the one that thinks he can do all the trim work, the landscaping, the listings, the cleaning…get our point? Don’t overextend yourself. Be sure to keep your ambitions in check and don’t bite off more than you can chew. One of our main lessons in the Flipping Houses University is how to build your investing team and choose the right dependable people to help you accomplish your investing goals. Remember this word. LEVERAGE.

2. Don’t Be Too Big for Your Britches

Remember your mom telling you that? Don’t try to act like you know everything when in fact you are just starting out your flipping career. In reality, whether you are just starting out or have been investing for years… be yourself and be real. You will gain many more meaningful relationships that way–ones that you can use to your benefit. See LEVERAGE. Admit to what you know and what you don’t know. Don’t dismiss the advice of those who have been investing for years. They’ve seen both the ups and the downs in the market, and really know what they are talking about!

3. Do Use a Property Repair Estimate Sheet

One of the more important documents you need is Property Repair Estimate Sheet.   This document should include a list of all of the major items (roof, hvac, kitchen, paint, flooring…) as well as cost estimates for each item.  You should complete one of these during your initial visit of every house you look at.  The 2 main benefits of the form are 1) to save you time and 2) to give you confidence to proceed with the deal.

4. Do Know “Why”
Always know your why. Keep the main thing the main thing. Don’t get side tracked in all the hype. Keep in mind the reason you chose investing in real estate as your alternate income revenue. Maybe you want to be able to retire early. Or you are trying to pay off your house, or save for your kids’ futures. We provide these blogs so that what is important to you stays important. For example like spending time with your family. Don’t ignore your family while trying to build your business because then you would be sacrificing the very goal you are  trying to reach.

To learn more about Part-Time REI visit us at http://part-timerei.com/

Or connect with us  

 1. Recognize that  investing is a business.

Being a landlord and an REI is different from being a private homeowner — it’s a business and you need to treat it like that. Have a good business plan. This type of investment is not hands-off. It can be passive but it requires involvement. It requires your time. It requires certain knowledge and skills.

2. Start small.

Don’t get in over your head right away. Starting with a single house or smaller multiple-dwelling unit, perhaps with a partner, is a good staring move to see if the business really suits you. Starting with a single home will allow you to get a feel for the maintenance, bookkeeping and other work required.

3. Know your Farm Area

As with any business, location can be critical. And we all know real estate is all about location, location, location. A home that seems to be a steal might be priced lower because it’s in a neighborhood most people wouldn’t actually want to live in — one that has higher crime, noisy streets or poor schools. For that reason, investing in out-of-state property is a gamble. Do your research and get comps from your Realtor and only  buy in neighborhoods you know well or have carefully researched.

4. Figure out the right rent and rentors

Rents differ widely around the United States. Zillow, Craigslist or a real estate agent can give you an idea what they are where you’re buying. Then you need to determine if that rent will be enough to cover your costs.

Too often, people take a look at their loan and think if they cover that, they’re doing fine. But you’ll need to pay property taxes and insurance. Don’t forget though about regular maintenance. Things break, and you will need some money in the bank to deal with unexpected expenses.

You’ll also want to know the rate of return you’re getting on your investment. There are formulas, such as the “capitalization rate,” to help with this, but you might want to turn to a professional. A good accountant can make sure the purchase makes sense.

Finding a good first tenant is also an important step. Run background checks if you can. Finding and keeping good tenants is the heart of successfully investing long-term in real estate.Happy tenants are critically important. They’re your customers and the way you keep them happy is by keeping the property in good shape and treating them with respect

 5. Leave it to the professionals

If you decide to manage your property, you’ll probably need to consult a real estate lawyer to get a solid lease and learn the rights of tenants. You may want an accountant, and you’ll need a list of good plumbers, electricians and tradesmen. Building your investment team is very important; so is leveraging other people’s talents. Your goal is to have a second income, not a second job.Turning to a property management company can be a smart move. It’s usually worth it to pay 7% to 10% of our rental income to a manager.

To learn more about Part-Time REI visit us at http://part-timerei.com/

Or connect with us  

Building Your Real Estate Team

To learn more about Part-Time REI visit us at http://part-timerei.com/

Or connect with us  

Permits

Everyone knows that you need a permit to build. But different states require different licenses and permits for flipping homes. Some states require house-flipping businesses to be licensed as general contractors or if the home is being sold through a subsidiary, require a real estate selling license. In most states however you do not have to have a real estate license to flip a house.

