Mapa Mental Inversion en Bienes Raices

Bienes Raíces

CLASIFICACIÓN

VENTAJAS

LAVERAGE

ENTIDADES

NEGOCIACION

ESTRATEGIA

BUENAS OPORTUNIDADES

RECOMENDACIONES

IMPUESTOS

COMERCIALES

PROCESO DE INVERTIR

CONCEPTOS CLAVE

FIND THE RIGHT HOUSE

INVERSION EN SOCIEDAD

EVALUACION DE RENDIMIENTO

TAMAÑO DE LA CASA

EN QUE PARTE DE LA CASA INVERTIR MAS DINEROENCONTRANDO GANGAS

LOCALIZACION

RENTAS Y VENTAS

USO

VALUACION DE LA PROPIEDADAPPRECIATION

MANAGEMENT

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BECOMING EXPERT IN YOR BACKYARD

HOW TO ATTRACT TENANTS

THE THREE INVESTOR LEVELS

ANNUAL PROPERTY OPERATING DATA

Five Questions Your Real Estate Agent Will Ask That You Should Never Answer

Three Questions to Ask Every Lender or Mortgage Broker You Work With

Las propiedades inmobiliarias pueden subdividirse en:•Unifamiliares, •Oficinas comerciales, such as central business district assets, suburban buildings, office parks, and offices attached to mixed-use projects.

•Locales comerciales, including malls, strip centers, big box retail, high street retail, neighborhood centers, and factory outlet projects.

•Multifamiliares, •Almacenes Industriales, including both individual buildings and those located in industrial parks.

•Terrenos, •Apartment complexes located in the inner city, suburban garden style units, high-rise high end urban projects, tax exempt buildings, and condominiums.

Bienes RaícesCLASIFICACIÓN

The underlying real estate market is divided into the main types of property: retail, office, industrial and residential. (Other categories include hotels and resorts and mixed category properties.) The REIT market provides access to each segment of the market.


Investments in real estate equity divide between ownership of properties directly by an individual investor (the direct or private market), through a commingled fund, or through stock exchange listed vehicles, most commonly REITS, a US innovation dating from the early 1970s.

The principal difference between a REIT and a conventional company, whose business is investing in and managing properties, lies in their tax treatment. Generally, REIT are exempt from profit or corporation tax and, in the United States, have a guideline that at least 90% of their income must be distributed to investors as a taxable dividend. Guidelines vary between countries.



The main differences between listed real estate vehicles, such as REITS, and direct investments in property are that the former are securitised, have daily prices and are typically leveraged to some degree through borrowing. They are ideally suited to giving diversified exposure to real estate for modest levels of investment. Since they have daily prices, appraisal valuations of underlying properties help analysts construct estimates for the net asset value of REITS, but they do not set the terms on which investors transact.


Matching tenants to the property’s locationHere’s how to match your preferred group with the right property type:

Students. They want low-cost premises near their college or university. You may be competing with subsidised halls of residence. Expect a fair amount of cosmetic damage, supply low-cost furniture (preferably from secondhand shops), and factor in long vacations, in which case you may have no tenants.

Employed young people. Look at areas where parking is easy and that have good employment opportunities. This group prefers to be near city centers and not stuck on a distant estate.

Families with young children. Go for properties with gardens near schools. Public transport and access to shops can be important.

Professional high earners. They want upscale properties and will pay for them. Many of these people will come to you through company deals, such as a firm renting your property for a long period and then installing members of its staff who need a roof.

Ventajas de Invertir en Bienes RaícesPuedes invertir en bines raíces con financiamiento.Puedes encontrar inquilinos que paguen la hipoteca por ti.Provee de una retorno estable a la larga debido a que la tierra es limitada y la población del mundo crece.Es un mercado que casi todos tienen cierto conocimiento.Tiene ventajas en cuanto a los impuestos.Cuando las acciones están creciendo las ganancias en los bienes raíces parecen modestas. Cuando las acciones están en picada, los bienes raíces siguen creciendo.Good inflation hedge.Low correlations with other assets, good for portfolio diversification. Real estate investment serves as pension and/or annuity at the time of retirement.Interest payments on your mortgage and property taxes – are fully deductible.

Bienes RaícesVENTAJAS

Ventajas de Invertir en Bienes Raíces Puedes hacer algo para que el bien raíz valga más. There are many

ways to create nearly instant value at a very low cost when it comes to real estate. Examples:1. I have purchased buildings that simply needed to be cleaned up to double my

investment.

2. Split the office into two separate condo units. We installed a new entrance into the main hallway for half of the suite of offices. For one side, I was able to get a price that was equal to what I had paid for the total area, plus enough to cover almost all of the cleaning, painting, and carpentry needed to turn it into two offices.

3. Landscaping is another great way to create both instant and long-improving value. Many older properties suffer from deteriorating landscaping around them or are overgrown with plants. Each situation presents different challenges, but the end result can be an instant improvement with the longer-term growth of a beautiful yard at a relatively low cost. If you are looking for a longer period of growth (say you are going to use the building for five years yourself) then spend less money by purchasing the kinds and sizes of plants that will reach their greater value in five years.

El tiempo esta de tu lado.



Una ventaja de los bienes raíces es que el banco le prestará el dinero para comprar su propiedad. El banco jamás le prestaría para invertirlo en fondos de inversión o acciones.

Propiedades en renta son llamadas propiedades de ingreso, no solo por el % de ingreso que recibes (entre el 6 y 12% anual), sino por que el ingreso va ir subiendo conforme a la inflación.


Puedes obtener ganancias de bienes raíces a partir de ocho diferentes formas:1.Un flujo de ingreso dependiente y en crecimiento.

2.Amortización.

3.Creación de valor (mejoramiento de la propiedad).

4.Ganancias instantáneas (compras a precio de gangas).

5.Beneficios del gobierno (crédito de impuestos, deducciones de impuestos, prestamos ventajosos, etc).

6.Administración estratégica.

7.Incremento de valor (apreciación).

8.Inflación.


What are the attractions of investing in real estate?

The traditional reasons for making investments in real estate equity include portfolio diversification; accessing premium and generally secure income yields; and the potential for attractive total returns that should be protected from inflation.

Bienes RaícesLAVERAGE

The Six Leverage Points: Network Leverage. Who do you know, or who do you know who knows someone, that can help you create a breakthrough in your investing? Do you know someone who can refer you deal after deal? Do you know someone who can connect you with a source of private funding? Leveraging your contacts is one of the critical steps to super-sizing your investing success.

Time Leverage. How can you get more from your time? What activities give you the greatest return for the time and energy you spend on them? How can you leverage other people’s time—either team members you hire or business contacts you tap into?

Information Leverage. The right information can save you from going down the wrong path. The right information can give you a huge edge in your investing. Consistently ask yourself how you can leverage any new piece of information to create a magnified return in your investing business.

Skills Leverage. Certain key investor skills you’ll be learning about can be leveraged to produce amazing results. For example, take the skill of negotiation. Since you’ll be involved in thousands of negotiations over your investing lifetime, one unit of effort invested to improve your negotiating skill will literally produce a thousand fold return.

Money Leverage. One of the best features of real estate is the ease with which you can leverage your own money and other people’s money. Whether it be by financing 90 percent of a new purchase with outside funding, or investing some of your money in a proven marketing campaign to find motivated sellers, intelligently leveraging money will make you a fortune.

Creativity Leverage. This is perhaps the most overlooked form of leverage. Creative ideas are more valuable than just about any other resource you have as an investor, yet far too often new investors and rigid old pros forget this. One of the reasons I think all investors should learn to buy without cash or credit is because it forces these investors to get creative. We tend to grow in direct proportion to the demands we put on ourselves.

Bienes RaícesLAVERAGE

LeverageA través de leverage tu puedes magnificar tu retorno y construir bienestar de una manera más rápida que si pagas el 100% del efectivo de tu propiedad. Pero laverage también magnifica el riesgo.

Leverage significa que usas a relativamente poca cantidad de efectivo para adquirir o controlar una propiedad.

Ejemplo: Supón que quieres comprar una propiedad para rentar con valor de $100,000 USD que produce un ingreso neto de operación de $10,000 usted al año (ingreso en rentas, menos gastos como son seguro, reparaciones, mantenimiento e impuestos de propiedad). Si tu financias esta unidad con $10,000 de enganche y pides prestado $90,000 (un múltiplo prestado a valor del 90%), has hecho laverage muy alto para realizar tu compra.

Bienes Raíces

Importance of Leverage

Leverage is important for investors because the less cash you put down on each property, the more properties you can buy. If the properties go up in value, your rate of return goes up exponentially. However, if the properties go down in value and you have a lot of debt on the property, this can result in negative cash flow.

Since real estate is generally cyclical, negative cash flow is only a short-term problem and can be handled if you have other income or a cash reserve to handle the negative. “Nothing down” investing is very attractive for the high-leverage investor, but should be approached with caution.

If you are a long-term player, leverage will generally work in your favor if the markets in which your invest appreciate in the long run and your income from the properties can pay for most of the monthly debt service.

LAVERAGE

Bienes Raíces

Rules that you must follow with leverage

Go no more than two and a half times your income in overall debt to buy a home. For a down payment, only exceed 20% if you don’t think you can beat the interest rate in investments.

Your total housing payment should not exceed 30% of your net income. Total debt payments should not exceed 40% of your net income.

LAVERAGE

Bienes Raíces

Financiamiento creativo

El término financiamiento creativo se refiere al uso de diversas fuentes de crédito (ejemplo, vendedores, agentes de bienes raíces, contratistas, socios) y técnicas fuera de la norma tales como: mortage assumptions, subject to purchases, contratos de tierra, lease options, segunda o tercera hipoteca, anticipos con efectivo de tarjetas de crédito, master leases, etc.

Varias formas de financiamiento creativas se deben de utilizarse para adquirir algún tipo de propiedades. Pero hay que tener precaución.

LAVERAGE

Bienes Raíces

Antes de utilizar financiamiento creativo

Piensa en las siguientes cuestiones antes de utilizar dicho financiamiento:

•¿Vives a bajo de tus medios?, ¿Ahorras gran cantidad de tus ingresos?

•Precio vs Términos. Muchos gurus de financiamiento creativo enseñan a sus alumnos decir la frase “Tu pones el precio y yo pongo los términos”. De esta manera el vendedor recibe el precio ofrecido y en cambio el comprador pide los terminos los cuales pueden incluir, el financiamiento del vendedor con muy poquito enganche, tasas por debajo del mercado, lease options u otras conceciones del vendedor.

•Perseverancia. Este tipo de financiamiento son rechazadas la mayoría de las veces. Tienes que tener perseverancia para que alguien acepte este tipo de condiciones.

LAVERAGE

Bienes Raíces

Ejemplo 1: Todo los $100,000 usd pagados en efectivo.

ROI (retorno sobre lo invertido) = Ingreso (NOI) / Inversión en efectivo = $10,000 / $100,000 = 10%

Si asumimos que encontramos un financiamiento a un 8 porciento por 30 años, vas a tener que pagar a tu acreedor $7.34 al mes por cada $1,000 que pidas prestado). Usando diferentes porcentajes de leverage, los siguientes ejemplos muestran como se magnifica tu tasa de retorno.

Ejemplo 2: $50,000 de enganche y $50,000 financiado. El pago de la deuda anual es equivalente a $4,404 (50 x $7.34 x 12). El ingreso neto después de pagar tu hipoteca (lo cual es llamado cash throw off) es igual a $5,596 ($10,000 - $4,404)

ROI (retorno sobre lo invertido en efectivo) = Ingreso (CTO) / Inversión en efectivo = $5,596 / $50,000 = 11.1%

LAVERAGE

Bienes Raíces


ROI (retorno sobre lo invertido) = Ingreso (CTO) / Inversión en efectivo = $3,394 / $25,000 = 13.6%


ROI (retorno sobre lo invertido) = Ingreso (CTO) / Inversión en efectivo = $2,073 / $10,000 = 20.7%

Con estos datos en estos ejemplos, el ejemplo leveraged más alto doblega el retorno sobre lo invertido en efectivo al ejemplo donde se compra todo en efectivo. En principio, entre más pidas prestado y el menor efectivo tu inviertas en una propiedad, más grande será el retorno sobre lo invertido en efectivo. Por supuesto que la tasa de retorno que ganaras depende en las rentas actuales, gastos, tasa de interés y el precio de compra de tu propiedad. Vas a tener que trabajar sobre esos números al tiempo que vayas a comprar para ver si puedes ganar (o perder) del leverage.

LAVERAGE

Bienes Raíces

Lecciones de personas que han perdido dinero con laverage:1.- Nunca esperes que el valor de un bien raíz, acción, oro o cualquier otro tipo de inversión crezca a razón de 10, 15 o 20 porciento al año. Cuando necesitas altas tasas de crecimiento de apreciación para hacer que la inversión aparezca atractiva, te estas preparando para grandes pérdidas.

2.- Ten cuidado con inversiones que generen flujos de efectivos negativos. Si la inversión no se va pagar por si sola a través del ingreso que genera, tu no estas invirtiendo, tu estas especulando. Eso es correcto si eso es lo que quieres. Solo reconoce que especular es de alto riesgo.

3.- No te sobre endeudes. Alto laverage (un relación alta entre préstamo a valor) usualmente requiere cantidades grandes de hipotecas relativo a la cantidad del ingreso neto que genera la propiedad. Aunque al principio no sufras de flujos negativos de efectivo, desocupación, gastos más altos de lo esperado, concesiones en la renta para atraer bueno inquilinos puede a veces llevarte temporalmente en situaciones riesgosas.

4.- Aún que el financiamiento parece muy atractivo evita pagar de más por una propiedad. Muchos inversionistas compran propiedades muy caras con poco o nada de enganche.

LAVERAGE

Bienes Raíces

Para que manejes exitosamente el riesgo de un Para que manejes exitosamente el riesgo de un nivel alto de laverage sigue las siguientes nivel alto de laverage sigue las siguientes recomendaciones:recomendaciones:

1.- Compra propiedades a precio de ganga.

2.- Compra propiedades que puedes mejorar para aumentar su valor. La mejor manera para construir bienestar rápido y reducir el riesgo de laverage es agregar valor a la propiedad a través de creatividad, remodelación y renovación.

3.- Compra propiedades con ingresos de renta por debajo del mercado y que puedes incrementar al nivel de mercado en un periodo corto (de seis a doce meses). Conforme incrementas el ingreso por renta vas a reducir el estrés de un pago alto de hipoteca.

LAVERAGE

Bienes Raíces

Para que manejes exitosamente el riesgo de un nivel alto de laverage sigue las siguientes recomendaciones (cont…):

4.- Compra propiedades con tasas de interés bajo tales como hipotecas ajustables o financiamiento del vendedor. Tasas bajas de interés aumenta tu habilidad de manejar niveles altos de deuda.

5.- Compra propiedades en fraccionamientos que se están convirtiendo en excelentes lugares.

6.- Cuando todo lo anterior falla, para reducir el riesgo de altos niveles de laverage a un nivel cómodo, incrementa tu enganche para obtener un radio menor de préstamo a valor y unos pagos más bajos mensuales de hipoteca. Si no tienes el efectivo trae algún socio.

LAVERAGE

Bienes Raíces

¿Cuáles son tus objetivos de Riesgo – Ganancia?

Financiamiento con poco o nada de enganche crea oportunidades para magnificar el retorno. Pero entre más pidas prentado (todo lo demás igual), mayor es el riego. Cuando están altamente financiado, una pequeña caída en las rentas te puede empujar a tener flujos de efectivo negativo. Un pequeño declive en el valor de la propiedad puede causar que debas más de lo que vale tu propiedad. Con cuidado trabaja con los números de los negocios que te aparezcan en el camino. Con cuidado decide que riesgos vale la pena tomar y cuáles es mejor hacerse un lado.

Si no eres capas de encontrar bienes raíces en tu áreas favoritas que tengan buenas tasas de rendimiento, busca en otro lugar.

LAVERAGE

Selección de entidad: A menudo querrás tener entidades separadas para cada propiedad para que, si una propiedad está en riesgo, las otras no lo estén. Las entidades populares para tener bienes raíces son las compañías de responsabilidad limitada y las sociedades limitadas.

Bienes RaícesENTIDADES

Talk with your tax advisor and attorney before deciding which type of business structure is best for you. There is no “right” or “wrong” business structure. It all depends on your needs, priorities, and current investment level.

Haga infinidad de ofertas. Cuando quiero adquirir alguna propiedad, examino muchas, y generalmente redacto una oferta.

Bien, uno no sabe cuál es el precio correcto hasta que aparece una segunda parte que quiere negociar. La mayoría de los vendedores piden demasiado. Verdaderamente, es poco frecuente que un vendedor pida un precio inferior al valor real de la propiedad.

El juego de comprar y vender es divertido. Es tan sólo un juego. Haga ofertas. Alguien puede decir “sí”.

Usted debe salir al mercado y hablar con muchísimas personas, hacer una infinidad de ofertas, contraofertas, negociar, rechazar y aceptar.

Bienes RaícesNEGOCIACIO

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Necesitas ir de comprar, utilizar la fórmula 100:10:3:1 (Eso significa que analiza 100 propiedades, haz ofertas en diez, tiene tres vendedores que dicen sí y compra una). La manera de hacerte experto en bienes raíces es ver miles y miles de oportunidades de inversión. Hacer cientos de ofertas para comprar propiedades, de las cuales muchas se reirán. Con cada propiedad que veas y con cada oferta que hagas va creciendo tu conocimiento y experiencia sobre el mercado de bienes raíces y la naturaleza humana.


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¿Qué hace cuando no tengas dinero? La respuesta es la misma ¡ve de compras!. Cuando vas a un centro comercial, nadie te pregunta si tienes dinero. Lo mismo es cierto con la mayoría de las inversiones. Ir de compras, hacer preguntas, analizar tratos es la forma en que obtienes tu preparación. Lo que aprendes haciendo de compras no se puede encontrar en un libro.

Las siguientes lecciones en inversiones de bienes raíces no las debes pasar por alto:

1.- Ve más propiedades.

