tag:blogger.com,1999:blog-76575031172887138192024-03-05T16:57:54.224-05:00Almavesta Group News and InformationPractical Advice and Ideas for Today's Educated Real Estate InvestorAnonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.comBlogger55125tag:blogger.com,1999:blog-7657503117288713819.post-75992577283654871832014-06-16T10:03:00.002-04:002014-06-16T10:03:38.829-04:00How to Handle Contractors - Get the Job Done On Budget and On Time<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg2saCc2QoUI92woaFhyIvhqy_ObHRu2A4ZUZ46wbDBe-xNfkYslKWRl64QFGwDwU4updXgl7ctHQ3HH4VzKuY5G_sJ9MHy6TXstXGds3WLNDYgSbqjF8DYKXhj7umR7NbNTSfHnpY7Gs4Z/s1600/apartment-renovations.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg2saCc2QoUI92woaFhyIvhqy_ObHRu2A4ZUZ46wbDBe-xNfkYslKWRl64QFGwDwU4updXgl7ctHQ3HH4VzKuY5G_sJ9MHy6TXstXGds3WLNDYgSbqjF8DYKXhj7umR7NbNTSfHnpY7Gs4Z/s1600/apartment-renovations.jpg" height="256" width="320" /></a></div>
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<span style="font-family: Verdana, sans-serif;">If you're involved in real estate investments, then unless you're involved in notes, or wholesaling, then you're likely going to run into repairs, renovations, demolitions, new construction, additions, etc. at one time or another.</span></div>
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<span style="font-family: Verdana, sans-serif;">This post is intended for professionals in the industry who do not normally get involved with day to day project related work. This is not intended for project managers or general contractors (GC) as they already use these tips as common practice. </span></div>
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<span style="font-family: Verdana, sans-serif;">For owners, it's good to understand some of what your GC or project manager does to ensure that the jobs are done on time and within budget. If you're using a GC, then it's a good idea to use these tips in your contract with them. Never forget that the more time a job takes, the more money it will cost you if you are using financing or not. Even if you use all cash, your cash is being tied up and not earning anything for you while it's used in a particular project. In other words, for you cash buyers, the situation is exactly the same for late jobs. Lateness from your contractor = you losing money as a result of the lateness. These tips will help you avoid delays by empowering your contractor to get the job done quickly and efficiently.</span></div>
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<span style="font-family: Verdana, sans-serif;">The whole point of hiring a contractor is to ensure the job is done on time and on budget. The primary objective of a contractor and that of the owner are not entirely aligned. The contractor wants to do the job at as high a price he can get competitively. Once they have the job, they are interested in getting change orders that will put more money to their bottom line and to get the job done with the least amount of work time spent. The Owner however is interested in getting the job done at the lowest price while getting the job done professionally in the least amount of time.</span></div>
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<span style="font-family: Verdana, sans-serif;">Sometimes changes or extra work cannot be avoided, but it's important to ensure that the job is bid exactly as you want it BEFORE you sign the contract so there are no misunderstandings. This requires thorough planning from your Project Manager or GC. Make sure that every detail is captured in your bid on what you want your contractor to do. If you leave anything out, he is not obliged to do it. Typically commercial scopes are very detailed and leave little or even no room for interpretation, while on the residential side many problems appear because the details are not captured fully, or issues arise that were not anticipated. These considerations add cost and add extra time to the jobs. Let's discuss now how to form a good contract to help avoid the delays and higher costs associated with job delays:</span></div>
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<span style="font-family: Verdana, sans-serif;">1) As I've mentioned, ensure everything you want the contractor to do is captured in the bid. This must include everything down to the fine details and thorough broom swept clean-up and disposal of all construction waste at job end.</span></div>
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<span style="font-family: Verdana, sans-serif;">2) Ensure that you ask the contractor for the longest time he will require to do the job. He should give you a specific date. Write that into the contract and then place a penalty clause for every day that he doesn't meet timing. This is usually written as a penalty price per day that is deducted from any amount owing to the contractor. This is motivation for him to finish on time. He can't complain about this because he's the one who gave you the date. Penalty clauses must reasonably cover your delay costs and not be excessive in relation to the job. Calculate them and put them in the contract. Always remember to ask the contractor for the longest time they will need to complete the job before presenting the penalty clause if this is the first time you've used the contractor. If you've used them before, they will already know you will be using the penalty clause. <br /><br />Now, please do note that if there is work that needs to be completed in front of contractor 2, for example, you have to ensure that that contractor 1 has completed what he had to do before contractor 2 starts their job. You can't reasonably enforce a penalty onto contractor 2 if contractor 1 didn't finish his job on time that needed to be done before contractor 2 started.</span></div>
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<span style="font-family: Verdana, sans-serif;">For Example:</span></div>
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<span style="font-family: Verdana, sans-serif;">Rough framing is late and not inspected by the city, so your electrical contractor cannot start until the rough framing inspection is approved. Your electrical contractor in this case is not responsible for framing / inspection lateness. This is all a matter of being reasonable.</span></div>
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<span style="font-family: Verdana, sans-serif;">By imposing penalties onto the contractor in this manner, it's efficient and they really can't complain because it's their date and you are of course being fair. Just remember to ask them something along the lines of...., "from the start of your portion of the job, what is the maximum time you will need?" Once they give you the time / date, that's what you write in the contract.</span></div>
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<span style="font-family: Verdana, sans-serif;">3) Ensure your team member has daily direct contact with the contractor. Either be on site every day as the Owner or ensure you have an employee to represent your objectives on site. This is ideal, and is best, but realizing that sometimes this can't happen, it's important you get an update every day for work in progress from the contractor(s). Ensure someone is on site to review the work done every day if possible and NEVER at the same time. Your team member should mix up the time they come to the job site so that the contractor knows they can be surprised at any moment. Don't have your project manager or GC wait several days before inspecting the work that's being done. This allows the contractors to ease up and perhaps leave your job site to go to another job since the, "squeeky wheel gets the grease".<br /><br />4) Ensure each scope is fully completed and signed off by your rep / team member or you before full payment for that scope is paid.<br /><br />5) If you have a contractor that does not finish the job by the time they agreed to and they do not come back to finish within a reasonable period of time (this time frame should be in the contract explicitly, by the way), you will have the unfortunate situation of having to bring in another contractor to finish. They will likely charge you more than you expect at this point because they are coming in to finish someone else's work. If you've handled the finances well to this point by using progress payments per the contract, you should be able to complete the job reasonably close to budget, even though it's late as a result of the previous contractor's work.</span></div>
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<span style="font-family: Verdana, sans-serif;">This is by no means an exhaustive list, but it does give several practical pointers to make sure your jobs are completed on time and within budget.</span></div>
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<span style="font-family: Verdana, sans-serif;">Until next time....</span></div>
Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0tag:blogger.com,1999:blog-7657503117288713819.post-74655237956806534262014-05-22T22:32:00.002-04:002014-05-27T02:55:15.942-04:004 Strong Reasons to Invest in Commercial Real Estate<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOhzDjE1xIISvdsVdo_LQJ3Cqjxek3PM5HXNHG3tA4-VKwqir9qINJs9xBlcPAs1VHQ7AYaTg8s68D2cNHkSbpLQvZ3zMOi1kntCF6i9ZwAcl-i39uMDBKyxkrdAocbHib7gKIeKKYfL6Q/s1600/office+building.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOhzDjE1xIISvdsVdo_LQJ3Cqjxek3PM5HXNHG3tA4-VKwqir9qINJs9xBlcPAs1VHQ7AYaTg8s68D2cNHkSbpLQvZ3zMOi1kntCF6i9ZwAcl-i39uMDBKyxkrdAocbHib7gKIeKKYfL6Q/s1600/office+building.jpg"></a></div>
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<span style="font-family: Verdana, sans-serif;">I realize that many of you reading this can't imagine yourself getting out of making small deals in residential real estate and moving into the commercial real estate arena. Quite understandable as many of us don't like change or have some fear of it.</span><br>
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<span style="font-family: Verdana, sans-serif;">What you need to realize is that in commercial real estate, it's not about your personal resources that matters but it's a reflection of the deal itself...IT'S EXACTLY ABOUT THE PROPERTY.</span><br>
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<span style="font-family: Verdana, sans-serif;"><u><b>Reason #1</b></u></span><br>
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<span style="font-family: Verdana, sans-serif;">Cash flow is king! Commercial real estate when purchased right will produce much higher levels of cash flow compared to residential. This is intuitive, isn't it? Not really for some people because if you think about it for a moment, a single family home that needs renovations will produce zero cash flow. Additionally, your money is tied up until at least the renovation is over and if you're flipping a home after renovating it, you must factor in holding time again after the repairs are done. So, you could have zero cash flow for months or even years! (Yes, years!). Without cash flow, your business will grind down or even come to an abrupt halt. </span><br>
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<span style="font-family: Verdana, sans-serif;"><b><u>Reason #2</u></b></span><br>
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<span style="font-family: Verdana, sans-serif;">Related to Reason #1, commercial real estate offers less risk when the right systems are put in place. If you lose a single tenant in a single family home, you have zero income but when you lose a tenant in a 100 unit apartment building, you've lost 1% of your total income. I'm sure you get the idea...</span><br>
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<span style="font-family: Verdana, sans-serif;"><b><u>Reason #3</u></b></span><br>
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<span style="font-family: Verdana, sans-serif;">Building equity takes less time with commercial real estate. Bigger total payments from tenants mean your mortgage (if you have one) gets paid down in bigger lumps compared to residential rentals. Additionally, value appreciation over time also creates more dollars for you in comparison with residential.</span><br>
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<span style="font-family: Verdana, sans-serif;"><b><u>Reason #4</u></b></span><br>
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<span style="font-family: Verdana, sans-serif;">Forced Appreciation - This one is the best of the lot if executed right. By increasing income and/or decreasing expenses, you can effectively increase the value of a commercial property by $10 for every $1 increase in income or decrease in expenses. This is an average value with the standard understanding that average investors are looking for a 10% rate of return on their investment. The powerful thing to take away from this is that $1 more in your pocket translates to a $10 increase in value....powerful stuff and very true!</span><br>
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<span style="font-family: Verdana, sans-serif;">i.e. this comes from the standard commercial valuation formula of:</span><br>
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<span style="background-color: white; color: #111111; font-family: Verdana, Geneva, sans-serif; font-size: 15px; line-height: 22.5px;">Rate of Return = Income / Total Value </span><br>
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<span style="background-color: white; color: #111111; font-family: Verdana, Geneva, sans-serif; font-size: 15px; line-height: 22.5px;">By re-arranging this formula, we get Total Value = Income / Rate of Return</span><br>
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<span style="background-color: white; color: #111111; font-family: Verdana, Geneva, sans-serif; font-size: 15px; line-height: 22.5px;">and with our example the total value increase, assuming we want a 10% rate of return = $1 / 10% = $10.</span><br>
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<span style="background-color: white; color: #111111; font-family: Verdana, Geneva, sans-serif; font-size: 15px; line-height: 22.5px;">If you need a primer on commercial real estate, you may want to pick up a copy of Trump University Commercial Real Estate Investing 101, which is written by David Lindahl with a forward by Donald Trump. It's a very good beginner's </span><span style="background-color: white; color: #111111; font-family: Verdana, Geneva, sans-serif; font-size: 15px; line-height: 22.5px;">book</span><span style="background-color: white; color: #111111; font-family: Verdana, Geneva, sans-serif; font-size: 15px; line-height: 22.5px;"> </span><span style="background-color: white; color: #111111; font-family: Verdana, Geneva, sans-serif; font-size: 15px; line-height: 22.5px;">and a great reference for the more seasoned professional that I highly recommend. Check it out below.</span><div>
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<a href="http://www.amazon.com/gp/offer-listing/0470380357/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=0470380357&linkCode=am2&tag=almavgroup-20&linkId=A23CAWOWYECHOP5W" target="_blank"><img alt=" Order Here" border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhKITlYwDaJEDxxCAXtzIqdwScEUJqebFGEtHrojsG_q-7xwf_Gc4qeDfFUyyBBon4AFTlIX_d6qtT9rN5eLPkEXIqrSeh8DUG7rPtRrdV5PLiGerapfxmL63ll3b3l46U6J3K70cW92F6p/s1600/trump.jpg"></a></div>
