Think of it this way. To generate continuous leads, you will need the have the skill and habit of consistently planting seeds that will later grow into opportunities. Just like a real plant, it will need to be cared for and paid attention to. If you get a lead and do nothing with it, you will just watch it wither away like an unattended plant.

Here is a list of potential lead generators to think about:

• MLS daily searches
• Business cards you accumulate at networking events
• Direct mail
  • Non-Owner occupied
  • Owner-occupied with equity
  • Probate/estates
  • Local Professionals (attorneys, CPAs, etc)
  • Eviction landlords
  • Tax sale owners
• Radio advertising
• Wholesalers
• Coffee Shops
• Yard Signs
• Foreclosures
• Car magnets
• LinkedIn
• Facebook
• Bigger Pockets

The list could go on and on. We hope that you take these LEADS for starting your own leads in your own real estate investing opportunties. Where have you found a lead? Did we forget one? Tell us how you generate leads for REI.

Read more: http://www.nasdaq.com/article/why-more-real-estate-deals-dont-fall-into-your-lap-cm383348#ixzz3CIv8Q2XC

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First and foremost educate yourself. Education plus action is the key. Part-Time REI has a Flipping University to help you get started. Our team is also big promoters of mentoring. We believe it is the secret to success. Get connected with the right people. Mentoring is how people who are great at what they do learned, and it’s how our team learned. It has been said that experience is the best teacher.  But what we suggest is why spend valuable time reinventing the wheel? Part of our Flipping Houses University series talks about learning from others mistakes and the value of time.  Instead, if you learn from those who have been successful before you, you become more successful much faster.

Secondly, have a tried and true system in place with steps that you follow for every rehab, then you will not spend unnecessary time on issues and will have a turn-key process. It will mean every rehab is done consistently.  Also with a system in place it will help to build your confidence that you haven’t overlooked any repairs. Once you have a system that includes a Property Repair Estimate Sheet you will know how much the repairs should cost. Having a list of what actually needs to be done to the property will give you confidence that you aren’t overlooking anything. By referring to your list, you will make sure that no major items are missed.  It is easy to be distracted by something odd in a house and forget to check out every other area.  By referring to your Property Repair Estimate Sheet, you can be confident that you have reasonably captured all items.  The cost of overlooking a missing air-conditioner, damaged roof or cracked foundation is way too high to rely on your memory.

The essential thing to remember is that systems work.  Having good systems in place will make sure everything is done in the most financially sound and cost-efficient way. In the end, systems are what will save part-time real estate investors time and money by preventing costly mistakes.

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MORTGAGE BROKER

Like any broker, they are the middle man. There is the lender, the borrower, and sometimes the Mortgage brokers. They do the grunt work: gathering paperwork, documenting everything – and then passing it along to a lender who makes the final yes or no decision.

INCOME PROPERTY MORTGAGE

This is a loan given to real estate investors for both residential and commercial properties that are bought with the intent to rent them thus creating income from the rent.  Income property mortgages are a bit trickier to qualify for as lenders need more facts and not every lender does them.

CAP RATE

Also known as the capitalization rate. This just refers to  your annual rate of return on a real estate investment property based on the expected income that the property will generate. Be sure to use our Property Repair Estimate Sheet from the get go to start your numbers off right!

CAPPED RATE

Not to be confused with the above Cap rate. We thought we would cover this too since there is some confusion. A capped rate is an interest rate that has some leeway. In other words it can vary. Good news is it can not go past a set capped rate agreed upon in advance.

CASH EQUITY

Cash is king! This is what you have in liquid assets to put down on the property. In other words the amount of money you have to invest in a property you purchase

ALL-CASH DEAL

No banks needed, so no  financing needed. Perhaps the easiest transaction as there is no mortgage needed. Just a switching of deeds!

CASH-ON-CASH RETURN

Some may refer to this as your equity divided rate. What will be your ROI on this property?  That’s what the cash-on-cash return is all about.

ABSOLUTE TITLE

Absolute. Final. The End. What this means is that the title to a property is now free and clear of any deficiencies or problems that could bother the owner. The owner of the perfect, or absolute, title can not be challenged and has unequivocal rights to their property. No liens. No Judgements. No attachments.

TENANCY AT WILL

A tenancy agreement where a tenant occupies property with the consent of the owner, but without an agreement that specifies a definite rental period or the regular payment of rent. Tenancy at will is also known as estate at will.

