Sudeira

An essential part of being a real estate investor is networking to find money for funding deals. Traditional bank loans only go so far and hard money hurts to use. That leaves private real estate investors for funding your deals. The question is where to find individual’s with money to lend. What is required is power networking both on-line and off.

Networking for investors and partners is essential. Without that money, you have to fund real estate transactions yourself and that is not good news. The question is where to go.

Investor forums: A large number of websites cater to real estate investors, both those with money to lend and those seeking funding. I suggest finding 2-3 that have good traffic and active discussions. I particularly like Bigger Pockets, a newer but growing real estate investor’s forum. Post regularly, ask questions and be sure to not spam.

Investment clubs: These local groups are a great source of leads for people with money to lend. Often times there is a membership fee, but if used wisely, they are a great source of leads. Many have both regular meetings and online forums. Be sure to work both of them diligently.

Classified ads & signs: Call ads that advertise that they buy houses, talk with them. A good number of them will be real investors with connections. Some may even be in a position to fund your projects or may have a connection that can.

The key element is to network. Read books and blog posts about networking and put in the work. Talking with people both via the computer and in real life is your key to funding all your real estate deals!

Did you know that joint venture investment real estate deals can massively swell your retirement account?  I bet your stock broker has never told you that you can take your investment money and make solid returns by doing joint venture (JV) real estate deals.  With the stock market taking hit after hit and with the real estate market holding a fire sale, now is the time to invest in real estate.  However, going it alone is not a good idea.  You may have the capital required to do deals, but do you have the skill and time?  Probably not, so partnering up with someone that has ‘on the ground’ experience is a good idea.

Joint venture real estate deal makes sense because:

• You can maximize your investment by working with someone that is experienced in investment real estate.  More experience means less risk and better returns.
• JV deals mean you have less headaches.  If you are the capital partner in a joint venture, your partner is probably going to be in charge of the dirty work involved with finding, negotiating and disposing of investments.
• Working with a partner on a investment real estate property opens you up to new investment opportunities.  As you do more deals, you will get more contacts and be offered more opportunities to invest in more projects.
• Properly executed joint venture investment real estate deals are, at least in my opinion, far safer than investing in stocks, and give better returns.

How is this different from lending money on real estate investments?  As a joint venture partner, you have more to gain.  Instead of just accepting a relatively small amount of interest, you gain a larger share of the profit and can even take advantage of some of the tax rewards associated with owning investment real estate.  Can you say depreciation deduction?

You do want to have JV real estate deals set up correctly, and should be written out and placed in the correct corporate structures.  Doing that will minimize the problems that can occur with partnerships.  In my experience, there are generally few problems as long as everyone’s responsibilities and duties are spelled out in writing in advance.  Communication is essential!

If you are thinking of pulling your money out of the stock market, CDs or money market account and are wondering where to invest it, don’t overlook joint venture investment real estate transactions.  The rewards can be excellent!

Are you shopping around for private investors and investing companies to finance your next real estate project?  I came across this excellent post by Gavin Sorensen on how to avoid scammers that say they can loan you money, but are really just out to shaft you out of yours.  Be sure to read this and pay attention when you are approached by someone that wants to loan you money.  Thanks to Gavin for letting me re-post this!

Avoid individuals and organizations which:
- do not have a company website.
- cannot easily lead you to their corporate documentation.
- do not have legal counsel, regulation and guidance
- do not maintain strict client confidentiality standards
- do not perform the KYC check
- do not have a strict and transparent business model to protect the client and themselves from fraud

Legal Counsel – Any reputable organization shall have legal representation to ensure transactions and communications (paper and electronic) meet the strict standards of client confidentiality, the US Patriot Act and other International regulations that may be applicable.

Visit http://www.fincen.gov/ – Financial Crimes Enforcement Network: US Dept. of Treasury
Visit http://insidetradellc.com/ – Source for blacklisted companies and brokers

Any reputable company shall perform KYC (Know Your Customer) checks, which refers to the regulatory compliance mandate imposed on financial service providers to implement a Customer Identification Program and perform due diligence checks before doing business with a person or entity. KYC fulfills a risk mitigation function, and one its key requirements is checking that a prospective customer is not listed on any government lists for wanted money launders, known fraudsters or terrorists.

