Top 5 Must-Haves For Flipping Houses

By Glenn Curtis – Investopedia.com

Many people assume that they can simply 1) buy a house, 2) apply a fresh coat of paint, 3) trim some bushes, and then 4) resell the home at a profit. Unfortunately, this process, called “flipping” is not that easy. After all, if it were, everyone would be doing it.

There are several skills and people that every potential investor/flipper should have in place before even considering entering into a real estate transaction of this nature. In this article we’ll look at the top five “must-haves” you’ll need to succeed in this endeavor.
1. A Group of Experts

While a house flipper can certainly go it alone, it will certainly help to retain individuals that are familiar with the legal, accounting and construction ramifications of flipping houses.

Flippers typically work against the clock, so they must renovate a home on budget and then turn it around and sell it before the financing costs eat up their profits. In any case, a bevy of experts including a real estate agent, an attorney, a contractor or renovator, an accountant, a home inspector and an insurance agent can ensure that the work is completed in a timely and efficient manner.

2. A Handyman or Knack for Home Improvement

The house flippers that make the most money buying and selling homes tend to be handy people. That is, they have the ability to step in and lend a helping hand when time or money constraints kick in. Most flippers can do things like change a sink, install a countertop, do basic electrical or plumbing work, and/or shingle a roof.

Why is being handy so important?

The obvious answer is that if you can do the work yourself, you won’t have to pay someone to come in and do it. However, there are other advantages to being handy as well. For example, there are times when it will be impossible to get an electrician to install an attic fan on short notice. There are also times when a job must be completed without warning at the last second in order to obtain a certificate of occupancy. In these instances, having the ability to navigate your way around a tool box is very valuable.

3. A Good Lay of the Land

The buyer should know about the area in which they are buying property. A buyer should know, for example, what characteristics (acreage, number of rooms, type of home, etc) are the most desirable in the area in which they are looking to buy. Equally important is knowing what houses in the general vicinity have sold for and if there is likely to be any future development in the community (such as a new school, condominium or shopping center) as this could affect supply and demand.

4. A Good Estimator
By definition, house flippers attempt to buy a property and then resell it at a profit in relatively short order. In order to do this, however, the flipper must typically make some structural and/or cosmetic changes to make the property more appealing to the next buyer.

If the flipper underestimates the costs associated with the refurbishment he or she may be exposed to large monetary losses. Therefore, a flipper should be familiar with construction materials (their use and their cost), as well as local construction codes, the cost of local labor and the time it should take to do a given job.

This is no small feat. In fact, it takes even the most seasoned construction professional many years before he or she is aware of all the nuances that exist. In any case, before becoming involved in “flipping”, be certain of your abilities to estimate a job in terms of both cost and time.

5. A Dose of Patience

One of the biggest obstacles to making money in the real estate market is that buyers tend to overpay for a given property.

Why do buyers overpay?

Typically, buyers become emotionally attached to a property or develop some other bond with it, which in turn forces them to enter into a contract on less than favorable terms.

However, savvy flippers have the ability to avoid emotional purchases, and the desire to find diamonds in the rough and properties on the cheap. They also understand that if they aren’t buying a property at a favorable price and with favorable terms, it makes sense to simply move on to greener pastures.

The bad news is that patience is a difficult virtue to teach and hone. In general, either you have it or you’ll lose a lot of money trying to learn it. (To read more about choosing the right house, see Smart Real Estate Transactions and Investing In Real Estate.)
Bottom Line

While quitting your job and becoming a full-time house flipper may sound like an attractive proposition, be sure that you have these five “musts” before investing in a real estate project.

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MAKE A BLAST IN MAKING THE BEST REAL ESTATE DEALS - Rehab-Real-Estate

As consumers, we always want to buy stuff that is worth the money. Most often than not, we engage ourselves to something that is worth our time. Right? So, let me tell you about a product that is not only worth your money but also worth your time. Well, I’m going to talk about Jason Medley’s training in looking for a private money lender.

As someone who is into real estate industry, to take part on that event will shed not just knowledge and skills but definitely enhance your profit in the long run. Why? Given that you have the knowledge and skills gain from this one-of-a-kind product, then it follows that you make the right move and decisions and eventually reap remarkable profits.