These are just some of the more common terms that you may hear out there. Remember we are here to help. Be sure to educate yourself. Our Flipping Houses University is a great start. Don’t forget to surround yourself with people that have that investor mindset, and connect with a good mentor too. Leave a comment if you have any questions!

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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.

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Have you ever overlooked any of these items when flipping a house?

1. Vanishing Vandals

Rehabbing property is not a one day job. Depending on the time of year, it can take several months to finish. An empty piece of property is vulnerable to vandalism. Vacant Home Insurance is not required in all states and will cover vandalism only during the first month that your property is unoccupied, after that you are on your own. Keep in mind these easy tips:

• Cover windows with sheets or drapes
• Request the police for extra patrol and also explain to them that you are rehabbing
• Barricade all windows and doors that do not lock
• Change the locks
• See #2

2. Light it up!

If you were a buyer, would you buy a house that is full of shadows and dullness or one that is adequately lit and looks like it has some life in it? A well lit house looks less depressing and livelier.

Yellow lights are a no no. You can easily establish an upbeat mood with a bright set of lights so it’s a good idea to go for those. Another thing that you should never forget to replace is flickering lights. Some people associate flickering lights with horror films with gory murder scenes. Overall, proper lighting is a very economic way of showing potential buyers what you have done with the property.

3. Conforming and Comparing

If you are going to install new fixtures in the house at least ensure that they match. For starters, door knobs and hinges should match and so should shower heads, faucets and towel racks.

If you are going to purchase new appliances ensure they are all from the same brand or at least have the same style. Make sure your upgrades are comparable to other in the neighborhood as well.

4. For Sale Only When Finished!

Curb appeal is one way of attracting potential buyers but if a buyer sees a “for sale” sign outside a house that looks like it survived a storm, they might make a mental note never to return. Also don’t list a house with a picture before the renovating the front of the house. If the front of the house is dilapidated, that is what buyers will see on the picture. If you want to sell your house as soon as possible, this would be a less than ideal way to begin.

5. A New Mailbox

What’s the first thing you notice when you pull up to a house that you are interested in buying? Most people notice the mailbox.

Don’t mistakenly give potential buyers the wrong impression with an old rusty mailbox. This could tell them that the inside of the house is probably just as rusty. After all, if you didn’t bother to take care of it, what other thing did you also forget to take care of inside the house? Remember that mailboxes are not that expensive. You can get custom mailboxes from any of the local shops in your area for under a hundred bucks.

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 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.

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Why was this not disclosed to you? Do you have to disclose this to your potential buyers? Reality is rules are different in each state. Here’s what we would suggest.

1. Death in the Home

Some buyers may have concerns or superstitions about purchasing a home in which someone has died, so it’s important to know if your state requires sellers to disclose a previous death in the home. Keep in mind each state will have slightly different requirements for disclosure. A seller is required to disclose deaths related to the condition of the property or violent crimes though. For example, if a previous occupant’s child drowned in the swimming pool because it didn’t have the proper safety fence, the seller would need to disclose the death even after remedying the safety issue by installing a proper pool enclosure. There are, however, circumstances where sellers do not have to disclose a death on the property.

There are no states in which there is an obligation to disclose the death of a person who has deceased under natural conditions though. But even when disclosure isn’t required – for example, Georgia does not require the disclosure of homicide or suicide – you may want to err on the side of giving the buyer notice of a death on the property. You would want to know, right?  Remember how you learned of the suicide? They will hear about it from the neighbors anyways.

2. Neighborhood Nuisances

A nuisance is a noise or odor from a source outside the property that could irritate the property’s occupants. If you are investing in North Carolina, that state requires sellers to disclose noises, odors, smoke or other nuisances from commercial, industrial or military sources that affect the property. Michigan requires sellers to disclose farms, farm operations, landfills, airports, shooting ranges and other nuisances in the vicinity, but Pennsylvania leaves it up to the buyer to determine the presence of agricultural nuisances.

3. Environmental and Natural Hazards

If the home is at an increased risk of damage from a natural disaster or has known or potential environmental contamination, you may be required to disclose this information to the buyer.

Texas law requires sellers to disclose the presence of hazardous or toxic waste, asbestos, urea-formaldehyde insulation, radon gas, lead-based paint and previous use of the premises for the manufacture of methamphetamine. 

New York’s Property Condition Disclosure Act requires sellers to notify buyers about whether the property is located in a flood plain, wetland or agricultural district; whether it has ever been a landfill site; if there have ever been fuel-storage tanks above or below ground on the property; if and where the structure contains asbestos; if there is lead plumbing; whether the home has been tested for radon; and whether any fuel, oil, hazardous or toxic substance has been spilled or leaked on the property. 

