Creating A Winning Real Estate Exit Strategy
When we talk about creating an exit strategy we could actually be talking about a few different things. One could be a rat race exit strategy that we could touch on in another article. Basically that would be creating enough passive income from real estate or businesses to cover all of your expenses and then some. We are going to be discussing a different exit strategy the kind of exit strategy that you need to have in place before you ever make an offer or purchase a piece of income/investment property.
Buying a piece of real estate is easy. You look around for a “For Sale” sign and write up a contract and present it to the seller. Making money in real estate is something completely different. I don’t remember who said this or else I would give them credit for it but they said something to the effect that you make your money when you buy the property not when you sell it.
If you think about it…you make your money when you buy not when you sell. If you don’t purchase the property correctly you will never make money on the back end regardless if you are planning on keeping the property for a rental or if you are planning on turning around and wholesaling the property.
You need to figure out real quick when you are looking at a piece of property what it is good for. How much money needs to go into it for repairs, holding cost, maintenance, and/or closing costs. What would be the best use for the property; rental or sale? Some of you may be wondering how do I know, or how can I find out what would be the best use for the property? This is what separates the hobbyists from the professionals. This all comes down to property analysis which is an entire subject on its own.
Once you have done your property analysis and have determined what are all of the hard numbers associated with the property (again repairs, holding costs, closing costs, etc.) then you can determine what the best use of the property would be. Many times it is based on the market conditions and you need to keep in mind if it is a buyers or a seller’s market. If it is a buyer’s market you may want to consider holding onto that property until the market values increase to where you can make a substantial profit. Here is where you might want to consider doing a lease option. If it is a seller’s market then you can sell the property quickly and potentially make a nice profit right off of the bat.
You need to consider your long term strategy regardless of what the market is doing. If your long term strategy is to create cash flow then you will want to fix and hold onto the property. Your exit strategy would need to be purchase the property do the repairs and then refinance the property into long term financing. You should have the financing in place before you ever purchase that property and you need to know what the property will appraise for after repairs are completed so that you have all of the information in place to refinance the property quickly.
By having your exit strategy in place before you ever purchase the property then the easier and quicker your money turn over will be and the better returns you will make. You can even go as far as to have renter lined up to enter your property before you close on it so that you know once repairs are made you will immediately be making money. Just remember that your exit strategy is a critical step in becoming a true real estate professional.
So let’s recap the key points:
1. Decided what you long term goals are 1. Long term month cash flow 2. Great income off sale of each property 3. Combo of both
2. Understand what your local market place is doing (buyers or sellers market)
3. Analyze the property
4. Get renters ready to move right in or put it up for sale as quickly as possible.
By: Seth Joiner
This is a Real Estate Recovery?
The Great Recession is over! Well, at least that is what we keep hearing. In truth, the technical indicators show the recession is at an end, but the anemic recovery is going to make it hard to see any positive bright lights. One need look no further than the current real estate market.
The real estate bubble is considered by most the trigger that started the domino effect that got us into this mess. There were certainly many other issues, but housing was the focal point. The official end of the recession would seem to suggest the real estate market has bottomed out and is now in recovery. Is this really the case? The answer seems to be no.
The news from the real estate market shows there is no big recovery. Just consider the news this week from Las Vegas. MGM Casinos was developing a $8.5 billion high end condo development prior to the downturn. The company has just announced that the prices of those condos are being slashed by a whopping 30 percent because of a lack of demand. In fact, the word out of Vegas is no new casino projects will break ground for at least the next 10 years. You know it is bad when they stop building casinos in Las Vegas!
What about the rest of the nation? Well, the latest figures show that apartment vacancies are at record highs. The current figure is up to a massive 7.8 percent vacancy rate. This would seem to suggest that renters are buying homes, right? Unfortunately, no. The truth is this figure represents unemployment problems and family members moving in with each other to make their dollar go farther.
Make no mistake, there are parts of the country in which the real estate market has solidified. That being said, it is an entirely different thing to say the market has recovered and all is good. It simply is not and will not be for some time.
By: Raynor James
Do I Need A Real Estate Survey?
Getting a survey before you close on any real estate is very important.
Some people actually buy real estate without having a survey done. It is not a requirement from the financial institute,
so does that mean you don’t need one?
By getting a survey you will not only get a blueprint of your property you will get your property lines marked out for you.
Most importantly, you will find out if there are any infringements on your property like a neighbors fence, a neighbors tree, a neighbors driveway, etc.
A survey can tell you many things.
It will disclose any easements you might have on your property.