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<span style="background-color: white; color: #111111; font-family: Verdana, Geneva, sans-serif; font-size: 15px; line-height: 22.5px;"><br></span></div>Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0tag:blogger.com,1999:blog-7657503117288713819.post-46590575167511050212014-05-05T21:41:00.003-04:002014-05-05T21:41:35.923-04:00Low Interest Rates Got You Down? How Does 10%-17% Annualized Sound?<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiEMu93JaqEnpNFaV6n767WbI08k0yDm-Q-up08NfpsCa2HVSKn9o-EgfMz_-Kjd6ROwmQXuqqPugY7LrAhKTgrwKggI1jZvyJARXS7KwZjhWcwcaJ8RZYGDcfxJ6J-mJUBgmPROvJdiqRp/s1600/money+tap+pic.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiEMu93JaqEnpNFaV6n767WbI08k0yDm-Q-up08NfpsCa2HVSKn9o-EgfMz_-Kjd6ROwmQXuqqPugY7LrAhKTgrwKggI1jZvyJARXS7KwZjhWcwcaJ8RZYGDcfxJ6J-mJUBgmPROvJdiqRp/s1600/money+tap+pic.jpg" height="320" width="252" /></a></div>
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It seems as though low interest rates will be with us for some time yet. So how can we obtain higher returns and minimize risk? Stock market? Speculation in other areas? Both of these options can produce tremendous returns, however the element of risk is substantial also. For those people who don't have a stomach for high risk or the ups and downs of the daily markets, let's consider a viable, comparatively low risk option: VALUE-ADD REAL ESTATE. </div>
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Let me explain in layman's terms: Value-add real estate is real estate that we can increase the value over a relatively short period of time by executing a viable business plan to extract that value as profit. </div>
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What kind of returns, you may ask? </div>
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<b>Our track record shows 10%-17% annualized returns</b> over the past several years, which we pay our investors. Don't take my word for it at all! These numbers can be checked through the public records. We have never lost money on any deal we have done. Are we lucky? No. We carefully pour over hundreds and hundreds of deals to find the diamond that makes economic sense and minimizes any possible downside. By this approach, it's almost improbable to lose once we get into a deal. As I mentioned before, we have never lost on any deal we have done. It's a winner before we start, not by some appreciation due to market action. <u>We control the appreciation because we know what it is worth now and what it will be worth at the time we sell it within a small margin for error.</u> <b>Additionally, our investor's money never passes directly to us and is protected by multiple layer's of insurance. It is always handled through escrow through their chosen attorney!</b> </div>
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If you are looking for a viable option to generate a healthy 10% - 17% annualized return, then why not take a moment now and send us a quick email? We can discuss your objectives and see if they coincide with ours. If they do, great! If they don't, no problem at all! Let's start a dialogue today.... </div>
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You may contact us at: <a href="mailto:info@almavesta.com">info@almavesta.com</a> or toll free at 1-888-799-7740 ext. 129 at your convenience for further information.</div>
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Until next time....</div>
Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0tag:blogger.com,1999:blog-7657503117288713819.post-60590153541626200242014-02-28T04:17:00.000-05:002014-02-28T05:31:07.205-05:00US Banks Reporting Healthy 4th Quarter<div class="separator" style="clear: both; text-align: center;">
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The FDIC reported on February 26, 2014 that U.S. commercial banks and savings institutions that the agency insures stated that aggregate net income was $40.3 billion in 4th quarter 2013. This is up approximately 17% compared with 4th quarter 2012. Bank earnings have enjoyed a year-over-year increase for 17 of the last 18 quarters, which is good general news.</div>
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53% of reporting banks had year-over-year growth in quarterly earnings. Unprofitable banks now comprise just 12.2% of the total as of the 4th quarter 2013, down from 15% in the 4th quarter of 2012. The FDIC also stated that the number of unprofitable banks was reduced in number from 515 to 467 during the 4th quarter of 2013. This is just about half of the high of 888 at the end of the 1st quarter of 2011. Two FDIC-insured institutions failed in the 4th quarter of 2013, which is down from eight in the 4th quarter of 2012. For all of 2013, there were 24 bank failures, compared to 51 in 2012. </div>
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The value of 1-4 unit residential REOs held by banks declined from $6.79 billion in the 3rd quarter of 2013 to $6.64 billion in the 4th quarter, which is a reduction of 2.2%. This is the lowest level of REOs since the 3rd quarter of 2007. Even in good times, the FDIC insured institutions have about $2.5 billion in residential REO on their books.<br />
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Enjoy your day!</div>
Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0Varna, Bulgaria43.2046654 27.9105425000000243.0194794 27.587819000000021 43.389851400000005 28.233266000000018tag:blogger.com,1999:blog-7657503117288713819.post-68939449543525622692013-12-05T14:16:00.004-05:002013-12-05T14:23:54.705-05:00Economic Reality vs Typical Media Driven Misleading Information<span style="font-family: Verdana, sans-serif;">Now, don't let me bore you if you're not Canadian, since this first paragraph is really only for Canadians, but <span style="background-color: yellow;">if you're American, go straight to the chart below and read on.</span> You may find this information refreshing, positive and contrary to popular media and public opinion on the state of the United States economy. For some time, I have been telling Canadians that investing in United States real estate is a prudent, and profitable approach, and with the near par level of the Canadian dollar vs the US dollar, that the time to take advantage of low market prices, and a high relative dollar value was now. Well, "now" was best just about a year ago. It's still a great investment opportunity in general for Canadians to invest in US real estate now, however we have seen prices on the rise, as well as the US dollar rising significantly against the Canadian dollar recently which will likely trend in the same direction towards long term historical norms. The biggest additional factor that will influence the exchange rate is interest rates. The US dollar is rising and interest rates have not begun to creep up yet. They will definitely go higher, the only question is how soon, as the US Federal Government moves towards paying down the national debt with cheaper dollars with higher interest rates. The exchange rate as of today is 0.938 US$/CAD$. Just a few months ago it was above par on the flipside. I believe what we are seeing is the beginning of a consistent and long term drop of the Canadian dollar vs the US dollar as we have seen in the past. I recall working in Troy, Michigan from 1997-2000 and the exchange rate was as low as 0.6311. Now, let's take a look at a very interesting chart and how it relates to what I mentioned above.</span><br />
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<span style="font-family: Verdana, sans-serif;"><b>United States Federal Debt as a % of Gross Domestic Product (GDP)</b></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj5kQdkzWcTk0_iL-8dAdZZLXQz6l5AFttNo-huA59cG0CIjFaANVvz3slTdvIagPA6rum1Sd7cX2qnHWbEwHw3wOWsLrpdRe6kJGu0TLn9YxPEhM71Ih5yFu9PxxHNz5ws0Sw7zABIAGny/s1600/gross+debt+vs+gdp.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="294" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj5kQdkzWcTk0_iL-8dAdZZLXQz6l5AFttNo-huA59cG0CIjFaANVvz3slTdvIagPA6rum1Sd7cX2qnHWbEwHw3wOWsLrpdRe6kJGu0TLn9YxPEhM71Ih5yFu9PxxHNz5ws0Sw7zABIAGny/s640/gross+debt+vs+gdp.jpg" width="640" /></a></div>
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Chart taken from Wikipedia : <a href="http://en.wikipedia.org/wiki/File:FederalDebt1940to2012.svg">http://en.wikipedia.org/wiki/File:FederalDebt1940to2012.svg</a></div>
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<span style="font-family: Verdana, sans-serif;">The great recession took its toll, but it seems that we can safely say that the worst is behind us. Regardless of what the naysayers and pundits are saying, we must look at facts rather than conjecture AND SELF-INTEREST, which is a predominant difficulty with listening to the media and the hoards of "experts" that they put on television and radio and print. </span><br />
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<span style="font-family: Verdana, sans-serif;">Take a moment and look at the attached chart and make your own judgement...Real numbers do not lie. Clearly the debt / GDP ratio was significantly higher at the end of the second world war in 1945-1947 than it is today. It was significantly higher, so where the media tends to put "experts" on telling the world how bad the fiscal situation is in the United States, the real story is told by this simple chart. The absolute value of debt is irrelevant. What is relevant is the GDP compared to it as it shows the ability to repay this debt. Since the United States paid down debt significantly after 1945, then it most certainly can do it again since the levels are significantly lower now in comparison when we look at GDP and not total dollars. Now, don't misconstrue what I'm writing here. The national debt of the United States is very high in a vacuum, however we do not live in a vacuum. The fact remains that this chart tells the truth more than anything that I have seen anywhere else. There are clearly economic complexities that will drive the general economy, however, when we look at how the situation is now compared to the past, it's much more positive than we have been led to believe. As interest rates rise and the debt is paid down, and more foreign investment of "scared money" goes into the United States, look to have that impact the Canadian dollar in a negative way. An additional factor that will certainly influence exodus of money from Canada into the United States at least in real estate is that prices are sky-high in Canada compared to the United States in a relative way. Looking at all of these factors, we can certainly expect that the Canadian dollar valuation relative to the US dollar will tend to trend downwards.</span><br />
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<span style="font-family: Verdana, sans-serif;">I hope this information has been of help to clarify reality in a rather easy to understand manner.</span><br />
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<span style="font-family: Verdana, sans-serif;">Until next time.....</span>Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0tag:blogger.com,1999:blog-7657503117288713819.post-6306804169292479662013-11-22T16:40:00.000-05:002013-11-22T16:40:01.792-05:00The Real Deal: How to Exceed 12% Annualized Return With Low Risk<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEie9ACVEIPEyZ_qeWJBoXB5ax1YOPDc8VRuEnBWv55uj5i5C8B1Dm6BDE_njsQ7A-TT2vTGqYXN4FW1a7OKILhpFUCMggyC91oKJxByJJ3XugXiXuxBCytVItOme0ROgHxR4Upo54GjvL_2/s1600/aim+high.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="285" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEie9ACVEIPEyZ_qeWJBoXB5ax1YOPDc8VRuEnBWv55uj5i5C8B1Dm6BDE_njsQ7A-TT2vTGqYXN4FW1a7OKILhpFUCMggyC91oKJxByJJ3XugXiXuxBCytVItOme0ROgHxR4Upo54GjvL_2/s320/aim+high.jpg" width="320" /></a></div>
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<span style="font-family: Verdana, sans-serif;">For those that have an interest in low risk and high returns on investment (third party verifiable), I will detail below what we do:</span></div>
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<span style="font-family: Verdana, sans-serif;">As we move forward with our business, we steadily provide our investor partners with very strong (and notably very low risk) returns, <u><b>never offering less than 12% annualized ROI</b></u>. Now, this level of return may appeal to some of you, but let me explain that these returns are based on very carefully selected acquisitions that limit risk to a very low level for our partners. </span><span style="font-family: Verdana, sans-serif;">Contrary to the high risk stock market, where you can immediately lose money and the risk profile is very high in comparison, our focus is to only acquire assets at very low prices relative to current value to offer a risk profile that is very low. We achieve this through a multi-pronged proprietary approach with our entire focus to minimize risk for our investor partners, while maximizing their returns. There is absolutely no risk comparison between the general markets and what Almavesta Group Inc. does. We offer a stronger, better investment solution because of our years of investment in systems that produce bona fide results.</span></div>
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<span style="font-family: Verdana, sans-serif;">We prove our results with 3rd party reports. We are different and are transparent to sharing this information with our partners. Integrity, transparency and a desire to exceed our partner's goals are of paramount concern.</span></div>
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<span style="font-family: Verdana, sans-serif;">Should you have an interest in learning more about how we can help you exceed your financial goals, you may contact me personally (Alek Musulin) at:</span></div>
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<span style="font-family: Verdana, sans-serif;">info@almavesta.com or by dialing +1.888.799.7740 ext. 129.</span></div>
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<span style="font-family: Verdana, sans-serif;">Until next time...........</span></div>
Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0tag:blogger.com,1999:blog-7657503117288713819.post-35652556443977886762013-09-30T21:31:00.002-04:002013-09-30T21:31:43.995-04:00Can You Show a Real Track Record?<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhc5ZhOC2WiPdhmyAWdEUpc9moTDzOJqsBJ5L9Tofa9MSaP1nlVhWQdYuQsk4E8NC_Ysdh9NE3sevvCMu-7sVI2ex7o1_ST_vsfvgb62D_nDvmfgVks1IrmMUZFMiE4l_ce6wNtm6HXT4k_/s1600/track+record.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="212" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhc5ZhOC2WiPdhmyAWdEUpc9moTDzOJqsBJ5L9Tofa9MSaP1nlVhWQdYuQsk4E8NC_Ysdh9NE3sevvCMu-7sVI2ex7o1_ST_vsfvgb62D_nDvmfgVks1IrmMUZFMiE4l_ce6wNtm6HXT4k_/s320/track+record.jpg" width="320" /></a></div>
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There are many people who claim to have a successful track record in real estate, but when the question is asked for some examples of their success, there is no substance provided, but rather a change of subject matter tends to be the norm.</span><div>