Let me give at least two products of Jason Medley which I personally used. Well, until now I refer to it as a guide. Here are the two effective and worth the dime products which I would like to recommend:

Find Private Lenders NOW Home Study Course

This product has given me the unlimited access to trained staff to help answer to all of my questions regarding the Find Private Lenders NOW System. Well, this product, if you have this a bit of tight schedule, is the one for you. If you feel like to continue learning everything at home still, this product is a good buy.


4 Week Live Training Calls with Jason Medley

This product, as it was described by us who have availed it, is a “kick in the pants” that many of the real investors need to assure that we get the adequate guidance for us to execute the learning immediately.

This training will provide real estate investors the know-how to find private lenders so that they can use their funds for their real estate deals. Have you ever thought that if you had private money (and not hard money), funding your deals would be much easier, and you could close many more deals than ever before? Jason Medley will show exactly how to find private lenders who have already funded real estate deals and want to fund yours.

However, you may find the following products focusing on the same stuff when it comes to the content as all of them are pretty much engaged on learning the ways to locate private lenders and the do’s and don’ts if you are to close a deal, which you may ask yourself of this question: What’s the point of availing those products that will just talk about the same thing? Or Isn’t that a waste of money? Well, I for a time, have asked myself that question BUT then took the risk to avail both the products and found the answer.

The products may seem to be containing the same information but indeed, they are interrelated that both will give you the boost in closing the deals with your chosen private lenders.

I can really guarantee you that this training will serve as your primary tool in making a big leap in your career in real estate. Become one of us who transcend in making the best real estate deals!

Avail this product/training at its affordable price! I can attest that it’s indeed worth the money and surely worth the time.

Whether buying or selling real estate, arm yourself with information - The Boston Globe

In the real estate world, there was one word — repeated three times — that used to be the cardinal rule: location, location, location. Just about anybody could buy a house in a good location and easily make money by flipping, selling, or refinancing the home.

The new cardinal rule of real estate is information, information, information.

“For decades, the real estate industry has operated under the principle that the less information buyers and sellers have, the better it is for agents, lenders, title companies, and all the other folks who eat from the trough,’’ writes Ilyce Glink in “Buy, Close, Move In: How to Navigate the New World of Real Estate — Safely and Profitably — and End Up with the Home of Your Dreams’’ (Harper Paperbacks, $14.99). “But the real estate tide seems to be turning, as the housing and credit crises of 2008 have heightened awareness in Washington, D.C., and on Wall Street about the catastrophic consequences of a closed information loop.’’

I have no doubt that many professionals in the real estate industry will take great exception to Glink’s observation. But the evidence is on her side. We ended up in one of the worst housing market collapses because far too many borrowers were uninformed, ill-prepared, and overly optimistic about potential gain because of bad information they received and gladly embraced.

Glink has spent years covering the real estate industry and that’s why for August, I’m recommending her book for the Color of Money Book Club.

Glink is also the best-selling author of “100 Questions Every First-Time Home Buyer Should Ask.’’ She coauthors a syndicated column, “Real Estate Matters.’’

In her new book, Glink looks back at what happened and then forward to what’s to come in the real estate market. As she reports, millions of people have seen their home values plummet. One group of economists has suggested that housing prices won’t recover until 2017.

But this book isn’t all pessimism. It’s also a guide to help buyers and sellers navigate the new world of real estate. Glink offers advice on what to do in a new era of declining home values, the changing role of Fannie Mae and Freddie Mac, fixing your credit, calculating what you can afford, and snagging a house through a short-sell or foreclosure. She even ventures to help those still interested in investment property.

I think you will find the section on the 10 things that have changed in real estate sobering. If you’ve been looking for a home, you know that number one is that you need a lot of cash. The industry has long known that the more money someone puts down on a property, the less likely the person will default. In this case, an old rule is the new rule.

This is the worst of times and the best of times for real estate. It’s up to you to determine if this will also be the age of wisdom or the age of continued foolishness.

Michelle Singletary is a columnist for The Washington Post. She can be reached at singletarym@washpost.com. 

How to Find Motivated Home Sellers When Flipping Houses

If you're going to ask a real estate investor what's the biggest challenge he has encountered while starting out in the business, you'll probably get this answer: finding leads to motivated sellers. Indeed, many investors are having a hard time finding homeowners who are willing to sell their properties at discounted prices.  But if you're going to let this particular challenge discourage you, you won't be able to reach your full potential as real estate investor.

