Buying Real Estate Notes for sale can be a very prosperous investment.

There are different types of notes and often the question arises about how they work.

Here are probably the two most common types of notes…

The note purchased from a lender

These require some real estate investing knowledge and diligence to create the right structure.

• They require you have the ability to create the opportunity when you purchase the note. At the time you purchase there is often an occupant with a financial hardship and you need to contend with this non paying occupant first.
• Most times you need to deal with home renovations to the property. The challenge is you may not have a good understanding of the condition of the property as you purchase the note. This means it is very difficult to be a purposeful investor, if you cannot assess the expense up front, it is a lot like investing in a slot machine, you are rolling the dice in hopes of a great payout.
• The financial reward of the note investment relies on your ability to create the opportunity. These notes are great for the seasoned investors who understands the many nuances of real estate deals and negotiations. They can be very lucrative for the diligent mind. The risk levels are higher if you do not know what you are doing and the rewards can be higher as well.

Then there is the 50% equity Share Cash flowing notes

• Properties are purchased and rehabbed
• Properties are tenanted and cash flowing
• Properties are managed by the person who owns the property (the best invested interest to a value play)
• Properties are located in emerging markets (the best ability to create capitol growth)
• Notes are typically 20% below appraised value giving you great capitol growth potential
• A nice fixed rate of return generates consistent cash flow month after month

Cash flowing Notes with 50% equity share are great investment vehicles for the out of area or overseas investor. There are literally no management headaches, no lost cash flow due to tenant issues or repair issues.

We KNOW that the biggest problem investors have is finding current, active notes that are available for sale RIGHT NOW. Our list is updated weekly and has ONLY currently listed Real Estate notes for sale.

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In our previous post, How The Housing Market Crisis Affected US Investment Properties – Part 1, we talked about the back story to the US Housing Crisis. Today we are going to look at how real estate investors are using the US housing crisis to get the best investment properties.

Here is what the savvy real estate investors are doing:

Having A Plan – Start with a real estate investing plan in place and find a real estate power team that can help them execute the plan.

Set Up Proper Financial Structures – Entity structures are set up (such as a trust or LLC) for asset protection and liability protection by working with national and, or international tax accountants to make sure that their homeland laws do not create a double taxation issue with the US tax laws.

Understand Cash Is King – The domestic currency of many of the foreign countries, when converted to US dollars provides massive leverage. Using currency exchange facilitators to maximize the conversion of their dollars to U.S. Dollars by purchasing exchange rates when the dollar exchange is at its peak and then they can lock that exchange rate in for as much as two years. This gives them even more leverage.

US Lending Is Stagnant – The reason that home prices are so low is that a smaller percentage of people can actually get a loan for purchasing a US property. Foreign real estate investors are leveraging anything they can in their homeland to create the cash. Many just have cash, others have secured lines of credit to their homes or businesses.

Picking The Best Locations To Invest – Experienced real estate investors understand the importance of investing in the best locations. They do their diligence to make sure WHERE they invest within the US has the best markets to maximize their rate of return. Also that the market they choose is able to sustain the rate of returns they seek.

Effortless Equity – One of the keys to succeeding at US real estate investing is to find turnkey properties that are sold at below retail prices which gives immediate equity value from day one.

Property Management – It is vital to make sure that the turnkey property provider also provides excellent property management.

Affordable Financing – Smart investors position themselves to acquire US credit so that as the financial markets rebound, they will be able to qualify for US financing.

Forward Thinking – As this financing comes available, they plan to put some mortgages on their properties to further leverage their cash and purchase more properties.

We work with foreign and domestic real estate investors every day, putting these plans in place and making the connections to find turnkey properties with solid finacials and ongoing property management support. If you would like to find out more about the investment properties we represent or how real estate investing works in the US, give us a call today! +1 727-808-8735

We KNOW that the biggest problem investors have is finding current, active listings that are available for sale RIGHT NOW. Our list is updated weekly and has ONLY currently listed US Investment Properties for sale.

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Using the US housing crisis to get the best real estate investment properties can seem a little mercenary, BUT since it is happening, our best option is to capitalize on the opportunities we see in front of us now!