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<span style="font-family: Verdana, sans-serif;">I find it also very interesting that there are many people attempting to sell courses, seminars, training, and that's perfectly fine, but are those people really doers rather than theory pushers? My advice in this regard is to vet anyone you intend to pay for their knowledge. Just because someone wrote a published book or two, doesn't mean that what they are giving you is useful, practical knowledge. It may just be pure theory. How will you know the difference? I'm sorry to say that you just have to do more deals. There is no secret to the business, but if there is a "secret sauce", it is simply doing more deals. It's as straight forward as that.</span></div>
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<span style="font-family: Verdana, sans-serif;">Just make sure you are getting your information from someone who has actually walked the walk and not just talked the talk. These days it seems with social media there are far too many talkers and not enough experienced people sharing their knowledge of real-life deals.</span></div>
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<span style="font-family: Verdana, sans-serif;">So, for those of you out there that want to be in the Real Estate education business, I believe it's important that you have had a fair share of success in real estate and can demonstrate it with HUD-1's etc. if someone asks the question. Being transparent only solidifies your authority and helps those who want to do business with you to have confidence and trust in you. </span></div>
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<span style="font-family: Verdana, sans-serif;">Conversely, for those newer people who feel they need more knowledge or education in the business, let me just say again, that the best education is actually doing deals. If you're not doing deals, you're not in the business. Don't over-analyze. Just make sure you buy low enough to ensure you can make a tidy profit. If you buy too high for the neighborhood you're in, then you won't make much, or worse, you could be in a loss situation. Remember, you make money when you buy, not when you sell.</span></div>
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<span style="font-family: Verdana, sans-serif;">Until next time.......</span></div>
Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0tag:blogger.com,1999:blog-7657503117288713819.post-61320030982596328822013-08-31T18:36:00.001-04:002013-09-03T12:44:34.193-04:00Can You Trust Sellers and/or Buyers?<div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhx-hSQGkQ-ZuQgF5q6YU6fre8KZy6R08ODVSKv01dlZ_PUA4Xm5Bf8SaBg6G-ne4df3Ce_cuU1F0D7ovd7OmEnMf6MT4pUxihoZtzy3mDtgSbo7mTz8H-ko9K7U9kJlaV21EUG02XaQH1M/s1600/trust.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhx-hSQGkQ-ZuQgF5q6YU6fre8KZy6R08ODVSKv01dlZ_PUA4Xm5Bf8SaBg6G-ne4df3Ce_cuU1F0D7ovd7OmEnMf6MT4pUxihoZtzy3mDtgSbo7mTz8H-ko9K7U9kJlaV21EUG02XaQH1M/s320/trust.jpg" width="318" /></a></div>
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Hello everyone and hopefully your year has been fantastic so far and you are looking forward to finishing 2013 on a strong note! As always, I never throw theory at you, but rather the realities of real estate.<br />
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Let me give you a real example that happened not too long ago but it is not unique at all. This happens time and time again when you attempt to facilitate a deal. This is why I don't bother with these types of deal structures further. The funny and serious side of this is that this type of scenario is captured time and time again in various books on the topic and the writer is clearly only writing based on theory and not on real experience. The books make it sound so simple to facilitate as an intermediary and walk away with a huge profit with little to no effort. The truth to the matter is no matter how you try to facilitate (and please remember, that there is plenty of effort here because you have to time the deal so that two contracts consummate at the same time, and not just one), the end Buyer and the Seller do not want you to make any more money than what they deem is reasonable. This amount depends on the individual, but remember, ultimately, you have to satisfy two parties, and not just one in your negotiations. This is a large and complicated task with many moving parts. I write this not to dissuade you, but to make it clear that the books on this topic sugar-coat the reality of these situations and do not include the psychological factor that the Buyer and Seller are feeling, which ultimately influences their decisions.<br />
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I set up a deal where I knew the Seller was motivated. I negotiated the Purchase Price at $2.5 million and at the same time I had an LOI from a Buyer for $2.75 million. I then heard that the Buyer wanted to use their own Closing Agent, which would have created problems because my intention was to double close and get the deal done within 5 weeks of contract. Why would this create problems? Because "their" Closing Agent would note that my company did not own the properties that they were buying and that I was an intermediary that was double closing. Don't ask me why this matters, but Buyers get frazzled in this kind of deal because when they find out you don't own the properties that you are flipping to them, until the day of Closing, they get upset. Don't kid yourself in the vast quantities of trash written on the subject. Buyers absolutely care about this point. This is psychology and not anything real to do with the deal. If we used our own Closing Agent, the situation would have been exactly the same but since they are representing my company, they would not highlight the point that we didn't own the properties until the day of Closing before we flipped them to the end Buyer. This is the same information exactly, however, it's a question of what is highlighted and what is not.</div>
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Instead, we decided to skip the double closing and just show our fees on the contract to avoid any negative reaction from the end Buyer. From past experience, I knew that neither the Seller or Buyer would accept us making $250,000 on this deal, so to attempt to make this deal work, I offered the Seller $37,500 more and the Buyer a $37,500 price reduction which effectively changed our fee from $250,000 to $175,000, so this is roughly 6% of sales price which I thought would be acceptable to both parties. I was wrong.</div>
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The Buyer requested a phone call with Seller and I was hesitant to allow this before a contract was signed and I did not allow this. I was led to believe that the Buyer just wanted to ask some basic general questions. I knew better and waited until a signed contract was provided (it never came). What happened instead was that the fellow who claimed to be representing the Seller was in fact an intermediary and there was actually a real estate broker representing the Seller!! All this time I was led to believe this was an off-market deal with no licensed broker representation. This was a blatant lie fed in my direction. The individual who claimed to represent the Seller, once he learned the company that was interested in buying the package, looked up in the public records and found the name and phone number of the end Buyer and set up a phone call directly between Buyer and Seller without our involvement or our permission. Now of course, once the end Buyer and Seller talked and we didn't have a signed contract, we had absolutely no control anymore. We also learned that the Seller did not want to agree to pay our fees and actually he didn't want to pay ANY fees. It's interesting to note that until the end Buyer and Seller talked, the Seller made no comment on our fees. Once they got what they wanted (talking to the Buyer directly), they didn't need us any more and then told us exactly what they thought. Funny isn't it? No, it's not funny. We spent several months on this deal and several potential Buyers fell through the cracks.</div>
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The moral of the story is don't trust any Buyer or Seller to do anything that represents honesty or integrity. Sellers will LIE. Buyers will LIE. These people don't care about you or the number of hours you have put into any deal to work to a successful Closing. They are concerned only about themselves and the outcome for themselves, just as you are focused on what's in it for you. Cordially, and professionally, never forget these axioms.</div>
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Here's a simple addendum to a contract that you can put in your purchase contracts to protect yourself:</div>
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"Vesting to be determined at Closing." Simply put, this means you reserve the right to determine the Buying entity at Closing. This way if you are doing a double closing you don't advise anyone of the final Buying entity until the very last minute. This protects yourself and it motivates the Seller to sign closing documents because by the time they learn the Buyer's name, the money for the purchase is already in escrow. When you are asked why you are putting this clause, just tell them that you are consulting with your accountant and tax attorneys to determine the best way to buy the property(ies). This puts the concern off of you and onto a professional third party and this should suffice to answer the query.</div>
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Contrary to popular belief and written Guru documentation, Sellers and Buyers always worry about how much money you will make in a deal. They are very focused and concerned to maximize their gains and to minimize yours. DON'T EVER FORGET THIS!! This is the truth based on personal experience over and over again. Don't believe the mounds of b.s. written on the topic. If you don't heed my advice, you will learn the hard way that Mr. Alex was in fact telling the truth about this.</div>
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Until next time....Enjoy the rest of the Summer as Fall will be with us officially in about three weeks.</div>
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Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com1tag:blogger.com,1999:blog-7657503117288713819.post-30372208201355691592013-07-31T18:31:00.002-04:002013-07-31T18:43:58.421-04:00Negotiating Your Property Sale & Vetting Your Buyer - Commercial or Residential<br />
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<span style="font-family: Verdana, sans-serif;">As we go about our daily business, the most difficult problem facing investors is in my view, the number of people claiming to be something that they are not. i.e. the ones that are not straight-up about their intentions.</span><br />
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<span style="font-family: Verdana, sans-serif;">When we do a deal with a party claiming to be a Buyer, we don't care about how much money they are going to make on the deal and neither should you. If they are bringing a Buyer and they are getting paid through a double close, that's perfectly fine with us. If they want to do an assignment, then that's fine as well. What's wrong with this? Absolutely nothing.... </span><br />
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<span style="font-family: Verdana, sans-serif;">We get people telling us they want to contract our properties and then they don't explain their full intent is to do a flip or an assignment rather than an actual purchase. We typically get around this situation by asking for non-refundable earnest money for residential properties and proof of funds (POF) for the balance. For commercial, fully verifiable proof of funds from a known source should be your question to the Buyer and they should have no problem providing this to you. By asking these questions, you will usually get the truth. This usually puts the "Buyer" on notice that we are not fooling around and we don't intend to allow anyone to tie up one of our properties unless they have full intention to close.</span><br />
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<span style="font-family: Verdana, sans-serif;">These so-called Buyers are not really Buyers but middle-people and again, there's nothing wrong with this and they do deserve to be paid just like anyone else in a deal. What is typically wrong is that these intentions are not clearly spelled out and instead these people play a game whereby they pose as a Buyer instead. Why they do this has always crossed my mind, but the best way to squeeze out the truth is to ask for non-refundable earnest money and/or allowing a short closing period for an exclusive contract. Now, if we get a Buyer who comes clean and tells us that they really intend to double close instead, then that's fine, as long as the POF is presented and can be verified and the earnest money will become non-refundable with a short due diligence (DD) period and a short period after the DD to close the deal.</span><br />
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<span style="font-family: Verdana, sans-serif;">In no uncertain terms should you ever allow any property you are selling to get tied up for an unreasonable period of time without the Buyer putting, "skin in the game". As an alternative you can always offer a non-exclusive option contract that allows you to sell the property to someone else at any time. Out of courtesy, you can always put in a 24 hour clause that will allow your option contract holder to firm up the deal within that 24 hour window, but otherwise, you can then sell to your other stronger party willing to show a stronger offer.</span><br />
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<span style="font-family: Verdana, sans-serif;"><u>Time to Close after DD:</u> 10-15 days is adequate. May be slightly longer depending on the structure of the deal. </span><br />
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<span style="font-family: Verdana, sans-serif;">Due Diligence: 5-10 days (more time is absolutely not necessary)</span><br />
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<span style="font-family: Verdana, sans-serif;">Time to Close after DD: 5-7 business days is enough depending on the work load from the Closing Attorney / Title Company.</span><br />
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<span style="font-family: Verdana, sans-serif;">Hope this helps with your negotiation efforts! Until next time....</span>Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0tag:blogger.com,1999:blog-7657503117288713819.post-10121367837359122692013-06-14T20:43:00.003-04:002013-06-18T17:05:01.525-04:00How to Ask For a Commercial Real Estate Loan<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiEEXJVlUibqfbaOUJXLttardaLcCnkgTaEF3WJztdBKUCxFCE1J-1XEyoG0mPjgGTnTbNv6E4-RRAP0ccH-ya-I3j7ScsKyb-MZghPOVWKJVHzOT4VR29Jr5CYmmjJM4o0HmzkF-3AmulA/s1600/happy+businesswoman+sitting+at+desk.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img alt="" border="0" height="280" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiEEXJVlUibqfbaOUJXLttardaLcCnkgTaEF3WJztdBKUCxFCE1J-1XEyoG0mPjgGTnTbNv6E4-RRAP0ccH-ya-I3j7ScsKyb-MZghPOVWKJVHzOT4VR29Jr5CYmmjJM4o0HmzkF-3AmulA/s400/happy+businesswoman+sitting+at+desk.png" title="" width="400" /></a></div>