Grants

Did you now some areas actually give out money for flipping houses?  So inquire about government grants for flipping houses with state and local governments, not the federal government. Much of the grant money the federal government gives out each year is earmarked before requests are even made for it. On the other hand, states and municipalities within states take a greater interest in granting money to people who want to beautify the communities within the area.  It is a win win situation. Do the homework to find out which municipalities or states are setting aside money to redevelop certain areas. The best way to find this out is by calling the community and economic development office of a municipality to find out what programs might be in place that could lead to a grant.

To learn more about Part-Time REI visit us at http://part-timerei.com/

Or connect with us  

In an INC.com Magazine article George Stephanopoulos, anchor of ABC’s Good Morning America and host of This Week, is asked how he gets his interviewees to answer the hard questions.  Mr. Stephanopoluos replied with the following advice that applies to negotiating with buyers and sellers as well as to journalists.  

1. Prepare extensively. Good preparation leads to better questions. It also demonstrates a genuine interest, Stephanopoulos says. “Knowing what you’re talking about breeds respect on both sides.”  Before a 2009 interview about health care with President Barack Obama, Stephanopoulos prepared extensively to show his guest he had deep knowledge of the subject.

2. Don’t be a know-it-all. After all that prep work, you might feel like an expert. But keep things simple by starting with direct, open-ended questions. Then, use your knowledge to get your subject to expand on pat answers. “I used to try to show off how much work I did,” Stephanopoulos says. “But sometimes it was all wind-up and no question.”

3. Ask “Why?” Ask “What do you do?” at a cocktail party, and people go on autopilot. Ask “Why?” and people give fresher, more thoughtful answers. The same is true for television interviews, Stephanopoulos says.

4. Watch for facial cues. During a conversation, facial cues can indicate if someone wants to say more or less about a topic. For instance, Stephanopoulos says he can tell someone is having a new thought when his or her eyes light up. “You can see it more than you can hear it,” he says. Then, he guides the conversation in that direction.

5. Force yourself to be interested. If you’re bored by the person sitting across from you, your audience will be, too. The key is to find the one thing that does pique your curiosity. Stephanopoulos interviews a lot of actors, but he doesn’t always like their movies. His solution? He finds one scene that he finds remarkable for some reason and focuses on it.

Source: Inc.com Magazine October 2013 issue.

To learn more about Part-Time REI visit us at http://part-timerei.com/

Or connect with us  

A few blogs ago we talked about becoming successful at investing in real estate. One of the key components we mentioned when building your REI business is setting goals.

We start with the question of “Why do you want to start investing in real estate?” The answer to this can be different for many people. Maybe you want to retire early. Maybe you want to plan that dream vacation. Maybe you are just tired of the daily grind and “working for the man.” All of these questions can be good motivators to achieve the place in life you want to be. Clear goals implement clarity. Along with a goals, setting a clear schedule will compliment your structured goals.

Financial Goals

On every flip, be sure to set a goal of how much return you expect. If you don’t set this how do you know your business is profitable?  Without specific financial goals, you’ll find it difficult or impossible to correctly analyze potential real estate deals. Investors flipping houses typically set a purchase price goal of 30% below market value after repairs. In our area is is an attainable goal to make 10K to 15K on each flip. This of course would vary on region and market, but do the research for your area to know what to expect.

Leverage Goals

Think of  your real estate investment as an actual business. Don’t try to do all the work yourself. The goal is  not to have a second job but rather a second income. Make leveraging others to your advantage a goal. Learn to  LEVERAGE other people’s time to achieve your goals. Contractors, Realtors, wholesalers –you name it. Your goal is to invest in real estate not spend your spare time remodeling a house.

Also implementing a schedule will help you when leveraging other people’s time and yours. Having a set schedule will increase productivity on not only how fast your house is flipped but also on how your day is spent.

Why Goals Work

Part of being a successful real estate investor is having the investor mindset. Don’t say “I can’t do this.” or “I don’t know how.” Think “How CAN I do this.” If you think you are going to fail then unfortunately you probably will. If you educate yourself in real estate and how the whole process works you will be far more confident when working bids, choosing houses etc. Once you have that confidence, you will be able to envision yourself reaching your goals. Since education plus action is the key, Part-Time REI has a Flipping University to help you get started.