Easements can be a fire lane or an access road for the local Power Company. These easements cannot be blocked, built on in anyway to prevent the lanes from being accessed. You could have a city or county easement on your road front property anywhere from two to ten feet into your yard you might not know of. This gives the city or county use of this property for power lines, phone line and even city water drainage. Although you might have to mow this lawn the city has the rights to its use.
A survey will show you if your property has a right of way
for the property behind your property. A right of way is incorporated onto your property and must be available to the property owner behind you to get to and from their property.
If the survey conveys a property infringement you can delay the
purchase until the infringement is moved or back out of the deal
if necessary. Easements will not be removed.
A survey can and will give you peace of mind and knowledge about
your property preventing any unexpected surprises later.
Knowledge saves you money and anxiety.
You decide if you should buy real estate without one!
By: Shirley Turetsky
Real Estate – Where To Incorporate?
A lot of people remain curious for where they should incorporate.
There exist so many jurisdiction promoters. From the point of view of the favorable corporate law, Nevada and Delaware limit the liability of the directors.
In several cases, the law applied in lawsuit depends on the working of the corporation.
Nevada and Delaware offer maximum protection from the liability of director.
Shareholder privacy is most secured in Nevada as there is no state corporation income tax returned filed.
In almost all the cases, the benefit that we have described above can not be applied to your decision to incorporate.
This is because you are doing most of your business in your home state only.
A corporation that is doing business in its own state only has to register here as a ‘foreign corporation’ with the secretary of the state.
This is a process that involves some terms and conditions as well. You will have to pay an annual processing fees in both the states of incorporation and home state.
If you see some other states, such as Texas, you will find that filing fee is quite higher for a foreign entity than that for a domestic corporation.
Moreover, whatever you earn in your home state is taxable and your organisation has to file a return at the end of year.
The income earned in a foreign state is taxable too. You cannot expect yourself to avoid tax in a state with Nevada corporation.
You will have to show the identity of your shareholders if you file a return there.
By: Sumit Bhatnagar
Brazil: The Latest Exciting Emerging Real Estate Market
Since 2003 the Brazilian Government have committed to making major fiscal, political and fundamental changes to the country to improve the entire environment for foreign direct investment, as a result GDP growth rate is up, inflation is down and real estate prices are beginning to soar as overseas interest in the stunningly beautiful and amazingly diverse country of Brazil is intensifying.
Because Brazil is such a large country covering such a huge landmass it traverses many different geographic, environmental and climatic changes and offers a lifestyle alternative to suit everyone. The appeal of the country is immediately obvious to anyone who travels to Brazil on holiday and because the path has been smoothed for foreign freehold ownership of real estate in Brazil, more and more people who visit the country are choosing to buy a holiday home or investment property in the country.
The most popular area with holiday makers, second homers and now retirees is the north east of Brazil where the weather is at its best and where the coastal regions are home to stunning palm fringed beaches and growing communities of expatriates who are enjoying the laid back, low cost lifestyle they can achieve in Brazil.
It is in this part of the country that real estate prices are really starting to go up. The demand for real estate to buy and let is growing rapidly and the purchasing power of those overseas investors entering the market place is strong enough to support property price increases.
Anyone considering the world’s emerging real estate markets for maximum opportunity will find what they’re looking for in Brazil. The country has an active commercial property market, an active tourism market and local and overseas demand for housing is strong, therefore sufficient demand for real estate in Brazil exists creating the perfect environment for profit and gains.
A final additional tick in the suitability box for Brazil as a destination for investment is the fact that the real estate buying process for foreign purchasers is straightforward, and additional taxes and fees associated with purchasing and owning property or land in Brazil are very low.
By: Rhiannon Williamson
Real Estate Transfer Taxes Overlooked Sale or Purchase Expense
A real estate transfer tax is a one-time tax paid at the closing of a property, and is considered a stream of revenue for state budgets. This transfer tax though, once collected is not generally used for housing-related purposes. The tax is based on the value of a property as agreed to by the parties in a real estate contract.
In the excitement of selling or buying a home, often the real estate transfer tax cost is overlooked. Depending on locale, either the buyer or seller pays the tax at closing or escrow, but beware in New Hampshire both the buyer and seller pay, half of 1.5%!. In some states it can be a formidable amount, you should be prepared for what the transfer taxes will be, and who pays them, before you start a home search or list your home for-sale.
The good news is, thirteen states don’t have a real estate property tax. They are: Alaska, Idaho, Indiana, Louisiana, Mississippi, Missouri, Montana, New Mexico, North Dakota, Oregon, Texas, Utah, and Wyoming.