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Most investors don't use all of their own resources to do their deals, and in many instances, borrowing money from lenders is not only necessary but makes the most sense financially. However, it is important to note that the Underwriters of any lender will want to have a clear and complete picture of the property you want a loan for and it is entirely up to you as the proposed Borrower to paint that picture in the most complete and honest terms and nothing less is professionally acceptable. </span><br />
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<span style="font-family: Verdana, sans-serif;">The correct way to put this package together is to attempt to sit in the Underwriter's shoes and think about what they will want to know to review your loan application properly.</span></div>
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<span style="font-family: Verdana, sans-serif;">The package needed is as follows:</span></div>
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<li><span style="font-family: Verdana, sans-serif;">A detailed description of the deal and the property</span></li>
<li><span style="font-family: Verdana, sans-serif;">Include as many color pictures of the property as possible to show as much of the property as you can</span></li>
<li><span style="font-family: Verdana, sans-serif;">Aerial map of the property</span></li>
<li><span style="font-family: Verdana, sans-serif;">A copy of the Letter of Intent (LOI) or Purchase and Sale Agreement (PSA) (if available)</span></li>
<li><span style="font-family: Verdana, sans-serif;">Important dates should be highlighted, such as when the due diligence period ends, the closing date and what day the financing contingency expires</span></li>
<li><span style="font-family: Verdana, sans-serif;">2-3 years of financial statements for the property</span></li>
<li><span style="font-family: Verdana, sans-serif;">Current rent roll</span></li>
<li><span style="font-family: Verdana, sans-serif;">Current profit and loss statement (year to date)</span></li>
<li><span style="font-family: Verdana, sans-serif;">A detailed Operating Plan, explaining how you will operate the property. Include such things as explaining how you intend to keep the tenants that are there, and/or how you intend to fill vacancies, repairs etc. Include further explanations such as break-even analysis, and how the lender will be paid back. </span></li>
<li><span style="font-family: Verdana, sans-serif;">Include your exit strategy to exit the deal after your planned holding period.</span></li>
<li><span style="font-family: Verdana, sans-serif;">Your proposed property management company resume showing their level of experience and past and current work. Ensure that your property management company's marketing plan is included</span></li>
<li><span style="font-family: Verdana, sans-serif;">5 year Pro Forma projections to be included </span></li>
<li><span style="font-family: Verdana, sans-serif;">Your resume</span></li>
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<span style="font-family: Verdana, sans-serif;">The interesting thing about the above is if you put this package together, you will answer just about any question that the Loan Underwriter will have The Underwriter will want to know these details, so wouldn't it be great if we provided all that information in the package so that they don't waste their time having to ask us for it later???</span></div>
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<span style="font-family: Verdana, sans-serif;">You can get excellent aerial maps by going to <a href="http://earth.google.com/" style="background-color: white;"><span style="color: blue;">Earth.Google.com</span></a>.</span></div>
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<span style="font-family: Verdana, sans-serif;">Ensure in your description of the deal to highlight all of the strengths of the property, such as high occupancy, being close to an expressway / main road, high traffic, good neighborhood. Include as many positive features of the property as you can determine. Remember, the Underwriter is human and may not be familiar with the area and even some very obvious things to you may not appear obvious to them, so ensure these pluses are noted. Also recall that they are weighing the risk of lending to you so provide as much information as possible to help them do their risk analysis.</span></div>
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<span style="font-family: Verdana, sans-serif;">By following through in a professional manner as has been described, your loan will stand above others and will have a better chance for approval as a result of being thorough up front.</span></div>
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<span style="font-family: Verdana, sans-serif;">Until next time, make it a great day!</span></div>
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Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0tag:blogger.com,1999:blog-7657503117288713819.post-41334969793848313912013-05-31T19:13:00.001-04:002013-06-09T18:53:08.925-04:00Interest Rates and their Effect on Real Estate<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcq1wodeEpqRDAn_Tm2ZAPd7VpdLXWA_6HQu0eFhJ7NeWFOUb-AxukfBOknAeVx6pvFYdZ_TQgWcgFy_g1qkaO8RfNahNmlTf-NyGTjuQNGMfiIpHIHCO-_P53tnwjJCU4xBnGEe0ThVgl/s1600/bank-interest-rate.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcq1wodeEpqRDAn_Tm2ZAPd7VpdLXWA_6HQu0eFhJ7NeWFOUb-AxukfBOknAeVx6pvFYdZ_TQgWcgFy_g1qkaO8RfNahNmlTf-NyGTjuQNGMfiIpHIHCO-_P53tnwjJCU4xBnGEe0ThVgl/s320/bank-interest-rate.jpg" width="312" /></a></div>
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<span style="font-family: Verdana, sans-serif;">So apparently, it seems that the market is heating up. Prices are on the rise (or so the media does report), but they tend to only report averages and that may not be applicable to your particular market focus areas. The best thing to do is keep track of sales prices in your area. Finding recent sales prices in your market is very easy compared to just a few years ago. This will help you obtain market trends for your area and give you a focus rather than listening to the "averages" being thrown out there by the media.</span><br />
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<span style="font-family: Verdana, sans-serif;">Record low interest rates are allowing more qualified buyers into the market and the perception that prices are on the rise is really a good thing for the economy and it may well turn out to be a self-fulfilling prophecy. Time will certainly tell....</span><br />
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<span style="font-family: Verdana, sans-serif;">Be on the lookout for higher interest rates on the horizon, but in my opinion, those are still far away. I am not a fortune teller but through deductive reasoning, it follows that with the economy on the whole still not functioning on all cylinders with unemployment much higher than anyone wants, large interest rate increases are not coming yet. Interest rates will however rise as a necessity to cool off an increasingly heated economy when that begins to happen but also to allow the government to pay down debt with lower cost dollars. Because interest rates are so low now, a 1% rise in rates now will have a significantly higher impact on affordability than a 1% rise if interest rates were higher. Let me explain (numbers rounded for ease of viewing):</span><br />
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<span style="background-color: #e06666; font-family: Verdana, sans-serif; font-size: x-large;"><u>Example A</u></span><br />
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<span style="background-color: white; font-family: Verdana, sans-serif;">On a $100,000 loan at 4%, the monthly payment is = $477</span><br />
<span style="background-color: white; font-family: Verdana, sans-serif;">............................at 5%, the monthly payment is = $537 </span><br />
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<span style="background-color: #e06666; font-family: Verdana, sans-serif;">% payment increase</span><span style="background-color: white; font-family: Verdana, sans-serif;"> = <u>$537 - $477</u> = 0.12576 = </span><span style="background-color: #e06666; font-family: Verdana, sans-serif;">12.58%</span><span style="background-color: white; font-family: Verdana, sans-serif;"> </span><br />
<span style="background-color: white; font-family: Verdana, sans-serif;"> $477</span><br />
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<span style="background-color: white; font-family: Verdana, sans-serif;">On a $100,000 loan at 14%, the monthly payment is = $1,185</span><br />
<span style="background-color: white; font-family: Verdana, sans-serif;">................................15%, the monthly payment is = $1,264</span><br />
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<span style="font-family: Verdana, sans-serif;"><span style="background-color: #93c47d;">% payment increase</span><span style="background-color: white;"> = </span><u style="background-color: white;">$1,264 - $1,185</u><span style="background-color: white;"> = 0.06666 = </span><span style="background-color: #93c47d;">6.67%</span></span><span style="background-color: white; font-family: Verdana, sans-serif;"> </span><br />
<span style="background-color: white; font-family: Verdana, sans-serif;"> $1,185</span><br />
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<span style="font-family: Verdana, sans-serif;">Notice immediately that a 1% interest rate hike in Example A has a substantially higher impact on the monthly loan payment as a percentage than it does with the same hike of 1% in Example B. It follows that as interest rates rise, a 1% rate hike will have less and less impact as a percentage on the payment. Yes the payments are higher as interest rates rise, but the impact as a % is less as rates rise. Conversely, when interest rates go down, the impact on the monthly loan payment is substantially higher.</span><br />
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<span style="font-family: Verdana, sans-serif;">Those homeowners and commercial property owners that are "betting" on low interest rates to make ends meet are potentially going to be shocked as interest rates rise because of the mathematics shown above. Taking action to manage your real estate holdings to ensure that interest rates do not hurt you is very important at this time more than perhaps ever before.</span><br />
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<span style="font-family: Verdana, sans-serif;">On another general note, as a percentage of GDP, although the US National Debt is </span><span style="font-family: Verdana, sans-serif;">considered</span><span style="font-family: Verdana, sans-serif;"> </span><span style="font-family: Verdana, sans-serif;">high by just about any observer, it is not as high as it was at the end of the second world war (see article) </span><a href="http://en.wikipedia.org/wiki/National_debt_of_the_United_States"><span style="color: #3d85c6;">http://en.wikipedia.org/wiki/National_debt_of_the_United_States</span></a><span style="font-family: Verdana, sans-serif;">. I am simply presenting this information as a reflection of ratios and not total dollars because in my view, ratios tell the story better than total dollars owed.</span><br />
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<span style="font-family: Verdana, sans-serif;">Low interest rates are great if managed properly and by making provisions for interest rate increases that are definitely on the horizon, we can make the transition to a higher interest rate climate with less difficulty.</span><br />
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<span style="font-family: Verdana, sans-serif;">Until next time.....</span><br />
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<span style="font-family: Verdana, sans-serif;"><br /></span>Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0tag:blogger.com,1999:blog-7657503117288713819.post-23025476008044699552013-04-30T23:53:00.002-04:002013-05-02T17:41:27.200-04:00Now That Is Too Good To Be True!<div>
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<tr><td class="tr-caption" style="text-align: center;">Don't Let This Be Your Expression - Trust but Verify</td></tr>
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I am amazed at how many people always believe that if it sounds too good to be true, then it's not true. Do you fall into this non-belief category?</span><br />
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<span style="font-family: Verdana, sans-serif;">Let me give you three examples and you tell me whether it's too good to be true?</span></div>
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<span style="font-family: Verdana, sans-serif;">1) We bought a property for $80,000 and sold it for $140,000 with a holding time of less than 2 weeks.</span></div>
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<span style="font-family: Verdana, sans-serif;">2) We bought a property for $27,000 and sold it for $85,000 with a holding time of about 3 months. </span></div>
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<span style="font-family: Verdana, sans-serif;">In both cases we did nothing to the property and simply flipped it.</span></div>
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<span style="font-family: Verdana, sans-serif;">Too good to be true? Must be a scam? No way, Jose!?</span></div>
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<span style="font-family: Verdana, sans-serif;">Well, it's completely true and we have the HUD-1's to prove it. These are just two examples of many, many deals we've done.</span></div>
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<span style="font-family: Verdana, sans-serif;">Still think the same about "Too Good To Be True"?</span></div>
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<span style="font-family: Verdana, sans-serif;">We recently also had a high profile investor tell us that a 500+ unit deal we had for $4,000,000 with 80+% occupancy was too good to be true and he completely balked at even looking at the financials?!!! Let me reiterate: If it sounds too good to be true, then at least do your own due diligence to confirm or deny whether there is truth or not in the deal being presented. Not doing a simple due diligence may cost you thousands, hundreds of thousands or even millions of dollars in lost profit. Play things smart and follow Ronald Reagan's approach..."Trust but verify". Don't immediately pass on a deal if the numbers sounds amazing. They actually just may be true and by acting rather than passing, you are the one that will make the money and not your competition.</span></div>
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<span style="font-family: Verdana, sans-serif;">Until next time......</span></div>
Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com1tag:blogger.com,1999:blog-7657503117288713819.post-78328003922584595752013-03-28T16:20:00.002-04:002013-03-28T16:20:52.973-04:00Getting the Deal Closed<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJVpAqwMP9AYWn_hlPFKM-NnjjGCb41dZNd12HTe9s9iSq6N2eUUSnAbebyS4su1Nqlx3U7s_pgHKEV0sT49sCNlvbrxaIDU-zZiAT2mvW7t4p21GEXEYUDnPZ3mDvxHrer4RPFITDtT5b/s1600/shake+hands.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJVpAqwMP9AYWn_hlPFKM-NnjjGCb41dZNd12HTe9s9iSq6N2eUUSnAbebyS4su1Nqlx3U7s_pgHKEV0sT49sCNlvbrxaIDU-zZiAT2mvW7t4p21GEXEYUDnPZ3mDvxHrer4RPFITDtT5b/s1600/shake+hands.jpg" /></a></div>