To learn more about Part-Time REI visit us at http://part-timerei.com/

Or connect with us  

1.  Educate Yourself

You should have a plan for how you intend to learn about flipping houses. Just like any industry, real estate investing is constantly moving forward. You don’t have to be a Realtor to flip houses, but in some states there are specific requirements for real estate agents to take continuing education. As an investor, you should be doing the same thing. This can be anything from reading blogs, attending workshops, online seminars, or training courses online. Also stay on top of your market. By researching new opportunity you will stay apprises of what’s going on in the real estate marketing.

2. Set Goals

Why do you want to start investing in real estate? When do you want to retire? What is your dream trip? All good motivators to achieve  the place in life you want to be. Clear goals implement clarity.  Along with a goals, setting a clear schedule will compliment your structured goals. This includes financial goals.  Without specific financial goals, you’ll find it difficult or impossible to correctly analyze potential real estate deals. Investors flipping houses typically set a purchase price goal of 30% below market value after repairs.

3. Network with Successful REIs

Speak with fellow real estate investors. Join REI groups in your city. Here you can meet other investor minded individuals like wholesalers and contractors that can help you along your journey. It is essential that you connect with those who have more experience in order to get good advice. Make sure they align with your goals and strategy. Attend club meetings on a regular basis. Join online real estate forums like Bigger Pockets and read up on successful investors to see what they might be doing that you are not.

4. Learn from your Mistakes

Don’t make this mistake. Instead learn from others’ mistakes. Even the most experienced investors make mistakes. When a deal is less profitable than you intended it to be, take the time to make a thorough analysis of what went wrong.  Ask questions on real estate blogs to investors like what mistakes they made along the way and how they avoid those mistakes today. For a list of most common mistakes to avoid check out our blog on Why Flippers Fail.  

5. Implement Leverage

Think of  your real estate investment as an actual business. Don’t try to do all the work yourself. The point is not to have a second job but rather a second income. Become an investor. Learn to  LEVERAGE other people’s time to achieve your goals. Contractors, Realtors, wholesalers –you name it. Your goal is to invest in real estate not spend your spare time remodeling a house.

To learn more about Part-Time REI visit us at http://part-timerei.com/

Or connect with us  

You are probably thinking right now, “That sounds great! Where do I find these wholesalers? Is there a ‘How to Find Wholesalers’ e-book?”  And since a wholesaler’s pure existence depends finding deals and their network of investors to sell to, you can be their key to this. Since they have connections they will have access to the deals and opportunities. Let’s look at the tree main ways our team finds wholesalers.

Networking

Networking is everywhere. So it makes sense that you should be in networking, so you too, will be everywhere. Join your local chambers and building associations. There are also Realtor associations out there but make sure you have your real estate license first before you go showing up at their events. Many cities will also real estate investing (REI) meetings or chapters. This is a great place to meet other investor minded individuals that can pass along deals to you.

Social Media

Facebook, LinkedIn, Google+, Twitter… the list seems to grow every few months. Make sure you are making the most of your time on the social media sites. Facebook and LinkedIn are especially helpful in locating wholesalers as there are tons of them forming groups on said social media sites. All you have to do is put “wholesalers” in the search field and there will be hundreds of like minded individuals in groups looking for deal and buyers and wholesalers. LinkedIn also has forums and discussion groups that you can get involved in. There are also real estate investing sites that are just for investors like Bigger Pockets. Discussions, blogs and helpful tips abound on this site. One could also beg to differ it would categorize as networking as well.

 Craigslist

Yes Craigslist. It has gotten some bad rep over the years on people trying to find or sell some uh, slightly inappropriate items but it can be useful in your wholesaler search. Many “off market” deals can be found on Craig’s List. Tons of homeowners and wholesalers are trying to sell their homes on Craigslist. Some of the best FSBO deals are just waiting to be scooped up. Make it a habit to check the real estate section daily.