2.- Tómate tu tiempo. Hay más de un buen trato. Demasiadas personas compran porque creen que el trato que han encontrado es el único en el mundo.

3.- Analiza el mercado de rentas así como el mercado de compras.

4.- Habla con más de un vendedor de bienes raíces.


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You must learn how to negotiate and how to sell people on the idea of dealing with you, and on giving you terms when they are selling you their property.


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Making an Offer

When you find a house that you decide is priced right because it has good potential to be upgraded and improved, you make an offer. The best deal for you is a small cash down payment with a first mortgage of 80% to 90% of the purchase price, and the seller agreeing to carry the balance over 5-7 years at an attractive rate of interest.

A good strategy when making an offer is to “low-ball” at first. This means that you offer about 70% of the asking price, even though most houses in normal markets will sell at between 80% and 90% of the list price.

Sometimes, for reasons that you don't know, the seller will accept a ridiculously low offer, so always make a low offer to begin with. You can always increase the offer later if it is rejected.


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Advanced Strategy 1: Delay Your Down Payment

Is the seller flexible as to when you give them your down payment? Sometimes it’s to your advantage to give a small earnest money deposit, with any down payment coming later. Can you push the closing out 90 to 120 days? Often this gives you the chance to put together your financing or to use Advanced Strategies 2 or 3 (which you’ll read about in a moment). If you just need more time, see if the seller will let you make a fair payment of principal to extend the closing date by 30 to 60 days.

I’ve also seen deals structured where the down payment was used by the investor buying the property to fix up the property. This let the seller know the investor had something at stake, plus all that money went into improving the property, which made the seller’s protection greater. For the investor, this allowed them to significantly reduce the cash they needed to close on the deal. Once they had the house fixed up they either sold the house or, six months after they bought the house, they refinanced the property and cashed the seller out at that time.

Advanced Strategy 2: Wholesale the Deal

Some new investors are scared to lock up a contract to buy a house for cash because they mistakenly think they don’t have the money. Remember, you don’t need to have the money. If the deal is right you will find the money. One source of money is for you to sell your right to buy the property to another investor. This is called wholesaling or “flipping” the deal. Start to build your investor’s list of rehab investors and other cash investors in your area who might want to buy one of your lucrative cash deals from you at a wholesale price.

Example: A Mentorship student in Phoenix found the owner of a beat-up, ugly house and put the property under contract for a discounted cash price of $14,500. Then a short while later the student found another investor who gutted and rehabbed homes in that area, who paid the student $10,000 to buy the contract to purchase the house. The Mentorship student made $10,000 cash for assigning his contract to this new investor. The new investor used his money to rehab the house and later resold it for an even larger profit. The buyer, who in this case was the rehab investor, “funded” this deal by paying the student cash for the right to buy this house at a deep discount, and also “funded” the deal by using his own money to pay the original seller the $14,500 owed to him.


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Advanced Strategy 3: Presell the Property to a Retail Buyer

A retail buyer is someone who wants to buy the property so that he can move in and live there. A retail buyer can fund your deal using his cash in the form of a down payment or option payment, his credit in the form of a new bank loan, or a combination of the two.

Example: A past Mentorship student in Washington, D.C., found a motivated seller through the Internet. He negotiated over the phone and put the property under contract to purchase at a discounted cash price. He aggressively advertised and marketed the property and found a buyer who fell in love with the home. The student was able to sell the property for a $45,000 profit to this new buyer. He structured the sale to be what’s called a simultaneous closing, which meant he did a double closing where he took his new buyer’s money from the loan his new buyer secured, and gave most of it to the original seller to pay the original discounted cash price, and in the process the $45,000 spread in prices became the investor’s profit. The buyer “funded” this deal by getting a conventional loan to pay for the property, with our student using a large chunk of this cash to pay to the original seller.

Advanced Strategy 4: Joint Venture with the Seller

Imagine you came across a seller who is motivated to do a deal with you, but not quite motivated enough to give up her existing equity or to give up all the future appreciation of the property. The seller wants to do the deal, but you need one last sweetener to spur the seller to do it. This is a perfect scenario to try using an equity split.

An equity split is any deal where you, the investor, split part of your future profit with the seller of a property. Typically this is used to give the seller an extra bonus on top of the agreed-on purchase price for the property. For example, you and the seller agree on a cash price of $350,000 and you also agree that after you’re done fixing up the property and reselling it, you’ll split part of your profits from the resale of the property with the seller. How much should you give the seller when you resell? That is totally up to you to negotiate. You can give the seller a percentage of your future profit, say 10 to 15 percent. Or you can give them an extra bonus of $5,000 to $25,000 when you resell it for more than a specified amount.

Example: You find a seller who owns a rental house and is open to selling it to you on a two-year lease option. But he’s just not motivated enough to give you any longer on the term. You ask him, “Mr. Seller, if there was a way where we could get you your asking price of $180,000 and even a small percentage of the appreciation too, in exchange for a bit longer period of time, is this something you’d even be open to, or probably not?”


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The seller scratches his head and thinks for a moment. You negotiate back and forth for a while and this is what you agree on: a six-year lease option for a purchase price of $180,000 with a monthly rent to the seller of $1,200. Plus you also agree on one more thing. You agree to give the seller 30 percent of any amount over $180,000 that you get when you resell the property to your tenant buyer. This is an equity split.

The seller gets all of the first $180,000 (which is your option price) and 30 percent of the difference between $180,000 and the amount you resell it for to your tenant buyer. Imagine your tenant buyer buys it from you for $230,000. The seller gets $180,000 plus 30 percent of the $50,000 profit you made, for a total payment to the seller of $195,000. You make $35,000 from the resale plus any cash flow from the spread between your tenant buyer’s rent and your rent to the seller, and you also make any forfeited option payments from earlier tenant buyers who didn’t end up buying.

Remember, there is no set rule that says you have to do a 50-50 equity split. You can negotiate the deal any way you want. If you want to negotiate a 60-40 split or a 75-25 split, or even a 95-5 split, you can—whatever you and the seller agree to.

Advanced Strategy 5: Use the “Hybrid Equity Split” to Make an Extra

$25,000 or More on Every Equity Split Deal You Do Peter and I developed a smarter way to do an equity split several years ago where you the investor will make an extra $25,000 or more on every equity split you do, with zero extra work or effort! It’s call a hybrid equity split. I think you’ll like this simple yet highly profitable technique and want to add it to your toolbox of investing ideas.

In essence, a hybrid equity split is taking a normal equity split and adding in a minimum “base profit” that you the investor need to earn before the equity split kicks in.

Example: Several years ago I met with the owners of a two-bedroom, two-bath condo. The sellers were motivated because the husband had been transferred. When I met with them we talked through doing a five-year lease option on the property. Right at the very end they started to balk, so I introduced the idea of adding an equity split. In fact, by adding in this extra incentive to the seller, it was almost like they were my partners. The more money I made, the more money they made. They even agreed to extend my term with them to eight years!


NWatch this part very carefully. I told them that as a conservative investor, obviously I would need to build in a base profit for myself of $25,000. But if I sold it for any amount above that, they would get all the purchase price we had agreed to, plus they would get 10 percent of the amount I sold it for above the base profit. We went back and forth a little and I let them negotiate me all the way up to 12 percent. Here is what the final details of the lease option turned out to be: a term of eight years and a purchase price of $102,000. The upfront option consideration I paid was $1. I also agreed to an equity split on anything I resold the property for above $127,000. In other words, the first $25,000 in profit would be mine alone and I would only do the equity split on any amount above that.

Advanced Strategy 6: Use Hard Money

A hard money lender is an experienced investor who is willing to lend you money to purchase a property, based not on your creditworthiness or character, but based on the security of the loan. The security in this case is the property itself and not the borrower’s creditworthiness or other assets. Since most conventional lenders will only lend you money based on the appraised value or purchase price, whichever is less, it’s often impossible to 100 percent finance a cash purchase through a conventional lender, even if you have the price at 50 cents on the dollar. A hard money lender, however, will lend you money based solely on the appraised value of the property. This means that you can easily finance a cash sale through a hard money lender as long as your price is right. In fact, you can often borrow all the money you need to fix up the property too.

What’s the catch? The hard money lender is going to make you pay a whole lot more for the money. Hard money lenders typically require five to eight percentage points higher in the loan interest rate than conventional lenders charge. Plus, hard money lenders will usually charge you three to eight “points” on the loan. A point is prepaid interest, with each point equal to prepaid interest of 1 percent of the value of the loan. While this sounds like and is a lot to pay for your money, if the deal is a good one, and you only need the money short term, a hard money loan may very well be the way to go.

Two easy places to find a hard money lender are, first, the “Money to Lend” section of your local newspaper. Second, go to your local real estate investors association.* Usually there are several hard money lenders who are members solely for the purpose of finding new investors to lend money to.

Example: One Mentorship student put a four-bedroom house under contract for a discounted cash price of $130,000. The property was conservatively valued at $220,000. The student borrowed $150,000 from a local hard money lender. The money was used as follows:


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It took the student four months to fix up and resell the property. During that time she had to pay the hard money lender 12 percent interest payments on the loan. But because she only needed the money for a short time, when she resold the property for $220,000 she ended up netting $40,000.

Advanced Strategy 7: Use Private Money

Once you have a track record of proven results, you should start to establish sources of private money. Private money comes from people who are willing to lend you money secured by a mortgage on a property, but at a substantially lower cost than a sophisticated hard money lender would charge you.

Example: Two investor friends of mine recently bought a mobile home park. They borrowed roughly $300,000 from a person they knew who wanted to get a good rate of return on his money without much risk or effort. My friends got the money for 10 percent simple interest with no loan fees or credit checks, and the lender was able to have his loan secured with a first mortgage with over $500,000 of equity protecting the loan. A win-win.

Advanced Strategy 8: Use Graduated Payments to Protect Your Cash Flow in the Early Years

See if the seller will accept lower interest payments in the early years with built-in increases in the interest payments in the later years of the note. For example, “Mr. Seller, what if we were able to pay you $300 per month for the first 24 months, and then for the next 24 months we’d pay you $400 per month, and then for the final 24 months you’d get $600 per month?” There are no rules governing this, so be creative. The key is to protect your cash flow in the early years. Who knows, you just may sell or refinance the property before the interest or payment bumps up too high!


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Advanced Strategy 9: Use Graduated Prices to Get a Longer Term

Imagine you are working to negotiate a terms deal with a motivated seller. The seller is only willing to give you a three-year term before you have to fully repay the $365,000 owner-carry note. Try this with the seller: “Mr. Seller, I know that this may seem crazy for me to even suggest it, and you’ll probably hate the idea anyway, but what if we did it exactly like you wanted with a three-year term, and then if for some reason we needed more time, we’d have up to another 24 to 36 months, but the price we’d be paying you would jump all the way up to $375,000. Is that something we should even talk about, or probably not?” Is it worth it to pay an extra $10,000 for two or three years added onto the term of the note? Who knows? But remember, you don’t have to use the extension, but you’ll be awfully glad you have it prenegotiated if you end up needing it.

Advanced Strategy 10: Use a Reverse Credit to Incentivize the Seller to Carry the Negative Cash Flow

A reverse credit is when you increase your purchase price each month. It’s similar to a reverse amortizing loan. It is useful when you want to keep your payment to a seller low enough to have a property cash flow, and you need the seller to be willing to cover the negative cash flow.

Example: You are negotiating a five-year lease option on a three-bedroom house. You agree on a price of $350,000, which is $30,000 below market value. The sticking point is that the seller wants you to cover his full monthly mortgage payment (which includes the property taxes and insurance) of $2,200 per month. You, on the other hand, know that the most the house will rent for is $2,000 per month, so the most you want to pay is $1,900 per month to the seller. But this leaves a negative cash flow of $300 per month for the seller. Being the well-trained investor you are, you pull the “reverse credit” advanced strategy out of your tool box and say to the seller, “Look, what if I could get my partner to go along with adding that $300 that you are covering onto the purchase price each month. What this would mean is that each month you cover that money, it will get added into the purchase price.” In essence, your purchase price will increase by $3,600 per year with the seller taking on the risk and burden of the negative cash flow. And just in case you need one more kicker to make this work, you can always offer to pay the seller an interest rate of 5 to 12 percent on that money, to be added into the purchase price, so at least he feels like he’s getting paid something extra for tying up the money covering the negative cash flow. (Remember, though, this interest rate is only on the $300 per month as it’s paid and not on the full amount you owe him.)


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Advanced Strategy 11: Turn the Seller into Your Bank

My favorite source of funding a deal is the seller I am buying from. Whether the seller actually carries back a mortgage as part of your purchase, or whether you buy the property subject to the seller’s loan (both strategies were discussed earlier in this chapter), the seller is making your purchase of the property possible.

The following is an example of how you can put together a deal with owner financing. In the next several advanced strategies I’ll build on this strategy to give you even more insider options.

Example: A Mentorship student called on a “For Sale” ad in her local paper. She talked to a nice man on the phone and set up an appointment to see this midpriced home in a quiet suburb. When she met him at the property she found out that he wasn’t actually the seller, he was the attorney for a seller who lived out of state. They sat down and talked the purchase over and agreed on our student buying the house with $2,500 down with the owner carrying back a 30-year first mortgage at 8 percent interest. (Originally the attorney told the investor she would have to put $10,000 down, but she used the negotiating techniques you’ll be learning later in this book to talk him down to just a $2,500 down payment.) The best part about loans like these is that the investor didn’t have to pay points or loan origination fees or appraisal fees or any of a number of loan costs you’ll have if you finance a property with traditional sources. The investor later sold the house on a two-year rent to own for roughly $15,000 more than she bought it for. (And the funny thing was that she liked working with this attorney so much that she later hired him to be her family’s attorney!)

Advanced Technique 12: Combine Subject-To and Owner-Carry Financing

Better by far is to combine the subject-to financing strategy you learned about earlier with owner financing. What I mean is that you buy the property subject to the existing financing and the owner carries back a note for her equity. This is much lower risk to you the investor, plus it will save you money not having to pay to assume the existing loan.

Example: Two Mentorship graduates got a call from a motivated seller in response to the “I Buy Houses” ad they were running in the paper.


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The seller had bought a new house but hadn’t been able to sell his first house and was feeling the pressure of the double payments. While they didn’t sign the deal on the spot, the investors followed up every few weeks and eventually, six months later, the seller sold them the house. By this point the seller had refinanced out much of his equity with a new first mortgage of $280,000. The investors gave the seller $100 down and bought the house for a price of $350,000. They agreed to take over the payments on the existing $280,000 mortgage of $2,300 with the seller to carry back a $70,000 second mortgage with no interest and no payments, due in full as a lump-sum payment within 60 months of closing.

Next the investors sold the house on a two-year rent to own for $400,000. They collected a $24,000 option payment and got $3,300 a month in rent! All totaled, this deal netted the investors $65,000!

Advanced Strategy 13: Write Up a Zero Interest, Zero Payments Loan

Can you really do this, you ask? Yes! The simplest way to do this is to negotiate to pay off the mortgage the seller carries back as a “lump-sum payment due in full” down the road. This is the prettier way of saying zero interest, zero payment loan.

Here’s the fancy way to say this in your purchase contract:

“The Seller shall carry back a second purchase money mortgage in the amount of $150,000 to be paid as a lump-sum payment due in full within 60 months of closing of escrow.”

Advanced Strategy 14: If You Have to Make Payments, Pay Pure Principal

Obviously as an investor you would prefer a loan without payments and without interest. That’s why, whenever possible, you’ll use the language of paying your seller a “lump-sum” payment due down the road. But if you have to pay them as you go, pay them principal, not interest. Principal is money that goes towards the purchase price or loan amount.


“Seller to carry back a second mortgage in the amount of $100,000 to be paid by Buyer in 100 monthly payments of $1,000 including principal and interest with the first payment of $1,000 due within 30 days of closing.”


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Advanced Strategy 15: Agree to Pay “Thank You Payments”

Many times the only way to make a highly leveraged purchase of a nice house cash flow from the start is to get the seller to accept below-market interest rates on the money they are carrying. One languaging tip that makes this more palatable to a seller is to call these monthly or quarterly payments “thank you payments” versus interest payments. Just by labeling the payment this way, you deemphasize the seller’s need to get an interest rate and lower the seller’s expectation as to the amount. Tell the seller, “Mr. Seller, I’m even willing to give you a thank you payment of $300 every month as my way of saying I appreciate you being a bit patient waiting to get cashed out and getting that $100,000 check.”

Advanced Strategy 16: Let the Interest Accrue

As an investor you need to protect your cash flow. If you are negotiating with a seller who insists on interest, see if you can get them to let the interest accrue to be paid off down the road, ideally when you resell the property. This works especially well for properties you are buying far enough below value that you are going to have the margin to pay for this accumulating interest cost when you resell it to your buyer. Use caution here to make sure there is enough profit to make this possible.

If you use this strategy, your first choice is to pay simple interest versus compound interest. To do this, simply label the interest rate with the words “simple interest.”


“The Seller shall carry back a second mortgage in the amount of $100,000 with simple interest of 7 percent which shall accrue. The entire balance of principal and interest is due in full as a lump-sum payment within 72 months of closing.”

Advanced Strategy 17: Ask for Interest-Only Payments

If you have to pay money each month, and it can’t be principal, then make the owner-carry note “interest only.” In effect, this means you won’t be paying any principal each month when you send the seller her check. This lowers your monthly payment and protects your cash flow. Remember, you can always voluntarily prepay principal anytime you want. Don’t obligate yourself to pay principal if you can avoid it. This gives you more flexibility.


NAdvanced Strategy 18: Consider Adding Up Your Monthly

Payments into Quarterly, Semiannual, or Annual Payments If the amount of your monthly payment to the seller doesn’t seem like much, consider adding it up and offering a “larger” payment to your seller every quarter, semiannually, or annually.

Example: If $300 per month doesn’t sound like much, why not add up the payments and pay your seller annually. Say, “Mr. Seller, I’m even willing to pay you $3,000 to $3,500 every year as a thank you payment for your willingness to work with me to make this a win for both of us.”

