Advice for the First Time Real Estate Investor

Having worked with a variety of investment properties over the past several years, let me first say YES it is possible to make a nice living working with investment properties. However, I've also met a lot of individuals who have failed miserably at it. In fact I've seen so many failures; I don't even know where to start in discussing them...

One of the biggest mistakes I've seen people make is they spend time "researching" i.e. watching videos or reading the internet, but they never seem to seek advice from ACTUAL investors working in their local market. Buried near the bottom of the ABC article, it mentioned you should have a "home inspector, contractor, realtor, tax accountant and attorney to advise you."* Although I would add lender to that list as well, the point to be made is having a core group of experts from every aspect of the investment stage to help you should something go wrong can mean the difference between making a profit and losing your proverbial shirt.

From my experience, most would-be investors are afraid of looking “stupid” in front of other investors, or are afraid they will be perceived as competition. Trust me; successful investors do not see a first time neophyte as a threat. Most of you will fail so there is no need for the expert to feel angst by the presence of a novice. But believe me, it’s a whole lot less embarrassing to ask a stupid question of an experienced expert than to lose your home because you didn’t ask in the first place. And remember because laws and regulations vary from state to state, and city to city, the “great advice” you get from someone on the internet in California can land you in hot water in Missouri. For that matter, the differences between an established inner city and a budding subburb can be night and day.

The best advice, as well as the FIRST piece of advice I offer every “new” real estate investor or would-be rehabber is to seek excellent tax and legal council. When seeking advice of an accountant, research for a company or individual with experience in real estate. When it comes to home improvements and rehabbing, things like repairing a door verses replacing a door depreciate very differently having varying tax consequences. A knowledgeable tax advisor can be your greatest asset when Uncle Sam comes a callin'!

This is also true of your legal ally a.k.a. your attorney. Protect your current assets and minimize your exposure and vulnerability to liability should the unexpected occur- like someone becoming injured on your property, loss due to theft and possible items not covered under your insurance policy (that’s another story for another day- which I will post to my blog at
http://www.stlagent.com). Your attorney will guide you on an appropriate course of action be it in creating an LLC (Limited Liability Corporation) or other appropriate precautions to protect your best interests.

Along theses same lines, when you go to look for the rest of your core group of “experts” as you begin your endeavor into investment properties, seek out individuals who not only know their business, but have also owned investment properties themselves. For example, I run into residential real estate agents far too often than I care to reveal who are offering all sorts of bad advice to would-be investors because they are trying to find an investment property and don’t know the difference between an investment and a primary residence.

Not to beat my own drum, but my experience in these matters is first hand and once you’ve worked with investment properties you will realize it’s not like buying a home to live in. Think of it this way, a gynecologist is in fact a doctor, but would you go to him/her if you had a sore throat? It’s no different with real estate agents. Find an agent who has experience in investment properties, first hand, because you seek investment properties in a completely different approach than you do a home to live in (Again, another story, another day). The same is true of lenders because borrowing money on an investment property is extremely different than a primary residence- and finding out your lender didn’t know that after the project starts can break you.

If you really want to enter the world of investment properties, be certain of your goals and stay within those narrow parameters. If you think investment properties will be “fun” and a “bonding” experience with your teenager because of too many hours spent in front of the T.V. watching “Trading Spaces”, think again. Investing in real estate should be approached like any other investment. If the numbers look good on paper, proceed. If not, put on your tennis shoes and run like heck!

by Kimberly Shallenberger-Cameron

http://www.stlagent.com

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10 “No Money Down” Ways to Buy Real Estate

Turn the Television on any Sunday morning and you’ll find yourself in the middle of a “how to buy real estate” infomercial. Can you really buy a house with no down payment? Can you really make thousands or millions of dollars buying real estate. Of course the answer is “yes” and “no”. The real question is, are you willing to pay anywhere from $500 to $5000 for the information, classes and hotline? Most important are you self disciplined enough to follow the program.

Before you spend money on these expensive programs, here are my top ten “no money down” ways to buy real estate. If you’re self disciplined and willing to hear the word “no” many times before you get a “yes”, then maybe you can buy a house without a down payment.

1. First is to check out the many new zero down programs now available from lenders. Especially if you’re a fist time buyer. Also FHA and VA have loans that may not be zero down, but are very close.

