PROTECTING YOUR INVESTMENT

This week is going to be a quick KEY elements on PROTECTING your investment.  I saw this article and just think it is very smart.  Too many people, no matter what neighborhood are broken into, especially this time of the year.  Follow these easy tips and protect your INVESTMENT....

 Your Home - Keeping your Home Safe When You are Away

It is summer time and that means many people are leaving their homes for vacation! Before you leave for your trip, make sure to secure your home. To keep your mind at ease and have a more stress-free vacation, try following some of these tips:

Lights on a Timer

Set your timers on different hours or even different days to insure there is not an easily recognizable pattern.

Call the Post Office

Ask your local Post Office to hold your mail held for the length of your trip so it doesn't pile up in front of your house.

Social Media

Don't post any of your travel plans on social media. As more and more people tend to have their entire life documented on one of the social media sites; it would be wise to think twice before posting your travel plans or listing dates while you are away from your home.

Yard Work

If you are going to be gone for a while, have someone come by and mow the lawn. Call a landscaping company or ask a neighbor to stop by to do this at least once a week while you are gone.

INVESTING IN OTHER STATES

So this past week I spent some time in Denver.  I talked to numerous people about investing and having rental houses.
   DISCLAIMER;  THE FOLLOWING ARE THOUGHTS GENERATED FROM KNOWLEDGE AND INDUSTRY FACTS; THOUGH THERE ARE MANY EXCEPTS TO EVERY SCENARIO AND THE ONLY WAY TO GET AN ACCURATE UNDERSTANDING OF WHAT IS GOING ON IN YOUR MARKET IS TO CONTACT YOUR REAL ESTATE AGENT.


 The market in Denver much different than in Dallas.  In Dallas, people buy rental houses and try to rent them for a few hundred dollars over their mortgage payment.  Generating monthly income and a savings account for when things break. In Denver the houses are priced much higher and the rent is much lower, forcing investors to receive less than they mortgage payments.  This is of course if the house was purchased with the min. down payment- cash purchases or large down payments are exception to this. So the question is can you still make money if your revenue from renters is less than your mortgage? YES.
      So this goes back to long term or short term investments. (read previous blog) Each month you are generating equity in a house that you are not living in. A renter is covering most or even 3/4 of your mortgage payment.  The idea is to own something that creates money (equity) for the minimal amount of investment.  In other words, if you only have to spend a few hundred dollars on a house that you are not living in, in order to create thousands of dollars of equity, it is worth the investment and more than likely better than any investment with any bank in town. 
     Now of course this process takes time and patience.  When first buying a house, it takes money to put down and when selling a house it takes money to cover fees.  These costs need to be recovered with the equity generated by your tenant.  This always depends on the market and how fast house prices rise.  Of course this depends on the city which you live in as well as the neighborhood the rental is in. 
    The correct city and correct neighborhood and predictions of house valves is a completely different blog. Just know that in Dallas, the general housing market has increased 3-5% each year for the past 7 plus years. Some neighborhood prices in Dallas have recorded 15-20% increase in valve in the past 2 years. In general this means, with the average cost of investment being around 10-15% (explain that later) it typically takes 5 - 10 years in Dallas to recoup an investment and to generate a profit.  Now in Denver this process might take a little longer, but remember with each monthly payment you are generating equity even if the value of the house does not increase.
   Now lets break it down for simple explanation.  On most cases the mortgage is going to be a 30 year note.  Your payment is 2000 a month (including principal, interest and insurance) In Denver typically you  can rent the house to cover your principal and interest, but might not cover the insurance and taxes. The cost of your investment is the insurance and taxes each month.
  In Dallas the rent is higher and it is possible to cover the principal, interest, insurance and property tax with the tenants rent.
    So then the next question is.. is it better to invest in Dallas even if I live in Denver? Stay tuned for next blog on expenses of owning a rental house....out of state vs. local       management company vs self managing..