In Part 1 of this series, we will look at How The Housing Market Crisis Affected US Investment Properties:

Foreign real estate investors from all over the world love investing in the US real estate market. The Number 1 reason is that US real estate is deemed to be one of the safest investments in the world. As was shown at this years World Real Estate Investing Summit, US real estate continues to be one of the most highly sought after commodities around. Our population grows at a rate of 1 new (net) person every 10 seconds. Everyone who lives here wants to stay here and many people from all over the world wish they could live here.

Buying property in the US is as simple as identifying the right location and property and agreeing to the purchase contract. If indeed you have money to purchase a US real estate investment property and agree on the terms of a contract, you are good to go. Very few if any other countries have the simplicity to own real estate as the US does.

About 10 years ago the government and the finance industry wanted to make it possible for as many people as possible to own a home. This was a great concept but one that would later prove to be a disaster. In order to allow as many people as possible to get a home loan the lending standards were reduced to almost nothing. Many loans (nicknamed Liars Loans) were utilized and the process allowed most everyone who asked for a loan to get one.

What this ultimately did was created a large demand for homes. Everyone was buying homes and many were buying a second home. Investors were buying 10 to 20 homes and up. With little to no standards to qualify for a loan, the banks were lending money to people who could never sustain the payments they were committing to. Along came the A.R.M (Adjustable Rate Mortgage). These loans allowed you to get into the property very cheaply and after a year or two, the payment would rise as the interest rates went up. All these purchases obviously created a supply and demand imbalance for homes that were for sale, resulting in very rapid escalation in values.

Then the bubble burst. Home values started to decrease and now we are here, years later with a much deflated real estate market. In many parts of the country, the value actually reduced to home prices in the late 1990s to early 2000, eclipsing the increase and going even further down. In my opinion, most markets have over corrected.

Why the over correction? In its simplest form the finance industry has taken such a hit by borrowers who have defaulted on their mortgages that they are busy trying to liquidate their bad loans and are scared to finance money again. Lenders have done a complete turnaround from the height of the real estate boom days. They went from very loose lending standards to lending standards that are so tight many people who would normally qualify for a loan are not currently able to qualify to borrow money.

What this does to home prices is forces them to be reduced to the point that people can come in and pay cash for them. As fewer and fewer people have the means to purchase with cash, the supply of buyers is reduced which reduces the value of the homes. Homes are more affordable now than they have been for the past 15 years based on income to housing expense ratios.

Tune in next week for Part 2 of this series, Using the US Housing Crisis To Get the Best Investment Properties.

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There are both pros and cons to purchasing US investment property sight unseen. I hesitated to write this article as it had the possibility of opening a whole can of worms (great North American colloquialism!), I then thought why not. There are many real estate investors who do this every day, so it would serve them well to consider both the pros and cons.

Let’s start with a HUGE declaimer from my end, it is ALWAYS my advice to visit an investment property BEFORE you purchase so you have complete clarity as to what you are buying. That having been said, here are my takes on the pros and cons of purchasing US investment property sight unseen:

Pros: TO PURCHASING SIGHT UNSEEN

• you save money on travel expenses which improves your total ROI
• you save time by not traveling

Cons: TO PURCHASING SIGHT UNSEEN

• Your ROI is decreased by adding travel expenses into the mix
• You do not have visual clarity to the area and the condition of the area such as density of the area and condition of neighboring homes
• You are unable to see first-hand where is the path of progress in the city you purchase in
• You are unable to create an eye to eye contact with the people you are buying from and those who will manage your properties

While I tried to be fair, I still unequivocally recommend visiting the property (or having your agent or representative go in person to provide a detailed report).

If a picture is worth a thousand words, I believe seeing a 3 dimensional full panoramic in-person view is worth a million words. Pictures on the internet can hide a lot of telltale signs that can indeed be identified in person. One example is that freshly painted trim on a house that makes the visual appeal look awesome but in person you may identify that it is painted over wood decay.

In a picture you look at the house and its features, but in person you can see the roads out front and the condition of the curbs and gutters. If these are in disrepair, you may find yourself with an upcoming special assessment.

I can go on and on here, but I believe the illustration is there. Trusting the people you work with is important and, though there are a lot of people that cannot be trusted, there are many that can, the challenge is clarity. What may seem as an insignificant issue to one person is sometimes a huge issue to the next person. Only you know exactly what it is that makes you comfortable, so I believe viewing the property you purchase is paramount.