To learn more about Part-Time REI visit us at http://part-timerei.com/

Or connect with us  

The FHA loan limit reduction will  mainly affect home buyers in higher-end properties.  Homebuyers who once could buy with less capital will now have to invest more cash into the deal or buy less house. If you are investing in those higher end areas, as are many according to recent reports, this is good info to know. Some of these changes are particularly shocking to the so called “Sand States”  that are still recovering from the housing bust and relying on the flipping houses market to bring them back. For example, in Las Vegas, the FHA loan limit will drop from $400,000 to $287,500 on Jan. 1. The Fannie Mae loan limit will remain at $417,000.

Here are some of the changes  to FHA Loan Limits that Part-Time REI thinks flippers should pay attention to.

1. Your Mortgage Limits Will Be Reduced: Most counties will see the maximum loan limits decrease, on average, by $67,250 beginning January 2014.  In fact there are 146 counties that will experience declines of 20% or more.  FHA has offered no explanation for these significant decreases.

2. Get Your Credit Score in Order: You’ll need at least a 700 credit score to sit at the big kids table. The best terms and rates will go to those with 740 scores or better. One of the first to do’s on your list of getting started in to make sure you know where you stand on your credit. This will greatly affect how much and from whom you can borrow money. There are many free outlets to check your credit score.

3. A 20% Down Payment May Be Required: No longer will homebuyers on the higher-end market be able to purchase a home with less than 20 percent down if the loan is not conforming high balance or FHA. In other words, 20 percent down is going to be the new normal in most markets for majority buyers. Here also keep in mind that many investors simply do not allow for mortgage insurance on larger loan sizes.

For a comprehensive list of the FHA new loan limits please refer to this link from AOL Real Estate.

Link to press release from HUD http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2013/HUDNo.13-184

More resources:

http://www.fha.com/lending_limits

http://www.realtor.org/articles/new-fha-loan-limits-for-2014

To learn more about Part-Time REI visit us at http://part-timerei.com/

Or connect with us  

The modern economy has a lot of individuals curious about making money from real estate. The sad truth is that most people have no clue about where to get started. If you have  been wondering what you can do to invest in the real estate market the right way, you should know a couple of things first.

You must develop a good feel for local property values. Knowing your market is one of the key lessons that will prepare you for investing in real estate. The cost of mortgages and rent in the neighborhood is a better indicator than financial statements when providing a picture of the house value. If you view the property from a basic level, you can better make the right decision.

Learn from like-minded people. If you are reading this then you are definitely looking in the right place. Lots of people want to get involved in real estate investments. There are many groups focusing solely on real estate investing. Or you can also find many online as well. Join these groups and learn all that you can. Invest as much time in learning to achieve that investor mindset.

The national real estate industry is expected to continue growing in 2014 but at a slightly slower rate than 2013. More importantly, major investors will shift out of tier one markets into tier two markets due to the high cost of real estate in the “gateway” cities. Gateway cities are cities offering the most international airplane flights and international business. Cities like Boston, Chicago, Los Angeles, New York City, San Francisco, and Washington D.C. But there are other important cities now offering a better return on capital. These include Austin, Dallas, Houston, Miami, Orange County, Portland, San Jose, Seattle, and Minneapolis. These are the types of cities that institutional investors will be investing in during 2014.

Don’t Make Excuses

You are not too old and reality is you are never going to be any younger than you are right now. Start looking past your self-imposed age restrictions and start using your age to your benefit. Believe me – a lot of young professionals would LOVE to appear wiser and be taken more seriously than they are. Having lived it myself for the past decade, I know that age is an asset. It’s not always easy for young people to be taken seriously is the business world.

If you think the market is over-saturated, think again. All signs point to go. Succeeding in any business is about finding the right solutions to the right  problems. People will always live in houses and people will always be buying houses. Find your niche and become their problem solver.

If you think the economy is not strong enough, keep reading. Did you know that more than half of all Fortune 500 companies were started in the midst of a major recession or a down market? It doesn’t matter where the economy is headed, you just need to figure out how your solutions will fit into the grand scheme of things. We see the current market as one of the greatest financial opportunities you may ever see in your life.  Anyone who invested in real estate between 2009 – 2012 will probably tell you the same thing!

Don’t allow yourself to be marginalized by self doubt. It’s never too late to get started, and if you’re asking yourself when the time will be right for you, think about what was said in this article. The only really important question is, when will you get started?

To learn more about Part-Time REI visit us at http://part-timerei.com/

Or connect with us