Advanced Strategy 19: Prenegotiate an Extension or Renewal of the Loan

The best time to arrange an extension or renewal of the seller carryback is before you buy the property. The seller will never be as motivated, and you’ll never be as unmotivated, as at that moment. You can always agree to pay the seller a “renewal” payment to renew the loan term. (Just make sure that if you do make a renewal or extension payment, you label it as principal and not interest!)


“Buyer may extend the Seller second mortgage by paying to Seller $5,000 of principal to extend the Seller second mortgage by 24 months.”

Advanced Strategy 20: Offer to Cross Collateralize

Cross collateralize is a fancy name for you giving the seller a lien on another asset you own, like another house, as extra security so that the seller is more willing to carry back financing. Be careful not to offer this except as a last resort, and even still, use it only when you are confident that you have negotiated a really strong deal. If I agree to cross collateralize by giving the seller a second mortgage on another property as security for the seller carry, I also make sure to prenegotiate that the seller will release that mortgage after I have a 12- to 24-month track record of making the seller on-time mortgage payments. This gives the seller time to get to know how upstanding I really am, but it also makes sure I don’t tie up my other property recklessly.

Advanced Strategy 21: Ask for Seller Subordination—Pay a Seller with Borrowed Money

Have you ever run across a seller who owns a property free and clear, and who has a strong motivation to sell, but who doesn’t want to do a lease option or carry back all the financing? In other words, they are willing to carry back some of the financing as long as they get a good-sized chunk of their equity now.


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In these situations, the Big Money Cash Close is a powerful buying strategy to use. This technique means getting a new first mortgage secured against the property to get the seller some cash at closing, and then the seller simply carries back a second mortgage for the balance of his equity for a period of time.

Example: Imagine a $100,000 house. Using this technique you would bring in a new first mortgage of between $30,000 and $50,000 and have the seller carry back the balance as a second mortgage. Because the bank you are seeking the first mortgage from will have so much value protecting its money (after all, what banker doesn’t like to lend at 30 to 50 percent loan-to-value), this is a fairly easy mortgage to secure. This strategy is a way for you to get the seller a large chunk of money at closing, but having that money be borrowed rather than your own.

Using this strategy, it is important to note that the seller will need to be willing to carry a second mortgage for the balance of their equity. This is because you will be getting a new first mortgage to give the seller money at closing. To do this you need the seller to agree to subordinate his mortgage to second position behind the new financing you are bringing in from a conventional lender.

Here is exactly how to word your offer: “Mr. Seller, what if I were to bring in new financing and get you $30,000 or so cash at closing, and then you were to carry back a small second for the balance. Obviously you wouldn’t want to have to wait forever for the balance of your money, so we’d put a short-term balloon note of five to seven years on it.”

Notice you use the term “bring in new financing,” not “put $30,000 down.” Technically, if you say you are going to put money down that means you are going to be using your money. That’s not what you want to do. You’ll be using the bank’s money instead.

Let’s be clear on one critical item: Of course the seller will need to be very clear that their loan will be in second position. You are not trying to pull anything over their eyes. The language you use is very important so that you frame the offer in the seller’s mind the right way from the very beginning. You need to make sure the idea creates a good first impression on the seller. Later you can go back over it to make sure the seller is totally aware of all the advantages and disadvantages of this type of deal.

Using this technique you are going to be 100 percent financing the property. The critical question on any 100 percent financed property is, does it cash flow? If you pay market interest rates for the second mortgage that the seller is carrying back, it probably won’t. But when sellers carry back seconds they don’t need high interest rates—at least, they don’t if they are motivated, and if they’re not motivated what are you doing wasting your time talking with them?


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Mistake 1: Taking too long

Good deals don’t wait around for indecisive people. Many people “think a deal to death.” The best way I know to lower your anxiety level with a deal is to move forward provisionally (i.e., with a subject-to clause or liquidated damages clause of some sort—you’ll learn more about this in the next chapter).

Mistake 2: Trusting seller’s numbers

Even if they have only good intentions, most sellers just aren’t knowledgeable and all of them are inherently biased at least a bit. The most common problems with a seller’s numbers are pretty obvious—they overestimate the value (often confusing listing prices of local homes with actual selling prices), and they underestimate the cost to fix it up.

Mistake 3: Trusting appraisals

An appraisal really isn’t meaningful, unless you hired the appraiser, you gave them the instructions, and you are handing the appraiser the check. I can influence an appraiser to appraise a so-called $100,000 house for as little as $80,000 and as high as $120,000 (or more). That’s close to a 40 percent variance on the two appraisals of the same property! So take any appraisal the seller hands you in the spirit that it was intended, as a marketing piece! The best appraisals are ones where you hire the appraiser and give them their instructions. If I really want an appraisal to be accurate, then I choose a reliable appraiser I’ve used before and ask her, “What would this house need to be priced at to sell in 90 days or less in its current condition?” This should give you a conservative estimation of value.

Mistake 4: Doing your math in pencil

The next time you catch yourself thinking it’s okay to fudge your numbers a little to make the deal cash flow or the rehab pay off on paper, beware! Some investors have a tendency to play with the numbers a little to make them show that a marginal deal is better than it really is. Remember, just because the deal makes a profit on paper doesn’t mean you’ll make money in the real world. Mistake 5: Overestimating the market rents This one happens all the time. The way you know what a house will rent for is to do a market rent survey. The rents listed in the paper or that a real estate agent told you may or may not be accurate.


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Mistake 6: Overestimating the “as is” value

So many investors forget that to turn a house in 90 days or less requires the price to be real, not pie in the sky. What would it really take to get the house into top showing condition? Be careful to be conservative in your estimate of value going into the deal. The worst case then is that you make more money than you anticipated!

Mistake 7: Getting bogged down in process

Use the three-step process you just learned about so that you incrementally invest more time in the deal only as it proves it is warranted. Learn to trust your due diligence and evaluation process and make sure it is checklist driven. This is your best insurance that you’ll do it the right way every time.

Mistake 8: Worrying about the house on the Quick View step

On your first pass, you are only concerned about three things: (1) What is the real market value of the house? (2) Is your price right? (3) If you are planning on holding on to the property long term, will it cash flow?

Mistake 9: Underestimating the time it will take to flip/fix/fill/sell

I’ve bought a lot of houses from investors who got stuck with holding costs being too much for them to handle. Be careful here. If your exit strategy is to sell the house to a retail cash buyer, it will need to be in showing condition or you’ll struggle to find a quality retail cash buyer. Always be conservative with how long it will take you to execute your exit strategy and, if possible, build in a healthy cushion of extra time.

Mistake 10: (The biggest deadly deal disaster of all) Hiding behind analysis because you are afraid to pull the trigger on the deal

At a certain point, as an investor you will need to step forward in the deal and commit.

Cuando observas la tendencia en la población puedes planear tus inversiones en bienes raíces conforme a ella. Puedes comprar un terreno poco costoso y esperar a que el pueblo crezca.

La estrategia de bienes raíces de Rober Kiyosaki, es empezar con una propiedad pequeña, e ir cambiándola por una más grande, y en ese proceso, demorar el pago de impuestos sobre las ganancias. Esto permite que el valor se incremente en una forma impresionante. Generalmente, retengo la propiedad por menos de siete años.

Una estrategia es comprar propiedades de alquiler y, en un año o dos, pedir prestado el propio pago inicial para comprar otra propiedad de alquiler. La persona promedio denomina este proceso préstamo sobre hipoteca.

Bienes RaícesESTRATEGIA

Una de las formas en que puedes hacer mucho dinero es teniendo control sobre el valor de la propiedad que cambia, se modifica o mejora… algo que no puedes hacer con acciones ni con fondos de inversión. Muchas veces, el simple hecho de agregar una cochera o una habitación extra puede multiplicar en gran medida tu ganancia sobre la inversión.


Algunos inversores exitosos siguen el plan de comprar diez propiedades, lo que significa ver mil. De esas diez propiedades, esperamos que dos sean excelentes inversiones y dos sean papas, inversiones en las que podríamos perder dinero. Por lo general, esas se venden de inmediato. Eso deja seis inversiones que tenemos que mejorar o bien vender.


Algunas estrategias para competir para mantener buenos inquilinos o con otros dueños de casas tratando de vender su casa:

•Pintar el interior. •Hacer una opción de renta.

•Pintar el exterior. •Construir una cochera.

•Mejorar el borde de la banqueta. •Instalar nuevas lámparas o iluminación.

•Rentar por afuera el garaje. •Instalar kit de ahorradores de agua.

•Mejorar los muebles. •Cambiar el uso.

•Usar bulbos eficientes de energía. •Obtener un horno de alta eficiencia.

•Renovar el interior. •Mejorar el aislamiento.

•Compra cosas en oferta. •Has la propiedad hermética.

•La renueva las alfombras. •Reparar el jardín.


Portfolio strategy: The decisions made to manage real estate properties in such a way that your financial goals will be realized. Your portfolio strategy must be adjusted on an ongoing basis in response to individual property performance.

Your portfolio strategy may change as the number of properties you own grows and the amount of equity in theproperties increases.

As an investor, you must have the ability to alter your investment strategy, purchase additional properties or convert a portion of your equity into liquid assets. This is the reason why all the properties in you portfolio must be wise purchases. If it becomes necessary to liquidate any of these properties, you can do it without a loss of equity.


CREATIVE ENDGAMES: STRATEGIES TO INCREASE EARNINGS

Split and Double

Controlling Your Portfolio Growth Through

Diversification

Exercising Risk Control

Using Teams to Help You Control Your Portfolio

Using Options

Developing Real Estate for Profit


Split and DoubleIn building your portfolio, you might want to try a technique called "split and double." This technique could enable

you to convert the equity of a single property into a property of at least double the value.

Here's how the technique works. Dean P. purchased a small duplex for $58,000. Then, using the techniques taught in this course, he increased the value of the property to $67,000 within nine months. At the end of nine months, Dean exchanged his equity of $9,000 for the down-payment on a four-plex valued at more than $120,000. The four-plex was an excellent investment and carried its own weight in his investment portfolio.

Now Dean had the same $9,000 equity in the portfolio, but the assets of the portfolio were valued at over $120,000

instead of $67,000. With an 8 percent appreciation rate, the value of Dean's real estate portfolio was increasing at

approximately $800 per month, with the four-plex as the sole asset. (When the duplex was the sole asset, the portfolio was appreciating at only $447 per month.)

Each investor must build his portfolio of properties around both short-term and long-term investment goals.

If your short-term goals are equity growth and capital appreciation, the properties you place in your portfolio will

generally be highly leveraged, high-appreciation properties with low cash flows. As the portfolio grows in size and matures in age, you will buy properties that have lower financing and better cash flows.


Controlling Your Portfolio Growth Through DiversificationOne of the best ways to protect yourself as a real estate investor is to place in your portfolio properties of different value, geographical location, and size. Diversifying your portfolio in this way also increases your profits. Exactly how you diversify --which properties you choose and when you buy them--is based on your investment objectives. But remember: specializing is the key to establishing yourself as a successful real estate investor. Diversifying in the sense of buying different kinds or properties (office buildings, shopping centers, etc.) is for experienced investors only.

There are two basic reasons why diversification is in your best interests financially. Diversification (1) decreases the risk and (2) increases the yield.

1.Decreased risk. The more properties you own, the less dependent you are upon the performance of any one property. Thus, the chance that you will lose your entire portfolio because of one bad investment decreases with every profitable new property you buy.

In beginning, you should select small properties in different geographical locations. Then as your portfolio grows, you can use the split-and-double technique discussed earlier to consolidate some properties while maintaining a diversified portfolio.

2. Increased yield. Diversifying your portfolio increases your profits in three important ways:

First, if you have purchased your properties using nothing-down or little-down techniques, you could enjoy appreciation on several properties instead of only one.

Second, the portfolio is more liquid. You can sell, exchange, or refinance one or more of the properties while leaving the other investments alone to appreciate or bring in rents.

Third, diversification allows you to meet more than one investment objective. Most investors have different objectives to meet at different time. If the investor needs cash for education, he doesn't need to sell or refinance his entire portfolio to get the money.


Exercising Risk ControlWhether a real estate investment succeeds or fails depends on both the investment and the investor. Both elements are critical, and both have their own forms of risk.

Category 1. Investment Property Risk

The risks associated with the investment property itself include:

* Insurable risk

* Investment (business) risk

* Financial risk

1. Insurable risk. You can lose your investment if fire, flood, or some other natural disaster destroys the property.

This risk is low, however, and can be controlled by purchasing an insurance policy against such loss.

2. Investment (business) risk. If an investment property is not managed correctly, expenses associated with owning the property can very rapidly eat up any profits in it. If that happens, the property is not worth the same market value as it was when you bought it. For example, if tenants are not kept happy or if the property is not protected against the wrong kind of tenants, the vacancy rate may increase or rental rates go down. In either case, the property loses value.

This investment risk can be controlled through effective management techniques. Early in your investing career you may need to manage your portfolio personally, but once you can afford professional management, you should do so. Your time can then be used to control and balance your portfolio of properties.

3. Financial risk. Risk increases as the ratio of debt service to net operating income increases. High leverage financing can produce exceptional by high rates of return on the actual cash invested, but it can also increase the risk of investment loss if you cannot meet the debt payments.

The best way to control this risk is to use options when purchasing property you plan to resell immediately, to obtain realistic and reasonable financing terms when purchasing the property, and to include an exculpatory clause if possible.


Exercising Risk Control (cont…)Category 2. Investor Risk

There are many things an investor can do, foolishly, to increase the possibility his investments will fail. The main risks are in:

* Being too aggressive

* Speculating rather than investing

* Investing with too little capital

1. Being too aggressive. If an investor fails to plan his portfolio and map out his investment strategy, he may purchase too much property too quickly, acting out of emotion rather than reason. Remember Mark, at the beginning of this report? This was his problem, and the reason he lost his entire portfolio. The key to building a successful portfolio is to start small, buying one property at a time, doing so only after a careful review of your financial resources.

2. Speculating rather than investing. Some neophyte investors are tempted to try making their fortune on a single

transaction. The potential is certainly there, but the risks are very large. Still, speculating can be done--if you never commit more than 10 to 15 percent of your real estate investment capital in such projects. Another safeguard is to use options. In this way, you can try making it big all at once with minimal capital investment and risk.

3. Investing with too little capital. One of the major problems for many investors trying to build a real estate

portfolio is that they do not have the capital necessary to increase the growth of their portfolio as rapidly as they want. Capital cannot be created simply by imagination. It is possible, however, to expand your portfolio by arranging joint ventures, employing partnership arrangements and using wise nothingdown techniques.


Using Teams to Help You Control Your PortfolioAs your portfolio increases in size and value, you will find it necessary to use outside professional help in reaching your investment objectives. These professionals all charge a fee for their help, but if they provide a margin of safety and increase profits, their advice is worth every dime. The professionals that you will find most helpful are:Accountant, Appraiser, Architect/engineer, Broker, Insurance broker, Property manager and Lawyer9.94-1. AccountantA professional accountant can audit and analyze your finances, prepare your taxes, draft loan documents and financial reports, and make valuable suggestions for improving the cash flow of the entire portfolio.9.94-2. AppraiserAn appraiser can estimate property values for exchanges, sales, and refinancing. He can also do marketabilitystudies and make feasibility reports for the development of portfolio assets. Most appraisers can be hired on a one-time basis and are paid a fee based on the work performed.9.94-3. Architect/EngineerAn architect or engineer is most helpful in you have a portfolio that includes some development real estate. In fact, it is dangerous to buy such properties without securing the services of an engineer or architect. They can also provide valuable cost estimates for completing development work.9.94-4. BrokerMany real estate investors want to sell their properties by themselves. But the portfolio increases in value and size, a real estate broker can be a real asset. He can help market properties. He can watch for properties you might want to purchase. And he can provide valuable information only a broker would have access to. It is important, however, that the broker follow your guidelines. If he is unfamiliar with nothingdown techniques but is willing to learn, give him a try. After a few purchases, the broker may have learned enough about nothing-down techniques to provide a valuable service for your portfolio.9.94-5. Insurance brokerInsurance brokers are paid by the companies that insure your properties. You will want to decrease your insurable risk by working with a qualified insurance broker who can provide the liability and casualty insurance you need.9.94-6. Property managerAs you increase the number of rental units in your portfolio, you will want to consider engaging a professional property management firm. Good property managers can increase your rental receipts and lower your overall expense costs. Steven and Sally learned that with a professional property management firm, they were able to dedicate more time to portfolio management and increase their total equitymuch faster.9.94-7. LawyerA lawyer can assist your accountant in his work and help in estate planning and tax shelter selection. He can also protect you by reviewing legal documents and sales agreements.The key to using professionals is finding people you feel comfortable with and who will increase your profits. As long as the value of the services they provide equals or exceed their fees, they can be worthwhile additions to your portfolio management team.


Using OptionsThe astute investor will always have "options" on his/her mind. An option allows you to gain control of a propertywithout having to purchase it until a later date. When you negotiate an option with a seller, you pay a certain sum of money for the right to purchase the property for a designated price within a specified time frame.For example, let's say that you locate a twelve-unit apartment complex offered for $360,000 and your analysis indicates that the property would be an excellent addition to your portfolio. However, for financial reasons you cannot swing the deal for at least eighteen months. What can you do to hold on to that opportunity? You can offer the seller an option for, say, $3,000, to be exercised within eighteen months at a price of $400,000. The future purchase price is something you guess would be appropriate at that time. If the seller accepts, he might be guessing that his property might not quite appreciate that much in a year-and-a-half, or he might simply be betting that you will actually follow through with the deal and he will have sold his property for an acceptable price. If you do not follow through, then he will be $3,000 ahead of the game and have the use of that money for up to eighteen months without having any tax liability for it until after the option is exercised or expires.Meanwhile, you have "control" of the property in that no one else can purchase it during the option period unless you decide to let it go. If someone does come along and make a better offer, you could always sell your right to buy the property for a "price," which might be many thousands of dollars. To prepare for this possibility, you should make sure that your option agreement contains wording that allows you the right to sell your option to another party. Also, make sure that you record your option agreement with the county recorder so that the seller cannot option is off or sell it to someone else in the meantime. During the option period you have no management hassles or concerns with the property, since the owner has notsold it yet. You do not have to worry about taxes, either. It is a good way to have your cake and eat it, too.