If you are considering purchasing a US Investment Property sight unseen and would like to find out how to get a “feet on the ground assessment” done by a reputable Realtor, give me a call today and we can discuss your options! +1 727-808-8735

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Are Craig’s List, EBay, Classified Ads or For Sale By Owners (FSBOs) the best place to get a deal on real estate investing? The answer, of course, is it depends! You may find great properties on these internet sites and you may find horror stories. The big question to ask is, “is there someone involved in the transaction that will have a fiduciary responsibility in the transaction” (meaning: is there a licensed representative here that is obligated by law to look out for my best interests). If not that person needs to be YOU. Candidly, you should always do your diligence either way to make sure you are making sound decisions.

I hear stories everyday about people who have purchased investments only to learn the property is land locked (meaning you cannot access the property because it is in the middle of someone’s land and there are no roads in or out of the newly purchased property). Other “fun” problems are the property is located next to a nuclear power plant or some other disaster area.

The point I am illustrating here is that it is imperative to do your diligence and view the property BEFORE you purchase (check out our posts Exit Strategy – Foreign Investors Should Know About The FIRPTA Laws and Real Estate Investing Exit Strategy – The Demographic Shift). Ask lots of questions and know what you’re buying. Ask why it is being sold and do your diligence to see that the exit strategy you have in mind will work and be proficient for your desires.

The double edge sword when purchasing through these venues is the seller is trying to save money by marketing it themselves. (This is understandable human nature to save money). However, when there is not a real estate professional involved in the transaction there may be a lot of unknowns. If you do not sell properties every day, do you indeed know what you need to do to sell the property?

Same thing goes for the buyer. If the buyer does not buy property everyday, do you need to know what needs to be done to make a complete purchase without surprises? Many times it is the unknown that gets people in trouble. You should do plenty of diligence and, based on the stories I hear, I always advise to hire a real estate professional of some kind. Whether it be a real estate broker, a real estate attorney or someone that can help you make sound and intelligent decisions.

Stay on the right real estate investing track!

If you would like to stay on top of all the latest Real Estate Investor News, click the link to sign up for our free real estate investor’s dashboard report today!

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Not all realtors (as real estate agents are called here in the U.S.) are created equal. Here are the 5 things you want to know before calling a realtor:

1. Know where you want to invest and why.

Most realtors are commission based and they will try and sell you a property because quite simply that is their job. If you call a realtor in an area that may not be a good or emerging market, you will not hear that from a local realtor. Their job is to tell the fine qualities of their area and to sell you a property. That the area is not able to sustain a great ROI is of little concern to most local realtors.

2. Know what you want to accomplish from your investment before purchasing any property.

A realtor can only help accomplish the goal that you are trying to achieve. If you do not have perfect clarity of what you want from your investment that is exactly what you will get, lack of clarity of what your investment will actually do for you. Exit strategies need to be communicated with your realtor and clarity needs to be articulated to all parties in order for sound decisions to be made.

3. Find out if the Realtor is a real estate investor themselves.

Out of 1.2 million U.S realtors only 3% actually invest in real estate themselves. This is a sad but true statement. You would not want to buy stocks from someone who does not believe in the product enough to invest in them and similarly you should not want to purchase REAL ESTATE FROM SOMEONE WHO IS NOT A PRODUCT OF THE PRODUCT THEY SELL!

4. Ask if they are a full time real estate investor Realtor or a full time property manager.

Real estate is a full time activity. Selling real estate and being up on the latest and greatest information products and networking to have the best power team affiliates is in important issue and one that can take 50, 60 and even 70 or 80 hours a week. So never work with a realtor that says he or she can manage your property for you. Managing property is a full time job as well and one that can take 40 to 80 hours a week to do. If one realtor does both (sells property and manages property) they are not affective on either of them.

5. Ask appropriate questions to find out their knowledge level of real estate investing terms.

Finally you want to know your terms: Cap rates, cash on cash returns, ROI, exit strategies, cash flow, capitol growth, emerging markets, etc, etc. These are terms that real estate investing minded Realtors use every day. If your realtor uses these and can communicate using these, chances are they understand investing and can help you. You may be interested in seeing how many Realtors will not understand these terms at all. Test it out and ask to see what kind of a cap rate you can expect in your market place and see if they can answer that question for you.