For those who are having similar problems, here are some hints and tips that will help you find motivated home sellers when flipping houses:

• Look for FSBO (For Sale By Owner) signs. If you have lots of time to spare, you should drive around neighborhoods and look for FSBO signs. These signs are like an open invitation from motivated home sellers for you to buy their homes. Therefore, you shouldn't be afraid to talk to homeowners who have such signs on their lawn because these people are in dire need to sell their properties.
• Check out online classified ads. Online classified ads, such as Craigslist and Kijiji, are great sources of leads to lucrative real estate deals. As you may know, many people who want to get rid of their properties, including houses, post ads on these sites to find potential buyers. By taking a look at these sites, it would be easier for you to find homesellers who can provide you with profitable investment properties.
• Search for vacant houses. This is probably one of the lead generation strategies used by those who make money by flipping houses. To locate the owner of abandoned homes, write down the address of the vacant property that you want to invest in. Then, look up the names of the owner by checking out the office of public records. Once you've got the pertinent information, you should contact the homeowner and express your intent to buy the property.
• Send mail and tell people what you do. Although some people think that sending snail mail is a little bit old fashioned, many real estate investors agree that it is one of the most effective ways to find leads to motivated home sellers. So don't be afraid to mail those letters, especially the yellow ones, because it can help you secure a profitable investment property.

For more tips on flipping houses and making real estate investments, log on to www.RehabList.com.

Black homeowners being hit hard by foreclosure crisis - Fort Worth Business Press

BY ALESHIA HOWE

August 09, 2010

As the nation’s foreclosure crisis has ripped through communities in every state, the National Association of Real Estate Brokers held a special “call to action” at its annual conference held in Fort Worth last week, saying the African American homeowner communities have been hit harder than other home owner segments.
The National Association of Real Estate Brokers held its 63rd annual convention in Fort Worth July 29 to Aug. 5.
According Vincent Wimbish, president of NAREB, the call to action will focus on ensuring transparency in all financial transactions, continued and expanded support for loss mitigation and pre-home purchase counseling services, restoration of sustainable homeownership as a viable wealth building option, and public policy “that prevents another economic tsunami from sweeping away the remaining hopes and dreams of the nation’s multicultural homeowners.”
And according to group leaders, the subprime mortgage meltdown and resulting recession is far from finished, particularly in the African American community.  According to the Center For Responsible Lending, 11 percent of African Americans already have lost their homes, or are in imminent danger of losing their homes, and it is projected that between 2009 and 2012, $193 billion in wealth will be lost in the African American community.
The Center for Responsible Lending’s June 18 report titled “Foreclosures by race and ethnicity,” estimates 10 to 13 million foreclosures will occur in the United States before the crisis abates. Today, the report states that 52 percent of the nation’s at-risk borrowers are non-Hispanic whites, but only 15 percent of that group is at imminent risk of losing their homes. Comparatively, black and Hispanic home owners at imminent risk of losing their homes tops 21.6 percent and 21.4 percent, respectively.
Wimbish used strong words in describing the consequences of his organization members not pulling together to support change in the current residential real estate market.
“The color is green,” he said. “We got bamboozled by Wall Street because 56 percent of foreclosures are not in our community, but our community feels the same affect because the only loans being done in the communities of color – black and Hispanic communities – primarily were subprime loans, so we’re asking partners to join us because the color is green. And if we don’t come together and address this issue directly, were going to all be back on a plantation.”
The NAREB organization is a minority broker organization with 88 chapters throughout the nation, including one in Fort Worth.
The organization has introduced a number of alternative plans including a 10-year tax credit program or mortgage products based on a client’s ability to pay rather than on that client’s credit score, which is traditionally is how banks determine a client’s risk factor and ability to re-pay a loan.
“We are advocating that they create mortgage products that are not based on or determined by credit scores only. We want mortgage products based on loan to value, industry standard loan to value, a modest down payment,” Wimbish said. “The down payment HUD has currently is 3.5 percent and 3 percent seller concessions, but we know in our community we are advocating they target foreclosed properties and up to 6 percent seller concessions.”
Wimbish said Wall Street credit scores operate by predictable financial behavior – something that can sometimes disqualify some good potential borrowers.
“In lieu of credit score, we are advocating that they create a mortgage product that you can alleviate predictable financial behavior by having a consumer agree to automatic payment,” Wimbish said. “That way you don’t’ have to worry about getting your money because you know when they get paid, you collect that mortgage payment, if that’s a weekly, bi-weekly, or bi-monthly payment.”
Terri Attaway, president and CEO of the Fort Worth NAREB chapter, said the Center for Responsible Lending numbers aren’t shocking as they reflect what’s happening in the market today.
“It definitely is tougher out there,” she said. “You have to drill deeper now more than ever to educate people. But it’s still a great time to buy and if you can educate, then it’s good for everyone.
One such local program is offered by the city of Fort Worth and includes grants of up to $25,000 if one buys a home within a specified seven ZIP codes, which are the areas of the city most affected by foreclosures. Attaway said that program has many “hoops for home owners to jump through but the end result is worth it.”
“They have to do things like take a class, but our chapter offers a class that would qualify for that,” she said. “And any property where you stand to get that kind of help is worth it.
Attaway said another issue coming down the pipe will be an increase in FHA standards. Attaway said she recently heard talk that FHA, which now does not lend to anyone with lower than a 580 score, will open up loans to individuals with 500 to 580 credit scores – if they put 10 percent down.
“FHA already raised the down payment from 3 to 3.5 percent and there are a lot more changes coming and people have got to stay informed,” she said.
Maurice Jourdain-Earl, founder and managing director of Compliance Tech, also presented at the conference his soon-to-be-released report titled “By the numbers, disparities in credit availability for African Americans and Latinos 2004-2008.” The report, which will be available in the coming months, is based on data derived from the Home Mortgage Disclosure Act and, according to Jourdain-Earl, shows that African Americans and Latinos are disproportionately affected by the lack of credit.
“These perceptions are continuing to drive these disparities that will have a disproportionate impact on communities of color,” he said at the conference.
Jourdain-Earl touched on strategic defaults by home owners, or home owners who have decided it makes more sense for them to turn over their keys to the bank and walk away from the home because the home is worth less than what they paid for it originally.
“Those strategic defaults are increasing and believe it or not, many of those strategic defaults are not happening with low or moderate income or minority consumers, but mostly with middle and upper income folks who have made the calculus just like with any other investment that it is easier to walk away,” he said.