The bad news is that the remaining thirty-seven states and The District of Columbia charge taxes on the transfer of a property. The tax is only levied once when a property is exchanged between parties, unlike general property taxes which are paid annually and are based on the assessed value. Real estate transfer taxes range from a low of .01% in Colorado to a high of 1.28% in Washington state.
Variations on transfer taxes include; in Arizona only charges a tax on deeds. However Alabama and Florida charge on deeds and mortgages. To avoid financial surprises, inquire early as to who pays (buyer or seller) and how much transfer taxes will be. Some states dictate who pays the tax, and some just want the tax paid. This cost can typically be negotiated between the parties. Consult an experienced real estate attorney.
A handy online link for transfer taxes for all fifty states.
[http://www.parealtor.org/content/AssetMgmt/Issues] Resource Center/Realty Transfer Tax/Transfer tax chart.pdf
By: Mark Nash
Connecticut Real Estate Courses
Not everybody is interested in real estate. And not everybody knows anything about this subject, much less about the specifics of Connecticut real estate. This is one of the main reasons why experts on Connecticut real estate have come up with Connecticut real estate courses so as to provide knowledge and information to those who want to learn about this subject.
What are Connecticut real estate courses?
There are various laws and ordinances that govern each state of the US. Also, there are laws and ordinances that are unique to one or two states only. That is why it is important to understand the specifics of Connecticut real estate if you are interested in this field.
Connecticut real estate courses assist people in learning the specifics of Connecticut real estate. These are actually classes where there are lectures and lessons regarding anything and everything that one should know about Connecticut real estate. These courses are mostly handled and taught by Connecticut real estate agents or by people who are already experts in this field.
What do these courses offer?
People who teach these courses offer different kinds of information. The classes are also handled differently by each one. However, the most common and the basic things taught in Connecticut real estate courses include the laws that govern Connecticut real estate, the duties and responsibilities of a Connecticut real estate agent, and the types of real estate found in Connecticut. There also are some courses that teach people how to enhance, improve, and hone their real estate skills of selling and buying.
Who can take Connecticut real estate courses?
Anyone who is interested in real estate can take these courses. Most of the time, people who are interested in becoming Connecticut real estate agents or who would like to own real estate businesses in the state are the ones who enroll in these courses.
By: Kristy Annely
Understanding Your Local Real Estate Market
Many people mistakenly rely on national trends when evaluating the real estate market. The key is to focus on and understand your local market.
The housing market is booming! The housing market is in a downturn. The housing market is expected to do go up or down over the next year. These are all statements you will hear from time to time from alleged real estate gurus on television or radio shows. Should you pay attention to these predictions? No. First, pundits are famous for getting it wrong. More importantly, these individuals are talking about national trends, not your local market. The two markets are distinctly different.
Focusing on your local real estate market is the key to evaluating real estate deals. That being said, it can be a bit tougher to evaluate since there is often less information on particular areas versus the national situation. To understand your real estate market, here are a few things to focus on.
Job growth is the fuel of many real estate markets. Where there is strong growth, there are new workers. New workers need someplace to live. A vast percentage of these people will be moving in from another area and often are bringing money from a previous home. If job growth is strong, your real estate market should be stable and showing appreciation.
New construction is another area to consider when evaluating your market. In this case, we are focusing on supply and demand. The more homes available to buyers, the harder it will be for sellers to move properties. Most communities have some new construction, but the key is to determine if it is outpacing the demand. Las Vegas, for instance, is a city that is realizing serious population increases each year. That being said, the real estate market in the summer of 2006 is very tepid because the construction of new homes has saturated the market. When evaluating your local real estate market, try to get a feel for such an issue.
A secret to evaluating your local real estate market is to look at people around you. One sign of a hot real estate market is the number of people who suddenly become real estate investors. These tend to be people using the equity in their primary home to make secondary purchases. There is no statistical analysis for this factor. Just keep an ear out for friends or neighbors who are suddenly investing in multiple properties.
Trends in the national real estate market are interesting, but often irrelevant when evaluating your local market. Focus on your area and you should be able to better evaluate whether you should sell, hold or buy properties.
By: Raynor James
Real Estate in Pakistan
Investors who want to examine the real estate in Pakistan should first learn something about the nature of development in Pakistan. At the present time, Pakistan has experienced growth in what is called “urban sprawl.” Pakistan could benefit from the creation of urban centers, but those who hope to build such centers face roadblocks, roadblocks in the form of government regulations.
Keeping those possible roadblocks in mind, investors who still plan to put money into real estate in Pakistan must gain a familiarity with the categorization of that real estate.
