Real Estate

How to Budget for Your Next Investment Property

 

As a professional real estate investor, you know how easy it is for your ambitions to exceed your budget. Here is a step-by-step strategy to ensure that your next project remains in the red.
Know Your Limits
Before you begin any real estate venture, you have to know how much money you have available to work with. You would be amazed at the number of people who begin searching for loans without figuring out how much they are worth in the first place. Contact a professional financial advisor if you aren’t sure of your overall worth; you’ll need an exact number before you can continue!
Is the Property Sustainable?
You are going to have to sit on the property until you find a buyer. Calculate how many months you can comfortably incur the extra costs before it starts to become a major burden on the rest of your projects, and don’t forget to factor in overlooked expenses such as inspections and even natural disasters (better safe than sorry). For a better idea of how long you can expect to be on the market, research how long it took similar properties in the neighborhood to sell – in general, quicker is better!
Self-Savings
Any contracting job that you can do yourself will obviously save money. However, the more specialized the job, the more likely you are to have trouble. In the long-run, hiring a professional may save you more money than attempting a project yourself, especially since a botched operation will require professional assistance anyway.
Plan the Right Type of Loan
Time is money! There’s nothing worse than having to halt a project because a much-needed bank loan is still pending approval. Hard money lenders can get you the financial assistance you need […]

How to Deal With Late Rent During the Holidays

While everyone is scrambling to get their festivities organized and shopping done, unfortunately, it’s too common for rent payments to be put on the back burner. Landlords are faced with this problem each year, and if it’s happened to you, you know that it’s a tough decision (you know, whether  or not to be a Scrooge).
Keeping a Professional Distance From Your Tenants
If you’re a landlord, you know that maintaining a professional relationship and not becoming involved in your tenant’s financial woes is a necessity. No one enjoys evicting a tenant—especially during the holiday season—but you should remember that this is a business decision where you can weigh the pros and cons.
A Word on Eviction
Evicting someone is not easy, and it’s quite a lengthy process. After evicting your current tenant, you’ll most likely need to turn around the property quickly. However, it’s not easy finding an excellent tenant, especially when you’re facing the potential loss of more than one month’s income. Deciding to evict someone for a one-month lapse may not be worth it to you—especially if you’ve had a solid relationship with your tenant in the past.

If your tenant is always late, the answer should be easy. If not, you may want to consider things such as communication, history and present circumstances to help you decide.

Having to chase down your tenant for the monthly rent is not your job. If they contact you first, it may be to your advantage to just hear them out and work out a payment plan. Good tenants are sometimes hard to come by, and if they’ve always paid on time in the past, there may be some options you could explore for handling their arrears.
Do You Need a Hard Money Loan […]

Determining Fair Market Value

If you’re considering buying a home to fix and flip, the time to calculate fair market value is before you make the purchase. Even if you think it will be the deal of the century, the price you pay for the home now doesn’t necessarily have anything to do with its fair market value. The real estate market is constantly moving, and what’s high today could be low tomorrow. It usually doesn’t happen that quickly, but you’ll need to be aware that even a month or two can make a huge difference.
Calculating Fair Market Value
Calculating fair market value is not always easy—especially if you’re not a Realtor®. You’ll need to know what other homes in the area have sold for recently, so looking at the listing price of a home or outdated information won’t give you the information you need. If you don’t turn around a home quickly, the market value may have already changed.

If you’ve decided that fix-and-flip will become your investment niche, it would be a good idea to form an alliance with a real estate agent for several reasons. Not only will he or she be able to help you turn around future investment properties; your real estate partner can help you calculate fair market values accurately. While websites such as Zillow are available, they do not provide solid figures. In fact, the estimates they provide can be off by as much as 18 percent. (That’s a lot in both directions!) In addition, Zillow allows homeowners to update home information; that can make it tough to separate fact from exaggeration. Perhaps most importantly, a lot of the data is outdated.
Do You Need a Hard Money Loan in Atlanta?
If you’re looking for a hard […]

Who’s Responsible for Duplex Lawn Maintenance?

After purchasing and renovating a duplex, there are some things to consider before drafting a lease. Maintenance issues are not only a legality—they can make or break whether a tenant is attracted to your property.

Renters rent for a number of reasons, and a major one is low- to no maintenance of the dwelling. Renters expect that if a major issue arises inside or out, it will be taken care of.

But what about lawn maintenance?

This can get tricky in a duplex situation.
Lease Agreements and Lawn Maintenance in Atlanta
It is becoming common to see lease agreements specifying that tenants are responsible for the lawn maintenance of a duplex.

There are a few scenarios you should think of when deciding who will be responsible for the lawn care. What if you have a tenant on one side who enjoys gardening and mowing the lawn, while the other tenant thinks that having grass a foot tall is no big deal?