If you are looking for property in the US and want a real estate investing based Realtor, give us a call today! +1 727-808-8735

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Wow! I find myself in a weird mood today… I am the eternal optimist only positive things to say and yet I find myself writing this second post of the day that has its share of negative tones.

I guess I am just bothered by all I see happening to the new investors. There are so many properties being disguised as great investments that I have to vent a little.

I figure if I educate just one person from the bait of a large capital outlay or a reduced cash flow disguised as the investment of a lifetime then I can sleep better at night.

Things to consider: If an investment can produce and sustain a 20 to 40% return then why do they not all do that? The answer of course is they cannot. High returns are needed to generate interest to properties that may be awaiting capital outlay such as:

• Deferred maintenance
• A failing infrastructure to the immediate area such as roads or well and septic 
• A failing infrastructure to a community 
• Rises in un-employment and vacancies 
• Locations losing values due to path of progress within a community going the other direction 
• Overvalued markets 

Today’s awesome real estate market generates plenty of great opportunities and double digit returns are very possible. Low double digit returns are very sustainable. High double digit returns are bait and switch.

Stop being a price shopper and be a value shopper.

Establish your list of goals (if you fall prey to a deal that cannot sustain its returns, you probably did not have a planned real estate investing goal in the first place).

I learned this valuable lesson as a young boy. I loved woodworking and used the money I made mowing lawns to buy tools. Because I had very little money I bought the cheapest tool money could buy. My big brother (who was then a young adult) said to me , “you are always are complaining about these tools breaking down and falling apart, you get what you pay for. Save your money and get a quality brand tool when it is on sale and that tool (when taken care of properly) will last you a lifetime.” He was right. I started buying quality tools and still have them thirty years later.

I learned that by shopping only the price, I bought the same tool over and over again. Ultimately I spent more doing that then spending a little more to get a quality product that can sustain the test of time. The value was in the product that can generate a useful tool for the longest period of time. Value will beat out price every day.

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When you are looking for an Investment Property Management company, our top tip is that your property manager should manage property only. Seasoned investors all know that the key to a successful and profitable investment lies within the quality of the property manager. To be a property manager in the US you are required to hold a real estate license.

This makes great sense as there are many fair housing laws, etc they should know about to make sure people are being taken care of fairly. As I have great insight into the world of investment property, and I am also a licensed Real Estate Broker, I am often asked to manage property for people. They are stunned to learn that I do not do property management (I used to manage my own properties and I no longer do that either).

The real estate industry has many, many moving pieces to it and is changing very often. Selling real estate, or doing real estate consulting, or doing property management is an extremely busy and detailed job. It requires your undivided attention. To do any one of them effectively you must focus your attention on it. A gentleman whom I have come to highly respect by the name of Skip (who mentored me, years ago) stated to me, “To succeed you need a team of professionals working with you on you on your behalf. Make sure they know your goals and vision and treat them well. When you do, they will reward you with big success.” I never forgot this statement.

Investment Property Management Case Study

Investment property management is the exact conversation we were having at the time. This was about 15 years ago when I first got my real estate license. I owned lots of properties which I was managing for myself. Now that I was licensed and helping him to buy and sell his investment property, I thought he would also want to hire me to manage his property. He shared this concept with me; that I cannot possibly give his properties the attention needed to succeed if I am also busy selling real estate. Additionally you cannot give my purchase and sales proper attention if you are handling tenant issues.

Lesson well learned. What I do instead is to find the right minded property management. Management that has great systems in place & can give me the cash flow I seek while taking care of my properties to generate the capitol growth that I want.

See Due Diligence – Investment Property Management Questionnaire

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A property manager is to your investment as your engine is to your car. Without a great finely tuned engine your car does not deliver you your intended outcome (a safe journey without incident). Likewise, without a systemized, knowledgeable property manager, you will never get to your intended outcome (a safe profitable business operated without incident).

As I research real estate markets looking for quality turnkey property providers I have a list of questions I ask the property managers. As my early holiday gift to you, I am sharing this list of questions with you.

The first questions have to do with finding good tenants. A building with good tenants tends to have fewer maintenance and other issues.

Property Management Questionnaire – Tenant Questions

• How many vacancies do you have right now? Out of how many total units that you manage?
• What is the average length of time it takes to fill a vacancy?
• Is that average time getting longer or shorter?
• How do you market your rental units?
• Do you use the web site to attract new tenants and to keep prospects informed?
• What factors would make you reject a prospect?
• Would you accept a tenant who met your qualifications in some areas, but not others? 8. Which qualifications are most important to you?
• What screening methods do you use?