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<span style="font-family: Verdana, sans-serif;">As I'm sure we've all experienced, the Buyer comes to the table with an Offer and we think the terms and price are good, so we agree to move forward but the deal doesn't end up closing. What can we do to avoid this unpleasant result? </span><br />
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<span style="font-family: Verdana, sans-serif;">Ideally, the Buyer should have a very short due diligence (DD) period to limit their control on the property. Then they should close within days of the DD period expiring. The reason is that we do not want our property tied up for any extended period of time because there is always a possibility that we will miss another deal. This is why it's crucial to do our own due diligence on our Buyers. Do they have the ability to close? Are they serious? Will they close? These are all questions that we need answered before we agree to a contract and what they say is not necessarily the truth, so we need to dig further and ensure that we have a solid deal when we sign that contract to sell.</span><br />
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<span style="font-family: Verdana, sans-serif;">Ask for proof of funds at the time of Offer. As our deals are always solid for the investor, we ask for non-refundable earnest money deposits as well. <b><u>Yes, non-refundable!</u></b> If the Buyer sees they are getting a "smoking" deal, then they should have no difficulty with this and should really do their due diligence prior to contract. By providing a non-refundable EM deposit, they are showing they are serious and in this case it's probably not necessary to ask for proof of funds, just ensure that the due diligence period is reasonably short such as 3-5 business days. </span><span style="font-family: Verdana, sans-serif;">This is enough time for an inspection, which should be the only contingency they need to be satisfied with. </span><span style="font-family: Verdana, sans-serif;">Now if they don't close, they pay a penalty by forfeiting their EM deposit. We must of course provide Clear & Marketable Title and this is the Closing Attorney's job. Once this is confirmed, the deal is then firm and the Buyer must proceed with Closing by providing balance of funds and we then transfer title to them at Closing. If they don't Close then, then we do have legal recourse if we choose (consult with your Closing Attorney for options if your Buyer does not Close but has waived all conditions / contingencies). It's probably best to move on if this happens and at least you have the EM deposit as a penalty paid to you for wasting your time.</span><br />
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<span style="font-family: Verdana, sans-serif;">You don't have to ask for non-refundable EM deposits, but it doesn't hurt to do so and is indeed a preferred method of showing how serious the Buyer really is. It shows commitment and that the Buyer is serious. Refundable EM deposits are good as well as long as the contract due diligence period is not protracted to the benefit of the Buyer and the detriment of the Seller (in our example, YOU).</span><br />
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<span style="font-family: Verdana, sans-serif;">It's always best to deal with cash Buyers (theirs or someone else's, such as a hard money lender). </span><br />
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<span style="font-family: Verdana, sans-serif;">Hope this helps with the thought process of getting the next deal closed quickly and avoiding the walk-away non-serious Buyer who is looking to flip your deal and does not intend to buy at all, or a similar type of person.</span><br />
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<span style="font-family: Verdana, sans-serif;">Until next time.....</span>Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0tag:blogger.com,1999:blog-7657503117288713819.post-251888315506104242013-02-24T20:19:00.000-05:002013-02-24T20:19:19.673-05:00Valuation - Understand Your Asset Before Buying<div class="separator" style="clear: both; text-align: center;">
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<span style="font-family: Verdana, sans-serif;">Valuation and the clear understanding of how this pertains to your asset is a fundamental requirement BEFORE buying. Many people know this concept, but many also do not understand how to determine this to the best of their ability.</span></div>
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<span style="font-family: Verdana, sans-serif;">As was said before, confirmation of value is the responsibility of the Buyer and not the Seller. Sellers motivation and Buyers motivations are clearly different, so it is clear that the Buyer must have a clear understanding of value. When considering an acquisition that you simply wish to flip or rehab and flip, you must buy low enough to allow a reasonable profit. However, what is typically missed in this course of events is how to value a property for purchase. <br /><br />Let's consider some methods to help arrive at a value: </span></div>
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<span style="font-family: Verdana, sans-serif;">1) You can go to websites like Zillow, eppraisal, or Trulia etc. In fact there are many of these websites. However, as seasoned investors know, you cannot determine the value of a property through some simple or complex mathematical algorithm. This is simply not reality. Those investors that take these valuations from these websites as law will eventually get into trouble and could be subject to significant losses as a result of believing these numbers. Truly, I do not intend to put these sites down for providing this "data", however I do want to make it clear that it is in my opinion a negative for new investors because they are first, taking an algorithm's word for valuation and second, they are relying on a third party that has likely never walked through the property, understood the neighborhood dynamics, or noted any other affecting issues that would impact value. These as a whole may point one in the wrong direction on a property. This is why it is extremely important to have a feel for comparable sales in the area and then understand the condition of the property relative to these comps. Only then can you have a good gauge of value and thus be able to make the difference between a good and a bad acquisition. Website "value" numbers such as those on Zillow, eappraisal, Trulia etc. may serve as a basis only at the very best but in many instances do not even provide a basis. Being in tune and fully aware of what properties are worth in your target market is crucial to you as an investor.<br /><br />2) You can get comps from a Realtor or Licensed Appraiser. These could cost you money or they may not. Depending on how cooperative a relationship you have with one of these professionals can make the difference between having good or bad information. Ideally, one should go to a Licensed Appraiser to pull comps. The reason is that Realtors are motivated by commission whereas Appraisers are not. I am not suggesting that Realtors may steer you wrong, only that to avoid such a possibility, it's best to go to an Appraiser to pull comps, especially in this continuing volatile marketplace.</span></div>
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<span style="font-family: Verdana, sans-serif;">3) Once you understand the condition of the property </span><span style="font-family: Verdana, sans-serif;">you are looking to acquire, </span><span style="font-family: Verdana, sans-serif;">after physically walking through or having someone you trust do the same, have comps in hand and a good understanding of the neighborhood and potential future impacts in the area, you are then armed with information that will help you determine value.</span></div>
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<span style="font-family: Verdana, sans-serif;">As simple as it may sound at this point, picking a proposed market value based on the knowledge you've acquired, you simply subtract the cost of acquisition and cost of repairs to arrive at your maximum profit. Of course, do not expect the maximum as there will be marketing costs to consider as well as negotiation downward from your Buyers as they have the objective of buying as low as possible contrary to your objective of getting the most out of the property. If you follow these simple guidelines and build yourself a good "pad", you will make money and very much lower your probability of a potential loss financially.</span></div>
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<span style="font-family: Verdana, sans-serif;">Until next time.........</span></div>
Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0tag:blogger.com,1999:blog-7657503117288713819.post-32872335031750605272013-01-10T01:23:00.002-05:002013-01-10T01:31:23.472-05:00Flipping a Property (Reality vs What's in "books")<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh04uKbrtpdKg6rgQV6wWOp8sdwACDy7uPawsKeupV68ErcBH4er2Liuwsstk9BiFBOEOjrbHZQxJStCE_998TgESJxJst5YQ8Zht1v_aB1KOARulz-K8J8nn8m0eevtQU6V3JVMoNFpuFS/s1600/open-house2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh04uKbrtpdKg6rgQV6wWOp8sdwACDy7uPawsKeupV68ErcBH4er2Liuwsstk9BiFBOEOjrbHZQxJStCE_998TgESJxJst5YQ8Zht1v_aB1KOARulz-K8J8nn8m0eevtQU6V3JVMoNFpuFS/s1600/open-house2.jpg" height="236" width="320" /></a></div>
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<span style="font-family: Verdana, sans-serif;">Happy 2013 Everyone!</span><br />
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<span style="font-family: Verdana, sans-serif;">This article is mostly for new people but other more experienced investors may learn some amazing tidbits here for free! The next couple of minutes can literally save you thousands of dollars and countless hours of time. Seriously...read on, it will be worth it.</span><br />
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<span style="font-family: Verdana, sans-serif;">If you're a typical real estate investor, you'll go to seminars, buy books, read everything you can on the subject, and then hear about stories where someone bought an apartment complex with no money and flipped it for a million dollar profit overnight using transactional funding! Now you want to try something similar because you are soooo smart with your knowledge :) Now isn't that special?! It's also unrealistic and if it did indeed happen, it was a complete fluke of astronomical proportion luck. How do you think I know that? From plenty of real life deals and experience, that's how. MLS deals are the worst to deal with because there's just too much public information. Off-market deals are better if you're selling to a homeowner, but if you're selling to an investor, the first thing they are going to check is how much you paid for the property! Yep! That's exactly what they are going to do.</span><br />
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<span style="font-family: Verdana, sans-serif;">Here's the reality folks: The buyer wants to know how much you're making, no matter how stupid that may sound, that is the complete, honest reality of life. And they'll find out in the HUD-1, won't they? If you're not sure, go get a copy of a completed transaction HUD-1 and look at it closely. The buyer will see "your" money. So it doesn't matter whether you are using transactional funding or not. The money distribution is on the HUD-1.</span><br />
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<span style="font-family: Verdana, sans-serif;">It's unfortunate, but you can rest assured that all buyers will look at the HUD-1 when it comes time to close and if they think you're making too much, your deal is dead. If you're going to be making a significant gain on your deal, then you have to negotiate that ahead of time and make it completely clear to all parties. I'm not talking about $10k profit. That's reasonable and not necessary to discuss with the buyer, but if you're flipping an apartment complex for say a $500,000 or $1,000,000 profit on a quick flip without adding any value, then you are probably doomed to failure unless you can negotiate that up front. </span><br />
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<span style="font-family: Verdana, sans-serif;">However, what I am writing in these short paragraphs that's free to you will save you a lot of time and money if you heed my advice. </span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span><span style="font-family: Verdana, sans-serif;">If you're expecting to make a significant sum on the deal, work out "your" money ahead of time and make sure it's ok with the buyer, otherwise when you're selling, you could get all the way to closing table and the buyer will likely back out if they think your side of the ledger is getting too much money, regardless of whether they are getting a smoking great deal or not. Doesn't that sound counter-intuitive? Absolutely, but people are funny and that's how people (buyers) think, make no mistake about it! If you don't believe me, go do a deal where on paper, you make a ton of cash in a quick flip! If it works, then I'd love to know your secret, but I would venture a guess that the probability is 99.99999% that you will fail at this endeavor. Quick flips for big money are highly unlikely using conventional methods. </span><br />
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<span style="font-family: Verdana, sans-serif;">Psychology plays a big part in real estate because you have to remember, that this is a people business and not a property business. Always remember psychology comes first, and the deal comes second.</span><br />
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<span style="font-family: Verdana, sans-serif;">All the best in the New Year!</span>Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0tag:blogger.com,1999:blog-7657503117288713819.post-67652099821835069312012-12-13T13:10:00.001-05:002013-01-10T00:26:29.333-05:00One Good Definition of Stupidity in Real Estate<span style="font-family: Verdana, sans-serif;"><br /></span>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj-SKkOMOQFdkoo-CPkpGFimisbiNGV9Xznu5GSM3MIdJRdrQkh-WzISZOhGqY5VR5MbFQcoSSrvew3G0-uMEW6KKJzKxahGfC1d_qRAShFHzomBJsUmxBy_zlCzfAAMZO2WRARL1n9NfCp/s1600/stupidity.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj-SKkOMOQFdkoo-CPkpGFimisbiNGV9Xznu5GSM3MIdJRdrQkh-WzISZOhGqY5VR5MbFQcoSSrvew3G0-uMEW6KKJzKxahGfC1d_qRAShFHzomBJsUmxBy_zlCzfAAMZO2WRARL1n9NfCp/s320/stupidity.jpg" height="247" width="320" /></a></div>
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<span style="font-family: Verdana, sans-serif;">I really don't have time for b.s. If you're a real buyer, you don't either. I've covered this topic before, but I really hope that hitting the same topic again will hit at least a few Sellers and shake their thought process up.</span><br />
