Mike’s Real Estate Show

Here’s a great article from “Broker/Agent News”.( http://www.brokeragentnews.com/) It is a web site for Realtors and consumers. I thought you might find it interesting.
By Eric Bramlett

http://www.brokeragentnews.com/news/residential/2007_1/1_5_2007_gg_1168061966.html

1. It’s not as easy as it looks on TV

“Flip This House” is a fantastic television program - that’s about as realistic for the average investor as “Sponge Bob Square Pants.” The problem with TV real estate investment programs is that they downplay the work involved, and accentuate the money made by the investors. “Flip This House” will show you a tidy $150,000 profit wrapped up in a 30 minute episode. What they’re not showing you is the work done to find the property under market value, build the industry relationships necessary to tackle a sizeable project, the skills necessary to manage that project, and the market knowledge to accurately predict that properties final sales price. Bottom line is: investing is hard. It can be, however, very lucrative.

2. Walk before you run.

So many “investors” decide one day that it’s time for them to make millions in the market, and begin looking for that perfect flip, or perfect rental property - with a hefty price tag. Would you walk out of your door today to run a marathon without training? Absolutely not! Investing is very similar. There are MANY mistakes you can make, and one big mistake can turn an investment sour. The best way to minimize your risk is to start out small, and reduce your variable costs. If you’re buying an income producing property, purchase one that’s already rented out - preferably to long term tenants. That way, you can do research on a tenant’s credit worthiness BEFORE you’ve taken the leap and bought the property. You’ll also know exactly how much cash flow your new property will generate. If you’re buying a rehabilitation project, it’s often the carrying costs that can overwhelm a new investor. If, at all possible, buy your rehab project as your home - that way you can take your time without paying the consequences. If that’s not possible, then build in PLENTY of carrying costs - around 6 months worth. Once you have a few investments under your built, you’ll be able to accurately predict your variable costs, keep them lower, and make more profit.

3. For Long Term Wealth - It’s a Marathon, Not a Sprint.

Many new “investors” come to me with the business model of “buying old houses and fixing them up.” This seems to be the easiest way to make money, but it’s not. Flipping houses takes skill, foresight, market knowledge, and market resources. Furthermore, flipping houses is hard work, and results in quick profits. Unless you take advantage of 1031 exchange, flipping houses results in short term capital gains. The true path to long-term wealth lies in income producing properties. Purchase an income property in a market you think will appreciate, hire a property management company, and forget about it. Let the check come in the mail once a month - this “mailbox money” will turn into your best friend. After you’ve let the property rent for 3, 5, even 7 years, check its value and you should be pleasantly surprised! The key here is that you didn’t have to put in very much work - you merely found a great property in an appreciating market, and let a passive investment earn big returns.

4. Use a Realtor You Trust - And Don’t Go After Their Commission.

Author Robert Kyosaki says, “Corporations have boards of directors. You should have one, too.” Good Realtors earn a sizeable income - and they’re worth every penny. The keyword here is “Good” because the real estate industry is like any other - there are plenty of bad agents. Don’t hire any agent that crosses your path; Make sure and interview plenty of Realtors and find one that works with investors, and personally invests. When you find your “Realtor Advisor” don’t go after their commission. Any good Realtor will have plenty of clients and you want to make sure that you’re not playing second fiddle to them.

5. Put Together a Business Plan, And Stick To It

The only time you can’t POSSIBLY lose money is before you invest it. That’s why putting together a solid business plan is the smartest action step you can take. Decide the type of property you plan to buy, what it will cost to purchase it, what it will cost you to hold the property, and how much income the process will produce for you. Most investors have a “formula” for buying properties - develop, borrow, or steal one. Write EVERYTHING down on paper and analyze every possible expense. Plan for the worst and anticipate how you will avoid the worst. Once you’ve put together your business plan and investing “formula” - Stick to it!!! Execution is key to successful investing.

6. When You See Something That Looks Good - Take Action!

I’ve worked with many investors that have excellent business plans, and great formulae, but who refuse to pull the trigger on something that looks good. There are MANY ways to back out of a contract, and if you hesitate when you see a good deal - another investor will already have tied the property up in their contract. In Texas , you typically pay $100 for a 10 day option period. You have 10 days to terminate the contract for ANY reason. In my opinion, not losing a good deal is well worth tying up MANY questionable deals at $100 a pop.

7. Try And Talk Yourself Out of the Deal

After you’ve put together your business plan and contracted a property, you need to look at every negative aspect of the property. Plan for the worst and hope for the best! Oftentimes, planning for the worst involves walking away from the transaction. After you’ve invested the time finding the property and the money to contract and inspect the property, you might feel emotionally invested. However, don’t let these feelings get in the way of making a smart financial decision. If you look at every possible negative that can happen in the transaction and you will still make a profit, then go for it. You can always minimize the negative variables. However, if the worst does happen, you will still have all the clothes on your back. No matter how hard it is, if it looks like you COULD lose money, walk away.