Property Management Questionnaire – Tenant Management

The next questions relate to tenant management. It’s just as important to keep good tenants as it is to find them.

• How do you collect rents?
• What is your late rent policy?
• What other rules do you set for tenants?
• What percentage of tenants do you have to evict?
• How does the eviction process work here?
• How do your tenants contact you?

Property Management Questionnaire – Maintenance

• Which kinds of maintenance jobs are handled in-house?
• Which ones do you use an outside handyman for?
• Which ones do you use professional contractors for?
• How many quotes do you get for jobs?
• How expensive does a job have to be for you to contact me before doing it?
• What are your rules for contractors being inside occupied rental units?
• Who are your preferred contractors?

Property Management Questionnaire – Experience

You want managers to know the local real estate world inside and out.

• How long have you been a property manager?
• Do you have any certifications?
• Does your locality require landlords to have a license or permit to operate a rental and if so what are those fees?
• Do you understand the local rules and ordinances to accommodate things such as local licensure requirements and or section 8 requirements?
• Do you personally invest in real estate in this area?

Finally, you need to understand your arrangement with the property manager.

• What is your fee structure?
• Are your reports web based if not how do we get them?
• Do you require an exclusive arrangement to broker the property?
• How much notice will you give before terminating a contract?

Here are some other things to watch out for – a manager with a messy office. Chances are they doesn’t much care about the condition of the properties either. A manager you have a hard time reaching by phone or email. If he won’t return your messages now when he’s trying to get your business, what are the chances that he’ll do better later?

Stay on the right real estate investing track!

If you would like to stay on top of all the latest Real Estate Investor News, click the link to sign up for our free real estate investor’s dashboard report today!

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Infrastructure Can Affect Capitol Growth and Cash Flow.

I hear these stories all the time so I thought I would share one with you. There are a number of areas where the infrastructure is incomplete and represents possible cash flow issues and or reduced capital growth to the uninformed investor.

There are a number of city properties that have roadways with no curbs or gutter to the roadways. Others have only private wells or septic instead of city water or sewer. This is an invisible cash flow dilemma that should always be addresses within your diligence process.

By infrastructure I am referring to things like the road way out front of your investment property, the curb and gutter system (the drainage for the neighborhoods to avoid flooding of streets and yards), as well as the water supply and the sewer system for the individual property.

In the US, it is customary for rural farm land areas to have what is called a well and septic system. This means the individual home has a private well that is dug and water is pumped into the house. The plumbing then drains to a septic system buried in the yard somewhere. Routinely the septic system needs draining and cleaning. These systems require routine maintenance and upgrades. Over time, the septic system may be overcome by tree roots that pierce the tank and require replacement.

Most city properties have a city (metropolitan) water supply that is plumbed to the property though water towers, the city digs much deeper wells and filters the water and abides to certain clean water acts to insure safe and clean water. The public sewer system drains all away from the property and makes for a much cleaner and maintenance free system for the homeowner.

I have seen many investors miss this important piece of diligence and later learn they have big expenses in repairing and or replacing the systems. Sometimes when purchasing new property, they can go for a number of years with little to no concerns other than an annual cleaning of the septic tank. They later learn when they try and sell, that the end user is not interested in purchasing the property as the more primitive system is considered an obsolescence (a material aspect that will affect the value of the property).

Another challenge they encounter is to learn that a few years after purchasing a property that the city is now coming in to update the infrastructure and will assess you big dollars on your tax bill (cutting into your cash flow).

Simple questions to avoid all this:

• Does the property have city sewer and water or is it well and septic (this should be outlined in the purchase contract but many miss it or do not know what it all means)
• Can you visibly see if there is curb and gutter. If there is not, you may want to identify if the city has plans to bring them in and when.

It does not mean you should never invest in these properties. I simply suggest you do proper diligence and evaluate the property for its true merits. I have seen too many people purchase what seems to be a “too good to be true” property only to learn later why the price was so cheap in the first place.

Stay on the right real estate investing track!

If you would like to stay on top of all the latest Real Estate Investor News, click the link to sign up for our free real estate investor’s dashboard report today!

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