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<span style="font-family: Verdana, sans-serif;">Let's talk to the Sellers:</span><br />
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<span style="background-color: white; color: red; font-family: Verdana, sans-serif;">Dear Seller,</span><br />
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<span style="background-color: white; color: red; font-family: Verdana, sans-serif;">It is your responsibility to demonstrate that you have something of value to your proposed Buyer. If you control it or own it, you should have no trouble providing any of the information needed for a prudent Buyer to evaluate your deal. Asking us for a proof of funds before demonstrating value proves nothing to us. It actually doesn't do anything for you either because if you don't have something of value to sell, then you won't sell it and all you'll have is a nice proof of funds. Do you really think you'll have anything else if you don't have something of value? If you do, then I suggest you go to Dr. Phil's website and ask to be on the show.</span><br />
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<span style="background-color: white; color: red; font-family: Verdana, sans-serif;">Respectfully,</span><br />
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<span style="background-color: white; color: red; font-family: Verdana, sans-serif;">The Buyers</span><br />
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<span style="font-family: Verdana, sans-serif;">Now for some this may seem like a rant, but really it's not. What it is, is a demonstration of reality and as such as reality check for those involved in this business. If you don't have something good to sell, nobody will buy it, so stop asking for proof of funds before you demonstrate that value Mr / Mrs / Ms Seller. Once you have an offer on the table, then you have a right to ask for a POF, but not ever before.</span><br />
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<span style="font-family: Verdana, sans-serif;">Now, I hope all of you Buyers and "REAL SELLERS" enjoyed that.</span><br />
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<span style="font-family: Verdana, sans-serif;">Until next time....</span>Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0tag:blogger.com,1999:blog-7657503117288713819.post-52750523339215894962012-11-24T23:59:00.000-05:002012-11-26T13:40:04.040-05:00Is this a Good or Bad Market Now in Real Estate? No Such Thing!<div class="separator" style="clear: both; text-align: center;">
<img border="0" height="291" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgob4XULP1fWQSBDM-qqCt1e8KQKBDyorRidly8W2ZLcws5faUn6KEx6D-2MLhaD8-fkpSNx1VO5vW-wcP93tZNoCE9Pa_aGh5ExRgrv4zMTO96dejTp1NohGrh4NlSt-E8RoaKeNAv0PbK/s400/market+pic.jpg" width="400" /></div>
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I speak to many people every day like most of you. I often am asked, "Hey Alex, what do you think will happen in the market next year."...or, "Do you think the market has bottomed?"...or various similar questions.</span><br />
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<span style="font-family: Verdana, sans-serif;">My business partner, Nate Mack says it best when he says, "There is no such thing as a good or bad market, only good or bad investment strategies."</span></div>
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<span style="font-family: Verdana, sans-serif;">Let's face the reality of the situation and understand that we cannot predict the future. We are not fortune tellers and thinking that we are can lead to trouble. I do not preach things that I cannot back up with data. That type of preaching is hypothesis and conjecture, but I prefer to work with facts because when it comes to investing, decision making using predictions is essentially gambling, and I don't gamble. There is no need to take on that kind of risk!</span></div>
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<span style="font-family: Verdana, sans-serif;">What we can do is make intelligent and educated decisions on investments by weighing all the facts at hand and ensuring that we've done our due diligence.</span></div>
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<span style="font-family: Verdana, sans-serif;">As I've mentioned many times in the past, our objective at this point in the market cycle is to buy low enough that we can't get hurt. By purchasing well below fair market value, we eliminate almost all risk. You can never eliminate it completely, but by being very picky and intelligent, you can buy into investments that have tremendous upside. Yes, some of you are going to say, well, that's all well and good but those deals are hard to find or even impossible to find. And those of you would be right (for YOU)! Remember, if you think you can, you can and if you think you can't, then well....you can't!</span></div>
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<span style="font-family: Verdana, sans-serif;">Who ever said that type of deal would be easy to find? Many people are skeptical that they can be found, but I'm here to tell you that we find them and we buy them and sell them. </span></div>
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<span style="font-family: Verdana, sans-serif;">I enjoy working with people of like mind and similar investment goals and objectives. You can get in touch with me at: <a href="mailto:info@almavesta.com">info@almavesta.com</a> or connect with me on LinkedIn at: <a href="http://www.linkedin.com/in/alexmusulin">www.linkedin.com/in/alexmusulin</a>.</span></div>
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<span style="font-family: Verdana, sans-serif;">Until next time....</span></div>
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Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0tag:blogger.com,1999:blog-7657503117288713819.post-55514423904078927382012-11-05T01:36:00.002-05:002012-11-05T01:49:46.667-05:00When and How to Show the Money<div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjpawcmGsdTmZAgdJDN4CLv_y4uh_P4lsJmTEdoKVbN_NJ_6ndFlrpRKWKhQpzhyyHsIYKWZt_gAy5DR6zxytLcLAINTc-ThCLZm1ImwQZH7rmSOISNpV9sfzsc7LWGaJ06_X93-ru4hBku/s1600/negotiation+pic.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjpawcmGsdTmZAgdJDN4CLv_y4uh_P4lsJmTEdoKVbN_NJ_6ndFlrpRKWKhQpzhyyHsIYKWZt_gAy5DR6zxytLcLAINTc-ThCLZm1ImwQZH7rmSOISNpV9sfzsc7LWGaJ06_X93-ru4hBku/s1600/negotiation+pic.jpg" /></a></div>
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My company is asked to show proof of funds many times each week. We have no problem doing that provided the other party has something of value to us. Having a property is not necessarily something of value. For example, if the property has a market value of X, and the asking price is X or higher, then there is nothing of value to us, and therefore, there is no need for us to show proof of funds.<br />
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As another example, many people ask for LOI's right up front before any due diligence has occurred. Why do they do this? I have no idea and sometimes I'll go ahead with it to get additional information about a property or properties, and sometimes I won't depending on what I know and/or how I feel about the source.</div>
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Asking for a Letter of Intent before divulging basic information about a property is entirely WRONG. For those of you reading this that practice this modus operandi, please consider not doing this. A buyer has a right to inspect and ask questions about a product until they are satisfied whether they want to buy it or not. This applies to real estate, cars, trucks, electronics, food, whatever! I wish the supposed professionals in our business would get that straight in their minds. What purpose does it serve to ask someone to submit an LOI on something they really don't have any idea about, aside maybe an address and in some cases, that isn't even given. You are wasting your time and theirs, period.</div>
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The last point is something that most professionals already practice but some do not. I choose to handle our business this way:</div>
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When I give an offer, I include a proof of funds regardless of whether I am asked or not. If the property I want to buy is $200,000, then my proof of funds will show this amount. If the property is $1,000,000, then my proof of funds will be for $1,000,000. Do the new folks understand why I am doing this? If you don't know why, I'm going to tell you: The reason is because it is nobody's business how much I have in my bank account except me. The seller or the seller rep only needs to know that I have enough to consummate the deal, nothing more. They do not need to know my bank account balance.</div>
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I have been asked by some sellers to provide proof of funds right up front before we've even decided what properties we want to purchase from the seller. Umm, nope, I'm not going to do that. Why should I provide that information before knowing I have something of value that I want to buy? Do I need to show my bank account prior to putting in an offer? NO, I DO NOT, and neither do YOU.</div>
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Let's not forget folks that seller's need buyers and we're buyers. We do not need sellers as buyers. We need sellers that have something of value that we want to buy. There is a drastic difference in need here, so please understand this and do not make the mistake of thinking that it is a reciprocal relationship. It certainly is not. Uncooperative sellers deserve exactly what they dish out....a no sale. </div>
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I had a rather annoying situation with a realtor recently. She wanted an LOI and POF (proof of funds) before we even identified what we may want to place an offer on through her pipeline. Well, as you now know our practice, the answer was no, but rather than saying no, I went through the trouble of showing several portions of HUD-1's we've closed in the past two months. They showed purchase price, and other pertinent details to show we were serious. I also posted a link to our buying entity from the Secretary of State and a link confirming ownership and signing authority from the same site. I gave her POF without giving her POF, but that was not enough for her. The realtor chose to play hard ball and ignored my valid request for additional information about the properties she had available. We do not deal with difficult people and unrealistic and unreasonable ones are the first to get dropped and so she is now history. </div>
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I like writing these articles because in many cases, I take real life events and discuss them. I do not gloss over them as some writers do to make real estate look easy and fast money. It is neither easy nor is the money fast. </div>
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So in summary, as a buyer, do not provide proof of funds until you place an offer and only provide proof of funds to show you can consummate the deal, nothing more. You do not show $1,000,000 in your bank account when you're buying a $50,000 property for example. Doing so, reduces your negotiating ability and it gives too much information to the other party that they do not need. It helps them, but does not help you. They only need to know that you can close the deal and nothing more.</div>
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I hope this has been a helpful article for all those fine folks out there in cyberspace and that it has helped steer certain sellers into proper professional behavior because serious buyers do not play games. They buy real deals fast and they pay cash but they only like to deal with nice, reasonable people. If you as a seller or seller rep find yourself getting frustrated with buyers, then you either need an attitude adjustment, or you need to pick a different occupation. Not having patience and being uncooperative with reasonable requests will hit you hard in your pocket book. Do not make this amateur mistake those of you who know who you are. :)</div>
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P.S., our sister company has a brand new website and some high value-add properties available in Atlanta, GA right now. Light to moderate rehabbers have the option of being one of the first to learn of new high value-add deals as they become available. You can get more information here: <a href="http://atlantawholesalehouses.com/">AtlantaWholesaleHouses.com</a>.</div>
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Until next time, enjoy your week!</div>
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Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0tag:blogger.com,1999:blog-7657503117288713819.post-65308500813082397702012-10-27T22:41:00.000-04:002012-10-28T00:11:22.977-04:00Done Any Volunteering?<div class="separator" style="clear: both; text-align: center;">
<img border="0" height="149" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEix7Fdi7Rcque9UX6HPzMoDqvxvlLmAEF5qkHWVTOaA9w7lFytwaqMP4F92F3m-5UkEIbHDZpq-65_VCc_ZaUWsgZ78ZiHaL5JT_eehE51QhwuiGQjCUfHzjlJsy7mzA6gr7lZLnYv0LZvw/s320/Volunteer_become.jpg" width="320" /></div>
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<span style="font-family: Verdana, sans-serif;">I've done a fair amount of volunteer work in the past and today spent my Saturday afternoon working with the UTVCG (University of Toronto Volunteer Consulting Group). Today was the first day in action this year, allowing me to meet with some great team members in an effort to come up with solutions for a non-profit group seeking help. After that meeting, I spent some time with an engineering student, as part of another volunteer program to help mentor a student.</span></div>
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<span style="font-family: Verdana, sans-serif;">In a couple of weeks, I am going to repeat some work I did last year with a new group as a Seminar Leader, also a volunteer position.</span></div>
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<span style="font-family: Verdana, sans-serif;">I don't mention the above to toot my own horn, but instead I mention it to remind everyone that there is a strong need for volunteers in every community, town, city, state, province, and country.</span></div>
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<span style="font-family: Verdana, sans-serif;">Regardless of where you are, there is a need right in your own backyard. The fulfillment one gets from helping is fantastic and extremely rewarding and you'll meet some tremendous people in the process. If you've never volunteered before, take time right now to think about a cause, a charity, a need in your community that you find interesting or close to your heart. Go and talk to those folks and tell them that you want to help. They will be very glad you called them and you will be very glad you did once you understand what I am writing about fulfillment. The only way you'll know is if you do.</span></div>
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<span style="font-family: Verdana, sans-serif;">If you've never volunteered or haven't in some time, go ahead, take the steps right now and go volunteer your time! The busiest people are the ones who can help the most because busy people get things done.</span></div>