Developing Real Estate for ProfitDeveloping is not without its risks, however, and first time investors enter the development arena with no more chance of success than a bull in a bull fight. They are excited about the possibilities and eager to begin earning large profits. But they fail to realize that the profits can be earned only if they understand the perils and pitfalls.How can you generate profits in an area of real estate that is known for its tremendous risks and liabilities? This final section will discuss a plan that will show you:* Which properties hold potential development profits and which ones don't.* What you must include in your purchase agreement in order to protect your future profits.•How zoning can make or break your real estate development.•How to control development property with no risk and no finance charges.* Why one developer can make a profit when another developer can't - with the same real estate!Profits through development may be as close as the ground you are standing one. Increase your understanding, practice what you learn, and profit from your real estate developments.* Good development property may be found in all locations. Developing a property if your site analysis says "no“ is an invitation to failure.* Analyzing the market demand for the completed development is an important as finding a property that can be developed. Profits from real estate development may be eaten up by interest and carrying costs. It is vital, therefore, that you gauge a property's marketability before you begin developing it. Otherwise, you aren't developing--you are speculating!* Zoning laws were not passed down from heaven. Don't be afraid to try to change them. You won't succeed every time, but when you do, the profits can be immediate and sometimes enormous.* Developing a property consists of several vital steps. Don't skip any of them. You may regret it all the way to the poorhouse.

Bienes RaícesBUENAS

OPORTUNIDADES

Cuando el mercado de bienes raíces esta bajo es fácil buscar y negociar inversiones sensatas. Si el mercado esta alto la búsqueda requiere de mayor esfuerzo y tendrás que ser más cauteloso.

Hay buenas oportunidades de compra de bienes raíces con personas que venden con el objetivo de que te hagas cargo de su hipoteca.

No tengas miedo de buscar una ganga. Encontrar una casa que se esta vendiendo por el valor justo del mercado no es tan difícil como parece. Es importante verificar las áreas alrededor par ver si la colonia tiene buen mantenimiento o se esta cayendo. Si la colonia se esta cayendo, no es una buena ganga. Compra en la mejor localización que puedas.


OPORTUNIDADES

The simplest way to buy real estate at a low price is simply to ask. Just because someone lists a home at $145,000 doesn’t mean he or she won’t accept something less. Perhaps the seller needs to move in three weeks and he or she just wants to get rid of the house as quickly as possible. Maybe the seller just listed the home at a higher price in hopes of getting it, but realistically expects something much less. If the property has been on the market for several months, the seller may just want to get rid of the home because he or she is tired of waiting for a better price. In real estate, you never know the seller’s motivation.

If you offer to pay a lower price, many buyers will refuse. It doesn’t cost you anything to ask for a lower price and if the seller won’t negotiate, then you walk away and look for another home.

As a real estate investor, you don’t need a particular home; you just need a home that you can buy at a wholesale price.

It may take several weeks or even several months to find a bargain home, so you may spend long amounts of time with no immediate profit. But all you need is one great deal and you’re immediately ahead of the game.


OPORTUNIDADES

To speed up the process, the more offers you make, the greater your chance of success. A very successful friend of mine uses what I would call an almost mass-marketing approach. He’ll do a little research on multiple properties and simply submit lowball offers where he can’t go wrong. Because he’s making so many offers, he picks up incredible deals that most investors would never get because they’re afraid of offending the seller. Remember, it never hurts to ask.

Besides asking for a lower price, another popular way to buy real estate at wholesale prices is through probate. When people die, they often leave behind property they lived in or owned. In many cases, the inheritors don’t live near that property and probably have never seen it. When multiple people inherit a property, they can’t divide a house into several pieces, so the first thing they want to do is sell it, usually as quickly as possible.

Bienes RaícesRECOMENDACIONE

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Three things condition the experience of investors in real estate investing: the performance of the market; the skill of their advisers; and the degree of leverage involved in whichever vehicle is used to access the market. This, in turn, depends upon the level of interest rates and the ease with which income yielding properties can support debt interest payments.

Five core investor skills:1. Marketing—Finding great deals in any market.2. Structuring—How to structure win-win real estate deals.3. Negotiation—How to get the other party to say yes to the deal you want.4. Analysis—How to determine if a deal is good in five minutes or less.5. Contracts—How to write up moneymaking real estate deals.


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Ten cuidado en invertir en condominios. Con mucha frecuencia, los condominios tienen una junta de directores, constituida por propietarios. Los propietarios y los inversionistas no siempre están completamente de acuerdo. La mayoría de los propietarios quieren mantener agradable su propiedad así que gastan excesivamente en mantenimiento. Aunque esto es bueno para mantener tu propiedad en buen estado, un inversionista pierde control sobre esa área muy importante de la inversión, el área del control de gastos.

Si los gastos están fuera de control, también afecta el futuro precio de venta de la propiedad.

Tu ganancia se produce cuando compras, no cuando vendes. Cada propiedad que compres debe tener un flujo de efectivo positivo en el día que compres incluso en una economía mala. La propiedad debería ser una buena inversión en una buena economía y en una mala economía.


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No inviertas emocionalmente. Cuando compras tu propia inversión personal, está bien ponerte emocional. Cuando compras una propiedad con fines de inversión, las emociones pueden cegarte.

Siempre que inviertas mantente calmado, calculador, paciente y lo más importante es que no permitas que las emociones influyan en las decisiones. Permitir que las emociones influyan en tu proceso de decisiones nubla tu juicio y seguido hace que cometas errores.


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TIP—CONSIDER A FIXERYou should also at least consider a fixer-upper, a home that is selling for less because it needs repair work. Sometimes you can find a sweet deal.

TIP—DON’T BUY NEW ON THE WAY DOWNBe wary of buying a new home in a real estate recession. In a down market you can find apparent “steals” on resales as desperate sellers fight to get out. However, how wise is it to buy today when you can buy the same house for less tomorrow?

TIP—FOLLOW INTEREST RATESIf you’re concerned about the market, be sure to check interest rates regularly. When they are falling, it’s almost a sure sign that soon, if not already, prices will likely rise. When they are rising, watch out. Real estate does not like higher interest rates, and a slowdown could be imminent.

TIP—DECIDE SI EL OBJETIVO DE TU INVERSIÓN A LARGO PLAZO O CORTO PLAZO.

Históricamente, los bienes raíces han mostrado un constante crecimiento en valor. Conforme tu propiedad va incrementando su valor y tu pago disminuyendo tu hipoteca, se va incrementando tu patrimonio. Si el bien raíz lo estas rentando, tus inquilinos están haciendo el pago por ti. También puede haber ventajas en los impuestos cuando tiene un bien raíz de largo plazo. Un bien raíz para corto plazo también tiene sus ventajas. Por ejemplo: tu compras una propiedad que necesita reparaciones en $50,000 dólares. Los costos de reparación son de $10,000 dólares y costo de venta es de $5,000 dólares. Vendes la propiedad en $85,000 y cierras la venta seis meses después de que la compraste. Has sacado una ganancia de $20,000.

TIP—YOU NEED TO FIRST FIGURE OUT WHAT YOUR PRIMARY INVESTING OBJECTIVE IS:

i) Quick cash / equity,

ii) Cash flow,

iii) Capital growth,

An investor focused on growth probably has a relatively long time horizon with no immediate or likely immediate need to use the money being invested.

An investor focused on income probably has a shorter investment horizon and an ongoing need to use money generated by the investment.

Bienes RaícesRECOMENDACION

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TIP—TOMA EL TIEMPO NECESARIO PARA ESTUDIAR LA CASA.

Aprende a juzgar bienes raíces, par que sepas cuando hacer un trato y cuando decir “no”.

TIP—APRENDE DE LA TERMINOLOGÍA DE BIENES RAÍCES Y PON EN MARCHA TUS HABILIDADES DE NEGOCIACIÓN.

Conocer la terminología te asegura que no vas agarrar desprevenido y te confundan con lo que dicen. Todos los bienes raíces una cantidad grande de negociaciones que es muy importante para tu éxito como inversionista.

ACT - don’t procrastinate! Go out there and do a small deal. You will make some mistakes so protect yourself against that by keeping your ‘training’ deals small. But it is critical to get some experience. You don’t need to know everything before you start. A major objective of small deals is to learn.


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A class in general contracting or in decorating might be a good start

Learn to observe what is going on. Change routes from time to time so as to know what is happening on the back streets and not just along the thriftiest route between your residence and place of work.

Learn to be curious, and learn whom you need to contact to satisfy that curiosity.


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Knowing what is going on in the marketplace is 90 percent of the effort.

Commercial real estate will generally produce a higher rental return than single family homes can produce. This statement takes into consideration the fact that if you have one single family home and it is vacant, you have, for that period of time at least, a 100 percent vacancy factor to consider. Single family homes may require a higher maintenance cost than other properties and, in general, the single family home as a rental property does not appreciate as rapidly because of overall wear and tear.

A portfolio of 100 single family homes spread all over town would be far more of a management headache than a single complex of 200 rental apartments. The synergy of income potential goes up as you reduce the cost to keep the facility in operation. Remember that fact when you consider single family homes over multifamily housing or other kinds of commercial real estate.


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1.- Personal power. The very best investors have learned to discipline themselves to consistently take action and do the things that they know will make the difference, even when they don’t feel like doing them or are afraid of doing them.

2.- Strong affinity for and with other people. Affinity simply means having a connection or attraction to and with other people. The most successful investors have both a deep understanding of how people work and a sincere enjoyment of connecting with other people.

3.- Outstanding negotiation skills.

4.- Commitment to leveraging their every action in their investing business. Leverage simply means a way of magnifying the power of a specific action to create a bigger result with less effort. We all have limited time, money, and skills. The best investors leverage all three through systems, outsourcing, and modeling proven winners.

Skills great investors have developed


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Sound Investment Requires a Sound Plan

Having a plan with stated goals is one of the most important foundations of successful investing. The idea is to develop a general plan with stated goals and a method on how to get there.

Goals Must be Meaningful

For a goal to work for you it must be attainable, measurable, tied to a timetable, and clearly defined.

Moreover, divide long-range goals (say further out than one year) into intermediate goals, and your investment plan into subsections such as "cash flow requirements," "net worth projections," "taxshelter benefits required," "cash withdrawal from plan," and so on.

Real Estate Investing Planning, Goals, and Crucial FormulasJames R Kobzeff


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Start here. How much cash do you have available to invest comfortably? What length of time do you plan to stay invested? How much of your own effort do you plan to contribute?

Define a general plan. You plan to develop or own only the highest quality properties in prestige locations. You plan to own the largest market share of duplexes or perhaps freestanding retail buildings in a local market. You plan to maximize your tax benefits on purchases and use tax-deferred exchanges and installment sales when available.

Define a detailed plan. How much cash do you want to collect each year beginning in the 10th year? What net worth do you want to attain by investing in rental properties after the 15th year? or generate $30,000 by the 5th year to pay for an additional house. And so on.

The idea is to create a target and then monitor your progress continually against that target to insure that you're on the right course. A written plan with stated goals that projects where you're headed and then reviewed regularly is critical to successful investing.

Real Estate Investing Planning, Goals, and Crucial FormulasJames R Kobzeff

Bienes RaícesIMPUESTOS

La idea de un negocio que renta bienes raíces de otro cuyo propietario es la misma persona se hace todo el tiempo para pagar menos impuestos para lo cual hay que conocer las leyes en materia de impuestos y a través del uso de entidades corporativas.

Conoce tu comunidad. Tienes que conocer los edificios, cuanto valen, quien es dueño de ellos. Identifica tendencias, o patrones en tu mercado local. Puede ser que vallan a construir un centro comercial dentro de tres años y puedes comprar tierras alrededor muy baratas, que dentro de unos años van a costar una fortuna.

Conoce la planeación urbana, los requerimientos de las zonas, las reuniones de los inversionistas, y cámaras de comercio.

Lee, lee y lee todo hacer sobre los bienes raíces comerciales. Debes de entender la industria de cerca y de fuera para tener éxito.

Bienes Raíces Comerciales para Inversionistas primerizos

Bienes RaícesCOMERCIALE

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Bienes RaícesCOMERCIALE

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In commercial real estate held for rental income, cash flow is king because it determines:

●market value (CAP) ●lending limits (DCR) ●your return (cash on cash)

Unlike 1-4 unit properties, for cash flowing commercial property, your credit is much less important than the property's cash flow in the lending decision.

Real estate investment consists of eight parts

1: Finding potential deals. During this phase you look for potential deals, employing whatever tactics works best ? from reading magazines to car trips around your neighborhood looking for promising properties.

2: Research and initial property examination

When you find a potentially interesting target for your real estate investment, perform some initial research about the property in order to check if the deal is possible and potentially profitable. During that phase you have to (1) take a closer look at the property and its neighborhood, (2) ask around about the property and its status, (3) meet the seller(s), (4) research market values for similar properties.

3: Making up your mind

At this stage of a real estate investment process you must make a decision ? buy the property or leave it for another real estate investor. Take the time and write down all pros and cons of the deal. If you determine that the profit potential is large enough and you can cope with everything involved, proceed to negotiations with the seller.

4: Negotiating with the seller

Negotiating is the critical part of every real estate investment. Here your profit margin is determined and the whole deal takes its (almost) final form. It is very probable that negotiations will involve making several offers and counteroffers. When you and the seller finally agree on the price and terms of the contract, the offer is put down in writing and you can start preparing to close the deal.

Bienes RaícesPROCESO DE

INVERTIR

5: Professional inspection

However, before you close any real estate deal, you have to perform a professional inspection of the property in order to find any potential problems that may affect your plans/profits. It is recommended to hire a professional to do that. Even the most experienced real estate investors cannot find everything, especially if problems are deeply hidden.

6: Closing

If the inspection goes well, it is time for you to close the deal. For the agreed price you will become the owner of the property.

7: Improving the value

A quality rehab is crucial for increasing the profit of every real estate investment. Unless you are really good at it, you should leave this job to hired professionals. It takes up your precious time and there is always a chance that you won’t be able to fix everything right, which will cost you more money than you save in the long run.

8: Marketing campaign

When the renovation is over, the property is ready for sale. It is time for you to start your real estate marketing campaign, find a buyer and then finalize the real estate investment by SELLING THE PROPERTY!If you do it step-by-step always remembering about the final goal (selling the property for a profit), your chances for the success grow. On the other hand, if you decide to skip or swap places of any of the phases, you will fail 9 times out of 10.

Bienes RaícesPROCESO DE

INVERTIR

http://www.richdadwisdom.com/webducation

Bienes Raíces

Equity

Does the property you are purchasing have equity? Equity can take a number of forms, such as:A discounted price, A potential fixer upper A rezoning opportunity A poorly managed property A foreclosure

There are many ways to create equity, but buying into equity is your best bet.

Find a motivated seller who wants out of his property and is willing to give up his equity for less than full value. Or, buy a property that needs work that can be done for 50 cents on the dollar or less.In other words, if the property needs $10,000 in work, make sure you get a $20,000 discount on the price or better.

CONCEPTOS CLAVE

Bienes Raíces

Appreciation

Buying in the right neighborhoods in the right stage of a real estate cycle will result in appreciation and profit. However, timing a real estate cycle is difficult and is speculative. If you buy properties without equity or cash flow solely for short-term appreciation, you are engaging in a very risky investment.

Buying for moderate, long-term (10 to 20 years) appreciation is safer and easier. Look at long-term neighborhood and city-wide trends to pick areas that will hold their values and grow at an average 5% to 7% pace. Combine this tactic with reasonable cash flow and buying into equity, and you will be a smart investor.

CONCEPTOS CLAVE

Bienes Raíces

Risk

Risk is a consideration that too few investors consider. Now ask yourself, “What if my assumptions are wrong?” In other words, do you have a “plan B”?

If you bought for appreciation and the property did not appreciate in value, can you rent for positive cash flow?

If you buy with an adjustable rate loan and the rates go up, will this put you out of business? If you have a few vacancies, can you handle the negative cash flow or will it break the bank for you? Expect the best, but prepare for the worst.

And remember, whenever you look at a property to purchase, think CLEAR: Cash flow, leverage, equity, appreciation, and risk.

CONCEPTOS CLAVE

Bienes RaícesFind the Right

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Choosing a Good Neighborhood

Good schools—Check test scores available at the district office. ¿close to schools?

Low crime rate—Check with the police department’s public affairs officer for crime statistics by neighborhood and block.

Pride of ownership—Check to see that all the homes are well kept.

Balance—Look for a mix of homes, apartments, condos, and townhouses. That produces diversity—a good place to live.

Anchored—Look for a neighborhood that has few homes for sale and no detracting new influence (such as a commercial or industrial park coming in nearby).

Check out public facilities —Look for libraries, fire stations, police departments, and hospitals as well as malls and grocery stores. Are they convenient and well located?

Extras—Look for parks, wide streets, tall trees, cul-de-sacs. Proximity to movies, drugstores, dry cleaning, hardware stores, gas stations, churches, ball fields.

Good access to main arteries.


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Choosing a Good Neighborhood (continuation)

If you’re going to be driving on a thruway or freeway, wait until rush hour, then try it yourself. Use a watch to determine just how long it takes you. (You may be surprised!).

Once you’ve winnowed down the areas even more on the basis of items you discovered (above) by driving around, stop, park your car, and start walking. Talk to anyone you meet. Ask about problems in the area, about schools, about bad neighbors.

Don’t be the sort of person who shops by car. Probably the biggest mistake that buyers make when checking out an area is not walking it. Nothing substitutes for shank’s mare when it comes to discovering the kind of neighborhood you’re in.