PERSONAL INVESTMENT

So investing in Real Estate....Last time I mentioned BIG and SMALL investments and the return which certain types of investing can give you.  Comments came about and people asked, but I don't have very much money or I don't have cash just laying around.  Well neither do I, so how can people like you and I invest in REAL ESTATE.  Well..
  There are a couple of ways, first of the simple way--rent out a room out of your house.  Rent a house with an extra room and rent it out for half the rent. This will save you money and create a cash flow to start investing.  Or if you own a house, rent out a section. Either the garage, or a room.  Or if you think you are handy, convert your house to a duplex!  Okay, so that sounds far fetched, but that is what I decided to do.
  So I have a 1100 sqft 3 bdrm 1 bath house and I decided to create a studio apartment on one side.  One of my bedrooms is 20x12. I closed off the door to the rest of the house and put in an exterior door to this room.  Then I took out the ceiling and created vaulted ceilings to give the space a bigger feel.  I split one side of the room in half and put a studio kitchen on one side and a bathroom on the other side.  We added stairs and created a loft above the bathroom and a separate bed area with AC above the existing living room in the attic.  Two of us added the sewer lines, water lines, move and added electrical lines, framed all the walls, textured and painted everything in about a week.  (Granted I have to add cabinets and finish some tile and put in the floor, -which might take me another month-but everything else is done.) So the first question people ask.. wow!  How much did that cost and is it worth it.  Well, Thank You Home Depot!  They financed almost all of it via a Home Depot card.  Even with the interest, the rent I will receive from this studio apartment will pay my card off in about 6-7 months.  So is changing one room in my house and creating a cash flow for as many years as I want worth it? ABSOLUTELY 
 If you are interested in pictures, let me know or if you are interesting in creating your investment and have questions on how to get started, call me; 972-322-1717

BIG or SMALL

BIG or SMALL

First of all, I have been involved in Real Estate for many years.  I have created my business as well as other businesses off of investors.  This blog is concentrated on investing in Real Estate.  My goal is to give a wide variety of thoughts and plans and ideas as well as pros and cons in investing in Real Estate.

This article is going to be about SMALL sale PRICE vs. BIG sale PRICE.

So do I purchase a condo for 20k or a small run down house for 15k or do I purchase newer home for 200k or a newer home that needs work?  This really comes down to how you want to spend your money and how you want your investment to come back to you.  Of course  there are many thoughts on this and the results vary per purchase, but rule of thumb is  higher the price of house you purchase the longer it will take for you to recoup your money.  Also, the dollar figure has a potential to be higher, the longer you hold on to the property and the longer you rent it for.    To put things short.

In Dallas you can buy houses for as little as 15-20k and rent them out for as much as 750 a month.  This is a great return on a monthly basis; though do not expect to sell it for big cash in 10 years and retire on this investment.  Now of course if you have a bunch of these and know how to do the maintenance on them, you could live off this residual income. The idea is to recoup your investment in 2-3 years and have the freedom to sell whenever, knowing you have made money; no matter what you sell the property for.

Now if you buy a house for 150-200k and your mortgage payment is 1500 a month; you can typically rent it for 200-300 more than your mortgage payment.  Even if you rent it just to cover your PITI you can essentially break even on a monthly basis.  If you rent it for more than your payment, save this money for repairs and months you do not have a tenant. The advantage of this type of investing is that the tenant is paying for your house.  When you go and sell it, all the equity that has been created by your tenant becomes cash in hand.  So in  20 years (depending on how long your mortgage is set up for) when you want to retire you can sell the property and walk with all the cash. The idea of course is to sell it for much more than what you paid for it, though this depends on how long you keep it.  Even if the market continues to be steady, after 20 years the price will still increase; or at worst it will be the same.  Some argue that if it is the same, you have not gained a profit; though on the other hand you have still.  If the tenant pays the mortgage and your monthly investment is minimal, after 20-30 years the house will be free and clear, netting you all the cash from the sale, no matter what the sale price is. The disadvantage of investing in something like this is that first you are more than likely will be required to put down 20% when you  buy it and it does not make financial since to sell it within the first few years.  This is more of a long term investment (it takes an avg. of 8 years before PITI starts to really effect the Principal)

Comments on real life experiences and thoughts are always welcome..

Five Great things about Homeownership

On the fence about purchasing a home vs. rentals?

Take a look at what's in store when you decide to take the "leap"

1. Equity.Equity.Equity:
We all know that when you pay rent into a place that at the end of the day, you're money is not invested. Granted, it is becoming more popular for some apartment complexes to add a equity rider into the lease however, not many do this. By renting, your basically lining the landlords pocket. Sure, homebuying comes with heavy cost up front (closing cost, downpayments) but if you look into the future of your home, you will easily earn that money back overtime with equity that's put into your home. Historically, homes appreciate by about 4 to 6 percent a year.