Some of the real estate in Pakistan falls in the category called “commercial.” The purchase of an office building represents an investment in commercial real estate. The purchase of a shop in Pakistan is also an investment in commercial real estate.
Of course not all of the real estate in Pakistan is commercial real estate. One can, for example, find plots of open land for sale within Pakistan. Some of those plots are meant to hold residential buildings. Some of those plots are expected to hold commercial buildings. A third group of the open plots have been set aside for industrial use.
Some open plots are on land that shows no signs of planned development. Other plots might well be on land that already contains one or more roads. Obviously, a plot of land located on a corner would be an excellent investment. The person who chose to purchase such a plot would need to consider how to make the most money from that plot
Before buying such a plot, an investor might want to consider the traffic patterns in the area. The investor might want to speak with local authorities about possible changes in the existing traffic patterns. Sometimes such changes are needed, if an investor hopes to lure shoppers into a planned commercial building, such a large shopping center.
The owner of a plot can not always put a commercial or industrial building on that plot. The owner of a plot might want to build a town house on that plot. The owner of a corner plot might decide to build an apartment on that plot. Either type of residence could provide the plot owner with a dependable income.
If one decides to buy land in Pakistan, and if that plot of land is not in a big urban center, then the land owner might want to offer accommodations to travelers. A plot of land on an island would be a good place to build a vacation bungalow. A plot of land near a scenic spot would seem like the ideal spot for a hotel.
A hotel has the ability to bring conventions and added money to any region that has agreed to the building of that hotel. An investor who intends to put up a hotel should make an effort to emphasize the degree to which a hotel can benefit a local economy. An improved economy in Pakistan would no doubt arise from the building of more hotels in that country.
By: Hayi Mansoor
Real Estate, Real Exciting
In looking back over the ten years while in the employ of a family real estate business, I came to the conclusion that real estate salesmen have a heavy load to carry. You may well ask why I have said this? The reality is, that unlike most other jobs, you are viewed with suspicion, the occupation carries a stigma which is a nasty sore to nurture. To become successful you have to develop a defense mechanism, it took me years to perfect it, but I eventually did.
Working in a small country town added more pressure, one wrong move, when someone feels they have paid too much for a house, can really have a disastrous affect on your reputation and future earning prospects. I well recall a blusterous prospective buyer storming into our office, his wife behind him, and telling all in earshot that “all real estate salesmen are crooks”. Immediate action was required, so I invited him into my office and told him that if what he said was true, he may as well deal with the nicest of the crooks, me!I sold him a house that day, we became good friends, and three years later I resold it for him at a handsome profit.
Real estate is not every ones cup of tea. I was well into my fifties when I gained my license, our kids were off our hands so weekend work was not a real issue. Weekends were often quite productive, but one bracket of customers were my most dreaded group. They appeared on weekends, usually without making an appointment. He was the rich boy, out to impress a much younger, usually some one else wife or girlfriend. He had no intention of buying a up market home, but she was not to know this. Squiring these sorts around and wasting a couple valuable hours, was a common occurrence. You had to get it right, what say your judgement proved wrong, and the chap was genuine?
The purpose of the exercise, from his point of view, was to give her the impression he was going to buy and hopefully share with her a very nice love nest. She thinks this guy is loaded and making a rosy future for much future week-end fun. The reality was normally that he was paving the way for tonight, and tonight only. The only one to miss out was, you guessed it, the poor salesman, who wasted fuel and time, and possibly missed genuine enquiries while looking after Prince Charming.
The upside of the job was meeting dozens of first class people to whom it was a pleasure to serve. We have maintained many close friendships from my real estate days, and we value them highly. Earnings were unpredictable, you never knew from one day to the next what lay ahead in the way of sales. You could gain several good listings only to find lenders were more demanding than usual by way of deposit or equity, and lose sales as a result. Maintaining a sense of humour, at all times, was a must, and in this department I was lucky.
Your real success always came through referrals, happy customers being visited by friends, finding out how well their agent treated them, put butter on the table. I thrived in this area, I learned all about first class service from day one as a 16 year old bank employee. I have never forgotten it, it works in every single business, not the least, real estate. Nothing made me more happy than to meet a new resident in the street, and be told their friends simply loved this town, they are putting their house on the market and will shortly call on you to find them a nice house like ours. Not hard to take.
In the year 2000, I was awarded “Citizen Of The Year”, completely unexpected, but something I am proud of. I often wonder how many other real estate salesmen have received a similar honor? At acceptance, I thought of the fellow who declared “all real estate salesmen are crooks.” This one was not, I valued my name and never let a fishy deal get under my guard.
By: Bill Adams
