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Question and Answer for IRER
Q- I am just getting into the
idea of investing in real estate- what 3 things should I do to begin?
A-The best advice we can give you is
to start educating yourself. Read books- there are so many available on the
subject! Much of what we teach and live by is based on the best selling book by
Gary Keller- The Millionaire Real Estate Investor. We also like the Rich
Dad/Poor Dad “Advisor” books on Real Estate by Robert Kiyosaki.
Watch the market. Learn the values
in your area and be on the lookout for market trends. Start looking at real
estate- driving around neighborhoods, attending open houses, etc. Decided on
which segment of the market will be your personal niche- what will your criteria
be?
Lastly, seek mentors. Attend
seminars, try to network with successful investors and create your own sphere of
influence.
Q- What can I expect to learn by
attending the MREI introductory seminar?
A-You’ll learn from the real life
examples of over 100 real life Millionaire Investors, based on the bestselling
book by Keller that is mentioned above. Using their models and successes, we
will show you how to develop the mindset of a Millionaire Real Estate Investor,
how to create sound criteria for identifying great investment opportunities, and
which proven and tested models are key to helping you build your own RE
investing portfolio.
Our seminars are not a “get rich”
scheme… we strive to educate and empower our clients with real tools, systems
and specialists to get started on the road to wealth.
Q- You keep mentioning criteria.
Can you give us a few examples of what could constitute someone’s criteria, and
why an investor may choose one type over another?
A-Having clearly defined criteria is
so simple yet so many of us don’t narrow ours down to a manageable size, or
worse we have no criteria at all and we never become experts in our chosen
focus. Here are some examples:
Larry focuses on single
family homes in working class towns in Worcester Country, MA with decent
schools. He seeks 3 bedroom homes with at least 1.5 baths that are located
within established neighborhoods. He chose this criteria because he believes
that single family homes are the “American Dream”, and they will always have
steady appreciation. Larry is also mastering a “rent to buy” program, where
his tenants have an option to buy his rentals after renting for a set period
of time. This is a “win-win” to him- the tenants take excellent care of the
property because they feel as if it’s almost their own, and Larry is able to
help those with credit problems, etc, to pursue the dream of owning their
own home.
Sarah and Ron look only for
mixed-use properties (residential and commercial combined) with 4 or less
units located between 128 and 495 in Middlesex County, MA They like
buildings located in the “downtown” area of smallish towns- they feel that
there is a rebirth happening in many suburban centers. They like having
commercial tenants, as they tend to be on longer term leases, and
potentially have triple net leases. Also, business owners are respected
members of the community in general, and Sarah and Ron enjoy this type of
tenant relationship.
They still deal with the residential units as well in their buildings, but
they rehab them to attract a high end rent.
This type of building can require a larger down payment than a typical
residential investment as it falls under commercial, but keep in mind that
some commercial loans may be assumable from the current owner.
Dianna has become an expert
in short sales- (A short sale in real estate occurs when the outstanding
obligations, such as loans, against a property are greater than what the
property can be sold for). She works with bank REO departments, which stands
for “real estate owned.”. Banks are not in the business to own homes…in fact
REO’s for lenders are thought of as a liability, not asset. Too many
liabilities will cause any business to go under if not dealt with quickly.
Learn more about short sales, and other such tools, in the glossary section.
These are just a few examples of
endless possibilities for potential criteria. We can work together with you to
determine what your ideal beginning criteria should look like.
Q- What is the number one way in
which investors find deals?
A-Based on our experience,
networking plays the largest role in helping experienced investors to locate
their best deals. In fact, research shows that 32% of investor deals are put
together this way. Those with the investor mindset are always asking “Do you
know a good deal”? Even better is to ask “do you know any good deals
with…..(fill in your specific criteria here). Just the other day my husband did
this at the hairdresser, and lo and behold we were told of a vacant property in
a neighboring town that met our criteria!
The next best way to seek deals is
through someone in the real estate field, whether it be an experienced
professional or through their web portals to the local MLS (multiple listing
service), 28% of deals are found through Realtors and/or the MLS.
Q-I don’t have any extra money.
How can I finance an investment property?
A-There are so many programs
designed for real estate investors. The best way to find out what is available
to you is to contact a lender who can consult you on the best program for your
situation. Often times, there are 0% down loans, or perhaps you can use the
dormant equity is your existing home to give you the money for a down payment.
The most important thing is to talk to the experts!
Q-What is the best way to avoid
capital gains taxes with real estate investments?
A-The best way is the buy and hold
approach. That way you are able to buy the property and hold on to it for a long
term wealth building strategy.
However, you can also get involved
in a 1031 Exchange. That allows you to “trade” your investment gain for a like
property, for example you bought a condo. You fixed it up and sold it. You can
now “trade” your gain for a single family home purchase. There is a lot more to
it than that, so you should contact a real estate professional or someone who
specializes in this area to fully understand the options that are available to
you.
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