2. Relationships:
People who rent typically sign year leases while others sign more temporary leases anywhere between 3-9 months. Gernerallly, renters tend to see their neighbors come and go these days which in turn make it difficult to build relationships and socialize. On the flip side, homeowners tend to have yards, clubhouses or community spots where those of the community are able to meet, greet, and get to know each other. Typically, neighbors seem to stay in their homes at least 5 years to regain their closing cost. In turn, there is more time to develop relationships. On another positive note, recent research has proven that people with healthy relationships have more happiness and incredibly less stress.

3. Predictability:
As long as you have a fixed-rate term on your mortgage it's predictable. Most people buying homes today know that a fixed-rate is the way to go. This means your payment amount is fixed for the life of the term. If your mortgage payment is $500 today, then it will still be $500 a month in 10 years. This allows for people to budget and make solid financial plans. The sub-prime crisis meant many homeowners with adjustable rate mortgages saw their monthly payments rise and then rise some more. Homeownership, though, generally comes with a predictable table of expenditures. Even the big purchases are predictable. You know most roofs last just 15 years. You know that each year you'll need to pay for the gutters to be cleaned, and so on.

4. Ownership:
Homeownership means you "own" your home. And, this means you can renovate, update, paint, and decorate to your heart's desire. You can plant trees, install a pool, expand the patio, or almost anything you want to the home... that the HOA allows. The bottom line is this is your home and you can personalize it to your taste. Most renters are stuck with the beige carpet, stock cabinets and bland white walls.

5. Great Deals:
It's a great time to buy. Interest rates are at historic lows. We're talking 4.0 percent instead of 6.0 or higher and this means HUGE savings!!

GET OUT OF THE CITY..

Nothing like living in style on the lake. Minutes away from the lake with over 2 acres, private pond, separate apartment to rent, huge 40x40 garage, fenced in yard, private drive, the list goes on. Come and see what relaxation is all about. Wrap around porch with views of the front and your pond.

Lawyers vs. Real Estate Agents

"My wife is an attorney, I don't need an agent"
"My best friend has a law degree, why do I need to hire an agent"
"I have bought many houses in my day, there is no reason to hire an agent"

I have heard them all. But if I said, that I work for free? Would you hire me? What if I said, I will represent you and provide you access to multiple attorneys for free? Would you hire me? What if I told you, I would save you money, protect your house from any loss and negotiate on your behalf, as well as do all the paperwork for free? Would you hire me then? Would you still say you don't need to hire a real estate agent? Well, okay, maybe you feel like you do not need an agent, but would you like one to do all the work for you and pay you for it? Still NO? Good, I do not want anyone to hire me, I want to hire them. What do I mean by this...buyers can not hire agents, that would mean that they are paid and are working for the buyer. All I want to do is work with you and consult with you and guide you in the right direction. (Can I hire someone as a buyer?...I promise I will pay you more than you pay me!)

I get frustrated when I here people say these things, because they are completely uneducated on what agents do and what benefit they provide and how much they cost. So I am going to explain things in a simple way.

1. Buyers do not pay anything to have representation.
2. Real Estate agents are paid from a listing agreement with the seller and the sellers agent, before a buyer even comes along.
- So, the thought that one is getting a better price because the seller is only paying one agent is false. That seller has already agreed to pay XXX amount. The only difference is that they are either paying two agents and splitting it 50/50 or they are paying ONE agent the entire amount. Again this amount is determined when the house is first listed on the market.
3. My buyers, as well most buyers when they use a real estate agent are not only represented by a Licensed agent, but are backed by errors and omission insurance and multiple attorney's. All of my contracts are review by an attorney. (Yes all of this is still free)
4.Real Estate agents are required to update and continue their education with a min. of 15 hours each year. These classes are to understand changes in contracts and real estate law. (which changes every year)
5. Real Estate agents are more qualified and more knowledgeable in the field of Real Estate, than attorneys are. Period. Oh, and they cost a whole lot less.

Now, do not get me wrong, if you work with a real estate agent and want to hire an attorney separate to review everything, well than sure, more power to you. I will however tell you that I have never had anyone question my team of real estate attorney's and hire their own.

I only have one question to leave with...

IF YOU GET A DWI.. DO YOU CALL A REAL ESTATE AGENT, WHAT ABOUT A CAR SALES MAN (they know all about cars)? NO, SO WHY WOULD YOU HIRE AN ATTORNEY TO DO A REAL ESTATE TRANSACTION?