There’s big money in real estate investment, and there’s the potential for big losses, as well. Someone giving themselves the title of “investor” far from makes them an actual investor. Before you take the plunge, talk to plenty of educated investors with experience, and follow these simple steps.

Here’s a great article from “Broker/Agent News”. It is a web site for Realtors and consumers. I thought you might find it interesting.
by Eric Bramlett

1. It’s not as easy as it looks on TV

“Flip This House” is a fantastic television program - that’s about as realistic for the average investor as “Sponge Bob Square Pants.” The problem with TV real estate investment programs is that they downplay the work involved, and accentuate the money made by the investors. “Flip This House” will show you a tidy $150,000 profit wrapped up in a 30 minute episode. What they’re not showing you is the work done to find the property under market value, build the industry relationships necessary to tackle a sizeable project, the skills necessary to manage that project, and the market knowledge to accurately predict that properties final sales price. Bottom line is: investing is hard. It can be, however, very lucrative.

2. Walk before you run.

So many “investors” decide one day that it’s time for them to make millions in the market, and begin looking for that perfect flip, or perfect rental property - with a hefty price tag. Would you walk out of your door today to run a marathon without training? Absolutely not! Investing is very similar. There are MANY mistakes you can make, and one big mistake can turn an investment sour. The best way to minimize your risk is to start out small, and reduce your variable costs. If you’re buying an income producing property, purchase one that’s already rented out - preferably to long term tenants. That way, you can do research on a tenant’s credit worthiness BEFORE you’ve taken the leap and bought the property. You’ll also know exactly how much cash flow your new property will generate. If you’re buying a rehabilitation project, it’s often the carrying costs that can overwhelm a new investor. If, at all possible, buy your rehab project as your home - that way you can take your time without paying the consequences. If that’s not possible, then build in PLENTY of carrying costs - around 6 months worth. Once you have a few investments under your built, you’ll be able to accurately predict your variable costs, keep them lower, and make more profit.

3. For Long Term Wealth - It’s a Marathon, Not a Sprint.

Many new “investors” come to me with the business model of “buying old houses and fixing them up.” This seems to be the easiest way to make money, but it’s not. Flipping houses takes skill, foresight, market knowledge, and market resources. Furthermore, flipping houses is hard work, and results in quick profits. Unless you take advantage of 1031 exchange, flipping houses results in short term capital gains. The true path to long-term wealth lies in income producing properties. Purchase an income property in a market you think will appreciate, hire a property management company, and forget about it. Let the check come in the mail once a month - this “mailbox money” will turn into your best friend. After you’ve let the property rent for 3, 5, even 7 years, check its value and you should be pleasantly surprised! The key here is that you didn’t have to put in very much work - you merely found a great property in an appreciating market, and let a passive investment earn big returns.

4. Use a Realtor You Trust - And Don’t Go After Their Commission.

Author Robert Kyosaki says, “Corporations have boards of directors. You should have one, too.” Good Realtors earn a sizeable income - and they’re worth every penny. The keyword here is “Good” because the real estate industry is like any other - there are plenty of bad agents. Don’t hire any agent that crosses your path; Make sure and interview plenty of Realtors and find one that works with investors, and personally invests. When you find your “Realtor Advisor” don’t go after their commission. Any good Realtor will have plenty of clients and you want to make sure that you’re not playing second fiddle to them.

5. Put Together a Business Plan, And Stick To It

The only time you can’t POSSIBLY lose money is before you invest it. That’s why putting together a solid business plan is the smartest action step you can take. Decide the type of property you plan to buy, what it will cost to purchase it, what it will cost you to hold the property, and how much income the process will produce for you. Most investors have a “formula” for buying properties - develop, borrow, or steal one. Write EVERYTHING down on paper and analyze every possible expense. Plan for the worst and anticipate how you will avoid the worst. Once you’ve put together your business plan and investing “formula” - Stick to it!!! Execution is key to successful investing.

6. When You See Something That Looks Good - Take Action!

I’ve worked with many investors that have excellent business plans, and great formulae, but who refuse to pull the trigger on something that looks good. There are MANY ways to back out of a contract, and if you hesitate when you see a good deal - another investor will already have tied the property up in their contract. In Texas , you typically pay $100 for a 10 day option period. You have 10 days to terminate the contract for ANY reason. In my opinion, not losing a good deal is well worth tying up MANY questionable deals at $100 a pop.

7. Try And Talk Yourself Out of the Deal

After you’ve put together your business plan and contracted a property, you need to look at every negative aspect of the property. Plan for the worst and hope for the best! Oftentimes, planning for the worst involves walking away from the transaction. After you’ve invested the time finding the property and the money to contract and inspect the property, you might feel emotionally invested. However, don’t let these feelings get in the way of making a smart financial decision. If you look at every possible negative that can happen in the transaction and you will still make a profit, then go for it. You can always minimize the negative variables. However, if the worst does happen, you will still have all the clothes on your back. No matter how hard it is, if it looks like you COULD lose money, walk away.