Buy a less expensive house in the most expensive neighborhood you can afford. If you do, you multiply your chances for making money later on when you resell.


HouseSet Your House-Hunting Parameters

No matter where you get your plans, you need to follow the same procedure to determine your needs. First, make a wish list. Include on this list all of the things you MUST have in the home. Think hard about what goes on this list and why you put it there, your list might look like this: Two-car garage, Master bedroom downstairs, John’s bedroom, Sally’s bedroom, Office area, Kitchen, Separate dinette, Dining room, Two full baths, 1⁄2 bath downstairs, Foyer, Covered front porch.

Then add the things you would LIKE to the list of things you MUST HAVE: Living room, Garage storage, Walk-in closets, Two-story foyer.

Prioritize your requirements. This exercise will help you determine what is important to you.

One word of caution: Some room sizes can be deceptive on paper. Measure rooms in your current house or apartment to get a feel for the size room that you need. Drawing furniture on the floor plan helps. Make sure everything fits. Figure out where your TV is going. Where will the beds go? Think all of this through.

When you find a plan you like, try to see something similar in real life. Even if you do not see your exact plan, walking through a home of similar size and shape will give you a good feel for yours. This is not always easy. But try to find something similar. It could prevent disappointment later.


HouseSet Your House-Hunting Parameters (continuación)

It’s easy to erase something on paper, and very costly to make changes during construction. Consider some of the following:

List of Details

1. Do all of the doors open without hitting each other or something else? Do they interfere with traffic patterns?

2. Do the window locations offer views? For example, can you see outside from the family room couch? Is there privacy where needed?

3. Are the light switches conveniently located?

4. Can you turn off the light at the top of the stairs without walking down? (We take these things for granted, but they get missed all the time.)

5. Is the lighting shown completely and correctly? Look at security lighting for outside. Check the dimensions for your dining room chandelier location. Do the bedrooms need overhead lights or switch plugs (an outlet in the wall controlled by a switch)?

6. Are there details drawn for: a. Stairs, b. Railings (and how they connect to the floor and stairs), c. Any blocking in the walls for cabinets, bath accessories, or grab bars, e. Roof ventilation methods. f. Soffit/fascia detail (eave detail), h. Foundation construction. i. Kitchen and bath elevations (drawings). Show cabinet sizes and dimensions for coordination purposes, j. Kitchen or family room pass-through openings. Show counter overhang if applicable, k. Chases (openings) for ductwork to travel between floors, l. Skylights, m. Dormers.


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List of Details (continuación)

7. Are all floor finishes shown on the plan or on a separate finish schedule? This affects how the framer builds stairs and sets doors. The flooring contractor needs this information too.

8. Is the HVAC (heating ventilation and air-conditioning) location shown? If there is an outside unit, show that too. Show ceiling and floor register location as well as return air locations. Check for furniture conflicts.

9. Are ceiling heights and finishes clearly shown?

10. Are there framing drawings that show floor and ceiling joist locations, header sizes, roof rafter sizes and locations? This will save you money if it is CLEARLY defined. There cannot be too much detail here. Dimensions and notes are required.

11. Are the smoke detectors shown?

12. Are fire-sprinkler head locations shown (if applicable)?

13. Are all telephone outlets located? Is there a place for your telephone and answering machine there?

14. Is there an outlet for your answering machine?

15. Are all of the cable TV outlets located? Will the TV fit there? Is it easy to see from couches and chairs?


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List of Details (continuación)

16. If you want a home security system, have you located the keypads and main panel?

17. If you want an intercom system, have you located the main control unit and all of the speakers?

18. Do you have any special computer wiring needs?

19. Do you want to wire for your stereo system inside the walls?


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Set Your House-Hunting Parameters (continuation)

How many bedrooms will you need?How many bathrooms will you need?Is there a better school district you want to be in? The better the neighborhood, almost invariably the better the schools.What about being close to shopping? Most people don’t want to drive more than a few minutes for bread or milk.Do you want a two-story, three-story, split-level, or ranch? What about colors? Are you willing to repaint?What about a pool?Air conditioning?Do you want a big lot? Big lots are supposed to be better and cost more. But in reality they require much more time, effort, and money to maintain and frequently are harder to resell.Does it have to have a view? A lot with a view will always cost more, but it will bring more on resale.Do you mind being on a busy street? Being on a busy street makes a house almost twice ashard to resell as being on a quiet street. What about a corner lot? A corner lot means street noise on two sides and is often objectionable.


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People who buy a home that is most likely to please others have an easier time reselling and selling for more money. When you buy, do so with an eye toward later reselling.

Bienes Raíces

TIP—IT’S NOT HOW MUCH YOU PAY, IT’S WHEN YOU BUY AND SELLMarkets go both ways. Sometimes the most important thing is knowing when to take your profit and when to hang on.

TIP—CHECK FOR THE ORIGINAL PRICEBy talking to those who bought six months ago in the same tract, you should be able to establish what the original pricing was. Thus you can determine if the builder has raised the price to pay for your buy down.

Bienes RaícesInversión en

sociedadPartnerships

In a real estate partnership, two or more individuals form a shared business enterprise to buy, manage, and sell properties.

A partnership lets you leverage your way into properties that are larger, more expensive, and potentially more profitable than you could afford as a sole proprietor. Partnerships promise other benefits, too. If you are not well informed about certain areas of real estate investing, you can partner with people from whom you can learn. Your partners will benefit from your expertise, too. This is one reason why real estate partnerships are often made up of people with complementary experience, such as a construction professional, a lending expert, and a skilled property manager.

Of course, there are dangers in partnerships. If one partner wants to sell a building and the other partners do not agree, frictions arise. If one partner wants to invest money to fix up a building or invest in additional properties, conflicts can start. Finally, if one partner decides to leave the business, difficult negotiations often take place about how he or she should be compensated.

The best prevention is to know a great deal about your partners before entering into a partnership and to hire an attorney to spell out your partnership agreement. This legal agreement should cover how one partner can buy his or her way out of the partnership since that is the time when conflict often arises.

Another area of potential conflict concerns the terms under which you and your partners will sell your business if that becomes a possibility in the future. Suppose, for example, that your partner wants to sell her half of your business to a big real estate development firm and you want to keep your half. How would such a deal be structured? How would each of your halves be given a dollar value? Such questions point up the necessity of structuring a partnership with the help of a smart attorney.


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Partnerships (continuation)

Beyond the legal issues of partnership, it is also important to know your partners’ long-term goals for their real estate investments. Do they intend to hold buildings for years, or sell them quickly after their values increase by a small percentage? Do they want to fix up rental units in your properties or invest as little as possible? The more you discuss such questions with potential partners, the more you minimize the possibility of significant friction later.

Never enter into a real estate partnership without first talking in detail with your prospective partner about differences that may surface later.

Do you both want to acquire properties at about the same rate? Do you want to invest similar amounts in fixing up the properties you share? The more differences you can put “on the table” before entering into a partnership, the lower the chances that significant frictions will upset your partnership later.


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Sole Proprietorships

When you acquire buildings without a partner, a corporation, or any other business entity behind you, you are functioning as a sole proprietor.You are in the driver’s seat, making the decisions, taking the profits, but also incurring the risks.Being a sole proprietorship offers the following advantages:

• You make all the decisions yourself. No one can show up at your door with a load of kitchen cabinets that you didn’t order. No one can rent an apartment to a tenant you wouldn’t approve, or undersell your property.

• Your business is relatively easy to run. Keeping records is not complicated. If you track your expenses, profits, depreciation, and other basic statistics, you can probably manage your business with only the help of an attorney and a tax accountant. You also enjoy one of the basic freedoms we have in the United States: the right to conduct business as an individual.

• You can treat your holdings the same way you treat all your personal property. If you want to give some of your buildings to your children or set them aside in a trust for them to inherit after you die, you can.

Yet, sole proprietorships pose some disadvantages too:

• You are personally liable for expenses, penalties, and legal liabilities. If your building sits vacant for a year and no one rents it, you will be the only person who suffers the damage of negative cash flow. If someone slips on a patch of ice in the driveway of your building and gets hurt, you are the person who gets sued.


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Sole Proprietorships (continuation)

• You don’t enjoy certain tax advantages. All income and expenses are reported on your personal tax return. If you die, your spouse and heirs may have to pay a lot of inheritance tax instead of inheriting all of the money you worked so hard to accrue.

• The rising value of your properties can become a liability. If you divorce, for example, the “on paper” value of your holdings can become a real asset to which your former spouse can lay claim. If you decide to sell properties for a great deal more than you paid for them, you will probably pay capital gains taxes. (You can get around paying capital gains taxes by like rolling your profits through investing in other properties. Consult with your attorney or tax advisor.)These advantages and disadvantages should be balanced against other options for structuring your business.

Bienes RaícesEvaluación de

Rendimiento

What is a property worth and how much return should you expect?

One of the attractions of real estate investing is that it is often easy to analyze individual investments in direct property quantitatively.

The financial appraisal of real estate requires assessment of a number of variables: today’s government bond yield; market supply and demand forecasts as influences on prospects for rental incomes; tenant creditworthiness; property depreciation or obsolescence.


Rendimiento

What is a property worth and how much return should you expect?

No real estate investment should be undertaken unless it is expected to perform better than the guaranteed return from government bonds; and any real estate investment should be sold if it is expected to underperform government bonds over some relevant time horizon.


RendimientoRental income

The return to be expected from a property is the discounted value of the expected rental income, net of expenses, plus the proceeds from selling the property at some date in the future.

The key variables in this evaluation are the future rate of change in rents (which is almost always assumed to be an increase) and the appropriate rate at which to discount that rental stream back to a present value or fair price for the property.

In real estate investing the principal driver of valuation is the forecast growth of earnings, or for a property, rent. The raw material for these forecasts is detailed real estate market forecasts or views, focusing on changes in trends in either local or regional markets. When appraising these forecasts, it is often helpful to gauge how the rent forecast relates to a forecast for economy-wide inflation. This is because rents need to be forecast, either implicitly or explicitly, for long periods, if only to provide a basis for estimating the price at which the building might be sold in the future (which will itself be a function of expected rents). This encourages a focus on any implicit strong assumptions.

Rental income

This focus on rental income is important to avoid two common mistakes. First, the value of a property has little to do with the cost of rebuilding it. It is the value of future rent that determines its value. Given the value of the property, this can be broken down into the cost of rebuilding, proxied by the insurance value put on the property, and a residual, which is the value of the land underneath the building. Second, a property is never expensive because the land underneath it is expensive. It is always the other way round. Land is expensive because rents are high, and because rents are high property is expensive. A third important feature for real estate investing follows from this: the price of land, the residual in property valuation, can be very, very volatile. Consider the simple illustration in Table 11.5 overleaf.

If the value of the property increases by 10%, and if rebuilding costs stay the same, the value of the land will double to $2m. This is important both as an explanation for the speculative nature of development land and as a useful cross-check on valuations. Equally, the importance of the price of land will depend upon the scarcity of land. Where land is abundant and planning restrictions do not impede new construction, rents will tend towards reimbursing with a “normal” profit, the marginal cost of new building, which may or may not keep pace with the general level of inflation.


Rendimiento

Evaluación de Rendimiento

Rental income

rents will tend towards reimbursing with a “normal” profit, the marginal cost of new building, which may or may not keep pace with the general level of inflation.

So long as this situation persists, land will always be cheap. With technological progress in building, commercial properties risk becoming a commodity, something that individuals or corporations who need to use real estate (for homes, offi ces, industrial or retail space) must decide whether to own, rent or lease on the same basis as other financial decisions. So although rents, and the cost of land, will move with changes in supply of and demand for properties, there is no inexorable tendency for them to increase faster than inflation. Rents can lag behind inflation for a long time.

Bienes Raíces


Rental income

There is no assurance that rents will keep pace with inflation, and little reason to expect them to increase in line with the rate of growth of the economy.

It follows that investors rely on rental income, rather than capital appreciation, as the principal source of investment performance in real estate investing.

It is not clear how much premium return over government bonds should be expected by financial investors in real estate in the long term. This required premium is reduced by the diversification benefits that real estate brings to a balanced investment strategy.

Government bond yields as the benchmark for real estate investing

Using government bond yields as the benchmark for assessing real estate investments is helpful in several respects.

First, it focuses on the only legitimate reason to move away from safe-haven investing: to achieve a superior return which more than compensates for the risk of a disappointing result. The prospects for superior returns will largely be determined by the state of the market in that location and for that type of property.

Bienes Raíces


Bienes Raíces

Second, it allows focus on the quality of the contractual income stream to be earned from a property, which will be influenced by the creditworthiness of the tenants.

Tenant credit risk

A property with a government agency as a long-term tenant will be directly comparable with government bonds, although some allowance should be made for the illiquidity of the real estate investment as well as the likely existence of options to break the contract.

More normally, the required spread over government bond yields needs to allow for the credit risk associated with its tenants. This is the risk that the tenant will fail to honour the terms of the lease, and that there will be an interruption to rental payments as well as costs associated with attracting new tenants, and that a new tenant might be attracted at less favourable terms than the existing one. The costs involved will be directly influenced by the state of the market – in a buoyant market replacement tenants can be found more quickly and at less expense than in a depressed market.


Corporate credit ratings can provide a guide to the credit risk spread that investors should demand from tenants, but it is unclear whether the spread should apply to the entire rental stream expected from the client.

Property obsolescence

The required yield spread over government bond yields needs to allow for the expected rate of depreciation of the property, which may be a very different cost from the actual outlay on property maintenance. This rate of obsolescence will be a major determinant of the rents that will be earned on the property in the future. Obsolescence is partly a matter of physical deterioration, but it is also accelerated by changes in the pattern of demand for particular types of building or location. Standard depreciation schedules rarely reflect actual experience, which is what matters for market investment values. Obsolescence is always subject to uncertainty, but it is uncertainty of a kind that can affect whole parts of a diversified real estate portfolio. This is why it is appropriate to allow a material risk premium.

Bienes Raíces

Bienes Raíces

Here’s a good formula to determine whether a potential real estate purchase is a deal.

Cash flow

“Will this property cash flow?” Well, that depends on a lot of factors, such as the strength of the local rental market, the interest rate on the financing, and how much of a down payment you make.

It also depends on whether it is a single-family or multi-family dwelling. All of these factors considered, ask yourself, “Will this property provide income?”.

Then ask the question, “How will this property cash flow compared to other potential properties?” For example, a $150,000 house that rents for $1,000/month has a better income potential than a $300,000 house that rents for $1,600/month. A four-unit building that costs $400,000 may bring in $3,000/month in the same neighborhood.

Now, of course, whether the property will provide income to you begs the question of whether income is important to you. Is it? Do you earn other income? Do you need more income now, or is future equity growth more important? There’s no right answer to these questions, but are all factors to consider when looking at a potential purchase.


Bienes RaícesEvaluación de Rendimiento

Calcular el total retorno de una propiedad

Para calcular el retorno total de una propiedad suma los siguientes conceptos:

1.Tasa de ganancia por renta,

2.La ganancia que recibiras por el financiemiento,

3.Amortización (pago de tu hipoteca con las rentas),

4.Inflación,

5.Plusvalía

6.Creación de valor (mejoramiento de la propiedad)

7.Ganancias por comprar por debajo del mercado,

8.Deducciones de impuestos.


Invested Amount = Cash + Debt + TimeThe real cost of every real estate investment can be broken down to this simple equation. The amount of your investment is ultimately the total of the cash you invest, the debt you take on, and the value of the time you spend. Each of these elements has its importance, and the degree of importance differs relative to each investor’s circumstance. If you have a lot of free cash, then the debt and time you spend may be reduced. It can go the other way too: If you are short of cash and have to max out your mortgage and other debt potentials, then you might have to spend a lot more time to turn the investment into a real winner. Nowhere in this equation should you consider that the invested amount is the same as what you paid for the property, without including your time as a part of that overall value. It is okay for you to discount the value of your time to a certain degree, as being your own boss has its own real value. But do put a value to your time.


Financial Analysis Models James R Kobzeff

Let's switch gears and summarize four very popular investment value measures used regularly by investors and real estate analysts.

1) Cash on Cash Return Cash on cash measures the initial profitability of a rental property. The higher the better, and typically a first-year cash on cash return ranges from about 4% to 10%.

Formula: Cash on Cash = Before Tax Cash Flow / Cash Equity (Initial Investment)

2) Gross Rent Multiplier Gross rent multiplier measures the ratio between annual gross rental income and sale price. Think of it as an indication of the number of years it takes the annual rental income to equal the price, so the lower the better. It is good for simple comparisons to other rental property opportunities but insufficient as a stand-alone number.

Formula: Gross Rent Multiplier = Purchase Price / Gross Rent



3) Capitalization Rate "Cap Rate" is essentially a return on asset indicator of how much debt an income property can carry. The higher the return rate, the more debt a property can support, and hence the better the investment opportunity for the real estate investor. Sellers of income property, of course, prefer to sell at lower cap rates. Local markets dictate capitalization rate (there is no one-size-fits-all) but they typically run from about 5% to 12%

Formula: Capitalization Rate = Net Operating Income / Purchase Price or Value



4) Internal Rate of Return The IRR model essentially calculates the average discount rate that equates all future returns over the projected holding period back to the present value of the initial equity investment. It's the most frequently used measurement of projected holding period overall returns because IRR delivers in one number an investment return that integrates rental growth rates and property value appreciation. IRR should be used as a comparison to the real estate investor's required rate of return for making capital allocation and initial investment decisions. IRR can be computed for before or after tax cash flows.

Formula: The computation requires Excel or a qualified real estate investment software solution.


Top 21 Real Estate Analysis Measures & FormulasJames R Kobzeff

Real estate investing requires an understanding and proficiency of at least a handful of financial measures and formulas, otherwise investment opportunities can't be evaluated correctly, and investment money can be lost.

So to help you better understand real estate investing, I've assembled a list of twenty-one measures and formulas used in real estate investing. Some formulas are omitted because they are complex and would require a financial calculator or real estate investment software to compute.