2. Borrow money for the down payment – Borrow the money from family, friends or a business partner at a high interest rate or a percentage of the profit when the property is sold

3. Raise the price and lower the terms – Offer the seller more than he is asking provided he is willing to accept the down payment in the form of a note. If the seller is asking $150,000 with $15,000 down and willing to carry the balance of $135,000. Try offering $155,000 in the form of a promissory not instead of cash. The seller gets a little more money for the additional risk.
4. Borrow against a life insurance policy – Many life insurance policy’s let you borrow against the policy for the purpose of investing in real estate or other investments.

5. Use other property as collateral – Create a note on existing property that you or a partner own and use it as the down payment for the property you are buying.

6. Home equity loan – Home equity loans are generally easy to qualify for as long as there is adequate equity in the property.

7. Seller refinance – Have the seller refinance the property, receiving the cash he needs from the proceeds of the new loan, the buyer gives the seller a note for the balance of the seller’s equity.

8. Find an investor – There are many people who have money but no time. Their current profession keeps them too busy. Work out a deal where they put up the money and you split the profits when you sell.

9. Lease with option to purchase – Lease a property with the right to buy it at some future time. Provide for the rental payment to be credited towards the down payment if you decide to exercise your option.

10. Give them something they need – If the seller is planning to purchase something in the future that you own or can buy, use it as a trade. This can be anything such as furniture, boat or motor home.

by Richard Massey

http://www.unitedfinancialresources.com or to read more articles go to

What Does The Future Hold For Lekki 2?

Lekki phase 2, as a government residential scheme has been underdeveloped for too long. As Phase 1 is become more expensive, Akintunde Seriki of (Castle Property Xtra) observes.

Lekki Scheme 2, a government residential scheme lying along the lekki Epe expressway, off Abraham Adesanya Estate, was created about 12 years ago. It covers about 20 hectares of land bounded by Abraham Adesanya Estate, Okun Ajah and Ogombo settlements. The scheme is fully subscribed and has the basic infrastructure in place such as good road network, proper drainage channels, electricity and water supply, all completed to about 90%.

Despite all these, owners of plots have failed to develop them, as development of the estate is put at 20% and this has resulted in the threat of renovation of some plots by the state government in the past. The renovation warning which is still standing is basically for those who have not finished paying up for their Letter of Allocation and those who have not stated any form of construction on land purchased. On the other hand, to encourage speedy development of the area, the state government, through LSDPC, built the Oba Elegushi Estate recently.

Many of the land owners try to avoid being sanctioned by quickly selling off the property or starting any sort of construction o the site. Besides the Letter of Allocation, which is given as soon as the property is paid for, owners will have to apply for the government’s certificate of Occupancy, in lieu of which Governor’s Consent can be given. However, few of the plots already have the C of O.

Lekki Phase 2 has been notorious for vacant plots and underdevelopment as many land owners have refused to start any form of construction in the estate. In fact, patronage in terms of purchase of land in the area is quite low has people are generally disinterested in the area. This can be attributed to the fact that no one wants to live in an isolated area which is also underscored by the lack of security there. We discovered that many of the land owners there also bought in to the Scheme 1and are presently resident there but are waiting for Scheme 2 to improve before starting anything.

The estate is not like any other estate around as it is not fenced round nor does it have any central entrance, facilities which have been suggested will push the estate desirability up a notch. The absence of the ‘estate feel’ is also evidence in the fact that there is no central facility management system and recreation centres, often provided within estates around, are unavailable.

There is also the waterlogged sections close to OkunAjah, just after the LSDPC development. This area is said to be occupied mainly by developers who are trying to sand fill that part of the estate.

Land in Lekki 2 goes for between N9m and N18m depending on size and exact location with rates of about N10, 000 to N12,000/sqm in the waterlogged parts whole those in the development area go for N13,000 to N19,000/sqm. In comparison with estate within the vicinity, VGC has the highest worth with plots costing between N76,000 and N85,000/sqm while Ikota Villa averages about N35,0000/sqm and Royal Gardens Estate around N46,000/sqm. Even Crown Estate, further down the road from Lekki 2 sell in the region of about N36, 000/sqm.

Purchase of land in Lekki 2 is fairly on the rise but some buy mainly for speculative purposes as the price is quite low. Nonetheless, as Lekki 1 is getting quite congested with less and less available land, Scheme 2 is becoming more attractive with the hope that by the end of the year, development should pick up. The higher cost of Scheme 1 land may also push more people to Scheme 2 while the while the inter-coastal Road, which is still under construction, will be expected to open up the area a little bit more when fully completed.

At the end of the day, the question remains, if every land owner is waiting for others to come before starting his own project, when will Lekki 2 actually get developed.