99 Real Estate Leads and No Real Estate Deals?

Some say there is an industry standard that says:

“For every 20 real estate leads you call, you’ll get at least 19 No’s and 1 Yes.” Well, imagine contacting 99 home owners who had a home to sell and having nearly all of them say “No” to your business.

In this blog post I’m going to tell you why and how this happened to me so you’ll know what not to do when talking with real estate leads.

A few years back I came to a point in my life where I wanted a real estate deal really bad! I wanted a deal so bad that I pulled out some old newspapers (a few days old) that I had been saving and circled all the real estate leads I wanted to call. My goal was to call 100 home owners and at least get my first deal.  Statistically I guess I should have a goal of getting at least 5 deals, but I would have been satisfied with 1 real estate deal.

So I picked up the phone and started dialing…

Ring Ring Ring!

First call goes straight to voice mail. I leave a message.

Ring Ring Ring!

Second call goes straight to voicemail. I leave a message.

Ring Ring Ring!

Third call goes straight to voice mail. I leave a message.

Ring Ring Ring!

Fourth call goes straight to voice mail. I leave a message. (I’m getting a little annoyed now)

Ring Ring Ring!

Seller Says: “Hello?”

I introduce myself and begin running through my script of what to say…*Click* in mid sentence.

First rejection…It’s cool. I have 95 more real estate leads to call, so it’s not a big deal.

As I began dialing number after number, it was like a pattern of voice mails and rejections. There were some soft promises of, “I’ll think about it and get back to you”, yet not a single firm Yes!

I burned through 99 real estate leads and didn’t get a single deal.  It all happened in one day and by the end of the day I was completely exhausted and didn’t even bother calling the last lead!

I seriously doubt it would have been a deal. Now that I think about it…I know it wouldn’t have been a deal given my state of mind after being completely drained.

What happened that day? Why wasn’t I able to nab a deal?

After analyzing all the conversations and analyzing myself.

Here some of the main problems I noticed:

Reading From a Script & Not Being in Control

Reading from a script is ok, but you don’t wan to sound rehearsed. If you’re going to do it then you at least have to make it sound natural to the person on the other end. Reading from a script can help guide the conversation and get the answers you need to make a decision. However, it’s important to position yourself accordingly when you’re on the phone. How do you sound to the other person on the end? Do you sound like a buyer/investor or do you sound like a salesman?