If preliminary KYC checks reveal that the person is a Politically Exposed Person (PEP), for example, Advanced Due Diligence must be done in order to ensure that the person’s source of wealth is transparent, and that he or she does not pose a reputational or financial risk in terms of their finances, public positions or associations.

In order to meet KYC compliance requirements, financial institutions must:

• Verify that customers are not or have not been involved in illegal activities such as fraud, money laundering or organized crime
• Verify a prospective client’s identity
• Maintain proof of the steps taken to identify their identity
• Establish whether a prospective customer is listed on any sanctions lists in connection with suspected terrorist activities, money laundering, fraud or other crimes.

Gavin Sorensen, FICArb.E, Deputy Registrar – International Court of Arbitration in Europe
Managing Partner – Untad Global – worldwide financing
UNTAD GLOBAL – worldwide financing
(division of Lestrade Law Associates International LLC Group)
Email: gavin.sorensen@untadglobal.co.cc

A few days ago I read a spammy little blog post supposedly about ‘Real Estate Investing in the Age of Government Regulation’.  Turned out to be lousy, and pointless, but it did hit on three good points that I wanted to touch on.

Real estate investing is filled with myths, gurus selling hype and until recently, TV shows that had just about anyone making a big money doing flips.  Most of that isn’t true.  These items are though, and you should give them some thought.

1. You will always get a positive result from investing in real estate education.  Before you go plunking your IRA money into a rental property, or a chunk of raw land that ‘just has to go up in value’ it is essential to learn the game.  Books are good tools for getting started,  and I have one real estate college that I can vouch for.  I avoid the gurus that are more interested in selling you more seminars than teaching you anything.

In any case, reading, taking classes and going to (good) seminars is always a wise investment.  If you spend $500 on a seminar and learn one tip that helps you put together one deal, you are going to make back the investment in education several times over.

2. Real estate investing is possible in ANY economy!  Despite all the noise you are hearing, there is always a way to make money in real estate.  It doesn’t matter if markets are going up, down or sideways, there is always money to be made.  What changes is the way that money is made.  I would suggest looking back at #1 for figuring out what is working right now!

3. You don’t have to have a big chunk of money to get started investing in real estate.  While you don’t have to have a big nest egg to get you started in real estate investing, I do have to say it helps!  If you don’t however, it isn’t impossible to get started investing.  What it will do is change what part of the game you are in.  Instead of immediately buying apartment buildings, you may have to start out doing some wholesaling or other such transactions to build up your cash reserves and contacts.

What you do need is a team and the skill/desire to network heavily.  Especially if you are short of funds to start, a good team and network is important.  Mentors and private investors can help you put deals together once you find them, but only if you have them on your team ahead of time!

Real estate investing is the #1 way to generate long term wealth, regardless of the economy or what is going on in the world.  The benefits to owning rentals are many, and you should really put a tax accountant and attorney like Mark Kohler on your team to really maximize your  rewards.

Finishing up 2009, the markets are still a mess.  While there are signs that the American economy in general is recovering, there are also several factors that could derail much of the gains that we have seen.  So things are still going to be ugly.

Those 5 year option arms from 2004 and 2005 are still coming to term and will be resetting soon, so round 3 of foreclosures?  How about the commercial real estate sector where buildings are going empty and predictions are that prices will drop to 40% or less of their values from a few years ago.  Scared yet?  Don’t be, unless you are too scared to take advantage of the opportunities in front of you.

Let us not forget that the credit markets are tight as hell and no one can get a decent loan.  How can we buy and sell homes if no one can get a loan?  Cripes!  How can I be saying that 2010 is going to be the best year yet to invest in real estate.  To make matters worse, a dubious energy bill that our lovely government is trying to pass an ‘energy bill’ that could totally screw home owners.

This all means that the real estate markets will be chaotic.  That chaos will keep the amateurs and would-be real estate investors that don’t have what it takes, out of the market.  Without easy access to funds to buy homes the weak investors won’t  be able to buy properties.  Furthermore, they won’t be able to move them because they will need to sell on conventional financing.

The creative real estate investor can take advantage of chaos, build networks, teams and do deals when other investors are running scared.  Private lending and joint ventures will be critical to making deals happen.  Likewise, being able to offer creative financing to buyers will be important. 