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<span style="font-family: Verdana, sans-serif;">Thanks for reading, enjoy the balance of October and go help and/or mentor someone today.</span></div>
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Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0tag:blogger.com,1999:blog-7657503117288713819.post-25779775478458821122012-10-14T20:23:00.001-04:002012-10-14T20:26:18.193-04:00Trust But Verify<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEit8yJGPYecauuo3ETLJimFNcnnMjg8inETJSx1wU5EDtGcRMVHHG8CvrsULkp03GNMRFLlIkSsnu9uzABIkJCFoYh53OyUJapvsgbexDbCVQbzpY9VO6oD-vq-Bul4dHudYenen6WlrmGa/s1600/trust+but+verify.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEit8yJGPYecauuo3ETLJimFNcnnMjg8inETJSx1wU5EDtGcRMVHHG8CvrsULkp03GNMRFLlIkSsnu9uzABIkJCFoYh53OyUJapvsgbexDbCVQbzpY9VO6oD-vq-Bul4dHudYenen6WlrmGa/s1600/trust+but+verify.jpg" /></a></div>
<span style="font-family: Verdana, sans-serif;">Regardless of your political affiliation, Ronald Reagan nailed it with the three words, "Trust, but verify."</span><br />
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<span style="font-family: Verdana, sans-serif;">Throughout time, people will say this and say that. They will also write this and write that in emails etc., and we as business people, must make judgments and decisions based on what other people are communicating. </span><br />
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<span style="font-family: Verdana, sans-serif;">However, it is our duty and responsibility to ensure that when people do say or write something, that during our course of doing business we need to verify what was communicated. If we fail to verify, then we have no one to blame but ourselves if the outcome does not follow from what was communicated.</span><br />
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<span style="font-family: Verdana, sans-serif;">So, let's remember that we need to, "TRUST, BUT VERIFY" all the time and don't let things lapse for one minute, or it may cost us.</span><br />
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<span style="font-family: Verdana, sans-serif;">This applies to business and personal relationships equally. </span><br />
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<span style="font-family: Verdana, sans-serif;">"Trust, but verify"....So simple, yet so powerful. Make it a standard in your day to day activities.</span><br />
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<span style="font-family: Verdana, sans-serif;">Until next time......</span>Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0tag:blogger.com,1999:blog-7657503117288713819.post-40818118175619498422012-10-03T00:45:00.000-04:002012-10-03T09:08:53.265-04:00So You Want to Buy a Fannie Mae or Freddie Mac Property?<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhnWo3OecC8bw5_1UKckxp57IAu-OYZjiT31leKfywbeW8H01FiY5VYCIg_uehdaSnHCrcfKAyblqa-lKitMDa-hTb3By6vAzVzNoo8hdP8n-AF_TDi6BqaQW1zqOZHBWn5m0UcAZ8rLdb3/s1600/freddie.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="147" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhnWo3OecC8bw5_1UKckxp57IAu-OYZjiT31leKfywbeW8H01FiY5VYCIg_uehdaSnHCrcfKAyblqa-lKitMDa-hTb3By6vAzVzNoo8hdP8n-AF_TDi6BqaQW1zqOZHBWn5m0UcAZ8rLdb3/s200/freddie.jpg" width="200" /></a><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhwEY4ZmKSpPLu12BKqznyK7Yx8DUgOGoN8lYUXdZOIT5nXVJwVYiUbOLse6vRzcLK5RlhhqVrNrEcVXRHBdTHkSmoYZ83XRIal5fNBd-qK_1I9RGMjJ9YV30s5oAlbUXu48Np2tVPbASb4/s1600/fannie.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="142" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhwEY4ZmKSpPLu12BKqznyK7Yx8DUgOGoN8lYUXdZOIT5nXVJwVYiUbOLse6vRzcLK5RlhhqVrNrEcVXRHBdTHkSmoYZ83XRIal5fNBd-qK_1I9RGMjJ9YV30s5oAlbUXu48Np2tVPbASb4/s200/fannie.jpg" width="200" /></a></div>
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<span style="font-family: Verdana, sans-serif;">Buying a Fannie or Freddie property can be a great option. It can also be a nightmare. Just like any other purchase, you have to know your market and ensure you are not overpaying. Just because it's a "government owned" property does not automatically mean it's a great value deal. We like to focus in our blog on real life and not theory. Theory is for students who want to study and learn about ideal situations. Practice is for professionals who want to apply real life knowledge to what really works. In real estate, theory is rarely valid. Real life practice is always valid. This blog is not for students but for professionals who are active in the business.</span><br />
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<span style="font-family: Verdana, sans-serif;">If you've identified a Fannie or Freddie property that makes sense, then bear some things in mind before buying one of these government owned properties:</span><br />
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<span style="font-family: Verdana, sans-serif;">1) You will almost certainly be subjected to a 90 day deed restriction. You won't be likely told of this restriction up front as it tends to be "assumed" that you should know but it will be in the paperwork eventually. The deed restriction works like this: For 90 days you cannot transfer title to another Buyer unless your gain is no more than 20% of what you originally paid to Fannie or Freddie. In other words, for example, if you buy a Fannie or Freddie property for $50,000, you can only sell it for up to $60,000 (a $10,000 profit...i.e. 20% of $50,000 = $10,000). The actual clause looks like this:</span><br />
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<span style="font-family: Verdana, sans-serif;"><i><b>"GRANTEE HEREIN SHALL BE PROHIBITED FROM CONVEYING CAPTIONED PROPERTY FOR A SALES PRICE OF GREATER THAN $_______ FOR A PERIOD OF _____ MONTH(S) FROM THE DATE OF THIS DEED. GRANTEE SHALL ALSO BE PROHIBITED FROM ENCUMBERING SUBJECT PROPERTY WITH A SECURITY INTEREST IN THE PRINCIPAL AMOUNT OF GREATER THAN $ _________ FOR A PERIOD OF _____ MONTH(S) FROM THE DATE OF THIS DEED. THESE RESTRICTIONS SHALL RUN WITH THE LAND AND ARE NOT PERSONAL TO GRANTEE.</b></i></span><br />
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<span style="font-family: Verdana, sans-serif;"><i><b>THIS RESTRICTION SHALL TERMINATE IMMEDIATELY UPON CONVEYANCE AT ANY FORECLOSURE SALE RELATED TO A MORTGAGE OR DEED OF TRUST."</b></i></span><br />
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<span style="font-family: Verdana, sans-serif;">Notice the clause states that it "RUNS WITH THE LAND"? That means that it doesn't apply to you personally but applies to anyone attempting to purchase the property from you because it is property based.</span><br />
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<span style="font-family: Verdana, sans-serif;">2) Using the above example, if you buy a property from someone else who has already purchased it from Fannie or Freddie and has held it less than 90 days, and they've sold it to you for the maximum allowable amount by law as we've explained above, then you cannot sell it at all until that 90 day period has expired from the date of the original deed restriction. Make no mistake...you are bound by the law and have no way around this. How do you think I know this?....the hard way as happens sometimes to the best of us. Learn here and don't get caught. No matter what your Seller is telling you, always check with your Attorney to verify what they are telling you. Get it in writing and make sure it's not just in writing but explicitly in writing.</span><br />
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<span style="font-family: Verdana, sans-serif;">3) Possible alternatives are to ask to have the deed restriction removed right in the Offer. Put this in the Special Stipulations section of a typical broker Purchase & Sale Agreement. What's the worst that can happen?...they say no. Just write in, <b><u>"Buyer requests any Deed Restrictions be removed."</u></b> With this simple statement, you are not demanding, but asking politely. Best case is that they accept and then you have no deed restriction. The odds are slim, but it's worth asking if you're in the deal.<br /><br />4) If they still refuse to remove the deed restriction, offer to pay a little extra to have it removed if you don't want the restriction.</span><br />
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<span style="font-family: Verdana, sans-serif;">5) You may get lucky that the "checkbox" that defines whether a deed restriction will be applied is not checked off for your property. I've heard of this happening from an asset manager not checking it off but have not experienced it. You may luck out however as it is possible.</span><br />
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<span style="font-family: Verdana, sans-serif;">6) If you can't get around the deed restriction, it's best to focus on properties that you can rehab and profit from. You can take the down time and use it constructively to rehab the property and then market it immediately. There is nothing wrong with marketing the property that has the deed restriction. You just can't transfer the deed to someone else until that 90 day period has expired.</span><br />
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<span style="font-family: Verdana, sans-serif;">For those that want the advice, the above can help you put together an entrance and exit strategy to purchase a Fannie or Freddie owned property if you've never purchased one before. If you have, it's good to brush up on your options for the next one. Again, I want to reiterate that the above is based on our experience only and that we are not attorneys and none of what's in this article should be construed as legal advice. You should always check with your attorney before signing any legal documents to completely understand what you are signing. </span><br />
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<span style="font-family: Verdana, sans-serif;">Until next time...have a very prosperous week. </span><br />
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<span style="font-family: Verdana, sans-serif;"><br /></span>Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0tag:blogger.com,1999:blog-7657503117288713819.post-2381432233330880102012-09-11T00:31:00.001-04:002012-09-11T00:56:20.030-04:00Keep Earnest Money in Check!<div class="separator" style="clear: both; text-align: center;"><img border="0" height="212" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFt1AtbEo4DiGzX71UCf-EHD7SSDnIimpssuI7VGavlDWMIMcxTYcO__ZpdPN6OyJhB8aGXCSR4SkuyrhkaMlh5IJRq04J1QJ5L8wzM_K3ykmvDNFfwCgTOVP0RgFKZc4BesLhMkndnmBv/s320/money+pics.jpg" width="320" /></div><span style="font-family: Verdana, sans-serif;"><br />
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</span> <span style="font-family: Verdana, sans-serif;">Now what exactly do I mean by that title, you're probably asking? Well, it's pretty simple: Earnest Money (EM) deposits should be held until such time that your deal closes or your Buyer forfeits their EM for some reason. It's as simple as that. I mean EM deposits that you personally receive for properties that you own or control and you receive the deposit from a prospective Buyer. If you've written a non-refundable Earnest Money clause in your contract that still means that you must perform your end of the deal.</span><br />
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</span> <span style="font-family: Verdana, sans-serif;">Now, while this is a straight forward professional concept, there are some people that treat Earnest Money as lottery winnings or use them for shopping sprees, payment to contractors for work on other properties or the like. I've seen it happen and that's why whenever we have a deal, we always try and use our own Closing Attorney or people that we trust to close but regardless, we always use a third party escrow Closing Agent. </span><br />
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</span> <span style="font-family: Verdana, sans-serif;">We never give EM deposits directly to Sellers and you shouldn't either! Always use a bona-fide third party Closing Agent who is registered with the State they're doing business in and holds a valid license to close. Do your due diligence on your Closing Agent </span><span style="font-family: Verdana, sans-serif;">just like you do on your properties.</span><br />
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</span> <span style="font-family: Verdana, sans-serif;">If you ever collect a direct EM, do NOT do anything with the EM deposit because you will run into problems eventually that may not be feasible to dig your way out of. Title problems, probate problems, conveyance problems such as Fannie Mae deed restrictions etc., etc. There are countless problems that may occur that can prevent closings or delay them.</span><br />
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</span> <span style="font-family: Verdana, sans-serif;">A deal is almost like a car. There are many moving parts and they all have to fit exactly right, or it won't work. There are smooth deals, and there are deals from the pit of hell that will drive you nuts. Regardless, if you're a real estate investor and you've done enough deals, you'll see them all. Doing deals is not just a bowl of cherries like the gurus' make it seem. This is real life, it's working in the trenches, and you're gonna get mud on your face once in a while and you're gonna deal with problems. If you don't believe me, then you're new or you're just not doing enough deals.</span><br />
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</span> <span style="font-family: Verdana, sans-serif;">In doing your deals, do not misappropriate Earnest Money. This is not your money until it's "YOUR MONEY". If the deal falls apart on your end, you will most likely have to refund the Earnest Money. Make sure it's where it's supposed to be and do not treat it as yours until the deal closes or it's forfeited to you. </span><br />
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</span> <span style="font-family: Verdana, sans-serif;">Y</span><span style="font-family: Verdana, sans-serif;">ou'll find that you cannot anticipate everything that may occur in a deal and you may have to give back that EM. By not touching the EM deposits until closing actually occurs or unless the other party forfeits it by contract, potential EM problems can be pretty much eliminated.</span><br />
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</span> <span style="font-family: Verdana, sans-serif;">Wishing you a great and prosperous week! </span><br />
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</span> <span style="font-family: Verdana, sans-serif;">Until next time....</span><br />
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</span>Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com3tag:blogger.com,1999:blog-7657503117288713819.post-42222675288120705502012-08-25T00:06:00.001-04:002012-08-25T00:08:11.929-04:00Professionals Exist to Help Us - Use Them and Pay Them<div class="separator" style="clear: both; text-align: center;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEji3auu60LGfVeWX6upkXoZKcCoNUailqMFm4wg5f7IERVyuefcsz7R5jX-R5bFsuFy8IS7GZ2uU2jQ9oNDp3DBaVrROnGZ93cm_O-fERO7fUx5UnenvxFkHfGDPiFlBi5BvGRjXi_s4QlF/s1600/construc.jpg" /></div><span style="font-family: Verdana, sans-serif;"><br />