1. Gross Scheduled Income (GSI) – This is the total annual income of the property as if all the space were 100% rented and all rent collected. It includes the actual rent generated by occupied units, as well as potential rent from vacant units. Example: $46,800



2. Vacancy & Credit Loss – This is potential rental income lost due to unoccupied units or nonpayment of rent by tenants.

Example: $46,800 x .05 = $2,340

3. Gross Operating Income (GOI) – This is the gross operating income, less vacancy and credit loss, plus income derived from other sources such as coin-operated laundry facilities.

Example: $46,800 – 2,340 + 720 = $45,180

4. Operating Expenses – These are the costs associated with keeping a property in service and revenue flowing. This includes property taxes, insurance, utilities, and routine maintenance but does not include debt service, income taxes, or depreciation.

Example: $18,525



5. Net Operating Income (NOI) - Net operating income is one of the most important measures because it represents a return on the purchase price of the property and, in short, expresses an objective measure of a property's income stream. It is the gross operating income, less the operating expenses.

Example: $45,180 – 18,525 = $26,655

6. Cash Flow before Taxes (CFBT) - Cash flow before taxes is net operating income, less debt service and capital expenditures, plus earned interest. It represents the annual cash available before consideration of income taxes.

Example: $26,655 – 19,114 = $7,541



7. Taxable Income or Loss – This is the net operating income, less mortgage interest, real property and capital additions depreciation, amortized loan points and closing costs, plus interest earned on property bank accounts or mortgage escrow accounts. Taxable income may be negative as well as positive. If negative, it can shelter your other earnings and actually result in a negative tax liability.

Example: $1,492

8. Tax Liability (Savings) – This is what you must pay (or save) in taxes. It's calculated by multiplying the taxable income or loss by the investor's tax bracket.

Example: $1,492 x .28 = $418

9. Cash Flow after Taxes (CFAT) – This is the amount of spendable cash generated from the property after consideration for taxes. In brief, it's the bottom line, and is calculated by subtracting the tax liability from cash flow before taxes.

Example: $7,541 - 418 = $7,123



10. Gross Rent Multiplier (GRM) – This provides a simple method you can use to estimate the market value of any income property.

Formula: Price / Gross Scheduled Income = GRM

Example: $360,000 / 46,800 = 7.69

11. Capitalization Rate – Cap rate (as it's more commonly called) is the rate at which you discount future income to determine its present value.

Formula: NOI / Value = Cap Rate

Example: $26,655 / 360,000 = 7.40%

12. Cash on Cash Return – This represents the ratio between the property's annual cash flow (usually the first year before taxes) and the amount of the initial capital investment (down payment, loan fees, acquisition costs).

Formula: CFBT / Cash Invested = Cash on Cash

Example: $7,541 / 110,520 = 6.82%



13. Time Value of Money - This is the underlying assumption that money, over time, will change value. For this reason, investment real estate must be studied from a time value of money standpoint because the timing of receipts might be more important than the amount received.

14. Present Value (PV) - This shows what a cash flow or series of cash flows available in the future is worth in purchasing power today. It's calculated by "discounting" future cash flows back in time using a given rate of return (i.e., discount rate).

15. Future Value (FV) - This shows what a cash flow or series of cash flows will be worth at a specified time in the future. It's calculated by "compounding" the original principal sum forward at a given compound rate.



16. Net Present Value (NPV) - This discounts all future cash flows by a desired rate of return to arrive at a present value (PV) of those cash flows, and then deducts it from the investor's initial capital investment. The resulting dollar amount is either negative (return not met), zero (return perfectly met), or positive (return met with room to spare).

17. Internal Rate of Return (IRR) - This model creates a single discount rate whereby all future cash flows can be discounted until they equal the investor's initial investment.

18. Operating Expense Ratio - This provides the ratio of the property's total operating expenses to its gross operating income (GOI).

Formula: Operating Expenses / GOI = Operating Expense Ratio

Example: $18,525 / 45,180 = 41.00%



19. Debt Coverage Ratio (DCR) - This is the ratio between the property's net operating income and annual debt service for the year. Lenders typically require a DCR of 1.2 or more.

Formula: Net Operating Income / Annual Debt Service = Debt Coverage Ratio

Example: $26,655 / 19,114 = 1.39

20. Break-Even Ratio (BER) - This measures the portion of money going out against money coming in, and tells the investor what part of gross operating income will be consumed by all estimated expenses. The result always must be less than 100% for a project to be viable (the lower the better). Lenders typically require a BER of 85% or less.

Formula: (Operating Expense + Debt Service) / Gross Operating Income = BER

Example: ($18,525 + 19,114) / 45,180 = 83.31%

21. Loan to Value (LTV) - This measures what percent of the property's appraised value or selling price (whichever is less) is attributable to financing. A higher LTV means greater leverage (higher financial risk), whereas a lower LTV means less leverage (lower financial risk).

Formula: Loan Amount / Lesser of (Appraised Value or Selling Price) = LTV

Example: $252,000 / 360,000 = 69.22%

Bienes Raíces

The size of your home needs to be compared to others in the area, especially in your community. As a general rule, you do not want to be the biggest or the smallest in the neighborhood. I like to be in the upper 25 percent for size.

TIP—SMALL HOUSE, TOP LOCATIONTry to find a small to medium-sized home in the best located tract—this property will often appreciate the fastest. (Beware the very smallest home, as it may be simply too small for many buyers when it comes time for you to sell; the largest home is often too expensive when it comes time for resale.)

TAMAÑO DE LA CASA

Bienes RaícesEN QUE PARTE DE LA CASA INVERTIR MAS

DINERO

For return on investment, using quality materials and a cohesive design provide the best returns on a home upgrade. Bathroom and kitchen upgrades add the most equity. For return on investment, the best home renovation is to upgrade an old bathroom. Kitchens come in second.

You need to know where to invest your money because certain features of a home sell it, and other features will not kill the deal. Make your home a good value throughcareful selection of the features and upgrades in your home. You’ll be able to save money on things that are generally less important to most home buyers. You can make money by spending money where it counts and saving every possible dollar where it will not be missed. This translates to cash in your pocket when you go to sell the home. Your home will be priced comparable to the surrounding homes, but yours will cost less to build. YOU KEEP THE DIFFERENCE! The trick is to select the items in the house that “will not kill the deal,” and save money on them. These are the items that may not be top of the line or may not be as costly as similar items in neighbors’ homes. However, they are items that would not prevent your average buyer from buying the home anyway.


DINERO

The profitable way to select options in a house is to limit your choices to those options that will sell for more than they cost.

If the person buying your house is willing to pay $5000 more for your house because it has a fireplace, the decision to install a fireplace was a good one. Let’s do the math:

Cost of fireplace: $3400

Value to buyer: $5000

Profit: $1600, which is a 47 percent profit margin

If the person buying your house is willing to pay $2000 more for your house because it has cherry hardwood floors throughout the first floor, the decision to install it was NOT a good one:

Cost of cherry floor upgrade: $7000

Value to buyer: $2000

Profit –$5000


DINERO

I have learned this lesson over and over again working for builders. When a builder builds a house for a customer, any option selected by the customer is profitable for the builder because he just adds his profit to the cost of the option selected.

You can avoid it by not “overbuilding.” Do not choose options that are extravagant or unusual in the community. Stick close to what everyone else is selecting. There are plenty of inexpensive ways to add a WOW factor to your home.


DINERO

Key places to invest in renovating and upgrading:

1. Paint It Attractively.

First, top o the list. You will increase the value of the home by as much as $5 for every $1 that you invest on paint.

2. Upgrade the Carpeting.

You always put better quality carpets in high traffic areas and cheaper carpets in bedrooms, dens and basements. New carpets will increase your value by as much as $4 for every $1 that you invest in carpet.

There are some key rules with regard to purchasing and installing new carpets. Fist of all, use neutral colors. Stick with beige, salmon, cream or white. Select colors that go with anyone's furniture and which are acceptable to almost any taste.

The second rule is that you should use only one color throughout the entire house or apartment. Use the same color in the living room, bathrooms and bedrooms. This gives the house an overall uniform look of quality, cleanliness and attractiveness.


DINERO

Key places to invest in renovating and upgrading:

3. Fix up the Yard.

You can get a pay off in increased or resale value of as much as $25 for every $1 that you put into cleaning up the yard.

4. Add a Bathroom.

These will increase your value by as much as $1.1 for every $1 that you spend. The more bathrooms that a house possesses, the more attractive it is to the purchaser or renter.

5. Replace the Siding.

These will increase your value by as much as $1.1 for every $1 that you spend. But the most important factor is that the home will sell faster.

6. Remodel the Kitchen.

These will increase your value by as much as $.9 for every $1 that you spend. But the most important factor is that the home will sell o rent faster.


DINERO

8 modificaciones que agregan valor a tu propiedad de renta:

1. Limpia la propiedad.

Unidades de renta que no son limpiadas meticulosamente alejan a los clientes de calidad. Ellos van a buscar a otro lugar, y en su lugar, aquellos inquilinos que aceptarían bienes con vidrios y lámparas sucias, alfombras manchadas, estufas llenas de cochambre son más probable que traten tu propiedad como un muladar.

2. Moderniza los colores, estampados y accesorios.

Rápidamente puedes volver más atractivo a tu inmueble con colores modernos, o pequeños cambios como son molduras, espejos, plomería lujosa, accesorios de iluminación, o losetas de piso. La regla es no caer en un gusto muy particular o volverse loco, pero agregar solo la cantidad correcta de actractivos que hagan tus inmuebles sobresaliente de la competencia.


DINERO

8 modificaciones que agregan valor a tu propiedad de renta (continuación):

3. Crea más espacios útiles.

Si logras crear más espacios útiles a tu propiedad, vas a incrementar su valor. Siempre pregúntate “¿Cómo puedo usar o crear espacio para que la propiedad sea más atractiva o genere más ingresos?”. Talves puedes convertir un atico, una parte del garage, en una área avitable adicional. Talves encierras un porch o un patio, agragas un segundo nivel, o contruyes un apartamento.

También, piensa en remodelar el área habitable en el inmueble para que cada área habitable o de almacenamiento sea del tamaño del gusto y preferencias del mercado. Tal vez sea posible reducir el tamaño de un cuarto muy grande agregando paredes o separando áreas o quizás puedes juntar cuartos pequeños para agrandar áreas. Prospectos son normalmente reacios para pagar rentas altas cuando los cuartos u otras áreas son percibidas como muy chicas o muy grandes.


DINERO8 modificaciones que agregan valor a tu propiedad de renta

(continuación):

4. Crea una vista.Siempre que encuentres una propiedad que falle en ver la vista de un lago, océano, montaña, parque, bosque has descubierto una gran manera de agregar valor.

5. Amplifica la luz natural.Los inquilinos e inversionistas prefieren propiedades con un montón de luz natural. Considera agregar o agrandar ventanas, cambiando puertas sólidas por unas de vidrio o instalar ventanas de techo. Puedes lograr que se vea mas espaciosas los inmuebles con pinturas claras y alfombras, o tirando ese techo falso bajo.

6. Reduce el ruido.Los inquilinos pagan un extra por la tranquilidad. Considera aislamiento, árboles, ventanas contra ruido para mejorar el silencio. Entre más puedas eliminar el ruido, mejor. Si puedes escuchar una televisión, gente hablando o caminando, o baños descargando, ten cuidado. Solo que puedas resolver el problema del ruido, vas escuchar múltiples quejas y con una rotación alta de inquilinos.


DINERO

8 modificaciones que agregan valor a tu propiedad de renta (continuación):

3. Crea más espacios útiles.

Si logras crear más espacios útiles a tu propiedad, vas a incrementar su valor. Siempre pregúntate “¿Cómo puedo usar o crear espacio para que la propiedad sea más atractiva o genere más ingresos?”. Talves puedes convertir un atico, una parte del garage, en una área avitable adicional. Talves encierras un porch o un patio, agragas un segundo nivel, o contruyes un apartamento.

También, piensa en remodelar el área habitable en el inmueble para que cada área habitable o de almacenamiento sea del tamaño del gusto y preferencias del mercado. Tal vez sea posible reducir el tamaño de un cuarto muy grande agregando paredes o separando áreas o quizás puedes juntar cuartos pequeños para agrandar áreas. Prospectos son normalmente reacios para pagar rentas altas cuando los cuartos u otras áreas son percibidas como muy chicas o muy grandes.

Bienes RaícesENCONTRANDO GANGAS

The foundation that great real estate deals are built on is motivation. The first concern when you are looking at a deal is why the seller is selling the property. This is the first key ingredient of a great deal—finding a seller who has a strong motivation to sell. It’s the seller’s compelling reason to sell, with a perceived time crunch within which to do it, more than any other factor, that helps you get a great real estate deal. Remember this and say it to yourself over and over again—the foundation of all winning real estate deals is the seller’s motivation to sell. It’s almost as if what the seller initially tells you is his reason for selling is the tip of an iceberg. The real reason is the hidden 90 percent that is below the surface. And it’s this hidden 90 percent which is the key ingredient for a winning deal.

Finding a great deal


Dueños en problemas (perdida del trabajo, divorcio, un accidente o enfermedad, una caída en su negocio).

Gente que se tiene que ir de urgencia de la ciudad.

Gente que por su edad ya no quieren vivir en la casa, o vender la casa de renta por que ya no quieren lidiar con inquilinos.

Vendedores ignorantes.

Oportunidades para obtener gangas

Networking.

Periódicos u otras publicaciones.

Llamadas a dueños.

Agencias de bienes raíces.

Internet.

¿Donde encuentras vendedores de potenciales de gangas?


Antes de ir a la etapa de comprar, has más corta tu elección a través de estas preguntas:

¿Qué vecindario se ve más promisorio?

¿Quieres una casa unifamiliar, condominio, multi unit rental property or town house?

¿Cuánto trabajo quieres hacer en renovación o remodelación?

¿Qué tipo de renovaciones estas dispuesto a realizar? ¿estructurales?, ¿cosmético?, ¿otros?

¿Qué es más importante un precio de ganga o términos de ganga?

¿Comprarías una propiedad con flujo de efectivo negativo?

¿Cuál es el mínimo retorno sobre la inversión requerido? (ROI)

¿Aceptarías propiedades que están ocupadas por inquilinos problemáticos?

¿Cuánto riesgo estas dispuesto a tolerar? Cuando comprar propiedades para reparar, tus costos de renovación pueden exceder tus estimaciones. Si tu compras en colonias que esperas que se recuperen, la recuperación puede que se lleve más tiempo de lo estimado. ¿Cuánto efectivo o capacidad de préstamo tienes para sobrellevar un periodo de no obtención de rentas (por propiedad vacante o por falta de pago de los inquilinos).

¿Cuánto tiempo planeas poseer la propiedad? Después de todos los costos, la propiedad te va dirigir a un precio de venta o un nivel de renta suficiente mente alto para cumplir con tus objetivos de utilidad?

¿Cuáles son tus objetivos de utilidad?

Lista de criterios de búsqueda

Una buena localización es esencial. Lo localización puede ser la diferencia entre una buena inversión y una mala. Cuando veas una propiedad que quieras comprar y rentarla, tienes que recordar que es un lugar donde alguien va vivir. Puedes mejorar la casa pero no puedes moverla. Busca casas en donde siempre halla demanda de casas. Escoger casas en ciudades ocupadas es mejor que escoger casas en el campo o ciudades tranquilas. La localización de la casa debe de estar en el área más caliente de ventas de la ciudad.

LAS TRES COSAS MAS IMPORTANTES ACERCA DE UNA CASA SON:

LOCALIZACION, LOCALIZACION Y LOCALIZACION.

La localización nunca debe de ser subestimada. Puedes regarla en muchas cosas cuando se refiere a la propiedad, siempre y cuando escojas una ubicación ganadora, va haber una posibilidad muy grande que vas hacer capas de vender la propiedad por más dinero de lo que pagaste por ella.

Bienes RaícesLOCALIZACION

Indicadores para conocer la mejor ubicación.

Bienes Raíces

Indicador Que significa para ti…

La población en el área esta incrementando.

Una mayor demanda significa precios más altos.

Las tasas de desocupación van para bajo.

Menos gente esta comprando y más están rentando. Por lo que va ser más fácil rentar y podrás cobrar más caro.

Las tasas de desocupación están subiendo.

Será más difícil rentar, tendrás que hacer cosas para mejorar tu marketing.

El mayor empleador de la ciudad ha cerrado y se salio de la ciudad.

Puede ser la muerte, considera invertir en otra parte.

Una nueva fabrica esta abriendo y trae 1000 nuevos empleos.

Propiedades cercanas a la fabrica van a subir, por que la personas que trabajan ahí querrán vivir cerca.

El promedio que están casas en el mercado son 25 días.

Las ventas son muy rápidas, querrás entrar ahí.

El promedio que están casas en el mercado son 125 días.

Las ventas son muy lentas, Pudieras encontrar muy buenos negocios haciendo ofrecimientos bajos – asegúrate que el área es sólida.

LOCALIZACION


You must study the economics of the city and the neighborhood where you are thinking of investing.

Some cities and some neighborhoods are in a state of decline. These are risky choices for real estate speculation. These are primarily the places where you can get homes with no money down. What you are looking for cities and neighborhoods that are growing and that are therefore good choices for investment.

The Key Variable

People usually buy the very most house that they can qualify for in terms of the mortgage payments, and they buy it as close as they can to where they work, shop and go to school.


Nine factors to consider in Choosing a City

There are 9 factors to consider when choosing a city in which you intend to invest in real state. Every factor can help or hurt you.

1. Level of Business Activity.

What is the general level of business activity in the country as a whole? Nationwide recessions and depressions hurt all real estate values everywhere, but nationwide booms, or prosperous economic times, do not necessarily help all real estate values in the same way.

2.Local Business Activity.

Study the level of local business activity. The most important indicator to look at is the number of new business start-ups, and the growth of employment in the area. A growth rate of new business in excess of 3% to 4% is a good indicator of growth in both employment and economic activity.


3.Trend in Employment.