Many people get frustrated when they get phone calls out of the blue and you have to be able to build that rapport (relationship) from the beginning in order to set the tone for the rest of the call. If you’re on the defense in the conversation, then you’re climbing an uphill battle because you’re answering the majority of the seller’s questions instead of the other way around. Rapport building points are not something you’re likely to find in a script.

These were the problems I had. I didn’t build rapport. I sounded rehearsed and didn’t maintain control of the conversation. I didn’t position myself as a solution.

Not Listening during the conversations

The problem with using a script is that it could prevent you from listening to the seller unless they answer the question you happen to be on. My advice has always been to use a script as a guide or memory jogger because there will be questions that you need to ask and they might not be on your sheet.

A perfect example of not listening was when a motivated seller was telling me about their home repairs and then moved on to telling me about the neighborhood. After she finished discussing the neighborhood, I said, “So does the home need any repairs?” She called me out right on the spot and said, “Weren’t you listening?” I was kind of listening, but that just happened to be the next question on my script. You absolutely must listen when talking to people on the phone or you’ll likely lose out on the deal like I did.

The presence of negative energy

As I dialed number after number I didn’t take any breaks. Maybe to run to the bathroom or grab a quick glass of water. Other than that, I was diving striaght through this list like no tomorrow. As I kept getting voice mails and kept getting rejected, I would get more and more frustrated. If you get frustrated during a process like this, you’re frustration (negative energy) can easily carry over to the next call and it can be heard by the person on the other end. This can be a big turn off and the conversation will get cut fairly quickly. My advice is to take breaks and stay positive. Motivate yourself or talk to someone who can make you feel better. Then continue on with taking action.

Have you ever talked to someone on the phone and you can just hear a negative attitude in their tone? It’s like someone pissed in their cereal. Sometimes I’d get negative energy from some leads as well. Some either assumed I would low ball them because of being an investor or some just didn’t feel like talking. They had the old “Are you going to buy at full price or what?” mentality. Those are the type of real estate leads, I simply don’t deal with. My time is too valuable and if we’re going to do business, then we need to be on the same page.

Contacting unmotivated real estate leads

Let’s face it! A big handful of the leads I was contacting were unmotivated. As I analyzed all the things I was doing wrong, I also noticed that I was talking to people who wanted to sell, but didn’t need to sell. Motivated leads need to sell their home because there is some sort of problem that they desperately need to get rid of. Foreclosures are huge problems right now and many people out there need a solution.

If you talk with people who say they have time to wait and aren’t looking for a quick sale, then they are most likely unmotivated. It’s one thing for a person not to accept a low offer. It’s another thing for them to tell you that they’re not in a hurry before they even hear your offer. I’m not one to make insultingly low offers, however I do need to position myself to make some money. This is a business and if they have a problem with you making money more than you helping them sell their home fast, then they’re not that motivated. Unmotivated sellers can waste your time, so it’s best to end the call quickly and move on.

Understanding that No means No!

As I write this blog post, I had to stop for a few seconds to answer the phone. It just happened to be a telemarketer. How ironic is that? She wanted to give me an estimate on my windows. I told her I’m not interested. She said, “Well have you changed your windows?” I said, “Yes, but I’m not interested in any additional remodeling right now.” She said, “Well we also do estimates on sliding doors and our estimates are good for 1 full year.” I’m not INTERESTED! (My tone raised a bit). She said, “Ok thank you for your time!”

This made me think back to how many times I was told “No” on that dreadful day and how I kept trying to sell my real estate services to the person on the other end. There was one call in particular where a person kept saying that they weren’t interested and I kept trying to push and convince them. If it’s one thing I’ve learned and have been taught over and over again, you never want to try and convince someone to do business with you. It’s either they get it or they don’t. Your time is better spent with people who get it because the majority of your deals will come from people who will do whatever it takes to get rid of their problem. Position yourself as a solution and 9 times out of 10, you’ll get the deal.

Cold Calling versus Direct Response Marketing

The last point I want to make is that cold calling a real estate lead verus having the lead contact you can play a role in getting the deal as well. I’ve always believed that if a lead contacts you, then they are much stronger. Why? Because they saw you as a potential solution and they picked up the phone and dialed your number. They may have even taken the time to visit your website and fill out all the required information you asked them to fill out. If they’re not motivated, then they most likely won’t even do that.