Just starting to invest in real estate?  I encourage you to start building your team NOW!  Get your network going, you are going to need buyers both wholesale and retail, as well as cash partners and investors.  Don’t wait!  Start today.  As I am writing this we are coming into the holiday season.  Things will be busy, but it is a great time to get organized and start figuring out who you need to have on your list.

Take advantage of opportunity while others panic and you will make 2010 a year that can’t be beat for real estate investing!

We all make mistakes, it happens.  But when real estate investors make mistakes, they are big and expensive.  Do you know what the top 3 mistakes real estate investors make are?  You should, because any one of them can end your real estate investing career, especially if you are just starting out!

REAL ESTATE INVESTOR MISTAKE #0

BUYING A PROPERTY JUST FOR THE APPRECIATION – This is the top real estate investor killer of the last few years, and I put it in at number zero because you should NEVER buy a property based solely on its appreciation.  This is akin to trying to time the stock market.  Yes you can buy and sell on the up swing and make money.  People were making 15% a quarter on houses in the Seattle area doing this.  But, just like stocks, when the needle swings the other way you get burned.  And many real estate investors have gone under because of this!

REAL ESTATE INVESTOR MISTAKE #1

PAYING TOO MUCH FOR A PROPERTY – We all love a good deal and sometimes we get too excited by what appears to be a ‘hot deal’ and jump in before checking out all the facts.  This is where knowledge of the market you are in and having a great real estate agent on your team are essential.  Get your offer in and then follow up to make sure that you are accurate on your estimates of what it will sell for and what your repair and holding costs will be.  Screw these up and you can be upside down and bleeding money in a heart beat.

REAL ESTATE INVESTOR MISTAKE #2

NOT HAVING ENOUGH EXIT STRATEGIES – You have probably heard it a hundred times.  “The money is made when you buy the property.”  Sure, but the truth is that you don’t get to have that money until you actually execute an exit strategy.  Which one it is doesn’t really matter.  What is important is having one primary and at least one secondary way of exiting from your property when it is time.  This is a trap a lot of investors fell into with fix and flips.  They bought it, fixed it and now can’t sell it.  With no back up exit plans, they are hosed.  Don’t be that investor!

REAL ESTATE INVESTOR MISTAKE #3

TRYING TO DO IT ALL YOURSELF – “No man is an island!”  Yeah I know I am making with the quotes today, but it is true.  You might be able to pull off doing it all yourself but is it smart?  Especially if you are doing a hands on project like a fix and flip, there are things tasks you should farm out, delegate and just plain farm out.  Even if you know how to do everything on the list of projects, it is a good idea to not take it all on.  You will quickly burn out if your face is in real estate projects from before the sun comes up till after the sun goes down every night.  Stay fresh, work smart and delegate out what work you can!

There are top 3 mistakes that will kill your real estate investing business.  There are of course many other pit falls that you can trip in, but these are three of the most common killers of real estate investors.  If you have any questions about real estate investing or have a project you would like to talk over please contact us!

It is no secret that Chris and I are actively looking for real estate investments.  In doing so, we are working with a great group of real estate investors and recently someone posed the question, ‘why is it you are investing in real estate?’

This is a great question!  Many times our first answer is that we want more money, stable income, retirement money or so on.  That is more of the nuts and bolts of what it is we truly want.  For example, you might tell me that you want to buy enough rental units to generate $1,500 a month in positive cash flow.  But the real question is WHY?

What is it that that $1,500 in cash flow will do for you?  You need to drill down and get to the core of why you want that money.  What will that money change in your life?  Who will it help, what will it allow you to do?  It can be a tough question to answer sometimes.  Your true motivation will almost always have an emotional reaction in your core.

Why is it important to know this?  Because there will come a time when you need motivation.  There will come a time when things will get hard.  You may have just had a seller kick you out for making a tough offer.  You may be needing to go talk to a seller that you know is about to lose their home and are nervous.  There may come a day when you are burned out and want to quit.  That is when you need to have your true motivation clear in your mind.

Do your digging and write down your true motivation for investing in real estate on a card.  Put a copy on your mirror in the bathroom, one on your desk, and one in your car.  You could even put one in your wallet or purse.  When you are wavering and wondering what you are doing, look at that card.  It will give you the push you need to keep going.

This will keep you up and going when other people would have given up. That is often times the difference between those of us that succeed and those who fail.  Write down your true motivation for investing in real estate and use that to keep you driving forward!

So, what is your motivation for investing in real estate?