Examine changes in the employment and income sources for the community. Is industry or business moving in or out? Are there government offices moving in or out? Where are the jobs coming from, and where are the jobs going? The level of employment will have an enormous impact on rental rates.

4.Study Population Trends.

You must understand the trends in population growth or decline. Here is an important formula. Real estate prices increase at twice the rate of population growth and/or three times the rate of inflation. What does that mean? This mean that if there was no inflation, and the population was growing 3% per year, real estate prices would grow at to times 3% or 6% per year. If the population remained stable, but inflation was growing at 3% a year, home prices would increase at three times that, or 9% per year. If an area is losing 2% population per annum, real estate value will decline at 4% in that area. Never try to buck the trends.


5. Identify Tastes and Preferences.

Study the changes in the tastes and preferences of homebuyers. What kind of homes do people want now?. What kind of homes will they want in the future? How does that compare with the homes that are for sale at the present times.

Many homes are built in a style that is outdated. People don't want to live in the type of house. It is very important that you don’t invest in those houses, no matter what kind of a price you can get. Think long-term-

6. Determine the Level of Building Activity.

Find out the volume of building activity and construction cost levels and trends. How many new homes are being built each year relative to the rate of absorption? In other words, if an area requires 1000 new houses new year for growing population, and developers are building 1000 new houses per year, you will have very little upward pressure on housing prices.


7. Check the Vacancy Rates.

You must consider the vacancy rate in the area in witch you are thinking of investing. This perhaps the most important single factor affecting real estate market trends and values. The basic rule is that a vacancy rate below 5% in apartments or other rental accommodation is good. This vacancy rate causes upward pressure on home prices. A vacancy rates causes upward pressure on home prices. A vacancy rate above 10% is poor and causes downward pressure on home prices. A vacancy rate between 5% and 10% is factor that you must use your judgment to evaluate.

8. Analyze the Relationships between numbers.

Study the inter-relationships between prices, rents and construction costs. These are important market conditions. For example, wide differences between listing prices and final sales prices are especially significant. In most markets, 85% to 90% is a common difference between the listing price and what the purchaser actually pays. If the ratio is above or below


that, it can have a positive or negative effect on home prices. Let me give you an example.

In one area, a typical house is listed for $100,000. Homes listing for $100,000 however are selling for $75,000 to $80,000. This means that there will be downward pressure on home prices. In another area, if homes that area listed for $100,000 are selling at $95,000, $98,000 or at full price, this means that there will be upward pressure on home prices. Before you invest in an area, it is essential that you know the disparity between listing prices and final sales prices.

9. Study the level of Real Estate Sales Volume.

You must determine the volume of marketing activity taking place in real estate in that area. This is reflected in the number of deeds and mortgages recorded, and the volume of foreclosures.


10. Average Selling Time.

The average selling time for houses in certain price ranges is also important information. For example, in some markets, house selling for $150,000 will sell in an average of 2-4 weeks. A house selling for $500,000 may take 5-8 months to sell.

When you are thinking of investing in a home, it is important that you determine how fast the homes in that price range are turning over so that you know how quickly you can sell the house if you put it back on the market.


Five Types of Cities to Invest In.

Cities can be classified into five types, based on their major sources of employment and income. In deciding what city you want to live, work and invest in, these are important considerations.

1. Industrial Cities They are based on manufacture and processing of commodities. When the national economy is strong, these cities do well with jobs and wages, and real estate prices are stable.

2. Commercial Cities These cities have more stable economies because they are always busy with the trans-shipment of goods and services.

3. Government Cities One of the best types of city to invest in. Governments seldom decline in their levels of employment or wage levels, so there is a solid economic base in any city centered on government. These cities do not grow rapidly, nor do they decline when the economy slows.


4. Recreation Cities These are often retirement or vacation centers. Many of these places have seasonal economies and are often the first places to be affected by recessions or slow-downs in the national economy.

5. Educational Cities Usually have stable, strong economies. They attract new white-collar businesses in the high-tech and services areas that pay well.

Bienes RaícesRENTAS Y VENTAS

A house should rent for approximately 1% of its market value

Create a system for tracking and recording trend data such as the number of listings, new housing starts, selling prices, time on market, rent levels, and vacancy rates

In slow markets, properties can sit unsold for months, and the result could mean price decreases

Ask yourself. What types of units rent the quickest, i.e., one or two bedrooms, one or two baths, with or without covered parking or community center? How do vacancy rates differ among various neighborhoods and communities? Do some types of buildings or units enjoy waiting lists? If so, what are their features and locations?

Propiedades en renta son llamadas propiedades de ingreso, no solo por el % de ingreso que recibes (entre el 6 y 12% anual), sino por que el ingreso va ir subiendo conforme a la inflación.


The rule of residential rental rates.

One rule of residential real estate is that, over time, a house should rent for approximately 1% of its market value. Put another way, it should sell for about 100 times its monthly rent. This ratio holds true until you get into very expensive homes, where it begins to make no sense at all.

Bienes Raíces

Analiza el mercado de rentas

RENTAS Y VENTAS

The Benefit of Watching Sales and Rental TrendsJames R Kobzeff

Sales trends and rental trends are leading indicators of rising or falling investment property prices.

It would be a good idea, therefore, to create a system for tracking and recording trend data such as the number of listings, new housing starts, selling prices, time on market, rent levels, and vacancy rates when you begin real estate investing.

As you watch these sales and rental trends, you will be able to detect market changes as they occur and might make a profitable short-term gain.

Sales Trends

Watch for the time properties are sitting on the market. In slow markets, properties can sit unsold for months, and the result could mean price decreases. Likewise, as the average time on the market falls, say, from 270 days to 180 days to 120 days, prices are about to go up.



Watch for the number of properties for sale. Real estate prices result from supply and demand. As the number of "for sale" properties increases, thereby inventory increases, and the result could mean sellers lower their prices to attract buyers. Similarly, a minimal number of "for sale" properties signal a lesser inventory and points the way to what could be rapid advances in property prices.

Rental Market Trends

Watch for and review these four important rental market trends for the past 12 to 24 months:

1. vacancy rates

2. time on market

3. annual rent increases and rental concession

Okay, now ask yourself. Are vacancy rates falling or increasing? How long does it take to fill vacant apartments or rental houses? What types of units rent the quickest, i.e., one or two bedrooms, one or two baths, with or without covered parking or community center? How do vacancy rates differ among various neighborhoods and communities? Do some types of buildings or units enjoy waiting lists? If so, what are their features and locations?



What about rents, are rents steady or increasing? What about rent concessions, are property owners giving concessions to attract tenants, and if so, what are they giving away?

Watch for foreclosures in your area. Homeowners who lose their homes become renters, in turn causing a shortage of apartment units that results in increased rents; thus, higher property prices.

What about interest rates, bear in mind that low interest rates means that many tenants who are one pay check away from buying a home vacate the rentals, and vice versa. Of course, in our current economy, with lenders tightening their loan qualifications, this rise and fall in interest rates might be less telling. Nonetheless, interest rates should be monitored.

Bienes RaícesUSO

Grasp the idea that use may be the ultimate deciding factor in the purchase of a property, and that it may even be the sole reason for its value to a specific user. Keep in mind right from the start, not all properties can be used for every possible use.

The key insider secret to investing in real estate is use and in the long run use governs profit.

The most important aspect of any property is the allowed use. This aspect comes in several packages. First, what is the use the buyer intends for that property?

The word use must be viewed as referring to the possible uses that the local zoning and other restrictions will allow. In essence, what will they let you put there?

Your first choice may be to find a good location, but you need a location that allows the use that you need.

Bienes RaícesUSO

Use is controlled by a number of factors, some governmental in nature, such as zoning ordinances, controls dealing with fire issues, and regulations about hazardous substances (relating to such things as gas storage, paint booths, and chemical sales).

Bienes RaícesValuación de propiedades

Valuación de propiedades

Los inversionistas de propiedades normalmente valúan las propiedades generadoras de ingreso de acuerdo a la siguiente formula:

Precio de venta = Ingreso de operación neto / Taza de capitalización

El ingreso neto de operación es igual rentas obtenidas menos los gastos de operación (tales como reparaciones, mantenimieto, impuestos de propiedad, seguro).

Taza de capitalización es la taza prevaleciente de retorno para un tipo de propiedad. En estados unidos la tasa de capitalización enda entre 6 y 12 porciento.

Bienes RaícesValuación de propiedades

Bienes RaícesAPPRECIATION

One of the best ways to accelerate the appreciation is to let nature do it for you. Well land scaped commercial properties can take on a mature value that the barren parking lot of a similar property never achieves. But remember, landscaping is something that most communities are very particular about, so do not jump in and plant trees that may not be approved by the city. Sit down with the appropriate person in the city and get a list of what is allowed, and what they think would be the best plant for the intended area. Keep in mind that some plants tend to drop nasty things on cars parked under them, or millions of leaves each fall, and hard round things, like coconuts, that can damage property as well as people.

One of the most prudent ways to accelerate appreciation is through the right kind of management for the specific property.


The factors that affect the value of real estate are generally obvious once they are at work, causing real estate to rise or fall in value. It’s important to understand exactly what those factors are and how they can cause the value to move either up or down.

The key to success in real estate is to use this knowledge in determining when and what to buy, and how to maximize your profit on a sale.

By understanding the six factors, you will learn to recognize how to take advantage of a situation when it arises, as well as how and when to avoid potential problems that could diminish the value of a property you are about to purchase.


Community Planning

Nearly every community has some form of community planning. Within cities this may come in the form of a planning and zoning department that deals with matters such as “How is this city to be developed?” The county is further controlled by broader mandates from the state, which requires that each county adhere to standards of building and development to fit the scheme of things that the state legislature has decided. The federal government gets its fingers into the pie through its federal matching funds that local communities vie for—funds for road development, bridges, tollways, airports, schools, and countless other federal projects.

Each of these elements of community planning will impose something that may affect the value of your property so that you win or lose value because of it.


Departments of Transportation

Each level of community planning may have a Department of Transportation. This is a powerful factor in controlling development, because development doesn’t flourish unless there is good traffic flow in the community. So what goes on in your city will be greatly affected by the planning that is going on the departments of transportation.

Once you understand how transportation planning functions, you will be able to avoid most of its potential bite and reap most of its benefits.

First of all, understand that decisions and plans of departments of transportation are slow to evolve. Their future plans take years to draft, and years longer to implement. New roads and bridges, and revamping, expanding, and even resurfacing old roads are very expensive undertakings, and when something is expensive it takes a lot of yeses along the way to get final approval.

Keep in mind that transportation is not just about cars; it includes pedestrians, trains, planes, and ships.


Fire and Health Codes

The strongest of all the building codes are usually the fire and health codes of a community.

You need to pay careful attention to both fire and health codes.

Lack of Concurrency

Having concurrency means that your property meets all the current requirements to enable you to develop the property more or less as the zoning might allow.

If you do not meet concurrency, or if you lack concurrency, then your property may not be developable until you take steps to bring the property into concurrency.


Land Use Changes

Land use is a part of the master plan of the community. A change to this plan will suddenly change the overall outlook of the neighborhood and the anticipated growth of the market for certain businesses of that community.

One of the key requirements in speculation in land is to pay very close attention to the land use plan and the options available for the use of the land you are thinking of buying. The greater the flexibility of the plan, the more options you might have. Keep in mind, however, that flexibility is not always a good thing. If the ultimate highest price a buyer would pay for a tract of land that you purchased 10 years ago turns out to be for a high-end retail use, and the surrounding land to your tract has become low-end industrial buildings (great flexibility), then you will lose out. The only way to overcome that potential is either to already know what and who your neighbors are, or to have a large enough tract to be able to buffer yourself from future development that is not up to your standards.


Building MoratoriumsWhen there is a rash of development going on, things might be progressing at such a fast pace that the level of services available to the people who live in the area is being outstripped. This happens most often when new roadways have opened up vast areas of vacant land for new housing development. Developers rush in and, before you know it, there are thousands of new residents living in the area, with thousands more likely to follow. Traffic can no longer be handled on the new road, and more are needed now. Schools don’t even exist yet, and forget about things like shopping, fire department and police services, water and sewer service, and so on.

When this kind of situation starts to get out of hand, there are two things the local government can do. It can make the determination that none of the undeveloped property meets concurrency, so it cannot be developed until something is done to remedy that situation; or it can impose a building moratorium. The building moratorium halts the issuance of a building permit in the area chosen until the city planners have been able to sort things out and, at the same time, to slow down the pressure on existing services. Building moratoriums and concurrency issues are difficult to predict, so it is essential that investors of developmental property take them into consideration in their acquisition proposals. The way you do this is to include provisions in your offers to purchase such properties that can protect you as much as possible against the potential delay or reduction of development you will ultimately be allowed on the tract of land. You will do this as a buyer and if you are a seller you will anticipate that a buyer will want to protect himself against such an imposition.


Six Primary Factors That Make Real Estate Value Go Up or Down

There are six primary factors that can cause the value of any real estate to rise or fall:

1. Supply and demand

2. Local zoning

3. Changes in infrastructure

4. Economic obsolescence

5. Maintenance procedures

6. Motivation to buy or sell

A change in infrastructure, like the widening of the road in front of a strip store, can cause a sudden downturn in value as tenants move out or go out of business, but a year or two later that new roadway can cause the value to jump to a higher level than it originally was. The timing and duration of the factor can play an important role in how you time your acquisition or sale of the subject property.


Supply and DemandThe supply-and-demand effect tends to balance itself out in the long run. However, there is always a period at each end of the cycle when there is either a greater demand than supply or a greater supply than demand. It is important, when viewing a potential supply-and-demand situation, that you make sure you are looking at all apples, or all oranges, and not a mix of the two. For example, in a hot market there can be several things going on at the same time. All expensive homes in the million-dollar-and-up range can be in great demand with a moderate to low supply, while townhomes below that price might be overbuilt and the demand for such properties waning. This would suggest that an ideal time to buy a townhome is just around the corner and that it is likely a great time to sell a million-dollar house.

It is a good idea to examine the situation, however, to ascertain what has created the current demand that did not exist previously. If expensive high-rise condos are the hot ticket right now, what caused that? Have drug smugglers found this a great place to do business? Are people retiring to the area in greater numbers because the air above the ground floor is more healthful than at first-floor level?

Too many people overlook that factor and put a big profit in their pocket, only to find that there is nothing in the marketplace that they can purchase to replace what they just sold. Therefore I always caution investors when they get excited about a profit or despondent over a potential loss of value.


Supply and DemandThe supply-and-demand cycle is just that—a cycle. If the investment property is still throwing off a return you can live with, then hold on to a declining value if there is a good reason for the downturn, and if the light at the end of the tunnel—a change in the cycle—is just around the corner.

How to Take Advantage of the Situation: As I just mentioned, it might be a good idea to ride the down-cycle through its course if you find that you are well into it. If, however, you are just entering the cycle, you may want to consider making a move before the situation worsens, if you can. If you are in a really hot market, it is usually easy to see when the end is coming. All you have to do is to check out how much inventory is either available or being planned. If the product is flex-space (warehouse/office buildings), a quick review of industrial vacant or redevelopment land available can give you a good clue as to how long the rise in redevelopment will last. If there is a shortage of available land, the new development will come to a sudden halt and prices in the existing product will go even higher. This will occur because the demand will continue, until the high prices cause developers to open up other areas that are not too distant from the present area. Then local prices may stabilize or even drop as cheaper product comes available elsewhere. This concept can be applied to any kind of real estate use.


Supply and DemandIn almost any situation, there are opportunities to be had. A strong demand will eventually cause one of two events to happen. The first is that developers will run out of new sites to develop and the unspent demand will open up other areas. If you know that the current hot area will run out of development sites, then be the first (or one of the first, anyway) to find a new area that will offer opportunity for new product at a better buy. Keep in mind this new product will need to overcome the distance from the hot area by offering a similar or better product at a lower price.

The other possibility is that the demand will continue, and more and more supply will be developed in anticipation of the demand, until there is an overabundance of supply. Bam!—the hot market suddenly slows and things even out. You will have anticipated this and already be looking for an in-fill location and a new kind of product that will cater to the people who are occupying all these flex-space warehouse/offices. (In-fill locations are areas in the heart of existing communities or development where old buildings are torn down to make way for new product.)

Pitfalls to Watch Out For: The interplay of supply and demand is a factor that rarely exists by itself. There are almost always two or more factors occurring at the same time. One of the most critical outside influences to fuel the supply-and-demand cycle is the sudden loss or considerable reduction of the supply side of the equation. I say “sudden” because it may appear that way to the general public while not actually being sudden at all.


Changes in Infrastructure

General Comments: A change in any infrastructure can have a rippling effect on the value of real estate. I have already used several examples of this kind of valuechanging factor, such as new or expanded roadways, or bridges that bring traffic, good or bad, to an area. A new stadium, a playhouse, a new park—all these things will have an impact on the value of some real estate. Some will go up in value while others will decline.

Effect on Value: Because this factor is long in planning, the real estate insider will have ample time to consider how the change will affect the surrounding area, or to decide whether another, more distant area will benefit more from the change. The beauty of this factor is that the results from infrastructure changes are very predictable. What happens to the surrounding property when a mega shopping center is built? Where do the values go in any neighborhood that suddenly gets a university or a big expansion of the downtown government center? New roads, bridges, airports, schools and whatever else that has happened in the last few months, or has been announced as planned in the near future, will have an effect on property values. The key is to know which valueswill go up, which will go down, and why. To ascertain that, all you have to do is check out what happened elsewhere in similar circumstances. History will repeat itself—of that you can be sure.


Changes in Infrastructure

How to Take Advantage of the Situation: You will be able to take advantage of a situation only if you have become aware of it. This is a dilemma with most of these factors. They can slip past you and by the time you know what is going on, it is too late to get the maximum benefit from the situation. You learn about changes of infrastructure at the same governmental offices where you find out about zoning and the city fathers’ approach to future development. Remember, nothing happens with respect to changes in any infrastructure within a city that has not followed a process of public meetings. Anyone can keep informed by attaining these meetings.