If you hold your tenants responsible for the lawn maintenance, should you provide the equipment? Would it be easier if you just did the lawn maintenance yourself?

These are all important questions, and you have a better chance of handling it up-front than through trial and error.

Having the right verbiage in your lease agreement will eliminate a lot of questions and problems in the long run.

Should you decide that your tenants be responsible for the lawn maintenance, make sure you specify this, along with any aesthetic requirements (grass is to be mowed and trimmed according to city ordinance, garden is to be weeded on a regular basis, lawn is to be watered, etc.). Make it clear that if the tenants do not abide by this, you will add an extra specified […]

Are Co-Working Spaces Worth the Investment?

More and more, people are going into business for themselves. Those tired of “working for the man” or craving a better work-life balance are calling it quits on punching the clock.

Trends in Atlanta are also showing a demand for workspaces where people can come and go at their leisure—especially when working from home is not always ideal.

More often than not, freelancers and start-up companies are not in a position to rent costly office spaces, and above all, they are not willing to make a long-term commercial lease at the start. So, where is all this business being conducted?

Co-working spaces.

Co-working spaces are shared office workspaces that offer a complete, low-cost solution to telecommuters and small businesses. Even large corporations are catching on to the concept when planning for contract workers or special projects.

So how does it work?

If you provide the desks, internet, telephones and coffee—they will come.

Most co-working spaces are supported by (and make money from) memberships. Members comprise people who are looking for a space to work on a daily, weekly, monthly or quarterly basis. In addition, owners of these shared spaces make even more money by renting out conference rooms for meetings or events.

People are finding that they are much more productive when they have somewhere to go and people to connect with. Co-working spaces allow members to collaborate on ideas with people from all walks of life and all areas of business.

Office politics are almost nonexistent since everyone works for themselves. Also, having a professional place to hold a business meeting is an attraction in itself, as some people aren’t keen on the idea of doing business in a living room or coffee shop. (Sometimes those screaming kids or open mic sessions will kill a […]

3 Indispensable Tools for Real Estate Investors

If you’re like most real estate investors, you understand that the ability to quickly and easily evaluate a property—and its potential value—is key to deciding whether to purchase it. This first step is critical in making the right investment decision. Using the right tools to accurately value a property can save you a great deal of time and effort in making your determination.
REI Tool #1: Google Maps, Earth and Street View
Virtually everyone these days relies on Google maps for navigation. Before you even drive past a property, have a look at it—and the surrounding area—using Google Earth. Street view will give you another taste of the way a property looks. In some cases, you may be able to switch between a newer and older view, as well. This can give you great information, literally at your fingertips.

Additionally, use Google Maps to get a feel for the neighborhood retail and restaurant options. Homes located near a Trader Joes, Whole Foods and other popular retailers often increase in value more quickly than comparable homes in the same city. The same is true for homes in highly “walkable” areas or near popular parks.
REI Tool #2: Trustworthy Comparable Programs
All the major residential real estate websites offer AVM (automated valuation methods) values for any home you may select. While each has their weaknesses and can offer misleading figures, they’re all worth a glance. The county assessor’s office is still your best source for comparables information, but it’s hard to beat the likes of Zillow and Trulia for instant gratification. Just do your homework and take these values with a grain of salt.
REI Tool #3: Your Own Eyes
Technology can help you rule out properties that aren’t worth considering, but nothing […]

Cost vs. Price: What New Real Estate Investors Need to Know

Price and cost are two very different things in real estate, and any REI who’s been around for more than a few transactions can tell you that—but if you’re just starting out, here’s what you need to know about price vs. cost.
Price in a Real Estate Transaction
If the price and a real estate transaction is the flat-rate amount you pay. If you buy a property for $75,000, for example, that’s the price. The cost, however, is very different.
Cost in a Real Estate Transaction
The true cost of a real estate transaction includes the price and several other figures. When you’re calculating the overall cost of the transaction, you’ll need to factor in:

Insurance
Interest
Labor costs
Material costs
Fees for permits and licenses
Utilities
Repairs

How to Make Sure You’re Not Losing the Price vs. Cost Battle
It can be tempting to look only at the price of a property, but you need to look of the overall cost before you jump into a real estate transaction. Otherwise, you run the risk of slashing your profits and costing yourself far more than you should.

Be smart. Create your budget before you make an offer. Create limits and stick to them, and don’t overspend.
Do You Need a Hard Money Loan in Atlanta?
If you’re looking for a hard money loan in Atlanta, we may be able to help you.