There’s big money in real estate investment, and there’s the potential for big losses, as well. Someone giving themselves the title of “investor” far from makes them an actual investor. Before you take the plunge, talk to plenty of educated investors with experience, and follow these simple steps.

Friends,

  My oh my, Thank Heaven it is 2007!! This is my mantra for the year. 2006 was UNBELIVEABLE!! That blows both ways. Rates are still at historic lows and the paymentment between 5.75% and today’s low rates of 6.125 ain’t that much different. Don’t be one of those who has to have sub 6’s to go forward with your purchase or refinance.

  Our sage of Denver, Lou Barnes, thinks the fed is poised to raise the fed rate up .25%. Good economic news is bad for rates but good for us! Or is that reverse? I’ll talk about this more on today’s show. We’re going to have Alicia Hodenfield of Investor’s Trust on the show this morning to give us some guidance on those LOW, LOW teaser and very seductive, Option Adjustables Rate Mortages!! Be careful of these puppies. One guy is now advertising starting rates as low as 1/4%!!! Yes, a quarter of one percent! The negative amortization on that is spectacular and finacially deadly!! She’ll be talking about that and more.

  Tune us in and for all your real estate needs, be it a Market Analysis of your property or to buyer in this great “Deal of a market’ give me a shout: 322-8503 or toll free in the nation: 800-959-7244. See you on the Radio!

  Yes, it’s that time of year again when we begin our count down to Xmas and start playing our favorite ditty for the Season: “I’ll be Home for Xmas”. And you can!! We’ve got plenty of time to get you in. As of today’s count we have exactly 27 days to get you approved, find you a house, do our inspections, fund the loan and close by December 22nd which is the last Friday before Xmas day which falls on December 25th!! Can we do it! Piece of Cake! Read the rest of this entry »

Good morning!! How was the Real Estate Show this morning!!?? I’m writing this blog from the Best Buy booth at the National Association of Realtors trade show and exposition in New Orleans!! This trade show is one of the largest in the nation as our association is THE largest trade organization extant. Over 25,000 of us are here in New Orleans to network, learn new ideas to market your properties and help this beleagured city. Read the rest of this entry »

Listeners,

  Today we’ll discuss in more detail a number of disturbing forecasts for Real Estate here in Sonoma County. Dr. Chris Thornberg who cut his economic forecasting teeth with the UCLA School of Economics, has now gone out on his own with the “Beacon Group”. He was the guest of our own Sonoma County Economic Development Board and gave his annual forecast of the economy for California. A large component of this annual forecast is the real estate market. I’ve published the Press Democrat article also on the blog so check it out. I’ll give you my take on this and our CAR (California Assoc. of Realtors) annual forecast. Read the rest of this entry »

Happy almost Halloween! Our current market is full of Tricks AND Treats!! The tricks are those folks who bought at the last moment of our Bull market and now find themselves over their heads! How? Paying way to much to get the property as was the case in some of the “feeding frenzy” which was the height of the market and then adding even more in order to obtain credit back for closing costs. They then took the “option ARM” loan program and are now paying Negative Amortization loans (see my separate post on this!) and are paying the least expensive “option” of less than interest only.

  What happened? The market has declined a solid 8-10% in price since those go-go days. They have been making payments which don’t even cover the interest only part of the loan; hence they have been accruing the unpaid interest onto the principal amount (loan balance). Couple this with a 3 year “pre-payment” penalty, re-casting of credit cards at the turn of 2006 (increasing their debt burden) and you find someone who’s probably out trick or treating to get a meal!!

  Our topic on the show today was all about declining values, sales and price appreciation expectations. The California Association of Realtors (CAR) has realized their prediction of dramatic sales declines. How about 31% over this time last year!! Our medium in Sonoma County has dropped from $590,000 in October of 2005 to $560,000 for October 2006. Sales are off in excess of 30% also. Time to sell a house in this market? Now at 90 days on the market. Not the usual put it on the market and wait a week for the offers to pile up! Now I’m having my SELLERS writing letters to a prospective buyer as to why their home should be considered by them. Pendulum swings like a pendulum do!

  We also had Keller Williams Realtor, Grace Lucero, on the show today. She lives and works in Cloverdale and works the North County area. She sells commercial, residential, land and estate properties. We just closed a lovely property in the Dry Creek Valley for $1,700,000. It was on the market for over a year and had been first listed at $3,500,000!!! She has a historic home on the market now in Cloverdale; The summer residence of Colonel Armstrong. Think Armstrong Redwoods Park. Price is $1,300,000 and has 3 parcels in total and 3 residences. Grace can be reached at 888-2649. Hope you enjoyed the show!! Please post a reply or give us some feedback. Oh by the way, Temple finally won a football game!! Our big blowout College football score of the week did NOT have them on the loosing side for once! They broke a 20 game loosing streak!! Now let’s try and turn this market around. Hear me next week and if you wish to chat about YOUR real estate needs—707-322-8503 or Toll Free in the nation: 800-959-7244.