Pitfalls to Watch Out For: Government changes too. Appointed members of boards resign and the faces of everyone you ever saw sitting on the dais at one of these meetings will eventually be replaced. Not only are they gone, but there may be newcomers who have ideas and approaches different from those the former members had. This means you have to play it close, meet the new members, and learn which way they lean and how they are apt to vote when it is your turn to seek their approval for a project.


Economic Obsolescence

General Comments: It is one of the major factors that causes slums and brings about urban renewal. Traffic flow goes to pot, the inner city starts to get run down, and people begin to move to the suburbs, leaving the downtown area even worse off than before as the spiral of devaluation increases.

Effect on Value: Flip a coin, call it opportunity or chaos. Economic obsolescence is one of those natural events that allows for a renewal of thought and of use. The impact of this factor depends on how widespread the obsolescence is. If it is only one or two buildings then the problem is best seen as an opportunity. The value of the property affected by economic obsolescence will go down. This allows a buyer the chance to purchase it with room to improve the existing structure, or to buy it for the land value and start all over again. Economic conversion, a technique I discuss in Chapter 11, refers to the opportunity to transform an existing property when its current use has less economic viability than a new use for the same property. This is a good way to go with many properties.


Economic Obsolescence

How to Take Advantage of the Situation: I just gave you one answer. Economic conversion may be the best solution, but it is not the only one. In economic conversion you turn to our good friend, the zoning that is applied to the property, and review all the possible uses that can be put on that property.


Maintenance Procedures

Effect on Value: It’s a downhill trip for the property that is not being well maintained, unless there is a good reason for the lack of maintenance. For example, when you buy a property with the idea to remove the existing buildings in ten years or so, it might be easy to let the property deteriorate while getting every dime of rent you can. However, this may initiate a downward turn for the neighborhood, which will adversely affect your future development. Poor maintenance under any circumstance is not a good idea. I would recommend that you protect the surrounding values by at least keeping a good face on the property. If you don’t, you may not be able to stop that downward spiral for the surrounding properties.

How to Take Advantage of the Situation: Whenever I see a property that is slipping down the maintenance hill, I make a point of checking with the owner to see if they want to sell and at what price. You will be surprised at the reasons people let well-located properties go into such a state: no money, out-of town or -state owners, so deep in debt and so out of shape that even the bank doesn’t want the property, and so on. Often the property is owned by someone who just doesn’t have the time or patience to deal with it. Interestingly, this same owner may not even want to deal with the process of selling the property. Root them out and you might get the buy of the year.

Pitfalls to Watch Out For: A run-down property, especially one with roof leaks, may have that problem. It can be dealt with, but the remedy is expensive, so the new use for this property has to be a good one.


Motivation to Buy or Sell

When you are forced to sell is the very time that no one wants to come close to the price you need. It often doesn’t matter how realistic your asking price is. On the other hand, when you are the most qualified buyer, the seller might try to hold you up for a price greater than what anyone else would pay.

Effect on Value: Why were they so motivated? marriage, a health issue, job problems, debt up to their ears, or the bodies buried in the backyard.

How to Take Advantage of the Situation: For the potential buyer who might be faced with paying too much, there are some fine tactics that can help with that situation. “I’ll pay your price if you accept my terms.” Sometimes the situation requires some hard negotiations to take the phantoms out of the picture. Who are the phantoms? They are all the other people the seller is telling you are out there trying to buy the property. If you know you are being asked to buy at a price that you think is too high, then put your lower offer on the table and give the seller a “take it or leave it” proposition. You can always say, “I was only kidding.”

Bienes RaícesMANAGEMENT

Management Postures 1, 2, 3, and 4

Each owner has the choice to do one of the following forms of management. Let’s call them management postures 1, 2, 3, and 4. I refer to these management postures periodically throughout this book, so you may want to mark this page for easy reference.

Management posture 1: Do nothing to maintain the property.

Management posture 2: Do very little to maintain the property unless it is actually broken.

Management posture 3: Maintain the property in its original condition.

Management posture 4: Maintain the property in a constant upgrade mode.

It should be obvious that if the property has the potential for a long economic life, management posture (MP) 4 is the least expensive in the long run because the value of the property goes up faster than with MP 1, 2, or 3. There is no single reason for this, but one important lesson to learn is that investors who constantly strive to upgrade their properties are able to increase rent and, in the long run, reduce the percentage of gross income that is spent on maintenance.



How so? Assume your property grosses $100,000 in rents, and after all expenses and debt service you have a cash flow of $15,000. Assume also that all other expenses remain the same, except you increase your maintenance by $2,000. If you spent 6 percent of your gross rents on maintenance last year, or $6,000, and you increase that sum to $8,000, and the improved condition of the property allows you to bring in a new gross rent of $105,000, your cash flow has jumped up to $18,000 for the year. That $2,000 added cost brought you in an additional $3,000 in revenue. But more important, if an investor wanted 10 percent return on his or her investment, it increased the value of the property by $30,000.

Last year’s gross rent $100,000

Less all expenses and debt payments 85,000

Cash flow in your pocket $ 15,000



Next year’s gross rent $ 105,000

Less all expenses 87,000

New cash flow $ 18,000

Added value $ 30,000

This occurs because an additional price of $30,000 will be justified because of the added $3,000 of cash flow.


MP 4 is not always the best approach to real estate management. Sure, MP 4 is ideal for property you plan to keep for a while, and property that is not already near its economic obsolescence. There are times when you simply want to keep the property producing income, at its highest level, for a short period of time. This means you do not want to plow more capital into a property that is going to be torn down in a few years. In such cases, MP 2 or MP 3 might be all that is needed.


The most important aspect of real estate management is to deal with it quickly and decisively without big moves.

Tenant complaints should be addressed and not ignored,

Problem tenants removed if possible,

Rents kept at or below the market rate of similar properties.

If the property is in a constant upgrade program (MP 4), then stay at or above market rates.


As a real estate investor who has chosen the renting of apartments as a business, your goal now is to keep the units full, and at the highest rent per square foot possible.

So let’s consider the big picture of property management and look at some rental management basics.

Property condition Getting the best tenants and commanding the highest rent starts with a sharp-looking building that has good curb appeal. Keep the structure, landscaping, common areas, and parking in good clean condition.

Tenant applications and screening Require each potential tenant to complete a rental application and then follow up to verify their employment, rental history, and credit and criminal history. Remember, it's always easier to get tenants into your building then it is to get tenants out of your building.

Property Management Tips for Real Estate Investors


Emergency repairs Be sure you have reputable maintenance personnel on-call to service emergency repairs. This may be your job or someone you hire, just be sure the tenant has a repair “help line” they can call 24 hours a day when something must be fixed

immediately.

Aggressive marketing of vacancies Get the word out about an upcoming vacancy instantly. Use signage, advertise in the newspaper, or post it on the web.

Move-in/move-out coordination Get a unit “rent-ready” within a day or two after it becomes vacated, even when you don’t have a new tenant standing by. You wouldn't want to postpone a showing to a prospective tenant because the unit isn't ready to show.



Keys and locks It's always a good idea to change locks each time you have a turnover in tenants. This adds security for you and your new tenant.

Learn the laws about eviction Know what you must do to evict a deadbeat tenant even when you don’t think it might be necessary. The last thing you want is to have a deadbeat tenant hanging around any longer than necessary.

Keep accurate books and records Maintaining a good income and expense history is vital to your rental property business and the cornerstone to the profitability of your real estate investment.


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The following five key factors will aid you in becoming an expert in your comfort zone:

1. Learn the simple things.

2. Get the right tools.

3. Keep records of important data.

4. Research what happened in success stories.

5. Build walls around your comfort zone.


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1. Learn the simple things.

Remember, your goal is to get to know everything about the

zone you will chose.

The actual learning process will occur as you make the

commitment to start attending the planning and zoning board

meetings.


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2. Get the right tools.

The tools to start are few. Here is the initial list:

■ The city zoning map and the book of the building and zoning ordinances and codes which you will get from the city building and zoning department.

■ A list of principal characters, with full names and phone numbers, which include all the city commissioners, and the city manager, and city attorney; head of the building department; head of the planning and zoning department; head and members of the planning and zoning board; county commissioners.


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3. Keep Records of Important Data.

Your record system can be as elaborate or as simple as will work for you.

As you drive around your potential comfort zone, make note of what you encounter. What is for sale, whom to contact, and so on will all become important later on.

As you discover phone numbers and names of owners or brokers, make contact with those people. Do not worry if the property in question is not what you want to invest in. This is your fact-finding stage, and you need to learn about all the property in your zone.

You should become an avid reader of the business and real estate sections of the local newspaper. These will be filled with information that at first won’t appear to be important to you. Then one day you meet one of the people interviewed, and it turns out they own a property in your area. Start programming your brain to track the events of your community.


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3. Keep Records of Important Data (cont…).

A good source of information for years to come will be your photographic record of the events in the zone. As you see properties that are for sale or have recently sold, take a photo of them. On the back of the photo be sure to note the date, the property address, the legal description, the property owner at that date, the asking price, and the sold price. All this information will be easily obtained and will create a historic record of what has been going on in your zone. In just a few years you will have visual proof of what kind of trend is occurring in your area.

Always take photographs of property you own at regular intervals, say at least once a year. You will be surprised how fast time flies and how differently a well-maintained property matures compared to those that are just barely kept in operation.


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4. Research What Happened in Success Stories.

You will often hear or read about how someone developed a new shopping center on the other side of town, or filed for a permit to build a high-rise office building in the center of town. These are success stories you should pay close attention to.

How did they come about? Who were the players? You will probably cross paths with these people at some time in your investing future.

5. Build Walls around Your Comfort Zone.

Review this list and type or write it out as a checklist of the things you need to be aware of to insure that you are learning everything possible within the walls of your comfort zone. Consider each item on this checklist as it would apply to any property in your zone. Remember that different zoning codes may have different applications of these items.


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Your Comfort Zone Checklist

Building setback minimum allowed by zoning codeBuilding heights allowed by zoning codeCommissioners (city and county) for the zoneEmergency plans for storms or other emergenciesFire codesFire stations serving the zoneLibraries serving the areaMaster plan for transportation and traffic ways for the zoneNearest emergency room and hospitalPublic transportationPublic parks in the zoneResidential density per acre allowed by zoning codeSchool districtsSchool locationsShopping areas for the zoneStorm or emergency sheltersUtility upgrade plans for the zoneZoning codes


Bienes RaícesHOW TO ATTRACT

TENANTS

You also must be sure that the tenants are the type of people you want. The easiest way to find them is to hand the whole job over to a firm of estate agents who’ll manage your property, find tenants, interview them, and take security deposits.

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Level One

Level One investing is about belief. It’s about proving to yourself that not only does real estate work for other people, but it works for you! How do you prove this to yourself? By doing a few deals and making a significant profit. Yes, you know you still have a lot to learn, but you’ve seen for yourself how lucrative and possible it really is. The key for Level One is getting yourself into action.

Level TwoLevel Two is all about mastering the five core skills of real estate investing and building an investing business to support your real estate portfolio. At first Level Two is about building your knowledge base of investing strategies, tools, and techniques, but later it’s about building a real estate investing business.Why is this so important for you? Because ultimately, if you don’t learn how to leverage yourself through building a strong business infrastructure of systems and people, you will be limited in two critical ways. First, you will be limited in the scale of projects and profits you can earn. You just can’t do big deals without the infrastructure there to make the deal stand. Second, unless you build an investing business, you’ll be limited in your potential to create the time and freedom you truly want. That’s why it’s so important to learn to build an investing business.

The Three Investor Levels

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Level Three

Level Three is about mastering the art of building an investing business that works so you don’t have to. If Level Two investors are the heart, pumping the business forward, Level Three investors are the brain, directing the big picture of the business and enjoying the consistent profits from that business, without getting caught up in any of the day-to-day activities for the business. Imagine having built your real estate mini empire in such a way that you earn massive income without having to be involved in the day-to-day oversight of the business. Level Three investors earn at least as much as Level Two investors, but they do it passively. This means Level Three investors work less than 10 hours per month. Their property portfolio and real estate business works without them needing to be there to run things.

The Three Investor Levels

Bienes RaícesThe Three Investor Levels

Bienes RaícesAnnual Property Operating Data

Annual Property Operating Data (APOD)

Annual Property Operating Data and serves as the real estate equivalent of an annual income and expense statement. Consider it a snapshot of a property’s annual income and expenses if it helps plant the idea.

How to Construct an APOD

1. Show the annual income derived from rents. Take the sum of all monthly rents as if the units were 100% occupied (i.e., project a rent amount for vacant units) and then multiply by twelve to annualize it. Label it Gross Scheduled Income (GSI).

2. Enter an annual amount for vacancy and credit loss and deduct it from the gross scheduled income. Label the result Effective Gross Income (EGI).

3. Enter an annual amount for income generated from other sources associated with the property (i.e., laundry income) and add it to the effective gross income. Label the result Gross Operating Income (GOI).

4. Itemize the property’s annual operating expenses and total it. This should include property taxes, property insurance, utilities, trash, repairs and maintenance, and other applicable expenses (i.e., property management, advertising, landscaping, etc.). Label the result Annual Operating Expenses.

5. Deduct the total annual operating expenses from the gross operating income and label the result Net Operating Income (NOI).

6. Calculate the annual amount paid for debt service and deduct it from the net operating income. Label the result Cash Flow Before Taxes (CFBT). That is all there is. You have just constructed an APOD.

Bienes RaícesAnnual Property Operating Data

Bienes RaícesFive Questions Your Real Estate Agent Will Ask That You Should Never Answer

Remember, your agent, while he wants to do his best for you, is fundamentally incentivized to make sure the deal gets closed, any deal. Most agents have learned that part of their job is managing their client to help them complete the deal. I recommend that you never tell your agent anything you wouldn’t want him to convey to the other side of the negotiation. While your agent would never intentionally tell the other side confidential or costly information, very often your agent will inadvertently give away a crucial piece of data, either by directly saying something foolish, or indirectly through body language or tone of voice. The key is to share information with your agent on a need-to-know basis. If you don’t tell, neither can he!

Here are the five questions your real estate agent will probably ask you that you should never answer, along with your scripted response to handle each question.

One: Your buyer’s agent asks you, “How do you feel about the house?”

“I’m not really sure yet how I feel about this house. The most important thing for me as an investor is to make sure the numbers work out so I am making a smart business decision when I choose to buy. I won’t ever fall in love with a property like other people you work with might. For me, it’s just a matter of will I make a conservative profit if I buy the house or not.”

Two: Your listing agent asks you, “Why is it you wanted to sell your property?”

“I’m not totally convinced yet that I do want to sell it. I would like to see what you can get me for the house in a reasonable period of time looking for the right buyer. I guess I’m lucky because I don’t have to sell the house, so if we don’t find someone who is willing to pay what we are asking for it, then we can either keep it on the market longer, or maybe I’ll just take it off the market.”

Bienes RaícesFive Questions Your Real Estate Agent Will Ask That You Should Never Answer

Three: Your buyer’s agent asks you, “What’s the most you’d be willing to pay for the house?”

“That’s a great question. I’m not really sure what would make sense as an investment property. Rather than give you an amount to work with as the most I’ll pay, I’d rather you take this offer we just wrote up to them and do your best to get them to agree with it. I think it’s a real reasonable offer, and if for some reason they feel they need it to be different, you do the best you can do to get the lowest counteroffer you can. Then I’ll make a decision of whether it’s even worth spending more time on it or not. If they accept our offer like I am hoping, then we’ll close on the property right away because it’s a fair deal all around.”

Four: Your listing agent asks you, “What’s the lowest offer you would accept?”

“That’s a great question. Rather than even thinking about that right now, what I’d prefer you do is to use all your skill and talent to get me the very best offers you can, and I’ll talk with my partner and see if we’re willing to accept one of them or if the buyer will have to do better before we’ll consider accepting.”

Five: Your listing agent asks you, “What concessions are you willing to give to a buyer to make the house sell faster?”

“I’m not sure I’d be willing to make any concessions. Quite frankly, I don’t think I’ll need to, considering how fairly we’ve priced the house. If you find a serious buyer who asks you about this, get her specific request down in writing, and also get very clear on what she is willing to give me in return for these concessions, and I’ll certainly be willing to consider it.”

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It’s essential that you shift every front-end “originating” lender or mortgage broker you work with to be scrambling to earn your business. It’s also key to convert them in the process to being your champion within their organization so that your loan sails through the approval and underwriting process much easier. This means befriending them, but it also means cultivating within them a deep commitment to seeing that you get your loan. Notice how these three questions each layer in another key shift or commitment step on the part of the mortgage lender or broker you are dealing with.

Question One: “As you know, I’m in the process of interviewing several lenders to see which of them I want to select for me to give my business to. If you were an investor like me, why do you think your company is the one you would choose to work with out of all the hundreds of lenders in town and through the Internet? What lending programs and services do you have that would make you a dream for me to work with?”

Question Two: “If I do end up working with you, I’d want to be one of your preferred clients who does business with you again and again. Would you mind sharing with me what extra incentives or perks you give to your preferred lending clients? What are the preferred rates you give them or the lowered fee scale you give them to keep your preferred clients coming back to you again and again?”

Question Three: “One last question for you, [Insert their name] . If I do choose you to work with, are you going to be willing to commit to do what it takes on your side to be my champion within your organization to make sure I get a great deal on my financing package? It’s really important to me that I establish a partnership with my lender so I feel comfortable and have fun working with them over time. You are? Great. Well, as someone who’s really savvy as to how your company works with its approval and underwriting process, I’m going to rely on your help to make sure that my preliminary documents are presented in just the right way so that my loan sails through. Can I count on your help and experience to help me do things the right way? I thought I could. Let’s take a moment and brainstorm out the pieces of your company’s approval process so that together we can make sure we make it easy for them to pass the loan through. After all, your time is valuable too, so let’s make sure we get it right the first time. Are you up for it?”

Three Questions to Ask Every Lender or Mortgage Broker You Work With

Mapa Mental Inversion en Bienes Raices

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