 California’s Natural Hazards Disclosure Act requires sellers to disclose whether the property is in a seismic hazard zone and could therefore be subject to liquefaction or landslides after an earthquake. 

While most disclosure requirements are governed by the states, the federal government mandates one: the disclosure that lead-based paint may be present on any property constructed before 1978. 


Check in next week for What You Must Disclose Part 2!


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Value

Picking good, well-known areas is one of the key things to understand.  This is vital since it increases the resale value of the property. Also, look for low-maintenance properties. Look for investment properties that will increase in market value  over time. Purchasing a home near a body of water, for example, is generally a good idea. Also consider the forced value that you can put into the home so that it will become a a long-term investment.

However don’t assume that any property value will always rise. While in most flipping markets this assumption is true, just don’t assume it. The goal is to generate profit from the properties that you purchase.

Location

You want to become familiar with a neighborhood before investing in properties there. Have your real estate agent produce comps on homes that have sold in the area. Do your own research and investigate the schools, crime rates, taxes etc. When buying investment properties location plays a big part. It is crucial to know the local zoning laws and anything else that is involved with the property. Another good source for info are the neighbors. Most will be more than happy to tell you the gossip of the neighborhood, why the past owners sold and what they love about the area. 

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You don’t understand the comps in the area

Don’t be that guy. Research your farm area and learn what a house with your amenities goes for in the area. Never invest in a property without understanding the comparables yourself . Make sure you are comparing apples to apples so to speak. Unless you yourself are a Realtor, the real estate agent you hire is of course going to present to you comps that put a smile on your face. Do your home work though and analyze the numbers on not only what they selling price should be but also any rentals in the neighborhood as well.

You fall  for the get-rich-quick  scheme

If it looks like a duck, and sounds like a duck, it is probably a duck. Just like if a deal sounds too good to be true, it probably is. There are so many Ponzi-type schemes out there it is sometimes hard to tell what is really a deal of a lifetime.  Again, educate yourself on what is out there. Investment groups offering ridiculously high returns on your investment? REI guru that will tell you all his secrets for half your savings? Keep walking.

 You are confused on cash flow and what “could be”

Make sure you understand what the current property cash flow is and what it could be after the rehab. Never invest based on speculation. Just because the seller is asking more for it because a mall is going up across the street is not a sure investment. Time and time again projects will start and get delayed or never finish.  The value of the speculation home could take a nose dive and the loan amount not be recouped by the now lower reasonable rent  amount you can ask. Make sure that the Wholesalers and realtors  you are talking to are not touting rental properties based on current cash flow without accounting for future rehab. Ask yourself what the cost of  gaining the attention of a new renter or buyer.

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Where can I find money?

Learn from someone who knows what they are doing

Our team is also big promoters of mentoring. We believe it is the secret to success. Get connected with the right people. Let’s talk about mentoring. It’s how people who are great at what they do learned, and it’s how our team learned. It has been said that experience is the best teacher.  But what we suggest is why spend valuable time reinventing the wheel? Part of our Flipping Houses University series talks about learning from others mistakes and the value of time.  Instead, if you learn from those who have been successful before you, you become more successful much faster.

Have a system

We say this in about every blog: Have a system and stick to it. Jumping ahead in the flipping world with out laying out your strategy is not only dangerous it could ruin your flipping adventure. Having a system and using tools like your Property Repair Estimate Sheet will keep you organized and have an idea how the flip is going to turn out. Without a system, a flip could turn into a disaster.

Figure out Your Financing

Last year we did a blog on Where to Find Flipping Loans. Perhaps the most important item to get settled is where you will get your money from to be able to invest in real estate. Whether is private lending, buying from wholesalers, or you are getting the loans yourself, do your self a favor and get this figured out BEFORE your first opportunity presents itself. 

Learn from your Mistakes

Don’t make this mistake. Don’t rehab the home the way you want it. Don’t pick out designer tiles or trendy paint colors. Remember you are trying to appeal to potential home buyers, not your personal taste. Yes the marble counter tops will really look nice but an upgrade like that could price yourself right out of the neighborhood. Neutral options that are comparable to other homes in the area will best serve you to sell the house. For a list of most common mistakes to avoid check out our blog on Why Flippers Fail.

Be sure to check out Part-Time REI’s  Flipping University to help you get started.

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

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