Call us at 404-814-1644 or contact us online to find out whether you might qualify for this type of funding. In the meantime, check to ensure that you meet our loan criteria. Our loan amounts can be up to 65 percent of the after-repaired value of the collateral—and if you use the loan for renovation or construction, the loan amount can be based […]

Should You Depend on Your Intuition in a Real Estate Deal?

Intuition can be tremendously helpful. It can help you make snap decisions during emergencies; it’s the ability to understand something immediately, without the need of conscious reasoning—but in real estate, intuition can be dangerous.
What is Intuition?
According to Psychology Today, intuition and instinct are basically the same thing. They are our “innate inclination toward a particular behavior (as opposed to a learned a response).” It’s a process that “gives us the ability to know something directly without analytic reasoning, bridging the gap between the conscious and unconscious parts of our mind, and also between instinct and reason.”

We need our intuition… but in calculated real estate deals, we need rationality, reasonable thought, and methodical decision-making processes.
Why Can Intuition Be Damaging to Real Estate Deals?
If something’s telling you that a house just isn’t right for you, then listen. However, when it comes to the cold, hard facts about a real estate transaction, you can’t depend on your intuition.

You can’t afford to ignore the math pertaining to your real estate deals and trust your intuition when it comes to making a profit.

Certainly, it’s tempting to look only at the big picture. In real estate, though, you need to look at every corner and every possibility. Be very realistic about all of your expenses, including:

Property taxes
Insurance
Interest
Fees associated with selling the property
Labor costs
The cost of materials
Licensing and permit fees

It’s far more satisfying to be realistic, anyway. You’ll know exactly how much you’ll be able to make off any given deal, and you won’t set yourself up for disappointment.
Do You Need a Hard Money Loan in Atlanta?
If you’re looking for a hard money loan in Atlanta, we may be able to help you.

Call us […]

From Salaried Employee to REI: What You Need to Know

When you leave a company—one that gives you health insurance, paid vacation time and other benefits—to become a real estate investor, it’s a little scary.

Okay, so it’s extremely scary.

What if you don’t make it? What if things go horribly wrong?

Everyone thinks about these things. We’re hard-wired to envision the worst-case scenario, so it makes sense that many people change their minds and avoid taking the leap.

But what if you’re one of the few who can see past the potential bad outcomes?

Here’s what you need to know about the major life change involved in leaving your 9-to-5 behind for real estate investing.
What’s Critical to Becoming a Successful REI?
An entrepreneurial mindset is a critical component of becoming a successful real estate investor. Sure, you’ll make mistakes—everyone does—but when you have the right mindset, you can overcome those hurdles and turn them into learning experiences that will make you more money in the long haul.

According to Paul Esajian, co-founder of Fortune Builders and CFO of CT Homes, successful entrepreneurs in any field have good habits that include:

Visualizing success. You’ll need to set goals and envision how you’ll achieve them.
Network with other professionals. It’s essential that you build an extensive network of contacts, including real estate professionals, contractors and others who can help you achieve your goals.
Maintain your confidence and strengthen your willpower. You have to be confident that you’ll achieve your goals—and when you do, your confidence levels will reach new heights.
Get up early. Getting up early sets the tone for the rest of the day. Statistics have shown that the most productive, successful people get up by 7 a.m.

Do You Need a Hard Money Loan in Atlanta?
If you’re looking for a hard […]

4 “Phases” of Real Estate Markets

Whether it takes years or even take decades, every regional housing market is continuously cycling through four sequential phases of change. Understanding which stage the market in your area is in will enable you to choose the best strategies when flipping a home.

Here’s how it works:

Phase one (the “growth” stage) – a newer area with all of the social requirements that make people want to buy real estate are in place:

High employment level
Above-average salary
Low crime rates
High-ranking schools

These homes are highly desirable, sell quickly, and will fetch a good amount.

Phase two (the “plateau” stage) – after the “growth” stage comes a period of declining value that is usually brought on due to:

Aging properties
Aging landscapes
Higher crime rates
Expansion of other nearby areas lowers property values

These areas are still desirable, but may take longer to flip when compared to phase one.

Phase three (the “decline” stage) – properties in this stage have stopped becoming desirable due to the following reasons:

High crime rates
Aging infrastructure
Above-average poverty rates
Few chain stores
High eviction rates

Only an experienced house-flipper will be able to generate income from these properties, usually by sprucing them up and renting them out. In general, these areas tend to be problematic for most investors.

Phase four (the “re-planning” stage) – non-profit organizations and local government initiatives begin to call for reform, which over time leads to:

Increased law enforcement
Developmental projects
A strengthening community

Most real estate investors should avoid properties in this phase because there is still much work to be done before the area becomes desirable once again.
Do You Need a Hard Money Loan in Atlanta?
If you’re looking for a hard money loan in Atlanta, […]