This is exactly why I now concentrate on attracting motivated sellers and buyers. I have no doubt in my mind that cold calling works. In fact, I still do it every now and then. However, when you can pick up the phone and say, “How can I help you?”, you instantly gain control of the conversation because you’re asking the question and you’re letting them know right off the bat that you can be a potential solution.  It would be kind of strange to call someone out of the blue and say “How can I help you?”.

If you’re able to elicit a direct response from a real estate lead, then you’ve achieved the goal of direct response marketing. All you have to do next  is close the deal…if it’s really a deal!

I’m sure there are tons of reasons why I didn’t get a deal that day. However, in this post I wanted to point out the major ones that I knew contributed to that day.

Can you think of more? Have you ever called a bunch of real estate leads in a single day? What was your experience?

Share below by leaving a comment.

To Your Success,

J. Lamar Ferren
New Breed Investor

Tax foreclosures - Higher Profits with Pre Foreclosure Listings

You may bid as often as you dare. Low-ball offers are easy, but seldom produce the highest profit over a year. You would miss too many great deals chasing a few once in a lifetime dreams.

Hector Milla Editor of the "Best Free Foreclosure Listings" website -- http://www.BestFreeForeclosureListings.com -- pointed out;

“…The easiest way to maximize profits buying homes at foreclosure auctions is to use top quality foreclosure listings. The best lists provide sufficient information to form a reasonable opinion about each prospect. They allow you to evaluate thousands of home using basic data, sort by extended supplement information, and even provide proprietary valuations and index ratings. When searching through a list of over a million properties, all help is welcome…”

If profits are your goal rather than a one-time purchase, you cannot afford to rely on simple lists. Look for a list that includes photographs, comparable sales, and all taxes owed. Some lists include court data, including bankruptcy stays, injunctions, disputed titles and many more litigation traps. You will save days spent chasing records, making unproductive calls, and perhaps worst of all, driving to a location only to find a home in battered condition.

Targeting pre-foreclosure auctions eliminates the greatest delay in all real estate deals. You do not need a willing seller. Once the auction is set, it will occur. Occasionally, you may be the only bidder. More often, a few bidders actually compete toward the end. If you are better prepared and properly investigate each property, you can precisely bid up to, but not over your minimum profit requirement. You are not required to be perfect, but you must know when to raise your bid, and when to stop bidding.

“…The best companies provide a full ra

nge of data, features and functionality for about $30 to $50 a month. You could pay more, but be sure to evaluate all extended features and products carefully to insure you are not overpaying. Be sure to take advantage of free trial offers. You will have an opportunity to compare multiple services, free of charge, before selecting your favorite…” added H. Milla.

Further information and resources to get free home foreclosure listings by visiting http://www.BestFreeForeclosureListings.com

Hector Milla runs his corporate website at http://www.OpsRegs.com where you can see all his articles and press releases.

Investing � Five Factors to Consider Before Investing in Residential Real Estate

During the past decade, many people have jumped into residential real estate investing. This was never so true as during the recent real estate boom. People read all the “get rich quick” schemes that litter the book shelves of libraries and book stores — use other people’s money, use no money of your own, and make millions! A lot of people did make great sums of money during the most recent boom; but now those, who did not get out before the market cooled, are seeing those investments in foreclosure due to their inability to make the mortgage payments.

Just because the real estate market isn’t over the top, as in the past few years, does not mean you no longer can make money in residential real estate. The difference between now (post-boom) and during the market boom is that the “get rich quick” schemes will not work.

Do You Have What It Takes?

Investing in real estate is not for the faint hearted, the non-risk takers. It is for investors who are in it for the long haul, who can easily sit on their investment (if need be) until the market shifts in their favor. It also is for those who truly enjoy this type of investment. They are the ones who are the most successful in real estate investing.

You must be willing to invest time — upfront and before each potential investment. If you do not take the time to research the properties and your target market, you probably will not be very successful. You also must gather knowledge on how to make a real estate deal that works in your favor. That requires educating yourself to understand the jargon and game rules. Today, it takes a careful, methodical approach to residential real estate investing, especially when acquiring your first property.