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</span> <span style="font-family: Verdana, sans-serif;">We constantly need to make decisions about many things, every day during the course of business. One major factor that influences decisions is cost, and although that isn't anything new to anyone, managing those costs relative to reward is an important point. </span><br />
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</span></div><div><span style="font-family: Verdana, sans-serif;">When finding a potential deal, we must be very comfortable with the property and the upside as this is the reason we're considering the purchase, but when we're not quite sure, or need confirmation, or have a potential problem, hiring a professional estimator, appraiser, legal professional, engineer etc., is not really a cost, but is a necessary aspect of doing business. Some people try to avoid these professional costs and end up paying substantially in the price of experience. As many of us already know all too well, experience is sometimes a costly teacher.</span></div><div><span style="font-family: Verdana, sans-serif;"><br />
</span></div><div><span style="font-family: Verdana, sans-serif;">My point is that if you're not sure about something, hire a professional to make things sure. If you're presented with a property that you have reviewed comps and things don't seem right, why take a gamble in buying the property when for a couple hundred dollars, an appraiser can help you determine value. You may be out two or three hundred dollars, but that could save you from getting into a bad deal and losing tens of thousands!</span></div><div><span style="font-family: Verdana, sans-serif;"><br />
</span></div><div><span style="font-family: Verdana, sans-serif;">If you have a potential structural issue or you're dealing with load bearing walls etc., make sure you have a very experienced contractor or structural engineer to help you along the way.</span></div><div><span style="font-family: Verdana, sans-serif;"><br />
</span></div><div><span style="font-family: Verdana, sans-serif;">If a probate related or other legal issue arise, don't play around and waste time and money. Bite the bullet and pay an experienced attorney. These folks can be expensive, but their knowledge is what they get paid for and they can save you substantial money and grief and get the job done right the first time.</span></div><div><span style="font-family: Verdana, sans-serif;"><br />
</span></div><div><span style="font-family: Verdana, sans-serif;">I have an engineering degree, but this doesn't make me an expert in many things. I am humble and I know my limitations, so when I have a problem that I don't have the answer for, I hire a professional who does know the answer. If you don't have this same philosophy and try to cut corners in areas that you're not experienced in, sooner or later, it will bite you. This can be substantially more costly to you than simply paying a professional to make sure you are steering your business in the right direction, rather than the painful and costly approach that happens when we don't consult with pros.</span></div><div><span style="font-family: Verdana, sans-serif;"><br />
</span></div><div><span style="font-family: Verdana, sans-serif;">Don't worry about that money you're paying your hired professionals. The correct view is that paying them is like an insurance policy for big mistakes. These folks are there to help us, so when we need help, it's best to ask for it.</span></div><div><span style="font-family: Verdana, sans-serif;"><br />
</span></div><div><span style="font-family: Verdana, sans-serif;">Until next time.....</span></div>Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com1tag:blogger.com,1999:blog-7657503117288713819.post-79777831660714511412012-08-15T14:20:00.002-04:002012-08-15T22:19:45.432-04:00Taking Emotion Out of the Deal<div class="separator" style="clear: both; text-align: center;"><img alt="" border="0" height="212" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhroxSUSX5D-hG1UGJqjQ8dytvrSGK0IWKbn5K3IwYT7kFbD95roXktBINV5XXQGuJagWJVwjQSJpEHaOSNQFAEU3jvRlFbf6976Ty70Wte6J5x98ThSO7IqeC3j6e9SyXbVIq3x81U3Onf/s320/stress.jpg" title="" width="320" /></div><br />
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Throughout history, and indeed in today's markets, emotion drives the ebb and flow of the markets. Whether we like it or not, this is a fact that has been much studied and has been discussed in countless books, newspapers, articles and speeches.<br />
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Depending on your preferred medium of investment, this emotional component can either help you or work against you. Let me explain:<br />
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If one is Trading stocks, emotion is a massive factor in the movement of stocks. As a stock investor, we can remove our emotional component as much as possible, however, we cannot completely eliminate it and we certainly can't control what the "crowd" does. Determining the valuation of a stock at a particular moment in time is both an art and a science, so because it is typically difficult to determine future value, our emotions do come into play whether we like it or not. There are a number of things we can do to limit or eliminate that and that is to have a system / game-plan and follow it without exception. Even the brightest trading professionals are right only about two-thirds of the time, so losses are a part of the game regardless of how good we think we are. There is no such thing as getting it right all the time. These are the realities.<br />
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Now, moving onto real estate, when it comes to investing, we must limit or eliminate the emotional component also. Because we know by doing our due diligence ahead of time, how much a property is worth (within a reasonable estimate) at the present time, we can ensure that by purchasing at substantially below that value that we are good, taking emotion completely out of the picture. As in our stock example, we follow our game plan to to letter and ensure that based on the value today, that we are not paying more than that value. In fact, as I mentioned before, our aim is to buy very much below today's fair market value and if we don't have that present, then we do not have a deal! We then move onto the next potential deal.....<br />
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While we're on the topic of emotions, we came across a seller this morning who themselves presented a valuation in today's market for their own property that was based on an appraisal in current condition. This appraisal reflected what we were going to offer him, so he knew what it was worth in the market. However, he refused to accept market realities and wanted double the amount we offered. When he was asked what he felt the property was worth, he simply said that he knew it wasn't worth what he was asking, but that's "what he wanted" and that is that. He proceeded to tell us how nice the property was, how nice the neighborhood was....We are not emotionally driven home purchasers. We are numbers and facts only investors and you should be too. If the numbers don't work, then regardless of how nice the property is and whatever other flora and fauna the seller and/or their agent is spewing, move onto the next potential deal and leave the non-deal behind. Do not waste time on sellers that refuse to accept market realities. They are betting that "it'll come back". Let them gamble. We don't do that.<br />
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Yes, this is an emotional seller who overpaid for his property at some point in the past, and now cannot live with a loss even though the economic reality is that his asset isn't worth what he wants for it. So, it will sit and he will lose money maintaining insurance and paying property taxes and seeing his asset degrade further due to weathering / wear and tear with no other hope than potential appreciation down the road which most likely would not cover his mounting losses.<br />
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Do not become one of those statistics where you are only betting in market appreciation to salvage your investment. Sometimes, looking at a short term game plan makes much more sense than waiting to see what the distant future holds. As I've said before, nobody has a crystal ball, so why bet the farm on future appreciation when this is not a prudent approach to investment in real estate. Certainly, many other options are available to us. <br />
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If we're talking stocks, we need to have a bias whether the stock will go down or go up. This bias determines our potential profit or loss. In real estate, we lose money if the value goes below our purchase price, so price appreciation is only one of many exit strategies that we can use, and it is the most uncertain and volatile strategy available. There is no need to rely on price appreciation when buying real estate assets, so focus on other exit strategies that are available to you with some we have discussed in previous articles of this blog. This limits risk and increases potential profitability by buying well below current fair market value and knowing what your exit plan is before you sign the Purchase & Sale Agreement.<br />
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Remember, emotion has no place in real estate investing. If you buy low enough, and use the right exit strategies, you will be just fine almost all of the time.<br />
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Until next time....Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0tag:blogger.com,1999:blog-7657503117288713819.post-38824560570580714982012-08-05T12:37:00.002-04:002012-08-05T12:53:49.434-04:00Ready to Place an Offer? : Do's & Don'ts<div class="separator" style="clear: both; text-align: center;"><img border="0" height="228" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOR4ts_9kiD3FU_IRkX1uXDb2hZjRf9SBSgHtmxBXPugBsBWEsbUKgNo5MNkKFdb2uCUH_mNrOiDWuaQGrN34zNscIxTRZjejFHbP3DPoUmkPmOghyJncIezHNbxHCr1q5FNawqbuZqBD2/s320/invest.jpg" width="320" /></div>In the course of our daily business, we run into many people who are "want-to-be" investors. There is absolutely everything right with wanting to be. However, for those of you new investors, there are certain rules of conduct that those more seasoned already know but you may not know if you are new to the business. It is critical if you intend to do deals consistently to present yourself in an honest light. What exactly does this mean? <br />
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1) When presenting an offer, be real. That means, do not under any circumstances, lead the seller on by telling them that you have the money to close when in fact you do not. Do not waste people's time! This means, get your financing approval and/or cash together beforehand and demonstrate to the seller that you have the money at the time of your offer through a real proof of funds. This means send the offer with your proof of funds. Don't send the offer without proof of funds because if you do, you will be perceived as an amateur and may be in a poor negotiating position immediately because of this perception, whether this is right or wrong. There is no need to show proof of funds before this time, but at the time of offer, you should have everything in order to prove that you have the financial capability to close. Wanting to close and having the capability to close are key, not just the want.<br />
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2) It doesn't matter if you low-ball but can justify your offer. You want a great price? Of course, who doesn't? But don't just lowball without being able to explain why. Lowball offers are completely ok if you can justify them. Lowball offers without justification are amateur moves when what you're trying to do is show yourself as a professional.<br />
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3) In this real estate market, cash is truly king. Get all your cash together to buy the property you want and you'll be at the front of the line in acceptance. Sellers want cash (your cash), and you want their property, so why not make it easier for yourself and forget about getting financing if you want to close quick on that great deal that just came across your desk. This means, get a partner or partners to put up the cash if you don't have enough or even if you don't have any cash. You need cash, but there is no rule or law to state that it must be YOUR cash. Make deals with private investors whom could simply be friends and family, and get it all cleared before you make your offer. Don't make an offer and think in your head that Uncle Ben has $20 million sitting in his checking account doing nothing and you've got the greatest deal in history waiting for his $20 million to be used. Oh, but you just sent your offer in but haven't even spoken to Uncle Ben about what you're doing, right?...Don't do that! I think you get my point that the money has to be resolved BEFORE THE OFFER. Again, do not waste a seller's time. You want to be seen as a performer, not a non-performer, and the quickest way to become a performer is to do what you say you're going to do in a timely manner and back it up.<br />
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4) If you find after an inspection that some minimal issue exists, don't go back to the seller and ask him to knock off $500 or $1,000 because you have a toilet or some light fixtures that need replacing. If it's a major problem like serious electrical wiring faults, a defective septic system, cracked boiler, well then that's a different issue altogether, so perhaps in those types of cases, you can walk away from the deal altogether or ask for a credit at closing from the seller to pay for these repairs. Unless you have an all cash deal happening, ask for a credit at closing for major repairs that came up after inspection, because the repair has to be paid for by someone, either you or the seller. If you just ask for a reduction in purchase price, this won't help you if you are getting a lender to put up some of the money. The credit as closing works much better because you then have the cash to do the repairs right at the time of closing.<br />
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These are some simple points for investors who wish to build their reputation with sellers as performers and not as time wasting non-performers. Be a performer starting today and get your deal house in order. Real Estate is all about relationships and don't let anyone tell you otherwise. Being real and honest with your deals will build your credibility, gain you many more great contacts and referral business and put more cash in your pocket. If you wrong people, word spreads quickly so start right from today to build yourself up rather than tear yourself down. Being a performer pays much better.<br />
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Until next time........Anonymoushttp://www.blogger.com/profile/06718879305493517253noreply@blogger.com0