Besides needing time and money, being a risk taker, and being willing to commit to a long-term investment, if needed, there are five additional factors you must consider each time before you make an investment in residential real estate.

Supply and Demand — Where Is the Current Market?

The economics of supply and demand is what makes the long-term investors successful in residential real estate. They are willing to weather the ups and downs of the real estate market, waiting for an advantageous market to sell their property.

Supply and demand is influenced by many economic factors, which in turn affects the residential real estate market. Well-located residential real estate will endure fluctuations in the market and continue to appreciate in value. Knowing your market means knowing when to buy or not to buy, which deals will work when, and when to sit on an investment or sell it.

Your Creativity

Another factor to consider is your own creativity in managing your investments. Residential real estate is one type of investment that allows for a lot of creativity:

• You may invest for the long term, renting the property to continue making a profit while waiting to sell at a more advantageous time. You can purchase a home to fix up and resell immediately for a profit.

• There are many financing options available for residential real estate, allowing for even more creativity. You also can invest on your own, with a group of partners, with a corporation, or even with a Real Estate Investment Trust (REIT — a mutual fund with real property assets or mortgage securities).

• There is an abundant variety of residential real estate types in which to invest — single-family homes, townhouses, condominiums, and duplexes.

The more creative you are in creating and managing your real estate investments, the more profitable and successful you will be.

Other People’s Money

A third factor is knowing how you can use other people’s money to your advantage without landing in foreclosure, as so many people now are who subscribed to the “get rich quick” schemes during the boom.

You can begin with only a few thousand dollars, using other people’s money to underwrite the remaining mortgage. You must know all the different ways available to finance your investment. This goes back to taking the time to educate yourself, before you begin investing, and creatively making the best use of financing.

Other People’s Time

Whether you are fixing up real estate to sell or renting it, it will take time, effort and management. If you already have a full-time job and a family, you probably cannot do it all yourself, and I doubt you wish to be woke up at 2 a.m. by a renter with a plugged toilet.

Using contractors to fix up the property or experienced property managers to handle your rental real estate makes for less profit in your pocket on your individual investment properties. However, it frees up your time to invest in more properties, making your overall profits much higher.

Your Tax Advantage

Residential real estate investing is quite unique. It offers you tax write-offs not available in other types of investments. There are many deductions available to you — deducting the mortgage interest or refinancing without being taxed are just two examples. There are many benefits to real estate investing that reduce your tax liability and increase your profits.

If you believe residential real estate investing is for you, begin by learning more about it. There are thousands of books and resources on the topic. Stay away from anything that sounds too good to be true. It probably is, especially in today’s real estate market.

Advantages of Private Money Over Bank Loans | Understanding Real Estate

Since the credit bubble first burst, traditional sources of investment property loans have all but dried up, forcing real estate investors to find alternative sources of capital. Seasoned investors have been using private money for years, so it’s not an uncommon method of real estate financing, but when money was easy to come by at conventional banks, most investors took the familiar route. But now many people are realizing that finding the real estate deals is the easier part of the business these days, but getting a loan to buy the property is the hard part! So what do you do?

A great many real estate investors are turning to private lenders to fund their purchases. Private lenders can be anyone. They could be friends you already know, either very well or just casually. They could be relatives. Or they could be business owners, doctors, attorneys, and other professionals you do business with everyday. Private lenders in general don’t promote, and may not even realize they have the potential to make great money until they meet an investor— like you— who educates them. Since no one is getting a very good rate of return on their money these days, whether it be in a CD, mutual fund, IRA, or in the stock market, many everyday individuals you never thought of before as lenders could have money to lend to you for your real estate deals. It’s a win-win situation: they make a much higher interest rate than they could make elsewhere, and you set the terms you know you can afford.

Imagine how many great deals you could do if you had access to lots of quick cash—other people’s—not out of your own pocket. Imagine never again letting deals pass you by due to the rules and limitations of banks! And also image going to closing and only signing two or three documents instead of two inches worth!  Private real estate money deals are incredible simple and the total paperwork is normally less than 10 pages. In addition, investment property loans from private real estate money sources usually have no points and little upfront or back-end fees. You won’t find that at a conventional bank!

Establish your credibility with those who have “deep pockets” and you’ll have access to all the money you need for any estate deal. If private lending is new to you, first educate yourself about this type of real estate financing. Knowing the advantages can mean the difference between making a good deal work, or losing yet another to your competitors.